UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 2-70197
OCEAN BIO-CHEM, INC.
(Exact name of Registrant as specified in its charter)
Florida 59-1564329
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4041 SW 47 Avenue
Fort Lauderdale, FL 33314-4023
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (954) 587-6280
Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common stock, $0.01 par value
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
Aggregate market value of Registrant's common stock held by non-affiliates of the Registrant, based upon the closing price of a share of the Registrant's common stock on March 7, 2005 as reported by the NASDAQ Small Cap Market on that date: $3,989,754. For purposes of this disclosure, the Registrant has assumed that all directors, officers, and beneficial owners of 5% or more of the Registrant's common stock are affiliates of the Registrant.
Number of shares of the Registrant's common stock outstanding as of February 28, 2005: 5,567,816 shares Common stock, $0.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on June 1, 2005, which will be filed within 120 days of December 31, 2004 are incorporated by reference to Part III of this Form 10-K.
Certain statements contained in this Annual Report on Form 10-K, including without limitation expectations as to future sales and operating results, constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Without limiting the generality of the foregoing, words such as "believe", "may", "will", "expect", "anticipate", "intend", "could" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors, which may affect these results include, but are not limited to, the highly competitive nature of our industry; reliance on certain key customers; consumer demand for marine recreational vehicle and automotive products; advertising and promotional efforts; and other factors.
Part I
General: We were organized on November 13, 1973 under the laws of the state of Florida. We are principally engaged in the manufacturing, marketing and distribution of a broad line of appearance and maintenance products for boats, recreational vehicles, automobile and aircraft under the Star brite(R) and other trademarks within the United States of America and Canada. In addition, we produce private label formulations of many of our products for various customers as well as provide custom blending and packaging services of these and other products.
Set forth below is a general description of the products that we manufacture and market:
Marine: Our Marine line consists of polishes, cleaners, protectants and waxes of various formulations under the Star brite(R) brand name as well as private label customers. The line also includes various vinyl protectants, cleaners, teak cleaners, teak oils, bilge cleaners, hull cleaners, silicone sealants, polyurethane sealants, polysulfide sealants, gasket materials, lubricants, antifouling additives and anti-freeze coolants. In addition, we manufacture a line of brushes, poles and tie-downs and other related marine accessories.
Automotive: We manufacture a line of automotive products under the Star brite(R) brand name including brake and transmission fluids, hydraulic, gear and motor oils, and related items. In addition, anti-freeze and windshield washes are produced in varying formulations both under the Star brite(R) brand as well as private labels for customers. We also produce a line of automotive polishes, cleaners and associated appearance items.
Recreational vehicle: Our recreational vehicle products are made up of cleaners, polishes, detergents, fabric cleaners and protectors, silicone sealants, waterproofers, gasket materials, degreasers, vinyl cleaners, protectors, toilet treatment fluids and anti-freeze coolants.
Aircraft: Our Aircraft product line consists primarily of polishes and cleaners.
Although the above products are utilized for different types of vehicles, boats, aircrafts and household purposes, it is management's view that they all constitute one industry segment.
Manufacturing: We manufacture the majority of our products at our manufacturing facility in Montgomery, Alabama. In addition, we contract with two unrelated companies located in northeastern and mid-western areas of the country to package other products, which are manufactured to our specifications, using ouR provided formulas. Each third party packager enters into a confidentiality agreement with us.
We purchase raw materials from a wide variety of suppliers, none of which are significant to operations and all raw materials used in manufacturing are readily available. We design our own packaging and supply our outside manufacturers with the appropriate design and packaging. We believe that our internal manufacturing capacity as well as the arrangements with our present outside manufacturers is adequate for our present needs.
In the event that these arrangements are discontinued with any manufacturer, we believe that substitute facilities can be found without substantial adverse effect on manufacturing and distribution.
Our in-house manufacturing is primarily performed by our wholly owned subsidiary, Kinpak Inc, an Alabama corporation ("Kinpak"). On February 27, 1996, we acquired certain assets of Kinpak, Inc., and assumed two (2) leases of land and facilities leased by Kinpak from the Industrial Development Board of the City of Montgomery, Alabama and the Alabama State Docks Department. On December 20, 1996, we entered a new agreement with the Industrial Development Board of the City of Montgomery, Alabama to issue Industrial Development Bonds in the amount of $4,990,000 to repay certain financial costs and to expand the capacity of the Alabama facility. The underlying premises, at that time, consisted of a manufacturing and distribution facility containing approximately 110,000 square feet located on approximately 20 acres of real property and a docking facility located on the Alabama River. In addition, we purchased the machinery, equipment and inventory located on the leased premises. Subsequent to the acquisition, we changed the name of our subsidiary to Kinpak Inc. (an Alabama corporation).
During July 2002, we completed an additional $3.5 million Industrial Development Bond financing through the City of Montgomery, Alabama. Such transaction funded an approximate 70,000 square foot addition to the manufacturing facility as well as the requisite machinery and equipment additions required therein. Such project was substantially completed during the year ended December 31, 2003.
Marketing: Our marine products and recreational vehicle products are sold through national mass merchandisers such as Wal-mart and Home Depot and through specialized marine retailers such as West Marine and Boater's World. We also sell to national and regional distributors who in turn sell our products to specialized retail outlets for that specific market. Currently we have one customer (West Marine, Inc., which is an unrelated entity) to whom sales exceeded 10% of consolidated revenues for the year ended December 31, 2004. Sales to our five largest customers for the year ended December 31, 2004 amounted to approximately 55% of consolidated gross revenues and outstanding balances due us at year-end from these customers aggregated approximately 77% of consolidated trade receivables. We market our products through internal salesmen and approximately 250 sales representatives who work on an independent contractor-commission basis. Our officers also participate in sales presentations and trade shows. In addition, we aid marketing through advertising campaigns in national magazines related to specific marketplaces. The products are distributed primarily from our manufacturing and distribution facility in Alabama.
Backlog and Seasonality: We have no significant backlog of orders as of December 31, 2004. We do not give customers the absolute right to return product. The majority of our products are non-seasonal and are sold throughout the year. Normal trade terms offered to credit customers range from 30 to 60 days. However, at times special dating and/or discount arrangements are offered as purchasing incentives to customers. Such programs do not materially distort normal margins.
Marine: We have several national and regional competitors in the marine marketplace. The principal elements of competition are brand recognition, price, service and the ability to deliver products on a timely basis. In the opinion of management no one or few competitors holds a dominant market share. We believe that we can increase or maintain our market share through our present methods of advertising and distribution.
Automotive: The automotive marketplace into which the Company began selling various products during 2001 is the largest in which we operate. There are many entities, both national and regional, which represent competition to us. Many are more established and have greater financial resources than we do. However, the market is so large that even a minimal market share could be significant to us. The principal elements of competition are brand recognition, price, service and the ability to deliver products on a timely basis. We believe that we can establish a reasonable market share through our present methods of advertising and distribution.
Recreational Vehicle: Our recreational vehicle appearance and maintenance market is parallel to that of the marine marketplace. In this market we compete with national and regional competitors, none of which singly or as a few have a dominant market share. The principal elements of competition are brand recognition, price, service and the ability to deliver products on a timely basis. Management is of the opinion that it can increase or maintain our market share by utilizing similar methods as those employed in the marine market.
Trademarks: We have obtained registered trademarks for Star brite(R) and other tradenames used on our products. We view our trademarks as significant assets because they provide product recognition. We believe
that our intellectual property is significantly protected, but there are no assurances that these rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged.
Patents: We hold two patents which we believe are valuable in limited product lines, but not material to our success or competitiveness in general.
New Product Development: We continue to develop specialized products for the marine, automotive, and recreational vehicle trade. We believe that our current operations and working capital financing arrangement are sufficient to meet development expenditures without securing external funding. The amounts expended toward this effort in any fiscal period have not been significant and are charged to operations in the year incurred.
Environmental Costs: We adhere to a policy of compliance with applicable regulatory mandates on environmental issues. Amounts expended in this regard have not been significant and management is not aware of any instances of material non-compliance.
Year ended December 31,
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2004 2003 2002
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United States:
Northeast $ 4,455,000 $ 4,054,000 $ 4,258,000
Southeast 6,832,000 6,218,000 6,242,000
Central 7,015,000 6,384,000 6,454,000
West Coast 5,197,000 4,730,000 4,960,000
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23,499,000 21,386,000 21,915,000
Canada (US Dollars) 862,000 792,000 798,000
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$24,361,000 $22,178,000 $22,713,000
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Personnel: We employ approximately 24 full time employees at our corporate office in Fort Lauderdale, Florida. These employees are engaged in administration, clerical and accounting functions. In addition, we employ manufacturing and fabrication personnel in both Florida and Alabama.
The following is a tabulation of the total number of personnel working for the Company and/or its subsidiaries as of December 31, 2004:
Full-time
Location Description Employees
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Fort Lauderdale, Florida Administrative 24
Fort Lauderdale, Florida Manufacturing and distribution 9
Montgomery, Alabama Manufacturing and distribution 81
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114
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Our executive offices and warehouse located in Fort Lauderdale, Florida are held under a lease with an entity fifty percent each owned by Messrs. Peter G. Dornau and Jeffrey J. Tieger, our President and Vice President-Advertising, respectively. The lease covers approximately 12,700 square feet of office and warehouse space. On May 1, 1998, we renewed our lease agreement for a term of ten years. The lease required an initial annual rental of $94,800 and provides for a maximum increase of 2% per annum on the annual anniversary of the lease for the term thereof. Additionally, the landlord is entitled to collect from us its pro-rata share of all taxes, assessments, insurance premiums, operating charges, maintenance charges and any other expenses which normally arise from ownership. Rent charged to operations during the years ended December 31, 2004, 2003 and 2002 amounted to approximately $100,500 each year.
Our Alabama facility currently contains approximately 180,000 square feet of office, plant and warehouse space located on 20 acres of land (the "Plant") and also includes a leased 1.5 acre docking facility on the Alabama River located eleven miles from the Plant. This facility has undergone two separate expansions of 60,000 and 70,000 square feet in 1998 and 2002, respectively. We financed the facility's enhancements and related equipment needs with Industrial Development Bonds issued through the city of Montgomery, AL. Our manufacturing facility is subject to a priority first mortgage; and our manufacturing equipment serves as collateral to a financial institution, which issued letters of credit to secure the bonds. .
We were not involved in any significant litigation at December 31, 2004.
No matter was submitted for a vote of shareholders during the fourth quarter of 2004. Shareholders will vote at the Annual Meeting to be held during June, 2005 to elect members of the Board of Directors, ratify the engagement of the Company's Independent Certified Public Accountants, and any other matter presented at such meeting.
Part II
A. Our common stock was sold to the public initially on March 26, 1981. The common stock of the Company is traded on the NASDAQ Small Cap Market System under the symbol OBCI. A summary of the trading ranges during each quarter of 2004 and 2003 is presented below.
Market Range of
Common Stock Bid: 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
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2004 High $1.89 $1.85 $1.49 $1.40
Low $1.53 $1.31 $1.13 $. 93
2003 High $2.00 $1.20 $1.69 $1.98
Low $1.30 $0.90 $0.97 $1.30
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A. The quotations reflect inter-dealer prices without retail mark-up, markdown or commission and may not represent actual transactions.
B. The number of record holders of our Common Stock owners was approximately 200 at December 31, 2004. In addition, we believe that there are approximately 600 beneficial holders based on information obtained from our Transfer Agent and Registrar and indications from broker dealers of shares held by them as nominee for actual shareholders.
C. We have not paid any cash dividends since it has been organized. However, during the years ended December 31, 2002 and 2000, the Company declared and distributed a 10% and a 5% stock dividend, respectively. The Company has no other dividend policy except as stated herein.
D. Securities authorized for issuance at December 31, 2004 under equity compensation plans:
Number of securities
Number of securities Weighted average remaining available
to be issued upon exercise price of for future issuance
exercise of outstanding outstanding options, under equity com-
options, warrants & rights warrants & rights pensation plans
Equity compensation plans
approved by security holders:
Stock options granted (1) 600,000 $1.29 165,000
Equity compensation plans
not approved by security holders:
Stock options and restricted
stock awards (2), (3) and (4) 723,500 $0.95 --
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Total equity compensation plans
approved and not approved by
security holders 1,323,500 $1.10 165,000
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(2) Includes 352,000 options granted under the 1994 Non-Qualified Stock Option Plan.
(3) Includes 231,000 options granted to Messrs. Peter G. Dornau and Jeffrey J. Tieger in conjunction with a loan made to the Company by and entity 50% owned by each of them.
(4) Includes140,500 shares of restricted common stock awarded to officers and other employees outside of our stock option plans.
During April 2004 we issued 140,500 shares of our common stock bearing a restricted legend to certain officers and other key employees as a component of their compensation. At the date of grant the shares had a market value of $1.25 each. Shares were awarded as follows:
Officers:
Peter G. Dornau, President and CEO 35,000 shares
Edward Anchel, Vice President and CFO 35,000 shares
Jeffrey J. Tieger, Vice President and Secretary 20,000 shares
William Dudman, Vice President 16,000 shares
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106,000 shares
Other employees, as a group (7 individuals) 34,500 shares
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Total restricted shares awarded 140,500 shares
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The following tables set forth selected financial data as of, and for the years ended December 31,
2004 2003 2002 2001 2000
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Operations
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Gross sales $24,361,056 $22,178,352 $22,712,991 $19,876,095 $18,072,784
Net sales $21,657,083 $19,997,702 $20,585,898 $18,013,393 $16,139,256
Net income (loss) $ 134,554 $ 345,071 $ 134,518 $ 106,384 ($ 244,823)
Earnings (loss) per
common share $ .03 $ .07 $ .03 $ .03 ($ .06)
Balance Sheet
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Working capital $ 3,403,574 $ 2,869,172 $ 2,212,872 $ 1,385,016 $ 1,724,043
Total assets $19,398,344 $18,303,184 $18,650,237 $15,030,206 $15,410,264
Long-term
obligations $ 5,840,250 $ 5,883,302 $ 6,745,232 $ 3,843,515 $ 3,963,145
Total liabilities $13,509,849 $12,899,189 $13,727,315 $10,268,884 $10,737,972
Shareholders'
equity $ 5,888,495 $ 5,403,995 $ 4,922,922 $ 4,761,322 $ 4,672,292
Cash dividends declared
per share of common stock $ -- $ -- $ -- $ -- $ --
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The following discussion should be read in conjunction with our consolidated financial statements contained herein as Item 15.
We are a leading manufacturer and distributor of chemical formulations serving the appearance and functional categories of the marine, automotive, recreational vehicle and home care markets. We were founded in 1973 and have conducted operations within the aforementioned categories since then. During 1984, we changed our corporate name to Ocean Bio-Chem, Inc. (the parent company) from our former name, Star brite Corporation. Our operations were conducted as a privately owned company through March, 1981 when we completed our initial public offering of common stock.
Critical accounting policies and estimates:
Principles of consolidation - Our consolidated financial statements include the accounts of the parent company and its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.
Revenue recognition - Revenue from product sales is recognized when persuasive evidence of an arrangement exists, delivery to customer has occurred, the sales price is fixed and determinable, and collectibility of the related receivable is probable.
Inventories - Inventories are primarily composed of raw materials and finished goods and are stated at the lower of cost, using the first-in, first-out method, or market.
Prepaid advertising and promotion - In any given year we introduce certain new products to our customers. In connection therewith, we produce new promotional items to be distributed over a period of time. We follow the policy of amortizing these costs over a one-year basis.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method.
Stock based compensation - We follow the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, to record compensation costs. Opinion No. 25 requires that compensation cost be based on the difference, if any, between the quoted market price of the stock and the price the employee must pay to acquire the stock depending on the terms of the award. For the years ended December 31, 2004, 2003 and 2002, we have not adopted Statement of Financial Accounting Standards No. 123 to record such compensation costs.
Concentration of credit risk - Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable. Our five largest customers represented approximately 55%, 55% and 42% of consolidated gross revenues for the years ended December 31, 2004, 2003 and 2002; and 77% and 76% of consolidated accounts receivable at December 31, 2004 and 2003, respectively. We have had a longstanding relationship with each of these entities and have always collected open receivable balances. However, the loss of any of these customers could have an adverse impact on our operations.
Concentration of cash - At various times of the year and at December 31, 2004, we had a concentration of cash in one bank in excess of prevailing insurance offered through the Federal Deposit Insurance Corporation at such institution. Management does not consider the excess deposits to be a significant risk.
Fair value of financial instruments - The carrying amount of cash approximates its fair value. The fair value of long-term debt is based on current rates at which we could borrow funds with similar remaining maturities, and the carrying amount approximates fair value.
Income taxes - We file consolidated federal and state income tax returns. We haves adopted Statement of Financial Accounting Standards No. 109 in the accompanying consolidated financial statements. The only temporary differences included therein are attributable to differing methods of reflecting depreciation for financial statement and income tax purposes.
Trademarks, trade names and patents - The Star brite trade name and trademark were purchased in 1980 for $880,000. The cost of such intangible assets was amortized on a straight-line basis over an estimated useful life of 40 years through December 31, 2001. Effective January 1, 2002 and pursuant to Statement of Financial Accounting Standards No. 142, we have determined that the carrying value of such intangible assets relating to its Star brite brand does not require further amortization. In addition, we own two patents that we believes are valuable in limited product lines, but not material to our success or competitiveness in general. There are no capitalized costs of these two patents.
Translation of Canadian currency - The accounts of our Canadian subsidiary are translated in accordance with Statement of Financial Accounting Standards No. 52, which requires that foreign currency assets and liabilities be translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average exchange rate prevailing throughout the period. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as the translation adjustment in shareholders' equity. Realized gains and losses from foreign currency transactions, if any, are included in net earnings of the period.
The primary sources of our liquidity are our operations and short-term borrowings from a commercial bank pursuant to a revolving line of credit aggregating $6 million. Such line matures May 31, 2005, bears interest at prime plus .25% and is secured by our trade receivables and inventory. We are required to maintain a minimum working capital of $1.5 million and meet certain other financial covenants during the term of the agreement. As of December 31, 2004, we were obligated under this arrangement in the amount of $4,500,000.
In connection with the purchase and expansion of the Alabama facility, we closed on Industrial Development Bonds during 1997. The proceeds were utilized for both the repayment of certain advances used to purchase the Alabama facility and to expand such facility for our future needs. During July 2002, we completed another $3.5 million Industrial Development Bond financing through the City of Montgomery, Alabama. Such transaction funded an approximate 70,000 square foot addition to the manufacturing facility as well as the remaining machinery and equipment additions required therein. This project was substantially completed during 2003.
In order to market its Alabama Industrial Development Bonds at favorable rates, we obtained a substitute irrevocable letter of credit for the 1997 issue and a new irrevocable letter of credit for the 2002 issue. Under such letters of credit agreements maturing on July 31, 2005, we are required to maintain a stipulated level of working capital, a designated maximum debt to tangible ratio, and a required debt service coverage ratio. Such letters of credit are secured by a first priority mortgage on the underlying Alabama facility and equipment.
The bonds are marketed weekly at the prevailing rates for such tax-exempt instruments. During the year ended December 31, 2004 such bonds carried interest ranging between 1.5% and 2.3% annually. Interest and principal are payable quarterly. We believe current operations are sufficient to meet these obligations.
We are involved in making sales in the Canadian market and must deal with the currency fluctuations of the Canadian currency. We do not engage in currency hedging and deals with such currency risk as a pricing issue.
During the past few years, we have introduced various new products to our customers. At times this has required us to carry greater amounts of overall inventory and has resulted in lower inventory turnover rates. The effects of such inventory turnover have not been material to our overall operations. We believe that all required capital to maintain such increases can continue to be provided by operations and current financing arrangements.
Many of the raw materials that we use in the manufacturing process are commodities that are subject to fluctuating prices. We react to long-term increases by passing along all or a portion of such increases to our customers.
Sales and earnings varied when comparing the year ended December 31, 2004 to 2003 principally due to the factors enumerated below.
Gross sales increased 9% to approximately $24,361,000 for the year ended December 31, 2004 compared to $22,178,000 for the year ended December 31, 2003. Management attributes this increase in sales to gains made during the third quarter of the current year as well as increased sales promotions and the related increase in revenues during the fourth quarter of 2004.
Cost of goods sold increased to 77% of net sales for the year ended December 31, 2004 compared to 75.7% of net sales in the year ended December 31, 2003. This change resulted from various factors, some of which negatively impacted margins and others, which mitigated these factors. Specifically, petroleum product costs are higher than those experienced in prior years and currently represent a higher portion of our manufacturing expenses. In addition, a price increase was passed along on certain of our products during the first and second quarters of 2004. In addition, margins were favorably impacted by spreading the fixed elements of overhead over an increased revenue base.
Advertising and promotion expenses increased approximately $201,000 for the 2004 period when compared to expenses in the same time period in the previous year. This increase resulted primarily from increased co-op advertising associated with increased sales to certain customers and the timing of various advertising programs in 2004.
Selling and administrative expenses increased by approximately $100,000 or 3% in the year ended December 31, 2004 compared to the year ended December 31, 2003. Such change was primarily due to increased personnel costs and other normal recurring increases in operating expenses.
Interest expense for the year ended December 31, 2004 increased approximately $17,000 when compared to the same twelve-month period of 2003. This change was primarily due to the impact of higher interest rates and increased borrowings.
Sales and earnings varied when comparing the year ended December 31, 2003 to 2002 principally due to the factors enumerated below.
Net sales - Net sales decreased approximately $588,000 or 3% comparing the year ended December 31, 2003 with the 2002 period. This was primarily due to decreased sales of our marine anti-freeze and certain automotive products. The anti-freeze decrease was attributed to commodity pricing of raw materials and related freight issues, and the automotive decrease resulted from initial customer reaction to our strategic decision to achieve higher margins on these products.
Cost of goods sold - Gross margins improved and cost of goods sold decreased as a percentage of net sales when comparing the years ended December 31, 2003 and 2002. The costs of goods sold percentages were 75.7% and 77.7% for the periods during 2003 and 2002, respectively. This change was primarily due to our on-going initiatives towards improving operating margins including a general sales price increase, utilization of cash discounts offered by suppliers, and product pricing in response to current commodity costs.
Advertising and promotion - Advertising expense decreased approximately $27,000 or 4% when comparing 2003 to 2002. This was primarily due to planned decreases in media advertising expenditures and lower customer co-op advertising.
Selling, general and administrative - Selling, general and administrative expenses increased approximately $45,000 or 1% when comparing 2003 to 2002.
Interest expense - Interest expense incurred during 2003 decreased by approximately $95,000 compared to 2002. The decrease was primarily due to prevailing interest rates.
Contractual obligations:
The following table reflects our contractual obligations for the years ended December 31,:
Total 2005 2006 - 08 2009 Thereafter
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Long-term debt obligations $6,026,332 $467,180 $1,402,360 $468,610 $3,688,182
Capital leases 37,030 15,932 21,098 -- --
Operating leases 422,292 102,458 319,834 -- --
Purchase obligations -- -- -- -- --
Other -- -- -- -- --
---------- -------- ---------- -------- ----------
Total $6,485,654 $585,570 $1,743,292 $468,610 $3,688,182
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We do not engage in derivative transactions. We become exposed to foreign currency transactions as a result of our operations in Canada and we do not hedge such exposure. Differences in the fair value of investment securities are not material; therefore, the related market risk is not significant. Our exposure to market risk for changes in interest rates relates primarily to the interest rate on our bonds. The interest rates on our bonds adjusted weekly and ranged between 1.5% and 2.3% during the year ended December 31, 2004.
The audited financial statements of the Company required pursuant to this Item 8 are included in this Annual Report on Form 10-K, as a separate section commencing on page F-1 and are incorporated herein by reference.
None.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of December 31, 2004. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that , as of December 31, 2004, our disclosure controls and procedures were (1) designed to ensure that material information relating to our company, including our consolidated subsidiaries made known to our Chief Executive Officer and Chief Financial Officer by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to be disclosed by the our company in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
We did not have any change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which occurred during the fiscal quarter ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part III
The following tables set forth the name and ages of our elected directors and officers of the Company, as of December 31, 2004.
All directors will serve until the next annual meeting of directors or until their successors are duly elected and qualified. Each officer serves at the discretion of the board of directors.
There are no arrangements or understandings between any of the officers or directors of our Company and the Company or any other persons pursuant to which any officer or director was or is to be selected as a director or officer.
Name Office Age
---- ------ ---
Peter G. Dornau President, Chief Executive Officer, and 65
Director since 1973
Edward Anchel Vice President-Finance, Chief Financial 58
Officer since 1999 and Director since 1998
Jeffrey J. Tieger Vice President - Advertising and Marketing,
Secretary and Director since 1977 61
William W. Dudman Vice President-Operations since 2004 40
James M. Kolisch Director since 1998 53
Laz L. Schneider Director since 1998 65
John B. Turner Director since 2000 57
Sonia B. Beard Director since 2002 34
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Peter G. Dornau is our co-founder and has served as our President, CEO and Chairman of Board of Directors since 1973.
Edward Anchel joined our company as Vice President-Finance and Chief Financial Officer in March 1999. For the five years immediately preceding his employment, he was an officer of a privately owned manufacturing company and in private practice as a Certified Public Accountant. He was initially elected to serve as an outside Director of the Company in May 1998.
Jeffrey J. Tieger joined our company in June 1977 as our Vice President-Advertising and has served in that position through the present date.
William W. Dudman joined our company in February 2004 as our Vice President-Operations. For the five years immediately preceding his employment he had held various management positions within the marine industry, most recently with West Marine, Inc., our largest customer.
James M. Kolisch joined our Board of Directors as an outside director in May 1998. During the past five years, Mr. Kolisch has been engaged in the insurance industry and served as president of USI Florida an entity that sources most of the our insurance needs. Mr. Kolisch serves on the Board of Directors' Audit Committee.
Laz L. Schneider is, and has for the past five years, been an attorney in private practice and was elected to serve as an outside Director of the Company during May 1998. Mr. Schneider is a partner at Berger, Singerman, P.A., a law firm that serves as our lead counsel in various corporate and litigation matters.
John B. Turner joined our Board of Directors in June 2002. During the past five years, Mr. Turner has been retired. Prior to his retirement, he was an insurance executive. In addition to his insurance credentials, Mr. Turner holds a Series 7 stock brokerage license. His professional experience in the aforementioned areas spans in excess of twenty-five years. Mr. Turner serves on the Board of Directors' Audit Committee.
Sonia B. Beard is a Florida Certified Public Accountant working for Walt Disney World since 1997. She currently holds the position as the Manager of Concept Development for the Revenue Lines of Business of Walt Disney World. Ms. Beard has in excess of twelve years financial experience. She is an outside director and serves as the Chairperson and Financial Expert of the Board of Directors' Audit Committee.
We have an Audit Committee, which consists of Sonia B. Beard, John B. Turner and James M. Kolisch as of December 31, 2004. The Board has designated Sonia B. Beard as the "audit committee financial expert," as defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934. The Board has determined that Sonia B. Beard, John B. Turner and James M. Kolisch are "independent directors" within the meaning of the listing standards of the Nasdaq Small Cap Market.
We have adopted a Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees of the company, including our principal executive officer, our principal financial officer, our principal accounting officer or controller or other persons performing similar functions. We filed our Code of Ethics as Exhibit 14.1 to this Annual Report on Form 10-K.
Based solely on reviews of Forms 3 and 4 furnished to us by the aforementioned individuals, it was determined that no reporting person failed to file a timely submission of ownership changes and that we were in compliance with Rule 16(a)3(e) of the Exchange Act during our most recent fiscal year.
The information required for this item is incorporated by reference to our Definitive Proxy Statement to be filed in conjunction with the annual shareholders' meeting that shall be filed with the United States Securities and Exchange Commission and sent out to shareholders prior to 120 days past our year-end of December 31, 2004.
The following table sets forth information at December 31, 2004 with respect to the beneficial ownership of our common stock by holders of more than 5% of such stock and by all of our directors and officers as a group:
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
-------- ------------------- -------------------- --------
Common Peter G. Dornau, President, CEO,
Chairman Board of Directors
Fort Lauderdale, FL 33317 2,926,868 (1) 46.27%
Common Edward Anchel, Vice President-Finance,
CFO, Director
Boynton Beach, FL 33437 244,451 (2) 3.86%
Common Jeffrey J. Tieger,
Vice President-Advertising,
Secretary, Director
Plantation, FL 33314 365,780 (3) 5.78%
Common William W. Dudman, Vice President
Plantation, FL 33317 19,300 .31%
Common James M. Kolisch, Director
Coral Gables, FL 33114 18,167 (4) .73%
Common Laz L. Schneider, Director
Fort Lauderdale, FL 33305 30,000 (5) .47%
|
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
-------- ------------------- -------------------- --------
Common John B. Turner, Director
Miami, FL 33186 47,463 (6) .31%
Common Sonia B. Beard, Director
Merritt Island, FL 32952 20,000 (7) .75%
Common All directors and officers as a group
8 individuals 3,700,029 (8) 58.49%
|
(2) Includes 48,500 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(3) Includes 164,000 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(4) Includes 30,000 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(5) Includes 30,000 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(6) Includes 30,000 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(7) Includes 20,000 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
(8) Includes 486,500 shares that are issuable upon the exercise of stock options within 60 days of December 31, 2004.
On May 1, 1998, we entered into a ten-year lease for approximately 12,700 square feet of office and warehouse facilities in Fort Lauderdale, Florida from an entity fifty percent owned each by Messrs. Peter G. Dornau and Jeffrey J. Tieger, our President and Vice President-Advertising, respectively. The lease required a minimum rental of $94,800 the first year and provides for a maximum 2% increase on the anniversary of the lease throughout the term. Additionally, the landlord is entitled to collect from us its pro-rata share of all taxes, assessments, insurance premiums, operating charges, maintenance charges and any other expenses, which normally arise from ownership. We believe that the terms of this lease are comparable to those of similar properties in the same geographic area of the Company available from unrelated third parties. Rent charged to operations during the years ended December 31, 2004, 2003 and 2002 amounted to approximately $100,500 each year.
We acquired the rights to the Star brite(R) trademark and related products for the United States and Canada in conjunction with our original public offering during March 1981. Peter G. Dornau, our president is the direct or beneficial owner of three companies that market Star brite(R) products outside the United States and Canada. These companies serve as distributors of our products and the terms of payment are the same as for our other customers. At December 31, 2004 and 2003, we had amounts due from affiliated companies, which are directly or beneficially owned by our president aggregating approximately $408,500 and $172,900, respectively.
Sales of Star brite products to such affiliates aggregated approximately $616,800, $373,600 and $317,100 during the years ended December 31, 2004, 2003 and 2002, respectively.
A subsidiary of ours currently uses the services of an entity that is owned by our president to conduct product research and development. Such entity received $30,000 per year during the years ended December 31, 2004, 2003 and 2002 under such relationship.
The information required for this item is incorporated by reference to our Definitive Proxy Statement to be filed in conjunction with the annual shareholders' meeting which shall be filed with the United States Securities and Exchange Commission and sent out to shareholders prior to 120 days past our year-end of December 31, 2004.
(A) Consolidated financial statements:
(i) Consolidated balance sheets as of December 31, 2004 and 2003.
(ii) Consolidated statements of operations for each of the three years ended December 31, 2004, 2003 and 2002.
(iii) Consolidated statement of shareholders' equity for each of the three years ended December 31, 2004, 2003 and 2002.
(iv) Consolidated statements of cash flows for each of the three years ended December 31, 2004, 2003 and 2002.
(v) Notes to consolidated financial statements.
(a) All schedules are omitted because either they are not applicable or the required information is shown in the consolidated financial statement or the notes thereto.
Exhibits:
(B) Exhibits
3.1 Articles of Incorporation (incorporated by reference to the Company's Registration Statement on Form S-18 filed with the United States Securities and Exchange Commission on March 26, 1981).
3.2 Bylaws (incorporated by reference to the Company's Registration Statement on Form S-18 filed with the United States Securities and Exchange Commission on March 26, 1981).
4.1 Form of Certificate for Series 1997 Bonds*
4.2 Form of Certificate for Series 2002 Bond*
4.3 Trust Indenture dated as of December 1, 1996 between the IDB Board and Regions Bank, as Trustee and Registrar relating to the $4,000,000 1997 IDB Bonds
4.4 Supplement to Trust Indenture for 1997 Bonds dated March 1, 1997*
4.5 Trust Indenture dated as of July 22, 2002 between the IDB Board and Regions Bank, as Trustee and Registrar relating to the $3,500,000 IDB Bonds Series 2002*
10.1 Restated Lease Agreement dated as of December 1, 1996 between The Industrial Development Board of the City of Montgomery ("IDB Board") and Kinpak, Inc.*
10.2 First Supplemental Lease dated as of March 1, 1997 between the IDB Board and Kinpak, Inc.*
10.3 Second Supplemental Lease dated as of July 1, 2002 between the IDB Board and Kinpak, Inc.*
10.4 Credit Agreement dated as of July 1, 2002 by and among the Company, Star-Brite Distributing, Inc., Star-Brite Automotive, Inc., Star Brite Distributing (Canada), Inc., Kinpak, Inc. and Regions Bank*
10.5 Amendment to Credit Agreement dated June 1, 2004 by and among the Company, Star-Brite Distributing, Inc., Star-Brite Automotive, Inc., Star Brite Distributing (Canada), Inc., Kinpak, Inc. and Regions Bank*
10.6 Mortgage, Assignment of Leases and Security Agreement dated as of July 1, 2002 between Kinpak, Inc. and Regions Bank.*
10.7 Security Agreement dated as of July 22, 2002 between Kinpak, Inc. and Regions Bank.*
10.8 Irrevocable Letter of Credit dated July 22, 2002 issued by Regions Bank to secure the Series 1991 Bonds*
10.9 Irrevocable Letter of Credit dated July 22, 2002 issued by Regions Bank to secure the Series 2002 Bonds*
10.10 Extension to Credit Agreement dated march 31, 2003 by and among the Company, Star-Brite Distributing, Inc., Star-Brite Automotive, Inc., Star Brite Distributing (Canada), Inc., Kinpak, Inc. and Regions Bank*
10.11 Ocean Bio-Chem, Inc. 1992 Incentive Stock Option Plan (incorporated by reference to Form S-8 filed with the United States Securities and Exchange Commission on June 24, 1994).
10.12 Ocean Bio-Chem, Inc. 1994 Non-Qualified Stock Option Plan (incorporated by reference to Form S-8 filed with the United States Securities and Exchange Commission on June 24, 1994).
10.13 Ocean Bio-Chem, Inc. 2002 Incentive Stock Option Plan (incorporated by reference to an exhibit contained in the Company's proxy statement filed with the United States Securities and Exchange Commission on April 28, 2003).
10.14 Lease dated May 1, 1998 between the Star Brite Distributing, Inc. and PEJE, Inc.*
14.1 Code of Ethics (incorporated by reference to an exhibit contained in the Company's proxy statement filed with the United States Securities and Exchange Commission on April 13, 2004)
21. List of Subsidiaries*
23.1 Consent of Levi, Cahlin & Co.*
23.2 Consent of Berkovits, Lago & Company, LLP*
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of Sarbanes-Oxley*
31.2 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley*
32.1 Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley*
32.2 Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley*
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
By: /s/ Peter G. Dornau
-------------------------------------
PETER G. DORNAU
Chairman of the Board of Directors
and Chief Executive Officer
March 30, 2005
By: /s/ Edward Anchel
-------------------------------------
EDWARD ANCHEL
Chief Financial Officer
March 30, 2005
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Capacity Date --------- -------- ---- /s/ Peter G. Dornau President, Chief Executive March 30, 2005 ---------------------- Officer and Director Peter G. Dornau /s/ Edward Anchel Vice President Finance, Chief March 30, 2005 ---------------------- Financial Officer, Director Edward Anchel /s/ Jeffrey J. Tieger Vice President, Secretary March 30, 2005 ---------------------- and Director Jeffrey J. Tieger /s/ James M. Kolisch Director March 30, 2005 ---------------------- James M. Kolisch /s/ Laz L. Schneider Director March 30, 2005 ---------------------- Laz Schneider /s/ John B. Turner Director March 30, 2005 ---------------------- John B. Turner /s/ Sonia B. Beard Director March 30, 2005 ---------------------- Sonia B. Beard |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has not sent an annual report or proxy material to security-holders as of this date. Subsequent to this filing the Registrant will produce an annual report and definitive proxy materials for its Annual Meeting of Shareholders. Copies of such shall be filed with the United States Securities and Exchange Commission pursuant to the current requirements.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
Page
----
Reports of independent auditors F-2 - F-3
Consolidated balance sheets F-4
Consolidated statements of operations F-5
Consolidated statement of shareholders' equity F-6
Consolidated statements of cash flows F-7
Notes to consolidated financial statements F-8 - 15
|
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheet of Ocean Bio-Chem, Inc. (the "Company") and its Subsidiaries, as of December 31, 2004, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Ocean Bio-Chem, Inc for the years ending December 31, 2003 and 2002, were audited by other auditors whose report thereon, dated March 25, 2004, expressed an unqualified opinion.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ocean Bio-Chem, Inc. as of December 31, 2004 and their results of their consolidated operations and its cash flows for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.
/s/ Levi, Cahlin & Co. Levi, Cahlin & Co. March 8, 2005 |
[Letter Head of Berkovits, Lago & Company, LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders Ocean Bio-Chem, Inc. and its Subsidiaries Ft. Lauderdale, Florida
We have audited the consolidated balance sheets of Ocean Bio-Chem, Inc. (the "Company") and its Subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ocean Bio-Chem, Inc. and its Subsidiaries at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.
/s/ Berkovits, Lago & Company, LLP Fort Lauderdale, Florida March 25, 2004 |
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
ASSETS
Current Assets 2004 2003
------------ ------------
Cash $ 988,106 $ 42,923
Trade accounts receivable net of allowance for
doubtful accounts of approximately $201,000
and $206,000, respectively 4,652,144 4,333,023
Inventories 5,218,431 5,315,741
Prepaid expenses and other current assets 214,492 193,372
------------ ------------
Total current assets 11,073,173 9,885,059
------------ ------------
Property, plant and equipment, net 7,337,600 7,506,586
------------ ------------
Other assets:
Funds held in escrow for equipment 1,853 126,295
Trademarks, trade names, and patents 330,439 330,439
Due from affiliated companies 408,476 172,925
Deposits and other assets 246,803 281,880
------------ ------------
Total other assets 987,571 911,539
------------ ------------
Total assets $ 19,398,344 $ 18,303,184
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable trade $ 2,251,287 $ 1,305,484
Note payable bank 4,500,000 4,550,000
Current portion of long-term debt 483,112 898,964
Income taxes payable-current 44,600 80,000
Accrued expenses payable 390,600 181,439
------------ ------------
Total current liabilities 7,669,599 7,015,887
------------ ------------
Deferred income taxes payable 260,000 205,610
------------ ------------
Long-term debt less current portion 5,580,250 5,677,692
------------ ------------
Commitments and contingencies -- --
Shareholders' equity:
Common stock - $.01 par value, 10,000,000 shares authorized,
5,417,813 and 4,960,843 shares issued and outstanding at
December 31, 2004 and 2003, respectively 54,178 49,608
Additional paid-in capital 4,722,746 4,409,829
Foreign currency translation adjustment (204,864) (237,323)
Retained earnings 1,324,630 1,190,076
------------ ------------
5,896,690 5,412,190
Less treasury stock 7,519 shares, at cost (8,195) (8,195)
------------ ------------
Total shareholders' equity 5,888,495 5,403,995
------------ ------------
Total liabilities and shareholders' equity $ 19,398,344 $ 18,303,184
============ ============
|
The accompanying notes are an integral part of these financial statements.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
2004 2003 2002
------------ ------------ ------------
Gross Sales $ 24,361,056 $ 22,178,352 $ 22,712,991
Less discounts, returns and allowances 2,703,973 2,180,650 2,127,093
------------ ------------ ------------
Net sales 21,657,083 19,997,702 20,585,898
Cost of goods sold 16,675,780 15,131,775 15,961,692
------------ ------------ ------------
Gross profit 4,981,303 4,865,927 4,624,206
------------ ------------ ------------
Operating expenses:
Advertising and promotion 942,991 742,167 769,275
Selling and administrative 3,428,873 3,329,904 3,284,652
Interest 307,840 290,856 386,109
------------ ------------ ------------
Total operating expenses 4,679,704 4,362,927 4,440,036
------------ ------------ ------------
Operating profit 301,599 503,000 184,170
Interest income 955 19,871 8,848
------------ ------------ ------------
Income before provision
for income taxes 302,554 522,871 193,018
Provision for income taxes 168,000 177,800 58,500
------------ ------------ ------------
Net income 134,554 345,071 134,518
Other comprehensive income:
Foreign currency translation,
net of taxes 32,459 66,252 (40,642)
------------ ------------ ------------
Comprehensive income $ 167,013 $ 411,323 $ 93,876
============ ============ ============
Earnings per share:
Basic $ .03 $ .07 $ .03
============ ============ ============
Diluted $ .02 $ .07 $ .03
============ ============ ============
|
The accompanying notes are an integral part of these financial statements.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
ENDED DECEMBER 31, 2004, 2003 AND 2002
Common stock Foreign
-------------------- Additional currency Retained Treasury
Shares Amount paid-in capital adjustment earnings stock Total
--------- ------- --------------- ---------- ---------- -------- ----------
January 1, 4,239,889 $42,399 $3,755,219 ($262,933) $1,234,832 ($8,195) $4,761,322
2002
Net income 134,518 134,518
Issuances of
common stock 565,954 5,659 586,410 (524,345) 67,724
Foreign currency
translation
adjustment (40,642) (40,642)
--------- ------- ---------- --------- ---------- ------- ----------
December 31,
2002 4,805,893 48,058 4,341,629 (303,575) 845,005 (8,195) 4,922,922
Net income 345,071 345,071
Issuances of
common stock 155,000 1,550 68,200 69,750
Foreign currency
translation
adjustment 66,252 66,252
--------- ------- ---------- --------- ---------- ------- ----------
December 31,
2003 4,960,843 49,608 4,409,829 (237,323) 1,190,076 (8,195) 5,403,995
Net income 134,554 134,554
Issuances of
common stock 456,970 4,570 312,917 317,487
Foreign currency
translation
adjustment 32,459 32,459
--------- ------- ---------- --------- ---------- ------- ----------
December 31,
2004 5,417,813 $54,178 $4,722,746 ($204,864) $1,324,630 ($8,195) $5,888,495
========= ======= ========== ========= ========== ======= ==========
|
The accompanying notes are an integral part of these financial statements.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
2004 2003 2002
----------- ----------- -----------
Cash flows from operating activities:
Net income $ 134,554 $ 345,071 $ 134,518
Adjustments to reconcile net income
to net cash provided (used) by operations:
Depreciation and amortization 735,103 674,955 601,064
Issuance of common stock to employees 87,813 69,750 67,724
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (319,121) (1,142,666) 96,491
(Increase) decrease in inventory 97,310 (774,591) (244,967)
(Increase) decrease in prepaid expenses (21,120) 268,740 (44,517)
(Decrease) increase in accounts payable
and accrued taxes and other 1,209,030 (540,922) (339,698)
----------- ----------- -----------
Net cash provided (used) by operating activities 1,923,569 (1,099,663) 270,615
----------- ----------- -----------
Cash flows from financing activities:
Net borrowings (reductions) under line of credit (50,000) 300,000 584,140
(Increase) decrease in amounts due from affiliates (235,551) 439,350 (48,544)
Increases in (reductions to) long-term debt, net (513,293) (587,203) 2,973,989
Issuance of common stock from exercised
stock options 229,674 -- --
----------- ----------- -----------
Net cash provided (used) by financing activities (569,170) 152,147 3,509,585
----------- ----------- -----------
Cash flows used by investing activities:
Purchases of property, plant and equipment (566,117) (1,204,538) (1,575,622)
Utilization of (additions to) trust funds for
equipment purchased, net 124,442 1,034,899 (1,152,110)
----------- ----------- -----------
Net cash used by investing activities (441,675) (169,639) (2,727,732)
----------- ----------- -----------
Increase (decrease) in cash prior to effect of
exchange rate on cash 912,724 (1,117,155) 1,052,468
Effect of exchange rate on cash 32,459 66,252 (40,642)
----------- ----------- -----------
Net increase (decrease) in cash 945,183 (1,050,903) 1,011,826
Cash at beginning of year 42,923 1,093,826 82,000
----------- ----------- -----------
Cash at end of year $ 988,106 $ 42,923 $ 1,093,826
=========== =========== ===========
Supplemental information
Cash used for interest during period $ 307,840 $ 290,856 $ 434,869
=========== =========== ===========
Cash used for income taxes during $ 149,000 $ 60,000 $ 240,000
=========== =========== ===========
|
The Company had no cash equivalents at December 31, 2004, 2003, and 2002.
The accompanying notes are an integral part of these financial statements.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
Organization - The Company was incorporated during November, 1973 under the laws of the state of Florida and operates as a manufacturer and distributor of products to the marine, automotive and recreational vehicle aftermarkets. During 1984, the Company changed its corporate name to Ocean Bio-Chem, Inc. (the parent company) from its former name, Star brite Corporation.
Principles of consolidation - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Revenue recognition - Revenue from product sales is recognized when persuasive evidence of an arrangement exists, delivery to customer has occurred, the sales price is fixed and determinable, and collectibility of the related receivable is probable.
Inventories - Inventories are primarily composed of raw materials and finished goods and are stated at the lower of cost, using the first-in, first-out method, or market.
Prepaid advertising and promotion - During the years ended December 31, 2004, 2003 and 2002, the Company introduced certain new products to its customers. In connection therewith, the Company produced new promotional items to be distributed over a period of time and increased its catalog advertising. The Company follows the policy of amortizing these costs over a one-year basis. At December 31, 2004 and 2003, the accumulated cost of materials on hand and other deferred promotional costs that were or will be charged against the subsequent year's operations amounted to approximately $25,900 and $43,500, respectively.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method.
Stock based compensation - The Company follows the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, to record compensation costs. Opinion No. 25 requires that compensation cost be based on the difference, if any, between the quoted market price of the stock and the price the employee must pay to acquire the stock depending on the terms of the award. For the years ended December 31, 2004, 2003 and 2002, the Company has not adopted Statement of Financial Accounting Standards No. 123 to record such compensation costs.
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the reported amount of assets, liabilities, revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentration of credit risk - Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable. The Company's five largest customers represented approximately 55%, 55% and 42% of consolidated gross revenues for the years ended December 31, 2004, 2003 and 2002; and 77% and 76% of consolidated accounts receivable at December 31, 2004 and 2003, respectively. The Company has a longstanding relationship with each of these entities and has always collected open receivable balances. However, the loss of any of these customers could have an adverse impact on the Company's operations.
Concentration of cash - At various times of the year and at December 31, 2004, the Company had a concentration of cash in one bank in excess of prevailing insurance offered through the Federal Deposit Insurance Corporation at such institution. Management does not consider the excess deposits to be a significant risk.
Fair value of financial instruments - The carrying amount of cash approximates its fair value. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities, and the carrying amount approximates fair value.
Income taxes - The Company and its subsidiaries file consolidated federal and state income tax returns. The Company has adopted Statement of Financial Accounting Standards No. 109 in the accompanying consolidated financial statements. The only temporary differences included therein are attributable to differing methods of reflecting depreciation for financial statement and income tax purposes.
Trademarks, trade names and patents - The Star brite trade name and trademark were purchased in 1980 for $880,000. The cost of such intangible assets was amortized on a straight-line basis over an estimated useful life of 40 years through December 31, 2001. Effective January 1, 2002 and pursuant to Statement of Financial Accounting Standards No. 142, the Company has determined that the carrying value of such intangible assets relating to its Star brite(R) brand does not require further amortization. In addition, the Company owns two patents that it believes are valuable in limited product lines, but not material to its success or competitiveness in general. There are no capitalized costs of these two patents.
Translation of Canadian currency - The accounts of the Company's Canadian subsidiary are translated in accordance with Statement of Financial Accounting Standards No. 52, which requires that foreign currency assets and liabilities be translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average exchange rate prevailing throughout the period. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as the translation adjustment in shareholders' equity. Realized gains and losses from foreign currency transactions, if any, are included in net earnings of the period.
Reclassifications - Certain items in the accompanying consolidated financial statements for the years ended December 31, 2003 and 2002 have been reclassified to conform with the 2004 presentation.
December 31,
------------------------
2004 2003
----------- ----------
Land $ 278,325 $ 278,325
Building 4,390,894 4,390,894
Manufacturing and warehouse equipment 5,359,009 4,750,972
Office equipment and furniture 623,825 591,024
Construction in process 261,693 400,800
Leasehold improvement 151,976 141,826
----------- ----------
11,065,722 10,553,841
Less accumulated depreciation 3,728,122 3,047,255
----------- ----------
Total property, plant and equipment, net $ 7,337,600 $7,506,586
=========== ==========
|
Depreciation expense for the years ended December 31, 2004, 2003 and 2002, which includes amortization of capitalized lease assets, amounted to approximately $735,100, $675,100 and $601,100, respectively.
Included in property, plant and equipment are the following assets at the Company's Alabama subsidiary and which are substantially held under capitalized leases securing certain City of Montgomery, AL Industrial Development Bonds:
December 31,
--------------------------
2004 2003
---------- ----------
Land $ 278,325 $ 278,325
Building 4,390,894 4,390,894
Manufacturing and warehouse equipment 4,867,141 4,304,271
Construction in process 261,693 331,469
---------- ----------
9,798,053 9,304,959
Less accumulated depreciation 2,773,757 2,147,151
---------- ----------
Total $7,024,296 $7,157,809
========== ==========
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During February 1996, the Company purchased the assets of Kinpak, Inc. In order to finance the expansion contemplated by the purchase, the Company entered into an agreement with the City of Montgomery to issue Industrial Development Bonds. The Alabama facility expansion consisted of an additional building, which was completed during October 1997, bringing the facility, at that time, to approximately 110,000 square feet. Such facility serves as the Company's primary manufacturing and distribution center.
During the year ended December 31, 2002, the Company entered into an agreement with the City of Montgomery to issue an additional series Industrial Development Bonds aggregating $3,500,000 to finance the construction of an additional 70,000 square feet of warehousing and manufacturing space and the related equipment requirements. Such project was substantially completed during 2003.
Obligations for future payments attributable to these capitalized leases are discussed in Note 4, below.
During 2002, the Company secured a revolving line of credit, which provided a maximum of $5 million of working capital from the commercial bank providing the financing for the expansion discussed in Note 2, above. The line carries interest at the lender's prime rate plus .25% payable monthly and is collateralized by the Company's inventory, trade receivables, and intangible assets. During May, 2004, the Company and its commercial bank agreed to increase the maximum allowed borrowing under the line to $6 million. The remaining terms including required financial covenants relating to maintaining minimum working capital levels, maintaining stipulated debt to tangible net worth and adhering to debt coverage ratios were substantially unchanged. This financing matures on May 31, 2005. As of December 31, 2004, the Company was obligated to its commercial lender under this arrangement in the amount of $4,500,000.
Long-term debt at December 31, 2004 consisted of the following:
The Company is obligated pursuant to capital leases financed through Industrial Development Bonds. Such obligations were incurred during 1997 and 2002 in connection with building and equipment expansion at the Company's Alabama manufacturing and distribution facility. Both bear interest at tax-free rates that adjust weekly. At December 31, 2004, $2,465,000 and $3,200,000 were outstanding attributable to the 1997 and 2002 series, respectively. During the year ended December 31, 2004 interest rates ranged between 1.5% and 2.3%. Principal and accrued interest retiring the underlying bonds are payable quarterly through March, 2012 and July, 2017 for the 1997 and 2002 series, respectively. Repayment of the bonds is guaranteed by a Letter of Credit issued by the Company's primary commercial bank. Security for the Letter of Credit is a priority first mortgage on the Kinpak facility and manufacturing equipment.
The Company is obligated to an affiliated entity owned by certain officers of the Company pursuant to a note payable aggregating $360,962 at December 31, 2004. Such obligation requires monthly installments of $ 2,357 including principal and interest through maturity when a balloon payment will be due. The terms of this obligation are identical to that of an underlying obligation of the affiliated entity to a financial institution. During the year ended December 31, 2004, this obligation and the underlying mortgage payable of the affiliate were modified extending the maturity date to April 11, 2011 and the interest rate to 6% per annum.
During 2004 and 2003, the Company, through certain subsidiaries, entered into various capital lease agreements covering equipment utilized in the Company's Alabama plant and its corporate offices. Such obligations, aggregating approximately $37,000 at December 31, 2004, have varying maturities through 2008 and carry interest rates ranging from 7% to 12%.
The composition of these obligations at December 31, 2004 and 2003 were as follows:
Current Portion Long Term Portion
---------------------- ----------------------------
2004 2003 2004 2003
-------- -------- ---------- ----------
Industrial Development Bonds $460,000 $455,000 $5,205,000 $5,665,000
Notes payable 7,180 427,238 354,152 ----
Capitalized equipment leases 15,932 16,726 21,098 12,692
-------- -------- ---------- ----------
$483,112 $898,964 $5,580,250 $5,677,692
======== ======== ========== ==========
|
Required principal payment obligations attributable to the foregoing are tabulated below:
Year ending December 31,
2005 $483,113
2006 476,552
2007 475,152
2008 471,754
2009 468,610
Thereafter 3,688,182
----------
Total $6,063,363
==========
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The Components of the Company's consolidated income tax provision are as follows:
Year ended December 31,
---------------------------------
2004 2003 2002
-------- -------- -------
Income tax provision (benefit):
Federal - current $ 97,600 $140,000 $ --
- deferred 54,400 37,800 58,000
State 16,000 -- --
-------- -------- -------
Total $168,000 $177,800 $58,500
======== ======== =======
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The reconciliation of income tax provision at the statutory rate to the reported income tax expense is as follows:
Year ended December 31,
--------------------------
2004 2003 2002
---- ---- ----
Computed at statutory rate 34.0% 34.0% 34.0%
State tax, net of federal benefit 5.5 -- --
Other, principally deferred income
taxes attributable to depreciation 16.0 -- (3.7%)
---- ---- ----
Effective tax rate 55.5% 34.0% 30.3%
==== ==== ====
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At December 31, 2004 and 2003 deferred income taxes payable aggregating $260,000 and $205,610, respectively are reflected on the accompanying consolidated balance sheets. Such amounts are attributable to the timing differences between financial statement and income tax treatment of depreciation expense.
At December 31, 2004 and 2003, the Company had amounts receivable from affiliated companies, which are directly or beneficially owned by the Company's president, aggregating approximately $408,500 and $172,900, respectively. Such receivables result from sales to the affiliates as well as an allocation of expenses incurred by the Company on the affiliates' behalf. Sales to such affiliates aggregated approximately $616,800, $373,600, and $317,100 during the years ended December 31, 2004, 2003, and 2002, respectively.
On May 1, 1998, the Company entered into a ten year lease for approximately 12,700 square feet of office and warehouse facilities in Fort Lauderdale, Florida from an entity owned by certain officers of the Company. The lease required a minimum rental of $94,800 for the first year and provides for a maximum 2% increase on the anniversary of the lease throughout the term. Additionally, the landlord is entitled to its pro-rata share of all taxes, assessments, and any other expenses that arise from ownership. Rent charged to operations during the years ended December 31, 2004, 2003, and 2002 amounted to approximately $100,500 each year.
The Company has entered into a corporate guaranty of the mortgage note obligations of such affiliate. The obligations aggregating approximately $365,500 at December 31, 2004 are primarily secured by the real estate leased to the Company.
The following is a schedule of minimum future rentals on the non-cancelable operating leases.
Year ending December 31,
2005 $102,458
2006 104,507
2007 106,597
2008 108,729
2009 --
Thereafter --
--------
Total $422,292
========
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During January 2002, the Company entered into an agreement with an investment banker to provide financial advisory and other services to the Company for a one-year period ending January, 2003. Such agreement required a monthly retainer of $5,000, reimbursement of Company approved expenses and the issuance of warrants to purchase 275,000 shares of the Company's common stock at an exercise
price of $1.27 per share. The covered shares and the exercise price were adjusted for stock dividends distributed during the years ended December 31, 2002 and 2000. This agreement was terminated during 2004.
During February 2005, the Company issued 150,003 shares of its common stock to its former investment banker pursuant to a cashless exercise of warrants granted during 2002.
During 1992, the Company adopted an incentive stock option plan covering 200,000 shares of its common stock. During 1994, the Company adopted a non-qualified employee stock option plan covering 400,000 shares of its common stock. During 2002, the Company adopted a qualified employee incentive stock option plan and a non-qualified stock option plan covering 400,000 and 200,000 shares of its common stock, respectively.
The following schedule reflects the status of outstanding options under the Company's four stock option plans as of December 31, 2004, as adjusted for the Company's stock dividend distributions of 2000 and 2002.
Weighted
Date Options Exercisable Exercise Expiration Average
Plan granted outstanding options price date remaining life
---- -------- ----------- ----------- -------- ---------- --------------
1992 12/20/01 165,000 99,000 $1.009 12/20/06 1.08
1994 12/20/00 159,500 127,600 $ .573 12/19/05 1.00
1994 10/26/04 192,500 -- $1.260 10/25/09 4.83
2002 10/22/02 150,000 60,000 $1.260 10/21/07 2.75
2002 03/02/04 170,000 -- $1.620 03/01/09 4.25
2002 10/22/02 35,000 35,000 $1.260 10/21/07 2.75
2002 06/20/03 40,000 40,000 $1.030 06/19/08 3.50
2002 05/25/04 40,000 40,000 $1.460 05/04/09 4.50
------- ------- ----
952,000 401,600 3.02 yrs.
======= ======= ====
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On March 25, 1999, the Company granted two officers a five-year option for 115,000 shares each, as adjusted for the Company's stock dividend distributions of 2000 and 2002, at an exercise price of $.758 representing the market price at the time of grant. Such grants were awarded in consideration of a loan to the Company in the amount of $400,000 from an affiliated company in which they are each 50% co-shareholders. During 2004, the underlying loan was modified to extend the maturity date and, accordingly, the options were extended for an additional five years expiring March 25, 2009.
Statement of Financial Accounting Standards No. 123 requires that companies that continue to account for employer stock options under APB No. 25 disclose pro forma net income and earnings per share as if such Statement had been applied. The following table is presented pursuant to such requirement.
2004 2003 2002
-------- -------- --------
Net income As reported $134,554 $345,071 $134,518
Pro forma $ 98,728 $301,887 $101,925
Earnings per share As reported $ .03 $ .07 $ .03
Pro forma $ .02 $ .06 $ .03
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A summary of the Company's stock options as of December 31, 2004, 2003 and 2002, and changes during the years ending on these dates, is presented below:
2004 2003 2002
--------------------- ------------------------- ----------------------------
Weighted Weighted Weighted
Optioned average Optioned average Optioned average
Shares exercise price shares exercise price shares exercise price
--------- -------------- --------- -------------- --------- --------------
Options outstanding
at beginning of year 1,106,210 $ .95 1,082,210 $1.03 794,000 $ .89
Granted 412,500 40,000 1.03 190,000 1.26
Expired 19,240 (16,000) (1.09) (7,500) (.68)
Exercised 316,470 -- -- --
Adjustment for stock
dividend distributions -- -- 105,710 --
--------- ----- --------- ----- --------- -----
Options outstanding at
end of year 1,183,000 $1.12 1,106,210 $ .95 1,082,210 $1.03
========= ===== ========= ===== ========= =====
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Stock options are granted annually to selective executives, key employees, directors and others pursuant to the terms of the Company's various plans. Such grants are made at the discretion of the Board of Directors. Options typically have a five-year life with vesting occurring at 20% per year on a cumulative basis with forfeiture at the end of the option, if not exercised.
The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following assumptions for the years 2004, 2003 and 2002; risk free rate 6.5%, no dividend yield for all years, expected life of five years and volatility of 31.6%.
The Company has one major customer, West Marine, Inc., with sales in excess of 10% of consolidated gross revenue for the years ended December 31, 2004, 2003, and 2002. Sales to this customer represented approximately 39%, 36% and 23% of consolidated gross revenues for such periods, respectively.
The Company's top five customers represented approximately 55%, 55%, and 42% of consolidated revenues and 77%, 76% and 44% of consolidated trade receivables for the years ended December 31, 2004, 2003, and 2002, and at the balance sheet date for the years then ended, respectively. The Company enjoys good relations with these customers. However, the loss of any of these customers could have an adverse impact on the Company's operations.
Earnings per share are reported pursuant to the provisions of Statement of Financial Standards No. 128. Accordingly, basic earnings per share reflects the weighted average number of shares outstanding during the year, and diluted shares adjusts that figure by the additional hypothetical shares that would be outstanding if all exercisable outstanding common stock equivalents with an exercise price below the current market value of the underlying stock were exercised. Common stock equivalents consist of stock options and warrants. The following tabulation reflects the number of shares utilized to determine basic and diluted earnings per share for the years ended December 31, 2004, 2003, and 2002:
2004 2003 2002
--------- --------- ---------
Basic 5,356,316 4,888,133 4,438,207
========= ========= =========
Diluted 5,500,113 5,338,015 4,760,487
========= ========= =========
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During the years ended December 31, 2002 and 2000 the Company declared and distributed stock dividends of 10% and 5%, respectively.
During the years ended December 31, 2004, 2003 and 2002 the Company awarded 140,500, 155,000 and 129,000 shares of restricted common stock, respectively to certain executives, key employees and others as a component of annual compensation. Charges to operations attributable to such awards aggregated approximately $87,800, $67,500 and $67,700 for each period, respectively.
During March 2004, certain employees of the Registrant exercised stock options scheduled to expire during 2004 covering 316,470 shares of its common stock. The aggregate exercise price of such transaction amounted to approximately $229,700 and is reflected in the accompanying financial statements as additional paid-in capital.
EXHIBIT 4.1
No. R-1 $4,000,000
UNITED STATES OF AMERICA
STATE OF ALABAMA
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY
INDUSTRIAL REFUNDING REVENUE BOND
(KINPAK INC. PROJECT)
SERIES 1997
Maturity Date: First Business Day CUSIP NO. 613052 QA 0
of March, 2012
Registered Owner: CEDE & CO. Dated date: March 3, 1997
Principal Amount: $4,000,000 Interest Rate: Seven-Day Rate,
unless otherwise legended
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THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, a public corporation organized under the laws of the State of Alabama (the "Issuer", which term includes any successor corporation thereto), for value received, promises to pay, solely from the source hereinafter provided, to the Registered Owner set forth above or its registered assigns, the Principal Amount set forth above on the Maturity Date set forth above, unless sooner tendered for purchase or called for redemption, and to pay interest on said Principal Amount at the interest rates provided herein from the most recent date to which interest shall have been paid or provided for or, if no interest shall have been paid or provided for, from the date of initial delivery hereof and payment herefor, being the Dated date shown above (the "Issue Date").
In no event will the interest rate on the Bonds (hereinafter defined) exceed the lower of (i) 15% per annum or (ii) for any period during which the Bonds are supported by a Letter of Credit (hereinafter defined), the maximum rate per annum, specified therein, at which there has been calculated the amount available to be drawn on such Letter of Credit to pay interest on the Bonds (the "Cap Rate").
Principal hereof and any premium hereon are payable, upon presentation and surrender of this Bond, at the corporate trust office located in Montgomery, Alabama, of the Trustee, initially Regions Bank, which is also initially the Tender Agent (the "Tender Agent") for the Bonds; provided that the principal and interest due as components of the purchase price of this Bond are payable only at said office of the Tender Agent (the "Tender Office"). Interest payable on each Interest Payment Date (hereinafter defined) will be payable by check or draft caused to be sent by the Trustee to the person in whose name this Bond (or one or more predecessor bonds) is registered (the "Holder") at the close of business on the Record Date (hereinafter defined) on the registration books for this issue (the "Register") maintained by the Trustee, as Registrar, at the address appearing therein; provided that the Trustee shall, upon written request of any Holder of at least $500,000 in aggregate principal amount of the Bonds, enter into an agreement with such Holder providing for such payments to be made by wire transfer or other method than check or draft. As used herein, "Record
Date" shall mean the Business Day next preceding any Interest Payment Date during the Seven-Day Rate Period (hereinafter defined) or the 15th day (whether or not a Business Day) next preceding any Interest Payment Date during the Fixed Rate Period (hereinafter defined). Any interest which is not timely paid or duly provided for shall be payable to the Holder hereof (or of one or more predecessor bonds) at the close of business on a date (the "Special Record Date") to be fixed by the Trustee for the payment of that overdue interest. Notice of the Special Record Date shall be mailed to Holders not less than ten calendar days prior thereto. The principal of and interest and any premium on this Bond are payable in lawful money of the United States of America, without deduction for the services of any paying agent.
This Bond is one of a duly authorized issue of obligations designated "Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997" limited in aggregate principal amount to $4,000,000 (the "Bonds") issued by the Issuer pursuant to Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended (the "Act"). The Bonds are issued for the purpose of refunding obligations heretofore issued by the Issuer to pay costs of the acquisition, construction and equipping of a "manufacturing facility" along with facilities "directly related and ancillary" thereto, all within the meaning of Section 144(a)(12)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), including without limitation facilities for the manufacture of aftermarket products for the consumer marine and recreational vehicles markets (the "Project"). Title to the Project is vested in the Issuer, but is leased by the Issuer to and used by KINPAK INC., an Alabama corporation (the "Company") pursuant to a Restated Lease Agreement dated as of December 1, 1996 (the "Original Lease"), as amended and supplemented by a First Supplemental Lease Agreement dated as of March 1, 1997 (the "First Supplemental Lease", and collectively with the Original Lease, the "Lease Agreement").
Pursuant to the Lease Agreement, the Company has agreed to make payments to or for the account of the Issuer (the "Basic Rent") at such times and in such amounts as shall be sufficient (subject to any credits therein provided for) to pay when due the principal of and premium (if any) and interest on ("Debt Service"), and purchase price of, the Bonds.
The Bonds are issued under and secured and entitled to the protection given by a Trust Indenture dated as of December 1, 1996 (the "Original Indenture"), as amended and supplemented by a First Supplemental Trust Indenture dated as of March 1, 1997 (the "First Supplemental Indenture", and collectively with the Original Indenture, the "Indenture"), both duly executed and delivered by the Issuer to the Trustee. The term "Trustee" where used herein refers to Regions Bank, Montgomery, Alabama, or its successor in trust. CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM OR INCORPORATED BY REFERENCE IN THE FIRST SUPPLEMENTAL INDENTURE.
The Bonds are secured under the Indenture on a parity with the Issuer's $990,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1996B, heretofore issued on December 20, 1996 (the "Series 1996B Bonds"), which have terms and provisions substantially similar to those of the Bonds.
PURSUANT TO THE INDENTURE, THE ISSUER HAS ASSIGNED AND PLEDGED TO THE TRUSTEE ALL BASIC RENT AND ALL RIGHTS OF THE ISSUER UNDER THE LEASE AGREEMENT (EXCEPT AS THEREIN RESERVED).
As further security for the payment of the Bonds, the Company has caused First Union National Bank of Florida, Ft. Lauderdale, Florida (the "Bank"), to issue an irrevocable letter of credit in favor of the Trustee in the amount of (a) the aggregate principal amount of the Bonds, to enable the Trustee to pay the principal amount of the Bonds when due and to pay the principal portion of the purchase price of Bonds tendered (or deemed tendered) for purchase, plus (b) interest on the Bonds for a period of 120 days at the maximum annual rate of 15%, to enable the Trustee to pay interest thereon when due and to pay the interest portion of the purchase price of Bonds tendered (or deemed tendered) for purchase. The initial letter of credit so delivered to the Trustee and any substitute letter of credit delivered to the Trustee pursuant to the Indenture and the Lease Agreement are herein referred to as the "Letter of Credit".
The Letter of Credit provides identical security for the payment of the Series 1996B Bonds.
The initial Letter of Credit has been issued by the Bank pursuant to a Letter of Credit and Reimbursement Agreement dated as of December 1, 1996 (as the same may be amended or supplemented in connection with the issuance of the Bonds, the "Reimbursement Agreement") between the Bank and the Company whereby the Company has agreed, among other things, to reimburse the Bank for all amounts drawn by the Trustee pursuant to the initial Letter of Credit or any substitute Letter of Credit issued by the Bank.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY OUT OF THE BASIC RENT. THE BONDS ARE ALSO PAYABLE OUT OF PAYMENTS MADE BY THE BANK PURSUANT TO THE LETTER OF CREDIT. THE BONDS AND THE PREMIUM, IF ANY AND INTEREST THEREON WILL NOT BE IN ANY WAY A DEBT OR LIABILITY OF THE CITY OF MONTGOMERY, ALABAMA (THE "CITY"), THE STATE OR ANY POLITICAL SUBDIVISION OF EITHER OF THEM. NO HOLDER SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION OF EITHER OF THEM TO PAY THE BONDS OR ANY PREMIUM OR INTEREST THEREON. THE ISSUER HAS NO TAXING POWER.
No covenant or agreement contained in this Bond shall be deemed to be a covenant or agreement of any officer, agent or employee of the Issuer, and neither any member of the governing body of the Issuer nor any officer executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance hereof.
Copies of the Indenture, the Lease Agreement, the initial Letter of Credit and the Reimbursement Agreement are on file at the principal office of the Trustee, and reference is hereby made to such instruments for a more complete description of the Project, the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Trustee and the Holders of the Bonds and the terms upon which the Bonds are issued and secured, to all of which provisions each Holder, by acceptance hereof, hereby assents.
INTEREST RATE PROVISIONS
This Bond shall bear interest at the Seven-Day Rate (determined as provided below) (a) from the Issue Date until and including the day immediately prior to the earlier of the Conversion Date or the Maturity Date (the "Seven-Day Rate Period"). This Bond shall bear interest at the Fixed Rate (determined as provided below) from the Conversion Date until and including the day immediately prior to the Maturity Date (the "Fixed Rate Period").
Interest at the Seven-Day Rate shall be computed on the basis of a 365- or 366-day year, as the case may be, for the number of days actually elapsed. Interest at the Fixed Rate shall be computed on the basis of a 360-day year for the number of days actually elapsed.
Interest shall be payable (but solely from the source hereinabove described) on overdue principal of this Bond and (to the extent legally enforceable) on any overdue installment of interest on this Bond at the rate per annum which is one percent per annum in excess of that rate announced from time to time by the Bank as its Prime Rate.
Interest on this Bond shall be payable in arrears on the first Business Day of each March, June, September and December, commencing on the first Business Day of June, 1997 (each such date, an "Interest Payment Date").
In any case where the scheduled date of any payment on this Bond is not a Business Day, then such payment shall be made on the Business Day next succeeding the scheduled date, in the same amount due, and with the same force and effect as if made, on the scheduled date.
Seven-Day Rate. The Seven-Day Rate shall be determined on the Issue Date and on each Wednesday (or if Wednesday is not a Business Day, on the next succeeding Business Day) of each succeeding week during the Seven-Day Rate Period (each such date being herein called a "Seven-Day Rate Determination Date"). The Seven-Day Rate so determined on each Seven-Day Rate Determination Date shall be effective from the day of each week during any Seven-Day Rate Period following the Seven-Day Rate Determination Date for such week until and including the day immediately prior to the earlier of the Conversion Date or the following Thursday; provided, however, that if the Seven-Day Rate is not so determined on any Seven-Day Rate Determination Date, the Seven-Day Rate as determined on the next preceding Seven-Day Rate Determination Date shall remain in effect until and including the day immediately prior to the earlier of the Conversion Date or the following Thursday. From the Issue Date to and including the first Seven-Day Rate Determination Date, the Bonds shall bear interest at the interest rate determined, in accordance with the Indenture, to be the rate necessary, taking into account prevailing market conditions, to enable the Remarketing Agent to sell the Bonds at par (plus accrued interest, if any); such rate, however, not to exceed the Cap Rate. The Seven-Day Rate shall thereafter
be determined by the Remarketing Agent on each Seven-Day Rate Determination Date and shall equal the lesser of (a) the Cap Rate, or (b) the interest rate determined by the Remarketing Agent to be the interest rate that would result in the market value of the Bonds on such Seven-Day Rate Determination Date being 100% of the principal amount thereof, taking into account prevailing market conditions. The Trustee shall confirm the Seven-Day Rate on the Bonds from time to time upon the request of any Holder of a Bond.
Fixed Rate. At any time that the Bonds bear interest at the Seven-Day Rate, the Company may elect that the Bonds shall bear interest at the Fixed Rate, which rate shall be equal to the lesser of (a) the Cap Rate or (b) the interest rate established in the manner described in this paragraph. The Company shall give the Trustee, the Placement Agent and the Bank written notice of the exercise of its option to convert the interest rate borne by the Bonds to the Fixed Rate, to be received by each of them not fewer than 30 nor more than 60 days prior to the proposed Conversion Date. Such notice shall, if the Company intends that the Bonds be secured by a Letter of Credit following the proposed Conversion Date, be accompanied by the documentation required pursuant to the Lease Agreement. At least 25 days prior to the proposed Conversion Date, the Placement Agent shall determine the Preliminary Fixed Rate, being that rate which, taking into account prevailing market conditions as of the date of such determination and assuming such conditions continue to prevail until and including such proposed Conversion Date, would result in the market value of the Bonds on such proposed Conversion Date being 100% of the principal amount thereof; and on such date shall give telephonic notice, confirmed by Telefax, of the Preliminary Fixed Rate to the Trustee, the Company and the Bank. From and after the Conversion Date, the Fixed Rate shall be (x) that rate, at least equal to the Preliminary Fixed Rate, at which some or all of the Bonds shall have been remarketed at par, or (y) if no Bonds shall have been so remarketed or all Holders shall have timely delivered a Non-Tender Notice, the Preliminary Fixed Rate. Notwithstanding the foregoing, the Fixed Rate shall not become effective unless (i) there shall have been supplied to the Trustee, the Company and the Placement Agent at or prior to 10:00 a.m. (prevailing Eastern time) on the proposed Conversion Date a Non-Taxability Opinion further stating that such conversion to the Fixed Rate is lawful under applicable law and permitted by the Indenture, and (ii) if a substitute Letter of Credit is required to be provided, there shall have been delivered to the Trustee such substitute Letter of Credit at or prior to 10:00 a.m. (prevailing Eastern time) on the proposed Conversion Date. If all conditions to the effectiveness of the Fixed Rate shall not have been met, the Bonds shall continue to bear interest at the Seven-Day Rate from such proposed Conversion Date until and including the earlier of the date immediately prior to the Conversion Date or the Maturity Date.
TENDER PROVISIONS
Optional Tender. The Holder of this Bond shall have the right to tender this Bond to the Tender Agent for purchase in whole or in part (if in part, in any Authorized Denomination) on any Business Day during the Seven-Day Rate Period, but not during the Fixed Rate Period, at a purchase price equal to 100% of the principal amount hereof (or portions hereof) tendered plus accrued interest to the specified purchase date (the "Optional Tender Date"). In order to exercise such option with respect to this Bond, the Holder hereof must give to the Trustee at the Trustee's Office, with a copy to the Tender Agent at the
Tender Office, at least seven days prior to the proposed Optional Tender Date, notice (a) by telephone, confirmed by Notice of Tender not more than two Business Days after such initial notice, or (b) by Notice of Tender. "Notice of Tender" shall mean written, formal notice of tender in the form attached hereto as Schedule I or in such other form as shall be acceptable to the Trustee. If the telephonic notice or the Notice of Tender specifies an Optional Tender Date that is not a Business Day, then such notice shall be deemed to specify the Business Day next succeeding the stated Optional Tender Date. Upon the delivery of Notice of Tender, such election to tender shall be irrevocable and binding upon the Holder of this Bond. If a Notice of Tender with respect to this Bond shall have been duly given, the Holder of this Bond shall deliver this Bond to the Tender Agent at the Tender Office not fewer than five days prior to the Optional Tender Date (or, if the Holder hereof is an investment company registered under the Investment Company Act of 1940, at or before 10:00 a.m. (prevailing Eastern time) on the Optional Tender Date), together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form attached hereto or in such other form as shall be acceptable to the Tender Agent). At or before 3:00 p.m. (prevailing Eastern time) on that Optional Tender Date, the Trustee shall cause the Tender Agent to purchase this Bond so delivered at the aforesaid purchase price. If this Bond is not so delivered on the Optional Tender Date, provided the amount on deposit in the Bond Purchase Fund is sufficient to pay the purchase price of all Bonds to be purchased on such Optional Tender Date, this Bond shall nevertheless be deemed to have been tendered for purchase by the Holder hereof on the Optional Tender Date, this Bond shall cease to accrue interest on the Optional Tender Date and the Holder hereof shall thereafter be entitled only to payment of the aforesaid purchase price herefor and not to the benefits of the Indenture.
No tender of this Bond shall be deemed a redemption hereof; and the right of the Holder to tender this Bond as described in the preceding paragraph shall cease immediately and without further notice from and including the date Bonds are declared accelerated, subject, however, to reinstatement upon rescission and annulment of such declaration, all pursuant to the applicable provisions of the Indenture.
Mandatory Tender. Subject to the provisions below, the Holder of this
Bond shall be required to tender this Bond to the Tender Agent for purchase on
(a) each proposed Conversion Date, and (b) the first day of the calendar month
in which the Stated Expiration Date of the Letter of Credit occurs, or, if any
of such dates is not a Business Day, the next succeeding Business Day (each such
date being herein referred to as a "Mandatory Tender Date"), all as more fully
provided below.
Notice of a Mandatory Tender shall be given by the Trustee by first-class mail, postage prepaid, to the Holder of this Bond at his address appearing on the Register not fewer than 20 days prior to a Mandatory Tender Date. Such notice shall, among other things, specify the Mandatory Tender Date and whether or not a Letter of Credit will be in effect during the ensuing interest rate period. In the case of a Mandatory Tender, the Holder of this Bond may, by delivery of a written notice (a "Non-Tender Notice") to the Trustee, with a copy to the Tender Agent, not fewer than five days prior to such Mandatory Tender Date, elect not to tender or sell this Bond on such Mandatory Tender Date, which Non-Tender Notice shall be irrevocable. Any such Non-Tender
Notice must be accompanied by a written statement from the Holder of this Bond identifying the certificate number and principal amount of this Bond, and acknowledging that such Holder is aware, if such Mandatory Tender Date is a proposed Conversion Date, that the Bonds will bear interest from such date at the Fixed Rate, and that he is aware that effective immediately after the Mandatory Tender Date the Trustee may or may not draw on the Letter of Credit, as the case may be, and that if the Trustee does not so draw, the rating or ratings on the Bonds then in effect may be reduced or withdrawn. Unless the Holder of this Bond shall have properly delivered a Non-Tender Notice with respect hereto to the Trustee, with a copy to the Tender Agent, this Bond shall be tendered for purchase by the Holder hereof by delivering this Bond to the Tender Agent at the Tender Office at or before 10:00 a.m. (prevailing Eastern time) on the Mandatory Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form attached hereto or such other form as shall be acceptable to the Tender Agent). At or before 3:00 p.m. (prevailing Eastern time) on the Mandatory Tender Date, the Trustee shall cause the Tender Agent to purchase this Bond (unless the Holder hereof shall have delivered a Non-Tender Notice to the Trustee, with a copy to the Tender Agent) at a purchase price equal to 100% of the principal amount hereof plus accrued interest, if any, hereon, and the Holder of this Bond, by his acceptance hereof, hereby covenants and agrees to tender this Bond in the manner and at the times as aforesaid. If a Non-Tender Notice is not properly delivered to the Trustee with respect to this Bond and this Bond is not tendered at or before 10:00 a.m. (prevailing Eastern time) on any Mandatory Tender Date, provided the amount on deposit in the Bond Purchase Fund is sufficient to pay the purchase price of all Bonds to be purchased on such Mandatory Tender Date, this Bond shall nevertheless be deemed to have been tendered for purchase by the Holder on the Mandatory Tender Date, this Bond shall cease to accrue interest on the Mandatory Tender Date and the Holder hereof shall thereafter be entitled only to payment of the aforesaid purchase price herefor and not to the benefits of the Indenture.
REDEMPTION PROVISIONS
In the manner and with the effect provided in the Indenture, the Bonds will be subject to redemption prior to maturity as follows:
(a) Optional Redemption. The Bonds are subject to optional redemption by the Company on behalf of the Issuer as follows:
(i) during any Seven-Day Rate Period, in whole on any Business Day or in part (in multiples of $100,000 and any multiple of $5,000 in excess thereof) on any Interest Payment Date at a redemption price equal to the principal amount thereof plus accrued interest to the date of redemption; and
(ii) during the Fixed Rate Period, subject to the written consent of the provider of the Letter of Credit (if a Letter of Credit be then in effect), in whole on any Business Day or in part (in multiples of $100,000 and any multiple of $5,000 in excess thereof) on any Interest Payment Date on or after the first permitted redemption date set forth below and at a redemption price equal to the principal amount thereof plus
accrued interest to the date fixed for redemption plus the applicable redemption premium (expressed as a percentage of the principal amount to be redeemed), if any, set forth below.
First Permitted
Redemption Date Redemption Premium
--------------- ------------------
4th Anniversary 3%, declining by _% on each
of Conversion Date succeeding anniversary of the
Conversion Date until reaching
0%, and thereafter 0%
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(b) Extraordinary Optional Redemption. During the Fixed Rate Period, subject to the written consent of the provider of the Letter of Credit (if a Letter of Credit be then in effect), the Bonds are subject to optional redemption (exercised upon direction of the Company on behalf of the Issuer within 120 days after the occurrence giving rise to such option) in whole but not in part on any date at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the redemption date, if any of the following shall have occurred:
(i) the Project shall have been damaged or destroyed to such extent that, in the reasonable opinion of the Company, it cannot be restored within a period of four months to substantially the condition thereof immediately prior to such damage or destruction or the Company is thereby prevented from carrying on its normal operations at the Project for a period of not less than four months;
(ii) the taking by eminent domain of all or substantially all the Project or of any part, use or control of the Project that, in the reasonable opinion of the Company, results in the Company being thereby prevented from carrying on its normal operations at the Project for a period of not less than four months; or
(iii) as a result of a change in law or a final order of any court or other governmental authority the Lease Agreement becomes void or unenforceable or impossible of performance or unreasonable burdens or excessive liabilities are imposed on the Company that, in the reasonable opinion of the Company, render the Project uneconomic for its intended use.
(c) Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption in part, at a redemption price equal to 100% of the following principal amounts to be so redeemed plus accrued interest thereon to the redemption date, in amounts of (i) $80,000 on each Interest Payment Date from June 1, 2000 to March 1, 2004, both inclusive, and (ii) $85,000 on each Interest Payment Date from June 1, 2004 to December 1, 2011, both inclusive. If retired only by mandatory sinking fund redemption prior to their stated maturity, there would remain $85,000 in Bonds to be paid on the Maturity Date.
The Issuer, or the Company on behalf of the Issuer, shall have the option to deliver Bonds to the Trustee for cancellation, in any aggregate principal amount, and to receive a credit against the then current mandatory sinking fund requirement and corresponding mandatory redemption obligation for the Bonds. Each Bond so delivered, or previously redeemed, or purchased and cancelled, shall be credited by the Trustee at 100% of the principal amount thereof against the then current mandatory sinking fund obligation. Any excess of that amount over and then current mandatory sinking fund requirement shall be credited against subsequent mandatory sinking fund redemption obligations for the Bonds.
(d) Mandatory Redemption Upon Final Determination. The Bonds are subject to mandatory redemption in whole and not in part on the 180th day (or if such day is not a Business Day, on the next preceding Business Day) following a Final Determination (as hereinafter defined), at a redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. "Determination of Taxability" means, with respect to the Bonds, a determination that interest thereon is Taxable because of (i) the receipt by any Holder or any member of an "affiliated group", as that term is defined in Section 1504 of the Code, of a "30-day letter" within the meaning of Treasury Regulations Section 601.105(d)(1)(iv) proposing a determination to that effect; (ii) receipt by the Company of written advice from the Commissioner or any District Director of the Internal Revenue Service to that effect; or (iii) receipt by the Trustee or any Holder of a written opinion of nationally recognized bond counsel that there is substantial likelihood that such interest is Taxable; subject, however, in all such cases to the right on the part of the Company set forth in the Indenture to contest a Determination of Taxability. Upon forfeiture or termination of such right to contest in accordance with the Indenture, a Determination of Taxability shall be deemed to become a "Final Determination".
(e) Mandatory Redemption with Excess Proceeds. The Bonds are subject to partial mandatory redemption, in an amount equal to the amount, if any, on deposit in the Construction Fund (or transferred therefrom into the Bond Fund) as of the redemption date (rounded down to the nearest multiple of $5,000, but in no event less than $100,000), on any Interest Payment Date not fewer than 90 days after the Completion Date, but in no event later than June 1, 2000, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest thereon to the redemption date; provided, however, that such redemption need not be made if the Company delivers to the Trustee a Non-Taxability Opinion in respect of such non-redemption. As used herein, "Completion Date" means the date of substantial completion of the Project, as certified by the Company in accordance with the provisions of the Lease Agreement.
(f) Notice of Redemption; Partial Redemption. The notice of the call for redemption of Bonds shall identify (i) by designation, letters, numbers or other distinguishing marks, the Bonds or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the
date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. The Trustee shall, on behalf of the Issuer, give written notice by first-class mail, postage prepaid, of any redemption not more than 60 nor less than 20 days prior to the date fixed for redemption, to the Holder of each Bond subject to redemption in whole or in part at the Holder's address shown on the Register as of the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Bond shall not affect the validity of the proceedings for the redemption of any Bond for which notice is properly given. If fewer than all the Bonds are being called for redemption at one time, the Trustee shall select the Bond or Bonds to be so redeemed by lot. If less than the entire principal amount of a Bond is called for redemption, the Holder thereof shall exchange the same, without charge, for a new Bond or Bonds in any Authorized Denomination in aggregate principal amount equal to the unredeemed portion of the Bond so called.
MISCELLANEOUS
The Holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture.
Modifications, alterations or supplements of the Indenture may be made only to the extent and in the circumstances permitted by the Indenture.
If an Event of Default, as defined in the Indenture, shall occur, the principal of the Bonds then outstanding may, subject to the conditions set forth in the Indenture, be declared due and payable in the manner and with the effect provided by the Indenture; subject, however, to waiver of such Event of Default or rescission of such declaration as provided in the Indenture.
The Bonds are issuable only as fully registered bonds in denominations of $100,000 and any integral multiple of $5,000 in excess thereof. The Bonds are exchangeable for Bonds of other Authorized Denominations in equal aggregate principal amounts at the aforementioned office of the Registrar, but only in the manner and subject to the limitations provided herein and in the Indenture.
This Bond is transferable, as provided in the Indenture, only upon the Register by the Holder hereof in person or by his duly authorized attorney, upon surrender of this Bond to the Registrar together with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney, and upon payment of the charges prescribed in the Indenture.
Neither the Issuer, the Registrar nor any Authenticating Agent, as the case may be, shall be required to make any exchange or transfer of a Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing or to transfer or exchange any Bonds selected for redemption, in whole or in part.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been duly signed.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law.
IN WITNESS OF THE ABOVE, The Industrial Development Board of the City of Montgomery has caused this Bond to be duly executed under its corporate seal, all as of the Issue Date.
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
( S E A L )
By:____________________________________
Chairman of the Board of Directors
ATTEST:
CERTIFICATE OF AUTHENTICATION
Date of Authentication: ____________________________
This Bond constitutes the issue of Bonds described in the within-mentioned Indenture.
REGIONS BANK, as Authenticating Agent
By:____________________________________
Authorized Signatory
ASSIGNMENT
The following abbreviations, when used in the inscription on this Bond or in the Assignment below, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - AS TENANTS IN COMMON
TEN ENT - AS TENANTS BY THE ENTIRETIES
JT TEN - as joint tenants with right of survivorship and not as
tenants in common and not as community property
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UNIF TRAN MIN ACT - ______________ Custodian _____________
(Custodian) (Minor)
under Uniform Transfers to Minors Act _______
(State)
Additional abbreviations may also be used although not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto ___________________________ the within Bond and irrevocably constitutes and appoints __________________________ attorney to transfer that Bond on the books kept for registration thereof, with full power of substitution in the premises.
NOTICE: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever.
Signature Guaranteed:
By_______________________________
Its______________________________
Medallion Number: ______________________________________________________________ *Signature(s) must be guaranteed by an eligible guarantor institution which is a member of a recognized signature guarantee program, i.e., Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP), or New York Stock Exchange Medallion Signature Program (MSP).
Schedule I
The undersigned hereby elects to have the within Bond numbered ______ (the "Bond") of the Issuer (or any portion thereof in any integral multiple of $100,000 and any multiple of $5,000 in excess thereof) purchased in accordance with the provisions of the Bond and the Trust Indenture dated as of December 1, 1996, as amended and supplemented by a First Supplemental Trust Indenture dated as of March 1, 1997 (collectively, the "Indenture"), both between The Industrial Development Board of the City of Montgomery (the "Issuer") and Regions Bank (the "Trustee") , on _____________________ (the "Optional Tender Date"), which Optional Tender Date shall be a Business Day (as defined in the Indenture) at least seven days immediately following the submission of this Bondholder Tender Notice to the Trustee, with a copy to the Tender Agent (as defined in the Indenture); provided, however, that if the undersigned shall have initially given telephonic notice to the Trustee of its election to tender the Bond, the Optional Tender Date shall be a Business Day at least seven days immediately following the date of such telephonic notice. The purchase price upon such tender shall equal 100% of the principal amount of the Bond (or portion thereof) being purchased plus accrued interest thereon to the Optional Tender Date (the "Purchase Price").
Pursuant to the terms of the Indenture, the Purchase Price of the Bond (or portion thereof) to be purchased shall be paid to the Holder of the Bond in federal or other immediately available funds, as provided in the Indenture, at or before 3:00 p.m. (prevailing Eastern time) on the Optional Tender Date upon presentation, not fewer than five (5) days prior to the Optional Tender Date at the Tender Office designated in the Indenture, of the Bond, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bond or in such other form acceptable to the Tender Agent). However, if the undersigned is an investment company registered under the Investment Company Act of 1940 and submits proof thereof along with this Notice, then the undersigned may present this Bond at said Tender Office, together with an instrument of assignment or transfer as hereinabove described, at or before 10:00 a.m. on the Optional Tender Date. The undersigned hereby acknowledges and agrees to such terms.
This Bondholder Tender Notice shall not be accepted by the Trustee unless it is properly completed and received by the Trustee at its principal corporate trust office.
If the Bond is submitted for purchase in part, the undersigned hereby directs the Tender Agent to exchange the Bond for (i) a Bond representing the principal amount of the Bond to be purchased, and, if applicable, (ii) a Bond (or Bonds of Authorized Denominations, as defined and provided for in the Indenture, if the owner specifies such Denominations) representing the principal amount of the Bond not to be purchased. The Bond or Bonds not to be purchased shall be registered in the same name(s) as the Bond tendered for purchase. Unless the Holder of the Bond delivers instructions to the Trustee with this Bondholder Tender Notice, specifying that such Holder wishes to have the Tender Agent deliver more than one Bond representing the principal amount of the Bond not to be purchased, and specifying the denominations of such replacement Bonds, the Tender Agent will deliver only one replacement Bond to such Holder in the principal amount of the Bond not to be purchased.
THIS ELECTION IS IRREVOCABLE AND BINDING ON THE UNDERSIGNED AND CANNOT
BE WITHDRAWN.
The undersigned hereby authorizes the Trustee to accept on behalf of the undersigned the Purchase Price of the Bond (or portion thereof) subject to this Bondholder Tender Notice.
Print or Type: __________________________________________________________
Name(s) of Bondholder(s)
__________________________________________________________
Street City State Zip
__________________________________________________________
Area Code Telephone Number
Signature(s): __________________________________________________
Date: __________________________________________________
Note: The signature(s) to this Bondholder Tender Notice must correspond
exactly to the name(s) appearing on the Register (as defined in
the Indenture) in every particular, without alteration or
enlargement or any change whatsoever.
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The principal amount of the Bond subject to this notice of tender for purchase is:
$_________________________________________________.
(INSERT TOTAL PRINCIPAL AMOUNT OF BOND OR A PORTION
THEREOF IN THE AMOUNT OF $100,000 OR ANY INTEGRAL
MULTIPLE THEREOF AND ANY MULTIPLE OF $5,000 IN
EXCESS THEREOF.)
IF NO AMOUNT IS INDICATED IN THE SPACE ABOVE, THE OWNER OF THE BOND SUBJECT TO THIS BONDHOLDER TENDER NOTICE WILL BE DEEMED TO HAVE TENDERED THE BOND IN ITS FULL PRINCIPAL AMOUNT FOR PURCHASE.
EXHIBIT 4.2
No. R-1 $3,500,000
UNITED STATES OF AMERICA
STATE OF ALABAMA
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY
INDUSTRIAL DEVELOPMENT REVENUE BOND
(KINPAK INC. PROJECT)
SERIES 2002
Maturity Date: June 1, 2017 CUSIP NO. 613 052 RE1
Registered Owner: CEDE & CO. Dated date: July 22, 2002
Principal Amount: $3,500,000 Interest Rate: Seven-Day Rate,
unless otherwise legended
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THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, a public corporation organized under the laws of the State of Alabama (the "Issuer", which term includes any successor corporation thereto), for value received, promises to pay, solely from the source hereinafter provided, to the Registered Owner set forth above or its registered assigns, the Principal Amount set forth above on the Maturity Date set forth above, unless sooner tendered for purchase or called for redemption, and to pay interest on said Principal Amount at the interest rates provided herein from the most recent date to which interest shall have been paid or provided for or, if no interest shall have been paid or provided for, from the date of initial delivery hereof and payment herefor, being the Dated date shown above (the "Issue Date").
In no event will the interest rate on the Bonds (hereinafter defined) exceed the lower of (i) 12% per annum or (ii) for any period during which the Bonds are supported by a Letter of Credit (hereinafter defined), the maximum rate per annum, specified therein, at which there has been calculated the amount available to be drawn on such Letter of Credit to pay interest on the Bonds (the "Cap Rate").
Principal hereof and any premium hereon are payable, upon presentation and surrender of this Bond, at the corporate trust office located in Montgomery, Alabama, of the Trustee, initially Regions Bank, which is also initially the Tender Agent (the "Tender Agent") for the Bonds; provided that the principal and interest due as components of the purchase price of this Bond are payable only at said office of the Tender Agent (the "Tender Office"). Interest payable on each Interest Payment Date (hereinafter defined) will be payable by check or draft caused to be sent by the Trustee to the person in whose name this Bond (or one or more predecessor bonds) is registered (the "Holder") at the close of business on the Record Date (hereinafter defined) on the registration books for
this issue (the "Register") maintained by the Trustee, as Registrar, at the address appearing therein; provided that the Trustee shall, upon written request of any Holder of at least $500,000 in aggregate principal amount of the Bonds, enter into an agreement with such Holder providing for such payments to be made by wire transfer or other method than check or draft. As used herein, "Record Date" shall mean the 15th day (whether or not a Business Day) next preceding any Interest Payment Date (hereinafter defined). Any interest which is not timely paid or duly provided for shall be payable to the Holder hereof (or of one or more predecessor bonds) at the close of business on a date (the "Special Record Date") to be fixed by the Trustee for the payment of that overdue interest. Notice of the Special Record Date shall be mailed to Holders not less than ten calendar days prior thereto. The principal of and interest and any premium on this Bond are payable in lawful money of the United States of America, without deduction for the services of any paying agent.
This Bond is one of a duly authorized issue of obligations designated "Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002" limited in aggregate principal amount to $3,500,000 (the "Bonds") issued by the Issuer pursuant to Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended (the "Act"). The Bonds are issued for the purpose of paying or reimbursing costs of constructing an approximately 70,000 square-foot addition to and acquiring and installing additional equipment in certain existing manufacturing facilities (the "Existing Facilities") for the manufacture of aftermarket products for consumer marine, recreational vehicle and automotive markets (such Existing Facilities, as so expanded and improved, being herein referred to as the "Project"). Part of the cost of constructing and equipping the Existing Facilities was paid from proceeds of a prior issue of the Issuer's revenue bonds, which the Issuer refunded with proceeds of its $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project ) Series 1997 (the "1997 Bonds"), now outstanding in the principal amount of $3,280,000. Title to the Project is vested in the Issuer, but the Project is leased by the Issuer to and used by KINPAK INC., an Alabama corporation (the "Company") pursuant to a Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by a First Supplemental Lease Agreement dated as of March 1, 1997 and a Second Supplemental Lease Agreement dated as of July 1, 2002 (the "Second Supplemental Lease"), in each case by and between the Issuer and the Company (collectively, the "Lease Agreement").
Pursuant to the Second Supplemental Lease, the Company has agreed to make payments to or for the account of the Issuer (the "Basic Rent") at such times and in such amounts as shall be sufficient to pay when due the principal of and premium (if any) and interest on the Bonds.
The Bonds are issued under and secured and entitled to the protection given by a Trust Indenture dated as of July 1, 2002 (the "Indenture"), duly executed and delivered by the Issuer to the Trustee. The term "Trustee" where used herein refers to Regions Bank, Montgomery, Alabama, or its successor in trust. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Indenture.
PURSUANT TO THE INDENTURE, THE ISSUER HAS ASSIGNED AND PLEDGED TO THE TRUSTEE ALL BASIC RENT AND ALL RIGHTS OF THE ISSUER UNDER THE SECOND SUPPLEMENTAL LEASE (EXCEPT AS THEREIN RESERVED).
As further security for the payment of the Bonds, the Company will cause Regions Bank, Montgomery, Alabama (the "Bank"), to issue an irrevocable letter of credit in favor of the Trustee in the amount of (a) the aggregate principal amount of the Bonds, to enable the Trustee to pay the principal amount
of the Bonds when due and to pay the principal portion of the purchase price of Bonds tendered (or deemed tendered) for purchase; plus (b) interest on the Bonds for a period of 120 days at the maximum annual rate of 12%, to enable the Trustee to pay interest thereon when due and to pay the interest portion of the purchase price of Bonds tendered (or deemed tendered) for purchase. Said letter of credit will be issued by the Bank pursuant to a Credit Agreement dated as of July 1, 2002 (the "Credit Agreement") among the Bank and the Company, Ocean Bio-Chem, Inc. ("Bio-Chem"), a Florida corporation of which the Company is a wholly-owned subsidiary, and three other wholly-owned subsidiaries of Bio-Chem. The initial letter of credit so delivered to the Trustee and any extension or substitute letter of credit delivered to the Trustee pursuant to the Credit Agreement, the Indenture and the Second Supplemental Lease are herein referred to as the "Letter of Credit". Simultaneously with the initial issuance of the Letter of Credit, the Bank will also, pursuant to the Credit Agreement, issue an irrevocable letter of credit (herein, together with any extension thereof or substitute therefor, the "Substitute Letter") as additional security for the payment of the 1997 Bonds. Pursuant to the Credit Agreement, the Company (as well as Bio-Chem and its other three subsidiaries) will agree, among other things, to reimburse the Bank for all amounts drawn by the Trustee under the Letter of Credit and by the trustee for the 1997 Bonds under the Substitute Letter.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY OUT OF THE BASIC RENT. THE BONDS ARE ALSO PAYABLE OUT OF PAYMENTS MADE BY THE BANK PURSUANT TO THE LETTER OF CREDIT. THE BONDS AND THE PREMIUM, IF ANY AND INTEREST THEREON WILL NOT BE IN ANY WAY A DEBT OR LIABILITY OF THE CITY OF MONTGOMERY, ALABAMA (THE "CITY"), THE STATE OR ANY POLITICAL SUBDIVISION OF EITHER OF THEM. NO HOLDER SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION OF EITHER OF THEM TO PAY THE BONDS OR ANY PREMIUM OR INTEREST THEREON. THE ISSUER HAS NO TAXING POWER.
No covenant or agreement contained in this Bond shall be deemed to be a covenant or agreement of any officer, agent or employee of the Issuer, and neither any member of the governing body of the Issuer nor any officer executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance hereof.
Copies of the Indenture, the Lease Agreement, the initial Letter of Credit and the Credit Agreement are on file at the principal office of the Trustee in Montgomery, Alabama, and reference is hereby made to such instruments for a more complete description of the Project, the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Trustee and the Holders of the Bonds and the terms upon which the Bonds are issued and secured, to all of which provisions each Holder, by acceptance hereof, hereby assents.
[The following provisions may be printed on the reverse side of the Bonds]
INTEREST RATE PROVISIONS
This Bond shall bear interest at the Seven-Day Rate (determined as provided below) (a) from the Issue Date until and including the day immediately prior to the earlier of a Conversion Date or the Maturity Date and (b) from any Seven-Day Rate Recommencement Date until and including the day immediately prior to the earlier of a Conversion Date or the Maturity Date (each such period being herein called a "Seven-Day Rate Period"). This Bond shall bear interest at the Yearly Fixed Rate (determined as provided below) from each Yearly Fixed Rate Conversion Date until and including the day immediately prior to the earliest of a Conversion Date, a Seven-Day Rate Recommencement Date or the Maturity Date (each such period being herein called a "Yearly Fixed Rate Period"). This Bond shall bear interest at the Permanent Fixed Rate (determined as provided below) from the Permanent Fixed Rate Conversion Date until and including the day immediately prior to the Maturity Date (such period being herein called the "Permanent Fixed Rate Period").
Interest at the Seven-Day Rate shall be computed on the basis of a 365- or 366-day year, as the case may be, for the actual number of days elapsed. Interest at the Yearly Fixed Rate or Permanent Fixed Rate shall be computed on the basis of a 360-day year consisting of 12 months of 30 days each.
Interest shall be payable (but solely from the source hereinabove described) on overdue principal of this Bond and (to the extent legally enforceable) on any overdue installment of interest on this Bond at the rate per annum which is two percent per annum in excess of the Revolving Line of Credit Note Rate (as defined in the Credit Agreement).
Interest on this Bond shall be payable in arrears on the first Business Day of each March, June, September and December, commencing September 3, 2002 (each such date, an "Interest Payment Date").
In any case where the scheduled date of any payment on this Bond is not a Business Day, then such payment shall be made on the Business Day next succeeding the scheduled date, in the same amount due, and with the same force and effect as if made, on the scheduled date.
Seven-Day Rate. The Seven-Day Rate shall be determined on the Issue Date, on each Seven-Day Rate Recommencement Date and on each Wednesday (or if Wednesday is not a Business Day, on the next succeeding Business Day) of each succeeding week during any Seven-Day Rate Period (each such date being herein called a "Seven-Day Rate Determination Date"). The Seven-Day Rate so determined on each Seven-Day Rate Determination Date shall be effective from the day of each week during any Seven-Day Rate Period following the Seven-Day Rate Determination Date for such week until and including the day immediately prior
to the earlier of a Conversion Date or the following Thursday; provided, however, that if the Seven-Day Rate is not so determined on any Seven-Day Rate Determination Date, the Seven-Day Rate as determined on the next preceding Seven-Day Rate Determination Date shall remain in effect until and including the day immediately prior to the earlier of a Conversion Date or the following Thursday. From the Issue Date to and including the first Seven-Day Rate Determination Date, the Bonds shall bear interest at the interest rate determined, in accordance with the Indenture, to be the rate necessary, taking into account current transactions in comparable securities in which the Remarketing Agent is involved or of which it is aware and prevailing financial market conditions, to enable the Remarketing Agent to sell the Bonds at par (plus accrued interest, if any); such rate, however, not to exceed the Cap Rate. The Seven-Day Rate shall thereafter be determined by the Remarketing Agent on each Seven-Day Rate Determination Date and shall equal the lesser of (a) the Cap Rate, or (b) the interest rate determined by the Remarketing Agent to be the interest rate that would result in the market value of the Bonds on such Seven-Day Rate Determination Date being 100% of the principal amount thereof, taking into account the applicable Rate Determination Factors. The Trustee shall confirm the Seven-Day Rate on the Bonds from time to time upon the request of any Holder of a Bond.
Yearly Fixed Rate. At any time that the Bonds bear interest at the
Seven-Day Rate, or at any time during the six months preceding the expiration of
any previously elected Yearly Fixed Rate Period, the Company may elect that the
Bonds bear interest at a Yearly Fixed Rate for a Yearly Fixed Rate Period
designated by the Company in the manner described in this paragraph, which rate
shall be equal to the lesser of (a) the Cap Rate, or (b) the interest rate
established by the Remarketing Agent in the manner described in this paragraph.
The Company shall give the Trustee, the Remarketing Agent and the Bank written
notice of the exercise of its option to convert the interest rate borne by the
Bonds to the Yearly Fixed Rate, to be received by each of them not fewer than 30
days prior to the proposed Yearly Fixed Rate Conversion Date. Such notice shall
also specify the length of the proposed Yearly Fixed Rate Period, which shall be
one or more whole years from the proposed Yearly Fixed Rate Conversion Date. No
Yearly Fixed Rate Period may be selected which would extend to the Maturity Date
unless the proposed Yearly Fixed Rate Conversion Date is the June 1 of any year.
Any Yearly Fixed Rate Conversion Date selected by the Company during the six
months preceding the termination of a Yearly Fixed Rate Period shall be a date
not earlier than the date immediately following the termination of such Yearly
Fixed Rate Period. On or before the Business Day immediately preceding the
proposed Yearly Fixed Rate Conversion Date, the Remarketing Agent shall
determine the interest rate to be borne by the Bonds during the proposed ensuing
Yearly Fixed Rate Period, being that rate which would result in the market value
of the Bonds on such Proposed Conversion Date being 100% of the principal amount
thereof, taking into account applicable Rate Determination Factors, and on such
date shall give telephonic notice, confirmed by Telefax, of the interest rate so
determined to the Trustee, the Company and the Bank. The interest rate so
determined shall be the Yearly Fixed Rate from and after the proposed Yearly
Fixed Rate Conversion Date for the ensuing Yearly Fixed Rate Period, provided
that in no event shall the Yearly Fixed Rate exceed the Cap Rate.
Notwithstanding the foregoing, such Yearly Fixed Rate shall not be established
unless (i) there shall have been supplied to the Trustee, the Company, the
Remarketing Agent and the Bank at or prior to 10:00 a.m. Trustee's Time on the
proposed Yearly Fixed Rate Conversion Date a Non-Taxability Opinion further
stating that such conversion to the Yearly Fixed Rate is lawful under applicable
law and permitted by the Indenture, and (ii) if a substitute Letter of Credit is
required to be delivered to the Trustee, such substitute Letter of Credit shall
have been delivered to the Trustee at or prior to 10:00 a.m. Trustee's Time on
the proposed Yearly Fixed Rate Conversion Date. If all the conditions to the
establishment of the Yearly Fixed Rate shall not have been met, the Bonds shall
bear interest at the Seven-Day Rate from such proposed Conversion Date until and
including the earlier of the date immediately prior to the next effective Conversion Date or the Maturity Date.
Permanent Fixed Rate. At any time that the Bonds bear interest at the Seven-Day Rate, or at any time during the six months preceding the expiration of any previously elected Yearly Fixed Rate Period, the Company may elect that the Bonds shall bear interest at the Permanent Fixed Rate, which rate shall be equal to the lesser of (a) the Cap Rate or (b) the interest rate established by the Remarketing Agent in the manner described in this paragraph. The Company shall give the Trustee, the Remarketing Agent and the Bank written notice of the exercise of its option to convert the interest rate borne by the Bonds to the Permanent Fixed Rate, to be received by each of them at least 30 days prior to the proposed Permanent Fixed Rate Conversion Date. Any Permanent Fixed Rate Conversion Date selected during a Yearly Fixed Rate Period shall be a date not earlier than the date immediately following the termination of such Yearly Fixed Rate Period. On or before the Business Day next preceding the proposed Permanent Fixed Rate Conversion Date, the Remarketing Agent shall determine the interest rate to be borne by the Bonds during the proposed ensuing Permanent Fixed Rate Period, being that rate which would result in the market value of the Bonds on such Proposed Conversion Date being 100% of the principal amount thereof, taking into account the applicable Rate Determination Factors, and on such date shall give telephonic notice, confirmed by Telefax, of the interest rate so determined to the Trustee, the Company and the Bank. The interest rate so determined shall be the Permanent Fixed Rate from and after the Permanent Fixed Rate Conversion Date, provided that in no event shall the Permanent Fixed Rate exceed the Cap Rate. Notwithstanding the foregoing, such Permanent Fixed Rate shall not be established unless (i) there shall have been supplied to the Trustee, the Company and the Remarketing Agent at or prior to 10:00 a.m. Trustee's Time on the proposed Permanent Fixed Rate Conversion Date a Non-Taxability Opinion further stating that such conversion is lawful under applicable law and permitted by the Indenture, and (ii) if a substitute Letter of Credit is required to be provided by the Company for the Permanent Fixed Rate Period, there shall have been delivered to the Trustee such substitute Letter of Credit at or prior to 10:00 a.m. Trustee's Time on the proposed Permanent Fixed Rate Conversion Date. If all conditions to the establishment of the Permanent Fixed Rate shall not have been met, the Bonds shall bear interest at the Seven-Day Rate from such proposed Conversion Date until and including the earlier of the date immediately prior to the next effective Conversion Date or the Maturity Date.
TENDER PROVISIONS
Optional Tender. The Holder of this Bond shall have the right to tender
this Bond to the Tender Agent for purchase in whole or in part (if in part, in
any authorized denomination) on any Business Day during any Seven-Day Rate
Period, but not during any Yearly Fixed Rate Period or the Permanent Fixed Rate
Period, at a purchase price equal to 100% of the principal amount hereof (or
portions hereof) tendered plus accrued interest to the specified purchase date
(the "Optional Tender Date"). In order to exercise such option with respect to
this Bond, the Holder hereof must give to the Trustee at the Trustee's Office,
with a copy to the Tender Agent at the Tender Office, at least seven days prior
to the proposed Optional Tender Date, notice (a) by telephone, confirmed by
Notice of Tender not more than two Business Days after such initial notice, or
(b) by Notice of Tender. "Notice of Tender" shall mean written, formal notice of
tender in the form attached hereto as Schedule I or in such other form as shall be acceptable to the Trustee. If the telephonic notice or the Notice of Tender specifies an Optional Tender Date that is not a Business Day, then such notice shall be deemed to specify the Business Day next succeeding the stated Optional Tender Date. Upon the delivery of Notice of Tender, such election to tender shall be irrevocable and binding upon the Holder of this Bond. If a Notice of Tender with respect to this Bond shall have been duly given, the Holder of this Bond shall deliver this Bond to the Tender Agent at the Tender Office at or before 10:00 a.m. Trustee's Time on the Optional Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form attached hereto or in such other form as shall be acceptable to the Tender Agent). At or before 3:00 p.m. New York, New York time on that Optional Tender Date, the Trustee shall cause the Tender Agent to purchase this Bond so delivered at the aforesaid purchase price. If this Bond is not so delivered on the Optional Tender Date, this Bond shall nevertheless be deemed to have been tendered for purchase by the Holder hereof on the Optional Tender Date, and the Holder hereof shall not be entitled to receive interest on this Bond for any period on or after the Optional Tender Date if the amount on deposit in the Bond Purchase Fund is sufficient to pay the purchase price of all Bonds to be purchased on such Optional Tender Date.
Mandatory Tender. Subject to the provisions below, the Holder of this
Bond shall be required to tender this Bond to the Tender Agent for purchase on
(a) each proposed Conversion Date, (b) each date immediately following the
expiration of a Yearly Fixed Rate Period that is not a proposed Conversion Date,
(c) the first day of the calendar month in which the Stated Termination Date of
the Letter of Credit occurs, and (d) the date specified by the Bank in a notice
of default under the Credit Agreement; or, if any of such dates is not a
Business Day, the next succeeding Business Day (each such date being herein
referred to as a "Mandatory Tender Date"), all as more fully provided below.
Notice of a Mandatory Tender shall be given by the Trustee by first-class mail, postage prepaid, to the Holder of this Bond at his address appearing on the Register not fewer than 20 days prior to a Mandatory Tender Date. Such notice shall, among other things, specify the Mandatory Tender Date and whether or not a Letter of Credit will be in effect during the ensuing interest rate period. This Bond shall be tendered for purchase by the Holder hereof by delivering this Bond to the Tender Agent at the Tender Office at or before 10:00 a.m. Trustee's Time on the Mandatory Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form attached hereto or such other form as shall be acceptable to the Tender Agent). At or before 3:00 p.m. New York, New York time on the Mandatory Tender Date, the Trustee shall cause the Tender Agent to purchase this Bond at a purchase price equal to 100% of the principal amount hereof plus accrued interest, if any, hereon. The Holder of this Bond, by his acceptance hereof, hereby covenants and agrees to tender this Bond in the manner and at the times as aforesaid. If this Bond is not tendered at or before 10:00 a.m. Trustee's Time on any Mandatory Tender Date, this Bond shall be deemed to be tendered for purchase by the Holder on the Mandatory Tender Date, and the Holder hereof shall not be entitled to receive interest on this Bond for any period on or after the Mandatory Tender Date if the amount on deposit in the Bond Purchase Fund is sufficient to pay the purchase price of all Bonds to be purchased on such Mandatory Tender Date.
REDEMPTION PROVISIONS
In the manner and with the effect provided in the Indenture, the Bonds will be subject to redemption prior to maturity as follows:
(a) Optional Redemption. The Bonds are subject to optional redemption by the Company on behalf of the Issuer as follows:
(i) during any Seven-Day Rate Period, in whole on any Business Day or in part (in multiples of $5,000, provided no partial redemption shall leave less than $100,000 in principal amount of Bonds outstanding) on any Interest Payment Date at a redemption price equal to the principal amount thereof plus accrued interest to the date of redemption; and
(ii) during any Yearly Fixed Rate Period or the Permanent Fixed Rate Period, as a whole on any Business Day or in part (in multiples of $5,000) on any Interest Payment Date on or after the first permitted redemption dates set forth below and at a redemption price equal to the principal amount thereof plus accrued interest to the date fixed for redemption plus the applicable redemption premium (expressed as a percentage of the principal amount to be redeemed), if any, set forth below.
Length of
Rate Period First Permitted
(in Years) Redemption Date Redemption Premium
----------- --------------- ------------------
10 or more 8th Anniversary 2%, declining by 1% on each
of Conversion Date succeeding anniversary of the
Conversion Date until reaching
0%, and thereafter 0%
6 to 9 4th Anniversary 2%, declining by 1% on each
of Conversion Date succeeding anniversary of the
Conversion Date until reaching
0%, and thereafter 0%
5 or less Bonds not callable
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(b) Extraordinary Optional Redemption. During any Yearly Fixed Rate Period or Permanent Fixed Rate Period the Bonds are subject to optional redemption (exercised upon direction of the Company on behalf of the Issuer within 120 days after the occurrence giving rise to such option) in whole but not in part on any Business Day at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the redemption date, if any of the following shall have occurred:
(i) the Project shall have been damaged or destroyed to such extent that, in the reasonable opinion of the Company, it cannot be restored within a period of four months to substantially the condition thereof immediately prior to such damage or destruction or the Company is thereby prevented from carrying on its normal operations at the Project for a period of not less than four months;
(ii) the taking by eminent domain of all or substantially all the Project or of any part, use or control of the Project that, in the reasonable opinion of the Company, results in the Company being thereby prevented from carrying on its normal operations at the Project for a period of not less than four months; or
(iii) as a result of a change in law or a final order of any court or other governmental authority the Lease Agreement becomes void or unenforceable or impossible of performance or unreasonable burdens or excessive liabilities are imposed on the Company that, in the reasonable opinion of the Company, render the Project uneconomic for its intended use.
(c) Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption in part, at a redemption price equal to 100% of the following principal amounts to be so redeemed plus accrued interest thereon to the redemption date, in amounts of (i) $30,000 on each Interest Payment Date from September 1, 2002 to March 1, 2012, both inclusive, (ii) $110,000 on each Interest Payment Date from June 1, 2012 to June 1, 2016, both inclusive, and (iii) $115,000 on each Interest Payment Date from September 1, 2016 to March 1, 2017, both inclusive. If retired only by mandatory sinking fund redemption prior to their stated maturity, there would remain $115,000 in Bonds to be paid on the Maturity Date.
The Issuer, or the Company on behalf of the Issuer, shall have the option to deliver Bonds to the Trustee for cancellation, in any aggregate principal amount, and to receive a credit against the then current mandatory sinking fund requirement and corresponding mandatory redemption obligation for the Bonds. Each Bond so delivered, or previously redeemed, or purchased and cancelled, shall be credited by the Trustee at 100% of the principal amount thereof against the then current mandatory sinking fund obligation. Any excess of that amount over and then current mandatory sinking fund requirement shall be credited against subsequent mandatory sinking fund redemption obligations for the Bonds.
(d) Mandatory Redemption Upon Final Determination. The Bonds are subject to mandatory redemption in whole and not in part on the first Interest Payment Date which is at least 30 days after a Final Determination (as hereinafter defined), at a redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. "Determination of Taxability" means, with respect to the Bonds, a determination that interest thereon is Taxable because of (i) the receipt by any Holder or any member of an "affiliated group", as that term is defined in Section 1504 of the Code, of a "30-day letter" within the meaning of Treasury Regulations Section 601.105(d)(1)(iv) proposing a determination to that effect; or (ii) receipt by the Trustee or any Holder of a written opinion of nationally recognized bond counsel that there is substantial likelihood that such interest is Taxable; subject, however, in all such cases to the right on the part of the Company set forth in the Indenture to contest a Determination of Taxability. Upon forfeiture or termination of such right to contest in accordance with the Indenture, a Determination of Taxability shall be deemed to become a "Final Determination".
(e) Mandatory Redemption with Excess Proceeds. The Bonds are subject to partial mandatory redemption in an amount equal to the amount, if any, on deposit in the Construction Fund as of the date
notice of such redemption is given (rounded upward to the nearest Authorized Denomination), on the first Interest Payment Date which is at least 90 days after the Completion Date with respect to the Project, but in no event later than July 1, 2005, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest thereon to the redemption date; provided, however, that such redemption need not be made if the Company delivers to the Trustee a Non-Taxability Opinion in respect of such non-redemption.
(f) Notice of Redemption; Partial Redemption. The notice of the call for redemption of Bonds shall identify (i) by designation, letters, numbers or other distinguishing marks, the Bonds or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. The Trustee shall, on behalf of the Issuer, give written notice by first-class mail, postage prepaid, of any redemption not more than 60 nor less than 30 days prior to the date fixed for redemption, to the Holder of each Bond subject to redemption in whole or in part at the Holder's address shown on the Register as of the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Bond shall not affect the validity of the proceedings for the redemption of any Bond for which notice is properly given. If fewer than all the Bonds are being called for redemption at one time, the Trustee shall select the Bond or Bonds to be so redeemed by lot. If less than the entire principal amount of a Bond is called for redemption, the Holder thereof shall exchange the same, without charge, for a new Bond or Bonds in principal amount equal to the unredeemed portion of the Bond so called.
MISCELLANEOUS
The Holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture.
Modifications, alterations or supplements of the Indenture may be made only to the extent and in the circumstances permitted by the Indenture.
If an Event of Default, as defined in the Indenture, shall occur, the principal of the Bonds then outstanding may, subject to the conditions set forth in the Indenture, be declared due and payable in the manner and with the effect provided by the Indenture; subject, however, to waiver of such Event of Default or rescission of such declaration as provided in the Indenture.
The Bonds are issuable only as fully registered bonds (i) in denominations of $100,000 and any multiple of $5,000 in excess thereof, so long as the Bonds bear interest at the Seven-Day Rate; and (ii) in denominations of $5,000 and any integral multiple thereof, whenever the Bonds bear interest at a Yearly Fixed Rate or the Permanent Fixed Rate. The Bonds are exchangeable for Bonds of other authorized denominations in equal aggregate principal amounts at the aforementioned office of the Registrar, but only in the manner and subject to the limitations provided herein and in the Indenture.
This Bond is transferable, as provided in the Indenture, only upon the Register by the Holder hereof in person or by his duly authorized attorney, upon surrender of this Bond to the Registrar together with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney, and upon payment of the charges prescribed in the Indenture.
Neither the Issuer, the Registrar nor any Authenticating Agent, as the case may be, shall be required to make any exchange or transfer of a Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing or to transfer or exchange any Bonds selected for redemption, in whole or in part.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been duly signed.
[End of provisions that may be printed on the reverse side of bonds]
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law.
IN WITNESS OF THE ABOVE, The Industrial Development Board of the City of Montgomery has caused this Bond to be duly executed under its corporate seal, all as of the Issue Date.
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
( S E A L )
By:________________________________________
Vice-Chairman of the Board of Directors
ATTEST:
[FORM OF CERTIFICATE OF AUTHENTICATION]
Date of Authentication: ____________________________
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within-mentioned Indenture.
REGIONS BANK,
as Authenticating Agent
By:_________________________________
Authorized Signatory
The following abbreviations, when used in the inscription on this Bond or in the Assignment below, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - AS TENANTS IN COMMON
TEN ENT - AS TENANTS BY THE ENTIRETIES
JT TEN - AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT
AS TENANTS IN COMMON AND NOT AS COMMUNITY PROPERTY
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UNIF TRAN MIN ACT - ______________ CUSTODIAN _____________
(CUSTODIAN) (MINOR)
UNDER UNIFORM TRANSFERS TO MINORS ACT _______
(STATE)
Additional abbreviations may also be used although not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto ___________________________ the within Bond and irrevocably constitutes and appoints __________________________ attorney to transfer that Bond on the books kept for registration thereof, with full power of substitution in the premises.
Dated:___________________________
Signature Guaranteed:
By_______________________________
Its_______________________________
Medallion Number:
Schedule I
[Form of Bondholder Tender Notice]
The undersigned hereby elects to have the within Bond numbered ______ (the "Bond") of the Issuer (or any portion thereof in any integral multiple of $100,000 and any multiple of $5,000 in excess thereof) purchased in accordance with the provisions of the Bond and the Trust Indenture dated as of July 1, 2002 (the "Indenture"), between The Industrial Development Board of the City of Montgomery (the "Issuer") and Regions Bank (the "Trustee") , on _____________________ (the "Optional Tender Date"), which Optional Tender Date shall be a Business Day (as defined in the Indenture) at least seven days immediately following the submission of this Bondholder Tender Notice to the Trustee, with a copy to the Tender Agent (as defined in the Indenture); provided, however, that if the undersigned shall have initially given telephonic notice to the Trustee of its election to tender the Bond, the Optional Tender Date shall be a Business Day at least seven days immediately following the date of such telephonic notice. The purchase price upon such tender shall equal 100% of the principal amount of the Bond (or portion thereof) being purchased plus accrued interest thereon to the Optional Tender Date (the "Purchase Price").
Pursuant to the terms of the Indenture, the Purchase Price of the Bond (or portion thereof) to be purchased shall be paid to the Holder of the Bond in federal or other immediately available funds, as provided in the Indenture, at or before 3:00 p.m. (New York, New York time) on the Optional Tender Date upon presentation, at or before 10:00 a.m. (Montgomery, Alabama time) on the Optional Tender Date at the Tender Office designated in the Indenture, of the Bond, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bond or in such other form acceptable to the Tender Agent). The undersigned hereby acknowledges and agrees to such terms.
This Bondholder Tender Notice shall not be accepted by the Trustee unless it is properly completed and received by the Trustee at its principal corporate trust office in Montgomery, Alabama.
If the Bond is submitted for purchase in part, the undersigned hereby directs the Tender Agent to exchange the Bond for (i) a Bond representing the principal amount of the Bond to be purchased, and, if applicable, (ii) a Bond (or Bonds of authorized denominations, as provided for in the Indenture, if the owner specifies such denominations) representing the principal amount of the Bond not to be purchased. The Bond or Bonds not to be purchased shall be registered in the same name(s) as the Bond tendered for purchase. Unless the Holder of the Bond delivers instructions to the Trustee with this Bondholder Tender Notice, specifying that such Holder wishes to have the Tender Agent deliver more than one Bond representing the principal amount of the Bond not to be purchased, and specifying the denominations of such replacement Bonds, the Tender Agent will deliver only one replacement Bond to such Holder in the principal amount of the Bond not to be purchased.
THIS ELECTION IS IRREVOCABLE AND BINDING ON THE UNDERSIGNED AND CANNOT
BE WITHDRAWN.
The undersigned hereby authorizes the Trustee to accept on behalf of the undersigned the Purchase Price of the Bond (or portion thereof) subject to this Bondholder Tender Notice.
Print or Type: ________________________________________________________
Name(s) of Bondholder(s)
________________________________________________________
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Street City State Zip
Signature(s): _________________________________________________________________
Date: _________________________________________________________________
Note: The signature(s) to this Bondholder Tender Notice must
correspond exactly to the name(s) appearing on the Register
(as defined in the Indenture) in every particular, without
alteration or enlargement or any change whatsoever.
The principal amount of the Bond subject to this notice of tender for
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purchase is:
$_________________________________________________________.
(INSERT TOTAL PRINCIPAL AMOUNT OF BOND OR A PORTION THEREOF
IN THE AMOUNT OF $100,000 OR ANY INTEGRAL MULTIPLE THEREOF
AND ANY MULTIPLE OF $5,000 IN EXCESS THEREOF.)
IF NO AMOUNT IS INDICATED IN THE SPACE ABOVE, THE OWNER OF THE BOND SUBJECT TO THIS BONDHOLDER TENDER NOTICE WILL BE DEEMED TO HAVE TENDERED THE BOND IN ITS FULL PRINCIPAL AMOUNT FOR PURCHASE.
EXHIBIT 4.3
TRUST INDENTURE
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY
AND
REGIONS BANK,
AS TRUSTEE AND REGISTRAR
RELATING TO
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
$4,000,000 TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS
(KINPAK INC. PROJECT) SERIES 1996A
AND
$990,000 INDUSTRIAL REFUNDING REVENUE BONDS
(KINPAK INC. PROJECT) SERIES 1996B
DATED
AS OF
DECEMBER 1, 1996
ROY S. GOLDFINGER, P.C.
MONTGOMERY, ALABAMA
BOND COUNSEL
TRUST INDENTURE
INDEX
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Page
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PARTIES.................................................................... 1
RECITALS................................................................... 1
GRANTING CLAUSES........................................................... 2
ARTICLE I
DEFINITIONS
Section 101. Definitions.................................................. 4
Section 102. Interpretation............................................... 15
Section 103. Captions and Headings........................................ 16
ARTICLE II
THE BONDS
Section 201. Authorized Amounts of Bonds.................................. 17
Section 202. Issuance of the Bonds; Terms Thereof......................... 17
Section 203. Execution of Bonds........................................... 20
Section 204. Authentication of Bonds...................................... 20
Section 205. Payment and Ownership of Bonds............................... 20
Section 206. Redemption................................................... 21
Section 207. Notice of Redemption......................................... 21
Section 208. Payment of Redeemed Bonds.................................... 22
Section 209. Partial Redemption........................................... 22
Section 210. Election to Redeem........................................... 23
Section 211. Mutilated, Lost, Stolen or Destroyed Bonds................... 23
Section 212. Transfer and Exchange of Bonds............................... 23
Section 213. Safekeeping and Cancellation of Bonds........................ 24
Section 214. Special Agreement with Holders............................... 24
Section 215. Actions Regarding of Letter of Credit........................ 25
Section 216. DTC Eligibility Requirements................................. 25
ARTICLE III
TENDER PROVISIONS
Section 301. Optional Tenders............................................. 26
Section 302. Mandatory Tenders............................................ 27
Section 303. Procedures for Purchase and Remarketing...................... 29
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ARTICLE IV
PROVISIONS AS TO FUNDS AND PAYMENTS
Section 401. Bond Fund.................................................... 34
Section 402. Payment of Debt Service...................................... 35
Section 403. Non-Presentment of Bonds..................................... 35
Section 404. Release of Funds Upon Payment of Bonds....................... 36
Section 405. Construction Fund; Disbursements............................. 36
Section 406. Bond Purchase Fund........................................... 37
Section 407. Rebate Fund ................................................. 39
Section 408. Refunding Fund............................................... 40
Section 409. Investment of Fund Moneys.................................... 40
Section 410. Moneys to be Held in Trust................................... 41
ARTICLE V
FIDUCIARIES
Section 501. Trustee's Acceptance and Responsibilities.................... 42
Section 502. Fees, Charges and Expenses of Fiduciaries.................... 44
Section 503. Notices to Holders........................................... 44
Section 504. Intervention by Trustee...................................... 45
Section 505. Successor Trustees........................................... 45
Section 506. Appointment of Co-Trustee.................................... 45
Section 507. Resignation by the Trustee................................... 46
Section 508. Removal of the Trustee....................................... 46
Section 509. Appointment of Successor Trustee............................. 47
Section 510. Concerning Any Successor Trustee............................. 47
Section 511. Right of Trustee to Pay Taxes and Other Charges.............. 47
Section 512. Adoption of Authentication................................... 48
Section 513. Registrars................................................... 48
Section 514. Designation and Succession of Paying Agents.................. 50
Section 515. Designation and Succession of Authenticating Agents.......... 50
Section 516. Dealing in Bonds............................................. 51
Section 517. Tender Agent................................................. 51
Section 518. Remarketing Agent............................................ 51
ARTICLE VI
DEFAULT PROVISIONS AND
REMEDIES OF TRUSTEE AND HOLDERS
Section 601. Events of Default............................................ 53
Section 602. Acceleration................................................. 54
Section 603. Other Remedies; Rights of Holders............................ 55
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Page
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Section 604. Application of Moneys........................................ 56
Section 605. Remedies Vested in Trustee................................... 57
Section 606. Rights and Remedies of Holders............................... 57
Section 607. Remedies Subject to Applicable Law........................... 58
ARTICLE VII
SUPPLEMENTAL INDENTURES; OTHER AMENDMENTS
Section 701. Supplemental Indentures Not Requiring Consent of Holders..... 59
Section 702. Supplemental Indentures Requiring Consent of Holders......... 60
Section 703. Additional Consents Required................................. 61
Section 704. Amendments of Lease Agreement................................ 61
Section 705. Amendments of Letter of Credit............................... 62
ARTICLE VIII
DEFEASANCE
Section 801. Defeasance................................................... 63
Section 802. Payment of Bonds............................................. 63
Section 803. Survival of Certain Provisions............................... 64
ARTICLE IX
COVENANTS BY THE ISSUER
Section 901. Payment of Debt Service and Purchase Price................... 65
Section 902. Revenues and Assignment of Revenues.......................... 65
Section 903. Performance of Covenants by Issuer........................... 65
Section 904. Inspection of Project Books.................................. 65
Section 905. Register..................................................... 65
Section 906. Rights and Enforcement of the Lease Agreement................ 65
Section 907. Further Assurances........................................... 66
Section 908. Non-Taxable Status........................................... 66
ARTICLE X
MISCELLANEOUS
Section 1001. Consents, Etc., of Holders.................................. 67
Section 1002. Limitation of Rights........................................ 67
Section 1003. Severability................................................ 67
Section 1004. Limitation of Liability..................................... 67
Section 1005. Payments Due on Other than Business Days.................... 68
Section 1006. Counterparts................................................ 68
Section 1007. Notices..................................................... 68
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Section 1008. Suspension of Mail.......................................... 69 Section 1009. Governing Law............................................... 69 Section 1010. Opinions of Bond Counsel Not Required....................... 69 Section 1011. Contest of Determination of Taxability...................... 69 SIGNATURES................................................................. 70 ACKNOWLEDGMENTS............................................................ 71 Exhibit A Forms of Bonds |
TRUST INDENTURE
THIS TRUST INDENTURE made and entered into as of December 1, 1996 (as the same may hereafter be amended or supplemented, this "Indenture"), by and between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, its successors and assigns (the "Issuer"), a public corporation organized and existing under the laws of the State of Alabama (the "State"), and REGIONS BANK, a state banking corporation authorized to accept and execute trusts of the character herein set forth, with its principal corporate trust office for purposes of discharging the trusts hereunder being in the City of Montgomery, Alabama, its successors and assigns (the "Trustee"), under the circumstances set forth in the following recitals (the capitalized terms not defined in this paragraph or the recitals having the meanings given to them in Article I hereof):
W I T N E S S E T H:
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, replace, own, lease and dispose of properties to the end that the Issuer may be able to promote industry, develop trade and further the use of the agricultural products and natural and human resources of the State and the development and preservation of said resources.
B. On October 17, 1979, the Issuer issued the Prior Bonds pursuant to the Act and the Prior Indenture and applied the proceeds thereof to acquire, construct and equip the Existing Facilities as a "project" under the Act, which the Issuer leased to Kinark pursuant to the Original Lease. Pursuant to the Lease Assignments (as defined in the Lease Agreement), the Company has succeeded to the position of Kinark as lessee under the Original Lease.
C. The Company has heretofore expressed to the Issuer its desire (a) to achieve interest rate savings by refinancing the debt represented by the Prior Bonds, (b) to renovate and upgrade the Existing Facilities and (c) to acquire, construct and equip the New Facilities. The Issuer heretofore adopted the Inducement Resolution which provided, among other things, for the issuance of the Bonds by the Issuer to refund (inter alia) the Prior Bonds and to assist in financing the costs of the Project.
D. Simultaneously with the execution and delivery of this Indenture, the Issuer, as lessor, and the Company, as lessee, will enter into the Lease Agreement which will amend, supplement and restate the provisions of the Original Lease under which the Existing Facilities are leased to the Company. Pursuant to the Lease Agreement, the Company will agree to pay the Basic Rent at such times and in such amounts as shall be sufficient to pay when due the Debt Service on and Purchase Price of the Bonds.
E. The Bonds shall be limited obligations of the Issuer payable solely out of the Revenues. As additional security for the payment of the Bonds, the Company shall cause the Bank to issue the Initial Letter of Credit in favor of the Trustee in an amount equal to the sum of (a) the aggregate principal amount of the Bonds, to enable the Trustee to pay the principal of the Bonds when due and to pay the principal portion of the Purchase Price of Bonds tendered (or deemed tendered) for purchase, plus (b) interest on the Bonds for a period of 120 days at the maximum rate of 15% per annum, to enable the Trustee to pay
interest on the Bonds when due and to pay the interest portion of the Purchase Price of Bonds tendered (or deemed tendered) for purchase.
F. The execution and delivery of this Indenture and the issuance of the Bonds under the Act have been in all respects duly and validly authorized by resolutions duly adopted and approved by the Issuer.
G. The Bonds to be issued hereunder and the authentication certificate thereon are to be substantially in the forms thereof attached hereto as Exhibit A, with appropriate omissions, insertions and variations permitted or authorized as hereinafter provided.
H. All things necessary to make the Bonds, when authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid pledge of the Revenues to the payment of the Debt Service on and Purchase Price of the Bonds, have been done and performed, and the creation, execution and delivery of this Indenture, and the execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That the Issuer, in consideration of the premises and the acceptance by the Trustee and the Registrar of the trusts created herein and the acceptance of the Bonds by the Holders thereof, and for other good and valuable considerations, the receipt of which is hereby acknowledged, in order to secure the payment of the Debt Service on and Purchase Price of the Bonds according to their tenor and effect and the performance and observance by the Issuer of all the covenants expressed or implied herein and in the Bonds, does hereby grant, bargain, sell, convey, mortgage and pledge unto the Trustee and unto its successors in trust, and to it and their respective assigns forever, the following:
I.
All right, title and interest of the Issuer in and to the Lease Agreement, except for Unassigned Rights (as therein defined).
II.
All Revenues receivable by or for the account of the Issuer, including, without limitation, all Basic Rent and other payments in respect of payment of Basic Rent to be received under and pursuant to and subject to the provisions of the Lease Agreement, which moneys are (subject to the credits or offsets provided for under the Lease Agreement) to be paid directly to the Trustee at the Trustee's Office for the account of the Issuer and deposited as hereinafter provided.
TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby and hereafter conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in trust and its and their respective assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the benefit, security and protection of the Holders from time to time of the Bonds issued under and secured by this Indenture, without preference, priority or distinction as to lien or otherwise of any of such Bonds over any of the others except as herein expressly provided.
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the Debt Service due or to become due, at the times and in the manner mentioned in the Bonds according to the true intent and meaning thereof, and shall cause the payments to be made as required hereunder, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee and the other Fiduciaries all sums of money due or to become due to them in accordance with the terms and provisions hereof; then upon such final payments this Indenture and the rights granted shall cease, determine and be void; otherwise this Indenture to be and remain in full force and effect.
The terms and conditions upon which the Bonds are to be issued, authenticated, delivered, secured and accepted by all Persons who from time to time shall be or become Holders thereof, and the trusts and conditions upon which the Revenues pledged are to be held and disposed of, which said trusts and conditions the Trustee and Registrar hereby accept, and to all of which the respective parties hereto covenant and agree, are as follows:
ARTICLE I
Section 101. Definitions. In addition to the words and terms elsewhere defined in this Indenture (including in the recitals hereto) or by reference to the Lease Agreement or other document, unless the context or use indicates another or different meaning or intent:
"Act" means Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended.
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Company or by the Issuer, as debtor, under any applicable bankruptcy, reorganization, insolvency or other similar law now or hereafter in effect.
"Affiliate" means, as to any specified Person, another Person that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person.
"Alternate Credit Facility" means an irrevocable letter of credit, a surety bond, an insurance policy or other credit facility delivered to the Trustee pursuant to Section 5.8(f) of the Lease Agreement.
"Authenticating Agent" means the Trustee and any bank, trust company or other Person designated as an Authenticating Agent for the Bonds by or in accordance with Section 515 of this Indenture, each of which shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934, as amended.
"Authorized Denominations" means, as to the Bonds, the denominations of $100,000 and any integral multiple of $5,000 in excess thereof.
"Available Moneys" shall mean: (a) with respect to any payment date
occurring during any period that the Bonds are entitled to the benefit of a
Letter of Credit, (i) any moneys which have been paid to the Trustee by the
Company (including moneys transferred from the Construction Fund pursuant to
Section 405(f) hereof) and which have been on deposit with the Trustee for at
least 367 days during and prior to which no Act of Bankruptcy shall have
occurred, and the proceeds from the investment of such moneys after such moneys
have become Available Moneys, (ii) moneys on deposit with the Trustee
representing proceeds from the resale by the Remarketing Agent of Bonds to
persons other than the Issuer or the Company as described in Article III hereof,
which, in each case, were at all times since their deposit with the Trustee held
in a separate and segregated account or accounts or sub-account or sub-accounts
in which no moneys which were not Available Moneys were at any time held, and
the proceeds from the investment thereof, and (iii) moneys drawn under a Letter
of Credit which in each case were at all times since their deposit with the
Trustee held in a separate and segregated account or accounts or sub-account or
sub-accounts in which no moneys (other than those drawn under a Letter of Credit) were at any time held; and (b) with respect to any payment date not occurring during a period that the Bonds are entitled to the benefit of a Letter of Credit, any moneys furnished to the Trustee and the proceeds from the investment thereof. The Trustee may presume that no Act of Bankruptcy has occurred unless notified in writing to the contrary by the Company, the Bank or the owners of not less than 25% in aggregate principal amount of Bonds Outstanding.
"Bank" means First Union National Bank of Florida, Fort Lauderdale, Florida, and its successors and assigns, as issuer of the Initial Letter of Credit, until such time, if any, as a Substitute Letter of Credit or Alternate Credit Facility shall become effective pursuant to Section 5.8 of the Lease Agreement, and thereafter "Bank" shall mean the issuer of such Substitute Letter of Credit or Alternate Credit Facility.
"Basic Rent" means that portion of the rentals payable under the Lease Agreement in the amounts and at the times sufficient, giving effect to any credit therein provided for, to pay Debt Service on or Purchase Price of the Bonds.
"Bio-Chem" means Ocean Bio-Chem, Inc., a Florida corporation, its successors and assigns, of which the Company is a wholly-owned subsidiary.
"Bond" or "Bonds" means, collectively, the Series 1996A Bonds and the Series 1996B Bonds.
"Bond Counsel" means Roy S. Goldfinger, P.C., Montgomery, Alabama, or any other attorney or firm of attorneys nationally recognized on the subject of municipal bonds and acceptable to the Trustee.
"Bond Fund" means the fund created and described in Section 401 hereof.
"Bond Payment Date" means each date (including any date fixed for redemption of Bonds) on which Debt Service on the Bonds is payable.
"Bond Purchase Fund" means the fund created and described in Section 406 hereof.
"Bond Year" means, during the period the Series 1996B Bonds and (if and when issued) the Refunding Obligations remain outstanding, the annual period provided for the computation of Excess Earnings under Section 148(f) of the Code (except that the first and last Bond Years may be less than 12 months long).
"Building" means that certain existing manufacturing facility of approximately 50,000 square feet, the proposed new building of approximately 60,000 square feet and all other structures and improvements which are required or permitted by the Lease Agreement to stand or be constructed on the Leased Realty, as they may at any time exist.
"Business Day" means any day other than (1) a day on which the payment
system of the Federal Reserve System is not operational, or (2) a day on which
commercial banks are required or authorized by law to close in any of the
following locations: (i) the city in which the Trustee's Office is located, (ii)
the city in which the principal office of the Remarketing Agent is located, or
(iii) the city in which the office of the Bank at which drawings under the
Letter of Credit are to be made is located.
"Cap Rate" means the lower of (i) the rate of 15% per annum or (ii) for any period during which the Bonds are supported by a Letter of Credit, the maximum rate per annum, specified therein, at which there has been calculated the amount available to be drawn on such Letter of Credit to pay interest on the Bonds.
"City" means the City of Montgomery, Alabama.
"Code" means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include relevant applicable temporary, proposed or final regulations thereunder and under any predecessor provisions of the Internal Revenue Code of 1954, as amended.
"Company" means KINPAK INC., formerly known as Kinbright, Inc., a corporation for profit organized and existing under the laws of the State, and its successors and assigns.
"Company Account" means the account so named in the Bond Fund.
"Company Bonds" means Bonds registered in the name of the Company pursuant to Section 303(e) or (f) hereof.
"Completion Date" means the date of completion of the Project to be established by the Company in accordance with the provisions of the Lease Agreement.
"Computation Date" means the last day of each Bond Year and the day on which the final payment in full of all the Series 1996B Bonds and (if and when issued) the Refunding Obligations is made.
"Construction Fund" means the fund created and described in Section 405 hereof.
"Conversion Date" means a Proposed Conversion Date on which the Fixed Rate shall become effective.
"County" means Montgomery County, Alabama.
"Credit Facility Account" means the account so named in the Bond Fund.
"Credit Facility Proceeds Account" means the account so named in the Bond Purchase Fund.
"DTC" means The Depository Trust Company, New York, New York.
"DTC-Eligible Obligations" means securities which are eligible for deposit at DTC.
"Debt Service" means, for any period or payable at any time, the principal, interest and any premium due on the Bonds for that period or payable at that time.
"Determination of Taxability" means, with respect to the Series 1996B
Bonds and (if and when issued) the Refunding Obligations, a determination that
interest on any such obligation is Taxable because of (i) the receipt by any
Holder or any member of an "affiliated group", as that term is defined in
Section 1504 of the Code, of a "30-day letter" within the meaning of Treasury
Regulations Section 601.105(d)(1)(iv) proposing a determination to that effect;
(ii) receipt by the Company of written advice from the Commissioner or any
District Director of the Internal Revenue Service to that effect; or (iii)
receipt by the Trustee or any Holder of a written opinion of Bond Counsel that
there is substantial likelihood that such interest is Taxable; subject, however,
in all such cases to the right on the part of the Company set forth in Section
1011 hereof to contest the same.
"Eligible Investments" means (i) Government Obligations; (ii) obligations issued or guaranteed by any state or political subdivision thereof, which obligations are rated by a Rating Agency in the highest category if rated as short-term obligations or not lower than the third highest category if rated as long-term obligations; (iii) commercial or finance paper which is rated in not lower than the second highest rating category by a Rating Agency; (iv) deposit accounts, bankers' acceptances, certificates of deposit or bearer deposit notes in one or more banks, trust companies or savings and loan associations (including without limitation, the Trustee or any bank affiliated with the Trustee) organized under the laws of Canada or the United States of America or any state or province thereof, provided that the debt obligations of each such bank, trust company or savings and loan association are rated by a Rating Agency in the highest category if rated as short-term obligations or not lower than the third highest category if rated as long-term obligations; (v) obligations of the Federal Land Bank, the Federal Home Loan Bank or the Federal Intermediate Credit Bank; (vi) money market mutual funds registered under the Investment Company Act of 1940, as amended, provided that the portfolio of any such money market fund is limited to Government Obligations and to agreements to purchase Government Obligations; and (vii) repurchase agreements secured fully by obligations of the type specified in clause (i), which obligations must be held by or under the control of the Trustee, and issued by a bank or savings and loan association which is insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation; provided that any investment or deposit described above is not prohibited by applicable law.
"Equipment" means all items of machinery, equipment, fixtures and tangible personal property now or hereafter constituting part of the Project, and any item of machinery, equipment, fixtures or tangible personal property acquired in substitution therefor or as a renewal or replacement thereof pursuant to the provisions of the Lease Agreement.
"Event of Default" means an Event of Default specified in and defined by Section 601 hereof.
"Excess Earnings" means, with respect to the proceeds from the Series 1996B Bonds and (if and when issued) the Refunding Obligations, as of each Computation Date, an amount equal to the sum of (a) plus (b) where:
(a) is the excess of
(i) the aggregate amount earned from the Issue Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (a)), taking into account any gain or loss on the disposition of nonpurpose investments, over
(ii) the amount that would have been earned if such nonpurpose investments (other than amounts attributable to an excess described in this clause (a)) had been invested at a rate equal to the yield on the Bonds; and
(b) is any income attributable to the excess described in clause
(a), taking into account any gain or loss on the disposition of
nonpurpose investments.
The sum of (a) plus (b) shall be determined in accordance with Sections 148(f)(2) and 148(f)(4) of the Code. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
"Existing Facilities" means the land, buildings and equipment financed in part with the proceeds of the Prior Bonds, previously leased by the Issuer to and operated by Kinark and now constituting a part of the Project.
"Existing Letter of Credit" means, as of any particular time, the Letter of Credit or Alternate Credit Facility held by the Trustee at that time.
"Extension Letter of Credit" means a Substitute Letter of Credit from the same Bank which issued the Existing Letter of Credit, substantially identical to the Existing Letter of Credit except that it has a Stated Expiration Date at least one year later than that of the Existing Letter of Credit.
"Extraordinary Services" and "Extraordinary Expenses" mean all services rendered and all expenses incurred under the Indenture other than Ordinary Services and Ordinary Expenses.
"Fiduciaries" means the Trustee, the Tender Agent, the Registrar and any Paying Agent or Authenticating Agent, and their respective successors and assigns.
"Final Determination" means a Determination of Taxability deemed final by reason of the termination or forfeiture of the Company's right to contest the same under Section 1011 hereof.
"Fixed Rate" means, with respect to each Series of the Bonds, the interest rate to be borne by such Bonds on and after the Conversion Date, established pursuant to Section 202(g) hereof.
"Fixed Rate Period" means, with respect to each Series of the Bonds, the period beginning on the Conversion Date and ending on the day immediately prior to the maturity date of that Series.
"Government Obligations" means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged; (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of, premium, if any, and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation by the United States of America; or (c) securities or receipts evidencing ownership interests in obligations or specified portions (such as principal or interest) of obligations described in preceding clause (a) or (b), which securities, receipts or portions of obligations are not subject to redemption prior to maturity at less than par at the option of anyone other than the holder thereof.
"Governmental Authority" means the United States, any state or political subdivision thereof and any court, agency, department, commission, board, bureau or instrumentality of any of the foregoing.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond is registered on the Register.
"Initial Letter of Credit" means the initial Letter of Credit in the form attached to the Reimbursement Agreement as Schedule I and delivered to the Trustee on or prior to the Issue Date.
"Interest Payment Date" means, so long as the Bonds are outstanding, the first Business Day of each March, June, September and December, commencing on the first Business Day of March, 1997.
"Interest Rate for Advances" means the rate per annum which is one percent (1%) per annum in excess of the Prime Rate.
"Interim Indebtedness" means the indebtedness in the principal amount of $220,000 incurred, in anticipation of the issuance of the Series 1996B Bonds, to pay a like principal amount of the Prior Bonds which matured on September 1, 1996.
"Issue Date" means the date of the initial authentication and delivery of the Bonds.
"Kinark" means Kinark Corporation, a Delaware corporation, as lessee under the Original Lease.
"Lease Agreement" means the Restated Lease Agreement of even date herewith between the Issuer, as lessor, and the Company, as lessee, as the same may hereafter be amended and supplemented.
"Leased Realty" means the real estate and interests therein constituting the site of the Project and described in Exhibit A to the Lease Agreement, together with any additions thereto, less any removals therefrom.
"Letter of Credit" means the Initial Letter of Credit and, unless the context or use indicates another or different meaning or intent, any Substitute Letter of Credit.
"Letter of Credit Substitution Date" means any Business Day specified by the Company pursuant to Section 5.8 of the Lease Agreement on which the Company proposes (other than by reason of the Conversion Date or the Stated Expiration Date of the Existing Letter of Credit) to furnish a Substitute Letter of Credit (other than an Extension Letter of Credit) or Alternate Credit Facility in place of the then Existing Letter of Credit.
"Mandatory Tender" means a tender of Bonds required by Section 302 hereof.
"Mandatory Tender Date" means a date on which any Mandatory Tender is required, more particularly described in Section 302 hereof.
"Miscellaneous Account" means the account so named in the Bond Purchase Fund.
"Moody's" means Moody's Investors Service, Inc., New York, New York.
"Necessary Authorizations" means, with respect to any given action or effect, all authorizations, consents, approvals, permits, licenses and exemptions of, filings and registrations with, and reports to, all Governmental Authorities which are necessary or required to accomplish such action or achieve such effect.
"New Facilities" means an expansion to the Existing Facilities, consisting of an approximately 60,000 square-foot new building and new machinery and equipment therefor.
"Non-Taxability Opinion" means, with respect to one or more given events or prospective events, an opinion of Bond Counsel to the effect that the occurrence of such event or events will not adversely affect the non-Taxable status of the interest on the obligations in question.
"Non-Tender Notice" shall have the meaning assigned in Section 302(c) hereof.
"Notice of Tender" shall mean written, formal notice of tender in the form provided in the Bonds or in such other form as shall be acceptable to the Trustee.
"Optional Tender" means a tender of Bonds at the option of the Holder thereof pursuant to Section 301 hereof.
"Optional Tender Date" means any date on which Bonds are to be purchased pursuant to the Optional Tender provisions of Section 301 hereof.
"Ordinary Services" and "Ordinary Expenses" mean those services normally rendered and those expenses normally incurred by a trustee under instruments similar to this Indenture.
"Original Lease" means the Lease Agreement dated as of September 1, 1979 between the Issuer and Kinark.
"Outstanding", as applied to the Bonds, means all Bonds which have been authenticated and delivered under this Indenture, except:
(a) Bonds cancelled upon surrender, exchange or transfer, or because of payment or redemption prior to maturity;
(b) Bonds, or any portion thereof, for the payment, redemption or purchase for cancellation of which sufficient moneys have been deposited and credited with the Trustee or any Paying Agents (whether upon or prior to the maturity, purchase or redemption date of those Bonds); provided, that if any of those Bonds are to be redeemed prior to their maturity, notice of that redemption shall have been given or arrangements satisfactory to the Trustee shall have been made for giving notice of that redemption, or waiver by the affected Holders of that notice satisfactory in form to the Trustee shall have been filed with the Trustee;
(c) Unsurrendered Bonds for the purchase of which money in the necessary amount has been deposited in the Bond Purchase Fund and is held in trust for the Holders of such Unsurrendered Bonds; and
(d) Bonds in exchange for or in lieu of which others have been authenticated and delivered under Section 211 hereof;
provided, however, that in determining whether the Holders of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the Company, the Issuer, any other obligor with respect to the Bonds or any affiliate of any of the foregoing, shall be disregarded and deemed not to be Outstanding; except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. Notwithstanding the foregoing proviso, Pledged Bonds shall be deemed, at the election of the Bank, to be Outstanding for all purposes, except that the Bank may not vote such Bonds in any manner that would lessen the protection to the Holders of other Outstanding Bonds provided by the Letter of Credit. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for such purposes if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not the Company, the Issuer, any other obligor with respect to the Bonds or any affiliate of any of the foregoing.
"Paying Agent" means the Trustee and any other bank or trust company designated as a Paying Agent by or in accordance with Section 514 of this Indenture.
"Person" includes natural persons, firms, associations, partnerships, trusts, corporations, limited liability companies and public bodies.
"Placement Agency Agreement" means that certain letter agreement dated the Issue Date among the Issuer, the Company and the Placement Agent.
"Placement Agent" means First Union National Bank of North Carolina, in its capacity as Placement Agent.
"Pledge Agreement" means the Pledge Agreement of even date herewith from the Company to the Bank, as the same may hereafter be amended or supplemented.
"Pledged Bonds" means Bonds registered in the name of the Company, subject to the provisions of the Pledge Agreement, pursuant to Section 303(e)(ii) hereof.
"Predecessor Bond" of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond. For the purposes of this definition, any Bond authenticated and delivered under Section 211 of this Indenture in lieu of a lost, stolen or destroyed Bond shall be deemed to evidence the same debt as the lost, stolen or destroyed Bond.
"Preliminary Fixed Rate" means the interest rate determined by the Placement Agent prior to a Proposed Conversion Date, in accordance with Section 2.2(g) hereof, to be that rate which, taking into account prevailing market conditions as of the date of such determination and assuming such conditions continue to prevail until and including such Proposed Conversion Date, would result in the market value of the Bonds on such Proposed Conversion Date being 100% of the principal amount thereof; provided such rate shall not exceed the Cap Rate.
"Prime Rate" means (a) the interest rate publicly announced from time to time by the Bank to be its prime rate for lending purposes, which may not necessarily be its best lending rate; or (b) in the event the Bank shall abolish or abandon the practice of announcing its prime rate or should the same be unascertainable, a comparable reference rate designated by the Bank.
"Prior Bonds" means the Issuer's First Mortgage Industrial Revenue Bonds (Kinark Corporation Project) Series 1979 heretofore issued on October 17, 1979 in the original principal amount of $3,000,000 and now outstanding in the principal amount of $770,000.
"Prior Indenture" means that Trust Indenture dated as of September 1, 1979 between the Issuer and the Prior Trustee, pursuant to which the Prior Bonds were issued.
"Prior Trustee" means Regions Bank (formerly known as First Alabama Bank), Montgomery, Alabama, successor by merger to Union Bank & Trust Co., in its capacity as trustee under the Prior Indenture.
"Project" means, collectively, the Existing Facilities and the New Facilities, consisting of the Leased Realty, the Building and the Equipment (as the same may at any time exist), leased to the Company pursuant to the Lease Agreement for the manufacture of aftermarket products for consumer marine and recreational vehicle markets or for such other purposes as may be consistent with the Act and the Code and permitted by the Lease Agreement.
"Proposed Conversion Date" means that Interest Payment Date elected by the Company in accordance with Section 202(g) hereof as the date on which the interest rate borne by the Bonds is intended to convert from the Seven-Day Rate to the Fixed Rate.
"Purchase Price" means, with respect to any Bond tendered for purchase by Optional Tender or Mandatory Tender, 100% of the principal amount thereof plus accrued interest thereon to the Tender Date.
"Rating Agency" means Moody's or S & P, their respective successors and assigns and any other nationally recognized securities rating agency.
"Rebate Fund" means the fund created and described in Section 407 hereof.
"Record Date" means (a) with respect to any Interest Payment Date during the Seven-Day Rate Period, the Business Day immediately prior to such Interest Payment Date, and (b) with respect to any Interest Payment Date during the Fixed Rate Period, the 15th day (whether or not a Business Day) next preceding such Interest Payment Date.
"Refunding Fund" means the fund created and described in Section 408 hereof.
"Refunding Obligations" means the revenue bonds intended to be hereafter issued by the Issuer on a non-Taxable basis in order to refund the Series 1996A Bonds.
"Register" means the books kept and maintained by the Registrar for registration and transfer of Bonds.
"Registrar" means the Trustee, until such time, if any, as a successor Registrar, which shall be a transfer agent registered in accordance with Section 17(A)(c) of the Securities Exchange Act of 1934, shall have become such pursuant to Section 513 of this Indenture.
"Reimbursement Agreement" means that certain Letter of Credit and Reimbursement Agreement of even date herewith between the Bank, as issuer of the Initial Letter of Credit, and the Company and Bio-Chem, jointly and severally, as account parties, as the same may hereafter be amended or supplemented; or any comparable agreement relating to a Substitute Letter of Credit or Alternate Credit Facility.
"Related Documentation" means the documentation required to accompany a Substitute Letter of Credit or Alternate Credit Facility in accordance with the provisions of Section 5.8 of the Lease Agreement.
"Remarketing Agent" means, initially, First Union National Bank of North Carolina or any successor thereto appointed in accordance with this Indenture.
"Remarketing Agreement" means the Remarketing Agreement of even date herewith between the Company and the Remarketing Agent, as the same may hereafter be amended or supplemented.
"Remarketing Proceeds Account" means the account so named in the Bond Purchase Fund.
"Revenues" means (a) the Basic Rent; (b) all other moneys received or to be received by the Issuer or the Trustee in respect of payment of the Basic Rent, including without limitation, moneys and investments in the Bond Fund and Bond Purchase Fund and received by the Trustee from drawings made under the Letter of Credit or an Alternate Credit Facility or as a result of the remarketing of any Bonds, but excluding any moneys and investments in the Rebate Fund; (c) any moneys and investments in the Construction Fund; and (d) all income and profit from the investment of the foregoing moneys.
"S & P" means Standard & Poor's, New York, New York.
"Series 1996A Bonds" means the $4,000,000 Taxable Industrial Development Revenue Bonds (KINPAK INC. Project) Series 1996A of the Issuer to be issued under the Indenture.
"Series 1996B Bonds" means the $990,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1996B of the Issuer to be issued under the Indenture.
"Seven-Day Rate" means, with respect to each Series of the Bonds, the interest rate on such Bonds from time to time in effect during a Seven-Day Rate Period, as established pursuant to Section 202(f) hereof.
"Seven-Day Rate Determination Date" means a date on which the Seven-Day Rate is determined, as provided in Section 202(f) hereof.
"Seven-Day Rate Period" means, with respect to each Series of the Bonds, the period beginning on the Issue Date and ending on the day immediately prior to the earlier of the Conversion Date or the maturity date of that Series.
"Special Record Date" means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest on that Bond pursuant to Section 604 hereof.
"State" means the State of Alabama.
"Stated Expiration Date" means the date on which the Letter of Credit is stated to expire, unless extended in accordance with its terms.
"Substitute Letter of Credit" means an irrevocable letter of credit delivered to the Trustee in substitution for the Existing Letter of Credit, in compliance with the requirements of Section 5.8 of the Lease Agreement and accompanied by the Related Documentation.
"Taxable" means that interest on the Bonds (including for this purpose the Refunding Obligations) is includable in the gross income of any Holder thereof for any reason other than the fact that such Holder is a "substantial user" of the Project or a "related person" as those terms are used in Section 147(a) of the Code. Interest on the Bonds shall not be deemed "Taxable" because interest is includable in any calculation of income for purposes of any alternative minimum tax, any foreign branch profits tax or any other type of taxation other than the regular federal tax imposed on gross income.
"Telefax" means telecopy, telefax or other instantaneous transmission device; and whenever in this Indenture "confirmation by Telefax" is required, such requirement shall, unless otherwise herein provided, be deemed satisfied if such confirmation is received by not later than 11:00 a.m. on the Business Day following the day on which the communication to be confirmed was given.
"Tender Agent" means any Person appointed as such pursuant to Section 517 hereof. Until such time, if any, as a Tender Agent shall be appointed, the Trustee shall perform all duties of the Tender Agent; provided, that the Trustee shall not be required to maintain an office in New York, New York.
"Tender Date" means an Optional Tender Date or a Mandatory Tender Date, as the case may be.
"Tender Office" means the location of the office of the Tender Agent where Bonds may be exchanged and transferred or tendered for purchase in accordance with the provisions hereof.
"Trustee's Office" means the office from time to time designated by the Trustee, or its successor in trust, as its principal corporate trust office for purposes of discharging its trusts and duties under this Indenture, which office as of the Issue Date is located at 60 Commerce Street, 2nd Floor, Montgomery, Alabama.
"Unsurrendered Bonds" means Bonds (or portions thereof in Authorized
Denominations hereunder) which are deemed purchased pursuant to Section 301 or
Section 302 hereof, but which have not been presented to the Trustee or Tender
Agent by the Holders thereof.
Section 102. Interpretation. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this Indenture; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this Indenture. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise.
All references herein to time shall be prevailing Eastern time.
Section 103. Captions and Headings. The captions and headings in this Indenture are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
[END OF ARTICLE I]
ARTICLE II
(a) No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. The aggregate principal amount of Series 1996A Bonds authorized to be issued under this Indenture is $4,000,000, and the aggregate principal amount of Series 1996B Bonds authorized to be issued under this Indenture is $990,000. Other than as provided in subsection (b) of this Section 201, this Indenture does not authorize the issuance of additional bonds or other indebtedness secured by the lien and entitled to the benefits hereof.
(b) The Issuer has agreed and hereby reaffirms that it will
hereafter issue the Refunding Obligations in order to refund the Series
1996A Bonds, such refunding to occur as soon as all of the requirements
of the Code to assure the non-Taxable status of the Refunding
Obligations may be satisfied. Such issuance may be accomplished by a
supplement to this Indenture entered into pursuant to the provisions of
Section 701 hereof. Upon issuance, such Refunding Obligations will have
many of the same terms and provisions as the Series 1996A Bonds
refunded thereby, all as shall be more fully set forth in such
supplemental indenture; provided, however, that, among other things,
the Refunding Obligations shall be subject to two events of mandatory
redemption in addition to that specified for the Series 1996A Bonds,
namely, upon a Final Determination and from excess Construction Fund
moneys. The Trustee shall, at the time of issuance of the Refunding
Obligations, establish separate accounts within the Rebate Fund for the
Series 1996B Bonds and for the Refunding Obligations.
(a) It is determined to be necessary to, and the Issuer shall, issue, sell and deliver the Bonds for the purposes of refunding the Prior Bonds and retiring the Interim Indebtedness and assisting in financing the costs of the Project. The Series 1996A Bonds shall be designated "Taxable Industrial Development Revenue Bonds (KINPAK INC. Project) Series 1996A" and shall mature, unless earlier redeemed, on the first Business Day of March, 2012. The Series 1996B Bonds shall be designated "Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1996B" and shall mature, unless earlier redeemed, on the first Business Day of March, 2000. The Bonds shall be issuable only in fully registered form, substantially in the forms attached as Exhibit A to this Indenture; shall be numbered consecutively upwards beginning with AR-1 and BR-1, respectively; shall be dated the Issue Date; shall bear interest from the most recent date to which interest shall have been paid or duly provided for or, if no interest shall have been paid or duly provided for, from the Issue Date; and shall be issuable in Authorized Denominations, except that the final maturity of either Series may be represented by an instrument of a denomination equal to a multiple of $5,000 that is less than $100,000. The Bonds may be issued in book-entry form in accordance with the requirements of applicable law. The Bonds shall be initially issued as DTC-Eligible Obligations, and therefore the requirements of Section 216 hereof shall be applicable.
(b) The Bonds shall bear interest at the Seven-Day Rate throughout the Seven-Day Rate Period and, if the Conversion Date shall occur, at the Fixed Rate throughout the Fixed Rate Period. It is understood, however, that the Seven-Day Rate (and, if applicable, the Fixed Rate) borne by the two Series of the Bonds will not be the same at least until such time (if any) as the Refunding Obligations shall have been issued, and even thereafter need not be the same; and therefore that the Remarketing Agent shall make separate rate determinations for the two Series of the Bonds at least until such time (if any) as the Refunding Obligations shall have been issued.
(c) Interest at the Seven-Day Rate shall be computed on the basis of a 365- or 366-day year, as the case may be, for the number of days actually elapsed. Interest at the Fixed Rate shall be computed on the basis of a 360-day year for the number of days actually elapsed.
(d) Interest shall be payable on overdue principal of the Bonds and (to the extent legally enforceable) on any overdue installment of interest on the Bonds at the Interest Rate for Advances.
(e) Interest shall be payable in arrears on each Interest Payment Date.
(f) The Seven-Day Rate shall be determined on the Issue Date and on each Wednesday (or if Wednesday is not a Business Day, on the next succeeding Business Day) of each succeeding week during the Seven-Day Rate Period (each such date, a "Seven-Day Rate Determination Date"). The Seven-Day Rate so determined on each Seven-Day Rate Determination Date shall be effective from the day of each week during any Seven-Day Rate Period following the Seven-Day Rate Determination Date for such week until and including the day immediately prior to the earlier of the Conversion Date or the following Thursday; provided, however, that if the Seven-Day Rate is not so determined on any Seven-Day Rate Determination Date, the Seven-Day Rate as determined on the next preceding Seven-Day Rate Determination Date shall remain in effect until and including the day immediately prior to the earlier of the Conversion Date or the following Thursday. The Seven-Day Rate shall be determined by the Remarketing Agent and shall equal the lesser of (i) the Cap Rate or (ii) the interest rate determined by the Remarketing Agent to be the interest rate that would result in the market value of the Bonds on such Seven-Day Rate Determination Date being 100% of the principal amount thereof, taking into account prevailing market conditions. On each Seven-Day Rate Determination Date the Remarketing Agent shall give notice of the Seven-Day Rate so determined by telephone, with confirmation by Telefax or other form of written notice selected by the Remarketing Agent, to the Trustee and the Company. The Trustee shall confirm the Seven-Day Rate on the Bonds from time to time in effect by telephone (confirmed in writing, if requested). The determination of the Seven-Day Rate by the Remarketing Agent (if not greater than the Cap Rate) shall be conclusive and binding on the Issuer, the Company, the Trustee, the Bank and the Holders from time to time of the Bonds.
(g) At any time that the Bonds bear interest at the Seven-Day Rate, the Company may elect that the Bonds shall bear interest at the
Fixed Rate, which rate shall be equal to the lesser of (i) the Cap Rate
or (ii) the interest rate established in the manner described in this
subsection. The Company shall give the Trustee, the Placement Agent and
the Bank written notice of the exercise of its option to convert the
interest rate borne by the Bonds to the Fixed Rate, to be received by
each of them not fewer than 30 nor more than 60 days prior to the
Proposed Conversion Date. Such notice shall, if the Company intends
that the Bonds be secured by a Letter of Credit following the Proposed
Conversion Date, be accompanied by the documentation required pursuant
to Section 5.8(b)(3) of the Lease Agreement. At least 25 days prior to
the Proposed Conversion Date, the Placement Agent shall determine the
Preliminary Fixed Rate, and on such date shall give telephonic notice
thereof, with confirmation by Telefax, to the Trustee, the Company and
the Bank. From and after the Proposed Conversion Date, the Fixed Rate
shall be (x) that rate, at least equal to the Preliminary Fixed Rate,
at which some or all of the Bonds shall have been remarketed at par, or
(y) if no Bonds shall have been so remarketed or all Holders shall have
timely delivered a Non-Tender Notice, the Preliminary Fixed Rate.
Notwithstanding the foregoing, such Fixed Rate shall not become
effective unless (i) there shall have been supplied to the Trustee, the
Company and the Placement Agent at or prior to 10:00 a.m. on the
Proposed Conversion Date a Non-Taxability Opinion further stating that
such conversion to the Fixed Rate is lawful under applicable law and
permitted by this Indenture, and (ii) if a Substitute Letter of Credit
is required to be provided, there shall have been delivered to the
Trustee such Substitute Letter of Credit and the Related Documentation
at or prior to 10:00 a.m. on the Proposed Conversion Date. If all
conditions to the effectiveness of the Fixed Rate shall not have been
met, the Bonds of each Series shall continue to bear interest at the
Seven-Day Rate from such Proposed Conversion Date until and including
the earlier of the date immediately prior to the Conversion Date or the
maturity date of such Series. The determination of the Fixed Rate shall
be conclusive and binding on the Issuer, the Company, the Trustee, the
Bank and the Holders from time to time of the Bonds. The Trustee shall
stamp a legend on the face of each Bond authenticated on or after the
Conversion Date reading substantially as follows:
"This Bond bears interest at the Fixed Rate, as defined in this Bond, which is _______% per annum, from and after ______________, ____."
and, if applicable,
"From and after such date, no Letter of Credit is in effect."
(h) Upon the execution and delivery of this Indenture, and satisfaction of the conditions established by the Issuer for delivery of the Bonds, including delivery to the Trustee of the Initial Letter of Credit pursuant to Section 5.8(a) of the Lease Agreement, the Issuer shall execute the Bonds and deliver them to the Trustee or other Authenticating Agent for authentication and delivery to, or on the order of, the Placement Agent. Prior to the delivery of the Bonds, there shall have been received by the Trustee a duly executed request and authorization to the Trustee from the Issuer to authenticate and deliver the Bonds to, or on the order of, the Placement Agent upon payment to the Trustee of the amount specified therein. That portion of
such amount allocable to the Series 1996A Bonds shall be deposited in the Construction Fund and the portion allocable to the Series 1996B Bonds shall be deposited in the Refunding Fund, all as hereinafter described and as shall be more fully provided in said request and authorization of the Issuer.
(i) Pending preparation of definitive Bonds, the Issuer may issue and, upon its request, the Trustee or any Authenticating Agent shall authenticate, in lieu of definitive Bonds, one or more temporary printed or typewritten Bonds of each Series substantially in the respective forms set forth in Exhibit A hereto. Upon request of the Issuer, the Trustee or any Authenticating Agent shall authenticate definitive Bonds in exchange for and upon surrender of an equal principal amount of such temporary Bonds without charge. Until so exchanged, temporary Bonds shall have the same rights, remedies and security hereunder as definitive Bonds.
Section 203. Execution of Bonds. The Bonds shall be executed on behalf of the Issuer by its Chairman or Vice-Chairman under its corporate seal impressed or otherwise reproduced thereon and attested by its Secretary. The signature of any of these officers of the Issuer on the Bonds may be manual or, to the extent permitted by law, facsimile. In case any officer of the Issuer whose signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such signature shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery.
Section 204. Authentication of Bonds. Only such Bonds as shall have endorsed thereon a certificate of authentication substantially in the form set forth as part of Exhibit A hereto, duly executed by the Trustee or by any Authenticating Agent, shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Trustee or by any Authenticating Agent, and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an officer of the Trustee or any Authenticating Agent, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued under this Indenture.
Section 205. Payment and Ownership of Bonds. Debt Service on the Bonds shall be payable in lawful money of the United States of America without deduction for the services of the Trustee or any Paying Agent. Subject to the provisions of Section 214 of this Indenture, (a) the principal of and any premium on any Bond shall be payable when due to a Holder upon presentation and surrender of such Bond at the Trustee's Office or at the office, designated by the Trustee, of any other Paying Agent, and (b) interest on any Bond shall be paid on each Interest Payment Date by check or draft which the Trustee shall cause to be sent on that date to the Person in whose name the Bond (or one or more Predecessor Bonds) is registered, at the close of business on the Record Date applicable to that Interest Payment Date, on the Register at the address appearing therein. If and to the extent, however, that the Issuer shall fail to make payment or provision for payment of interest on any Bond on any Interest Payment Date, whenever moneys become available for payment of that overdue interest and any subsequently accruing interest, (i) the Trustee shall, pursuant
to Section 604 hereof, establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment, and (ii) the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first class mail, postage prepaid, to each Holder at its address as it appears on the Register not fewer than ten days prior to the Special Record Date and, thereafter, the interest shall be payable to the Persons who are the Holders of the Bonds (or their respective Predecessor Bonds) at the close of business on the Special Record Date.
The Holder of any Bond shall be deemed and regarded as the absolute owner thereof for all purposes of this Indenture; payment of or on account of the Debt Service on any Bond shall be made only to or upon the order of that Holder or its duly authorized attorney in the manner permitted by this Indenture; and neither the Issuer, the Trustee, the Registrar nor any Paying Agent or Authenticating Agent shall, to the extent permitted by law, be affected by notice to the contrary. All of those payments shall be valid and effective to satisfy and discharge the liability upon that Bond, including without limitation, the interest thereon, to the extent of the amount or amounts so paid.
(a) The Bonds of each Series shall be redeemable in accordance with the respective redemption provisions contained in the Forms of Bond attached as Exhibit A hereto and incorporated by reference herein.
(b) If Bonds are redeemed prior to maturity and a Letter of Credit is then in effect, the Trustee shall take such action as may be necessary to reduce the coverage of the Letter of Credit to an amount equal to the sum of:
(1) the principal of all Bonds Outstanding following the redemption; plus
(2) accrued interest thereon for a period of 120 days (A) at the Cap Rate, if the Bonds then bear interest at the Seven-Day Rate, or (B) at the Fixed Rate, if the Bonds then bear interest at the Fixed Rate.
(c) So long as a Letter of Credit is in effect, the Company
acknowledges that if any redemption of Bonds is to be effected (i) from
its own funds (as would be the case whenever a redemption premium is
payable), such funds must constitute Available Moneys; or (ii) from a
draw under the Letter of Credit, the Company must procure and furnish
to the Trustee, by not later than the time of the election pursuant to
Section 210 hereof, the written consent of the Bank to such redemption.
Section 207. Notice of Redemption. The notice of the call for redemption of Bonds shall identify (a) by Series, designation, letters, numbers or other distinguishing marks, the Bonds or portions thereof to be redeemed, (b) the redemption price to be paid, (c) the date fixed for redemption and (d) the place or places where the amounts due upon redemption are payable. The notice shall be given or caused to be given by the Trustee on behalf of the Issuer by mailing a copy of the redemption notice by first class mail, postage prepaid,
not more than 60 nor fewer than 20 days prior to the date fixed for redemption to the Holder of each Bond subject to redemption in whole or in part at the Holder's address shown on the Register on the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Bond shall not affect the validity of the proceedings for the redemption of any Bond for which notice is properly given.
Section 208. Payment of Redeemed Bonds. Notice having been mailed in the manner provided in the preceding Section, the Bonds and portions thereof called for redemption shall become due and payable on the redemption date, and upon presentation and surrender thereof at the place or places specified in that notice, shall be paid at the redemption price, plus interest accrued to the redemption date; provided that, so long as the Letter of Credit or an Alternate Credit Facility is in effect, payment of the Bonds upon optional redemption thereof shall be made from moneys only to the extent such moneys constitute Available Moneys.
If moneys for the redemption of all of the Bonds and portions thereof to be redeemed, together with interest accrued thereon to the redemption date, are held by the Trustee or any Paying Agent on the redemption date, so as to be available therefor on that date, then from and after the redemption date the Bonds and portions thereof called for redemption shall cease to bear interest and no longer shall be considered to be Outstanding hereunder. If those moneys shall not be so available on the redemption date, those Bonds and portions thereof shall continue to bear interest, until they are paid, at the same rate as they would have borne had they not been called for redemption.
All moneys deposited in the Bond Fund or held by the Trustee or a Paying Agent for the redemption of particular Bonds shall be held in trust for the account of the Holders thereof and shall be paid to them, respectively, upon presentation and surrender of those Bonds.
Section 209. Partial Redemption. If fewer than all of the Bonds of either Series are to be redeemed, the selection of Bonds to be redeemed, or portions thereof in multiples of $100,000 and any integral multiple of $5,000 in excess thereof, shall be made by lot by the Trustee in any manner which the Trustee may determine. In the case of a partial redemption of Bonds of either Series by lot when Bonds of that Series in denominations greater than $100,000 are then Outstanding, the Trustee shall treat any Bond of a denomination greater than $100,000 as representing that number of separate Bonds, each of the minimum denomination of $100,000 or any integral multiple of $5,000 in excess thereof, as the Trustee may determine; and if less than the full number of such separate Bonds are to be called for redemption, then upon surrender the Holder thereof shall receive a new Bond or Bonds of any Authorized Denomination in an aggregate principal amount equal to the unmatured and unredeemed portion of, and bearing interest at the same rate as, the Bond surrendered.
Notwithstanding anything to the contrary contained in this Indenture, whenever the Bonds are to be redeemed in part, Bonds which are Pledged Bonds at the time of selection of Bonds for redemption shall be selected for redemption prior to the selection of any other Bonds. If the aggregate principal amount of Bonds to be redeemed exceeds the aggregate principal amount of Pledged Bonds at
the time of selection, the Trustee may select for redemption Bonds in an aggregate principal amount equal to such excess by lot in any manner which the Trustee may determine.
Section 210. Election to Redeem. Except in the case of redemption pursuant to any mandatory redemption provisions (in connection with which no election need be made), Bonds shall be redeemed only by written election effected by notice from the Company (on behalf of the Issuer) to the Trustee. That notice shall specify the redemption date and the principal amount of Bonds to be redeemed, and shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. In the event that notice of redemption shall have been given by the Trustee to the Holders as provided in Section 207 hereof, there shall be deposited with the Trustee on or prior to the redemption date, funds which, in addition to any other moneys available therefor and held by the Trustee, will be sufficient to redeem at the redemption price thereof, plus interest accrued to the redemption date, all of the redeemable Bonds for which notice of redemption has been given.
Section 211. Mutilated, Lost, Stolen or Destroyed Bonds. In the event any Bond is mutilated, lost, stolen or destroyed, the Issuer shall execute and the Registrar shall authenticate a new Bond of like Series, date, number and denomination to that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated bond, such mutilated Bond shall first be surrendered to the Registrar and, in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Issuer, the Company, the Registrar and the Trustee evidence of such loss, theft or destruction satisfactory to them together with indemnity satisfactory to them. In the event any such Bond shall have matured, instead of issuing a new Bond the Company may direct the Trustee to pay the same without surrender. The Issuer, the Registrar and the Trustee may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Bond their reasonable fees and expenses in connection with their actions pursuant to this Section.
Section 212. Transfer and Exchange of Bonds. So long as any of the Bonds remain outstanding, the Issuer will cause books for the registration and transfer of Bonds, as provided in this Indenture, to be maintained and kept at the designated office of the Registrar.
Any Bond shall be transferable, subject to any restrictions on transferability therein contained, only upon the books of the Registrar by the Holder thereof in person or by his duly authorized attorney, upon surrender thereof to the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney. Upon the registration of transfer, the Issuer shall issue in the name of the transferee one or more new Bonds of the same Series and aggregate principal amount as the surrendered Bond.
Bonds may be exchanged, at the option of their Holder, for Bonds of any Authorized Denomination in an aggregate principal amount equal to the unmatured and unredeemed principal amount of, and bearing interest at the same rate as, the Bonds being exchanged. The exchange shall be made upon presentation and
surrender of the Bonds being exchanged at the designated office of the Registrar or at the designated office of any Authenticating Agent, together with an assignment duly executed by the Holder or its duly authorized attorney in any form which shall be satisfactory to the Registrar or the Authenticating Agent, as the case may be.
In all cases in which the privilege of exchanging or transferring Bonds is exercised, the Issuer shall execute and the Registrar or other Authenticating Agent shall authenticate and deliver new Bonds in accordance with the provisions hereof. The new Bonds shall be issued upon the surrender of the old Bonds, in such manner that no gain or loss of interest results from said transfer or exchange.
No charge shall be made to any Holder for the privilege of transfer or exchange hereinabove granted, but any Holder requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Neither the Issuer, the Registrar nor any Authenticating Agent, as the case may be, shall be required to make any exchange or transfer of a Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing or to transfer or exchange any Bonds selected for redemption, in whole or in part.
Section 213. Safekeeping and Cancellation of Bonds. Any Bond surrendered pursuant to this Article for the purpose of payment or retirement, or for exchange, replacement or transfer, shall be cancelled upon presentation and surrender thereof to the Registrar, the Trustee or any Paying Agent or Authenticating Agent. Any Bond cancelled by the Trustee or any Paying Agent or Authenticating Agent shall be transmitted promptly to the Registrar by the Trustee, Paying Agent or Authenticating Agent.
The Issuer, or the Company on behalf of the Issuer, may deliver at any time to the Registrar for cancellation any Bonds previously authenticated and delivered hereunder, which the Issuer or the Company may have acquired in any manner whatsoever. All Bonds so delivered shall be promptly cancelled and destroyed by shredding or incineration by the Registrar. Certification of such surrender, cancellation and destruction (describing the manner thereof) shall be made to the Issuer, the Company and the Trustee by the Registrar once each calendar year.
Section 214. Special Agreement with Holders. Notwithstanding any provision of this Indenture or of any Bond to the contrary, upon written request of any Holder of at least $500,000 in aggregate principal amount of the Bonds given at least ten days prior to the first applicable Record Date, the Trustee (or other Paying Agent) shall enter into an agreement with that Holder providing for making all payments to that Holder of Debt Service on that Bond or any part thereof at a place and in a manner, including without limitation by wire transfer, other than as provided in this Indenture and in the Bond, upon any conditions which shall be satisfactory to the Trustee (or other Paying Agent) and the Company; provided, that payment in any event shall be made to the Person in whose name a Bond shall be registered on the Register, with respect to payment of principal and premium, on the date such principal and premium is due, and, with respect to the payment of interest, as of the applicable Record Date or Special Record Date, as the case may be.
The Trustee (or other Paying Agent) will upon request furnish a copy of each of those agreements, certified to be a true copy by an officer of the Trustee (or other Paying Agent), to the Registrar, the Tender Agent and the Company. Any payment of Debt Service pursuant to such an agreement shall constitute payment thereof pursuant to, and for all purposes of, this Indenture.
(a) The Trustee is hereby authorized to accept the Initial Letter of Credit and any Substitute Letter of Credit delivered to it pursuant to Section 5.8 of the Lease Agreement.
(b) The Trustee shall, at least 30 days prior to any proposed Letter of Credit Substitution Date, furnish to the Holders a copy of the Company's written notice, given pursuant to Section 5.8(b)(1) of the Lease Agreement, of its intention to furnish a Substitute Letter of Credit.
(b) If a Substitute Letter of Credit shall have been delivered to the Trustee pursuant to Section 5.8 of the Lease Agreement and become effective, the Existing Letter of Credit shall be returned to the issuer thereof as provided in said Section of the Lease Agreement.
Section 216. DTC Eligibility Requirements. To induce DTC to accept the Bonds as eligible for deposit at DTC, and to assure compliance with the rules of DTC with respect to the Bonds, the Issuer and the Trustee agree, with respect to any Bonds that are to be deposited with DTC, to comply with the terms of a letter of representations heretofore executed by the Issuer in connection with DTC-eligible debt offerings generally, the terms and provisions of which are incorporated herein by this reference. In the event of any conflict between any term or provision of said letter of representations and any other term or provision of this Indenture, the terms and provisions of said letter of representations shall be controlling during any period that the Bonds are deposited with DTC.
[END OF ARTICLE II]
ARTICLE III
(a) The Holder of any Bond (other than a Pledged Bond or Company
Bond) shall have the right to tender such Bond to the Tender Agent, for
purchase at the Purchase Price, in whole or in part (and if in part, in
any Authorized Denomination) on any Business Day (the "Optional Tender
Date") during the Seven-Day Rate Period, but not during the Fixed Rate
Period. In order to exercise such option with respect to any Bond, the
Holder thereof must give to the Trustee at the Trustee's Office, with a
copy to the Tender Agent at the Tender Office, at least seven days
prior to the proposed Optional Tender Date, notice (i) by telephone,
confirmed by Notice of Tender not more than two Business Days after
such telephonic notice, or (ii) by Notice of Tender. If the telephonic
notice or the Notice of Tender specifies an Optional Tender Date that
is not a Business Day, then such notice shall be deemed to specify the
Business Day following the designated Optional Tender Date. Upon the
delivery of Notice of Tender, such election to tender shall be
irrevocable and binding upon such Holder. If a Notice of Tender shall
have been duly given with respect to any Bond, the Holder of such Bond
shall deliver such Bond to the Tender Agent at the Tender Office not
fewer than five days prior to the Optional Tender Date, together with
an instrument of assignment or transfer duly executed in blank (which
instrument of assignment or transfer shall be in the form provided on
such Bond or in such other form as shall be acceptable to the Tender
Agent); provided, however, that any such Holder which is an investment
company registered under the Investment Company Act of 1940 may deliver
its Bonds to the Tender Agent at the Tender Office at or before 10:00
a.m. on the Optional Tender Date. The Trustee shall, in its sole
discretion, determine whether, with respect to any Bond, the Holder
thereof shall have properly exercised the option to have its Bond
purchased.
(b) As to any such notice of tender for purchase which the Trustee deems duly given pursuant to this Section, the Trustee shall immediately give telegraphic or telephonic notice, with prompt confirmation by Telefax, to the Tender Agent, the Remarketing Agent, the Bank and the Company of the principal amount of affected Bonds and the proposed Optional Tender Date therefor. On each Optional Tender Date the Trustee shall cause the Tender Agent to purchase, at the Purchase Price, all Bonds as to which Notices of Tender for purchase shall have been received. Funds for payment of the Purchase Price of such Bonds shall be drawn by the Trustee from the Bond Purchase Fund as provided in Section 406 of this Indenture.
(c) Any Bond for which a Notice of Tender shall have been given but which shall not be so delivered to the Tender Agent (an "Unsurrendered Bond"), shall nevertheless be deemed to have been tendered by the Holder thereof on the Optional Tender Date. If there shall have been irrevocably deposited in the Bond Purchase Fund an amount sufficient to pay the Purchase Price of all Bonds tendered or deemed tendered for purchase on an Optional Tender Date, any
Unsurrendered Bonds shall cease to accrue interest on such Optional Tender Date and the Holders thereof shall thereafter be entitled only to payment of the Purchase Price therefor and not to the benefits of this Indenture. The Tender Agent shall notify the Trustee and Registrar of any Unsurrendered Bonds, shall authenticate a new Bond or Bonds in the same aggregate principal amount as the Unsurrendered Bonds, and shall hold or dispose of such new Bond or Bonds in accordance with the provisions of subsections (e) and (f) of Section 303 hereof. The Trustee shall notify the Remarketing Agent of such Unsurrendered Bonds and shall place a stop transfer against such Unsurrendered Bonds until they are properly delivered to the Tender Agent. Payment of the Purchase Price of any such Unsurrendered Bonds shall be made only upon the presentment and surrender of such Bonds to the Tender Agent, whereupon the Registrar shall make any necessary adjustment to the Register.
(d) Notwithstanding anything to the contrary contained herein, no tender hereunder shall be deemed a redemption of the affected Bonds; and the right of Holders to tender Bonds pursuant to this Section 301 shall cease immediately and without further notice from and including the date Bonds are declared accelerated, subject, however, to reinstatement upon rescission and annulment of such declaration, all pursuant to Section 602 hereof.
(a) Subject to the provisions of subsection (c) of this Section,
the Holder of each Bond shall be required to tender such Bond to the
Tender Agent for purchase on (i) each Proposed Conversion Date, and
(ii) the first day of the calendar month in which the Stated Expiration
Date of the Letter of Credit occurs; or, if any of such dates is not a
Business Day, the next succeeding Business Day (each such date, a
"Mandatory Tender Date"), all as more fully provided in this Section.
(b) Notice of a Mandatory Tender shall be given by the Trustee by first-class mail, postage prepaid, to the Holders of all Bonds at their addresses appearing on the Register not fewer than 20 days prior to a Mandatory Tender Date. Such notice of Mandatory Tender shall:
(i) specify the Mandatory Tender Date;
(ii) state the reason for the Mandatory Tender (that is, the applicable event listed in subsection (a) of this Section);
(iii) if such Mandatory Tender Date is the first day of the calendar month in which the Stated Expiration Date of the Letter of Credit occurs, state that the Trustee will no longer be permitted to make drawings under the Existing Letter of Credit after the Stated Expiration Date, which date shall be specified;
(iv) if such Mandatory Tender Date is a Proposed Conversion Date, state (A) that after the tenth day preceding the Proposed Conversion Date, Holders will not be entitled to tender Bonds for purchase pursuant to Section 301 hereof, (B) the Preliminary Fixed Rate, and (C) that depending on market conditions, the Fixed Rate may be higher but in no event lower than the Preliminary Fixed Rate;
(v) state whether or not a Letter of Credit or Alternate Credit Facility will be or is expected to be in effect following the Stated Expiration Date or Proposed Conversion Date, as the case may be; if not, that the rating or ratings on the Bonds may be reduced or withdrawn; but if so, the name of the Bank issuing the same, the rating or ratings, if any, assigned or expected to be assigned to the Bonds by reason of such Letter of Credit or Alternate Credit Facility, and whether such rating or ratings, if any, are equivalent to or lower than the rating or ratings, if any, on the Bonds in effect prior to the Mandatory Tender Date;
(vi) state that the Holder may elect not to tender or sell its Bond or Bonds on such Mandatory Tender Date by delivering to the Trustee a Non-Tender Notice, together with the written statement referred to below, not less than five days prior to such Mandatory Tender Date; and
(vii) state that all Bonds as to which no such Non-Tender Notice is properly received must be tendered by the Holder thereof to the Tender Agent at the Tender Office at or before 10:00 a.m. on such Mandatory Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bonds or such other form as shall be acceptable to the Tender Agent), and shall be purchased on the Mandatory Tender Date at the Purchase Price. Any Bond (other than a Bond for which a Non-Tender Notice shall have been given) that is not so delivered to the Tender Agent (an "Unsurrendered Bond") shall be deemed to have been tendered for purchase by the Holder thereof on the Mandatory Tender Date.
(c) In the case of any Mandatory Tender, the Holder of any Bond may, by delivery of a written notice (a "Non-Tender Notice") to the Trustee, with a copy to the Tender Agent, not fewer than five days prior to such Mandatory Tender Date, elect not to tender or sell such Bond on such Mandatory Tender Date, which Non-Tender Notice shall be irrevocable. Any such Non-Tender Notice must be accompanied by a written statement from the Holder of such Bond identifying the Series, number and principal amount of such Bond, and acknowledging that such Holder is aware, if such Mandatory Tender Date is a Proposed Conversion Date, that the Bonds will bear interest from such date at the Fixed Rate, that he or she is aware that effective immediately after the Mandatory Tender Date the Trustee may or may not draw on the Letter of Credit, as the case may be, and that if the Trustee does not so draw,
the rating or ratings on the Bonds may be reduced or withdrawn. The Trustee shall immediately give telegraphic or telephonic notice of receipt of any such Non-Tender Notice, and promptly Telefax a copy of any such Non-Tender Notice received by it, to the Tender Agent, the Company, the Bank and the Remarketing Agent.
(d) All Bonds (other than any Bond with respect to which a Non-Tender Notice shall have been properly delivered to the Trustee, with a copy to the Tender Agent) shall be tendered by the Holders thereof for purchase at or before 10:00 a.m. on the Mandatory Tender Date, by delivering such Bonds to the Tender Agent at the Tender Office, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bonds or such other form as shall be acceptable to the Tender Agent). On the Mandatory Tender Date, the Trustee shall cause the Tender Agent to purchase all Bonds (other than any Bond as to which a Non-Tender Notice shall have been properly delivered to the Trustee) at the Purchase Price. Funds for payment of the Purchase Price of such Bonds shall be drawn by the Trustee from the Bond Purchase Fund as provided in Section 406 of this Indenture.
(e) All Bonds so to be purchased that are not timely delivered to the Tender Agent on the Mandatory Tender Date (the "Unsurrendered Bonds") shall nevertheless be deemed to have been tendered for purchase by the Holders thereof on the Mandatory Tender Date. If there shall have been irrevocably deposited in the Bond Purchase Fund an amount sufficient to pay the Purchase Price of all Bonds tendered or deemed tendered for purchase on the Mandatory Tender Date (except Bonds as to which a Non-Tender Notice shall have been received), any Unsurrendered Bonds shall cease to accrue interest on such Mandatory Tender Date and the Holders thereof shall thereafter be entitled only to payment of the Purchase Price therefor and not to the benefits of this Indenture. The Tender Agent shall notify the Trustee and Registrar of any Unsurrendered Bonds, shall authenticate a new Bond or Bonds in the same aggregate principal amount as the Unsurrendered Bonds, and shall hold or dispose of such new Bond or Bonds in accordance with the provisions of subsections (e) and (f) of Section 303 hereof. The Trustee shall notify the Remarketing Agent of such Unsurrendered Bonds and shall place a stop transfer against such Unsurrendered Bonds until they are properly delivered to the Tender Agent. Payment of the Purchase Price of any such Unsurrendered Bonds shall be made only upon the presentment and surrender of such Bonds to the Tender Agent, whereupon the Registrar shall make any necessary adjustment to the Register.
(a) Unless directed by the Company not to do so, the Remarketing Agent will use its best efforts to remarket all Bonds tendered or deemed to be tendered for purchase pursuant to Sections 301 and 302 hereof, and, when directed in writing by the Company, to remarket all Bonds held by the Tender Agent pursuant to this Section; provided no such remarketing shall be made to the Company, the Issuer or any
Affiliate of either; provided further no such remarketing shall be permitted while an Event of Default exists. The Company may at any time, upon written direction to the Remarketing Agent, direct the Remarketing Agent to cease or resume the remarketing of some or all of the Bonds.
(b) As soon as practicable, but by not later than 3:00 p.m. on the Business Day preceding any Tender Date, the Remarketing Agent shall give telegraphic or telephonic notice, confirmed on the same day by Telefax, to the Trustee, the Tender Agent, the Company and the Bank, of:
(i) the principal amount of Bonds, if any, remarketed by it pursuant to the first sentence of Section 303(a) hereof (or that no Bonds have been so remarketed, if such is the case); and
(ii) the names, addresses and taxpayer identification numbers of those who, upon payment therefor as herein specified, shall become the new registered Holders of, and the principal amount and denominations of, such Bonds, if any, as shall have been remarketed by it pursuant to this Section.
The Remarketing Agent shall make appropriate settlement arrangements between the purchasers of such remarketed Bonds and the Trustee, and shall by appropriate instructions direct such purchasers to pay the Purchase Price of the Bonds which shall have been so remarketed to the Trustee or its order in federal or other immediately available funds at or before 10:00 a.m. on the Tender Date; provided, the Remarketing Agent shall further instruct each such purchaser that payment must in any event be so made by 10:00 a.m. on the Tender Date, or else that purchaser will not be entitled to receive the Bonds purchased by it until the next Business Day and that purchaser will be required to pay additional accrued interest on the Bonds from the Tender Date to the next Business Day; provided, further, if Bonds are remarketed after a Tender Date, such purchasers shall be instructed to pay, in addition to the Purchase Price, accrued interest on the Bonds from the Tender Date to the date such purchasers do make payment to the Trustee by 12:00 noon. The Remarketing Agent shall further instruct purchasers of remarketed Bonds to which subsection (g) hereof applies, to deliver acknowledgment to the Trustee that they have received notice of redemption or Mandatory Tender, as the case may be. The Trustee shall deposit the proceeds of any such remarketing in the Remarketing Proceeds Account of the Bond Purchase Fund and shall hold such moneys therein in trust for the benefit of the Person who or which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been registered or delivered to or for the account of such Person.
(c) At or before 3:00 p.m. on each Tender Date, the Trustee shall cause the Tender Agent to pay the Purchase Price to each Holder of a Bond (or portion thereof) tendered for purchase in federal or other immediately available funds. The Tender Agent shall pay such Purchase Price from moneys on deposit in the Bond Purchase Fund; provided, that
the Tender Agent shall not pay the Purchase Price of any Unsurrendered Bond, unless and until the Holder of such Unsurrendered Bond presents such Unsurrendered Bond, together with an instrument of assignment or transfer duly executed in blank, to the Tender Agent. All Bonds so purchased by the Tender Agent shall be delivered by the Tender Agent in accordance with this Section.
(d) The Tender Agent shall hold all Bonds delivered to it pursuant to Sections 301 and 302 hereof in trust solely for the benefit of the respective Holders who shall have so delivered such Bonds until moneys representing the Purchase Price of such Bonds shall have been delivered to or for the account of such Holder.
(e) Bonds purchased on a Tender Date with moneys drawn under the Letter of Credit shall be held or disposed of by the Tender Agent as follows:
(i) If the Letter of Credit provides by its terms that the amount available for drawing thereunder to pay Purchase Price reinstates upon the Bank's receipt from the Trustee or its representative of notice of reimbursement (whether from proceeds of remarketing of Bonds or payments by the Company) and the moneys constituting such reimbursement, then the Trustee shall, by not later than 3:00 p.m. on any Tender Date, to the extent the Trustee shall have received remarketing proceeds or payments of Basic Rent in respect of Purchase Price by such time, forward such notice of reimbursement and the aggregate amount of such reimbursement to the Bank in accordance with the terms of the Letter of Credit. The Trustee shall immediately furnish to the Tender Agent a copy of such notice to the Bank, whereupon the Tender Agent shall register that amount of such Bonds equal to the amount so reimbursed as follows: (A) to the extent such Bonds shall have been remarketed by the Remarketing Agent, as directed by the Remarketing Agent pursuant to subsection (b) of this Section; and/or (B) to the extent such Bonds shall not have been remarketed, in the name of the Company. The Bank shall give telephonic notice to the Trustee and the Tender Agent, confirmed on the same day by Telefax (a "Reimbursement Notice"), that it has received from the Trustee or its representative the notice of reimbursement and the amount of the reimbursement; such notice shall further state the amount, if any, reimbursed directly to the Bank by or on behalf of the Company, and that the Letter of Credit has been reinstated by such amount, whereupon the Tender Agent shall register in the name of the Company an amount of Bonds equal to such amount reimbursed directly to the Bank.
(ii) If the Trustee shall not have received moneys
(whether from remarketing proceeds or payments from the Company)
sufficient to make reimbursement to the Bank in full, and if the
Trustee and Tender Agent shall not have received a Reimbursement
Notice from the Bank as to any reimbursement made directly to the
Bank by or on behalf of the Company, then the Tender Agent shall
register in the name of the Company, subject, however, to the
provisions of the Pledge Agreement, that amount of such Bonds
equal to the amount not reimbursed ("Pledged Bonds"); such Bonds
shall remain so registered until such time, if any, as the Trustee shall receive from the Bank a Reimbursement Notice, whereupon the Tender Agent shall, if appropriate, re-register Pledged Bonds pursuant to clause (i) of this subsection. Moreover, if the Letter of Credit does not provide by its terms that the amount available for drawing thereunder to pay Purchase Price reinstates upon the Bank's receipt from the Trustee or its representative of notice of reimbursement and the moneys constituting such reimbursement, the Tender Agent shall register in the name of the Company, subject, however, to the provisions of the Pledge Agreement, all tendered Bonds until the Trustee and Tender Agent shall have received evidence from the Bank of the reinstatement of the Letter of Credit in the amount of the tendered Bonds, whereupon the Tender Agent shall, if appropriate, re-register Pledged Bonds pursuant to clause (i) of this subsection.
(iii) Bonds registered as directed by the Remarketing Agent shall be delivered by the Tender Agent to, or upon the direction of, the Remarketing Agent. Company Bonds shall be held by the Tender Agent for the account of the Company or, upon written request of the Company, shall be delivered to the Company.
(f) Bonds purchased with moneys from any source other than moneys drawn under the Letter of Credit shall be registered as follows: (i) to the extent such Bonds shall have been remarketed by the Remarketing Agent, as directed by the Remarketing Agent pursuant to subsection (b) of this Section, and/or (ii) to the extent such Bonds shall not have been remarketed, in the name of the Company. Bonds registered as directed by the Remarketing Agent shall be delivered by the Tender Agent to, or upon the direction of, the Remarketing Agent. Company Bonds shall be held by the Tender Agent for the account of the Company or, upon written request of the Company, shall be delivered to the Company.
(g) Any Bond remarketed by the Remarketing Agent that shall theretofore have been called for redemption shall be redelivered with a copy of the redemption notice, and any such Bond as to which notice of Mandatory Tender shall theretofore have been given pursuant to Section 302 hereof shall be redelivered with a copy of the notice of Mandatory Tender.
(h) Bonds purchased pursuant to the Optional Tender or Mandatory Tender provisions of this Indenture shall not, by virtue of such purchase, be deemed paid or cancelled, but shall remain Outstanding until fully paid within the meaning of Article VIII hereof. Notwithstanding any other provision herein which may be interpreted to the contrary, any purchase of Bonds pursuant to a remarketing by the Remarketing Agent shall not be viewed as a sale of the Bonds from the Holder directly to a new purchaser, but rather as a sale to the Remarketing Agent and a resale by the Remarketing Agent to the new purchaser. Proceeds of a remarketing are intended to be a source of payment, together with amounts available under the Letter of Credit and
other funds as specified herein, for Bonds following tender and delivery in accordance with this Article; and the occurrence of a successful remarketing is not a precondition to a Holder's right to receive payment for its Bonds following tender and delivery in accordance with this Article.
[END OF ARTICLE III]
ARTICLE IV
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. Bond Fund" (the "Bond Fund"). Amounts in the Bond Fund shall be used solely to pay Debt Service on the Bonds as the same shall become due and payable or to reimburse the Bank for amounts drawn under the Letter of Credit, as provided in subsection (d) of this Section.
(b) There shall be deposited in the appropriate account in the Bond Fund, as and when received:
(i) All moneys drawn by the Trustee under the Letter of Credit for the purpose of paying the principal amount of the Bonds and the interest due thereon on any Bond Payment Date, into the Credit Facility Account;
(ii) All payments of Basic Rent under the Lease Agreement with respect to Debt Service, into the Company Account;
(iii) All other moneys required to be deposited in the Bond Fund pursuant to the Lease Agreement or this Indenture, into the Company Account; and
(iv) All other moneys received by the Trustee when accompanied by directions that such moneys are to be deposited in the Bond Fund, into the Company Account.
(c) The Issuer hereby authorizes and directs the Trustee to withdraw sufficient moneys from the Bond Fund to pay Debt Service on the Bonds as the same shall become due and payable, whether at maturity, by call for redemption or otherwise, which authorization and direction the Trustee hereby accepts. Funds for such payments of Debt Service shall be derived from the following sources in the order of priority indicated:
(i) First, moneys drawn by the Trustee under the Letter of Credit, and
(ii) Second, all other moneys on deposit in the Bond Fund.
(d) If the Letter of Credit is then in effect, prior to 12:00 noon on each Business Day preceding a Bond Payment Date the Trustee shall, without making any prior claim or demand upon the Company for payment of Basic Rent, make a draw under the Letter of Credit in an
amount equal to the amount of Debt Service due on such Bond Payment Date on Bonds other than Pledged Bonds or Company Bonds. Any such moneys drawn under the Letter of Credit shall be deposited and held in the Credit Facility Account in the Bond Fund, and shall not be commingled with other moneys in the Bond Fund. If moneys from any source other than a drawing under the Letter of Credit are, on the date of such draw or any later date, on deposit in the Bond Fund, the Trustee shall nevertheless draw under the Letter of Credit to make such payment of Debt Service, and the moneys available from such other source shall, to the extent of the amount paid by the Bank against such draw but not reimbursed by the Company to the Bank, be paid to the Bank. All moneys so drawn under the Letter of Credit shall be used to pay Debt Service on Bonds other than Pledged Bonds or Company Bonds.
(e) Debt Service on Pledged Bonds and Company Bonds shall be paid
(i) with moneys deposited in the Bond Fund from any source other than a
drawing under the Letter of Credit and (ii) to the Bank and the
Company, respectively.
Section 402. Payment of Debt Service. The Trustee shall be obligated to draw under the Letter of Credit or Alternate Credit Facility at such times and in such manner and amounts as shall be necessary to provide for the payment when due of Debt Service on Bonds other than Pledged Bonds or Company Bonds. The Trustee shall not in any event be liable for any failure on the part of the Bank to make payment under the Letter of Credit once a draw in conformity with the terms of the Letter of Credit shall have been submitted by the Trustee.
Section 403. Non-Presentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity, upon tender, redemption or otherwise, or a check or draft for interest is not cashed, if funds sufficient to pay such Bonds or such check or draft shall have been made available to the Trustee for the benefit of the Holders thereof, all liability of the Issuer to the Holders thereof for the payment of such Bonds or such check or draft shall cease, determine and be completely discharged as of the time such funds are made available to the Trustee and thereupon it shall be the duty of the Trustee to hold such funds, uninvested, in a separate account of the Bond Fund or Bond Purchase Fund, as appropriate, for the benefit of the Holders of such Bonds, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on their part under this Indenture or on, or with respect to, such Bonds.
Any of those moneys which shall be so held by the Trustee, and which remain unclaimed by the Holder of a Bond not presented for payment or check or draft not cashed for a period of three years after the due date thereof, shall be paid to the Company free of any trust or lien. Thereafter, the Holder of that Bond shall look only to the Company for payment and then only to the amounts so received by the Company without any interest thereon, and the Trustee shall not have any responsibility with respect to those moneys.
Section 404. Release of Funds Upon Payment of Bonds. Except as provided in Section 403 hereof, any amounts remaining in the Bond Fund (other than amounts in the Credit Facility Account) or the Bond Purchase Fund (other than amounts in the Remarketing Proceeds or Credit Facility Proceeds Accounts) after payment in full of the Bonds, the fees, charges and expenses of the Issuer and of the Trustee, the Paying Agents and any other Fiduciaries hereunder and all other amounts required to be paid hereunder, shall be paid to the Company if there is then no Event of Default under and as defined in the Lease Agreement.
Any amounts remaining in the Credit Facility Account, Remarketing Proceeds Account or Credit Facility Proceeds Account shall be paid to the Bank and not to the Company.
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. Construction Fund" (the "Construction Fund"). The proceeds of the sale of the Series 1996A Bonds shall be deposited in the Construction Fund.
(b) The moneys in the Construction Fund shall be paid out by the Trustee from time to time solely for the purposes of (1) paying Issuance Costs, as defined in the Lease Agreement, but subject to the limitations in Sections 2.3(n) and 2.4(l) of the Lease Agreement; (2) reimbursing to or for the account of the Company all funds advanced to the Issuer or otherwise expended, subsequent to the date of the Inducement Agreement, for the acquisition, construction and equipping of the new facilities; and (3) paying the Project Costs.
(c) The Trustee shall make such payments from the Construction
Fund, but in each case only after receipt of a payment requisition
substantially in the form prescribed and promulgated by the Issuer,
duly completed and executed. Each such payment requisition (1) shall be
signed by any duly authorized officer, employee or agent of the Issuer;
(2) shall state, with respect to each payment requested thereby, the
amount requested to be paid, the name and address of the person, firm
or corporation to whom such payment is due and the purpose for which
such payment is to be made; (3) shall be consecutively numbered; (4)
shall be accompanied by bills, invoices or other appropriate
documentation supporting the payments or reimbursements requested; (5)
shall bear an endorsement signed by the Project Supervisor as to the
matters therein specified; and (6) shall, prior to submission to the
Trustee, have been submitted to and approved by the Bank in accordance
with the provisions of the Reimbursement Agreement.
(d) At the time of submission of each such payment requisition, the Company shall be deemed to make the following certifications: (1) the purpose for which such payment is to be made is one for which Construction Fund moneys are authorized under the Lease Agreement to be expended; (2) such payment is for the acquisition, construction,
reconstruction or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 144(a)(1) of the Code or for paying Issuance Costs (as defined in the Lease Agreement); (3) payment of any such item will not result (i) in less than 95% of the net proceeds (within the meaning of the Code) of the Series 1996A Bonds being used (A) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation under said Section 144(a)(1) or (B) to provide a "manufacturing facility" within the meaning of Section 144(a)(12)(C) of the Code, or (ii) in more than 2% of the proceeds of the Series 1996A Bonds being used to pay Issuance Costs; and (4) any property for which payment is to be made has been installed or located on the Leased Realty.
(e) The provisions of this Section to the contrary notwithstanding, if with respect to payment of any item of Project Cost from the Construction Fund the Company shall furnish the Trustee a certificate signed by the Project Supervisor stating that the Issuer had failed or refused, after reasonable request therefor made by the Company, to issue a payment requisition for payment of such item, the payment requisition therefor may be signed in the name of the Issuer by the Project Supervisor, and the Trustee shall be fully protected in making the payments directed by such payment requisition as fully and completely as if it were signed by an authorized officer, employee or other agent of the Issuer, provided that such payment requisition is accompanied by the endorsement and other documentation required by the provisions of this Section.
(f) Any amounts remaining in the Construction Fund after the
Completion Date shall be applied as directed by the Company pursuant to
Section 4.5(c) of the Lease Agreement.
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. Bond Purchase Fund" (the "Bond Purchase Fund"). The Trustee shall be the custodian for the Bond Purchase Fund, and moneys in such Fund may be disbursed by the Trustee as hereinafter provided. The moneys in the Bond Purchase Fund shall be used (i) to pay the Purchase Price of Bonds due on any Tender Date or (ii) to reimburse the Bank for amounts drawn under the Letter of Credit, as provided in subsection (d) of this Section.
(b) There shall be deposited in the appropriate account of the Bond Purchase Fund, as and when received:
(i) All moneys drawn by the Trustee under the Letter of Credit for the purpose of paying the Purchase Price of Bonds due on any Tender Date, into the Credit Facility Proceeds Account;
(ii) The proceeds of any remarketing of Bonds by the Remarketing Agent, into the Remarketing Proceeds Account;
(iii) All payments of Basic Rent under the Lease Agreement with respect to Purchase Price, into the Miscellaneous Account;
(iv) All other moneys required to be deposited in the Bond Purchase Fund pursuant to the Lease Agreement or this Indenture, into the Miscellaneous Account; and
(v) All other moneys received by the Trustee when accompanied by directions that such moneys are to be deposited in the Bond Purchase Fund, into the Miscellaneous Account.
(c) The Trustee is hereby authorized and directed to withdraw sufficient moneys from the Bond Purchase Fund to pay the Purchase Price of Bonds due on any Tender Date. Funds for such payments shall be derived from the following sources in the order of priority indicated:
(i) First, Available Moneys received by the Trustee from the remarketing of Bonds by the Remarketing Agent;
(ii) Second, moneys drawn by the Trustee under the Letter of Credit; and
(iii) Third, all other moneys on deposit in the Bond Purchase Fund.
(d) If the Letter of Credit is then in effect, by 10:30 a.m. on each Tender Date the Trustee shall, if necessary, and without making any prior claim or demand upon the Company for payments of Basic Rent with respect to the Purchase Price of Bonds, make a draw under the Letter of Credit in an amount equal to (i) the Purchase Price of all Bonds to be purchased on such Tender Date, less (ii) the amount, if any, then on deposit in the Remarketing Proceeds Account of the Bond Purchase Fund. Any such moneys drawn under the Letter of Credit shall be deposited and held in the Credit Facility Proceeds Account in the Bond Purchase Fund, and shall not be commingled with other moneys in the Bond Purchase Fund. If moneys from any source other than remarketing proceeds or a drawing under the Letter of Credit are, on the date of such draw or any later date, on deposit in the Miscellaneous Account of the Bond Purchase Fund, the Trustee shall nevertheless draw under the Letter of Credit in the net amount hereinabove specified; and any such moneys on deposit in the Miscellaneous Account from such other sources shall, to the extent of the amount so drawn under the Letter of Credit and paid by the Bank against such draw but not reimbursed by the Company to the Bank, be paid to the Bank.
Section 407. Rebate Fund. There is hereby created by the Issuer and ordered established in the custody of the Trustee a fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. Rebate Fund" (the "Rebate Fund"). Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder.
As required by the Lease Agreement, the Company shall calculate with respect to the Series 1996B Bonds and report to the Trustee, within 20 days after each Computation Date, the amount of Excess Earnings as of the end of that Bond Year or the date of such payment in full. The Trustee shall notify the Company in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund is in excess of the Excess Earnings, the Trustee shall forthwith pay that excess amount to the Company. If the amount then on deposit in the Rebate Fund is less than the Excess Earnings, the Company shall, within five days after receipt of the aforesaid notice from the Trustee, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to the Excess Earnings. Within 30 days after the end of the fifth Bond Year and every fifth Bond Year thereafter, the Trustee, acting at the written direction of the Company and on behalf of the Issuer, shall pay to the United States, in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund, an amount calculated by the Company to be equal to 90% (or such greater percentage not in excess of 100% as the Company may direct the Trustee to pay) of the Excess Earnings earned from the Issue Date through the end of such fifth Bond Year (less the amount of Excess Earnings, if any, previously paid to the United States pursuant to this Section). Within 60 days after the payment in full of all Series 1996B Bonds then outstanding the Trustee shall, at the written direction of the Company and on behalf of the Issuer, pay to the United States in accordance with Section 148(f) of the Code from the moneys deposited in the Rebate Fund an amount calculated by the Company to be equal to 100% of the Excess Earnings earned from the Issue Date to the date of such payment in full (less the amount of Excess Earnings, if any, previously paid to the United States pursuant to this Section) and any moneys remaining in the Rebate Fund following such payment shall be paid to the Company. In each case of any payment made pursuant to either of the two preceding sentences, it shall be the responsibility of the Company to prepare and furnish to the Trustee any information returns or forms required to accompany such payment. All computations of Excess Earnings pursuant to the Lease Agreement shall treat the amount or amounts, if any, previously paid to the United States pursuant to this Section as amounts on deposit in the Rebate Fund.
The Trustee shall be entitled to rely on the calculations made by the Company and shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in reliance upon those calculations.
The Trustee shall make available to the Company such records as the Trustee customarily maintains concerning the investments of the gross proceeds of the Series 1996B Bonds and the investments of earnings from those investments.
The provisions of this Section 407 shall not apply if and to the extent that the Issuer, the Company and the Trustee receive a Non-Taxability Opinion regarding the failure to comply therewith.
Section 408. Refunding Fund. There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. Refunding Fund (the "Refunding Fund"). All the proceeds of the sale of the Series 1996B Bonds shall be deposited in the Refunding Fund on the Issue Date. Moreover, pursuant to Section 4.4 of the Lease Agreement, the Company has agreed that it shall, on the Issue Date, deposit in the Refunding Fund such additional amounts, if any, as shall be necessary to pay in full the Interim Indebtedness and to provide for the redemption, on the redemption date designated by the Prior Trustee, of all outstanding Prior Bonds (including accrued interest thereon to such redemption date). The Trustee shall, on the Issue Date, and without need for further direction from the Issuer and the Company, apply the moneys on deposit in the Refunding Fund (a) to pay in full the Interim Indebtedness and (b) to pay to the Prior Trustee the amount necessary to provide for the redemption, on the redemption date designated by the Prior Trustee, of all outstanding Prior Bonds (including accrued interest thereon to such redemption date).
Section 409. Investment of Fund Moneys. Moneys in the Bond Fund and the Bond Purchase Fund (except for moneys therein (i) held pursuant to Section 403 hereof, (ii) to pay Unsurrendered Bonds or (iii) representing proceeds of a drawing under the Letter of Credit, which moneys shall be either held in cash and not invested or invested only in Government Obligations with a maturity of not to exceed 30 days or fewer, as needed) and the Refunding Fund shall be invested and reinvested by the Trustee in Eligible Investments at the direction of the Company, consistent, however, with the covenants of the Company contained in Section 5.7 of the Lease Agreement. Investments of moneys in the Bond Fund shall mature or be redeemable at the option of the Trustee at the times and in the amounts necessary to provide moneys to pay Debt Service on Bonds as the same shall become due at stated maturity, by redemption or otherwise.
Subject to any directions from the Company with respect thereto, from time to time, the Trustee may sell those investments and reinvest the proceeds therefrom in Eligible Investments maturing or redeemable as aforesaid. Any of those investments may be purchased from or sold to the Trustee, the Registrar, an Authenticating Agent or a Paying Agent, or any bank, trust company or savings and loan association affiliated with any of the foregoing. The Trustee shall sell or redeem investments credited to the Bond Fund to produce sufficient moneys applicable hereunder to and at the times required for the purpose of paying Debt Service on Bonds when due as aforesaid, and shall do so without necessity for any order on behalf of the Issuer and without restriction by reason of any order. An investment made from moneys credited to the Bond Fund, the Bond Purchase Fund or the Refunding Fund shall constitute part of that respective Fund, and each respective Fund shall be credited with all proceeds of
sale and income from investment of moneys credited thereto. For purposes of this Indenture, all investments shall be valued at face amount or market value, whichever is less.
In addition to the foregoing requirements, the Issuer will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose investments in which gross proceeds of the Series 1996B Bonds are invested or that results in a smaller profit or a larger loss than would have resulted in an arm's length transaction in which the yield on the nonpurpose investment was not subject to any restriction. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
Furthermore, except to the extent set forth in an opinion of Bond Counsel, investments or deposits of proceeds of Series 1996B Bonds in certificates of deposit or pursuant to investment contracts shall not be made without compliance, at or prior to such investment or deposit, with the requirements of Treasury Regulations Section 1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions thereto.
Section 410. Moneys to be Held in Trust. Except where moneys have been
deposited with or paid to the Trustee pursuant to an instrument restricting
their application to particular Bonds, all moneys required or permitted to be
deposited with or paid to the Trustee or any Paying Agent under any provision of
this Indenture, the Lease Agreement or the Letter of Credit, and any investments
thereof, shall be held by the Trustee or that Paying Agent in trust. Except for
(a) moneys deposited with or paid to the Trustee or any Paying Agent for the
redemption of Bonds, notice of the redemption of which shall have been duly
given, (b) moneys held by the Trustee pursuant to Section 403 hereof, and (c)
any moneys in the Rebate Fund, all moneys described in the preceding sentence
held by the Trustee or any Paying Agent shall be subject to the lien hereof
while so held.
[END OF ARTICLE IV]
ARTICLE V
Section 501. Trustee's Acceptance and Responsibilities. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default shall have occurred (which shall not have been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall be answerable for the conduct of the same in accordance with the standard specified above, and shall be entitled to advice of counsel concerning all matters of trusts hereof and the duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer or the Company), approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or non-action in good faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds (except with respect to any certificate of authentication on the Bonds executed by the Trustee), or for any matters in respect of the Project, or for the validity of the execution by the Issuer of this Indenture or of any supplement hereto or instruments of further assurance, or for the sufficiency or maintenance of the security for the Bonds issued hereunder or intended to be secured hereby.
(d) The Trustee shall not be accountable for the use of the proceeds of any Bonds authenticated or delivered hereunder, other than to comply with the Issuer's request and authorization with respect thereto as described in Section 202(h) hereof. The Trustee may become a Holder of Bonds secured hereby with the same rights which it would have if not Trustee.
(e) The Trustee shall be protected, in the absence of bad faith, in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, Telefax or other paper or document believed to be genuine and correct and to have been signed or sent by
the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any Person who at the time of making such request or giving such authority or consent is a Holder of any Bond, shall be conclusive and binding upon all future Holders of the same Bond and of Bonds issued in exchange therefor or in place thereof.
(f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by any duly authorized officer thereof as sufficient evidence of the facts therein contained; and prior to the occurrence of an Event of Default of which the Trustee shall have been notified as provided in subsection (h) of this Section, or of which pursuant to said subsection it shall be deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, though the Trustee may at its discretion (but shall in no case be bound to) secure such further evidence as it shall deem necessary or advisable.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligent action or failure to act or willful misconduct.
(h) Unless the Trustee shall be specifically notified in writing of an Event of Default by the Issuer or by the Holders of at least 25% in aggregate principal amount of Bonds then Outstanding, the Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except Events of Default by reason of (i) any notice from the Bank given under Section 601 hereof or (ii) failure by the Issuer to cause to be made any payments of Debt Service on or Purchase Price of the Bonds. All notices or other instruments required by this Indenture to be delivered to the Trustee, must, in order to be effective, be delivered at the Trustee's Office, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property herein conveyed, including all books, papers and records of the Issuer and the Company pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee may demand, in respect and as a condition of the authentication of any Bonds, the withdrawal of any cash, the release of any property or the taking of any action whatsoever within the purview of this Indenture, such showing, certificates, opinions, appraisals or
other information, or corporate action or evidence thereof, as the Trustee may reasonably deem desirable in addition to what is expressly required hereby.
(l) Before taking any action hereunder (with the exceptions of declaring acceleration of the Bonds pursuant to clause (b)(ii) of the first paragraph of Section 602 hereof and of making payments of Debt Service and drawings under the Letter of Credit pursuant to Sections 401, 402 and 406 hereof) the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses which it may incur and to protect it against all liability, except liability which is adjudicated to have resulted from its negligent action or failure to act or willful misconduct. The Trustee may take action without indemnity, and in that case, the Company shall reimburse the Trustee for all of the Trustee's expenses pursuant to Section 502 hereof.
(m) Unless otherwise provided herein, all moneys received by the Trustee or any Paying Agent shall, until applied or invested as herein provided, be held in trust for the purposes for which they were received, provided that those moneys need not be segregated from other funds except to the extent required by this Indenture or by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon.
Section 502. Fees, Charges and Expenses of Fiduciaries. Each Fiduciary shall be entitled to payment and/or reimbursement by the Company as provided in the Lease Agreement for reasonable fees for its Ordinary Services rendered hereunder and all advances, counsel fees and other Ordinary Expenses reasonably and necessarily made or incurred by it in connection with such Ordinary Services. For purposes hereof, fees for Ordinary Services provided for in the standard fee schedule (if any) of each Fiduciary shall be considered reasonable. In the event that it should become necessary that any Fiduciary perform Extraordinary Services, it shall be entitled to reasonable extra compensation therefor, and to reimbursement for reasonable and necessary Extraordinary Expenses in connection therewith; provided, that if such Extraordinary Services or Extraordinary Expenses are occasioned by the neglect or misconduct of such Fiduciary, it shall not be entitled to compensation or reimbursement therefor.
A Fiduciary shall be entitled to payment and reimbursement for Ordinary
Services and Ordinary Expenses only from (a) the additional payments made by the
Company pursuant to the Lease Agreement, or (b) other moneys available therefor
(except for moneys in the Bond Fund or Bond Purchase Fund (i) held pursuant to
Section 403 hereof, (ii) to pay Unsurrendered Bonds or (iii) representing
proceeds of remarketing of Bonds or a drawing under the Letter of Credit). Any
amounts payable to a Fiduciary pursuant to this Section shall be payable upon
demand and shall bear interest from the date of demand therefor at the Interest
Rate for Advances.
Section 503. Notices to Holders. If an Event of Default occurs of which the Trustee has actual notice or of which the Trustee is pursuant to Section 501(h) hereof required to take or deemed to have notice, then the Trustee shall
promptly give or cause to be given written notice thereof by first class mail, postage prepaid, to each Holder at its address shown on the Register (a "Notice by Trustee"); provided the Trustee shall, on the date of such occurrence, give telephonic notice thereof to each Holder of 25% or more in aggregate principal amount of Bonds Outstanding.
Section 504. Intervention by Trustee. In any judicial proceeding to which the Issuer or the Company is a party of which the Trustee has actual notice and which in the opinion of the Trustee has a substantial bearing on the interests of Holders of the Bonds, the Trustee may intervene on behalf of Holders, and shall intervene if requested to do so in writing by Holders of at least 25% of the aggregate principal amount of Bonds then Outstanding. The rights and obligations of the Trustee under this Section are subject to the approval of a court of competent jurisdiction.
Section 505. Successor Trustees. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from such conversion, sale, merger, consolidation or transfer to which it is a party shall be and become, ipso facto, successor Trustee hereunder and vested with all of the title to the property herein conveyed and all the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Any successor Trustee other than the foregoing, however, (a) shall be a trust company or a bank having the powers of a trust company, (b) shall be in good standing within the State or shall be duly authorized to exercise trust powers within the State, and (c) shall have a reported capital and surplus of not less than $50,000,000.
Section 506. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including without limitation, the laws of the State) denying or restricting the right of banks or trust companies to transact business as trustees in that jurisdiction. It is recognized that, (a) if there is litigation under this Indenture or other instruments or documents relating to the Bonds, and in particular, in case of the enforcement thereof upon a default or an Event of Default, or (b) if the Trustee should deem that, by reason of any present or future law of any jurisdiction, it may not (i) exercise any of the powers, rights or remedies granted herein to the Trustee, (ii) hold title to the properties, in trust, as granted herein, or (iii) take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or additional institution as a co-Trustee. The following provisions of this Section are adapted to these ends.
In the event that the Trustee appoints an individual or additional institution as a co-Trustee, each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this
Indenture to be exercised by, vested in or conveyed to the Trustee shall be exercisable by, vest in and be conveyed to that co-Trustee, but only to the extent necessary for it to be so vested and conveyed and to enable that co-Trustee to exercise it. Every covenant, agreement and obligation necessary to the exercise thereof by the co-Trustee shall run to and be enforceable by it.
Notwithstanding the foregoing, a co-Trustee shall exercise only such rights and perform only such duties as may be required to avoid violation of any law of any jurisdiction or as may be directed by the Trustee in writing. Any written direction by the Trustee to a co-Trustee to take or to refrain from taking any action hereunder shall be sufficient warrant for taking or refraining from taking such action by such co-Trustee. Neither the Trustee nor any co-Trustee shall be personally liable by reason of any act or omission of a co-Trustee or the Trustee, respectively, hereunder. Any moneys, papers, securities or other items of personal property received by a co-Trustee pursuant to its exercise of rights or performance of duties hereunder shall forthwith, to the extent permitted by law, be turned over to the Trustee.
Should any instrument or document in writing from the Issuer reasonably be required by the co-Trustee so appointed by the Trustee for vesting and conveying more fully and certainly in and to that co-Trustee those trusts, properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens, that instrument or document shall be executed, acknowledged and delivered, but not prepared, by the Issuer. In case any co-Trustee or a successor to it shall die, become incapable of acting, resign or be removed, all of the trusts, properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the co-Trustee shall be exercised by, vest in and be conveyed to the Trustee, to the extent permitted by law, until the appointment of a successor to the co-Trustee.
Section 507. Resignation by the Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created, by giving 30 days' written notice to the Issuer, the Registrar, the Tender Agent, the Remarketing Agent, the Bank and the Company and notice by registered or certified mail to each Holder of Bonds then Outstanding. Such resignation shall take effect only upon the appointment of a successor trustee. Such notices to the Issuer, the Registrar, the Tender Agent, the Remarketing Agent, the Bank and the Company may be served personally or sent by registered mail.
Section 508. Removal of the Trustee. The Trustee may be removed at any time, by an instrument or concurrent instruments in writing delivered to the Trustee and to the Issuer, and signed by the Holders of a majority in aggregate principal amount of Bonds then Outstanding.
The Trustee also may be removed at any time by any court of competent jurisdiction upon the application of the Issuer or the Holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding, for any breach of trust or for acting or proceeding in violation of, or for failing to act or
proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee. Such removal shall take effect only upon the appointment of a successor trustee.
Section 509. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Trustee shall be taken under the control of any public officer or officers or of a receiver appointed by a court, a successor shall be appointed by the Issuer and with the consent of the Company; provided if the Issuer shall not have appointed a successor within ten days after the event giving rise to the need for such appointment, then a successor may be appointed by the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, by an instrument or concurrent instruments in writing delivered to the Issuer, the Trustee and the successor Trustee, signed by such Holders, or by their duly authorized attorneys in fact. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section, the Holder of any Bond outstanding hereunder or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee under this Indenture. Every such Trustee appointed pursuant to the provisions of this Section to succeed the Trustee shall satisfy the requirements of the second paragraph of Section 505 hereof.
Section 510. Concerning Any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer, the Company, the Registrar and the Tender Agent an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties (including, without limitation, all securities and moneys and the Letter of Credit), rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall nevertheless, on the written request of the Issuer or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall deliver all securities and moneys held by it as trustee hereunder to its successor. Should any instrument in writing from the Issuer be required by any successor trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. In the event of a change in the Trustee, the predecessor trustee shall cease to be Registrar, Authenticating Agent, Tender Agent and Paying Agent for any of the Bonds, to the extent it served in any of those capacities. The successor Trustee shall become custodian of any moneys held by its predecessor and, if applicable, Registrar, Authenticating Agent, Tender Agent and a Paying Agent. Upon delivery to the successor trustee of any moneys or securities held by it, the predecessor trustee shall be discharged from any further liability on account of such moneys or securities so delivered.
Section 511. Right of Trustee to Pay Taxes and Other Charges. In case any tax, assessment or governmental or other charge upon any part of the property herein conveyed is not paid as required herein or by law, the Trustee
may pay such tax, assessment or governmental charge, without prejudice, however, to any rights of the Trustee or the Holders hereunder arising as a result of such failure; and any amount at any time so paid under this Section with interest thereon from the date of payment at the Interest Rate for Advances, shall become so much additional indebtedness secured by this Indenture, and shall be paid out of the Revenues (excluding moneys in the Bond Fund or Bond Purchase Fund (i) held pursuant to Section 403 hereof, (ii) for the payment of Unsurrendered Bonds or (iii) representing proceeds of a drawing under the Letter of Credit), if not otherwise paid; but the Trustee shall be under no obligation to make any such payment unless it shall have been requested to do so by the Holders of at least 25% of the aggregate principal amount of Bonds then Outstanding and shall have been provided with adequate funds for the purpose of payment.
Section 512. Adoption of Authentication. In case any of the Bonds shall have been authenticated, but shall not have been delivered, any successor Trustee, Registrar or Authenticating Agent may adopt the certificate of authentication of any predecessor Trustee, Registrar or Authenticating Agent and may deliver those Bonds so authenticated as provided herein. In case any Bonds shall not have been authenticated, any successor Trustee, Registrar or Authenticating Agent may authenticate those Bonds either in the name of any predecessor or in its own name. In all cases, the certificate of authentication shall have the same force and effect as provided in the Bonds or in this Indenture with respect to the certificate of authentication of the predecessor Trustee, Registrar or Authenticating Agent.
(a) Succession. Anything herein to the contrary notwithstanding, any corporation or association (i) into which the Registrar may be converted or merged, (ii) with which the Registrar or any successor to it may be consolidated, or (iii) to which it may sell or transfer its assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Registrar hereunder and shall be vested with each and every power, right, duty, obligation, discretion and privilege expressed or intended by this Indenture to be exercised by or vested in the predecessor Registrar, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto.
(b) Resignation. The Registrar may resign at any time by giving written notice of its resignation to the Issuer, the Company, the Trustee, the Bank, the Remarketing Agent and each Paying Agent and Authenticating Agent for the Bonds, at least 60 days before the resignation is to take effect. The resignation shall take effect only upon the appointment of a successor Registrar, but may take effect sooner than within 60 days if the successor Registrar is appointed and accepts that appointment before the time stated in the notice.
(c) Removal. The Registrar may be removed at any time by an instrument or document or concurrent instruments or documents in writing delivered to the Registrar, with copies thereof mailed to the Issuer, the Trustee and the Company, and signed by or on behalf of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding. Such removal shall take effect only upon the appointment of a successor Registrar.
(d) Appointment of Successors. If (i) the Registrar shall resign, shall be removed, shall be dissolved, or shall become otherwise incapable of acting hereunder, (ii) the Registrar shall be taken under the control of any public officer or officers, (iii) a receiver shall be appointed for the Registrar by a court, or (iv) the Registrar shall have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws or commence a proceeding under any federal or state bankruptcy, insolvency, reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for 90 days, then a successor Registrar shall be appointed by the Issuer, with the written consent of the Company and the Trustee; provided, that if a successor Registrar is not so appointed within ten days after (a) a notice of resignation or an instrument or document of removal is received by the Issuer, as provided above, or (b) the Registrar is dissolved, taken under control, becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above, then, if the Issuer shall not have appointed a successor Registrar, the Trustee or the Holders of a majority in aggregate principal amount of Bonds then Outstanding may designate a successor Registrar by an instrument or document or concurrent instruments or documents in writing signed by the Trustee, or in the case of the Holders, by or on behalf of those Holders.
Every successor Registrar appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer, the Trustee and the Company, an instrument or document accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, titles and interests of its predecessor. Upon the written request of its successor, the Issuer or the Company, a predecessor Registrar (i) shall execute and deliver an instrument or document transferring to its successor all of the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, titles and interests of it as predecessor Registrar hereunder, and (ii) shall take any other action necessary duly to assign, transfer and deliver to its successor all property and records (including without limitation, the Register and any cancelled Bonds) held by it as Registrar. Should any instrument or document from the Issuer be requested by any successor Registrar for vesting and conveying more fully and certainly in and to that successor the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, titles and interests vested or conveyed or intended to be vested or conveyed hereby in or to a predecessor Registrar, the Issuer shall execute, acknowledge and deliver that instrument or document.
Section 514. Designation and Succession of Paying Agents. The Trustee shall be the Paying Agent for the Bonds and, with the consent of the Issuer, the Trustee may appoint an additional Paying Agent or Agents with power to act on its behalf and subject to its direction in the payment of Debt Service on the Bonds. It is the responsibility of the Trustee to establish the duties and responsibilities of any Paying Agent for the purposes of this Indenture, to the extent not specified herein.
Any corporation or association with or into which any Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Paying Agent shall be a party, or any corporation or association succeeding to the trust business of any Paying Agent, shall be the successor of that Paying Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or of the predecessor or that successor Paying Agent.
Any Paying Agent may at any time resign by giving written notice of resignation to the Trustee, the Registrar and the Company. The Trustee may at any time terminate the agency of any Paying Agent by giving written notice of termination to such Paying Agent, the Registrar and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Paying Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Paying Agent. Any successor Paying Agent must be a bank or trust company organized under the laws of the United States or any state thereof. The Trustee shall give written notice of appointment of a successor Paying Agent to the Company, the Issuer and the Registrar and shall mail, within ten days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment.
Section 515. Designation and Succession of Authenticating Agents. With
the consent of the Issuer, the Trustee may appoint an Authenticating Agent or
Agents, in addition to the Trustee, with power to act on its behalf and subject
to its direction in the authentication and delivery of Bonds in connection with
transfers and exchanges hereunder. For all purposes of this Indenture, the
authentication and delivery of Bonds by an Authenticating Agent pursuant to this
Section shall be deemed to be authentication and delivery of those Bonds "by the
Trustee", and any authorized signatory of an Authenticating Agent shall be
deemed an "authorized signatory" on behalf of the Trustee for any such
authentication.
Any corporation or association with or into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation or association succeeding to the trust business of any Authenticating Agent, shall be the successor of that Authenticating Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or of the predecessor or that successor Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee, the Registrar and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent, the Registrar and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent. The Trustee shall give written notice of appointment of a successor Authenticating Agent to the Company, the Issuer and the Tender Agent and shall mail, within ten days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment.
Section 516. Dealing in Bonds. The Trustee, the Tender Agent, a Registrar, a Paying Agent and an Authenticating Agent, their affiliates, and any directors, officers, employees or agents thereof may become the Holders of Bonds secured hereby with the same rights which it or they would have hereunder if the Trustee, the Tender Agent, the Registrar, Paying Agents or Authenticating Agents did not serve in those capacities.
Section 517. Tender Agent. The Trustee may appoint an agent (the "Tender Agent") to act on its behalf in the acceptance of delivery of Bonds tendered for purchase pursuant to the optional or mandatory tender provisions of this Indenture; provided, however, that any such Tender Agent (i) shall be a bank or trust company organized under the laws of the United States or any state thereof, and (ii) shall have its principal office in New York, New York. The Tender Agent shall also be an Authenticating Agent. The Tender Agent shall signify its acceptance of the duties and obligations imposed upon it hereunder in its various capacities by a written instrument of acceptance delivered to the Issuer, the Company, the Trustee, the Remarketing Agent and the Bank. The provisions of Section 513 hereof pertaining to the succession, resignation and removal of Registrars shall be applicable to the succession, resignation and removal of the Tender Agent.
Section 518. Remarketing Agent. The Company has, pursuant to the Remarketing Agreement, appointed First Union Capital Markets Group of First Union National Bank of North Carolina, Charlotte, North Carolina, as Remarketing Agent for the Bonds, subject to the conditions set forth herein. The Remarketing Agent has, pursuant to the Remarketing Agreement, designated to the Trustee its principal office, signified its acceptance of the duties and obligations imposed upon it hereunder and agreed to perform the duties specified to be performed by it in Articles II and III hereof and in the Bonds, and in particular those duties relating to remarketing of Bonds and determining the interest rate applicable to each Series of the Bonds from time to time.
The Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc. and authorized to perform all the duties imposed upon it by this Indenture. The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 30 days' notice to the Issuer, the Company, the Bank, the Tender Agent and the Trustee. The Remarketing Agent may be removed at any time, at the election of the Company, by an instrument signed by the Company on behalf of the Issuer and mailed by first class mail to the Issuer, the Remarketing Agent, the Bank, the Tender Agent and the Trustee not fewer than 30 days prior to the date proposed for removal.
In the event of the resignation or removal of the Remarketing Agent, it shall be the responsibility of the Company to designate a successor (which position may be held jointly), and the old Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to its successor or, if there be no successor, to the Tender Agent. No successor Remarketing Agent may be an Affiliate of the Company.
In the event that the Remarketing Agent shall resign, be removed or be dissolved, or if the property or affairs of the Remarketing Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency or for any other reason, and the Company shall not have made a timely appointment of a successor as Remarketing Agent, the Tender Agent shall be deemed to be the Remarketing Agent for all purposes of this Indenture until the appointment by the Company of a successor Remarketing Agent; provided, however, that the Tender Agent, in its capacity as Remarketing Agent, shall not be required to sell Bonds or to perform the duties with respect thereto.
[END OF ARTICLE V]
ARTICLE VI
Section 601. Events of Default. If any of the following events occurs, it is hereby defined as and declared to be and to constitute an "Event of Default" under this Indenture:
(a) Payment of any interest on any Bond shall not be made when and as that interest shall have become due and payable;
(b) Payment of the principal of or any premium on any Bond shall not be made when and as that principal or premium shall have become due and payable, whether at stated maturity, by redemption, by acceleration or otherwise;
(c) Failure by the Issuer to perform any of the other agreements on its part herein contained which failure shall continue for 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Issuer and the Company by the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice can be corrected but not within the applicable period, it shall not constitute an Event of Default if corrective action shall be instituted by the Issuer within the applicable period and diligently pursued until the failure is corrected;
(d) The occurrence of any "Event of Default" under and as defined in the Lease Agreement;
(e) Payment of the Purchase Price of Bonds tendered pursuant to Article III hereof shall not be made when the same shall have become due;
(f) Receipt by the Trustee of written notice from the Bank that an "Event of Default" has occurred under and as defined in the Reimbursement Agreement, which notice shall instruct the Trustee to declare the principal of all Bonds then Outstanding and interest thereon to be immediately due and payable;
(g) Receipt by the Trustee, on or before the tenth day following a drawing under the Letter of Credit to pay accrued interest on the Bonds, of written notice from the Bank that the Bank has not been reimbursed for such drawing and that the interest portion of the Letter of Credit will not be reinstated; or
(h) The occurrence of an Act of Bankruptcy. The declaration of an Event of Default under this subsection and the exercise of remedies upon any such declaration shall be subject to any applicable limitations of federal or state law affecting or precluding such declaration or exercise during the pendency of or immediately following any liquidation or reorganization proceedings.
Section 602. Acceleration. Except as otherwise provided herein, (a)
upon the occurrence of an Event of Default described in Section 601(c) or (d)
hereof, the Trustee may declare, and (b) (i) upon the written request of the
Holders of not less than 25% in aggregate principal amount of Bonds then
Outstanding or (ii) upon the occurrence of an Event of Default described in
Section 601(a), (b), (e), (f), (g) or (h) hereof, the Trustee shall declare, the
principal of all Bonds then Outstanding (if not then due and payable), and the
interest accrued thereon, to be due and payable on the date specified in the
notice by the Trustee described in the following paragraph. The Trustee shall
promptly draw upon the Letter of Credit to the full extent permitted by the
terms thereof and deposit the proceeds of such drawing (to the extent allocable
to the Bonds) in the Credit Facility Account of the Bond Fund. Interest on the
Bonds shall accrue to the date determined by the Trustee for the tender of
payment to the Holders pursuant to such declaration; provided interest on the
Bonds shall continue to accrue on and after such date, if on such date the
Trustee shall not hold moneys sufficient to pay the principal and interest so
declared to be payable.
Any acceleration pursuant to the preceding paragraph of this Section shall be by notice in writing delivered to the Issuer, the Bank, the Company, the Registrar, any Paying Agent and any Authenticating Agent. The Trustee shall further, on the same day as such declaration, give telephonic notice thereof to each Holder of 25% or more in aggregate principal amount of Bonds Outstanding, and mail or cause to be mailed notice of such acceleration to all Holders of Bonds then Outstanding, as shown on the Register at the close of business on the day of the mailing of that notice. Such notice shall specify the date on which payment of principal and interest shall be tendered to the Holders, such date to be not more than ten calendar days after the date of notice. Upon any declaration of acceleration hereunder, the Trustee shall immediately exercise such rights as it may have under the Bonds and the Lease Agreement to declare all payments thereunder to be due and payable on the tender date specified in the notice by the Trustee described in this paragraph and the Trustee shall draw upon the Letter of Credit to the full extent necessary hereunder and permitted by the terms thereof to provide for the timely payment of principal and interest accrued to such tender date.
The provisions of the preceding paragraphs are subject, however, to the condition that if, at any time after declaration or the occurrence of acceleration and prior to the entry of a judgment in a court for enforcement hereunder (after an opportunity for hearing by the Issuer and the Company),
(a) all sums payable hereunder (except the principal of and interest on Bonds which shall not have reached their stated maturity but which shall be due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default shall have occurred, shall have been duly paid or provision shall have been made therefor by deposit with the Trustee or Paying Agents,
(b) all existing Events of Default shall have been cured, and
(c) so long as the Letter of Credit or an Alternate Credit Facility is in effect, (i) the written consent of the Bank shall have been obtained (which consent shall also rescind any "Event of Default" under the Reimbursement Agreement, if the Event of Default hereunder is one specified in Section 601(f) hereof); and (ii) if the Event of Default hereunder is one specified in Section 601(g) hereof or if a drawing under the Letter of Credit or Alternate Credit Facility shall have been made, the Trustee shall have received written notice of reinstatement of the full amount of such drawing,
then and in every case, the Trustee shall waive the Event of Default and its consequences and shall rescind and annul that declaration. No waiver or rescission and annulment shall extend to or affect any subsequent Event of Default or shall impair any rights consequent thereon.
Section 603. Other Remedies; Rights of Holders. With or without taking action under Section 602 hereof, upon the occurrence and continuation of an Event of Default, the Trustee may pursue any available remedy to enforce the payment of Debt Service or the observance and performance of any other covenant, agreement or obligation under this Indenture, the Lease Agreement, the Letter of Credit or any other instrument providing security, directly or indirectly, for the Bonds.
If, upon the occurrence and continuation of an Event of Default, the Trustee is requested so to do by the Holders of at least 25% in aggregate principal amount of Bonds Outstanding, the Trustee shall exercise any rights and powers conferred by this Section and by Section 602 hereof.
No remedy conferred upon or reserved to the Trustee (or to the Holders) by this Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or otherwise to the Trustee or to the Holders or now or hereafter existing.
No delay in exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default shall impair that remedy, right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient.
No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Holders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy, right or power consequent thereon.
As the assignee of all right, title and interest of the Issuer in and to the Lease Agreement (except as therein reserved), the Trustee is empowered to enforce each remedy, right and power granted to the Issuer under the Lease Agreement. In exercising any remedy, right or power thereunder or hereunder, the Trustee shall take any action which would best serve the interests of the Holders in the judgment of the Trustee.
Section 604. Application of Moneys. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the expenses, liabilities and advances
incurred or made by the Trustee, be deposited in the Bond Fund and all moneys in
the Bond Fund shall be applied as follows (provided, however, that (i) moneys
received from a drawing under the Letter of Credit or held pursuant to Section
403 hereof shall only be used to pay Debt Service on other than Pledged Bonds;
(ii) moneys received from any other source shall be used to pay Debt Service on
Pledged Bonds first; and (iii) any characterization made herein as to the
application of such moneys to pay interest or principal or both shall not
necessarily govern or mirror such characterization of those payments as may be
made by any taxing authority with jurisdiction over the recipient thereof):
(a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied to the payment to the Persons entitled thereto of (i) all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and (ii) the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), with interest on such Bonds (at the rate borne by the Bonds) from the respective dates upon which they became due and, if the amount available shall not be sufficient to pay in full the principal of Bonds due on any particular date, together with such interest, then to the payment thereof ratably, according to the amount of principal due on such date, to the Persons entitled thereto, without any discrimination or privilege.
(b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds (provided for this purpose any premium then payable on the Bonds shall be treated as principal), without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto, without any discrimination or privilege.
(c) If the principal of all the Bonds shall have been declared due and payable and such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, all such moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date (the "Special Record Date") interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give notice of the deposit with it of any such moneys and of the fixing of any such date (all consistent with the requirements hereof for the establishment and notification of a Special Record Date for the payment of overdue interest), and shall not be required to make payment to the Holder of any unpaid Bond until such date.
Whenever all Bonds and interest and premium, if any, thereon shall have been paid under the provisions of this Section and all expenses and charges of the Trustee shall have been paid, any balance remaining in the Bond Fund shall be paid to or upon the order of the Company or the Bank, if any reimbursement obligation is owing to it under the Reimbursement Agreement; provided that no moneys remaining in the Credit Facility Account of the Bond Fund shall be paid to the Company.
Section 605. Remedies Vested in Trustee. All rights of action (including the right to file proofs of claim) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Bonds, and any recovery of judgment shall be for the equal benefit of the Holders of the Outstanding Bonds.
Section 606. Rights and Remedies of Holders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless (a) the Holders of not less than 25% in principal amount of Bonds then Outstanding shall have made written request to the Trustee and shall have offered reasonable opportunity either to proceed to exercise the powers hereinabove granted or to institute such action, suit or proceeding in its own name, (b) such Holders shall also have offered to the Trustee indemnity as provided in Article V hereof, and (c) the Trustee shall thereafter have failed or refused to exercise the powers hereinabove granted or to institute such action, suit or proceeding in its own name. Such notification, request and offer of indemnity shall in every case (excepting those specified in Section 501(l) hereof), at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by its, his or their action or to enforce any right hereunder except in the manner herein provided,
and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Holders of all Bonds then Outstanding. Nothing in this Indenture contained shall, however, affect or impair the right of any Holder to enforce the payment of the principal of, premium, if any, and interest on any Bond at and after the maturity thereof at the time, place, from the source and in the manner in said Bond expressed.
Section 607. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Indenture invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law.
[END OF ARTICLE VI]
ARTICLE VII
Section 701. Supplemental Indentures Not Requiring Consent of Holders. The Issuer and the Trustee may, without the consent of, or notice to, any of the Holders, enter into an indenture or indentures supplemental to this Indenture to accomplish any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Indenture;
(b) To grant to or confer upon the Holders or the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Holders or the Trustee;
(c) To subject to this Indenture additional revenues, properties or collateral;
(d) To add to the covenants, agreements and obligations of the Issuer under this Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders;
(e) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under this Indenture, the Lease Agreement and the Bonds;
(f) To provide for the issuance of the Refunding Obligations and the refunding of the Series 1996A Bonds;
(g) To permit the use of a book entry system to identify the owner of an interest in an obligation issued by the Issuer under this Indenture, whether that obligation was formerly, or could be, evidenced by a tangible security;
(h) To permit the Trustee to comply with any obligations imposed upon it by law;
(i) To specify further the duties and responsibilities of, and to define further the relationships among, the Trustee, the Tender Agent, the Registrar and any Authenticating Agents or Paying Agents;
(j) To achieve compliance of this Indenture with any applicable federal or state securities or tax law;
(k) To provide for a Substitute Letter of Credit or an Alternate Credit Facility and to make any change necessary to facilitate the provision of such Substitute Letter of Credit or Alternate Credit
Facility, provided such change shall not adversely affect the interests of the Holders of the Bonds;
(l) To secure or maintain ratings from a Rating Agency, provided that (i) the changes necessary to obtain or secure such ratings do not adversely affect the interests of the Holders of the Bonds and (ii) the Trustee receives a Non-Taxability Opinion with respect to such changes, which further opines to the effect that such changes are permitted by applicable law; and
(m) To make amendments to the provisions hereof with respect to the Bonds relating to arbitrage matters under Section 148 of the Code, which amendments may, among other things, change the responsibility for making the relevant calculations, but only upon receipt of a Non-Taxability Opinion with respect to the proposed changes.
The provisions of Subsections 701(h) and (j) hereof shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of any right which any of them may have in the absence of those provisions to contest the application of any change in law to this Indenture or the Bonds.
Section 702. Supplemental Indentures Requiring Consent of Holders. Exclusive of supplemental indentures covered by the preceding Section and subject to the terms and provisions contained in this Section, and not otherwise, the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to and approve the execution by the Issuer and the Trustee of such other indenture or indentures supplemental hereto as shall be requested by the Issuer or the Company as necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture. Nothing in this Section or Section 701 hereof shall permit, however, or be construed as permitting,
(a) without the consent of the Holder of each Bond so affected,
(i) an extension of the maturity of the principal of or the interest on
any Bond or (ii) a reduction in the principal amount of any Bond or the
rate of interest or premium thereon, or
(b) without the consent of the Holders of all Bonds then Outstanding, (i) the creation of a privilege or priority of any such Bond or Bonds over any other such Bond or Bonds, or (ii) a reduction in the aggregate principal amount of Bonds required for consent to a supplemental indenture.
If at any time the Issuer (or the Company, on the Issuer's behalf) shall request the Trustee to enter into a supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture (setting forth briefly the subject matter thereof and stating that copies thereof are available for inspection at the Trustee's
Office) to be mailed by first class mail, postage prepaid, to all Holders of Bonds then Outstanding at their addresses appearing on the Register. The Trustee shall not, however, be subject to any liability by reason of its failure to mail, or the failure of any Holder to receive, such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and executed as provided in this Section.
If within such period, not exceeding one year, as shall be prescribed by the Issuer, following the giving of the notice referred to in the preceding paragraph of this Section, the Trustee shall receive an instrument or instruments purporting to be executed by the Holders of not less than a majority in aggregate principal amount of Bonds then Outstanding, which instrument or instruments shall refer to the proposed supplemental indenture described in such notice and shall specifically consent to the execution thereof in substantially the form referenced in such notice as on file with the Trustee, thereupon, but not otherwise, the Trustee shall execute such supplemental indenture in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto.
Any such consent shall be binding upon the Holder of the Bond giving the same and, anything in Section 1001 hereof to the contrary notwithstanding, upon any subsequent Holder of such Bond and of any Bond issued in exchange therefor (whether or not such subsequent Holder has notice thereof), unless such consent is revoked in writing by the Holder of such Bond giving such consent or by a subsequent Holder thereof by filing with the Trustee, prior to the execution by the Trustee of such supplemental indenture, such revocation. At any time after the Holders of the required percentage of Bonds shall have filed their consents to the supplemental indenture, the Trustee shall make and file with the Issuer a written statement that the Holders of such required percentage of Bonds have filed such consents, which statement shall be conclusive that such consents have been so filed.
If the Holders of the required percentage in aggregate principal amount of the Bonds Outstanding shall have consented to the execution thereof as herein provided, no Holder of any Bond shall have any right to object to the execution of such supplemental indenture, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.
Section 703. Additional Consents Required. Anything herein to the contrary notwithstanding, any supplemental indenture under this Article shall not become effective unless and until the Company and, so long as a Letter of Credit or Alternate Credit Facility shall be in effect, the Bank shall have consented in writing to the execution and delivery of such supplemental indenture.
Section 704. Amendments of Lease Agreement. The Issuer and the Company may, with the consent of the Trustee and the Bank but without consent of or notice to any Holders, enter into any amendment of the Lease Agreement for
purposes analogous to those described in subsections (a) through (f) and (k) through (m) of Section 701 hereof pertaining to supplemental indentures. Any other amendment of the Lease Agreement may only be made with the consent of the Holders of such percentage of Bonds Outstanding as is specified in Section 702 hereof pertaining to supplemental indentures.
(a) The Trustee may, without the consent of or notice to the Holders of the Bonds, consent to any amendment, modification or other change of the Letter of Credit for the purpose of curing any ambiguity or formal defect or omission or obtaining a credit rating on the Bonds from any Rating Agency, provided that (i) the Trustee, in its sole judgment, shall determine that such change does not adversely affects the interests of the Holders of the Bonds and (ii) the Trustee shall receive a Non-Taxability Opinion with respect to such change and further opining to the effect that such change is permitted by applicable law.
(b) Except as provided in subsection (a) of this Section, no amendment, modification or other change of the Letter of Credit (other than in connection with an Extension Letter of Credit) shall be made without the consent of the Holders of all Bonds Outstanding.
[END OF ARTICLE VII]
ARTICLE VIII
Section 801. Defeasance. When all of the Bonds shall have been fully
paid and provision shall also have been made for paying all other sums payable
hereunder and under the Lease Agreement, then this Indenture shall be defeased,
discharged and satisfied (except for those provisions surviving by reason of
Section 803 hereof) and the Issuer shall be released from the covenants,
agreements and obligations of the Issuer contained in this Indenture. Upon such
defeasance, discharge and satisfaction, the Trustee, at the request of the
Issuer, shall execute such documents as may be reasonably requested by the
Issuer to evidence the defeasance, discharge and satisfaction of this Indenture
and the release of the Issuer from its obligations hereunder.
Section 802. Payment of Bonds. At such time (if any) as the Bonds bear interest at the Fixed Rate, and only at any such time, all of the Bonds shall be deemed to have been fully paid within the meaning of Section 801 hereof, if the Trustee (and, if applicable, any other Paying Agents) shall have received, in trust therefor and irrevocably committed thereto,
(a) sufficient Available Moneys, or
(b) noncallable direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America are pledged, which shall have been acquired with Available Moneys and which are certified by an independent public accounting firm of national reputation to be of such maturities or redemption dates and interest payment dates, and to bear such interest, as will be sufficient, together with any moneys to which reference is made in subparagraph (a) above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so committed, except as provided herein),
for the payment of all Debt Service on the Bonds, at their maturity or redemption dates, as the case may be, or if a default in payment shall have occurred on any maturity or redemption date, then for the payment of all Debt Service thereon to the date of the tender of payment; provided, that if any of those Bonds are to be redeemed prior to the maturity thereof, notice of that redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of that notice; provided further, that if any of those Bonds are purchased upon tender prior to the maturity thereof, such Bonds shall be delivered to the Trustee for cancellation and not remarketed.
Any moneys held by the Trustee in accordance with the provisions of this Section may be invested by the Trustee only in noncallable direct obligations of the United States of America having maturity dates, or having redemption dates which, at the option of the holder of those obligations, shall be not later than the date or dates on which moneys will be required for the
purposes described above. To the extent that any income or interest earned by,
or increment to, the investments held under this Section is determined from time
to time by the Trustee to be in excess of the amount required to be held by the
Trustee for the purposes of this Section, that income, interest or increment
shall be transferred at the time of that determination in the manner provided in
Section 404 hereof for transfers of amounts remaining in the Bond Fund.
If any Bonds shall be deemed paid and discharged pursuant to this
Section 802, then within 15 days after such Bonds are so deemed paid and
discharged the Trustee shall cause a written notice to be given to each Holder
as shown on the Register on the date on which such Bonds are deemed paid and
discharged. Such notice shall state that all Bonds are deemed paid and
discharged, set forth a description of the obligations, if any, held pursuant to
subparagraph (b) of the first paragraph of this Section 802 and specify any date
or dates on which any of the Bonds are to be called for redemption pursuant to
notice of redemption given or irrevocable provision made for such notice
pursuant to the first paragraph of this Section 802.
Section 803. Survival of Certain Provisions. Any provisions of this
Indenture which relate to the maturity of Bonds, interest payments and dates,
optional and mandatory redemption provisions, exchange, transfer and
registration of Bonds, replacement of mutilated, destroyed, lost or stolen
Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, the
holding of moneys in trust (including without limitation any moneys or
investments held by the Trustee at such time in the Bond Fund or Bond Purchase
Fund for payments in accordance with Article III and Sections 403 and 404
hereof), repayments to the Bank or the Company from the Bond Fund, and the
duties of the Trustee and the Registrar in connection with all of the foregoing,
shall remain in effect and be binding upon the Trustee, the Registrar, the
Authenticating Agents, Paying Agents and the Holders notwithstanding the
release, discharge and satisfaction of this Indenture. The provisions of this
Section 803 shall survive the release, discharge and satisfaction of this
Indenture.
[END OF ARTICLE VIII]
ARTICLE IX
In addition to any other covenants and agreements of the Issuer contained in this Indenture, the Issuer, for itself, its successors and assigns, covenants and agrees with the Trustee and the Holders from time to time of the Bonds as follows:/
Section 901. Payment of Debt Service and Purchase Price. The Issuer will pay all Debt Service on and Purchase Price of the Bonds, or cause the same to be paid, solely from the sources provided herein, on the dates, at the places and in the manner provided in this Indenture.
Section 902. Revenues and Assignment of Revenues. The Issuer has not assigned or granted a security interest in, and will not assign or grant a security interest in, or create or authorize to be created any debt, lien or charge on, the Revenues, other than the absolute and irrevocable assignment hereby made to the Trustee of any right, title and interest of the Issuer in and to those Revenues constituting proceeds of a drawing under the Letter of Credit or any Alternate Credit Facility and remarketing proceeds and all rights and remedies of the Issuer under the Lease Agreement (except for the Unassigned Rights, as therein defined) and the grant to the Trustee of a security interest in the other Revenues.
Section 903. Performance of Covenants by Issuer. The Issuer will faithfully perform at all times any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, in the Lease Agreement, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of its governing body pertaining thereto.
Section 904. Inspection of Project Books. All books and documents in its possession relating to the Project and the Revenues and receipts derived from the Project, including any financial statement or other report by the Company, shall at all times during the Issuer's regular business hours be open to inspection by such accountants or other agents of the Trustee as the Trustee may from time to time designate.
Section 905. Register. At reasonable times and under reasonable regulations established by the Registrar, the Register may be inspected and copied by the Company, the Trustee, by Holders of 25% or more in principal amount of the Bonds then Outstanding, or a designated representative of any of the foregoing.
Section 906. Rights and Enforcement of the Lease Agreement. The Trustee may, for and on behalf of the Holders, enforce in its name or in the name of the Issuer all rights of the Issuer under the Lease Agreement (except for Unassigned Rights), and may enforce all covenants, agreements and obligations of the Company under and pursuant to the Lease Agreement, regardless of whether the Issuer is in default in the pursuit or enforcement of those rights, covenants, agreements or obligations. The Issuer, however, will do all things and take all
actions on its part necessary to comply with covenants, agreements, obligations, duties and responsibilities on its part to be observed or performed under the Lease Agreement, and will take all actions within its authority to keep the Lease Agreement in effect in accordance with the terms thereof.
Section 907. Further Assurances. The Issuer will at any time or times, and at the expense of the Company, do, execute, acknowledge and deliver and cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, assignments, pledges, transfers and assurances in law as the Trustee shall reasonably require for the better assuring, assigning, transferring, pledging and confirming unto the Trustee, all and singular, the property herein conveyed or intended so to be.
Section 908. Non-Taxable Status. The Issuer covenants that it (i) will take, or require to be taken, all actions that may be required of the Issuer for the interest on the Series 1996B Bonds and (if and when issued) the Refunding Obligations to be and remain excluded from gross income for federal income tax purposes, and (ii) will not take or authorize to be taken any actions that would adversely affect that exclusion under the provisions of the Code.
[END OF ARTICLE IX]
ARTICLE X
Section 1001. Consents, Etc., of Holders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by Holders may be in any number of writings of similar tenor and may be signed or executed by such Holders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument:
(a) the fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of any witness to such execution; and
(b) the fact of ownership of Bonds shall be proved from the Register maintained by the Registrar.
Section 1002. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give any Person other than the parties hereto, the Holders of the Bonds, the Bank and the Company any legal or equitable right, remedy or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto, the Company, the Bank and the Holders of the Bonds as herein provided.
Section 1003. Severability. If any provision of this Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or Sections in this Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof.
Section 1004. Limitation of Liability. The Bonds will not constitute general obligations of the Issuer nor will they constitute a liability or obligation of the State or any political subdivision thereof. No recourse under
or upon any covenant or agreement of this Indenture, or of any of the Bonds, or for any claim based thereon or otherwise in respect thereof, shall be had against any past, present or future incorporator, officer or member of the governing body of the Issuer, or any of its servants, agents or employees, or of any successor corporation, either directly or through the Issuer, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the Bonds issued hereunder are solely corporate obligations, and that no personal liability whatever shall attach to, or is or shall be incurred by, any incorporator, officer or member of the governing body of the Issuer or any successor corporation, or any servants, agents or employees of the Issuer or any successor corporation, or any of them, because of the issuance of the Bonds, or under or by reason of the covenants or agreements contained in this Indenture or the Bonds or implied therefrom.
Section 1005. Payments Due on Other than Business Days. In any case where the scheduled date of payment of Debt Service or Purchase Price is not a Business Day, then such payment need not be made on such date but may be made on the Business Day next succeeding the scheduled date, in the same amount due, and with the same force and effect as if made, on the scheduled date.
Section 1006. Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 1007. Notices. Unless otherwise provided or permitted herein, any notice, request, complaint, demand, communication or other paper shall be in writing and shall be deemed to be sufficiently given to a party when delivered or mailed by registered or certified mail, postage prepaid, or sent by telegram or Telefax, addressed as follows:
(a) if to the Issuer, at The Industrial Development Board of the City of Montgomery, Post Office Box 79, Montgomery, Alabama 36101, Attention: Chairman of the Board of Directors, Telefax No. (334) 265-4745;
(b) if to the Company, at KINPAK INC., c/o Ocean Bio-Chem, Inc., 4041 S.W. 47th Avenue, Ft. Lauderdale, FL 33314, Attention: President, Telefax No. (954) 587-2813;
(c) if to the Trustee, at Regions Bank, 60 Commerce Street, 2nd Floor, Montgomery, Alabama 36104, Attention: Corporate Trust Department, Telefax No. (334) 230-6150;
(d) if to the Bank, at First Union National Bank of Florida, 200
East Broward Boulevard, 9th Floor, Ft. Lauderdale, FL 33301, Attention:
Debbie Gilchrist, Telefax No. (954) 467-5331; and
(e) If to the Remarketing Agent, at First Union Capital Markets Group, One First Union Center, DC-6, Charlotte, North Carolina 28288-0166, Attention: John F. Wooten, Telefax No. (704) 383-3694.
Any of the foregoing parties may, by notice given hereunder, designate any further or different address or addresses to which subsequent notices, certificates, requests or other communications shall be sent.
Section 1008. Suspension of Mail. If, because of the suspension of delivery of first class mail or any other reason, the Trustee shall be unable to mail by the required class of mail any notice required to be mailed by the provisions of this Indenture, the Trustee shall give such notice in such other manner as in the judgment of the Trustee shall most effectively approximate mailing thereof, and the giving of that notice in that manner for all purposes of this Indenture shall be deemed to be in compliance with the requirement for the mailing thereof. Except as otherwise provided herein, the mailing of any notice shall be deemed complete upon deposit of that notice in the mail and the giving of any notice by any other means of delivery shall be deemed complete upon receipt of the notice by the delivery service.
Section 1009. Governing Law. This Indenture and the Bonds shall be deemed to be contracts made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State.
Section 1010. Opinions of Bond Counsel Not Required. Notwithstanding the provisions of Section 202(g) of this Indenture, in the event the Company obtains an opinion of Bond Counsel, and delivers a copy of the same to the Trustee, the Remarketing Agent and the Bank, to the effect that opinions of Bond Counsel should no longer be required in any instance of a Proposed Conversion Date, such opinions shall thereupon no longer be required as a precondition to the Conversion Date.
Section 1011. Contest of Determination of Taxability. If no Event of Default exists, the Company may, within 20 days after being notified of a Determination of Taxability and after furnishing to the Trustee a Non-Taxability Opinion in respect of the event or events leading up to said Determination, pursue in the name of any affected Holder such remedies as may then be available to such Holder in order to obtain an administrative ruling or judicial determination in a proceeding to which the Internal Revenue Service is a party, to the effect that the interest on the Series 1996B Bonds or (if and when issued) the Refunding Obligations is not Taxable. In such event, and for so long as the Company pursues such administrative or judicial remedies with due diligence, such Holder shall cooperate with the Company and no Final Determination shall be deemed to have occurred until the first to occur of either (1) the final determination of such contest adversely to the Company with no further right of appeal, or (2) prior to such final determination, the expiration of a period of 24 months after the date the Company received such notification of a Determination of Taxability or such further extended periods of time (not to exceed three months at a time) as such Holder may from time to time consent to in writing.
[END OF ARTICLE X]
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this instrument to be duly executed and their respective corporate seals to be hereunto affixed and attested.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MONTGOMERY
(SEAL)
By: /s/ R. E. Thornton, Jr.
-----------------------------------
Chairman of the Board of Directors
ATTEST:
/s/ [ILLEGIBLE]
----------------------------
[Assistant] Secretary
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REGIONS BANK, as Trustee and Registrar
(SEAL)
By: /s/ Robert B. Rinehart
-----------------------------------
Vice President/Corporate Trust Officer
ATTEST:
/s/ [ILLEGIBLE]
---------------------------
Corporate Trust Officer
|
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that R. E. Thornton, Jr., whose signature as the Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing Indenture and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Indenture, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this 16th day of December, 1996.
/s/ [ILLEGIBLE]
----------------------------------
NOTARY PUBLIC, State at Large
My Commission Expires:
------------
(SEAL)
|
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Robert B. Rinehart, whose signature as Vice President/Corporate Trust Officer of Regions Bank is signed to the foregoing Indenture, and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Indenture, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Bank.
Given under my hand and seal of office this 18th day of December, 1996.
/s/ [ILLEGIBLE]
----------------------------------
NOTARY PUBLIC, State at Large
My Commission Expires:
------------
(SEAL)
|
Roy S. Goldfinger, Esq.
Roy S. Goldfinger, P.C.
P.O. Box 2007
Montgomery, Alabama 36102-2007
(334) 832-4567
FIRST SUPPLEMENTAL TRUST INDENTURE
between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY
and
REGIONS BANK,
as Trustee and Registrar
Relating to The Industrial Development Board of the City of Montgomery $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 and $990,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1996B
Dated
as of
March 1, 1997
Roy S. Goldfinger, P.C.
Montgomery, Alabama
Bond Counsel
THIS INSTRUMENT AMENDS AND SUPPLEMENTS THAT CERTAIN TRUST INDENTURE, DATED AS OF DECEMBER 1, 1996 AND RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN RLPY BOOK 1718, PAGE 679, BETWEEN THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY AS LESSOR AND REGIONS BANK AS TRUSTEE.
FIRST SUPPLEMENTAL TRUST INDENTURE
INDEX
-----
Page
----
PARTIES.....................................................................1
RECITALS....................................................................1
Section 1. Definitions.....................................................2
Section 2. Interpretation..................................................3
Section 3. Captions and Headings...........................................3
Section 4. Issuance of the Series 1997 Bonds; Terms Thereof................4
Section 5. Provisions as to Funds..........................................4
Section 6. Investment of Fund Moneys.......................................6
Section 7. Effect on Original Indenture....................................7
Section 8. Execution Counterparts..........................................7
SIGNATURES..................................................................8
ACKNOWLEDGMENTS.............................................................9
CONSENT OF COMPANY.........................................................10
CONSENT OF BANK............................................................11
Exhibit A Form of Series 1997 Bond
|
FIRST SUPPLEMENTAL TRUST INDENTURE
THIS FIRST SUPPLEMENTAL TRUST INDENTURE made and entered into as of March 1, 1997 (this "First Supplemental Indenture"), by and between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, its successors and assigns (the "Issuer"), a public corporation organized and existing under the laws of the State of Alabama (the "State"), and REGIONS BANK, a state banking corporation authorized to accept and execute trusts of the character herein set forth, with its principal corporate trust office for purposes of discharging the trusts hereunder being in the City of Montgomery, Alabama, its successors and assigns (the "Trustee"), under the circumstances set forth in the following recitals (the capitalized terms not defined in this paragraph or the recitals being used therein as defined in Article I hereof or, if not otherwise defined herein, in the Original Indenture hereinafter mentioned, which definitions are hereby incorporated by reference herein):
W I T N E S S E T H:
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, expand, own, lease, and dispose of properties to the end that the Issuer may be able to promote industry and develop trade by inducing manufacturing, industrial, commercial and research enterprises to locate in the State, or to enlarge and expand existing enterprises, or both, and further the use of the agricultural products and natural resources of the State.
B. On October 17, 1979, the Issuer issued the Prior Bonds pursuant to the Act and applied the proceeds thereof to acquire, construct and equip the Existing Facilities. On December 20, 1996, the Issuer issued inter alia the Series 1996A Bonds pursuant to the Act and the Original Indenture, the proceeds of which were to be applied (1) to renovate and upgrade the Existing Facilities and (2) to acquire, construct and equip the New Facilities. The Old Facilities and the New Facilities (collectively, and as more fully described in the Original Lease, the "Project") are situated on the Leased Realty as described in Exhibit A to the First Supplemental Lease.
C. In the Original Lease and the Original Indenture, the Issuer agreed to issue the Refunding Obligations in order to refund the Series 1996A Bonds, such issuance and refunding to occur as soon as all of the requirements of the Code to assure the non-Taxable status of the Refunding Obligations could be satisfied, including without limitation the requirement of obtaining an allocation of the State ceiling for private activity bonds (an "Allocation").
D. The Issuer has on January 8, 1997 received an Allocation in the amount of $4,000,000, allowing the issuance on a non-Taxable basis of Refunding Obligations in such amount, being equal to the outstanding amount of the Series 1996A Bonds.
E. The Issuer has adopted the Bond Resolution providing for the issuance of the Series 1997 Bonds and for the amending and supplementing of the Original Indenture, to be accomplished hereby, and of the Original Lease, to be accomplished by the First Supplemental Lease to be entered into simultaneously herewith.
F. The execution and delivery of this First Supplemental Indenture and the issuance of the Series 1997 Bonds under the Act have been in all respects duly and validly authorized by resolutions duly adopted and approved by the Issuer.
G. The Series 1997 Bonds to be issued under the Indenture and the authentication certificate thereon are to be substantially in the forms thereof attached hereto as Exhibit A, with appropriate omissions, insertions and variations permitted or authorized as hereinafter provided.
H. All things necessary to make the Series 1997 Bonds, when authenticated by the Trustee and issued as in this First Supplemental Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute the Indenture a valid pledge of the Revenues to the payment of the Debt Service on and Purchase Price of the Bonds, have been done and performed, and the creation, execution and delivery of this First Supplemental Indenture, and the execution and issuance of the Series 1997 Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties to this First Supplemental Indenture hereby formally covenant, agree and bind themselves as follows:
Section 1. Definitions. In addition to the words and terms elsewhere defined in this First Supplemental Indenture or the Original Indenture, or by reference to the Lease Agreement or other document, unless the context or use clearly indicates another or different meaning or intent:
"Bond" or "Bonds" means, collectively, the Series 1996B Bonds and the Series 1997 Bonds.
"Bond Fund" means, individually or collectively, as the context may require, the Bond Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Bond Fund in respect of the Series 1997 Bonds created in this First Supplemental Indenture.
"Bond Purchase Fund" means, individually or collectively, as the context may require, the Bond Purchase Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Bond Purchase Fund in respect of the Series 1997 Bonds created in this First Supplemental Indenture.
"Bond Resolution" means the resolution adopted by the Board of Directors of the Issuer on January 22, 1997 authorizing the issuance of the Series 1997 Bonds and the execution and delivery of the Issuer Documents and related documents.
"Construction Fund" means the Construction Fund created in this First Supplemental Indenture.
"First Supplemental Lease" means the First Supplemental Lease Agreement, dated as of the first day of the month in which the Issue Date occurs, between the Issuer and the Company, amending and supplementing the Original Lease in connection with the issuance of the Series 1997 Bonds.
"Indenture" means the Original Indenture, as amended and supplemented by this First Supplemental Indenture and as the same may hereafter be further amended and supplemented.
"Initial Letter of Credit" means the Letter of Credit issued by the Bank and delivered to the Trustee on December 20, 1996, as the same has been modified in connection with the issuance of the Series 1997 Bonds.
"Issue Date" means the date of the initial authentication and delivery of the Series 1997 Bonds.
"Lease Agreement" means the Original Lease, as amended and supplemented by the First Supplemental Lease and as the same may hereafter be further amended and supplemented.
"Original Indenture" means the Trust Indenture dated as of December 1, 1996 between the Issuer and the Trustee.
"Original Lease" means the Restated Lease Agreement dated as of December 1, 1996 between the Issuer and the Company.
"Placement Memorandum" means the Private Placement Memorandum to be dated on or before the Issue Date pertaining to the private placement of the Bonds.
"Rebate Fund" means, individually or collectively, as the context may require, the Rebate Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Rebate Fund in respect of the Series 1997 Bonds created in this First Supplemental Indenture.
"Refunding Fund" means the Refunding Fund created in this First Supplemental Indenture.
Section 2. Interpretation. The provisions of Section 102 of the Original Indenture are hereby ratified and reaffirmed, except that, unless the context indicates otherwise, the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this First Supplemental Indenture; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this First Supplemental Indenture.
All references in the Original Indenture and the Original Lease to the Refunding Obligations shall be construed to refer to the Series 1997 Bonds, which are and constitute the Refunding Obligations.
Section 3. Captions and Headings. The captions and headings in this First Supplemental Indenture are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
Section 4. Issuance of the Series 1997 Bonds; Terms Thereof.
(a) It is determined to be necessary to, and the Issuer shall, issue, sell and deliver the Series 1997 Bonds for the purpose of refunding the Series 1996A Bonds, which were in turn issued for the purpose of assisting in financing the costs of the Project. The Series 1997 Bonds shall be designated "Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997"; shall mature, unless earlier redeemed, on the first Business Day of March, 2012; shall be issuable only in fully registered form, substantially in the form attached as Exhibit A to this First Supplemental Indenture; shall be numbered consecutively upwards beginning with R-1; shall be dated the Issue Date; shall be redeemable in accordance with the redemption provisions contained in the Form of Bond attached as Exhibit A hereto and incorporated by reference herein; shall bear interest from the most recent date to which interest shall have been paid or duly provided for or, if no interest shall have been paid or duly provided for, from the Issue Date; and shall be issuable in Authorized Denominations, except that the final maturity of the Series 1997 Bonds may be represented by an instrument of a denomination equal to a multiple of $5,000 that is less than $100,000. The Series 1997 Bonds may be issued in book-entry form in accordance with the requirements of applicable law. The Series 1997 Bonds shall be initially issued as DTC-Eligible Obligations, and therefore the requirements of Section 216 of the Original Indenture shall be applicable.
(b) As contemplated in Section 202(b) of the Original Indenture, the Remarketing Agent shall continue to make separate Seven-Day Rate determinations for the Series 1996B Bonds and the Series 1997 Bonds.
(c) All other provisions of Articles II and III of the Original Indenture shall continue to be applicable to the Series 1997 Bonds.
(d) Upon the execution and delivery of this First Supplemental Indenture, and satisfaction of the conditions established by the Issuer for delivery of the Series 1997 Bonds, the Issuer shall execute the Series 1997 Bonds and deliver them to the Trustee or other Authenticating Agent for authentication and delivery to, or on the order of, the Placement Agent. Prior to the delivery of the Series 1997 Bonds, there shall have been received by the Trustee a duly executed request and authorization to the Trustee from the Issuer to authenticate and deliver the Series 1997 Bonds to, or on the order of, the Placement Agent upon payment to the Trustee of the amount specified therein. That amount shall be deposited in the Refunding Fund herein created, all as hereinafter described and as shall be more fully provided in said request and authorization of the Issuer.
Section 5. Provisions as to Funds.
(a) Sections 401(a) and 406(a) of the Original Indenture contemplated the creation by the Trustee of a single Bond Fund and a single Bond Purchase Fund, respectively, for both the Series 1996A Bonds and the Series 1996B Bonds. In fact, the Trustee created separate Bond Funds and Bond Purchase Funds for each of the aforesaid Series, and the provisions of Sections 401(a) and 406(a) are hereby amended to correct said formal inaccuracy.
(b) Upon the redemption in whole of the Series 1996A Bonds, which is intended to occur on the Issue Date, the Trustee shall take the necessary steps to close the Bond Fund, the Bond Purchase Fund and the Construction Fund created under the Original Indenture in connection with the issuance of the Series 1996A Bonds; and any moneys and investments remaining in any such Fund upon its closure shall be transferred, respectively, to the Bond Fund, the Bond Purchase Fund or the Construction Fund created under this First Supplemental Indenture in connection with the issuance of the Series 1997 Bonds.
(c) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. 1997 Bond Fund" (the "Bond Fund"). The provisions of the Original Indenture relating to the Bond Funds created thereunder shall continue to be applicable to the Bond Fund created hereunder.
(d) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. 1997 Bond Purchase Fund" (the "Bond Purchase Fund"). The provisions of the Original Indenture relating to the Bond Purchase Funds created thereunder shall continue to be applicable to the Bond Purchase Fund created hereunder.
(e) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. 1997 Construction Fund" (the "Construction Fund"). As provided in Section 5(b) hereinabove, the moneys and investments remaining in the Construction Fund created under the Original Indenture, representing proceeds of the sale of the Series 1996A Bonds, shall be deposited in the Construction Fund created hereunder. All provisions of Section 405 of the Original Indenture pertaining to the Construction Fund created thereunder and disbursements therefrom shall continue to be applicable to the Construction Fund created hereunder, except that the cross-references to the Series 1996A Bonds in the Company certifications deemed made pursuant to Section 405(d)(3)(i) and (ii) of the Original Indenture shall be expanded to encompass the Series 1997 Bonds.
(f) There is hereby created by the Issuer and ordered established in the custody of the Trustee a fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. 1997 Rebate Fund" (the "Rebate Fund"). Any provision of the Indenture to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien under the Indenture. The provisions of the Original Indenture relating to the Rebate Fund created thereunder shall remain in full force and effect with respect to the Series 1996B Bonds and shall furthermore apply to the Rebate Fund created hereunder (provided that references in Section 407 of the Original Indenture to the Series 1996B Bonds shall, in the application of said Section to the Series 1997 Bonds, be deemed amended to refer to the Series 1997 Bonds).
(g) There is hereby created by the Issuer and ordered established in the custody of the Trustee a fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK INC. 1997
Refunding Fund" (the "Refunding Fund"). All the proceeds of the sale of the Series 1997 Bonds shall be deposited in the Refunding Fund on the Issue Date. The Trustee shall, on the Issue Date, and without need for further direction from the Issuer and the Company, apply the moneys on deposit in the Refunding Fund to the redemption, on the redemption date designated by the Trustee, of all outstanding Series 1996A Bonds, provided that accrued interest thereon to such redemption date shall be paid from proceeds of a drawing under the Initial Letter of Credit.
Section 6. Investment of Fund Moneys. Moneys in the Bond Fund and the Bond Purchase Fund (except for moneys therein (i) held pursuant to Section 403 of the Original Indenture, (ii) to pay Unsurrendered Bonds or (iii) representing proceeds of a drawing under the Letter of Credit, which moneys shall be either held in cash and not invested or invested only in Government Obligations with a maturity of not to exceed 30 days or fewer, as needed), the Refunding Fund and the Construction Fund shall be invested and reinvested by the Trustee in Eligible Investments at the direction of the Company, consistent, however, with the covenants of the Company contained in Section 11 of the First Supplemental Lease. Investments of moneys in the Bond Fund shall mature or be redeemable at the option of the Trustee at the times and in the amounts necessary to provide moneys to pay Debt Service on Series 1997 Bonds as the same shall become due at stated maturity, by redemption or otherwise.
Subject to any directions from the Company with respect thereto, from time to time, the Trustee may sell those investments and reinvest the proceeds therefrom in Eligible Investments maturing or redeemable as aforesaid. Any of those investments may be purchased from or sold to the Trustee, the Registrar, an Authenticating Agent or a Paying Agent, or any bank, trust company or savings and loan association affiliated with any of the foregoing. The Trustee shall sell or redeem investments credited to the Bond Fund to produce sufficient moneys applicable hereunder to and at the times required for the purpose of paying Debt Service on Series 1997 Bonds when due as aforesaid, and shall do so without necessity for any order on behalf of the Issuer and without restriction by reason of any order. An investment made from moneys credited to the Bond Fund, the Bond Purchase Fund, the Construction Fund or the Refunding Fund shall constitute part of that respective Fund, and each respective Fund shall be credited with all proceeds of sale and income from investment of moneys credited thereto. For purposes of the Indenture, all investments shall be valued at face amount or market value, whichever is less.
In addition to the foregoing requirements, the Issuer will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose investments in which gross proceeds of the Series 1997 Bonds are invested or that results in a smaller profit or a larger loss than would have resulted in an arm's length transaction in which the yield on the nonpurpose investment was not subject to any restriction. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
Furthermore, except to the extent set forth in an opinion of Bond Counsel, investments or deposits of proceeds of Series 1997 Bonds in certificates of deposit or pursuant to investment contracts shall not be made
without compliance, at or prior to such investment or deposit, with the requirements of Treasury Regulations Section 1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions thereto.
Section 7. Effect on Original Indenture. Except as hereby amended and supplemented, all other provisions of the Original Indenture are hereby ratified and reaffirmed.
Section 8. Execution Counterparts. This First Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this First Supplemental Indenture to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the date first hereinabove set forth.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MONTGOMERY
(SEAL)
By: /s/ R. E. Thornton, Jr.
----------------------------------
Chairman of the Board of Directors
ATTEST:
/s/ [illegible]
-----------------------
[Assistant] Secretary
|
REGIONS BANK, as Trustee and Registrar
(SEAL)
By: /s/ Robert B. Rinehart
-------------------------------------
Vice President/Corporate Trust Officer
ATTEST:
/s/ [illegible]
-----------------------
Corporate Trust Officer
|
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that R. E. Thornton, Jr., whose signature as the Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing First Supplemental Indenture and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this _______ day of ________, 1997.
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Robert B. Rinehart, whose signature as Vice President/Corporate Trust Officer of Regions Bank is signed to the foregoing First Supplemental Indenture, and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Bank.
Given under my hand and seal of office this _____ day of ________, 1997.
KINPAK INC., in its capacity as the Company (as defined in the Original Indenture) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as a supplemental indenture, all pursuant to Article VII of the Original Indenture.
IN WITNESS WHEREOF, KINPAK INC. has caused this consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
KINPAK INC.
By: /s/ Peter G. Dornau
--------------------------
Peter G. Dornau, President
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STATE OF FLORIDA )
:
BROWARD COUNTY )
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I, the undersigned Notary Public in and for said County in said State, hereby certify that Peter G. Dornau, whose name as President of KINPAK INC., an Alabama corporation, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of said Consent, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal of office this day of , 1997.
NOTARY PUBLIC State at Large (SEAL) My Commission Expires:
FIRST UNION NATIONAL BANK OF FLORIDA, in its capacity as the Bank (as defined in the Original Indenture) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as a supplemental indenture, all pursuant to Article VII of the Original Indenture.
IN WITNESS WHEREOF, FIRST UNION NATIONAL BANK OF FLORIDA has caused this Consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ Debbie Gilchrist
-----------------------
Debbie Gilchrist
Vice President
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STATE OF FLORIDA )
:
BROWARD COUNTY )
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I, the undersigned Notary Public in and for said County in said State, hereby certify that Debbie Gilchrist, whose name as Vice President of First Union National Bank of Florida, a national banking association, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of said Consent, she, as such officer and with full authority, executed the same voluntarily for and as the act of said association.
Given under my hand and seal of office this day of , 1997.
NOTARY PUBLIC State at Large
(SEAL) My Commission Expires:
THIS INSTRUMENT PREPARED BY:
----------------------------
Roy S. Goldfinger, Esq.
Roy S. Goldfinger, P.C.
P.O. Box 2007
Montgomery, Alabama 36102-2007
(334) 832-4567
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EXHIBIT 4.5
TRUST INDENTURE
between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY
and
REGIONS BANK,
as Trustee and Registrar
Relating to $3,500,000 The Industrial Development Board of the City of Montgomery Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002
Dated
as of
July 1, 2002
Roy S. Goldfinger, P.C.
Montgomery, Alabama
Bond Counsel
TRUST INDENTURE
INDEX
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Page
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PARTIES.....................................................................1
RECITALS....................................................................1
GRANTING CLAUSES............................................................2
ARTICLE I
DEFINITIONS
Section 101. Definitions...................................................4
Section 102. Interpretation...............................................17
Section 103. Captions and Headings........................................17
ARTICLE II
THE BONDS
Section 201. Authorized Amount of Bonds...................................18
Section 202. Issuance of the Bonds; Terms Thereof.........................18
Section 203. Execution of Bonds...........................................22
Section 204. Authentication of Bonds......................................22
Section 205. Payment and Ownership of Bonds...............................22
Section 206. Redemption...................................................23
Section 207. Notice of Redemption.........................................23
Section 208. Payment of Redeemed Bonds....................................24
Section 209. Partial Redemption...........................................24
Section 210. Election to Redeem...........................................25
Section 211. Mutilated, Lost, Stolen or Destroyed Bonds...................25
Section 212. Transfer and Exchange of Bonds...............................25
Section 213. Safekeeping and Cancellation of Bonds........................26
Section 214. Special Agreement with Holders...............................26
Section 215. Acceptance of Letter of Credit...............................27
Section 216. DTC Eligibility Requirements.................................27
ARTICLE III
TENDER PROVISIONS
Section 301. Optional Tenders.............................................28
Section 302. Mandatory Tenders............................................29
Section 303. Procedures for Purchase and Remarketing......................31
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ARTICLE IV
PROVISIONS AS TO FUNDS AND PAYMENTS
Section 401. Bond Fund....................................................35
Section 402. Payment of Debt Service......................................36
Section 403. Non-Presentment of Bonds.....................................36
Section 404. Release of Funds Upon Payment of Bonds.......................37
Section 405. Construction Fund; Disbursements.............................37
Section 406. Bond Purchase Fund...........................................38
Section 407. Rebate Fund..................................................39
Section 408. Investment of Fund Moneys....................................40
Section 409. Moneys to be Held in Trust...................................41
ARTICLE V
FIDUCIARIES
Section 501. Trustee's Acceptance and Responsibilities....................43
Section 502. Fees, Charges and Expenses of Fiduciaries....................45
Section 503. Notices to Holders...........................................45
Section 504. Intervention by Trustee......................................46
Section 505. Successor Trustees...........................................46
Section 506. Appointment of Co-Trustee....................................46
Section 507. Resignation by the Trustee...................................47
Section 508. Removal of the Trustee.......................................47
Section 509. Appointment of Successor Trustee.............................48
Section 510. Concerning Any Successor Trustee.............................48
Section 511. Right of Trustee to Pay Taxes and Other Charges..............49
Section 512. Adoption of Authentication...................................49
Section 513. Registrars...................................................49
Section 514. Designation and Succession of Paying Agents..................51
Section 515. Designation and Succession of Authenticating Agents..........51
Section 516. Dealing in Bonds.............................................52
Section 517. Tender Agent.................................................52
Section 518. Remarketing Agent............................................52
ARTICLE VI
DEFAULT PROVISIONS AND
REMEDIES OF TRUSTEE AND HOLDERS
Section 601. Events of Default............................................54
Section 602. Acceleration.................................................55
Section 603. Other Remedies; Rights of Holders............................56
Section 604. Application of Moneys........................................57
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Page
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Section 605. Remedies Vested in Trustee...................................58
Section 606. Rights and Remedies of Holders...............................58
Section 607. Remedies Subject to Applicable Law...........................59
ARTICLE VII
SUPPLEMENTAL INDENTURES; OTHER AMENDMENTS
Section 701. Supplemental Indentures Not Requiring Consent of Holders.....60
Section 702. Supplemental Indentures Requiring Consent of Holders.........61
Section 703. Additional Consents Required.................................62
Section 704. Amendments of Lease Agreement................................62
Section 705. Amendments of Letter of Credit...............................63
ARTICLE VIII
DEFEASANCE
Section 801. Defeasance...................................................64
Section 802. Payment of Bonds.............................................64
Section 803. Survival of Certain Provisions...............................65
ARTICLE IX
COVENANTS BY THE ISSUER
Section 901. Payment of Debt Service......................................66
Section 902. Revenues and Assignment of Revenues..........................66
Section 903. Performance of Covenants by Issuer...........................66
Section 904. Inspection of Project Books..................................66
Section 905. Register.....................................................66
Section 906. Rights and Enforcement of the Second Supplemental Lease......66
Section 907. Further Assurances...........................................67
Section 908. Corporate Existence..........................................67
Section 909. Issuer Not to Adversely Affect Tax Exemption.................68
ARTICLE X
MISCELLANEOUS
Section 1001. Consents, Etc., of Holders...................................69
Section 1002. Limitation of Rights.........................................69
Section 1003. Severability.................................................69
Section 1004. Limitation of Liability......................................70
Section 1005. Payments Due on Other than Business Days.....................70
Section 1006. Counterparts.................................................70
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Section 1007. Notices......................................................70
Section 1008. Suspension of Mail...........................................71
Section 1009. Governing Law................................................71
Section 1010. Opinions of Bond Counsel Not Required........................71
Section 1011. Contest of Determination of Taxability.......................71
SIGNATURES.................................................................72
ACKNOWLEDGMENTS............................................................73
Exhibit A Form of Bond
Exhibit B Form of Payment Requisition
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TRUST INDENTURE
THIS TRUST INDENTURE made and entered into as of July 1, 2002 (this "Indenture"), by and between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, a public corporation organized and existing under the laws of the State, its successors and assigns (the "Issuer"), and REGIONS BANK, a State banking corporation authorized to accept and execute trusts of the character herein set forth, with its principal corporate trust office for purposes of discharging the trusts hereunder being in the City of Montgomery, Alabama, its successors and assigns (the "Trustee"), under the circumstances set forth in the following recitals (the capitalized terms not defined in this paragraph or the recitals having the meanings given to them in Article I hereof):
W I T N E S S E T H:
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, expand, own, lease, and dispose of properties to the end that the Issuer may be able to promote industry and develop trade by inducing manufacturing, industrial, commercial and research enterprises to locate in the State, or to enlarge and expand existing enterprises, or both, and further the use of the agricultural products and natural resources of the State.
B. Pursuant to and in furtherance of the public purposes expressed in the Act, the Issuer heretofore on October 17, 1979 issued its revenue bonds (all of which have been paid in full as of the date hereof) and applied the proceeds thereof to pay costs of a "project", within the meaning of the Act, consisting of the acquisition, construction and equipping of certain manufacturing facilities (the "Initial Facilities") which the Issuer leased to Kinark Corporation, a Delaware corporation ("Kinark"). On or about February 27, 1996, the Company succeeded to the position of Kinark as lessee of the Initial Facilities.
C. At the request of the Company, the Issuer heretofore on December 20, 1996 issued revenue bonds on a Taxable basis (which the Issuer refunded in whole with the proceeds of the 1997 Bonds) and applied the proceeds thereof to pay costs of an additional "project", within the meaning of the Act, consisting of the renovation and improvement of the Initial Facilities and the acquisition, construction and equipping of an expansion thereto (the "1996 Project"). The Initial Facilities, as improved and expanded by the 1996 Project, constitute the "Existing Facilities".
D. In May 2000, the Company proposed to the Issuer the undertaking of a new "project", within the meaning of the Act (the "2002 Project"). In support of such proposal, the Issuer adopted the Inducement Resolution and the Bond Resolution and is now prepared to proceed with the issuance of the Bonds and to apply the proceeds thereof to pay or reimburse a portion of the Project Costs.
E. Simultaneously with the execution and delivery of this Indenture, the Issuer and the Company will enter into the Second Supplemental Lease, amending and supplementing the Existing Lease, pursuant to which the Company will agree, among other things, to pay Basic Rent at such times and in such amounts as shall be sufficient to pay when due the Debt Service on and Purchase Price of the Bonds.
F. The Bonds shall be limited obligations of the Issuer payable solely out of the Revenues. As additional security for the payment of the Bonds, the Company shall cause the Bank to issue the Initial Letter of Credit in favor of the Trustee in an amount equal to the sum of (a) the aggregate principal amount of the Bonds, to enable the Trustee to pay the principal of the Bonds when due and to pay the principal portion of the Purchase Price of Bonds tendered (or deemed tendered) for purchase, plus (b) interest on the Bonds for a period of 120 days at the maximum rate of 12% per annum, to enable the Trustee to pay interest on the Bonds when due and to pay the interest portion of the Purchase Price of Bonds tendered (or deemed tendered) for purchase.
G. The Initial Letter of Credit will be issued by the Bank pursuant to the Credit Agreement, whereby the Company (among others) will agree, among other things, to reimburse the Bank for amounts drawn by the Trustee under the Initial Letter of Credit, in accordance with the terms of the Credit Agreement. Simultaneously with the issuance of the Initial Letter of Credit, the Company will also cause the Bank, pursuant to the Credit Agreement, to issue an irrevocable letter of credit in favor of the 1996 Trustee (which will constitute a "Substitute Letter of Credit" under and as defined in the 1996 Indenture) as additional security for the payment of the 1997 Bonds.
H. The execution and delivery of this Indenture and the issuance of the Bonds under the Act have been in all respects duly and validly authorized by resolutions duly adopted and approved by the Issuer.
I. The Bonds to be issued hereunder and the authentication certificate thereon are to be substantially in the forms thereof attached hereto as Exhibit A, with appropriate omissions, insertions and variations permitted or authorized as hereinafter provided.
J. All things necessary to make the Bonds, when authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid pledge of the Revenues to the payment of the Debt Service on and Purchase Price of the Bonds, have been done and performed, and the creation, execution and delivery of this Indenture, and the execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That the Issuer, in consideration of the premises and the acceptance by
the Trustee and the Registrar of the trusts created herein and the acceptance of
the Bonds by the Holders thereof, and for other good and valuable
considerations, the receipt of which is hereby acknowledged, in order to secure
(a) the payment of the Debt Service on and Purchase Price of the Bonds according
to their tenor and effect, and (b) the performance and observance by the Issuer
of all the covenants expressed or implied herein and in the Bonds, does hereby
grant, bargain, sell, convey, mortgage and pledge unto the Trustee and unto its
successors in trust, and to it and their respective assigns forever, the
following:
I.
All right, title and interest of the Issuer in and to (A) the Second Supplemental Lease, except for Unassigned Rights; and (B), on a subordinated basis to the grant thereof made in the 1996 Indenture to secure the 1997 Bonds, the Existing Lease, except as therein reserved.
II.
All Revenues receivable by or for the account of the Issuer, including, without limitation, all Basic Rent and other payments in respect of payment of Basic Rent to be received under and pursuant to and subject to the provisions of the Second Supplemental Lease, which moneys are to be paid directly to the Trustee at the Trustee's Office for the account of the Issuer and deposited as hereinafter provided.
TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby and hereafter conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in trust and its and their respective assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the benefit, security and protection of the Holders from time to time of the Bonds issued under and secured by this Indenture, without preference, priority or distinction as to lien or otherwise of any of such Bonds over any of the others except as herein expressly provided.
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the Debt Service due or to become due, at the times and in the manner mentioned in the Bonds according to the true intent and meaning thereof, and shall cause the payments to be made as required hereunder, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee and the other Fiduciaries all sums of money due or to become due to them in accordance with the terms and provisions hereof; then upon such final payments this Indenture and the rights granted shall cease, determine and be void; otherwise this Indenture to be and remain in full force and effect.
The terms and conditions upon which the Bonds are to be issued, authenticated, delivered, secured and accepted by all persons who from time to time shall be or become Holders thereof, and the trusts and conditions upon which the Revenues pledged are to be held and disposed of, which said trusts and conditions the Trustee and Registrar hereby accept, and to all of which the respective parties hereto covenant and agree, are as follows:
ARTICLE I
Section 101. Definitions. In addition to the words and terms elsewhere defined in this Indenture (including in the Recitals hereto) or by reference to the Second Supplemental Lease or other document, unless the context or use indicates another or different meaning or intent:
"Act" means Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended.
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Company or by the Issuer, as debtor, under any applicable bankruptcy, reorganization, insolvency or other similar law now or hereafter in effect.
"Affiliate" means, as to any Person, any other Person that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, that Person.
"Alternate Credit Facility" means an irrevocable letter of credit, a surety bond, an insurance policy or other credit facility delivered to the Trustee pursuant to Section 5.6(f) of the Second Supplemental Lease.
"Authenticating Agent" means the Trustee and any bank, trust company or other Person designated as an Authenticating Agent for the Bonds by or in accordance with Section 515 of this Indenture, each of which shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934, as amended.
"Available Moneys" shall mean (a) original proceeds of the Bonds held in any fund or account under this Indenture, together with investment earnings on such proceeds, provided such proceeds are not furnished by, and do not come into the possession of, the Company; (b) moneys paid by the Company to the Trustee pursuant to the Second Supplemental Lease, together with investment earnings on such moneys, provided that, at the time of such payment and for a period of at least 123 days thereafter, there shall not have occurred any Act of Bankruptcy, as evidenced by a certificate of the Company and the Issuer delivered to the Trustee to that effect; provided such moneys need not have been on deposit for 123 days if the Company shall furnish to the Trustee and any
Rating Agency by which the Bonds shall then be rated a Preference Opinion with respect to such moneys; (c) proceeds from the issuance and sale of refunding bonds or other such indebtedness, together with investment earnings on such proceeds, provided the Company shall furnish to the Trustee and any Rating Agency by which the Bonds shall then be rated a Preference Opinion with respect to such proceeds; and (d) moneys received by the Trustee from a draw under the Letter of Credit or Alternate Credit Facility (provided such moneys are the Bank's own funds and are not funds furnished by the Company), together with investment earnings on such moneys.
"Bank" means Regions Bank, Montgomery, Alabama, and its successors and assigns, as issuer of the Initial Letter of Credit, until such time, if any, as a Substitute Letter of Credit or Alternate Credit Facility shall become effective pursuant to Section 5.6 of the Second Supplemental Lease, and thereafter "Bank" shall mean the issuer or provider of such Substitute Letter of Credit or Alternate Credit Facility.
"Bank Bonds" means Bonds registered in the name of the Bank pursuant to
Section 303(e)(ii) hereof.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, as amended, or any substitute or replacement legislation.
"Basic Rent" means that portion of the rentals payable under the Second Supplemental Lease in the amounts and at the times sufficient to pay Debt Service on or Purchase Price of the Bonds.
"Bio-Chem" means Ocean Bio-Chem, Inc., a Florida corporation, its successors and assigns, of which the Company is a wholly-owned subsidiary.
"Bond" or "Bonds" means the $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 of the Issuer to be issued under this Indenture.
"Bond Counsel" means Roy S. Goldfinger, P.C., Montgomery, Alabama, or any other attorney or firm of attorneys nationally recognized on the subject of municipal bonds and acceptable to the Trustee.
"Bond Fund" means the fund created and described in Section 401 hereof.
"Bond Payment Date" means each date (including any date fixed for redemption or acceleration of Bonds) on which Debt Service on the Bonds is payable.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated July 22, 2002 among the Issuer, the Company and the Underwriter relating to the Bonds.
"Bond Purchase Fund" means the fund created and described in Section 406 hereof.
"Bond Resolution" means the resolution adopted by the Board of Directors of the Issuer on July 11, 2002 authorizing the issuance of the Bonds and the execution and delivery of the Issuer Documents and related documents.
"Bond Year" means, during the period the Bonds remain outstanding, the annual period provided for the computation of Excess Earnings under Section 148(f) of the Code (except that the first and last Bond Years may be less than 12 months long).
"Building" means, collectively, all structures and improvements now existing or hereafter expanded, constructed, reconstructed or made on the Realty, as they may at any time exist.
"Business Day" means any day other than (i) a Saturday or Sunday; (ii) a day on which banking institutions are required or authorized to remain closed in (A) the city in which the principal office of the Trustee is located, (B) the city in which the principal office of the Remarketing Agent is located, (C) the city in which the office of the Bank where drawings under the Letter of Credit are to be made is located; or (iii) a day on which the payment system of the Federal Reserve System is not operational.
"Cap Rate" means the lower of (i) the rate of 12% per annum or (ii) for any period during which the Bonds are supported by a Letter of Credit, the maximum rate per annum, specified therein, at which there has been calculated the amount available to be drawn on such Letter of Credit to pay interest on the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include relevant applicable temporary, proposed or final regulations thereunder and under any predecessor provisions of the Internal Revenue Code of 1954, as amended.
"Company" means KINPAK INC., an Alabama corporation, its successors and assigns.
"Company Account" means the account so named in the Bond Fund.
"Company-Owned Bonds" means Bonds registered in the name of the Company pursuant to Section 303(e) or (f) hereof.
"Completion Date" means the date of completion of the 2002 Project to be established by the Company in accordance with the provisions of the Second Supplemental Lease.
"Computation Date" means the last day of each fifth Bond Year and the date on which final payment in full of all the Bonds is made.
"Construction Fund" means the fund created and described in Section 405 hereof.
"Conversion Date" means any Yearly Fixed Rate Conversion Date or the Permanent Fixed Rate Conversion Date.
"Credit Agreement" means the Credit Agreement of even date herewith among the Company, Bio-Chem, the Subsidiaries and the Bank, as issuer of the Initial Letter of Credit, as the same may hereafter be amended or supplemented; or any comparable agreement relating to a Substitute Letter of Credit or Alternate Credit Facility.
"Credit Facility Account" means the account so named in the Bond Fund.
"Credit Facility Proceeds Account" means the account so named in the Bond Purchase Fund.
"DTC" means The Depository Trust Company, New York, New York.
"DTC-Eligible Obligations" means securities which are eligible for deposit at DTC.
"Debt Service" means, for any period or payable at any time, the principal, interest and any premium due on the Bonds for that period or payable at that time.
"Determination of Taxability" means, with respect to the Bonds, a
determination that interest on any Bond is Taxable because of (i) the receipt by
any Holder or any member of an "affiliated group", as that term is defined in
Section 1504 of the Code, of a "30-day letter" within the meaning of Treasury
Regulations Section 601.105(d)(1)(iv) proposing a determination to that effect; or (ii) receipt by the Trustee or any Holder of a written opinion of Bond Counsel that there is substantial likelihood that such interest is Taxable; subject, however, in all such cases to the right on the part of the Company set forth in Section 1011 hereof to contest the same.
"Eligible Investments" means (i) Government Obligations; (ii) obligations issued or guaranteed by any state or political subdivision thereof, which obligations are rated by a Rating Agency in the highest category if rated as short-term obligations or not lower than the third highest category if rated as long-term obligations; (iii) commercial or finance paper which is rated in not lower than the second highest rating category by a Rating Agency; (iv) deposit accounts, bankers' acceptances, certificates of deposit or bearer deposit notes in one or more banks, trust companies or savings and loan associations (including without limitation, the Trustee or any bank affiliated with the Trustee) organized under the laws of Canada or the United States of America or any state or province thereof, provided that the debt obligations of each such bank, trust company or savings and loan association are rated by a Rating Agency in the highest category if rated as short-term obligations or not lower than the third highest category if rated as long-term obligations; and (v) repurchase agreements secured fully by obligations of the type specified in clause (i), which obligations must be held by or under the control of the Trustee, and issued by a bank or savings and loan association which is insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation; provided that any investment or deposit described above is not prohibited by applicable law.
"Equipment" means any item of equipment, fixtures and tangible personal property located in or on the Building or the Realty, and any item of equipment, fixtures or tangible personal property acquired in substitution therefor or as a renewal or replacement thereof pursuant to the provisions of the Lease Agreement.
"Event of Default" means an Event of Default specified in and defined by Section 601 hereof.
"Excess Earnings" means, with respect to the proceeds from the Bonds, as of each Computation Date, an amount equal to the sum of (a) plus (b) where:
(a) is the excess of
(i) the aggregate amount earned from the Issue Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (a)), taking into account any gain or loss on the disposition of nonpurpose investments, over
(ii) the amount that would have been earned if such nonpurpose investments (other than amounts attributable to an excess described in this clause (a)) had been invested at a rate equal to the yield on the Bonds; and
(b) is any income attributable to the excess described in clause
(a), taking into account any gain or loss on the disposition of
nonpurpose investments.
The sum of (a) plus (b) shall be determined in accordance with Sections 148(f)(2) and 148(f)(4) of the Code. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
"Existing Lease" means the Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by the First Supplemental Lease Agreement dated as of March 1, 1997, both between the Issuer and the Company, with respect to the Existing Facilities.
"Existing Letter of Credit" means, as of any particular time, the Letter of Credit or Alternate Credit Facility held by the Trustee at that time.
"Extension Letter of Credit" means a Substitute Letter of Credit from the same Bank which issued the Existing Letter of Credit, substantially identical to the Existing Letter of Credit except that it has a Stated Termination Date at least one year later than that of the Existing Letter of Credit.
"Extraordinary Services" and "Extraordinary Expenses" mean all services rendered and all expenses incurred under the Indenture other than Ordinary Services and Ordinary Expenses.
"Fiduciaries" means the Trustee, the Tender Agent, the Registrar and any Paying Agent or Authenticating Agent, and their respective successors and assigns.
"Final Determination" means a Determination of Taxability deemed final by reason of the termination or forfeiture of the Company's right to contest the same under Section 1011 hereof.
"Government Obligations" means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged, or (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of, premium, if any, and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation by the United States of America.
"Governmental Authority" means the United States, any state or political subdivision thereof and any court, agency, department, commission, board, bureau or instrumentality of any of the foregoing.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond is registered on the Register.
"Inducement Resolution" means the resolution adopted by the Board of Directors of the Issuer on May 30, 2000 preliminarily approving the 2002 Project and the issuance of the Bonds.
"Initial Letter of Credit" means the initial Letter of Credit in the form attached to the Credit Agreement as Exhibit C and delivered to the Trustee on or prior to the Issue Date.
"Interest Payment Date" means, so long as the Bonds are outstanding, the first Business Day of each March, June, September and December, commencing on the first Business Day of September, 2002.
"Issue Date" means the date of the initial authentication and delivery of the Bonds.
"Issuer Documents" means, individually or collectively, as the context may require, each or all of the Second Supplemental Lease, this Indenture, the
Bond Purchase Agreement, the Remarketing Agreement, the Mortgage and such other documents as the Issuer may enter into in order to consummate the transactions contemplated hereby and thereby.
"Lease Agreement" means the Existing Lease as amended and supplemented by the Second Supplemental Lease and as the same may hereafter be further amended and supplemented.
"Letter of Credit" means the Initial Letter of Credit and, unless the context or use indicates another or different meaning or intent, any Substitute Letter of Credit.
"Letter of Credit Substitution Date" means any Business Day specified by the Company pursuant to Section 5.6(b)(1) of the Second Supplemental Lease on which the Company elects to furnish a Substitute Letter of Credit (other than an Extension Letter of Credit) or Alternate Credit Facility in place of the then Existing Letter of Credit, other than in connection with a Conversion Date, a Seven-Day Rate Recommencement Date or the Stated Termination Date of the Existing Letter of Credit.
"Letter of Representations" means the Blanket Issuer Letter of Representations dated April 4, 1996, as the same may have been amended and supplemented to date, executed and delivered by the Issuer to DTC.
"Mandatory Tender" means a tender of Bonds required by Section 302 hereof.
"Mandatory Tender Date" means a date on which any Mandatory Tender is required, more particularly described in Section 302 hereof.
"Miscellaneous Account" means the account so named in the Bond Purchase Fund.
"Moody's" means Moody's Investors Service, Inc., New York, New York.
"Mortgage" means the Mortgage, Assignment of Leases and Security Agreement of even date herewith from the Issuer and the Company to the Bank with respect to the Project, as the same may hereafter be amended or supplemented.
"Necessary Authorizations" means, with respect to any given action or effect, all authorizations, consents, approvals, permits, licenses and
exemptions of, filings and registrations with, and reports to, all Governmental Authorities which are necessary or required to accomplish such action or achieve such effect.
"1997 Bonds" means the Issuer's $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 issued under the 1996 Indenture.
"1996 Indenture" means the Trust Indenture dated as of December 1, 1996, as amended, between the Issuer and the 1996 Trustee, pursuant to which the 1997 Bonds were issued.
"1996 Trustee" means Regions Bank, Montgomery, Alabama, in its capacity as trustee under the 1996 Indenture.
"Non-Taxability Opinion" means, with respect to one or more given events or prospective events, an opinion of Bond Counsel to the effect that the occurrence of such event or events will not adversely affect the non-Taxable status of the interest on the Bonds.
"Notice of Tender" shall mean written, formal notice of tender in the form provided in the Bonds or in such other form as shall be acceptable to the Trustee.
"Optional Tender" means a tender of Bonds at the option of the Holder thereof pursuant to Section 301 hereof.
"Optional Tender Date" means any date on which Bonds are to be purchased pursuant to the Optional Tender provisions of Section 301 hereof.
"Ordinary Services" and "Ordinary Expenses" mean those services normally rendered and those expenses normally incurred by a trustee under instruments similar to this Indenture.
"Outstanding", as applied to the Bonds, means all Bonds which have been authenticated and delivered under this Indenture, except:
(a) Bonds cancelled upon surrender, exchange or transfer, or because of payment or redemption prior to maturity;
(b) Bonds, or any portion thereof, for the payment, redemption or purchase for cancellation of which sufficient moneys have been deposited and credited with the Trustee or any Paying Agents (whether upon or prior to the maturity, purchase or redemption date of those Bonds); provided, that if any of those Bonds are to be redeemed prior
to their maturity, notice of that redemption shall have been given or arrangements satisfactory to the Trustee shall have been made for giving notice of that redemption, or waiver by the affected Holders of that notice satisfactory in form to the Trustee shall have been filed with the Trustee;
(c) Unsurrendered Bonds for the purchase of which money in the necessary amount has been deposited in the Bond Purchase Fund and is held in trust for the Holders of such Unsurrendered Bonds; and
(d) Bonds in exchange for or in lieu of which others have been authenticated and delivered under Section 211 hereof;
provided, however, that in determining whether the Holders of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the Company, the Issuer, any other obligor with respect to the Bonds or any affiliate of any of the foregoing, shall be disregarded and deemed not to be Outstanding; except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. Notwithstanding the foregoing proviso, Bank Bonds shall be deemed, at the election of the Bank, to be Outstanding for all purposes, except that the Bank may not vote such Bonds in any manner that would lessen the protection to the Holders of other Outstanding Bonds provided by the Letter of Credit. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for such purposes if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not the Company, the Issuer, any other obligor with respect to the Bonds or any affiliate of any of the foregoing.
"Paying Agent" means the Trustee and any other bank or trust company designated as a Paying Agent by or in accordance with Section 514 of this Indenture.
"Permanent Fixed Rate" means the interest rate to be borne by the Bonds
on and after the Permanent Fixed Rate Conversion Date, established pursuant to
Section 202(h) hereof.
"Permanent Fixed Rate Conversion Date" means that Business Day on which the Permanent Fixed Rate on the Bonds shall be effective pursuant to Section 202(h) hereof.
"Permanent Fixed Rate Period" means the period beginning on the Permanent Fixed Rate Conversion Date and ending on the day immediately prior to the maturity date of the Bonds.
"Person" includes natural persons, firms, associations, partnerships, trusts, corporations, limited liability companies and public bodies.
"Predecessor Bond" of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond. For the purposes of this definition, any Bond authenticated and delivered under Section 211 of this Indenture in lieu of a lost, stolen or destroyed Bond shall be deemed to evidence the same debt as the lost, stolen or destroyed Bond.
"Preference Opinion" means, with respect to any moneys intended to be used to pay Debt Service, an unqualified opinion of counsel of national recognition experienced in bankruptcy matters that payment of such moneys to the Holders would not constitute an avoidable preference under Section 547 of the Bankruptcy Code recoverable under Section 550 thereof in the event of the filing of a petition thereunder by or against the Company or by the Issuer.
"Project" means the Existing Facilities as expanded and improved by the 2002 Project, consisting of the Realty, the Building and the Equipment (as the same may at any time exist), leased and to be leased to the Company pursuant to the Lease Agreement for use as manufacturing facilities for the manufacture of aftermarket products for consumer marine, recreational vehicle and automotive markets or for such other purposes as may be consistent with the provisions of the Act and the Code and permitted by the Lease Agreement.
"Project Costs" means those costs of the 2002 Project for which payment may be made as provided in the Second Supplemental Lease.
"Project Supervisor" means any agent of the Company, designated in writing by the Company, authorized to act for and on behalf of the Company in connection with any and all matters pertaining to the 2002 Project.
"Proposed Conversion Date" means any Interest Payment Date designated by the Company as a Conversion Date with respect to the Bonds.
"Purchase Price" means, with respect to any Bond tendered for purchase by Optional Tender or Mandatory Tender, 100% of the principal amount thereof
plus accrued interest thereon, if any, from the last preceding Interest Payment Date to the Tender Date.
"Rate Determination Factors" means, to the extent applicable,
(a) market interest rates for comparable securities (outstanding tax-exempt bonds (i) with interest periods, maturities and demand purchase options substantially identical to the Bonds and (ii) if the Bonds are rated, rated by a Rating Agency in the same rating category as the Bonds) held by unit investment trusts or similar institutional investors with substantial portfolios;
(b) other financial market rates and indices which may have a bearing on the interest rate (including market rates borne by commercial paper, United States Treasury obligations, commercial bank prime rates, the London Interbank Offered Rate and other publicly available tax-exempt obligation rate indices);
(c) general financial market conditions (including current forward supply); and
(d) factors particular to the Project or the credit standing of the Company or the Bank.
"Rating Agency" means Moody's or S&P, their respective successors and assigns and any other nationally recognized securities rating agency.
"Realty" means the real estate and interests therein constituting the site of the Building, as described in Exhibit A to the Second Supplemental Lease, less any such real estate, interests in real estate and other rights as may be released from the Lease Agreement pursuant to the provisions thereof or taken by the exercise of the power of eminent domain.
"Rebate Fund" means the fund created and described in Section 407 hereof.
"Record Date" means the 15th day (whether or not a Business Day) next preceding each Interest Payment Date.
"Register" means the books kept and maintained by the Registrar for registration and transfer of Bonds.
"Registrar" means the Trustee, until such time, if any, as a successor Registrar, which shall be a transfer agent registered in accordance with Section 17(A)(c) of the Securities Exchange Act of 1934, shall have become such pursuant to Section 513 of this Indenture.
"Related Documentation" means the documentation required to accompany a Substitute Letter of Credit or Alternate Credit Facility in accordance with the provisions of Section 5.6(d) of the Second Supplemental Lease.
"Remarketing Agent" means the Remarketing Agent appointed in accordance with Section 518 hereof, the principal office of which shall be designated in writing by the Remarketing Agent to the Trustee, the Tender Agent, the Bank and the Company.
"Remarketing Agreement" means the Remarketing Agreement of even date herewith among the Issuer, the Company, the Trustee and the Remarketing Agent, as the same may hereafter be amended or supplemented.
"Remarketing Proceeds Account" means the account so named in the Bond Purchase Fund.
"Revenues" means (a) the Basic Rent; (b) all other moneys received or to be received by the Issuer or the Trustee in respect of payment of the Basic Rent, including without limitation, moneys and investments in the Bond Fund or Bond Purchase Fund and received by the Trustee from drawings made under the Letter of Credit or as a result of the remarketing of any Bonds, but excluding any moneys and investments in the Rebate Fund; (c) any moneys and investments in the Construction Fund; and (d) all income and profit from the investment of the foregoing moneys.
"S&P" means Standard & Poor's, New York, New York.
"Second Supplemental Lease" means the Second Supplemental Lease Agreement dated as of July 1, 2002 between the Issuer and the Company, amending and supplementing the Existing Lease with respect to the 2002 Project.
"Seven-Day Rate" means the interest rate on the Bonds from time to time in effect during a Seven-Day Rate Period, as established pursuant to Section 202(f) hereof.
"Seven-Day Rate Determination Date" means a date on which the Seven-Day Rate is determined, as provided in Section 202(f) hereof.
"Seven-Day Rate Period" means (a) the period beginning on the Issue Date and ending on the day immediately prior to the earlier of a Conversion Date or the maturity of the Bonds and (b) each period beginning on a Seven-Day Rate Recommencement Date and ending on the day immediately prior to the earlier of a Conversion Date or the maturity of the Bonds.
"Seven-Day Rate Recommencement Date" means the date immediately following the last day of a Yearly Fixed Rate Period on which the interest rate on the Bonds has not been effectively converted to a new Yearly Fixed Rate or the Permanent Fixed Rate.
"Special Record Date" means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest on that Bond pursuant to Section 604 hereof.
"State" means the State of Alabama.
"Stated Termination Date" means the date on which the Letter of Credit is stated to expire, unless extended in accordance with its terms.
"Subsidiaries" means the following wholly-owned subsidiaries of Bio-Chem, all of which are Florida corporations: Star-Brite Distributing, Inc.; Star Brite Distributing (Canada), Inc.; and Star Brite Automotive, Inc.
"Substitute Letter of Credit" means an irrevocable letter of credit delivered to the Trustee in substitution for the Existing Letter of Credit, in compliance with the requirements of Section 5.6(c) of the Second Supplemental Lease and accompanied by the Related Documentation.
"Taxable" means, when used in reference to the Bonds or other obligations, that interest thereon is includable in the gross income of any Holder thereof for any reason other than the fact that such Holder is a "substantial user" of the Project or a "related person" as those terms are used in Section 147(a) of the Code. Interest on the Bonds shall not be deemed "Taxable" because interest is includable in any calculation of income for purposes of any alternative minimum tax, any foreign branch profits tax or any other type of taxation other than the regular federal tax imposed on gross income.
"Telefax" means telecopy, telefax or other instantaneous transmission device; and whenever in this Indenture "confirmation by Telefax" is required, such requirement shall, unless otherwise herein provided, be deemed satisfied if such confirmation is received by not later than 10:00 a.m. Trustee's Time on the Business Day following the day on which the communication to be confirmed was given.
"Tender Agent" means any Person appointed as such pursuant to Section 517 hereof. Until such time, if any, as a Tender Agent shall be appointed, the Trustee shall perform all duties of the Tender Agent; provided, that the Trustee shall not be required to maintain an office in New York, New York.
"Tender Date" means an Optional Tender Date or a Mandatory Tender Date, as the case may be.
"Tender Office" means the location of the office of the Tender Agent where Bonds may be exchanged and transferred or tendered for purchase in accordance with the provisions hereof.
"Trustee's Office" means the office from time to time designated by the Trustee, or its successor in trust, as its principal corporate trust office for purposes of discharging its trusts and duties under this Indenture, which office as of the Issue Date is located at 60 Commerce Street, Montgomery, Alabama.
"Trustee's Time" means Central Standard Time or Central Daylight Time, as the case may be.
"2002 Project" means a "project", within the meaning of the Act, consisting of (1) the construction of an approximately 70,000 square-foot addition to the Existing Facilities, and (2) the acquisition and installation within said addition and the Existing Facilities of new and additional manufacturing machinery and equipment.
"Unassigned Rights" means all of the rights of the Issuer to receive payments or reimbursement for its fees and expenses, to be held harmless and indemnified and to be reimbursed for attorney's fees and expenses, all pursuant to applicable provisions of the Second Supplemental Lease, to receive notices under the Lease Agreement and to give or withhold consent to amendments, supplements, modifications or termination of the Lease Agreement and of this Indenture.
"Underwriter" means Merchant Capital, L.L.C., Montgomery, Alabama.
"Unsurrendered Bonds" means Bonds (or portions thereof in authorized
denominations hereunder) which are deemed purchased pursuant to Section 301 or
Section 302 hereof, but which have not been presented to the Trustee or Tender
Agent by the Holders thereof.
"Yearly Fixed Rate" means the interest rate to be borne by the Bonds on and after a Yearly Fixed Rate Conversion Date for the ensuing Yearly Fixed Rate Period, as established pursuant to Section 202(g) hereof.
"Yearly Fixed Rate Conversion Date" means any Business Day on which the Yearly Fixed Rate on the Bonds shall be effective pursuant to Section 202(g) hereof.
"Yearly Fixed Rate Period" means a period of one of more whole years beginning on a Yearly Fixed Rate Conversion Date and ending on the day immediately prior to the earliest of a Conversion Date, a Seven-Day Rate Recommencement Date or the maturity of the Bonds.
Section 102. Interpretation. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this Indenture; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this Indenture. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise.
Section 103. Captions and Headings. The captions and headings in this Indenture are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
[END OF ARTICLE I]
ARTICLE II
Section 201. Authorized Amount of Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. The aggregate principal amount of Bonds authorized to be issued under this Indenture is $3,500,000. This Indenture does not authorize the issuance of additional bonds or other indebtedness secured by the lien and entitled to the benefits hereof.
Section 202. Issuance of the Bonds; Terms Thereof.
(a) It is determined to be necessary to, and the Issuer shall, issue, sell and deliver the Bonds for the purpose of paying or reimbursing a portion of the Project Costs. The Bonds shall be designated "Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002"; shall be issuable only in fully registered form, substantially in the form attached as Exhibit A to this Indenture; shall be numbered consecutively from R-1 upwards; shall be dated the Issue Date; shall bear interest from the most recent date to which interest shall have been paid or duly provided for or, if no interest shall have been paid or duly provided for, from the Issue Date; and shall mature, unless earlier redeemed, on June 1, 2017. The Bonds shall be issuable (i) in denominations of $100,000 and any multiple of $5,000 in excess thereof, so long as the Bonds bear interest at the Seven-Day Rate; and (ii) in denominations of $5,000 and any integral multiple thereof, whenever the Bonds bear interest at a Yearly Fixed Rate or the Permanent Fixed Rate. The Bonds may be issued in book-entry form in accordance with the requirements of applicable law. The Bonds shall be initially issued as DTC-Eligible Obligations, and therefore the requirements of Section 216 hereof shall be applicable.
(b) The Bonds shall bear interest at the Seven-Day Rate (i) from their date until and including the day immediately prior to the earlier of a Conversion Date or the maturity of the Bonds and (ii) from any Seven-Day Rate Recommencement Date until and including the day immediately prior to the earlier of a Conversion Date or the maturity of the Bonds (each such period being herein called a "Seven-Day Rate Period"). The Bonds shall bear interest at a Yearly Fixed Rate from any Yearly Fixed Rate Conversion Date until and including the day immediately prior to the earliest of a Conversion Date, a Seven-Day
Rate Recommencement Date or the maturity of the Bonds (any such period being herein called a "Yearly Fixed Rate Period"). The Bonds shall bear interest at the Permanent Fixed Rate from the Permanent Fixed Rate Conversion Date until and including the day immediately prior to the maturity of the Bonds (such period being herein called the "Permanent Fixed Rate Period").
(c) Interest at the Seven-Day Rate shall be computed on the basis of a 365- or 366-day year, as the case may be, for the actual number of days elapsed. Interest at a Yearly Fixed Rate or the Permanent Fixed Rate shall be computed on the basis of a 360-day year with 12 months of 30 days each.
(d) Interest shall be payable on overdue principal of the Bonds and (to the extent legally enforceable) on any overdue installment of interest on the Bonds at the Interest Rate for Advances.
(e) Interest shall be payable in arrears on each Interest Payment Date.
(f) The Seven-Day Rate shall be determined on the Issue Date, on each Seven-Day Rate Recommencement Date, and on each Wednesday (or if Wednesday is not a Business Day, on the next succeeding Business Day) of each succeeding week during any Seven-Day Rate Period (each such date, a "Seven-Day Rate Determination Date"). The Seven-Day Rate so determined on each Seven-Day Rate Determination Date shall be effective from the day of each week during any Seven-Day Rate Period following the Seven-Day Rate Determination Date for such week until and including the day immediately prior to the earlier of a Conversion Date or the following Thursday; provided, however, that if the Seven-Day Rate is not so determined on any Seven-Day Rate Determination Date, the Seven-Day Rate as determined on the next preceding Seven-Day Rate Determination Date shall remain in effect until and including the day immediately prior to the earlier of a Conversion Date or the following Thursday. The Seven-Day Rate shall be determined by the Remarketing Agent and shall equal the lesser of (i) the Cap Rate or (ii) the interest rate determined by the Remarketing Agent to be the interest rate that would result in the market value of the Bonds on such Seven-Day Rate Determination Date being 100% of the principal amount thereof, taking into account the applicable Rate Determination Factors. On each Seven-Day Rate Determination Date the Remarketing Agent shall give notice of the Seven-Day Rate so determined by telephone, with
confirmation by Telefax or other form of written notice selected by the Remarketing Agent, to the Trustee and the Company. The Trustee shall confirm the Seven-Day Rate on the Bonds from time to time in effect by telephone (confirmed in writing, if requested). The determination of the Seven-Day Rate by the Remarketing Agent (if not greater than the Cap Rate) shall be conclusive and binding on the Issuer, the Company, the Trustee, the Bank and the Holders from time to time of the Bonds.
(g) At any time that the Bonds bear interest at the Seven-Day Rate, or at any time during the six months preceding the expiration of any previously elected Yearly Fixed Rate Period, the Company may elect that the Bonds bear interest at a Yearly Fixed Rate for a Yearly Fixed Rate Period designated by the Company in the manner described in this subsection, which rate shall be equal to the lesser of (i) the Cap Rate or (ii) the interest rate established by the Remarketing Agent in the manner described in this subsection. The Company shall give the Trustee, the Remarketing Agent and the Bank written notice of the exercise of its option to convert the interest rate borne by the Bonds to the Yearly Fixed Rate, to be received by each of them not less than 30 days prior to the Proposed Conversion Date. Such notice shall also specify the length of the proposed Yearly Fixed Rate Period, which shall be one or more whole years from the Proposed Conversion Date. No Yearly Fixed Rate Period may be selected which would extend to the stated maturity of the Bonds unless the Proposed Conversion Date is the June 1 of any year. Any Yearly Fixed Rate Conversion Date selected by the Company during the six months preceding the termination of a Yearly Fixed Rate Period shall be a date not earlier than the date immediately following the termination of such Yearly Fixed Rate Period. On or before the Business Day immediately preceding the Proposed Conversion Date, the Remarketing Agent shall determine the interest rate to be borne by the Bonds during the proposed ensuing Yearly Fixed Rate Period, being that rate which would result in the market value of the Bonds on such Proposed Conversion Date being 100% of the principal amount thereof, taking into account applicable Rate Determination Factors, and on such date shall give telephonic notice, with confirmation by Telefax, of the interest rate so determined to the Trustee, the Company and the Bank. The interest rate so determined shall be the Yearly Fixed Rate from and after the Proposed Conversion Date for the ensuing Yearly Fixed Rate Period, provided that in no event shall the Yearly Fixed Rate exceed the Cap Rate. Notwithstanding the foregoing, such Yearly Fixed Rate shall not be established unless
(i) there shall have been supplied to the Trustee, the Company, the Remarketing Agent and the Bank at or prior to 10:00 a.m. Trustee's Time on the Proposed Conversion Date a Non-Taxability Opinion further stating that such conversion to the Yearly Fixed Rate is lawful under applicable law and permitted by this Indenture, and (ii) if a Substitute Letter of Credit is required to be delivered to the Trustee, such Substitute Letter of Credit shall have been delivered to the Trustee at or prior to 10:00 a.m. Trustee's Time on the Proposed Conversion Date. If all conditions to the establishment of the Yearly Fixed Rate shall not have been met, the Bonds shall bear interest at the Seven-Day Rate from such Proposed Conversion Date until and including the earlier of the date immediately prior to the next effective Conversion Date or the maturity of the Bonds. The determination of the Yearly Fixed Rate shall be conclusive and binding on the Issuer, the Company, the Trustee, the Remarketing Agent, the Bank and the Holders from time to time of the Bonds. The Trustee shall stamp a legend on the face of each Bond authenticated on or after a Yearly Fixed Rate Conversion Date in substantially the following form:
"This Bond bears interest at a Yearly Fixed Rate, as defined in this Bond, which is _____% per annum, from ____________, ____, until _____________, _____."
(h) At any time that the Bonds bear interest at the Seven-Day Rate, or at any time during the six months preceding the expiration of any previously elected Yearly Fixed Rate Period, the Company may elect that the Bonds shall bear interest at the Permanent Fixed Rate, which rate shall be equal to the lesser of (i) the Cap Rate or (ii) the interest rate established by the Remarketing Agent in the manner described in this subsection. The Company shall give the Trustee, the Remarketing Agent and the Bank written notice of the exercise of its option to convert the interest rate borne by the Bonds to the Permanent Fixed Rate, to be received by each of them at least 30 days prior to the Proposed Conversion Date. Any Permanent Fixed Rate Conversion Date selected during a Yearly Fixed Rate Period shall be a date not earlier than the date immediately following the termination of such Yearly Fixed Rate Period. On or before the Business Day next preceding the Proposed Conversion Date, the Remarketing Agent shall determine the interest rate to be borne by the Bonds during the proposed ensuing Permanent Fixed Rate Period, being that rate which would result in the market value of the Bonds on such Proposed Conversion Date being 100%
of the principal amount thereof, taking into account the applicable Rate Determination Factors, and on such date shall give telephonic notice, with confirmation by Telefax, of the interest rate so determined to the Trustee, the Company and the Bank. The interest rate so determined shall be the Permanent Fixed Rate from and after the Proposed Conversion Date, provided that in no event shall the Permanent Fixed Rate exceed the Cap Rate. Notwithstanding the foregoing, such Permanent Fixed Rate shall not be established unless (i) there shall have been supplied to the Trustee, the Company and the Remarketing Agent at or prior to 10:00 a.m. Trustee's Time on the Proposed Conversion Date a Non-Taxability Opinion further stating that such conversion to the Permanent Fixed Rate is lawful under applicable law and permitted by this Indenture, and (ii) if a Substitute Letter of Credit is required to be provided by the Company for the Permanent Fixed Rate Period, there shall have been delivered to the Trustee such Substitute Letter of Credit at or prior to 10:00 a.m. Trustee's Time on the Proposed Conversion Date. If all conditions to the establishment of the Permanent Fixed Rate shall not have been met, the Bonds shall bear interest at the Seven-Day Rate from such Proposed Conversion Date until and including the earlier of the date immediately prior to the next effective Conversion Date or the maturity of the Bonds. The determination of the Permanent Fixed Rate shall be conclusive and binding on the Issuer, the Company, the Trustee, the Bank and the Holders from time to time of the Bonds. The Trustee shall stamp a legend on the face of each Bond authenticated on or after the Permanent Fixed Rate Conversion Date in substantially the following form:
"This Bond bears interest at the Permanent Fixed Rate, as defined in this Bond, which is _______% per annum, from and after ______________, ____."
(i) Upon the execution and delivery of this Indenture, and satisfaction of the conditions established by the Issuer for delivery of the Bonds, including delivery to the Trustee of the Letter of Credit pursuant to Section 5.6(a) of the Second Supplemental Lease, the Issuer shall execute the Bonds and deliver them to the Trustee or other Authenticating Agent for authentication and delivery to, or on the order of, the Underwriter. Prior to the delivery of the Bonds, there shall have been received by the Trustee a duly executed request and authorization to the Trustee from the Issuer to authenticate and deliver the Bonds to, or on the order of, the Underwriter upon payment to the Trustee of the amount specified therein, which amount shall be
deposited in the Construction Fund as hereinafter described and as shall be more fully provided in said request and authorization of the Issuer.
(j) Pending preparation of definitive Bonds, the Issuer may issue and, upon its request, the Trustee or any Authenticating Agent shall authenticate, in lieu of definitive Bonds, one or more temporary printed or typewritten Bonds substantially in the form of Exhibit A hereto. Upon request of the Issuer, the Trustee or any Authenticating Agent shall authenticate definitive Bonds in exchange for and upon surrender of an equal principal amount of temporary Bonds without charge. Until so exchanged, temporary Bonds shall have the same rights, remedies and security hereunder as definitive Bonds.
Section 203. Execution of Bonds. The Bonds shall be executed on behalf of the Issuer by its Chairman or Vice-Chairman under its corporate seal impressed or otherwise reproduced thereon and attested by its Secretary or any Assistant Secretary. The signature of any of these officers of the Issuer on the Bonds may be manual or, to the extent permitted by law, facsimile. In case any officer of the Issuer whose signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such signature shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery.
Section 204. Authentication of Bonds. Only such Bonds as shall have endorsed thereon a certificate of authentication substantially in the form set forth as part of Exhibit A hereto, duly executed by the Trustee or by any Authenticating Agent, shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Trustee or by any Authenticating Agent, and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an officer of the Trustee or any Authenticating Agent, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued under this Indenture.
Section 205. Payment and Ownership of Bonds. Debt Service on the Bonds shall be payable in lawful money of the United States of America without deduction for the services of the Trustee or any Paying Agent. Subject to the provisions of Section 214 of this Indenture, (a) the principal of and any
premium on any Bond shall be payable when due to a Holder upon presentation and surrender of such Bond at the Trustee's Office or at the office, designated by the Trustee, of any other Paying Agent, and (b) interest on any Bond shall be paid on each Interest Payment Date by check or draft which the Trustee shall cause to be sent on that date to the Person in whose name the Bond (or one or more Predecessor Bonds) is registered, at the close of business on the Record Date applicable to that Interest Payment Date, on the Register at the address appearing therein. If and to the extent, however, that the Issuer shall fail to make payment or provision for payment of interest on any Bond on any Interest Payment Date, whenever moneys become available for payment of that overdue interest and any subsequently accruing interest, (i) the Trustee shall, pursuant to Section 604 hereof, establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment, and (ii) the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first class mail, postage prepaid, to each Holder at its address as it appears on the Register not fewer than ten days prior to the Special Record Date and, thereafter, the interest shall be payable to the Persons who are the Holders of the Bonds (or their respective Predecessor Bonds) at the close of business on the Special Record Date.
The Holder of any Bond shall be deemed and regarded as the absolute owner thereof for all purposes of this Indenture; payment of or on account of the Debt Service on any Bond shall be made only to or upon the order of that Holder or its duly authorized attorney in the manner permitted by this Indenture; and neither the Issuer, the Trustee, the Registrar nor any Paying Agent or Authenticating Agent shall, to the extent permitted by law, be affected by notice to the contrary. All of those payments shall be valid and effective to satisfy and discharge the liability upon that Bond, including without limitation, the interest thereon, to the extent of the amount or amounts so paid.
Section 206. Redemption.
(a) The Bonds shall be redeemable in accordance with the redemption provisions contained in the Form of Bond attached as Exhibit A hereto and incorporated by reference herein.
(b) If Bonds are redeemed prior to maturity and a Letter of Credit is then in effect, the Trustee shall take such action as may be necessary to reduce the coverage of the Letter of Credit to an amount
equal to the sum of (i) the principal of all Bonds Outstanding following the redemption, plus (ii) accrued interest thereon for a period of 120 days (A) at the Cap Rate, if the Bonds then bear interest at a Seven-Day Rate, or (B), if the Bonds then bear interest at a Yearly Fixed Rate or the Permanent Fixed Rate, at that fixed rate, plus (but only if the Bonds then bear interest at a Yearly Fixed Rate or the Permanent Fixed Rate) (iii) an amount equal to that percentage of the principal of all Bonds Outstanding following the redemption which corresponds to the then-applicable redemption premium (if any) payable on the Bonds in the event of a further optional redemption thereof.
(c) So long as a Letter of Credit is in effect, the Company acknowledges that any redemption of Bonds must be effected from a draw under the Letter of Credit, and that the Company must procure and furnish to the Trustee, by not later than the time of the election pursuant to Section 210 hereof, the written consent of the Bank to such redemption.
Section 207. Notice of Redemption. The notice of the call for redemption of Bonds shall identify (a) by designation, letters, numbers or other distinguishing marks, the Bonds or portions thereof to be redeemed, (b) the redemption price to be paid, (c) the date fixed for redemption and (d) the place or places where the amounts due upon redemption are payable. The notice shall be given or caused to be given by the Trustee on behalf of the Issuer by mailing a copy of the redemption notice by first class mail, postage prepaid, not more than 60 nor fewer than 30 days prior to the date fixed for redemption to the Holder of each Bond subject to redemption in whole or in part at the Holder's address shown on the Register on the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Bond shall not affect the validity of the proceedings for the redemption of any Bond for which notice is properly given.
Section 208. Payment of Redeemed Bonds. Notice having been mailed in the manner provided in the preceding Section, the Bonds and portions thereof called for redemption shall become due and payable on the redemption date, and upon presentation and surrender thereof at the place or places specified in that notice, shall be paid at the redemption price, plus interest accrued to the redemption date; provided that, so long as the Letter of Credit or an Alternate Credit Facility is in effect, payment of the Bonds upon optional redemption thereof shall be made from moneys only to the extent such moneys constitute Available Moneys.
If moneys for the redemption of all of the Bonds and portions thereof to be redeemed, together with interest accrued thereon to the redemption date, are held by the Trustee or any Paying Agent on the redemption date, so as to be available therefor on that date, then from and after the redemption date the Bonds and portions thereof called for redemption shall cease to bear interest and no longer shall be considered to be Outstanding hereunder. If those moneys shall not be so available on the redemption date, those Bonds and portions thereof shall continue to bear interest, until they are paid, at the same rate as they would have borne had they not been called for redemption.
All moneys deposited in the Bond Fund or held by the Trustee or a Paying Agent for the redemption of particular Bonds shall be held in trust for the account of the Holders thereof and shall be paid to them, respectively, upon presentation and surrender of those Bonds.
Section 209. Partial Redemption. If fewer than all of the Bonds are to be redeemed, the selection of Bonds to be redeemed, or portions thereof in amounts of $5,000 or any integral multiple thereof, shall be made by lot by the Trustee in any manner which the Trustee may determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than $5,000 are then Outstanding, each $5,000 unit of face value of principal thereof shall be treated as though it were a separate Bond of the denomination of $5,000. If it is determined that one or more, but not all, of the $5,000 units of face value represented by a Bond are to be called for redemption, then upon notice of redemption of a $5,000 unit or units, the Holder of that Bond shall surrender the Bond to the Trustee (a) for payment of the redemption price of the $5,000 unit or units of face value called for redemption (including without limitation, the interest accrued to the date fixed for redemption), and (b) for issuance, without charge to the Holder thereof, of a new Bond or Bonds of any authorized denomination in an aggregate principal amount equal to the unmatured and unredeemed portion of, and bearing interest at the same rate as, the Bond surrendered.
Notwithstanding anything to the contrary contained in this Indenture, whenever the Bonds are to be redeemed in part, Bonds which are Bank Bonds at the time of selection of Bonds for redemption shall be selected for redemption prior to the selection of any other Bonds. If the aggregate principal amount of Bonds to be redeemed exceeds the aggregate principal amount of Bank Bonds at the time of selection, the Trustee may select for redemption Bonds in an aggregate principal amount equal to such excess by lot in any manner which the Trustee may determine.
Section 210. Election to Redeem. Except in the case of redemption pursuant to any mandatory redemption provisions (in connection with which no election need be made), Bonds shall be redeemed only by written election effected by notice from the Company (on behalf of the Issuer) to the Trustee. That notice shall specify the redemption date and the principal amount of Bonds to be redeemed, and shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. In the event that notice of redemption shall have been given by the Trustee to the Holders as provided in Section 207 hereof, there shall be deposited with the Trustee on or prior to the redemption date, funds which, in addition to any other moneys available therefor and held by the Trustee, will be sufficient to redeem at the redemption price thereof, plus interest accrued to the redemption date, all of the redeemable Bonds for which notice of redemption has been given.
Section 211. Mutilated, Lost, Stolen or Destroyed Bonds. In the event any Bond is mutilated, lost, stolen or destroyed, the Issuer shall execute and the Registrar shall authenticate a new Bond of like date, number and denomination to that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated bond, such mutilated Bond shall first be surrendered to the Registrar and, in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Issuer, the Company, the Registrar and the Trustee evidence of such loss, theft or destruction satisfactory to them together with indemnity satisfactory to them. In the event any such Bond shall have matured, instead of issuing a new Bond the Company may direct the Trustee to pay the same without surrender. The Issuer, the Registrar and the Trustee may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Bond their reasonable fees and expenses in connection with their actions pursuant to this Section.
Section 212. Transfer and Exchange of Bonds. So long as any of the Bonds remain outstanding, the Issuer will cause books for the registration and transfer of Bonds, as provided in this Indenture, to be maintained and kept at the designated office of the Registrar.
Any Bond shall be transferable, subject to any restrictions on transferability therein contained, only upon the books of the Registrar by the Holder thereof in person or by his duly authorized attorney, upon surrender thereof to the Registrar with a written instrument of transfer satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney. Upon
the registration of transfer, the Issuer shall issue in the name of the transferee one or more new Bonds of the same aggregate principal amount as the surrendered Bond.
Bonds may be exchanged, at the option of their Holder, for Bonds of any authorized denomination in an aggregate principal amount equal to the unmatured and unredeemed principal amount of, and bearing interest at the same rate as, the Bonds being exchanged. The exchange shall be made upon presentation and surrender of the Bonds being exchanged at the designated office of the Registrar or at the designated office of any Authenticating Agent, together with an assignment duly executed by the Holder or its duly authorized attorney in any form which shall be satisfactory to the Registrar or the Authenticating Agent, as the case may be.
In all cases in which the privilege of exchanging or transferring Bonds is exercised, the Issuer shall execute and the Registrar or other Authenticating Agent shall authenticate and deliver new Bonds in accordance with the provisions hereof. The new Bonds shall be issued upon the surrender of the old Bonds, together with any appropriate due-bill check so that no gain or loss of interest results from said transfer or exchange.
No charge shall be made to any Holder for the privilege of transfer or exchange hereinabove granted, but any Holder requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Neither the Issuer, the Registrar nor any Authenticating Agent, as the case may be, shall be required to make any exchange or transfer of a Bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing or to transfer or exchange any Bonds selected for redemption, in whole or in part.
Section 213. Safekeeping and Cancellation of Bonds. Any Bond surrendered pursuant to this Article for the purpose of payment or retirement, or for exchange, replacement or transfer, shall be cancelled upon presentation and surrender thereof to the Registrar, the Trustee or any Paying Agent or Authenticating Agent. Any Bond cancelled by the Trustee or any Paying Agent or Authenticating Agent shall be transmitted promptly to the Registrar by the Trustee, Paying Agent or Authenticating Agent.
The Issuer, or the Company on behalf of the Issuer, may deliver at any time to the Registrar for cancellation any Bonds previously authenticated and
delivered hereunder, which the Issuer or the Company may have acquired in any manner whatsoever. All Bonds so delivered shall be promptly cancelled and destroyed by shredding or incineration by the Registrar. Certification of such surrender, cancellation and destruction (describing the manner thereof) shall be made to the Issuer, the Company and the Trustee by the Registrar once each calendar year.
Section 214. Special Agreement with Holders. Notwithstanding any provision of this Indenture or of any Bond to the contrary, upon written request of any Holder of at least $500,000 in aggregate principal amount of the Bonds, the Trustee (or other Paying Agent) shall enter into an agreement with that Holder providing for making all payments to that Holder of Debt Service on that Bond or any part thereof at a place and in a manner, including without limitation by wire transfer, other than as provided in this Indenture and in the Bond, upon any conditions which shall be satisfactory to the Trustee (or other Paying Agent) and the Company; provided, that payment in any event shall be made to the Person in whose name a Bond shall be registered on the Register, with respect to payment of principal and premium, on the date such principal and premium is due, and, with respect to the payment of interest, as of the applicable Record Date or Special Record Date, as the case may be.
The Trustee (or other Paying Agent) will upon request furnish a copy of each of those agreements, certified to be a true copy by an officer of the Trustee (or other Paying Agent), to the Registrar, the Tender Agent and the Company. Any payment of Debt Service pursuant to such an agreement shall constitute payment thereof pursuant to, and for all purposes of, this Indenture.
Section 215. Acceptance of Letter of Credit.
(a) The Trustee is hereby authorized to accept the Initial Letter of Credit and any Substitute Letter of Credit delivered to it pursuant to Section 5.6 of the Second Supplemental Lease.
(b) The Trustee shall, at least 30 days prior to any proposed Letter of Credit Substitution Date, furnish to the Holders a copy of the Company's written notice, given pursuant to Section 5.6(b)(1) of the Second Supplemental Lease, of its intention to furnish a Substitute Letter of Credit.
(c) If a Substitute Letter of Credit shall have been delivered to the Trustee pursuant to Section 5.6 of the Second Supplemental Lease and become effective, the Existing Letter of Credit shall be returned to the issuer thereof as provided in said Section of the Second Supplemental Lease.
Section 216. DTC Eligibility Requirements. To induce DTC to accept the Bonds as eligible for deposit at DTC, and to assure compliance with the rules of DTC with respect to the Bonds, the Issuer and the Trustee agree, with respect to any Bonds that are to be deposited with DTC, to comply with the terms and provisions of the Letter of Representations, which are incorporated herein by this reference. In the event of any conflict between any term or provision of the Letter of Representations and any other term or provision of this Indenture, the terms and provisions of the Letter of Representations shall be controlling during any period that the Bonds are deposited with DTC.
[END OF ARTICLE II]
ARTICLE III
Section 301. Optional Tenders.
(a) The Holder of any Bond shall have the right to tender such Bond to the Tender Agent, for purchase at the Purchase Price, in whole or in part (and if in part, in any authorized denomination) on any Business Day (the "Optional Tender Date") during any Seven-Day Rate Period, but not during any Yearly Fixed Rate Period or the Permanent Fixed Rate Period. In order to exercise such option with respect to any Bond, the Holder thereof must give to the Trustee at the Trustee's Office, with a copy to the Tender Agent at the Tender Office, at least seven days prior to the proposed Optional Tender Date, notice (i) by telephone, confirmed by Notice of Tender not more than two Business Days after such telephonic notice, or (ii) by Notice of Tender. If the telephonic notice or the Notice of Tender specifies an Optional Tender Date that is not a Business Day, then such notice shall be deemed to specify the Business Day following the designated Optional Tender Date. Upon the delivery of Notice of Tender, such election to tender shall be irrevocable and binding upon such Holder. If a Notice of Tender shall have been duly given with respect to any Bond, the Holder of such Bond shall deliver such Bond to the Tender Agent at the Tender Office at or before 10:00 a.m. Trustee's Time on the Optional Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided on such Bond or in such other form as shall be acceptable to the Tender Agent). Any Bond for which a Notice of Tender shall have been given but which shall not be so delivered to the Tender Agent (an "Unsurrendered Bond"), shall nevertheless be deemed to have been tendered by the Holder thereof on the Optional Tender Date. The Trustee shall, in its sole discretion, determine whether, with respect to any Bond, the Holder thereof shall have properly exercised the option to have its Bond purchased.
(b) If any such notice of tender for purchase shall have been given to the Trustee pursuant to this Section, the Trustee shall immediately give telegraphic or telephonic notice, with prompt confirmation by Telefax, to the Tender Agent, the Remarketing Agent, the Bank and the Company of the principal amount of Bonds as to which notice of tender for purchase shall have been given and the proposed
Optional Tender Date therefor. On each Optional Tender Date the Trustee
shall cause the Tender Agent to purchase, at the Purchase Price, all
Bonds as to which Notices of Tender for purchase shall have been
received. Funds for payment of the Purchase Price of such Bonds shall
be drawn by the Trustee from the Bond Purchase Fund as provided in
Section 406 of this Indenture.
(c) If there shall have been irrevocably deposited in the Bond
Purchase Fund an amount sufficient to pay the Purchase Price of all
Bonds tendered or deemed tendered for purchase on an Optional Tender
Date, any Unsurrendered Bonds shall be deemed to have been tendered for
purchase and purchased from the Holder thereof on such Optional Tender
Date and the Holder of any Unsurrendered Bond shall not be entitled to
receive interest on such Unsurrendered Bond for any period on and after
the Optional Tender Date. The Tender Agent shall authenticate a new
Bond or Bonds in the same aggregate principal amount as the
Unsurrendered Bonds, and shall hold or dispose of such new Bond or
Bonds in accordance with the provisions of subsections (e) and (f) of
Section 303 hereof. Upon receipt by the Tender Agent of any such
Unsurrendered Bonds from the Holders thereof, the Trustee shall cause
the Tender Agent to pay the Purchase Price in respect of such
Unsurrendered Bonds to the Holders thereof and cancel such
Unsurrendered Bonds.
Section 302. Mandatory Tenders.
(a) The Holder of each Bond shall be required to tender such Bond
to the Tender Agent for purchase on (i) each Proposed Conversion Date,
(ii) each date immediately following the expiration of a Yearly Fixed
Rate Period that is not a Proposed Conversion Date, (iii) the first day
of the calendar month in which the Stated Termination Date of the
Letter of Credit occurs, and (iv) the date specified by the Bank
pursuant to Section 601(g) hereof by reason of a default under the
Credit Agreement; or, if any of such dates is not a Business Day, the
next succeeding Business Day (each such date, a "Mandatory Tender
Date"), all as more fully provided in this Section.
(b) Notice of a Mandatory Tender shall be given by the Trustee by first-class mail, postage prepaid, to the Holders of all Bonds at their addresses appearing on the Register not fewer than 20 days prior to a Mandatory Tender Date. Such notice of Mandatory Tender shall:
(i) specify the Mandatory Tender Date;
(ii) state the reason for the Mandatory Tender (that is, the applicable event listed in subsection (a) of this Section);
(iii) if such Mandatory Tender Date is the first day of the calendar month in which the Stated Termination Date of the Letter of Credit occurs, state that the Trustee will no longer be permitted to make drawings under the Existing Letter of Credit after the Stated Termination Date (which shall be specified);
(iv) if such Mandatory Tender Date is a Proposed Conversion Date or the date immediately following the expiration of a Yearly Fixed Rate Period that is not a Proposed Conversion Date, state the manner in which interest on the Bonds is anticipated to be calculated on and after the Mandatory Tender Date;
(v) state whether or not a Letter of Credit or Alternate Credit Facility will be or is expected to be in effect during the ensuing interest rate period; if not, that the rating or ratings on the Bonds may be reduced or withdrawn; but if so, the name of the Bank issuing the same, the rating or ratings, if any, assigned or expected to be assigned to the Bonds by reason of such Letter of Credit or Alternate Credit Facility, and whether such rating or ratings, if any, are equivalent to or lower than the rating or ratings on the Bonds in effect prior to the Mandatory Tender Date; and
(vi) state that all Bonds must be tendered by the Holder thereof to the Tender Agent at the Tender Office at or before 10:00 a.m. Trustee's Time on such Mandatory Tender Date, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bonds or such other form as shall be acceptable to the Tender Agent), and shall be purchased on the Mandatory Tender Date at the Purchase Price. Any Bond that is not so delivered to the Tender Agent (an "Unsurrendered Bond") shall be deemed to have been tendered for purchase by the Holder thereof on the Mandatory Tender Date.
(c) All Bonds shall be tendered by the Holders thereof for purchase at or before 10:00 a.m. Trustee's Time on the Mandatory Tender
Date, by delivering such Bonds to the Tender Agent at the Tender Office, together with an instrument of assignment or transfer duly executed in blank (which instrument of assignment or transfer shall be in the form provided in the Bonds or such other form as shall be acceptable to the Tender Agent). On the Mandatory Tender Date, the Trustee shall cause the Tender Agent to purchase all Bonds at the Purchase Price. All Bonds so to be purchased that are not delivered to the Tender Agent on the Mandatory Tender Date (the "Unsurrendered Bonds") shall nevertheless be deemed to have been tendered for purchase by the Holders thereof on the Mandatory Tender Date. Funds for payment of the Purchase Price of such Bonds shall be drawn by the Trustee from the Bond Purchase Fund as provided in Section 406 of this Indenture.
(d) If there shall have been irrevocably deposited in the Bond
Purchase Fund an amount sufficient to pay the Purchase Price of all
Bonds tendered or deemed tendered for purchase on the Mandatory Tender
Date, the Holder of any Unsurrendered Bond shall not be entitled to
receive interest on such Unsurrendered Bond for any period on and after
the relevant Mandatory Tender Date, and all such Unsurrendered Bonds
shall be deemed to have been tendered for purchase and purchased on
such Mandatory Tender Date. The Tender Agent shall authenticate a new
Bond or Bonds in the same aggregate principal amount as the
Unsurrendered Bonds, and shall hold or dispose of such new Bond or
Bonds in accordance with the provisions of subsections (e) and (f) of
Section 303 hereof. Upon receipt by the Tender Agent of any such
Unsurrendered Bonds from the Holders thereof, the Trustee shall cause
the Tender Agent to pay the Purchase Price of such Unsurrendered Bonds
to the Holders thereof and cancel such Unsurrendered Bonds.
Section 303. Procedures for Purchase and Remarketing.
(a) Unless directed by the Company not to do so, the Remarketing Agent will use its best efforts to remarket all Bonds tendered or deemed to be tendered for purchase pursuant to Sections 301 and 302 hereof, and, when directed in writing by the Company, to remarket all Bonds held by the Tender Agent pursuant to this Section; provided no such remarketing shall be made to the Company, the Issuer or any Affiliate of either; provided further no such remarketing shall be permitted while an Event of Default exists. The Company may at any time, upon written direction to the Remarketing Agent, direct the Remarketing Agent to cease or resume the remarketing of some or all of the Bonds.
(b) As soon as practicable, but by not later than 3:00 p.m. Trustee's Time on the Business Day preceding any Tender Date, the Remarketing Agent shall give telegraphic or telephonic notice, confirmed on the same day by Telefax, to the Trustee, the Tender Agent, the Company and the Bank, of:
(i) the principal amount of Bonds, if any, remarketed by it pursuant to the first sentence of Section 303(a) hereof (or that no Bonds have been so remarketed, if such is the case); and
(ii) the names, addresses and taxpayer identification numbers of those who, upon payment therefor as herein specified, shall become the new registered Holders of, and the principal amount and denominations of, such Bonds, if any, as shall have been remarketed by it pursuant to this Section.
The Remarketing Agent shall make appropriate settlement arrangements between the purchasers of such remarketed Bonds and the Trustee, and shall by appropriate instructions direct such purchasers to pay the Purchase Price of the Bonds which shall have been so remarketed to the Trustee or its order in federal or other immediately available funds at or before 11:00 a.m. Trustee's Time on the Tender Date; provided, the Remarketing Agent shall further instruct each such purchaser that payment must in any event be made by 11:00 a.m. Trustee's Time on the Tender Date, or else that purchaser will not be entitled to receive the Bonds purchased by it until the next Business Day and that purchaser will be required to pay additional accrued interest on the Bonds from the Tender Date to the next Business Day; provided, further, if Bonds are remarketed after a Tender Date, such purchasers shall be instructed to pay, in addition to the Purchase Price, accrued interest on the Bonds from the Tender Date to the date such purchasers do make payment to the Trustee by 11:00 a.m. Trustee's Time. The Remarketing Agent shall further instruct purchasers of remarketed Bonds to which subsection (g) hereof applies, to deliver acknowledgment to the Trustee that they have received notice of redemption or Mandatory Tender, as the case may be. The Trustee shall deposit the proceeds of any such remarketing in the Remarketing Proceeds Account of the Bond Purchase Fund and shall hold such moneys therein in trust for the benefit of the Person who or which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been registered or delivered to or for the account of such Person.
(c) At or before 3:00 p.m. New York, New York time on each Tender Date, the Trustee shall cause the Tender Agent to pay the Purchase Price to each Holder of a Bond (or portion thereof) tendered for purchase in federal or other immediately available funds. The Tender Agent shall pay such Purchase Price from moneys on deposit in the Bond Purchase Fund; provided, that the Tender Agent shall not pay the Purchase Price of any Unsurrendered Bond, unless and until the Holder of such Unsurrendered Bond presents such Unsurrendered Bond, together with an instrument of assignment or transfer duly executed in blank, to the Tender Agent. All Bonds so purchased by the Tender Agent shall be delivered by the Tender Agent in accordance with this Section.
(d) The Tender Agent shall hold all Bonds delivered to it pursuant to Sections 301 and 302 hereof in trust solely for the benefit of the respective Holders who shall have so delivered such Bonds until moneys representing the Purchase Price of such Bonds shall have been delivered to or for the account of such Holder.
(e) Bonds purchased on a Tender Date with moneys drawn under the Letter of Credit shall be held or disposed of by the Tender Agent as follows:
(i) If the Letter of Credit provides by its terms that the amount available for drawing thereunder to pay Purchase Price reinstates upon the Bank's receipt from the Trustee or its representative of written notice of reimbursement (whether from proceeds of remarketing of Bonds or payments by the Company) and the moneys constituting such reimbursement, then the Trustee shall, by not later than 12:00 Noon Trustee's Time on any Tender Date, to the extent the Trustee shall have received remarketing proceeds or payments of Basic Rent in respect of Purchase Price by such time, forward such notice of reimbursement and the aggregate amount of such reimbursement to the Bank in accordance with the terms of the Letter of Credit. The Trustee shall immediately furnish to the Tender Agent a copy of such notice to the Bank, whereupon the Tender Agent shall register that amount of such Bonds equal to the amount so reimbursed as follows: (A) to the extent such Bonds shall have been remarketed by the
Remarketing Agent, as directed by the Remarketing Agent pursuant to subsection (b) of this Section; and/or (B) to the extent such Bonds shall not have been remarketed, in the name of the Company. The Bank shall give telephonic notice to the Trustee and the Tender Agent, confirmed on the same day by Telefax (a "Reimbursement Notice"), that it has received from the Trustee or its representative the notice of reimbursement and the amount of the reimbursement; such notice shall further state the amount, if any, reimbursed directly to the Bank by or on behalf of the Company, and that the Letter of Credit has been reinstated by such amount, whereupon the Tender Agent shall register in the name of the Company an amount of Bonds equal to such amount reimbursed directly to the Bank.
(ii) If the Trustee shall not have received moneys
(whether from remarketing proceeds or payments from the Company)
sufficient to make reimbursement to the Bank in full, and if the
Trustee and Tender Agent shall not have received a Reimbursement
Notice from the Bank as to any reimbursement made directly to the
Bank by or on behalf of the Company, then the Tender Agent shall
register in the name of the Bank that amount of such Bonds equal
to the amount not reimbursed ("Bank Bonds"); such Bonds shall
remain so registered until such time, if any, as the Trustee
shall receive from the Bank a Reimbursement Notice, whereupon the
Tender Agent shall re-register Bank Bonds pursuant to clause (i)
of this subsection. Moreover, if the Letter of Credit does not
provide by its terms that the amount available for drawing
thereunder to pay Purchase Price reinstates upon the Bank's
receipt from the Trustee or its representative of notice of
reimbursement and the moneys constituting such reimbursement, the
Tender Agent shall register in the name of the Bank all tendered
Bonds until the Trustee and Tender Agent shall have received
written evidence from the Bank of the reinstatement of the Letter
of Credit in the amount of the tendered Bonds, whereupon the
Tender Agent shall re-register Bank Bonds pursuant to clause (i)
of this subsection.
(iii) Bonds registered as directed by the Remarketing Agent shall be delivered by the Tender Agent to, or upon the direction of, the Remarketing Agent. Company-Owned Bonds shall be held by the Tender Agent for the account of the Company or, upon written request of the Company, shall be delivered to the Company. Bank Bonds shall be held by the Tender Agent on behalf of the Bank or, upon written request of the Bank, shall be delivered to the Bank.
(f) Bonds purchased with moneys from any source other than moneys drawn under the Letter of Credit shall be registered as follows: (i) to the extent such Bonds shall have been remarketed by the Remarketing Agent, as directed by the Remarketing Agent pursuant to subsection (b) of this Section, and/or (ii) to the extent such Bonds shall not have been remarketed, in the name of the Company. Bonds registered as directed by the Remarketing Agent shall be delivered by the Tender Agent to, or upon the direction of, the Remarketing Agent. Company-Owned Bonds shall be held by the Tender Agent for the account of the Company or, upon written request of the Company, shall be delivered to the Company.
(g) Any Bond remarketed by the Remarketing Agent that shall theretofore have been called for redemption shall be redelivered with a copy of the redemption notice, and any such Bond as to which notice of Mandatory Tender shall theretofore have been given pursuant to Section 302 hereof shall be redelivered with a copy of the notice of Mandatory Tender.
(h) Bonds purchased pursuant to the Optional Tender or Mandatory Tender provisions of this Indenture shall not, by virtue of such purchase, be deemed paid or cancelled, but shall remain Outstanding until fully paid within the meaning of Article VIII hereof. Notwithstanding any other provision herein which may be interpreted to the contrary, any purchase of Bonds pursuant to a remarketing by the Remarketing Agent shall not be viewed as a sale of the Bonds from the Holder directly to a new purchaser, but rather as a sale to the Remarketing Agent and a resale by the Remarketing Agent to the new purchaser. Proceeds of a remarketing are intended to be a source of payment, together with amounts available under the Letter of Credit and other funds as specified herein, for Bonds following tender and delivery in accordance with this Article; and the occurrence of a successful remarketing is not a precondition to a Holder's right to receive payment for its Bonds following tender and delivery in accordance with this Article.
[END OF ARTICLE III]
ARTICLE IV
Section 401. Bond Fund.
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK 2002 Bond Fund" (the "Bond Fund"). Amounts in the Bond Fund shall be used solely to pay Debt Service on the Bonds as the same shall become due and payable or to reimburse the Bank for amounts drawn under the Letter of Credit, as provided in subsection (d) of this Section.
(b) There shall be deposited in the appropriate account in the Bond Fund, as and when received:
(i) All moneys drawn by the Trustee under the Letter of Credit for the purpose of paying the principal amount of the Bonds and the interest due thereon on any Bond Payment Date, into the Credit Facility Account;
(ii) All payments of Basic Rent under the Second Supplemental Lease with respect to Debt Service, into the Company Account;
(iii) All other moneys required to be deposited in the Bond Fund pursuant to the Second Supplemental Lease or this Indenture, into the Company Account; and
(iv) All other moneys received by the Trustee when accompanied by directions that such moneys are to be deposited in the Bond Fund, into the Company Account.
(c) The Issuer hereby authorizes and directs the Trustee to withdraw sufficient moneys from the Bond Fund to pay Debt Service on the Bonds as the same shall become due and payable, whether at maturity, by call for redemption or otherwise, which authorization and direction the Trustee hereby accepts. Funds for such payments of Debt Service shall be derived from the following sources in the order of priority indicated:
(i) First, moneys drawn by the Trustee under the Letter of Credit, and
(ii) Second, all other moneys on deposit in the Bond Fund.
(d) If the Letter of Credit is then in effect, prior to 12:00 noon (New York, New York, time) on each Business Day preceding a Bond Payment Date the Trustee shall, without making any prior claim or demand upon the Company for payment of Basic Rent, make a draw under the Letter of Credit in an amount equal to the amount of Debt Service due on such Bond Payment Date on Bonds other than Bank Bonds or Company-Owned Bonds. Any such moneys drawn under the Letter of Credit shall be deposited and held in the Credit Facility Account in the Bond Fund, and shall not be commingled with other moneys in the Bond Fund. If moneys from any source other than a drawing under the Letter of Credit were, on the date of such draw or any later date, on deposit in the Bond Fund and available for the payment of Debt Service on Bonds other than Bank Bonds or Company-Owned Bonds, the Trustee shall nevertheless draw under the Letter of Credit to make such payment of Debt Service, and the moneys available from such other source shall, to the extent of the amount paid by the Bank against such draw, be paid to the Bank by 3:00 p.m. Trustee's Time on the date such draw is honored or on any later date that moneys become so deposited. All moneys so drawn under the Letter of Credit shall be used to pay Debt Service on Bonds other than Bank Bonds or Company-Owned Bonds.
(e) Debt Service on Bank Bonds and Company-Owned Bonds shall be paid (i) with moneys deposited in the Bond Fund from any source other than a drawing under the Letter of Credit and (ii) to the Bank and the Company, respectively.
Section 402. Payment of Debt Service. The Trustee shall be obligated to draw under the Letter of Credit or Alternate Credit Facility at such times and in such manner and amounts as shall be necessary to provide for the payment when due of Debt Service on Bonds other than Bank Bonds or Company-Owned Bonds. The Trustee shall not in any event be liable for any failure on the part of the Bank to make payment under the Letter of Credit once a draw in conformity with the terms of the Letter of Credit shall have been submitted by the Trustee.
Section 403. Non-Presentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity, upon redemption or otherwise, or a check or draft for interest is not cashed, if funds sufficient to pay such Bonds or such check or draft shall have been made available to the Trustee for the benefit of the Holders thereof, all
liability of the Issuer to the Holders thereof for the payment of such Bonds or such check or draft shall cease, determine and be completely discharged as of the time such funds are made available to the Trustee and thereupon it shall be the duty of the Trustee to hold such funds, uninvested, in a separate account of the Bond Fund or Bond Purchase Fund, as appropriate, for the benefit of the Holders of such Bonds, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on their part under this Indenture or on, or with respect to, such Bonds.
Any of those moneys which shall be so held by the Trustee, and which remain unclaimed by the Holder of a Bond not presented for payment or check or draft not cashed for a period of three (3) years after the due date thereof, shall be paid to the Company free of any trust or lien. Thereafter, the Holder of that Bond shall look only to the Company for payment and then only to the amounts so received by the Company without any interest thereon, and the Trustee shall not have any responsibility with respect to those moneys.
Section 404. Release of Funds Upon Payment of Bonds. Except as provided in Section 403 hereof, any amounts remaining in the Bond Fund (other than amounts in the Credit Facility Account) or the Bond Purchase Fund (other than amounts in the Remarketing Proceeds or Credit Facility Proceeds Accounts) after payment in full of the Bonds, the fees, charges and expenses of the Issuer and of the Trustee, the Paying Agents and any other Fiduciaries hereunder and all other amounts required to be paid hereunder, shall be paid to the Company if there is then no Event of Default under and as defined in the Lease Agreement.
Any amounts remaining in the Credit Facility Account, Remarketing Proceeds Account or Credit Facility Proceeds Account shall be paid to the Bank and not to the Company.
Section 405. Construction Fund.
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK 2002 Construction Fund (the "Construction Fund"). All the proceeds of the sale of the Bonds shall be deposited in the Construction Fund.
(b) The moneys in the Construction Fund shall be paid out by the Trustee from time to time solely for the purposes of (1) paying Issuance Costs, as defined in the Second Supplemental Lease, but
subject to the limitation in Section 2.3(n) thereof; (2) reimbursing to or for the account of the Company all funds advanced to the Issuer or otherwise expended (including for this purpose any interim indebtedness incurred) on or after April 1, 2000 for the acquisition, construction and equipping of the 2002 Project; and (3) paying the Project Costs.
(c) The Trustee shall make such payments from the Construction Fund, but in each case only after receipt of a payment requisition substantially in the form of Exhibit C attached hereto, duly completed and executed. Each such payment requisition (1) shall be signed by any duly authorized officer, employee or agent of the Issuer; (2) shall state, with respect to each payment requested thereby, the amount requested to be paid, the name and address of the person, firm or corporation to whom such payment is due and the purpose for which such payment is to be made; (3) shall be consecutively numbered; (4) shall be accompanied by bills, invoices or other appropriate documentation supporting the payments or reimbursements requested; (5) shall bear an endorsement signed by the Project Supervisor as to the matters therein specified; and (6) shall, prior to submission to the Trustee, have been submitted to and approved by the Bank in accordance with the provisions of the Credit Agreement.
(d) The provisions of this Section to the contrary notwithstanding, if with respect to payment of any item of Project Cost from the Construction Fund the Company shall furnish the Trustee a certificate signed by the Project Supervisor stating that the Issuer had failed or refused, after reasonable request therefor made by the Company, to issue a payment requisition for payment of such item, the payment requisition therefor may be signed in the name of the Issuer by the Project Supervisor, and the Trustee shall be fully protected in making the payments directed by such payment requisition as fully and completely as if it were signed by an authorized officer, employee or other agent of the Issuer, provided that such payment requisition is accompanied by the endorsement and other documentation required by the provisions of this Section.
(e) Any amounts remaining in the Construction Fund after the
Completion Date shall be applied as directed by the Company pursuant to
Section 4.3(c) of the Second Supplemental Lease.
Section 406. Bond Purchase Fund.
(a) There is hereby created and established with the Trustee a trust fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK 2002 Bond Purchase Fund" (the "Bond Purchase Fund"). The Trustee shall be the custodian for the Bond Purchase Fund, and moneys in such Fund may be disbursed by the Trustee as hereinafter provided. The moneys in the Bond Purchase Fund shall be used (i) to pay the Purchase Price of Bonds due on any Tender Date or (ii) to reimburse the Bank for amounts drawn under the Letter of Credit, as provided in subsection (d) of this Section.
(b) There shall be deposited in the appropriate account of the Bond Purchase Fund, as and when received:
(i) All moneys drawn by the Trustee under the Letter of Credit for the purpose of paying the Purchase Price of Bonds due on any Tender Date, into the Credit Facility Proceeds Account;
(ii) All payments of Basic Rent under the Second Supplemental Lease with respect to Purchase Price, into the Miscellaneous Account;
(iii) The proceeds of any remarketing of Bonds by the Remarketing Agent, into the Remarketing Proceeds Account;
(iv) All other moneys required to be deposited in the Bond Purchase Fund pursuant to the Second Supplemental Lease or this Indenture, into the Miscellaneous Account; and
(v) All other moneys received by the Trustee when accompanied by directions that such moneys are to be deposited in the Bond Purchase Fund, into the Miscellaneous Account.
(c) The Trustee is hereby authorized and directed to withdraw sufficient moneys from the Bond Purchase Fund to pay the Purchase Price of Bonds due on any Tender Date. Funds for such payments shall be derived from the following sources in the order of priority indicated:
(i) First, moneys drawn by the Trustee under the Letter of Credit;
(ii) Second, moneys received by the Trustee from the remarketing of Bonds by the Remarketing Agent; and
(iii) Third, all other moneys on deposit in the Bond Purchase Fund.
(d) If the Letter of Credit is then in effect, prior to 12:00 noon (New York, New York, time) on the Business Day preceding each Tender Date the Trustee shall, without making any prior claim or demand upon the Company for payments of Basic Rent with respect to the Purchase Price of Bonds, make a draw under the Letter of Credit in an amount equal to the Purchase Price of all Bonds to be purchased on such Tender Date. Any such moneys drawn under the Letter of Credit shall be deposited and held in the Credit Facility Proceeds Account in the Bond Purchase Fund, and shall not be commingled with other moneys in the Bond Purchase Fund. If moneys from any source other than a drawing under the Letter of Credit were, at the time of such draw, on deposit in the Remarketing Proceeds Account or Miscellaneous Account of the Bond Purchase Fund and available for the payment of such Purchase Price, the Trustee shall nevertheless draw under the Letter of Credit in the full amount of such Purchase Price, and any such moneys available in the Bond Purchase Fund on such Tender Date from such other sources shall, to the extent of the amount paid by the Bank against such draw, be paid to the Bank. If proceeds from the remarketing of Bonds shall have been deposited in the Remarketing Proceeds Account of the Bond Purchase Fund, or if moneys paid by the Company in respect of Purchase Price shall have been deposited in the Miscellaneous Account of the Bond Purchase Fund, in either event by 11:00 a.m. Trustee's Time on such Tender Date or any later date, the Trustee shall pay or cause to be paid such amounts to the Bank as promptly as possible, but in any event by 12:00 noon Trustee's Time on any date the Trustee shall receive such amounts, so long as the Trustee shall have received such amounts by 11:00 a.m. Trustee's Time on that date.
Section 407. Rebate Fund. There is hereby created by the Issuer and ordered established in the custody of the Trustee a fund designated "The Industrial Development Board of the City of Montgomery -- KINPAK 2002 Rebate Fund" (the "Rebate Fund"). Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder.
As required by the Second Supplemental Lease, the Company shall calculate and report to the Trustee, within 20 days after each Computation Date, the amount of Excess Earnings as of the end of that Bond Year or the date of such payment in full. The Trustee shall notify the Company in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the
Rebate Fund is in excess of the Excess Earnings, the Trustee shall forthwith pay that excess amount to the Company. If the amount then on deposit in the Rebate Fund is less than the Excess Earnings, the Company shall, within five days after receipt of the aforesaid notice from the Trustee, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to the Excess Earnings. Within 30 days after the end of the fifth Bond Year and every fifth Bond Year thereafter, the Trustee, acting at the written direction of the Company and on behalf of the Issuer, shall pay to the United States, in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund, an amount calculated by the Company to be equal to 90% (or such greater percentage not in excess of 100% as the Company may direct the Trustee to pay) of the Excess Earnings earned from the Issue Date through the end of such fifth Bond Year (less the amount of Excess Earnings, if any, previously paid to the United States pursuant to this Section). Within 60 days after the payment in full of all Bonds then outstanding the Trustee shall, at the written direction of the Company and on behalf of the Issuer, pay to the United States in accordance with Section 148(f) of the Code from the moneys deposited in the Rebate Fund an amount calculated by the Company to be equal to 100% of the Excess Earnings earned from the Issue Date to the date of such payment in full (less the amount of Excess Earnings, if any, previously paid to the United States pursuant to this Section) and any moneys remaining in the Rebate Fund following such payment shall be paid to the Company. In each case of any payment made pursuant to either of the two preceding sentences, it shall be the responsibility of the Company to prepare and furnish to the Trustee any information returns or forms required to accompany such payment. All computations of Excess Earnings pursuant to the Second Supplemental Lease shall treat the amount or amounts, if any, previously paid to the United States pursuant to this Section as amounts on deposit in the Rebate Fund.
The Trustee shall be entitled to rely on the calculations made by the Company and shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in reliance upon those calculations.
The Trustee shall make available to the Company such records as the Trustee customarily maintains concerning the investments of the gross proceeds of the Bonds and the investments of earnings from those investments.
The provisions of this Section 407 shall not apply if and to the extent that the Issuer, the Company and the Trustee receive a Non-Taxability Opinion regarding the failure to comply therewith.
Section 408. Investment of Fund Moneys. Moneys in the Bond Fund and the Bond Purchase Fund (except for moneys therein (i) held pursuant to Section 403 hereof, (ii) to pay Unsurrendered Bonds or (iii) representing proceeds of a drawing under the Letter of Credit, which moneys shall be either held in cash and not invested or invested only in Government Obligations with a maturity of not to exceed 30 days or fewer, as needed) and in the Rebate Fund and the Construction Fund shall be invested and reinvested by the Trustee in Eligible Investments at the written direction of the Company, consistent, however, with the covenants of the Company contained in Section 5.5 of the Second Supplemental Lease. Investments of moneys in the Bond Fund shall mature or be redeemable (at the option of the Trustee) at the times and in the amounts necessary to provide moneys to pay Debt Service on Bonds as the same shall become due at stated maturity, by redemption or otherwise. Each investment of moneys in the Construction Fund shall mature or be redeemable at such time as the Company advises will be necessary to make payments from the Construction Fund.
Subject to any written directions from the Company with respect thereto, from time to time, the Trustee may sell those investments and reinvest the proceeds therefrom in Eligible Investments maturing or redeemable as aforesaid. Any of those investments may be purchased from or sold to any Fiduciary or any bank, trust company or savings and loan association affiliated with any Fiduciary. The Trustee shall sell or redeem investments credited to the Bond Fund to produce sufficient moneys applicable hereunder to and at the times required for the purpose of paying Debt Service on Bonds when due as aforesaid, and shall do so without necessity for any order on behalf of the Issuer and without restriction by reason of any order. An investment made from moneys credited to the Bond Fund, the Bond Purchase Fund, the Rebate Fund or the Construction Fund shall constitute part of that respective Fund, and each respective Fund shall be credited with all proceeds of sale and income from investment of moneys credited thereto. For purposes of this Indenture, all investments shall be valued at face amount or market value, whichever is less.
In addition to the foregoing requirements, the Issuer will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose
investments in which gross proceeds of the Bonds are invested or that results in
a smaller profit or a larger loss than would have resulted in an arm's length
transaction in which the yield on the nonpurpose investment was not subject to
any restriction. As used herein, the terms "gross proceeds", "nonpurpose
investments" and "yield" have the meanings assigned to them for purposes of
Section 148 of the Code.
Furthermore, except to the extent set forth in an opinion of Bond Counsel, investments or deposits of proceeds of Bonds in certificates of deposit or pursuant to investment contracts shall not be made without compliance, at or prior to such investment or deposit, with the requirements of Treasury Regulations Section 1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions thereto.
Section 409. Moneys to be Held in Trust. Except where moneys have been
deposited with or paid to the Trustee pursuant to an instrument restricting
their application to particular Bonds, all moneys required or permitted to be
deposited with or paid to the Trustee or any Paying Agent under any provision of
this Indenture, the Lease Agreement or the Letter of Credit, and any investments
thereof, shall be held by the Trustee or that Paying Agent in trust. Except for
(a) moneys deposited with or paid to the Trustee or any Paying Agent for the
redemption of Bonds, notice of the redemption of which shall have been duly
given, (b) moneys held by the Trustee pursuant to Section 403 hereof, and (c)
any moneys in the Rebate Fund, all moneys described in the preceding sentence
held by the Trustee or any Paying Agent shall be subject to the lien hereof
while so held.
[END OF ARTICLE IV]
ARTICLE V
Section 501. Trustee's Acceptance and Responsibilities. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default shall have occurred (which shall not have been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall be answerable for the conduct of the same in accordance with the standard specified above, and shall be entitled to advice of counsel concerning all matters of trusts hereof and the duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer or the Company), approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or non-action in good faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds (except with respect to any certificate of authentication on the Bonds executed by the Trustee), or for any matters in respect of the Project, or for the validity of the execution by the Issuer of this Indenture or of any supplement hereto or instruments of further assurance, or for the sufficiency or maintenance of the security for the Bonds issued hereunder or intended to be secured hereby.
(d) The Trustee shall not be accountable for the use of the proceeds of any Bonds authenticated or delivered hereunder, other than to comply with the Issuer's request and authorization with respect thereto as described in Section 202(i) hereof. The Trustee may become a Holder of Bonds secured hereby with the same rights which it would have if not Trustee.
(e) The Trustee shall be protected, in the absence of bad faith, in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, Telefax or other paper or document believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any Person who at the time of making such request or giving such authority or consent is a Holder of any Bond, shall be conclusive and binding upon all future Holders of the same Bond and of Bonds issued in exchange therefor or in place thereof.
(f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by any duly authorized officer thereof as sufficient evidence of the facts therein contained; and prior to the occurrence of an Event of Default of which the Trustee shall have been notified as provided in subsection (h) of this Section, or of which pursuant to said subsection it shall be deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, though the Trustee may at its discretion (but shall in no case be bound to) secure such further evidence as it shall deem necessary or advisable.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligent action or failure to act or willful misconduct.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except Events of Default by reason of (i) the Bank's notice under Section 601(g) hereof or (ii) failure by the Issuer to cause to be made any payments of Debt Service, unless the Trustee shall be specifically notified in writing of such default by the Issuer or by the Holders of at least 25% in aggregate principal amount of Bonds then Outstanding. All notices or
other instruments required by this Indenture to be delivered to the Trustee, must, in order to be effective, be delivered at the Trustee's Office, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property herein conveyed, including all books, papers and records of the Issuer and the Company pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee may demand, in respect and as a condition of the authentication of any Bonds, the withdrawal of any cash, the release of any property or the taking of any action whatsoever within the purview of this Indenture, such showing, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as the Trustee may reasonably deem desirable in addition to what is expressly required hereby.
(l) Before taking any action hereunder (with the exceptions of declaring acceleration of the Bonds pursuant to clause (b)(ii) of the first paragraph of Section 602 hereof and of making payments of Debt Service and drawings under the Letter of Credit pursuant to Sections 401, 402 and 406 hereof) the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses which it may incur and to protect it against all liability, except liability which is adjudicated to have resulted from its negligent action or failure to act or willful misconduct. The Trustee may take action without indemnity, and in that case, the Company shall reimburse the Trustee for all of the Trustee's expenses pursuant to Section 502 hereof.
(m) Unless otherwise provided herein, all moneys received by the Trustee or any Paying Agent shall, until applied or invested as herein provided, be held in trust for the purposes for which they were
received, provided that those moneys need not be segregated from other funds except to the extent required by this Indenture or by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon.
Section 502. Fees, Charges and Expenses of Fiduciaries. Each Fiduciary shall be entitled to payment and/or reimbursement by the Company as provided in the Second Supplemental Lease for reasonable fees for its Ordinary Services rendered hereunder and all advances, counsel fees and other Ordinary Expenses reasonably and necessarily made or incurred by it in connection with such Ordinary Services. For purposes hereof, fees for Ordinary Services provided for in the standard fee schedule (if any) of each Fiduciary shall be considered reasonable. In the event that it should become necessary that any Fiduciary perform Extraordinary Services, it shall be entitled to reasonable extra compensation therefor, and to reimbursement for reasonable and necessary Extraordinary Expenses in connection therewith; provided, that if such Extraordinary Services or Extraordinary Expenses are occasioned by the neglect or misconduct of such Fiduciary, it shall not be entitled to compensation or reimbursement therefor.
A Fiduciary shall be entitled to payment and reimbursement for Ordinary Services and Ordinary Expenses only from (a) the additional payments made by the Company pursuant to the Second Supplemental Lease, or (b) other moneys available therefor (except for moneys in the Bond Fund or Bond Purchase Fund (i) held pursuant to Section 403 hereof, (ii) to pay Unsurrendered Bonds or (iii) representing proceeds of remarketing of Bonds or a drawing under the Letter of Credit). Any amounts payable to a Fiduciary pursuant to this Section shall be payable upon demand and shall bear interest from the date of demand therefor at the Interest Rate for Advances.
Section 503. Notices to Holders. If an Event of Default occurs of which the Trustee has actual notice or of which the Trustee is pursuant to Section 501(h) hereof required to take or deemed to have notice, then the Trustee shall promptly give or cause to be given written notice thereof by first class mail, postage prepaid, to each Holder at its address shown on the Register (a "Notice by Trustee"); provided the Trustee shall, on the date of such occurrence, give telephonic notice thereof to each Holder of 25% or more in aggregate principal amount of Bonds Outstanding.
Section 504. Intervention by Trustee. In any judicial proceeding to which the Issuer or the Company is a party of which the Trustee has actual notice and which in the opinion of the Trustee has a substantial bearing on the interests of Holders of the Bonds, the Trustee may intervene on behalf of Holders, and shall intervene if requested to do so in writing by Holders of at least 25% of the aggregate principal amount of Bonds then Outstanding. The rights and obligations of the Trustee under this Section are subject to the approval of a court of competent jurisdiction.
Section 505. Successor Trustees. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from such conversion, sale, merger, consolidation or transfer to which it is a party shall be and become, ipso facto, successor Trustee hereunder and vested with all of the title to the property herein conveyed and all the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Any successor Trustee other than the foregoing, however, (a) shall be a trust company or a bank having the powers of a trust company, (b) shall be in good standing within the State or shall be duly authorized to exercise trust powers within the State, and (c) shall have a reported capital and surplus of not less than $50,000,000.
Section 506. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including without limitation, the laws of the State) denying or restricting the right of banks or trust companies to transact business as trustees in that jurisdiction. It is recognized that, (a) if there is litigation under this Indenture or other instruments or documents relating to the Bonds, and in particular, in case of the enforcement thereof upon a default or an Event of Default, or (b) if the Trustee should deem that, by reason of any present or future law of any jurisdiction, it may not (i) exercise any of the powers, rights or remedies granted herein to the Trustee, (ii) hold title to the properties, in trust, as granted herein, or (iii) take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or additional institution as a co-Trustee. The following provisions of this Section are adapted to these ends.
In the event that the Trustee appoints an individual or additional institution as a co-Trustee, each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee shall be exercisable by, vest in and be conveyed to that co-Trustee, but only to the extent necessary for it to be so vested and conveyed and to enable that co-Trustee to exercise it. Every covenant, agreement and obligation necessary to the exercise thereof by the co-Trustee shall run to and be enforceable by it.
Notwithstanding the foregoing, a co-Trustee shall exercise only such rights and perform only such duties as may be required to avoid violation of any law of any jurisdiction or as may be directed by the Trustee in writing. Any written direction by the Trustee to a co-Trustee to take or to refrain from taking any action hereunder shall be sufficient warrant for taking or refraining from taking such action by such co-Trustee. Neither the Trustee nor any co-Trustee shall be personally liable by reason of any act or omission of a co-Trustee or the Trustee, respectively, hereunder. Any moneys, papers, securities or other items of personal property received by a co-Trustee pursuant to its exercise of rights or performance of duties hereunder shall forthwith, to the extent permitted by law, be turned over to the Trustee.
Should any instrument or document in writing from the Issuer reasonably be required by the co-Trustee so appointed by the Trustee for vesting and conveying more fully and certainly in and to that co-Trustee those trusts, properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens, that instrument or document shall be executed, acknowledged and delivered, but not prepared, by the Issuer. In case any co-Trustee or a successor to it shall die, become incapable of acting, resign or be removed, all of the trusts, properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the co-Trustee shall be exercised by, vest in and be conveyed to the Trustee, to the extent permitted by law, until the appointment of a successor to the co-Trustee.
Section 507. Resignation by the Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created, by giving 30 days' written notice to the Issuer, the Registrar, the Tender Agent, the Remarketing Agent, the Bank and the Company and notice by registered or
certified mail to each Holder of Bonds then Outstanding. Such resignation shall take effect only upon the appointment of a successor trustee. Such notices to the Issuer, the Registrar, the Tender Agent, the Remarketing Agent, the Bank and the Company may be served personally or sent by registered mail.
Section 508. Removal of the Trustee. The Trustee may be removed at any time, by an instrument or concurrent instruments in writing delivered to the Trustee and to the Issuer, and signed by (a) the Company, provided the Bank shall consent thereto in writing, or (b) the Holders of a majority in aggregate principal amount of Bonds then Outstanding.
The Trustee also may be removed at any time by any court of competent jurisdiction upon the application of the Issuer or the Holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding, for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee. Such removal shall take effect only upon the appointment of a successor trustee.
Section 509. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Trustee shall be taken under the control of any public officer or officers or of a receiver appointed by a court, a successor shall be appointed by the Issuer and with the consent of the Company; provided if the Issuer shall not have appointed a successor within ten days after the event giving rise to the need for such appointment, then a successor may be appointed by the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, by an instrument or concurrent instruments in writing delivered to the Issuer, the Trustee and the successor Trustee, signed by such Holders, or by their duly authorized attorneys in fact. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section, the Holder of any Bond outstanding hereunder or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee under this Indenture. Every such Trustee appointed pursuant to the provisions of this Section to succeed the Trustee shall satisfy the requirements of the second paragraph of Section 505 hereof.
Section 510. Concerning Any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer, the Company, the Registrar and the Tender Agent an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties (including, without limitation, all securities and moneys and the Letter of Credit), rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall nevertheless, on the written request of the Issuer or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall deliver all securities and moneys held by it as trustee hereunder to its successor. Should any instrument in writing from the Issuer be required by any successor trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. In the event of a change in the Trustee, the predecessor trustee shall cease to be Registrar, Authenticating Agent, Tender Agent and Paying Agent for any of the Bonds, to the extent it served in any of those capacities. The successor Trustee shall become custodian of any moneys held by its predecessor and, if applicable, Registrar, Authenticating Agent, Tender Agent and a Paying Agent. Upon delivery to the successor trustee of any moneys or securities held by it, the predecessor trustee shall be discharged from any further liability on account of such moneys or securities so delivered.
Section 511. Right of Trustee to Pay Taxes and Other Charges. In case any tax, assessment or governmental or other charge upon any part of the property herein conveyed is not paid as required herein or by law, the Trustee may pay such tax, assessment or governmental charge, without prejudice, however, to any rights of the Trustee or the Holders hereunder arising as a result of such failure; and any amount at any time so paid under this Section with interest thereon from the date of payment at the Interest Rate for Advances, shall become so much additional indebtedness secured by this Indenture, and shall be paid out of the Revenues (excluding moneys in the Bond Fund or Bond Purchase Fund (i) held pursuant to Section 403 hereof, (ii) for the payment of Unsurrendered Bonds or (iii) representing proceeds of a drawing under the Letter of Credit), if not otherwise paid; but the Trustee shall be under no obligation to make any such payment unless it shall have been requested to do so by the Holders of at least 25% of the aggregate principal amount of Bonds then Outstanding and shall have been provided with adequate funds for the purpose of payment.
Section 512. Adoption of Authentication. In case any of the Bonds shall have been authenticated, but shall not have been delivered, any successor Trustee, Registrar or Authenticating Agent may adopt the certificate of authentication of any predecessor Trustee, Registrar or Authenticating Agent and may deliver those Bonds so authenticated as provided herein. In case any Bonds shall not have been authenticated, any successor Trustee, Registrar or Authenticating Agent may authenticate those Bonds either in the name of any predecessor or in its own name. In all cases, the certificate of authentication shall have the same force and effect as provided in the Bonds or in this Indenture with respect to the certificate of authentication of the predecessor Trustee, Registrar or Authenticating Agent.
Section 513. Registrars.
(a) Succession. Anything herein to the contrary notwithstanding, any corporation or association (i) into which the Registrar may be converted or merged, (ii) with which the Registrar or any successor to it may be consolidated, or (iii) to which it may sell or transfer its assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Registrar hereunder and shall be vested with each and every power, right, duty, obligation, discretion and privilege expressed or intended by this Indenture to be exercised by or vested in the predecessor Registrar, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto.
(b) Resignation. The Registrar may resign at any time by giving written notice of its resignation to the Issuer, the Company, the Trustee, the Bank, the Remarketing Agent and each Paying Agent and Authenticating Agent for the Bonds, at least 60 days before the resignation is to take effect. The resignation shall take effect only upon the appointment of a successor Registrar, but may take effect sooner than within 60 days if the successor Registrar is appointed and accepts that appointment before the time stated in the notice.
(c) Removal. The Registrar may be removed at any time by an instrument or document or concurrent instruments or documents in
writing delivered to the Registrar, with copies thereof mailed to the Issuer, the Trustee and the Company, and signed by or on behalf of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding. Such removal shall take effect only upon the appointment of a successor Registrar.
(d) Appointment of Successors. If (i) the Registrar shall resign, shall be removed, shall be dissolved, or shall become otherwise incapable of acting hereunder, (ii) the Registrar shall be taken under the control of any public officer or officers, (iii) a receiver shall be appointed for the Registrar by a court, or (iv) the Registrar shall have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws or commence a proceeding under any federal or state bankruptcy, insolvency, reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for 90 days, then a successor Registrar shall be appointed by the Issuer, with the written consent of the Company and the Trustee; provided, that if a successor Registrar is not so appointed within ten days after (a) a notice of resignation or an instrument or document of removal is received by the Issuer, as provided above, or (b) the Registrar is dissolved, taken under control, becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above, then, if the Issuer shall not have appointed a successor Registrar, the Trustee or the Holders of a majority in aggregate principal amount of Bonds then Outstanding may designate a successor Registrar by an instrument or document or concurrent instruments or documents in writing signed by the Trustee, or in the case of the Holders, by or on behalf of those Holders.
Every successor Registrar appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer, the Trustee and the Company, an instrument or document accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of
action, immunities, titles and interests of its predecessor. Upon the written request of its successor, the Issuer or the Company, a predecessor Registrar (i) shall execute and deliver an instrument or document transferring to its successor all of the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, titles and interests of it as predecessor Registrar hereunder, and (ii) shall take any other action necessary duly to assign, transfer and deliver to its successor all property and records (including without limitation, the Register and any cancelled Bonds) held by it as Registrar. Should any instrument or document from the Issuer be requested by any successor Registrar for vesting and conveying more fully and certainly in and to that successor the properties, remedies, powers, rights, duties, obligations, discretion, privileges, claims, demands, causes of action, immunities, titles and interests vested or conveyed or intended to be vested or conveyed hereby in or to a predecessor Registrar, the Issuer shall execute, acknowledge and deliver that instrument or document.
Section 514. Designation and Succession of Paying Agents. The Trustee shall be the Paying Agent for the Bonds and, with the consent of the Issuer, the Trustee may appoint an additional Paying Agent or Agents with power to act on its behalf and subject to its direction in the payment of Debt Service on the Bonds. It is the responsibility of the Trustee to establish the duties and responsibilities of any Paying Agent for the purposes of this Indenture, to the extent not specified herein.
Any corporation or association with or into which any Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Paying Agent shall be a party, or any corporation or association succeeding to the trust business of any Paying Agent, shall be the successor of that Paying Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or of the predecessor or that successor Paying Agent.
Any Paying Agent may at any time resign by giving written notice of resignation to the Trustee, the Registrar and the Company. The Trustee may at any time terminate the agency of any Paying Agent by giving written notice of termination to such Paying Agent, the Registrar and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Paying Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Paying Agent. Any successor Paying Agent must be a bank or trust company organized under the laws of the United States or any state thereof. The Trustee shall give written notice of appointment of a successor Paying Agent to the Company, the Issuer and the Registrar and shall mail, within ten days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment.
Section 515. Designation and Succession of Authenticating Agents. With
the consent of the Issuer, the Trustee may appoint an Authenticating Agent or
Agents, in addition to the Trustee, with power to act on its behalf and subject
to its direction in the authentication and delivery of Bonds in connection with
transfers and exchanges hereunder. For all purposes of this Indenture, the
authentication and delivery of Bonds by an Authenticating Agent pursuant to this
Section shall be deemed to be authentication and delivery of those Bonds "by the
Trustee", and any authorized signatory of an Authenticating Agent shall be
deemed an "authorized signatory" on behalf of the Trustee for any such
authentication.
Any corporation or association with or into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation or association succeeding to the trust business of any Authenticating Agent, shall be the successor of that Authenticating Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or of the predecessor or that successor Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee, the Registrar and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent, the Registrar and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent. The Trustee shall give written notice of appointment of a successor Authenticating Agent to the Company, the Issuer and the Tender Agent and shall mail, within ten days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment.
Section 516. Dealing in Bonds. The Trustee, the Tender Agent, a Registrar, a Paying Agent and an Authenticating Agent, their affiliates, and any directors, officers, employees or agents thereof may become the Holders of Bonds secured hereby with the same rights which it or they would have hereunder if the Trustee, the Tender Agent, the Registrar, Paying Agents or Authenticating Agents did not serve in those capacities.
Section 517. Tender Agent. The Trustee may appoint an agent (the "Tender Agent") to act on its behalf in the acceptance of delivery of Bonds tendered for purchase pursuant to the optional or mandatory tender provisions of this Indenture; provided, however, that any such Tender Agent (i) shall be a bank or trust company organized under the laws of the United States or any state thereof, and (ii) shall have its principal office in New York, New York. The Tender Agent shall also be an Authenticating Agent. The Tender Agent shall signify its acceptance of the duties and obligations imposed upon it hereunder in its various capacities by a written instrument of acceptance delivered to the Issuer, the Company, the Trustee, the Remarketing Agent and the Bank. The provisions of Section 513 hereof pertaining to the succession, resignation and removal of Registrars shall be applicable to the succession, resignation and removal of the Tender Agent.
Section 518. Remarketing Agent. The Issuer and the Company have, pursuant to the Remarketing Agreement, appointed Merchant Capital, L.L.C., Montgomery, Alabama, as Remarketing Agent for the Bonds, subject to the conditions set forth herein. Pursuant to the Remarketing Agreement, the Remarketing Agent has also been appointed by the Company as Remarketing Agent for the 1997 Bonds. The Remarketing Agent has, pursuant to the Remarketing Agreement, designated to the Trustee its principal office, signified its acceptance of the duties and obligations imposed upon it hereunder and agreed to perform the duties specified to be performed by it in Articles II and III hereof and in the Bonds, and in particular those duties relating to remarketing of Bonds and determining the interest rate applicable to the Bonds from time to time.
The Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc. and authorized to perform all the duties imposed upon it by this Indenture. The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 30 days' notice to the Issuer, the Company, the Bank, the Tender Agent and the Trustee. The Remarketing Agent may be removed at any time, at the election of the Company, by an instrument signed by the Company on behalf of the Issuer and mailed by first class mail to the Issuer, the Remarketing Agent, the Bank, the Tender Agent and the Trustee not fewer than 30 days prior to the date proposed for removal.
In the event of the resignation or removal of the Remarketing Agent, it shall be the responsibility of the Company to designate a successor (which position may be held jointly), and the old Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to its successor or, if there be no successor, to the Tender Agent. No successor Remarketing Agent may be an Affiliate of the Company.
In the event that the Remarketing Agent shall resign, be removed or be dissolved, or if the property or affairs of the Remarketing Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency or for any other reason, and the Company shall not have made a timely appointment of a successor as Remarketing Agent, the Tender Agent shall be deemed to be the Remarketing Agent for all purposes of this Indenture until the appointment by the Company of a successor Remarketing Agent; provided, however, that the Tender Agent, in its capacity as Remarketing Agent, shall not be required to sell Bonds or to perform the duties with respect thereto.
[END OF ARTICLE V]
ARTICLE VI
Section 601. Events of Default. If any of the following events occurs, it is hereby defined as and declared to be and to constitute an "Event of Default" under this Indenture:
(a) Payment of any interest on any Bond shall not be made when and as that interest shall have become due and payable;
(b) Payment of the principal of any Bond shall not be made when and as that principal or premium shall have become due and payable, whether at stated maturity, by redemption, by acceleration or otherwise;
(c) Failure by the Issuer to perform any of the other agreements on its part herein contained which failure shall continue for 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Issuer and the Company by the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice can be corrected but not within the applicable period, it shall not constitute an Event of Default if corrective action shall be instituted by the Issuer within the applicable period and diligently pursued until the failure is corrected;
(d) The occurrence of any "Event of Default" under and as defined in the Second Supplemental Lease;
(e) Payment of the Purchase Price of Bonds tendered pursuant to Article III hereof shall not be made when the same shall have become due;
(f) The occurrence of an Act of Bankruptcy. The declaration of an Event of Default under this subsection and the exercise of remedies upon any such declaration shall be subject to any applicable limitations of federal or state law affecting or precluding such declaration or exercise during the pendency of or immediately following any liquidation or reorganization proceedings; or
(g) Receipt by the Trustee of a written notice from the Bank that an "Event of Default" shall have occurred and be continuing under and as defined in the Credit Agreement, which notice shall, at the option of the Bank, direct the Trustee either (i) to effect a Mandatory Tender of the Bonds pursuant to Section 302(a)(iv) hereof, in which case the Bank shall specify the Mandatory Tender Date (which shall not be more than 20 days from the date of such notice), or (ii) to declare all Bonds and the interest due thereon immediately due and payable pursuant to Section 602 hereof.
Section 602. Acceleration. Except as otherwise provided herein, (a)
upon the occurrence of an Event of Default described in Section 601(c) or (d)
hereof, the Trustee may declare, and (b) (i) upon the written request of the
Holders of not less than 25% in aggregate principal amount of Bonds then
Outstanding or (ii) upon the occurrence of an Event of Default described in
Section 601(a), (b), (e), (f) or (unless the Bank directs the Trustee to effect
a Mandatory Tender of the Bonds) (g) hereof, the Trustee shall declare, the
principal of all Bonds then Outstanding (if not then due and payable), and the
interest accrued thereon, to be due and payable on the date specified in the
notice by the Trustee described in the following paragraph. The Trustee shall
promptly draw upon the Letter of Credit to the full extent permitted by the
terms thereof and deposit the proceeds of such drawing (to the extent allocable
to the Bonds) in the Credit Facility Account of the Bond Fund. Interest on the
Bonds shall accrue to the date determined by the Trustee for the tender of
payment to the Holders pursuant to such declaration (which date shall not be
more than ten days after an Event of Default described in Section 601(g)
hereof); provided interest on the Bonds shall continue to accrue on and after
such date, if on such date the Trustee shall not hold moneys sufficient to pay
the principal and interest so declared to be payable.
Any acceleration pursuant to the preceding paragraph of this Section shall be by notice in writing delivered to the Issuer, the Bank, the Company, the Registrar, any Paying Agent and any Authenticating Agent. The Trustee shall further, on the same day as such declaration, give telephonic notice thereof to each Holder of 25% or more in aggregate principal amount of Bonds Outstanding, and mail or cause to be mailed notice of such acceleration to all Holders of Bonds then Outstanding, as shown on the Register at the close of business 15 days prior to the mailing of that notice. Such notice shall specify the date on which payment of principal and interest shall be tendered to the Holders, such date to be not more than ten calendar days after the date of notice. Upon any declaration of acceleration hereunder, the Trustee shall immediately exercise
such rights as it may have under the Bonds and the Lease Agreement to declare all payments thereunder to be due and payable on the tender date specified in the notice by the Trustee described in this paragraph and the Trustee shall draw upon the Letter of Credit to the full extent necessary hereunder and permitted by the terms thereof to provide for the timely payment of principal and interest accrued to such tender date.
The provisions of the preceding paragraphs are subject, however, to the condition that if, at any time after declaration or the occurrence of acceleration and prior to the entry of a judgment in a court for enforcement hereunder (after an opportunity for hearing by the Issuer and the Company),
(a) all sums payable hereunder (except the principal of and interest on Bonds which shall not have reached their stated maturity but which shall be due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default shall have occurred, shall have been duly paid or provision shall have been made therefor by deposit with the Trustee or Paying Agents,
(b) all existing Events of Default shall have been cured, and
(c) so long as the Letter of Credit or an Alternate Credit Facility is in effect, (i) the written consent of the Bank shall have been obtained (which consent shall also rescind any "Event of Default" under the Credit Agreement, if the Event of Default hereunder is one specified in Section 601(g) hereof); and (ii) if the Event of Default hereunder is one specified in Section 601(g) hereof or if a drawing under the Letter of Credit or Alternate Credit Facility shall have been made, the Trustee shall have received written notice of reinstatement of the full amount of such drawing,
then and in every case, the Trustee shall waive the Event of Default and its consequences and shall rescind and annul that declaration. No waiver or rescission and annulment shall extend to or affect any subsequent Event of Default or shall impair any rights consequent thereon.
Section 603. Other Remedies; Rights of Holders. With or without taking action under Section 602 hereof, upon the occurrence and continuation of an Event of Default, the Trustee may pursue any available remedy to enforce the payment of Debt Service or the observance and performance of any other covenant, agreement or obligation under this Indenture, the Lease Agreement, the Letter of Credit or any other instrument providing security, directly or indirectly, for the Bonds.
If, upon the occurrence and continuation of an Event of Default, the Trustee is requested so to do by the Holders of at least 25% in aggregate principal amount of Bonds Outstanding, the Trustee shall exercise any rights and powers conferred by this Section and by Section 602 hereof.
No remedy conferred upon or reserved to the Trustee (or to the Holders) by this Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or otherwise to the Trustee or to the Holders or now or hereafter existing.
No delay in exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default shall impair that remedy, right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient.
No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Holders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy, right or power consequent thereon.
As the assignee of all right, title and interest of the Issuer in and to the Second Supplemental Lease (except as therein reserved), the Trustee is empowered to enforce each remedy, right and power granted to the Issuer under the Second Supplemental Lease. In exercising any remedy, right or power thereunder or hereunder, the Trustee shall take any action which would best serve the interests of the Holders in the judgment of the Trustee.
Section 604. Application of Moneys. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Trustee, be deposited in the Bond Fund and all moneys in the Bond Fund shall be applied as follows (provided, however, that (i) moneys
received from a drawing under the Letter of Credit or held pursuant to Section 403 hereof shall only be used to pay Debt Service on other than Bank Bonds; (ii) moneys received from any other source shall be used to pay Debt Service on Bank Bonds first; and (iii) any characterization made herein as to the application of such moneys to pay interest or principal or both shall not necessarily govern or mirror such characterization of those payments as may be made by any taxing authority with jurisdiction over the recipient thereof):
(a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied to the payment to the Persons entitled thereto of (i) all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and (ii) the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), with interest on such Bonds (at the rate borne by the Bonds) from the respective dates upon which they became due and, if the amount available shall not be sufficient to pay in full the principal of Bonds due on any particular date, together with such interest, then to the payment thereof ratably, according to the amount of principal due on such date, to the Persons entitled thereto, without any discrimination or privilege.
(b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds (provided for this purpose any premium then payable on the Bonds shall be treated as principal), without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto, without any discrimination or privilege.
(c) If the principal of all the Bonds shall have been declared due and payable and such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event
that the principal of all the Bonds shall later become due or be declared due and payable, all such moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date (the "Special Record Date") interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give notice of the deposit with it of any such moneys and of the fixing of any such date (all consistent with the requirements hereof for the establishment and notification of a Special Record Date for the payment of overdue interest), and shall not be required to make payment to the Holder of any unpaid Bond until such date.
Whenever all Bonds and interest and premium, if any, thereon shall have been paid under the provisions of this Section and all expenses and charges of the Trustee shall have been paid, any balance remaining in the Bond Fund shall be paid to or upon the order of the Company or the Bank, if any reimbursement obligation is owing to it under the Credit Agreement; provided that no moneys remaining in the Credit Facility Account of the Bond Fund shall be paid to the Company.
Section 605. Remedies Vested in Trustee. All rights of action (including the right to file proofs of claim) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Bonds, and any recovery of judgment shall be for the equal benefit of the Holders of the Outstanding Bonds.
Section 606. Rights and Remedies of Holders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder,
unless (a) the Holders of not less than 25% in principal amount of Bonds then Outstanding shall have made written request to the Trustee and shall have offered reasonable opportunity either to proceed to exercise the powers hereinabove granted or to institute such action, suit or proceeding in its own name, (b) such Holders shall also have offered to the Trustee indemnity as provided in Article V hereof, and (c) the Trustee shall thereafter have failed or refused to exercise the powers hereinabove granted or to institute such action, suit or proceeding in its own name. Such notification, request and offer of indemnity shall in every case (excepting those specified in Section 501(l) hereof), at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by its, his or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Holders of all Bonds then Outstanding. Nothing in this Indenture contained shall, however, affect or impair the right of any Holder to enforce the payment of the principal of, premium, if any, and interest on any Bond at and after the maturity thereof at the time, place, from the source and in the manner in said Bond expressed.
Section 607. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Indenture invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law.
[END OF ARTICLE VI]
ARTICLE VII
Section 701. Supplemental Indentures Not Requiring Consent of Holders. The Issuer and the Trustee may, without the consent of, or notice to, any of the Holders, enter into an indenture or indentures supplemental to this Indenture to accomplish any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Indenture;
(b) To grant to or confer upon the Holders or the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Holders or the Trustee;
(c) To subject to this Indenture additional revenues, properties or collateral;
(d) To add to the covenants, agreements and obligations of the Issuer under this Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders;
(e) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under this Indenture, the Lease Agreement and the Bonds;
(f) To permit the use of a book entry system to identify the owner of an interest in an obligation issued by the Issuer under this Indenture, whether that obligation was formerly, or could be, evidenced by a tangible security;
(g) To permit the Trustee to comply with any obligations imposed upon it by law;
(h) To specify further the duties and responsibilities of, and to define further the relationships among, the Trustee, the Tender Agent, the Registrar and any Authenticating Agents or Paying Agents;
(i) To achieve compliance of this Indenture with any applicable federal or state securities or tax law;
(j) To provide for a Substitute Letter of Credit or an Alternate Credit Facility and to make any change necessary to facilitate the provision of such Substitute Letter of Credit or Alternate Credit Facility, provided such change shall not adversely affect the interests of the Holders of the Bonds;
(k) To secure or maintain ratings from a Rating Agency, provided that (i) the changes necessary to obtain or secure such ratings do not adversely affect the interests of the Holders of the Bonds and (ii) the Trustee receives a Non-Taxability Opinion with respect to such changes, which further opines to the effect that such changes are permitted by applicable law; and
(l) To make amendments to the provisions hereof with respect to the Bonds relating to arbitrage matters under Section 148 of the Code, which amendments may, among other things, change the responsibility for making the relevant calculations, but only upon receipt of a Non-Taxability Opinion with respect to the proposed changes.
The provisions of Subsections 701(g) and (i) hereof shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of any right which any of them may have in the absence of those provisions to contest the application of any change in law to this Indenture or the Bonds.
Section 702. Supplemental Indentures Requiring Consent of Holders. Exclusive of supplemental indentures covered by the preceding Section and subject to the terms and provisions contained in this Section, and not otherwise, the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to and approve the execution by the Issuer and the Trustee of such other indenture or indentures supplemental hereto as shall be requested by the Issuer or the Company as necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture. Nothing in this Section or Section 701 hereof shall permit, however, or be construed as permitting,(i) without the consent of the Holder of each Bond so affected, (A) an extension of the maturity of the principal of or the interest on any Bond or (B) a reduction in the principal amount of any Bond or the rate of interest or premium thereon; or (ii) without the consent of the Holders of all Bonds then Outstanding, (A) the creation of a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (B) a reduction in the aggregate principal amount of the Bonds required for consent to a supplemental indenture.
If at any time the Issuer (or the Company, on the Issuer's behalf) shall request the Trustee to enter into a supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture (setting forth briefly the subject matter thereof and stating that copies thereof are available for inspection at the Trustee's Office) to be mailed by first class mail, postage prepaid, to all Holders of Bonds then Outstanding at their addresses appearing on the Register. The Trustee shall not, however, be subject to any liability by reason of its failure to mail, or the failure of any Holder to receive, such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and executed as provided in this Section.
If within such period, not exceeding one year, as shall be prescribed by the Issuer, following the giving of the notice referred to in the preceding paragraph of this Section, the Trustee shall receive an instrument or instruments purporting to be executed by the Holders of not less than a majority in aggregate principal amount of Bonds then Outstanding, which instrument or instruments shall refer to the proposed supplemental indenture described in such notice and shall specifically consent to the execution thereof in substantially the form referenced in such notice as on file with the Trustee, thereupon, but not otherwise, the Trustee shall execute such supplemental indenture in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto.
Any such consent shall be binding upon the Holder of the Bond giving the same and, anything in Section 1001 hereof to the contrary notwithstanding, upon any subsequent Holder of such Bond and of any Bond issued in exchange therefor (whether or not such subsequent Holder has notice thereof), unless such consent is revoked in writing by the Holder of such Bond giving such consent or by a subsequent Holder thereof by filing with the Trustee, prior to the execution by the Trustee of such supplemental indenture, such revocation. At any time after the Holders of the required percentage of Bonds shall have filed their consents to the supplemental indenture, the Trustee shall make and file with the Issuer a written statement that the Holders of such required percentage of Bonds have filed such consents, which statement shall be conclusive that such consents have been so filed.
If the Holders of the required percentage in aggregate principal amount of the Bonds Outstanding shall have consented to the execution thereof as herein provided, no Holder of any Bond shall have any right to object to the execution of such supplemental indenture, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.
Section 703. Additional Consents Required. Anything herein to the contrary notwithstanding, any supplemental indenture under this Article shall not become effective unless and until the Company and, so long as a Letter of Credit or Alternate Credit Facility shall be in effect, the Bank shall have consented in writing to the execution and delivery of such supplemental indenture.
Section 704. Amendments of Lease Agreement. The Issuer and the Company may, with the consent of the Trustee and the Bank but without consent of or notice to any Holders, enter into any amendment of the Lease Agreement for purposes analogous to those described in subsections (a) through (e) and (j) through (l) of Section 701 hereof pertaining to supplemental indentures. Any other amendment of the Lease Agreement may only be made with the consent of the Holders of such percentage of Bonds Outstanding as is specified in Section 702 hereof pertaining to supplemental indentures.
Section 705. Amendments of Letter of Credit.
(a) The Trustee may, without the consent of or notice to the Holders of the Bonds, consent to any amendment, modification or other change of the Letter of Credit for the purpose of curing any ambiguity or formal defect or omission or obtaining a credit rating on the Bonds from any Rating Agency, provided that (i) the Trustee, in its sole judgment, shall not have determined that such change adversely affects the interests of the Holders of the Bonds and (ii) the Trustee shall receive a Non-Taxability Opinion further opining that such change is permitted by applicable law.
(b) Except as provided in subsection (a) of this Section, no amendment, modification or other change of the Letter of Credit (other than in connection with an Extension Letter of Credit) shall be made without the consent of the Holders of all Bonds Outstanding.
[END OF ARTICLE VII]
ARTICLE VIII
Section 801. Defeasance. When all of the Bonds shall have been fully paid and provision shall also have been made for paying all other sums payable hereunder and under the Second Supplemental Lease, then this Indenture shall be defeased, discharged and satisfied (except for those provisions surviving by reason of Section 803 hereof) and the Issuer shall be released from the covenants, agreements and obligations of the Issuer contained in this Indenture. Upon such defeasance, discharge and satisfaction, the Trustee, at the request of the Issuer, shall execute such documents as may be reasonably requested by the Issuer to evidence the defeasance, discharge and satisfaction of this Indenture and the release of the Issuer from its obligations hereunder.
Section 802. Payment of Bonds. At such time (if any) as the Bonds bear interest at the Permanent Fixed Rate, and only at any such time, all of the Bonds shall be deemed to have been fully paid within the meaning of Section 801 hereof, if the Trustee (and, if applicable, any other Paying Agents) shall have received, in trust therefor and irrevocably committed thereto,
(a) sufficient Available Moneys, or
(b) noncallable direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America are pledged, which shall have been acquired with Available Moneys and which are certified by an independent public accounting firm of national reputation to be of such maturities or redemption dates and interest payment dates, and to bear such interest, as will be sufficient, together with any moneys to which reference is made in subparagraph (a) above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so committed, except as provided herein),
for the payment of all Debt Service on the Bonds, at their maturity or redemption dates, as the case may be, or if a default in payment shall have occurred on any maturity or redemption date, then for the payment of all Debt Service thereon to the date of the tender of payment; provided, that if any of those Bonds are to be redeemed prior to the maturity thereof, notice of that redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of that notice; provided further, that if any of those Bonds are purchased upon tender prior to the maturity thereof, such Bonds shall be delivered to the Trustee for cancellation and not remarketed.
Any moneys held by the Trustee in accordance with the provisions of
this Section may be invested by the Trustee only in noncallable direct
obligations of the United States of America having maturity dates, or having
redemption dates which, at the option of the holder of those obligations, shall
be not later than the date or dates on which moneys will be required for the
purposes described above. To the extent that any income or interest earned by,
or increment to, the investments held under this Section is determined from time
to time by the Trustee to be in excess of the amount required to be held by the
Trustee for the purposes of this Section, that income, interest or increment
shall be transferred at the time of that determination in the manner provided in
Section 404 hereof for transfers of amounts remaining in the Bond Fund.
If any Bonds shall be deemed paid and discharged pursuant to this
Section 802, then within 15 days after such Bonds are so deemed paid and
discharged the Trustee shall cause a written notice to be given to each Holder
as shown on the Register on the date on which such Bonds are deemed paid and
discharged. Such notice shall state that all Bonds are deemed paid and
discharged, set forth a description of the obligations, if any, held pursuant to
subparagraph (b) of the first paragraph of this Section 802 and specify any date
or dates on which any of the Bonds are to be called for redemption pursuant to
notice of redemption given or irrevocable provision made for such notice
pursuant to the first paragraph of this Section 802.
Section 803. Survival of Certain Provisions. Any provisions of this
Indenture which relate to the maturity of Bonds, interest payments and dates,
optional and mandatory redemption provisions, exchange, transfer and
registration of Bonds, replacement of mutilated, destroyed, lost or stolen
Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, the
holding of moneys in trust (including without limitation any moneys or
investments held by the Trustee at such time in the Bond Fund or Bond Purchase
Fund for payments in accordance with Article III and Sections 403 and 404
hereof), repayments to the Bank or the Company from the Bond Fund, and the
duties of the Trustee and the Registrar in connection with all of the foregoing,
shall remain in effect and be binding upon the Trustee, the Registrar, the
Authenticating Agents, Paying Agents and the Holders notwithstanding the
release, discharge and satisfaction of this Indenture. The provisions of this
Section 803 shall survive the release, discharge and satisfaction of this
Indenture.
[END OF ARTICLE VIII]
ARTICLE IX
In addition to any other covenants and agreements of the Issuer contained in this Indenture, the Issuer, for itself, its successors and assigns, covenants and agrees with the Trustee and the Holders from time to time of the Bonds as follows:
Section 901. Payment of Debt Service. The Issuer will pay all Debt Service, or cause the same to be paid, solely from the sources provided herein, on the dates, at the places and in the manner provided in this Indenture.
Section 902. Revenues and Assignment of Revenues. The Issuer has not assigned or granted a security interest in, and will not assign or grant a security interest in, or create or authorize to be created any debt, lien or charge on, the Revenues, other than the absolute and irrevocable assignment hereby made to the Trustee of any right, title and interest of the Issuer in and to those Revenues constituting proceeds of a drawing under the Letter of Credit or any Alternate Credit Facility and remarketing proceeds and all rights and remedies of the Issuer under the Second Supplemental Lease (except for the Unassigned Rights, as therein defined) and the grant to the Trustee of a security interest in the other Revenues; provided, however, that the Issuer has made a similar assignment of rights under the Second Supplemental Lease and granted a similar security interest in other Revenues to the Bank pursuant to the Mortgage, subordinated, however, to the assignment made and security interest granted pursuant to this Indenture.
Section 903. Performance of Covenants by Issuer. The Issuer will faithfully perform at all times any and all of its covenants, undertakings, stipulations and provisions contained in this Indenture, in the Lease Agreement, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of its governing body pertaining thereto.
Section 904. Inspection of Project Books. All books and documents in its possession relating to the Project and the Revenues and receipts derived from the Project, including any financial statement or other report by the Company, shall at all times during the Issuer's regular business hours be open to inspection by such accountants or other agents of the Trustee as the Trustee may from time to time designate.
Section 905. Register. At reasonable times and under reasonable regulations established by the Registrar, the Register may be inspected and copied by the Company, the Trustee, by Holders of 25% or more in principal amount of the Bonds then Outstanding, or a designated representative of any of the foregoing.
Section 906. Rights and Enforcement of the Second Supplemental Lease. The Trustee may, for and on behalf of the Holders, enforce in its name or in the name of the Issuer all rights of the Issuer under the Second Supplemental Lease (except for Unassigned Rights), and may enforce all covenants, agreements and obligations of the Company under and pursuant to the Second Supplemental Lease, regardless of whether the Issuer is in default in the pursuit or enforcement of those rights, covenants, agreements or obligations. The Issuer, however, will do all things and take all actions on its part necessary to comply with covenants, agreements, obligations, duties and responsibilities on its part to be observed or performed under the Lease Agreement, and will take all actions within its authority to keep the Lease Agreement in effect in accordance with the terms thereof.
Section 907. Further Assurances. The Issuer will at any time or times, and at the expense of the Company, do, execute, acknowledge and deliver and cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, assignments, pledges, transfers and assurances in law as the Trustee shall reasonably require for the better assuring, assigning, transferring, pledging and confirming unto the Trustee, all and singular, the property herein conveyed or intended so to be.
Section 908. Corporate Existence. (a) Except as otherwise provided in subsection (b) of this Section, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.
(b) The Issuer shall not consolidate with or merge into any other corporation or transfer its property substantially as an entirety to any person unless:
(1) the corporation formed by such consolidation or into which the Issuer is merged or the person which acquires by conveyance or transfer the Issuer's property substantially as an entirety (the "Successor") shall execute and deliver to the Trustee an instrument in form recordable and acceptable to the Trustee containing an assumption by such Successor of the due and punctual payment of the Debt Service on the Bonds and the performance and observance of every covenant and condition of this Indenture, the Bonds and the Lease Agreement to be performed or observed by the Issuer;
(2) immediately after giving effect to such transaction, no Event of Default or any event which, upon notice or lapse of time (or both), would constitute an Event of Default shall have occurred and be continuing; and
(3) the Issuer shall have delivered to the Trustee (A) a
certificate executed by an authorized officer of the Issuer and
an opinion of counsel, each of which shall state that such
consolidation, merger, conveyance or transfer complies with this
Section and that all conditions precedent herein provided
relating to such transaction shall have been complied with; and
(B) a Non-Taxability Opinion with respect to such consolidation,
merger, conveyance or transfer.
(c) Upon any consolidation or merger or any conveyance or transfer of the Issuer's property substantially as an entirety in accordance with this Section, the Successor shall succeed to, and be substituted for, the Issuer under this Indenture, the Lease Agreement and the Bonds with the same effect as if such Successor had been originally named as the Issuer herein and therein.
Section 909. Issuer Not to Adversely Affect Tax Exemption. The Issuer covenants that it (i) will take, or require to be taken, all actions that may be required of the Issuer for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes, and (ii) will not take or authorize to be taken any actions that would adversely affect that exclusion under the provisions of the Code.
[END OF ARTICLE IX]
ARTICLE X
Section 1001. Consents, Etc., of Holders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by Holders may be in any number of writings of similar tenor and may be signed or executed by such Holders in person or by agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument:
(a) the fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of any witness to such execution; and
(b) the fact of ownership of Bonds shall be proved from the Register maintained by the Registrar.
Section 1002. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give any Person other than the parties hereto, the Holders of the Bonds, the Bank and the Company any legal or equitable right, remedy or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto, the Company, the Bank and the Holders of the Bonds as herein provided.
Section 1003. Severability. If any provision of this Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or Sections in this Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof.
Section 1004. Limitation of Liability. The Bonds will not constitute general obligations of the Issuer nor will they constitute a liability or obligation of the State or any political subdivision thereof. No recourse under or upon any covenant or agreement of this Indenture, or of any of the Bonds, or for any claim based thereon or otherwise in respect thereof, shall be had against any past, present or future incorporator, officer or member of the governing body of the Issuer, or of any successor corporation, either directly or through the Issuer, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the Bonds issued hereunder are solely corporate obligations, and that no personal liability whatever shall attach to, or is or shall be incurred by, any incorporator, officer or member of the governing body of the Issuer or any successor corporation, or any of them, because of the issuance of the Bonds, or under or by reason of the covenants or agreements contained in this Indenture or the Bonds or implied therefrom.
Section 1005. Payments Due on Other than Business Days. In any case where the scheduled date of payment of Debt Service is not a Business Day, then such payment need not be made on such date but may be made on the Business Day next succeeding the scheduled date, in the same amount due, and with the same force and effect as if made, on the scheduled date.
Section 1006. Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 1007. Notices. Unless otherwise provided or permitted herein, any notice, request, complaint, demand, communication or other paper shall be in writing and shall be deemed to be sufficiently given to a party when delivered or mailed by registered or certified mail, postage prepaid, or sent by telegram or Telefax, addressed as follows:
(a) If to the Issuer, at The Industrial Development Board of the City of Montgomery, P.O. Box 79, Montgomery, Alabama 36101, Attention:
Chairman of the Board of Directors;
(b) If to the Trustee, (i) by mail or telegram, at Regions Bank, 60 Commerce Street, Montgomery, Alabama 36104, Attention: Corporate Trust Department; and (ii) by Telefax, at (334) 230-6150;
(c) If to the Bank, (i) by mail or telegram, at Regions Bank, 8 Commerce Street, Montgomery, Alabama 36104, Attention: Timothy D. Riley, Vice President, with a copy to Regions Bank, 417 North 20th Street, Birmingham, Alabama 35203, Attention: International Department; and (ii) by Telefax, at (334) 832-8560, with a copy to (205) 326-7440;
(d) If to the Remarketing Agent, (i) by mail or telegram, at Merchant Capital, L.L.C., 250 Commerce Street, Montgomery, Alabama 36104, Attention: Michael P. Dunn; and (ii) by Telefax, at (334) 269-0902; and
(e) If to the Company, (i) by mail or telegram, at KINPAK INC.,
2780 Gunter Park Drive East, Montgomery, Alabama 36109, Attention:
Plant Manager, with a copy to Ocean Bio-Chem, Inc., 4041 S.W. 47th
Avenue, Ft. Lauderdale, Florida 33314, Attention: Chief Financial
Officer; and (ii) by Telefax, at (334) 277-2099, with a copy to (954)
587-2813.
Any of the foregoing parties may, by notice given hereunder, designate any further or different address or addresses to which subsequent notices, certificates, requests or other communications shall be sent.
Section 1008. Suspension of Mail. If, because of the suspension of delivery of first class mail or any other reason, the Trustee shall be unable to mail by the required class of mail any notice required to be mailed by the provisions of this Indenture, the Trustee shall give such notice in such other manner as in the judgment of the Trustee shall most effectively approximate mailing thereof, and the giving of that notice in that manner for all purposes of this Indenture shall be deemed to be in compliance with the requirement for the mailing thereof. Except as otherwise provided herein, the mailing of any notice shall be deemed complete upon deposit of that notice in the mail and the giving of any notice by any other means of delivery shall be deemed complete upon receipt of the notice by the delivery service.
Section 1009. Governing Law. This Indenture and the Bonds shall be deemed to be contracts made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State.
Section 1010. Opinions of Bond Counsel Not Required. Notwithstanding the provisions of Section 202 of this Indenture, in the event the Company obtains an opinion of Bond Counsel, and delivers a copy of the same to the Trustee, the Remarketing Agent and the Bank, to the effect that Non-Taxability Opinions should no longer be required in each instance of a Proposed Conversion Date, such opinions shall thereafter no longer be required as a precondition to a Conversion Date.
Section 1011. Contest of Determination of Taxability. If no Event of Default exists, the Company may, within 20 days after being notified of a Determination of Taxability and after furnishing to the Trustee a Non-Taxability Opinion in respect of the event or events leading up to said Determination, pursue such remedies as may then be available in order to obtain an administrative ruling or judicial determination in a proceeding to which the Internal Revenue Service is a party, to the effect that the interest on the Bonds is not Taxable. In such event, and for so long as the Company pursues such administrative or judicial remedies with due diligence, no Final Determination shall be deemed to have occurred until the first to occur of either (1) the final determination of such contest adversely to the Company with no further right of appeal, or (2) prior to such final determination, the expiration of a period of 24 months after the date the Company received such notification of a Determination of Taxability.
[END OF ARTICLE X]
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this instrument to be duly executed and their respective corporate seals to be hereunto affixed and attested.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MONTGOMERY
( S E A L )
By: /s/ [Illegible]
----------------------------------
Vice Chairman of the Board of
Directors
ATTEST:
/s/ [Illegible]
-------------------
Assistant Secretary
|
REGIONS BANK
as Trustee and Registrar
By: /s/ [Illegible] ---------------------------------- Vice President and Corporate Trust Officer |
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that F. Berry Grant, whose signature as the Vice-Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing instrument and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this 22 day of July, 2002.
/s/ Roy S. Goldfinger ---------------------------------- NOTARY PUBLIC, State at Large My Commission Expires: May 18, 2005 |
( S E A L )
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Patsy Copeland, whose signature as Vice President and Corporate Trust Officer of Regions Bank, an Alabama banking corporation, is signed to the foregoing Trust Indenture, and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Trust Indenture, she, as such officer and with full authority, executed the same voluntarily for and as the act of said banking corporation.
Given under my hand and seal of office this 22 day of July, 2002.
/s/ Roy S. Goldfinger
----------------------------------
NOTARY PUBLIC, State at Large
My Commission Expires: May 18, 2005
S E A L )
|
THIS INSTRUMENT PREPARED BY:
Roy S. Goldfinger, Esq.
Roy S. Goldfinger, P.C.
P.O. Box 231555
Montgomery, Alabama 36123-1555
(334) 395-8500
EXHIBIT B
STATEMENT NO. ___________
REQUISITIONING PAYMENT OF FUNDS FROM CONSTRUCTION FUND
Pursuant to Section 405 of the Trust Indenture dated as of July 1, 2002 (the "Indenture") from The Industrial Development Board of the City of Montgomery (the "Board") to Regions Bank, as Trustee (the "Trustee"), relating to the Board's $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 (the "Bonds"), the undersigned officer, employee or agent of the Board hereby requests and authorizes the Trustee, as depository of the Construction Fund created by the Indenture, to pay the amounts listed in the Requisition Schedule attached hereto to the persons and at the addresses thereof shown on said Schedule, being the persons to whom the payments requested are due. The aggregate amount of all payments requested hereby is $________________.
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
Dated:______________ By: ___________________________________________
Its: __________________________________________
|
The undersigned, being the Project Supervisor (said term and others
used herein having the meanings given to them in the Indenture) of the Company,
hereby approves the payments hereinabove requested and hereby certifies,
pursuant to said Section 405, as follows: (1) the purpose for which each such
payment is to be made is described in reasonable detail on the attached
Requisition Schedule and is one for which Construction Fund moneys are
authorized under the Second Supplemental Lease and the Indenture to be expended;
and (2) any property for which any such payment is to be made has been installed
or located on or about the Realty. The undersigned further certifies, with
respect to each item listed on the Requisition Schedule, that: (1) payment of
any such item will not result (a) in less than 95% of the net proceeds (within
the meaning of the Code) of the Bonds being used (i) for the acquisition,
construction, reconstruction or improvement of land or property of a character
subject to the allowance for depreciation within the meaning of Section
144(a)(1) of the Code or (ii) to provide a "manufacturing facility", including
facilities "directly related and ancillary" thereto within the meaning of
Section 144(a)(12)(C) of the Code; or (b) in more than (i) 25% of said net
proceeds of the Bonds being used to provide such "directly related and
ancillary" facilities, or (ii) 2% of the proceeds of the Bonds being used to pay
Issuance Costs (as defined in the Second Supplemental Lease) in respect of the
Bonds; and (2) payment for such item was not made more than 60 days prior to May
30, 2000.
KINPAK INC.
Dated:______________ By: ____________________________________
Project Supervisor
REVIEWED AND APPROVED: REGIONS BANK
Dated:______________ By: ____________________________________
Its: ___________________________________
|
REQUISITION SCHEDULE
PAYEE NAME AND ADDRESS PURPOSE AMOUNT
1.__________________________ _________________________ $___________
__________________________ _________________________
2.__________________________ _________________________ $___________
__________________________ _________________________
3.__________________________ _________________________ $___________
__________________________ _________________________
4.__________________________ _________________________ $___________
__________________________ _________________________
5.__________________________ _________________________ $___________
__________________________ _________________________
6.__________________________ _________________________ $___________
__________________________ _________________________
7.__________________________ _________________________ $___________
__________________________ _________________________
8.__________________________ _________________________ $___________
__________________________ _________________________
TOTAL $
===========
|
[USE ADDITIONAL SHEET IF NECESSARY]
EXHIBIT 10.1
RESTATED LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
AND
KINPAK INC.
RELATING TO
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
$4,000,000 TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS
(KINPAK INC. PROJECT) SERIES 1996A
$990,000 INDUSTRIAL REFUNDING REVENUE BONDS
(KINPAK INC. PROJECT) SERIES 1996B
DATED
AS OF
DECEMBER 1, 1996
ROY S. GOLDFINGER, P.C.
MONTGOMERY, ALABAMA
BOND COUNSEL
THIS INSTRUMENT AMENDS, SUPPLEMENTS AND RESTATES THAT CERTAIN LEASE AGREEMENT, DATED AS OF SEPTEMBER 1, 1979 AND RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN RLPY BOOK 461, PAGE 566, BETWEEN THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY AS LESSOR AND KINARK CORPORATION AS LESSEE. BY INSTRUMENTS RECORDED IN SAID PROBATE OFFICE IN RLPY BOOK 1639, PAGE 276 AND IN RLPY BOOK ____, PAGE ___, RESPECTIVELY, KINARK CORPORATION ASSIGNED TO OCEAN BIO-CHEM, INC. AND OCEAN BIO-CHEM, INC. ASSIGNED TO KINPAK INC. ALL RIGHT, TITLE AND INTEREST IN AND TO SAID LEASE AGREEMENT. CERTAIN RIGHTS OF THE BOARD UNDER THIS INSTRUMENT HAVE BEEN ASSIGNED TO REGIONS BANK, AS TRUSTEE, PURSUANT TO A TRUST INDENTURE OF EVEN DATE HEREWITH.
RESTATED LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
AND
KINPAK INC.
INDEX
-----
Page
----
PARTIES.......................................................................1
RECITALS......................................................................1
ARTICLE I
DEFINITIONS
Section 1.1 Definitions......................................................3
Section 1.2 Interpretation..................................................12
Section 1.3 Captions and Headings...........................................12
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations by the Issuer...................................13
Section 2.2 Representations and Covenants by the Company - General..........13
Section 2.3 Representations and Covenants by the Company - Tax-Related -
Series 1996B Bonds.....................................14
Section 2.4 Representations and Covenants by the Company - Tax-Related -
Series 1996A Bonds.....................................17
Section 2.5 Representations and Covenants by the Company - Tax-Related -
Refunding Obligations..................................19
ARTICLE III
LEASE PROVISIONS
Section 3.1 Demise of the Project; Assignment of Redemption Rights..........22
Section 3.2 Lease Term; Possession and Quiet Enjoyment......................22
Section 3.3 Rentals.........................................................23
Section 3.4 Obligations of Company Unconditional............................24
Section 3.5 Assignment, Sublease or Grant of Use by Company.................24
Section 3.6 Assignment of Lease Agreement and Revenues;
Mortgaging of Project..................................25
Section 3.7 Restrictions on Mortgage or Sale of Project.....................25
Section 3.8 Prepayment of Rent; Redemption of Bonds.........................25
Section 3.9 Option to Terminate Lease Agreement and Purchase Project........26
Section 3.10 Option to Purchase Unimproved Leased Realty.....................26
Section 3.11 Conveyance on Exercise of Option to Purchase....................27
Section 3.12 Use of Party Walls..............................................27
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ARTICLE IV
PROVISIONS RESPECTING THE PROJECT
Section 4.1 Agreement to Complete Project...................................29
Section 4.2 No Warranty of Suitability by Issuer............................30
Section 4.3 Issuer to Pursue Remedies Against Contractors,
Subcontractors and Sureties...........................30
Section 4.4 Agreement to Issue Bonds; Application of Proceeds...............31
Section 4.5 Completion of the Project.......................................31
Section 4.6 Maintenance, Alterations and Improvements.......................32
Section 4.7 Taxes, Other Governmental Charges and Utility Charges...........34
Section 4.8 Insurance.......................................................35
Section 4.9 Advances........................................................35
Section 4.10 Damage or Destruction...........................................36
Section 4.11 Condemnation....................................................36
Section 4.12 Removal and Disposition of Equipment............................37
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1 General Covenants...............................................39
Section 5.2 Inspection of Project...........................................39
Section 5.3 Indemnification.................................................39
Section 5.4 Company Not to Adversely Affect Exclusion from Gross Income.....40
Section 5.5 Covenants under Other Company Documents.........................40
Section 5.6 Rebate Fund Calculations and Payments...........................40
Section 5.7 Investment of Fund Moneys.......................................41
Section 5.8 Letter of Credit; Alternate Credit Facility.....................41
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default...............................................45
Section 6.2 Remedies on Default.............................................45
Section 6.3 No Remedy Exclusive.............................................46
Section 6.4 Agreement to Pay Attorneys' Fees and Expenses...................46
Section 6.5 No Additional Waiver Implied by One Waiver......................47
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Prior Agreements Canceled.......................................48
Section 7.2 Issuer's Liabilities Limited....................................48
Section 7.3 Execution Counterparts..........................................49
Section 7.4 Binding Effect..................................................49
Section 7.5 Amendments......................................................49
Section 7.6 Severability....................................................49
Section 7.7 Notices.........................................................49
Section 7.8 Governing Law...................................................50
SIGNATURES...................................................................51
ACKNOWLEDGMENTS..............................................................52
EXHIBIT A - Description of Leased Realty
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STATE OF ALABAMA ) MONTGOMERY COUNTY ) |
RESTATED LEASE AGREEMENT
This RESTATED LEASE AGREEMENT (as the same may hereafter be amended or supplemented, this "Lease Agreement") made and entered into as of December 1, 1996, between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, its successors and assigns (the "Issuer"), a public corporation organized under the laws of the State of Alabama (the "State"), and KINPAK INC. (formerly known as Kinbright, Inc.), an Alabama corporation, its successors and assigns (the "Company"), under the circumstances summarized in the following recitals (the capitalized terms not defined in the recitals being used therein as defined in Article I hereof):
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, expand, own, lease, and dispose of properties to the end that the Issuer may be able to promote industry and develop trade by inducing manufacturing, industrial, commercial and research enterprises to locate in the State, or to enlarge and expand existing enterprises, or both, and further the use of the agricultural products and natural resources of the State.
B. On October 17, 1979, the Issuer issued the Prior Bonds pursuant to the Act and the Prior Indenture and applied the proceeds thereof to acquire, construct and equip the Existing Facilities as a "project" under the Act, which the Issuer leased to Kinark pursuant to the Original Lease. Pursuant to the Lease Assignments, the Company has succeeded to the position of Kinark as lessee under the Original Lease.
C. The Company has heretofore expressed to the Issuer its desire (a) to achieve interest rate savings by refinancing the debt represented by the Prior Bonds, (b) to renovate and upgrade the Existing Facilities and (c) to acquire, construct and equip the New Facilities. The Issuer heretofore adopted the Inducement Resolution which provided, among other things, for the entry into the Inducement Agreement with the Company, the issuance of the Bonds by the Issuer to refund (inter alia) the Prior Bonds and to assist in financing the costs of the Project, and the cooperation by the Issuer in obtaining and carrying out various incentives for which the Company may be eligible in connection with the Project.
D. The Issuer has adopted the Bond Resolution providing for the issuance of the Bonds, in connection with which the parties acknowledge that it is appropriate to amend, supplement and restate the Original Lease.
E. In the Bond Resolution, the Issuer has further acknowledged the request of the Company, and has agreed, to issue at a later time the Refunding Obligations in order to refund the Series 1996A Bonds, such refunding to occur as soon as all of the requirements of the Code to assure the non-Taxable status of the Refunding Obligations may be satisfied, including without limitation the requirement of obtaining a so-called "volume cap" allocation from the State. Accordingly, the Issuer and the Company have herein made and agreed to perform
such representations and covenants in respect of the Series 1996A Bonds as are necessary to enable the Refunding Obligations to be non-Taxable.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties to this Lease Agreement hereby formally covenant, agree and bind themselves as follows:
ARTICLE I
Section 1.1 Definitions. In addition to the words and terms elsewhere defined in this Lease Agreement (including in the Recitals hereto) or by reference to the Indenture or other document, unless the context or use clearly indicates another or different meaning or intent:
"Act" means Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended.
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Company under any applicable bankruptcy, reorganization, insolvency or other similar law now or hereafter in effect.
"Affiliate" means, as to any Person, any other Person that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, that Person.
"Alternate Credit Facility" means an irrevocable letter of credit, a surety bond, an insurance policy or other credit facility delivered to the Trustee pursuant to Section 5.8(f) of this Lease Agreement.
"Assignment" means the Assignment of Leases, Rents, Profits and Contracts of even date herewith from the Issuer and the Company to the Bank, as the same may hereafter be amended or supplemented.
"Average Economic Life" means the average reasonably expected economic life of the facilities financed with the proceeds of the Prior Bonds, determined pursuant to Section 147(b) of the Code on the basis of the expectations of Kinark at the date of issuance of the Prior Bonds.
"Bank" means First Union National Bank of Florida, Fort Lauderdale, Florida, and its successors and assigns, as issuer of the Initial Letter of Credit, until such time, if any, as a Substitute Letter of Credit or Alternate Credit Facility shall become effective pursuant to Section 5.8 of this Lease Agreement, and thereafter "Bank" shall mean the issuer of such Substitute Letter of Credit or Alternate Credit Facility.
"Basic Rent" means that portion of the Rentals payable under Section 3.3 of this Lease Agreement in the amounts and at the times sufficient, giving effect to any credit therein provided for, to pay Debt Service on or Purchase Price of the Bonds.
"Bio-Chem" means Ocean Bio-Chem, Inc., a Florida corporation, its successors and assigns, of which the Company is a wholly-owned subsidiary.
"Bond" or "Bonds" means, collectively, the Series 1996A Bonds and the Series 1996B Bonds.
"Bond Counsel" means Roy S. Goldfinger, P.C., Montgomery, Alabama, or any other attorney or firm of attorneys nationally recognized on the subject of municipal bonds and acceptable to the Trustee.
"Bond Fund" means the Bond Fund created in the Indenture.
"Bond Payment Date" means each date (including any date fixed for redemption of Bonds) on which Debt Service on the Bonds is payable.
"Bond Purchase Fund" means the Bond Purchase Fund created in the Indenture.
"Bond Resolution" means the resolution adopted by the Board of Directors of the Issuer on November 20, 1996 authorizing the issuance of the Bonds and the execution and delivery of the Issuer Documents and related documents.
"Bond Year" means, during the period the Series 1996B Bonds and (if and when issued) the Refunding Obligations remain outstanding, the annual period provided for the computation of Excess Earnings under Section 148(f) of the Code (except that the first and last Bond Years may be less than 12 months long).
"Building" means that certain existing manufacturing facility of approximately 50,000 square feet, the proposed new building of approximately 60,000 square feet and all other structures and improvements which are required or permitted by this Lease Agreement to stand or be constructed on the Leased Realty, as they may at any time exist.
"Business Day" means any day other than (1) a day on which the payment
system of the Federal Reserve System is not operational, or (2) a day on which
commercial banks are required or authorized by law to close in any of the
following locations: (i) the city in which the Trustee's Office is located, (ii)
the city in which the principal office of the Remarketing Agent is located, or
(iii) the city in which the office of the Bank at which drawings under the
Letter of Credit are to be made is located.
"City" means the City of Montgomery, Alabama.
"Code" means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include relevant applicable temporary, proposed or final regulations thereunder and under any predecessor provisions of the Internal Revenue Code of 1954, as amended.
"Company Documents" means, individually or collectively, as the context may require, each or all of the Reimbursement Agreement, this Lease Agreement, the Placement Agency Agreement, the Remarketing Agreement, the Mortgage, the Assignment, the Pledge Agreement and such other documents or instruments as the Company may enter into in order to consummate the transactions contemplated hereby and thereby.
"Completion Date" means the date of completion of the Project to be established by the Company in accordance with Section 4.5(b) hereof.
"Computation Date" means the last day of each Bond Year and the day on which the final payment in full of all the Series 1996B Bonds and (if and when issued) the Refunding Obligations is made.
"Construction Fund" means the Construction Fund created in the Indenture.
"County" means Montgomery County, Alabama.
"DTC" means The Depository Trust Company, New York, New York.
"Debt Service" means, for any period or payable at any time, the principal, interest and any premium due on Bonds for that period or payable at that time.
"Equipment" means all items of machinery, equipment, fixtures and tangible personal property now or hereafter constituting part of the Project, and any item of machinery, equipment, fixtures or tangible personal property acquired in substitution therefor or as a renewal or replacement thereof pursuant to the provisions of this Lease Agreement.
"Event of Default" means an Event of Default specified and defined in
Section 6.1 hereof.
"Excess Earnings" means, with respect to the proceeds from the Series 1996B Bonds and (if and when issued) the Refunding Obligations, as of each Computation Date, an amount equal to the sum of (a) plus (b) where:
(a) is the excess of
(i) the aggregate amount earned from the Issue Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (a)), taking into account any gain or loss on the disposition of nonpurpose investments, over
(ii) the amount that would have been earned if such nonpurpose investments (other than amounts attributable to an excess described in this clause (a)) had been invested at a rate equal to the yield on the Bonds; and
(b) is any income attributable to the excess described in clause
(a), taking into account any gain or loss on the disposition of
nonpurpose investments.
The sum of (a) plus (b) shall be determined in accordance with Sections 148(f)(2) and 148(f)(4) of the Code. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
"Existing Facilities" means the land, buildings and equipment financed in part with the proceeds of the Prior Bonds, previously leased by the Issuer to and operated by Kinark and now constituting a part of the Project.
"Existing Letter of Credit" means, as of any particular time, the Letter of Credit or Alternate Credit Facility held by the Trustee at that time.
"Extension Letter of Credit" means a Substitute Letter of Credit from the same Bank which issued the Existing Letter of Credit, substantially identical to the Existing Letter of Credit except that it has a Stated Expiration Date at least one year later than that of the Existing Letter of Credit.
"Government Obligations" means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged; (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of, premium, if any, and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation by the United States of America; or (c) securities or receipts evidencing ownership interests in obligations or specified portions (such as principal or interest) of obligations described in preceding clause (a) or (b), which securities, receipts or portions of obligations are not subject to redemption prior to maturity at less than par at the option of anyone other than the holder thereof.
"Governmental Authority" means the United States, any state or political subdivision thereof and any court, agency, department, commission, board, bureau or instrumentality of any of the foregoing.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond is registered on the books kept and maintained by the Registrar for the registration and transfer of Bonds.
"Indenture" means the Trust Indenture of even date herewith between the Issuer and the institution therein named as Trustee, as the same may hereafter be supplemented or amended.
"Independent Engineer" means an engineer or engineering firm registered and qualified to practice the profession of engineering under the laws of the State and not in the full-time employment of the Issuer or the Company.
"Inducement Agreement" means the Inducement and Abatement Agreement between the Issuer and the Company dated as of February 20, 1996.
"Inducement Resolution" means the resolution adopted by the Issuer on February 20, 1996 relating to the Project and the refunding of the Prior Bonds.
"Initial Letter of Credit" means the initial Letter of Credit in the form attached to the Reimbursement Agreement as Exhibit A issued by the Bank and caused by the Company to be delivered to the Trustee on or prior to the Issue Date.
"Interest Payment Date" means, so long as the Bonds are outstanding, the first Business Day of each March, June, September and December, commencing on the first Business Day of March, 1997.
"Interest Rate for Advances" means the rate per annum which is one percent (1%) per annum in excess of the Prime Rate.
"Interim Indebtedness" means the indebtedness in the principal amount of $220,000 incurred, in anticipation of the issuance of the Series 1996B Bonds, to pay a like principal amount of the Prior Bonds which matured on September 1, 1996.
"Issuance Costs" means costs associated with the issuance of the Bonds (including for this purpose the Refunding Obligations), including, but not limited to, (a) any underwriters' spread; (b) counsel fees (including Bond Counsel, underwriters' counsel, Issuer's counsel, Company counsel in the case of borrowings such as those for exempt facilities and manufacturing facilities, as well as any other specialized counsel fees incurred in connection with the borrowing); (c) financial advisor fees; (d) rating agency fees; (e) trustee fees; (f) paying agent and certifying and authenticating agent fees related to issuance of the Bonds; (g) accountant fees; (h) printing costs (for the Bonds and of any preliminary and final offering materials); (i) costs incurred in connection with the required public approval process; and (j) costs of engineering and feasibility studies necessary to the issuance of the Bonds.
"Issue Date" means the date of the initial authentication and delivery of the Bonds.
"Issuer Documents" means, individually or collectively, as the context may require, each or all of this Lease Agreement, the Indenture, the Letter of Representations, the Placement Agency Agreement, the Mortgage, the Assignment and such other documents as the Issuer may enter into in order to consummate the transactions contemplated hereby and thereby.
"Kinark" means Kinark Corporation, a Delaware corporation, as lessee under the Original Lease.
"Lease Assignments" means, collectively, the Assignment and Assumption of Lease from Kinark to Bio-Chem and the Assignment and Assumption of Lease from Bio-Chem to the Company, each dated as of February 27, 1996.
"Lease Term" means the duration of the leasehold estate created in this Lease Agreement as provided herein.
"Leased Realty" means the real estate and interests therein constituting the site of the Project and described in Exhibit A hereto, together with any additions thereto, less any removals therefrom.
"Letter of Credit" means the Initial Letter of Credit and, unless the context or use indicates another or different meaning or intent, any Substitute Letter of Credit.
"Letter of Credit Substitution Date" means any Business Day specified by the Company pursuant to Section 5.8 of this Lease Agreement on which the Company proposes (other than by reason of the Conversion Date, as defined in the Indenture, or the Stated Expiration Date of the Existing Letter of Credit) to furnish a Substitute Letter of Credit (other than an Extension Letter of Credit) or Alternate Credit Facility in place of the then Existing Letter of Credit.
"Letter of Representations" means the Book-Entry-Only Variable-Rate Demand Obligation Letter of Representations, in the form of Exhibit B to the Indenture, to be entered into on the Issue Date among the Trustee, the Issuer and DTC.
"Mandatory Tender" means a tender of Bonds required to be made by the provisions of the Indenture.
"Maximum Exemption Period", as found and determined in the Inducement Agreement, means a period of ten years, expiring as provided in Section 7.1 hereof.
"Moody's" means Moody's Investors Service, New York, New York.
"Mortgage" means the Mortgage and Security Agreement of even date herewith from the Issuer and the Company to the Bank, as the same may hereafter be amended or supplemented.
"Necessary Authorizations" means, with respect to any given action or effect, all authorizations, consents, approvals, permits, licenses and exemptions of, filings and registrations with, and reports to, all Governmental Authorities which are necessary or required to accomplish such action or achieve such effect.
"Net Proceeds", when used with respect to any insurance or condemnation award, means the gross proceeds from the insurance or condemnation award with respect to which that term is used remaining after payment of all reasonable expenses (including reasonable attorneys' fees and any fees of the Trustee) incurred in the collection of such gross proceeds.
"New Facilities" means an expansion to the Existing Facilities, consisting of an approximately 60,000 square-foot new building and new machinery and equipment therefor.
"1954 Code" means the Internal Revenue Code of 1954, as amended. References to the 1954 Code and Sections thereof include relevant applicable temporary, proposed or final regulations thereunder and under any successor provisions of the 1986 Code.
"Non-Taxability Opinion" means, with respect to one or more given events or prospective events, an opinion of Bond Counsel to the effect that the occurrence of such event or events will not adversely affect the non-Taxable status of the interest on the obligations in question.
"Optional Tender" means a tender of Bonds at the option of the Holder thereof pursuant to the provisions of the Indenture.
"Original Lease" means the Lease Agreement dated as of September 1, 1979 between the Issuer and Kinark.
"Person" includes natural persons, firms, associations, partnerships, trusts, corporations and public bodies.
"Placement Agency Agreement" means that certain letter agreement dated the Issue Date among the Issuer, the Company and the Placement Agent.
"Placement Agent" means First Union National Bank of North Carolina, in its capacity as Placement Agent.
"Plant" means the Building and Equipment.
"Pledge Agreement" means the Pledge Agreement of even date herewith from the Company to the Bank, as the same may hereafter be amended or supplemented.
"Prime Rate" means (a) the interest rate publicly announced from time to time by the Bank to be its prime rate for lending purposes, which may not necessarily be its best lending rate; or (b) in the event the Bank shall abolish or abandon the practice of announcing its prime rate or should the same be unascertainable, a comparable reference rate designated by the Bank.
"Prior Bonds" means the Issuer's First Mortgage Industrial Revenue Bonds (Kinark Corporation Project) Series 1979 heretofore issued on October 17, 1979 in the original principal amount of $3,000,000 and now outstanding in the principal amount of $770,000.
"Prior Indenture" means the Mortgage and Trust Indenture dated as of September 1, 1979 between the Issuer and the Prior Trustee, pursuant to which the Prior Bonds were issued.
"Prior Tax Certificates" means (a) the Statement by The Industrial
Development Board of the City of Montgomery Pursuant to the Provisions of
Section 103(b)(6)(D) of the Internal Revenue Code of 1954, As Amended, and
Section 1.103-10(b)(2)(vi) of Rules and Regulations Thereunder dated October 4,
1979, and (b) the No-Arbitrage Certificate of the Issuer dated October 17, 1979,
together with the certifications and computations upon which each was based, all
pertaining to the Prior Bonds.
"Prior Trustee" means Regions Bank (formerly known as First Alabama Bank), Montgomery, Alabama, successor by merger to Union Bank & Trust Co., in its capacity as trustee under the Prior Indenture.
"Project" means, collectively, the Existing Facilities and the New Facilities, consisting of the Leased Realty, the Building and the Equipment (as
the same may at any time exist), leased to the Company pursuant hereto for the manufacture of aftermarket products for the consumer marine and recreational vehicle markets or for such other purposes as may be consistent with the Act and the Code and permitted hereby.
"Project Costs" means those costs of the Project (including Issuance Costs as limited in Sections 2.3(n) and 2.4(l) hereof) for which payment is to be made as provided in this Lease Agreement.
"Project Supervisor" means any agent of the Company, designated in writing by the Company, authorized to act for and on behalf of the Company in connection with any and all matters pertaining to the Project.
"Purchase Price" means, with respect to any Bond tendered for purchase by Optional Tender or Mandatory Tender, 100% of the principal amount thereof plus accrued interest thereon to the Tender Date.
"Rating Agency" means Moody's or S & P, their respective successors and assigns, and any other nationally recognized securities rating agency.
"Rebate Fund" means the Rebate Fund created in the Indenture.
"Refunding Fund" means the Refunding Fund created in the Indenture.
"Refunding Obligations" means the revenue bonds intended to be hereafter issued by the Issuer on a non-Taxable basis in order to refund the Series 1996A Bonds.
"Registrar" means the Registrar as defined in the Indenture.
"Reimbursement Agreement" means that certain Letter of Credit and Reimbursement Agreement of even date herewith between the Bank, as issuer of the Initial Letter of Credit, and the Company and Bio-Chem, jointly and severally, as account parties, as the same may hereafter be amended or supplemented; or any comparable agreement relating to a Substitute Letter of Credit or Alternate Credit Facility.
"Related Documentation" means the documentation required to accompany a Substitute Letter of Credit or Alternate Credit Facility in accordance with the provisions of Section 5.8 of this Lease Agreement.
"Remarketing Agent" means, initially, First Union National Bank of North Carolina or any successor thereto appointed in accordance with the Indenture.
"Remarketing Agreement" means the Remarketing Agreement of even date herewith between the Company and the Remarketing Agent, as the same may hereafter be amended or supplemented.
"Rentals" means the amounts required to be paid by the Company pursuant to Section 3.3 hereof.
"Revenues" means (a) the Basic Rent; (b) all other moneys received or to be received by the Issuer or the Trustee in respect of payment of the Basic Rent, including without limitation, moneys and investments in the Bond Fund and Bond Purchase Fund and received by the Trustee from drawings made under the Letter of Credit or an Alternate Credit Facility or as a result of the remarketing of any Bonds, but excluding any moneys and investments in the Rebate Fund; (c) any moneys and investments in the Construction Fund; and (d) all income and profit from the investment of the foregoing moneys.
"SEC" means the Securities and Exchange Commission.
"S & P" means Standard & Poor's Corporation, New York, New York.
"Series 1996A Bonds" means the $4,000,000 Taxable Industrial Development Revenue Bonds (KINPAK INC. Project) Series 1996A of the Issuer to be issued under the Indenture.
"Series 1996B Bonds" means the $990,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1996B of the Issuer to be issued under the Indenture.
"State" means the State of Alabama.
"Stated Expiration Date" means the date on which a Letter of Credit is stated to expire, unless extended in accordance with its terms.
"Substitute Letter of Credit" means an irrevocable letter of credit delivered to the Trustee in substitution for the Existing Letter of Credit, in compliance with the requirements of this Lease Agreement and accompanied by the Related Documentation.
"Taxable" means that interest on the Bonds (including for this purpose the Refunding Obligations) is includable in the gross income of any Holder thereof for any reason other than the fact that such Holder is a "substantial user" of the Project or a "related person" as those terms are used in Section 147(a) of the Code. Interest on the Bonds shall not be deemed "Taxable" because interest is includable in any calculation of income for purposes of any alternative minimum tax, any foreign branch profits tax or any other type of taxation other than the regular federal tax imposed on gross income.
"Tender Date" means an Optional Tender Date or a Mandatory Tender Date, as the case may be.
"Trustee" means the trustee at the time serving as such under the Indenture, initially, Regions Bank, Montgomery, Alabama. .
"Trustee's Office" means the office from time to time designated by the Trustee, or its successor in trust, as its principal office for purposes of discharging the trusts under this Indenture, which office as of the Issue Date is located at 60 Commerce Street, 2nd Floor, Montgomery, Alabama. .
"Unassigned Rights" means all of the rights of the Issuer to receive payments or reimbursement pursuant to Section 3.3(c) hereof, to be held harmless and indemnified pursuant to Section 5.3 hereof, to be reimbursed for attorney's fees and expenses pursuant to Section 6.4 hereof, to receive notices hereunder and to give or withhold consent to amendments, supplements, modifications or termination of this Lease Agreement and of the Indenture pursuant to Section 7.5 hereof and Article VII of the Indenture, respectively.
"Unimproved", when used with reference to the Leased Realty, means any part or parts of the Leased Realty upon the surface of which no part of the Building rests.
Section 1.2 Interpretation. Any reference herein to the Issuer or to any member of the Board of Directors or officer thereof includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of the Code of Alabama of 1975 or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time, provided, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this provision, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee, the Registrar or the Company under this Lease Agreement, the Bonds, the Indenture or any other instrument or document entered into in connection with any of the foregoing, including without limitation, any alteration of the obligation to pay Debt Service in the amount and manner, at the times, and from the sources provided in the Indenture, except as permitted therein.
Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this Lease Agreement; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this Lease Agreement. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise.
All references herein to time shall be prevailing Eastern time.
Section 1.3 Captions and Headings. The captions and headings in this Lease Agreement are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
[END OF ARTICLE I]
ARTICLE II
Section 2.1 Representations by the Issuer. The Issuer makes the following representations as the basis for the undertakings on its part herein contained:
(a) The Issuer finds and determines that (i) the Existing
Facilities constituted and continue to constitute, and the New
Facilities will constitute, a "project" within the meaning of the Act;
(ii) the Project has been and will continue to be consistent with and
in furtherance of the purposes of the Act in promoting the development
of trade and furthering the use of natural and human resources of the
State and the development and preservation of said resources; and (iii)
the utilization of the Project has benefited and will continue to
benefit the people of the City, the County and the State by preserving
and creating jobs and employment opportunities, thereby promoting the
economic welfare of the City, the County and the State.
(a) The Issuer is duly incorporated under the provisions of the Act. Under the provisions of the Act, the Issuer had the power to acquire, construct and equip the Existing Facilities and to enter into the Original Lease and has the power to enter into the Issuer Documents and to carry out its obligations thereunder. The Issuer is not in default under any of the provisions contained in its Certificate of Incorporation or By-Laws or of the laws of the State. The Issuer by proper corporate action has duly authorized the execution, delivery and performance of the Issuer Documents.
(c) The Project has been and will continue to be located wholly within the corporate limits of the City and therefore within the jurisdiction of the Issuer.
(d) The execution, delivery and performance by the Issuer of the Issuer Documents are within the Issuer's corporate powers, and each such document, when executed and delivered, will constitute a legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by the application of general principles of equity.
Section 2.2 Representations and Covenants by the Company - General. The Company represents and covenants that:
(a) It is a corporation for profit duly organized, validly existing and qualified to transact business under the laws of the State.
(b) The execution, delivery and performance by the Company of each of the Company Documents and the carrying out of the transactions contemplated thereby are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not
violate any provision of law, any order of any court or other governmental agency, the Articles of Incorporation or By-Laws of the Company, or any indenture, agreement or other instrument to which the Company or any Affiliate is a party or by which the Company or any Affiliate or any of its or their properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company or any Affiliate.
(c) The Company intends to operate the Project as facilities for the manufacture of aftermarket products for consumer marine and recreational vehicle markets throughout the Lease Term and knows of no reason why the Project will not be so operated. If, in the future, there is a cessation of that operation, it will use its best efforts to resume that operation or accomplish an alternate use by the Company or others which will be consistent with the Act and the Code.
(d) To the best of its knowledge, the Company has obtained and will use its reasonable efforts to maintain all Necessary Authorizations for the acquisition and renovation of the Existing Facilities and the acquisition, construction and equipping of the New Facilities, and has obtained or will obtain and will use its reasonable efforts to maintain all Necessary Authorizations for the operation of the Project and for the due execution, delivery and performance by the Company of each of the Company Documents. In particular, all building permits required for the construction or renovation of the Building have been or will when and as necessary be obtained and, once obtained, will be maintained in full force and effect, and all utility services (including water supply, storm and sanitary sewerage, electric and telephone facilities) necessary for the construction or renovation and operation of the Building for the intended purposes are or will be available.
(e) Each of the Company Documents, when executed and delivered, will constitute a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by the application of general principles of equity.
(f) There is no pending or, to the best of its knowledge,
threatened action, investigation or proceeding before any court,
governmental agency or arbitrator against or affecting the Company or
any Affiliate (i) to restrain or enjoin or seeking to restrain or
enjoin the issuance or delivery of the Bonds or the collection or
payment of Revenues, (ii) in any way contesting or affecting any
authority for the issuance of the Bonds or the validity of the Bonds,
(iii) in any way contesting or affecting the validity of the Original
Lease, the Lease Assignments, this Lease Agreement or any of the other
Company Documents, or (iv) in any way contesting the corporate
existence or powers of the Company.
Section 2.3 Representations and Covenants by the Company - Tax-Related
- Series 1996B Bonds. The Company acknowledges that the proceeds of the Series
1996B Bonds, which are being applied to refund the Prior Bonds, are also treated conceptually as being applied to the purposes financed by the proceeds of the Prior Bonds, and therefore that the non-Taxable status of the Series 1996B Bonds is in part dependent on the continuing compliance, before and after the Issue Date, on the part of the Prior Bonds with the requirements and provisions of the Code essential to assure the non-Taxable status thereof. As such, the Company hereby incorporates by reference herein the representations and statements contained in the Original Lease and the Prior Tax Certificates, reaffirms (to the best of its knowledge) the accuracy and completeness thereof, represents that it has complied and will comply with the representations and covenants therein, and further represents or reiterates that:
(a) The average maturity date of the Series 1996B Bonds is not later than 120% of the Average Economic Life measured from and after the later of the date the Prior Bonds were issued or the date the facilities financed with the proceeds of the Prior Bonds were placed in service.
(b) Other than the Bond Fund, it is not anticipated, as of the
Issue Date, that there will be created any "sinking fund" or "pledged
fund", both within the meaning of Section 1.148-1(c) of the Treasury
Regulations, with respect to the Series 1996B Bonds; and the moneys in
the Bond Fund and in any other such sinking fund or pledged fund that
is deemed to have been created will be invested in compliance with
Section 148 of the Code.
(c) None of the proceeds of the Prior Bonds was, and none of the
proceeds of the Series 1996B Bonds will be, used to provide any private
or commercial golf course, country club, massage parlor, tennis club,
skating facility (including roller skating, skateboard and ice
skating), racquet sports facility (including any handball or
racquetball court), hot tub facility, suntan facility, racetrack,
airplane, skybox or other private luxury box or health club facility;
any facility primarily used for gambling; any store the principal
business of which is the sale of alcoholic beverages for consumption
off premises; or residential real property within the meaning of
Section 103(b)(6)(J) of the 1954 Code.
(d) Less than 25% of the proceeds of the Prior Bonds was, and less than 25% of the proceeds of the Series 1996B Bonds will be, used to provide facilities the primary purpose of which is retail food and beverage services (except grocery stores), automobile sales or service, or the provision of recreation or entertainment.
(e) Less than 25% of the proceeds of the Prior Bonds was, and less than 25% of the proceeds of the Series 1996B Bonds will be, used directly or indirectly to acquire land or any interest therein, and none of the proceeds of the Prior Bonds was, and none of the proceeds of the Series 1996B Bonds will be, used to provide land which was, is or is to be used for farming purposes.
(f) None of the proceeds of the Prior Bonds was, and none of the proceeds of the Series 1996B Bonds will be, used to acquire existing property or any interest therein.
(g) To the best of its knowledge, the information furnished by Kinark and used by the Issuer in preparing, with respect to the Prior Bonds, the certification pursuant to Section 103(c) of the 1954 Code and the federal tax election pursuant to Section 103(b)(6)(D) of the 1954 Code, was accurate and complete as of the date of issuance of the Prior Bonds and continues to be accurate as of the Issue Date. The information furnished by the Company and used by the Issuer in preparing, with respect to the Series 1996B Bonds, the certification pursuant to Section 148 of the Code, and the information statement pursuant to Section 149(e) of the Code, is accurate and complete as of the Issue Date.
(h) After the expiration of any applicable temporary period under
Section 148(d)(3) of the Code, at no time during any Bond Year will the
aggregate amount of gross proceeds of the Series 1996B Bonds invested
in higher yielding investments exceed 150% of the debt service on the
Series 1996B Bonds for such Bond Year. The aggregate amount of gross
proceeds of the Series 1996B Bonds invested in higher yielding
investments, if any, will be promptly and appropriately reduced as the
amount of outstanding Series 1996B Bonds is reduced; provided, however,
that the foregoing shall not require the sale or disposition of any
higher yielding investments if such sale or disposition would result in
a loss in excess of the amount which, had a payment to the United
States pursuant to Section 407 of the Indenture then been due, would
have been so payable but for such sale or disposition.
In addition to the foregoing requirements, the Issuer will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose investments in which gross proceeds of the Series 1996B Bonds are invested or that results in a smaller profit or a larger loss than would have resulted in an arm's length transaction in which the yield on the nonpurpose investment was not subject to any restriction.
The terms "bond year", "gross proceeds", "higher yielding investments", "yield" and "debt service" have the meanings assigned to them for purposes of said Section 148.
(i) The Prior Bonds were not and the Series 1996B Bonds are not "federally guaranteed" within the meaning of Section 103(h) of the 1954 Code.
(j) The Prior Bonds were not, and the Series 1996B Bonds are not
being, issued to finance facilities which are within or part of a
"single building, an enclosed shopping mall, or a strip of offices,
stores or warehouses using substantial common facilities" (within the
meaning of Section 103(b)(6)(P) of the 1954 Code) which have been
heretofore financed with obligations issued and still outstanding under
Section 144(a) of the Code or Section 103(b)(6) of the 1954 Code.
(k) Based on the accuracy of the representations of Kinark in the Original Lease, the acquisition, construction or reconstruction of the Existing Facilities was not commenced (within the meaning of Section
103(b) of the 1954 Code) prior to the adoption of the resolution of the Issuer on July 24, 1979, with respect to the Prior Bonds and the Existing Facilities.
(l) At least ninety percent (90%) of the proceeds from the sale of the Prior Bonds, plus all investment earnings thereon, minus any underwriter's discount or reasonable costs of issuance of the Prior Bonds paid with such proceeds (the "Prior Bond Proceeds"), were used for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation under Section 167 of the Code or its predecessor Section of the 1954 Code; and less than ten percent (10%) of the Prior Bond Proceeds were used to provide working capital or to finance inventory.
(m) The Company hereby expressly incorporates by reference herein the statements and representations of Kinark contained in the Original Lease and in the Prior Tax Certificates with respect to previously issued bonds and capital expenditures.
(n) All of the proceeds of the Series 1996B Bonds will be used exclusively to retire the Prior Bonds and the Interim Indebtedness within 90 days of the Issue Date. None of the proceeds of the Series 1996B Bonds will be used to finance Issuance Costs of the Bonds or to provide working capital. The principal amount of the Series 1996B Bonds does not exceed the outstanding principal amount of the Prior Bonds and the Interim Indebtedness. The average maturity date, determined in accordance with Section 103(b)(14)(B)(i) of the 1954 Code, of the Series 1996B Bonds is not later than the average maturity date of the Prior Bonds.
Section 2.4 Representations and Covenants by the Company - Tax-Related
- Series 1996A Bonds. The Company acknowledges that the proceeds of the
Refunding Obligations, if and when issued and applied to refund the Series 1996A
Bonds, will also be treated conceptually as being applied to the purposes
financed by the proceeds of the Series 1996A Bonds, and therefore that the
non-Taxable status of the Refunding Obligations will in part be dependent on the
compliance, as of the Issue Date, on the part of the Series 1996A Bonds with
certain requirements and provisions of the Code. As such, the Company hereby
represents and covenants that:
(a) The acquisition and renovation of the Existing Facilities and the acquisition and construction of the New Facilities were not commenced (within the meaning of Section 144 of the Code) prior to February 20, 1996, being the date of adoption by the Issuer of the Inducement Resolution.
(b) Ninety-five percent (95%) or more of the net proceeds (within the meaning of the Code) of the Series 1996A Bonds will be used (i) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 144(a)(1) of the Code and (ii) to provide a "manufacturing facility" and facilities "directly related and ancillary" thereto, all within the meaning of Section 144(a)(12)(C) of the Code; provided that no proceeds expended to pay Issuance Costs in respect of the Series 1996A Bonds shall count as being within such 95%.
The Company will not request or authorize any disbursement pursuant to
Section 4.1 hereof, which, if paid, would result in less than 95% of
such proceeds of the Series 1996A Bonds being so used.
(c) Not more than 25% of the net proceeds of the Series 1996A Bonds will be used to provide such "directly related and ancillary" facilities, as referred to in subsection (b) of this Section 2.4, and all such facilities shall be located on the same site as the "manufacturing facility" referred to in said subsection (b).
(d) Any office space being financed with proceeds of the Series 1996A Bonds is located within the Building constituting part of the Project, and not more than a de minimis amount of the functions to be performed in such space is not directly related to the day-to-day operations at the Project.
(e) Other than the Series 1996B Bonds, there have never been issued any "issues of bonds" with respect to "facilities", both as described in Section 144(a)(2) of the Code, (i) which facilities are to be or have been used by the Company or any other "principal user" of the Project or any "related person" to the Company or such other "principal user", as such terms are used and defined in Sections 144(a)(2)(B) and 144(a)(3) of the Code, respectively, and which are located within the incorporated area of the City; and (ii) which issues of bonds would have to be taken into account in determining the aggregate face amount of the Series 1996A Bonds as provided in Section 144(a)(2) of the Code.
(f) For each "test-period beneficiary" (as defined in Section 144(a)(10)(D) of the Code, and including any "related person" thereto) of the Project, the sum of (1) the aggregate authorized face amount of the Series 1996A Bonds allocated in accordance with Section 144(a)(10)(C) of the Code to such beneficiary, and (2) the aggregate outstanding principal amount of any other tax-exempt facility-related bonds as described in Section 144(a)(10)(B)(ii) of the Code, wherever and whenever issued, allocated to such beneficiary, does not exceed $40,000,000.
(g) The Series 1996A Bonds are not being issued to finance facilities which are within or part of "a single building, an enclosed shopping mall or a strip of offices, stores, or warehouses using substantial common facilities" (within the meaning of Section 144(a)(9) of the Code), any other facilities within or part of which have heretofore been financed with obligations issued and still outstanding under Section 144(a) of the Code or under prior Section 103(b)(6) of the 1954 Code.
(h) In accordance with Section 147(b) of the Code, the average maturity of the Series 1996A Bonds does not exceed 120% of the average reasonably expected economic life of the facilities being financed thereby.
(i) None of the proceeds of the Series 1996A Bonds will be used to provide any airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises; or any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including
roller skating, skateboard and ice skating), racquet sports facility (including handball or racquetball court), hot tub facility, suntan facility or racetrack.
(j) None of the net proceeds of the Series 1996A Bonds will be used (i) to provide a facility the primary purpose of which is retail food and beverage services (except grocery stores), automobile sales or service, or the provision of recreation or entertainment; or (ii) directly or indirectly to provide residential real property within the meaning of Section 144(a)(5) of the Code; less than 25% of such net proceeds will be used (directly or indirectly) for the acquisition of land (or any interest therein); and none of such net proceeds will be used (directly or indirectly) for the acquisition of land (or any interest therein) for farming purposes within the meaning of Section 147 of the Code.
(k) No portion of the proceeds of the Series 1996A Bonds will be used to acquire existing property or any interest therein unless such acquisition meets the rehabilitation requirements of Section 147(d) of the Code.
(l) In accordance with Section 147(g) of the Code, not more than two percent (2%) of the proceeds of the Series 1996A Bonds shall be applied to pay Issuance Costs in respect of the Bonds, and the Company covenants to pay any such Issuance Costs in excess of such limitation from funds other than Series 1996A Bond proceeds.
(m) The Series 1996A Bonds are not "federally guaranteed" within the meaning of Section 149(b) of the Code.
Section 2.5 Representations and Covenants by the Company - Tax-Related
- Series Refunding Obligations. If and when the Refunding Obligations are issued
and applied to refund the Series 1996A Bonds, in order to assure the non-Taxable
status of the Refunding Obligations, the Company acknowledges that it will be
required, on and as of the issuance date of the Refunding Obligations (the
"Refunding Date"), to:
(a) reiterate, as to the Series 1996A Bonds and the Refunding Obligations, the representations and covenants set forth in Section 2.4 hereof;
(b) additionally represent and warrant that:
(1) After the expiration of any applicable temporary period under Section 148(d)(3) of the Code, at no time during any Bond Year will the aggregate amount of gross proceeds of the Refunding Obligations invested in higher yielding investments exceed 150% of the debt service on the Refunding Obligations for such Bond Year. The aggregate amount of gross proceeds of the Refunding Obligations invested in higher yielding investments, if any, will be promptly and appropriately reduced as the amount of outstanding Refunding Obligations is reduced; provided, however, that the foregoing shall not require the sale or disposition of any higher yielding investments if such sale or disposition would result in a loss in excess of the amount which, had a payment to
the United States pursuant to Section 407 of the Indenture then been due, would have been so payable but for such sale or disposition.
The Company will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose investments in which gross proceeds of the Refunding Obligations are invested or that results in a smaller profit or a larger loss than would have resulted in an arm's length transaction in which the yield on the nonpurpose investment was not subject to any restriction.
The terms "bond year", "gross proceeds", "higher yielding investments", "yield" and "debt service" have the meanings assigned to them for purposes of Section 148 of the Code; and
(2) The information furnished by the Company and used by the Issuer and Bond Counsel in preparing, as to the Refunding Obligations, (i) the certifications pursuant to Section 148 of the Code and (ii) the information required pursuant to Section 149(e) of the Code, is accurate and complete as of the Refunding Date;
(c) cause the Issuer to make an election under Section 144(a)(4) of the Code, and in connection therewith, to represent and covenant that:
(1) The sum of:
(i) the principal amount of the Refunding Obligations,
(ii) the outstanding face amount of the any other "issues of bonds", as referred to in Section 2.4(e) hereof, and
(iii) the amount of capital expenditures ("Capital
Expenditures") with respect to "facilities" (as defined in
Section 144(a)(4)(B) of the Code) located within the
incorporated area of the City, other than capital
expenditures
(A) mentioned in Section 144(a)(4)(C) of the Code, or
(B) financed or to be financed from the proceeds of the Refunding Obligations or the other "issues of bonds", to the extent such other issues are outstanding, referred to in clause (ii) hereof, made during the three-year period preceding the Refunding Date, does not exceed $10,000,000.
(2) During the three-year period following the Refunding Date, the Company shall not make or cause or permit to be made
Capital Expenditures in an amount which would cause the interest on the Refunding Obligations to become Taxable.
(3) In the event, on account of a sublease, management contract or other agreement relating to the Project, or any portion thereof, permitted by the terms hereof and of the Mortgage, any Person other than the Company becomes a "principal user" of the Project (as referred to in Section 2.4(e) hereof), the Company shall promptly advise the Trustee of the identity of such Person and furnish to the Trustee a copy of such sublease, management contract or other agreement. In connection with any such sublease, management contract or other agreement, the Company will require by covenant that any sublessee, manager or user who is a "principal user" of the Project and any "related person" thereto also shall comply with the covenants set forth in subsections (c)(2) and (3) of this Section and in subsections (i) and (j) of Section 2.4 hereof as if those covenants were made herein by such sublessee, manager, user or "related person" thereto, and will require that any such "principal user" who is a "test-period beneficiary" with respect to the Project (as referred to in Section 2.4(f) hereof) shall, prior to its becoming such "principal user", make to the Company and the Trustee the representation set forth in said Section 2.4(f) as to itself and any "related person" thereto; and
(d) make, with respect to the Refunding Obligations and the moneys held in the Construction Fund, the same covenants as are made in Sections 5.4, 5.6 and 5.7 hereof with respect to the Series 1996B Bonds.
[END OF ARTICLE II]
ARTICLE III
Section 3.1 Demise of the Project; Assignment of Redemption Rights.
(a) The Issuer and the Company hereby reaffirm and ratify the provisions of Section 3.1 of the Original Lease, pursuant to which the Issuer demised and leased to the Company (as successor to Kinark), and the Company (as such successor) leased from the Issuer, the Project (including, but only for this purpose, the Dock Facilities Site, as defined in the Original Lease) in accordance with the provisions of this Lease Agreement and upon and subject to the terms, conditions and provisions of this Lease Agreement, to each of which the Issuer and the Company do hereby separately and severally covenant and agree.
(b) The Issuer hereby conveys and assigns to the Company, subject to the Mortgage, the Issuer's equity of redemption in respect of the Project, entitling the Company to redeem the Project from impending foreclosure under the Mortgage. The Issuer furthermore assigns to the Company, without reservation, the Issuer's statutory right of redemption under Section 6-5-248 of the Code of Alabama of 1975, as amended. Additionally, the Issuer will, upon request of the Company, transfer and assign the Issuer's statutory right of redemption to the Company for the sum of $1.00 at any time after foreclosure of any mortgage on the Project. The foregoing assignments are made in further consideration of the Company's acquisition of the Existing Facilities and its agreement to acquire, construct and equip the New Facilities on behalf of the Issuer and to use and operate the Project in furtherance of the public purposes of the Act.
Section 3.2 Lease Term; Possession and Quiet Enjoyment. The Lease Term, which commenced under the Original Lease on or about October 17, 1979 (the issuance date of the Prior Bonds) shall, subject to the provisions of this Lease Agreement permitting earlier termination, continue until midnight of March 1, 2012.
The Company has had possession of the Project pursuant to the provisions of the Original Lease and shall continue undisturbed in such possession pursuant to this Lease Agreement, subject to the inspection and other rights reserved herein; provided, however, the Issuer will be permitted such continued possession of the Project as shall be reasonably necessary and convenient for it to renovate or cause to be renovated the Existing Facilities, to construct and install or cause to be constructed and installed the New Facilities, to construct or install or cause to be constructed or installed any additions or improvements to the Project and to make or cause to be made any repairs or restorations thereto required or permitted to be constructed, installed or made by the Issuer pursuant to the provisions hereof.
So long as the Company performs and observes all the covenants and agreements on its part herein contained, it shall peaceably and quietly have, hold and enjoy the Project during the Lease Term subject to all the terms and provisions hereof.
Section 3.3 Rentals.
(a) In consideration of the lease of the Project, the Company does hereby covenant and agree to pay Basic Rent to the Trustee, for the account of the Issuer, in such amounts and at such times as shall be sufficient and timely to pay all Debt Service on or Purchase Price of the Bonds as the same shall be or become due and payable, whether at maturity, upon redemption, tender, acceleration or otherwise.
There shall be credited, (i) against any installment of Basic Rent due in respect of the Debt Service of Bonds due on a Bond Payment Date or the Purchase Price of Bonds due on a Tender Date, any amount on deposit in the Bond Fund or the Bond Purchase Fund, respectively, by not later than 10:00 a.m. on such Bond Payment Date or Tender Date, as the case may be, representing proceeds of a drawing under the Letter of Credit pursuant to the Indenture; and (ii) against any installment of Basic Rent due in respect of the Purchase Price of Bonds due on a Tender Date, any amount on deposit in the Bond Purchase Fund by not later than 10:00 a.m. on such Tender Date representing proceeds of the remarketing of Bonds pursuant to the Indenture.
(b) The Company recognizes and acknowledges that it is the intention of the parties hereto that this Lease Agreement be a net lease and that, until the Bonds are fully paid, Basic Rent shall be due in such amounts and at such times as shall be required, giving effect to any credits hereinabove provided for, to pay Debt Service on and Purchase Price of Bonds as the same shall become due and payable. Any amount of Basic Rent not timely paid shall bear interest from the due date thereof until paid at the Interest Rate for Advances.
(c) In further consideration of the lease of the Project, the Company covenants and agrees to pay as additional Rental hereunder: (i) any and all costs and expenses incurred or to be paid by the Issuer in connection with the issuance and delivery of the Bonds or otherwise related to actions taken by the Issuer under this Lease Agreement, including advances made pursuant to Section 4.9 hereof or the Indenture (excepting, however, Project Costs to the extent the same are paid from the proceeds of sale of the Bonds); and (ii) the fees, charges and expenses of the Trustee and the other Fiduciaries (as defined in the Indenture) for acting as such under the Indenture, as and when the same become due, provided, that the Company may, without creating a default hereunder, contest in good faith the necessity for any extraordinary services or extraordinary expenses and the reasonableness of any such fees, charges or expenses.
Following the payment or incurring of any such costs, expenses or liability, such additional Rental is payable upon written demand therefor, and if not paid upon such demand shall bear interest from the date paid or incurred at the Interest Rate for Advances.
Section 3.4 Obligations of Company Unconditional. The obligation of the
Company to pay the Rentals (subject to its right to contest certain Rental under
Section 3.3(c) hereof), to make all other payments provided for herein and to
perform and observe the other agreements and covenants on its part herein
contained shall be absolute and unconditional, irrespective of any rights of
setoff, recoupment or counterclaim it might otherwise have against the Issuer or
any other Person. The Company will not suspend or discontinue any such payment
or fail to perform and observe any of its other agreements and covenants
contained herein or terminate this Lease Agreement for any cause whatsoever,
including, without limiting the generality of the foregoing, the failure of the
Issuer to complete the Project, any acts or circumstances that may constitute an
eviction or constructive eviction, failure of consideration or commercial
frustration of purpose, any damage to or destruction of the Project, the
invalidity of any provision of this Lease Agreement, the taking by eminent
domain of title to or the right to temporary use of all or any of the Project,
any change in the tax or other laws of the United States of America, the State
or any political subdivision of either thereof, or any failure of the Issuer to
perform and observe any agreement or covenant, whether express or implied, or
any duty, liability or obligation arising out of or connected with this Lease
Agreement. Notwithstanding the foregoing, the Company may, at its own cost and
expense and in its own name or in the name of the Issuer, prosecute or defend
any action or proceeding or take any other action involving third persons which
the Company deems reasonably necessary, in order to secure or protect its rights
of use and occupancy and its other rights hereunder. Nothing contained herein
shall be construed to be a waiver of any rights which the Company may have
against the Issuer under this Lease Agreement or under any provision of law.
Section 3.5 Assignment, Sublease or Grant of Use by Company. Subject to any applicable provisions of the Mortgage, the Company may assign this Lease Agreement or sublease or grant the right to occupy and use the Project, in whole or in part, to others, provided that:
(a) No such assignment, grant or sublease shall relieve the Company from primary liability for any of its obligations under this Lease Agreement or any other Company Document;
(b) In connection with any such assignment, grant or sublease the Company shall retain such rights and interests as will permit it to comply with its obligations under this Lease Agreement and each other Company Document;
(c) No such assignment, grant or sublease shall permit a use other than one consistent with the intended use of the Project or the purposes of the Act and the Code; and
(d) All such subleases as may hereafter be entered into shall be subject to the terms and conditions of this Lease Agreement, including, without limitation, the provisions of Article II hereof and with respect to the maintenance and operation of the Project.
The Issuer hereby agrees to join in the execution and delivery of any
assignment, sublease or grant of use made pursuant to the provisions of this
Section 3.5, but solely for the purposes of indicating its consent thereto and
approval thereof; provided, however, that any such assignment or sublease
entered into pursuant to this Section will be effective even if not executed by
the Issuer.
Section 3.6 Assignment of Lease Agreement and Revenues; Mortgaging of Project. Except for Unassigned Rights, the Issuer has assigned its interest in and pledged any moneys receivable under this Lease Agreement to the Trustee as security for payment of Debt Service on and Purchase Price of the Bonds. The Issuer has also joined in the Mortgage and the Assignment for the purpose of mortgaging the Project and granting other collateral to the Bank as security for the payment and performance by the Company of its obligations under the Reimbursement Agreement. The Trustee shall have all rights and remedies herein accorded to the Issuer (except for Unassigned Rights) and any reference herein to the Issuer shall be deemed, with the necessary changes in detail, to include the Trustee, and the Trustee and the Holders are deemed to be third party beneficiaries of the representations, warranties, covenants and agreements of the Company herein contained. The Company hereby acknowledges and consents to the foregoing assignments and mortgage by the Issuer.
Section 3.7 Restrictions on Mortgage or Sale of Project. Except for the Mortgage and Assignment and the assignment of this Lease Agreement and the Revenues hereunder to the Trustee pursuant to the Indenture, the Issuer will not mortgage, sell, assign, transfer or convey the Project during the Lease Term without the prior written consent of the Company. If the laws of the State at the time shall permit it, nothing contained in this Section shall prevent the consolidation of the Issuer with, or merger of the Issuer into, or transfer of the Project as an entirety to, the City, the County or any public corporation whose property and income are not subject to federal or State taxation and which has corporate authority to carry on the business of owning and leasing the Project; provided, that upon any such consolidation, merger, or transfer, the due and punctual payment of the Debt Service and the due and punctual performance and observance of all the agreements and conditions of this Lease Agreement to be kept and performed by the Issuer, shall be expressly assumed in writing by the corporation resulting from such consolidation or surviving such merger or to which the Project shall be transferred as an entirety. However, nothing in this Section shall authorize the Issuer to act in such a manner as to cause the interest on the Bonds to become Taxable or to become subject to State taxation.
Section 3.8 Prepayment of Rent; Redemption of Bonds. The Company shall have the right at its option to prepay at any time all or any part of the Basic Rent payable under this Lease Agreement. All Basic Rent so prepaid shall be credited against future payments of Basic Rent as the same become due unless prior to the date on which such credit is to be taken the Company directs such moneys to be used to purchase or redeem Bonds in the manner and to the extent permitted and provided in the Indenture. The amount necessary to redeem Bonds shall be deemed to include, in addition to the redemption price, all expenses necessary to effect the redemption and, if all Bonds are to be redeemed, all other obligations under the Indenture, including the Trustee's and other Fiduciaries' fees, charges and expenses. At least 45 days prior to the proposed redemption date, the Company shall notify the Issuer and the Trustee, in
writing, as to the proposed redemption, and the Issuer, upon receiving such notice, shall be obligated and hereby agrees to take all necessary action to have the payment made for the purpose of redeeming Bonds applied to the redemption of as many Bonds as such payment will permit under the redemption provisions of the Bonds and the Indenture.
Section 3.9 Option to Terminate Lease Agreement and Purchase Project.
(a) Prior to the expiration of the Lease Term, the Company shall, if it is not then in default hereunder, have the option to terminate this Lease Agreement and purchase the Project from the Issuer upon:
(1) if the Bonds remain outstanding, either (A) redemption
of all of the Bonds in accordance with the terms thereof and
Section 3.8 hereof, or (B) payment of the Bonds in full in
accordance with Article VIII of the Indenture;
(2) written notice to the Issuer of the exercise of such option; and
(3) payment to the Issuer of the purchase price of the Project of $1,000.00, together with payment of any amounts due under Section 3.3(c) hereof.
When the foregoing conditions shall have been met, the Issuer will promptly convey the Project to the Company (or, if applicable, to any nominee of the Company designated in writing to the Issuer) in accordance with Section 3.11 hereof.
(b) In the event that, as of the expiration of the Lease Term, the Company shall not have exercised the option to purchase the Project, said option shall continue until the Issuer shall have given written notice to the Company that said option must be exercised within 90 days of the date of the notice and the Company shall thereafter fail to exercise said option within the specified period.
(c) The Issuer finds and determines that the price payable upon exercise of the option to purchase granted hereby, together with the amounts of Basic Rent and other Rentals payable hereunder, constitutes fair market value for the property for purposes of State law, including without limitation within the interpretation of Act No. 91-635, Legislature of Alabama, and any predecessor statute thereto.
Section 3.10 Option to Purchase Unimproved Leased Realty. Subject to the provisions of the Mortgage, the Company shall have, and is hereby granted, the option to purchase any Unimproved part of the Leased Realty at any time and from time to time, provided that it furnishes the Issuer and (if the Bonds remain outstanding) the Trustee with the following:
(a) A notice in writing containing (i) an adequate legal description of that portion of the Leased Realty with respect to which such option is to be exercised, (ii) a statement that the Company
intends to exercise its option to purchase such portion of the Leased Realty on a date stated, which shall not be less than 30 nor more than 90 days from the date of such notice and, if applicable, (iii) the name of Company's designee to which the Issuer shall convey the property;
(b) A certificate of an Independent Engineer, dated not more than 90 days prior to the date of the purchase and stating that, in the opinion of the person signing such certificate, (i) the portion of the Leased Realty with respect to which the option is exercised is not needed for the operation of the Project for the purposes hereinabove stated and (ii) the purchase will not impair the usefulness of the Project and will not destroy the means of ingress thereto and egress therefrom; and
(c) The purchase price for such portion of the Leased Realty, being equal to $8,500 per acre, which shall be paid directly to the Trustee for the account of the Issuer and deposited in the Bond Fund; provided, however, that if the Bonds shall at the time have been paid in full, the amount of such purchase price shall equal $10 per acre, shall be paid directly to the Issuer and shall be credited against the option price payable pursuant to Section 3.9 hereof.
Upon receipt of the notice, certificate and purchase price required above, the Issuer will promptly convey, in accordance with Section 3.11 hereof, that portion of the Leased Realty with respect to which the Company shall have exercised the option granted to it in this Section. If such option relates to Leased Realty on which transportation or utility facilities are located, the Issuer shall retain an easement to use such transportation or utility facilities to the extent necessary for the continued efficient operation of the Project.
Section 3.11 Conveyance on Exercise of Option to Purchase. At the closing of the purchase pursuant to the exercise of any option to purchase granted herein, the Issuer will upon receipt of the purchase price deliver to the Company documents conveying to the Company or its designee the property with respect to which such option was exercised, as such property then exists, subject only to the following: (a) those liens and encumbrances, if any, to which title to the property was subject when conveyed to the Issuer; (b) those liens and encumbrances created by the Company or to the creation or suffering of which the Company consented; and (c) those liens and encumbrances resulting from the failure of the Company to perform or observe any of the agreements on its part contained in this Lease Agreement.
Section 3.12 Use of Party Walls. If the Company purchases any Unimproved part of the Leased Realty pursuant to the provisions hereof or otherwise acquires or leases other real property adjacent to the Leased Realty, all walls presently standing or hereafter erected on or contiguous to the boundary line of the land so purchased, acquired or leased by the Company shall be party walls and each party grants the other a ten foot easement adjacent to any such party wall for the purpose of inspection, maintenance, repair and replacement thereof and the tying-in of new construction. If the Company utilizes any party wall for the purpose of tying in new construction that will be utilized under common control with the Project, Company may also tie in the utility facilities on the Leased Realty for the purpose of serving the new construction and may remove any non-loadbearing wall panels in the party wall; provided, however, that if the property so purchased, acquired or leased by the Company ceases to be operated under common control with the Project, Company
covenants that it will install non-loadbearing wall panels similar in quality to those that have been removed and will provide separate utility services for the new construction.
[END OF ARTICLE III]
ARTICLE IV
Section 4.1 Agreement to Complete Project. Pursuant to the Inducement Agreement and hereby reaffirmed, the Issuer authorized the Company to commence the planning, design, acquisition, construction, improvement and equipping of the Project and the Company accepted such authorization. In accordance with such authorization, the Company has consummated the acquisition of the Existing Facilities and is proceeding with the acquisition, construction, improvement and equipping of the remainder of the Project, which the Company shall complete as promptly as is practicable.
Promptly following the issuance and sale of the Bonds the Issuer will reimburse the Company for funds heretofore advanced and expenses incurred by the Company for qualifying Project Costs.
The Issuer has in the Indenture authorized and directed the Trustee to make payments from the Construction Fund, and shall cause payments to be made from the Construction Fund for Project Costs, which shall, subject to any applicable restrictions or limitations prescribed under the Code, include:
(a) The acquisition, construction and installation, as applicable, of all real or personal properties constituting a "project" within the meaning of the Act or necessary in connection therewith, including architect's and engineer's fees incidental thereto;
(b) The purchase price of any land or any part of a building that may be acquired by purchase;
(c) All expenses in connection with the authorization, sale and issuance of revenue bonds to finance such acquisition, construction and installation;
(d) Interest on such revenue bonds for a reasonable time prior to, during and for a period not exceeding two years after completion of, such acquisition, construction and installation; and
(e) Any other costs necessary or incidental for the foregoing or permitted, either expressly or impliedly, under the provisions of the Act.
Payments from the Construction Fund shall be made in all such cases only upon advance submission of each payment requisition to the Trustee bearing the written approval of the Issuer and the Company, and subject to the requirements of the Indenture and the Reimbursement Agreement with respect to withdrawals from the Construction Fund.
In the event that, after reasonable request made to the Issuer by the Company, the Issuer fails or refuses to issue or execute a payment requisition
for payment from the Construction Fund of any item that may under the terms of this Lease Agreement be paid from the Construction Fund (including reimbursement to the Company as aforesaid), the Project Supervisor, who is hereby irrevocably appointed as agent for the Issuer for such purposes, may issue and execute, also for and in the name and behalf of the Issuer and without any approval of any officer, employee or other agent thereof, such payment requisition for payment from the Construction Fund.
In the event the Refunding Obligations are hereafter issued and applied
to refund the Series 1996A Bonds, any payment requisition for any item of
Project Costs not described in, or the cost for which item is other than as
described in, the information to be hereafter furnished by the Company and
referred to in Section 2.5(b)(2)(ii) hereof for purposes of the Information
Return Form 8038 that will be required by Section 149(e) of the Code to be filed
by the Issuer in connection with the issuance of the Refunding Obligations,
shall identify such items with particularity and shall be accompanied by (i)
evidence satisfactory to Bond Counsel that the average reasonably expected
economic life of the facilities being financed by the Refunding Obligations is
not less than 5/6ths of the average maturity of the Refunding Obligations and
(ii) a Non-Taxability Opinion with respect to such disbursement.
Section 4.2 No Warranty of Suitability by Issuer. The Company recognizes that since the plans and specifications for constructing and equipping the Building will be prepared to its order, and that since the Equipment will be selected by it, the Issuer can make no warranty, either express or implied, or offer any assurances, that the Building or the Equipment will be suitable for the Company's purposes or needs or that the proceeds derived from the sale of the Bonds will be sufficient to pay in full all the Project Costs.
Section 4.3 Issuer to Pursue Remedies Against Contractors, Subcontractors and Sureties. In the event of default of any contractor or subcontractor under any contract made by it in connection with the Project, the Issuer at the request of the Company will promptly proceed (at the Company's sole cost and expense), either separately or in conjunction with others, to exhaust the remedies of the Issuer against the contractor or subcontractor so in default and against his surety, if any, for the performance of such contract. The Issuer will advise the Company of the steps it intends to take in connection with any such default. If the Company shall so notify the Issuer, the Company may, in its own name or in the name of the Issuer, prosecute or defend any action or proceeding or take any other action involving any such contractor, subcontractor or surety which the Company deems reasonably necessary, and in such event the Issuer will cooperate fully with the Company and will take all action necessary to effect the substitution of the Company for the Issuer in any such action or proceeding. Any amounts recovered by way of damages, refunds, adjustments or otherwise in connection with the foregoing prior to the completion of the Project shall, after payment of all costs and expenses including reasonable attorney's fees incurred in connection with the foregoing, be paid into the Construction Fund.
Upon completion of the Project or at any time prior thereto upon the request of the Company, so long as it is not in default hereunder, the Issuer will assign to the Company all warranties and guaranties of all contractors, subcontractors, suppliers, architects and engineers for the furnishing of labor, materials or equipment or for supervision or design in connection with the Project and any rights or causes of action against any of the foregoing.
Section 4.4 Agreement to Issue Bonds; Application of Proceeds. In order to provide moneys to refund the Prior Bonds and the Interim Indebtedness and to pay or reimburse the prior payment of the Project Costs, the Issuer will proceed as promptly as practicable with the issuance and sale of the Series 1996B Bonds in the aggregate principal amount of $990,000 and the Series 1996A Bonds in the aggregate principal amount of $4,000,000, respectively, bearing interest, maturing and having the other terms and provisions set forth in the Indenture. The proceeds of sale of the Series 1996A Bonds shall be deposited in the Construction Fund, for application to pay or reimburse the prior payment of Project Costs as hereinabove and in the Indenture provided. The proceeds of sale of the Series 1996B Bonds shall be deposited in the Refunding Fund, for immediate application to (a) the retirement of the Interim Indebtedness and (b) the payment to the Prior Trustee for redemption of the Prior Bonds on the earliest practicable date (but in no event later than the 90th day following the Issue Date). On the Issue Date, the Company shall deposit in the Refunding Fund such additional amounts, if any, as shall be necessary to pay in full the Interim Indebtedness and to provide for the redemption, on the redemption date designated by the Prior Trustee, of all outstanding Prior Bonds (including accrued interest thereon to such redemption date).
Section 4.5 Completion of the Project.
(a) If moneys representing proceeds of the Series 1996A Bonds shall be insufficient to pay fully all sums required to complete the Project, the Company shall be obligated to complete the acquisition, construction and equipping of the Project at its own expense and the Company shall pay any such deficiency either by making payments directly to the construction contractor or contractors or the suppliers of materials and equipment or by paying into the Construction Fund the moneys necessary to complete the Project, in which case the Issuer will proceed to complete the Project and the cost thereof will be paid from the Construction Fund. The Company shall save the Issuer whole and harmless from any obligation to pay any amount in excess of the money available therefor in the Construction Fund. The Company shall not by reason of the payment of such excess costs from its own funds (whether by direct payment thereof or payment into the Construction Fund) be entitled to any diminution in the payment of Rentals hereunder.
(b) The Company shall on behalf of the Issuer notify the Trustee of the Completion Date of the Project by a certificate signed by the Project Supervisor stating:
(i) the date on which the acquisition, construction and equipping of the Project were substantially completed (the "Completion Date");
(ii) that all other facilities necessary in connection with the Project have been acquired, constructed, improved and equipped;
(iii) that the acquisition, construction, improvement and equipping of the Project and those other facilities have been accomplished in such a manner as to conform with all applicable zoning, planning, buildings, environmental and other similar governmental regulations;
(iv) that all costs of that acquisition, construction, improvement and equipping then or theretofore due and payable have been paid; and
(v) the amounts (if any) which the Trustee shall retain in the Construction Fund for the payment of Project Costs not yet due or for liabilities which the Company is contesting or which otherwise should be retained.
Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. The Issuer and the Company will cooperate one with the other in causing such certificate to be furnished to the Trustee.
(c) Any moneys remaining in the Construction Fund after the Completion Date, other than amounts specified pursuant to clause (v) of subsection (b) of this Section 4.5, shall, at the direction of the Project Supervisor, promptly be (i) used to acquire, construct, install, equip or improve such additional real or personal property in connection with the Project as is designated by the Project Supervisor and the acquisition, construction, installation, equipment and improvement of which will be permitted under the Act and the Code; (ii) paid into the Bond Fund to be applied to the redemption of Bonds in accordance with their terms and, until such application, to be invested as provided in Section 5.7 hereof at a yield not exceeding the yield on the Bonds; or (iii) applied to any combination of the foregoing as is provided in that direction. Any direction to apply moneys from the Construction Fund pursuant to this subsection (c) shall be accompanied by a statement of the yield at which such moneys are to be invested and for what period and by a Non-Taxability Opinion with respect to such application and further opining to the effect that such application is permitted under the Act.
Section 4.6 Maintenance, Alterations and Improvements.
(a) The Company will, at its own expense, (i) keep the Project in as reasonably safe condition as its operations permit, and (ii) keep the Project in good order and repair, and from time to time make all needful and proper repairs, renewals and replacements thereto, including external and structural repairs, renewals and replacements. In lieu of making such repairs, renewals and replacements, the Company may, if it so desires, furnish to the Issuer the funds necessary therefor, in which case the Issuer will proceed to make such repairs, renewals and replacements.
(b) Subject to the provisions of the Mortgage, the Company may, also at its own expense, make any additions, improvements or alterations to the Project that it may deem desirable for its business purposes, provided that such additions, improvements or alterations do not adversely affect the value or utility of the Project or its character as a "project" under the Act or the character of the Project as qualifying facilities under Section 144(a)(12)(C) of the Code. In
lieu of making such additions, improvements or alterations itself, the Company may, if it so desires, furnish to the Issuer the funds necessary therefor, in which case the Issuer will proceed to make such additions, improvements or alterations. In connection with any such additions, improvements or alterations (including for this purpose additional machinery or equipment) and in connection with completing the Project (should Bond proceeds prove insufficient therefor), the Company may incur additional indebtedness secured by one or more liens on or security interests in the Project or any part thereof, and the Issuer shall join in the granting of such liens and security interests as the Company may request, provided any such lien or security interest (other than a purchase money security interest, which may be prior in rank) shall be subordinated in rank to the lien and security interest of the Mortgage.
(c) All such additions, improvements and alterations made by the Company or the Issuer shall become a part of the Project and shall be subject to the demise of this Lease Agreement and the lien of the Mortgage; provided, however, that any equipment, furniture or fixtures installed on the Project by the Company and not constituting replacements or renewals of Equipment constituting a part of the Project may, subject to the provisions of the Mortgage, be removed by the Company at any time and from time to time while it is not in default under the terms of this Lease Agreement; and provided further, that any damage to the Project occasioned by such removal shall be repaired by the Company at its own expense. The same provisions will apply with respect to equipment, furnishings or fixtures of any sublessee or user of the Project pursuant to Section 3.5 hereof.
(d) The Company will not permit any mechanic's or other liens to stand against the Project for labor or material furnished by others in connection with the acquisition, construction or equipping of the Project or any additions, improvements, alterations or repairs so made by the Company. The Company may, however, in good faith contest any such mechanic's or other liens and in such event may permit any such liens to remain unsatisfied and undischarged during the period of such contest and any appeal therefrom unless by such action the Project or any part thereof shall be subject to loss or forfeiture, in which event such mechanic's or other liens shall be promptly satisfied.
(e) The Company may, also at its own expense, subject to the provisions of the Mortgage, connect or "tie-in" walls and utility and other facilities located on the Leased Realty to other facilities owned or leased by it on real property adjacent to the Leased Realty or partly on such adjacent real property and partly on the Leased Realty but only if the Company furnishes the Issuer and the Bank a certificate of an Independent Engineer that such connection and "tie-in" of walls and facilities will not unreasonably interfere with the operation of the Project.
(f) The Issuer will, upon request of the Company, grant such utility, transportation and other similar easements over, across or under the Leased Realty as shall be necessary or convenient for the furnishing of utility and other similar services or the provision of ingress or egress in respect of the Leased Realty or other real property adjacent to or near the Leased Realty, provided that such easements shall not adversely affect the operations of any facilities forming a part of the Project.
Section 4.7 Taxes, Other Governmental Charges and Utility Charges.
(a) The Issuer and the Company acknowledge that (i) under the law in existence as of the Issue Date, (A) by reason of the entry by the Issuer and Kinark into the Original Lease prior to May 21, 1992, the Existing Facilities will not be subject, until September 2, 1999, to ad valorem taxation by the State or by any political or taxing subdivision thereof, and (B) by reason of the Inducement Agreement, the New Facilities are exempt, throughout the Maximum Exemption Period, from all ad valorem taxation by the State or by any political or taxing subdivision thereof, except such taxation (if any) as is levied for educational purposes; (ii) under the law in existence as of the Issue Date, the income and profits (if any) of the Issuer from the Project are not subject to either federal or State taxation; and (iii) these factors, among others, induced the Company to enter into this Lease Agreement. In the event such exemptions are terminated or deemed inapplicable to the Project, the Company may at its option terminate this Lease Agreement upon payment in full of all Debt Service then due and compliance with the other provisions of Section 3.8 hereof, whereupon the Issuer shall convey the same to the Company. However, the Company will pay, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project or any machinery, equipment or other property installed or brought by the Company onto the Leased Realty (including, without limiting the generality of the foregoing, (i) any taxes levied on or with respect to the income or profits of the Issuer from the Project which, if not paid, will become a lien on the Project or a charge on the revenues and receipts from the Project prior to or on a parity with the lien of the Mortgage thereon and (ii) any ad valorem taxes levied for educational purposes or assessed upon the Company's interest in the Project), and all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Project; provided, however, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Company shall be obligated to pay only such installments as are required to be paid during the Lease Term.
(b) The Company agrees to pay all gas, electric, light and power, water, sewer and all other charges for the operation, maintenance, use and upkeep of the Project.
(c) The Company may, subject to the provisions of the Mortgage, at its own expense and in its own name and behalf or in the name and behalf of the Issuer, in good faith contest any such taxes, assessments and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom, unless by such action the title of the Issuer to any part of the Project shall be materially endangered or the Project or any part thereof shall become subject to loss or forfeiture, in which event such taxes, assessments or charges shall be paid forthwith by the Company. The Issuer will cooperate fully with the Company in any such contest.
Section 4.8 Insurance.
(a) The Company will cause the Project to be insured and at all times keep the Project insured, including during the period of construction of the Project (during which time such insurance may be provided by way of builders' risk insurance), against loss and/or damage to the Project by fire and other perils (including vandalism and malicious mischief) customarily covered by the extended coverage clause of fire insurance policies in an amount equal to the full replacement cost of the Project. The Company will pay all premiums on such insurance. All such policies shall be for the benefit of the Company and the Bank (as mortgagee under the Mortgage), as their respective interests may appear. All such insurance policies shall be taken out and maintained with generally recognized, responsible insurance companies, each of which shall be qualified and authorized to assume the respective risks undertaken.
(b) The Company shall also take out and at all times maintain and pay the premium on policies of general liability insurance with generally recognized, responsible insurance companies, each of which shall be qualified to assume the risks undertaken, for the benefit of the Trustee, the Issuer, the Bank and the Company, as their interests may appear. Such general public liability insurance shall insure against liability for injuries to persons and property or death or accidental injuries arising out of the occupancy, use or operation of the Project, in the minimum amount of $1,000,000 combined single limit coverage, and also in the aforesaid amount with respect to any vehicle used in connection with the Project.
All such insurance shall be provided during the entire Lease Term. Notwithstanding the foregoing, during the construction phase of the New Facilities such insurance as may be applicable to the New Facilities may be provided by way of builders' risk insurance which shall be for the benefit of the parties specified above, as their respective interests may appear. Each policy shall provide that the policy may not be cancelled or expire without at least 30 days' prior written notice of such cancellation or expiration by the insurer to the Company and, as applicable, to the Issuer, the Trustee and the Bank. Such insurance may also be provided under a blanket insurance policy or policies.
Section 4.9 Advances. In the event that the Company fails to take out or maintain the full insurance coverage required by this Lease Agreement, fails to pay the taxes and other charges required to be paid by the Company at the times they are required to be paid, or fails to keep the Project in as reasonably safe condition as its operating conditions permit and the Plant in good order and repair, the Issuer or the Trustee, after first notifying the Company of any such failure, may (but shall not be obligated to) take out the required policies of insurance and pay the premiums on the same, pay such taxes or other charges, or make such repairs, renewals and replacements as may be necessary to maintain the Project in as reasonably safe condition as the Company's operations permit and the Plant in good order and repair, respectively; and all amounts so advanced therefor by the Issuer or the Trustee shall become an additional obligation of the Company to the Issuer or to the Trustee, as the case may be, which amounts, together with interest thereon at the Interest Rate for Advances, the Company agrees to pay. Any remedy herein vested in the Issuer or the Trustee for the collection of the Rentals shall also
be available to the Issuer and the Trustee for the collection of all such amounts so advanced.
Section 4.10 Damage or Destruction. If prior to full payment of the Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) the Project is destroyed (in whole or in part) or is damaged by fire or other casualty, the Company shall be obligated to continue to pay Rentals, to perform its other obligations and covenants hereunder and to repair, rebuild or restore the property damaged or destroyed to substantially the same condition as existed prior to the event causing such damage or destruction, with such changes, alterations and modifications (including the substitution and addition of other property) as may be desired by the Company and as will not, in the opinion of Bond Counsel, impair the character of the Project as a "project" under the Act or as qualifying facilities under Section 144(a)(12)(C) of the Code.
The Company may apply for such purpose so much as may be necessary of any Net Proceeds of insurance resulting from claims for such losses. In the event said Net Proceeds are not sufficient to pay in full the costs of such repair, rebuilding or restoration, the Company will nonetheless complete the work thereof and will pay that portion of the costs thereof in excess of the amount of said Net Proceeds or will pay to the Issuer or the Trustee on behalf of the Issuer the moneys necessary to complete the work, in which case the Issuer will proceed so to complete the work. The Company shall not, by reason of the payment of such excess costs (whether by direct payment thereof or payment to the Issuer or Trustee therefor), be entitled to any reimbursement from the Issuer or any abatement or diminution of the Rentals payable hereunder. Any balance of Net Proceeds remaining after payment of all the costs of such repair, rebuilding or restoration shall be paid to the Company.
Notwithstanding the foregoing, if the Company shall determine that such repair, restoration or rebuilding is not, in whole or in part, economically viable, then the Company may exercise its option to redeem Bonds in accordance with their terms, in which case the Net Proceeds (or such portion thereof as is allocable to the portion of the Project not being repaired, restored or rebuilt) shall be applied to such redemption.
The Issuer shall cooperate fully with the Company in the handling of any prospective or pending insurance claim with respect to the Project or any part thereof. In no event will the Issuer voluntarily settle, or consent to the settlement of, any prospective or pending insurance claim with respect to the Project or any part thereof without the written consent of the Company, in its sole discretion.
Section 4.11 Condemnation. In the event that title to, or the temporary use of, the Project or any part thereof or interest therein shall be taken under the exercise of the power of eminent domain by any Governmental Authority or by any Person acting under governmental authorization, the Company shall be obligated to continue to pay Rentals and to perform its other obligations and covenants hereunder. If the Company so elects, the Issuer and the Company will cause the Net Proceeds received by them or the Trustee or any of them from any award made in such eminent domain proceedings to be applied, as shall be directed in writing by the Company within 120 days from entry of a final order in such eminent domain proceedings, to:
(a) the restoration of the remaining improvements located on the Leased Realty to substantially the same condition as existed prior to the exercise of the power of eminent domain, and/or
(b) the acquisition, by construction or otherwise, by the Issuer of other lands or improvements suitable for the Company's operations at the Project (which land or improvements shall be deemed a part of the Project and available for use and occupancy by the Company without the payment of any rent other than herein provided for to the same extent as if such land or other improvements were specifically described herein and demised hereby).
In the event that the Company elects either of the foregoing options and said Net Proceeds are not sufficient to pay in full the costs of such restoration or acquisition, the Company will nonetheless pay that portion of the costs thereof in excess of the amount of said proceeds or will pay to the Issuer or the Trustee on behalf of the Issuer the moneys necessary to complete the work, in which case the Issuer will proceed so to complete the work. The Company shall not, by reason of the payment of such excess costs (whether by direct payment thereof or payment to the Issuer or Trustee therefor), be entitled to any reimbursement from the Issuer or any abatement or diminution of the Rentals payable hereunder.
Notwithstanding the foregoing, if the Company shall determine that such restoration or acquisition is not, in whole or in part, economically viable, then the Company may exercise its option to redeem Bonds in accordance with their terms, in which case the Net Proceeds (or such portion thereof as is allocable to the portion of the Project not being restored) shall be applied to such redemption.
Any balance of such Net Proceeds remaining after the application thereof as hereinabove provided shall be paid to the Company.
The Issuer shall cooperate fully with the Company in the handling and conduct of any prospective or pending condemnation proceeding with respect to the Project or any part thereof and will, to the extent it may lawfully do so, permit the Company to litigate in any such proceeding in the name and behalf of the Issuer, through counsel of Company's own choice; provided, however, if the Issuer is legally required to participate through its own counsel in any such defense, the Company shall be responsible for the reasonable fees and charges of such counsel. In no event will the Issuer voluntarily settle, or consent to the settlement of, any prospective or pending condemnation proceeding with respect to the Project or any part thereof without the written consent of the Company, in its sole discretion.
Section 4.12 Removal and Disposition of Equipment. Subject to the provisions of the Mortgage, the Company may, if no Event of Default shall have occurred and be continuing, remove or sever any item of the Equipment from the Project and use such item in its other operations or sell or otherwise dispose of such item in any way the Company may see fit, free of the demise of this Lease Agreement and of the lien of the Mortgage and without the Company having any responsibility or accountability to the Issuer or the Bank (as mortgagee under the Mortgage) therefor, provided that the Company shall first have
substituted property of equal value and utility, free and clear of liens prior to the lien of the Mortgage, or shall have deposited with the Bank the proceeds of such disposition.
[END OF ARTICLE IV]
ARTICLE V
Section 5.1 General Covenants. The Company will not do or permit anything to be done on or about the Project that will affect, impair or contravene any policies of insurance that may be carried on the Project or any part thereof against loss or damage by fire, casualty or otherwise. The Company will, in the use of the Project and the public ways abutting the same, obtain all Necessary Authorizations and comply with all lawful requirements of all Governmental Authorities; provided, however, the Company may, at its own expense in good faith, contest the validity or applicability of any such requirement.
Section 5.2 Inspection of Project. The Company will permit the Issuer, the Trustee, the Bank and their respective duly authorized agents at all reasonable times during normal business hours and on reasonable advance notice to enter upon, examine and inspect the Project and, provided the same shall not unduly infringe on trade secrets or processes of the Company, to have access to, inspect, examine and make copies of the books and records, accounts and data of the Company pertaining to the Project.
Section 5.3 Indemnification. The Company releases the Issuer from, agrees that the Issuer shall not be liable for, and indemnifies the Issuer, its servants, agents and employees against, all liabilities, claims, costs and expenses imposed upon or asserted against the Issuer, in the absence of gross negligence, bad faith or willful or wanton misconduct on the part of the Issuer, on account of: (a) any loss or damage to property or injury to or death of or loss by any person that may be occasioned by any cause whatsoever pertaining to the construction, maintenance, operation and use of the Project; (b) any breach or default on the part of the Company in the performance of any covenant or agreement of the Company under this Lease Agreement or any other Company Document, or arising from any act or failure to act by the Company, or any of its agents, contractors, servants, employees or licensees; (c) the authorization, issuance and sale of the Bonds, and the provision of any information furnished by the Company or its authorized agents in connection therewith concerning the Project or the Company (including, without limitation, any information furnished by the Company referred to in Section 2.3(g) hereof or any information hereafter furnished by the Company referred to in Section 2.5(b)(2) hereof); and (d) any claim, action or proceeding brought with respect to the matters set forth in (a), (b) or (c) above.
The Company agrees to indemnify each Fiduciary (as defined in the Indenture) for and to hold it harmless against all liabilities, claims, costs and expenses incurred without negligence, bad faith or willful or wanton misconduct on the part of such Fiduciary on account of any action taken or omitted to be taken by such Fiduciary in accordance with the terms of this Lease Agreement, the Bonds or the Indenture or at the request or with the consent of the Company, including the costs and expenses of such Fiduciary in defending itself against any such claim, action or proceeding brought in connection with the exercise or performance of any of its powers or duties under any such instrument.
In case any action or proceeding is brought against the Issuer or any Fiduciary in respect of which indemnity may be sought hereunder, the party seeking indemnity shall promptly give notice of that action or proceeding to the Company, and the Company upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding; provided that failure of a party to give that notice shall not relieve the Company from any of its obligations under this Section unless that failure materially prejudices the defense of the action or proceeding by the Company. At its own expense, an indemnified party may employ separate counsel and participate in the defense. The Company shall not be liable for any settlement without its consent, unless it shall have failed after due notice to participate in such proceedings.
The indemnification set forth above is intended to and shall include the indemnification of all affected officials, directors, officers and employees of the Issuer and each Fiduciary, respectively. That indemnification is intended to and shall be enforceable by the Issuer and each Fiduciary, respectively, to the full extent permitted by law. The covenant of indemnity by the Company contained in this Section shall survive the termination of this Lease Agreement.
Section 5.4 Company Not to Adversely Affect Exclusion from Gross Income. The Company hereby represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken, all actions that may be required of it, alone or in conjunction with the Issuer, for the interest on the Series 1996B Bonds and (if and when issued) the Refunding Obligations to be and remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code.
Section 5.5 Covenants Under Other Company Documents. The Company shall observe and perform all covenants and agreements to be observed or performed by the Company under the other Company Documents.
Section 5.6 Rebate Fund Calculations and Payments. Within 20 days after each Computation Date, the Company shall calculate with respect to the Series 1996B Bonds the amount of Excess Earnings as of that Computation Date and shall notify the Trustee of that amount, whereupon the Trustee shall notify the Company in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund created under the Indenture is less than the amount of Excess Earnings (computed by taking into account the amount or amounts, if any, previously paid to the United States pursuant to Section 407 of the Indenture and this Section), the Company shall, within five days after the date of the aforesaid notice, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to the Excess Earnings (computed as aforesaid); provided no such payment shall be required with respect to earnings on a bona fide debt service fund during any Bond Year when the gross earnings on such fund during the Bond Year were less than $100,000. The obligation of the Company to make such payments shall remain in effect and be binding upon the Company notwithstanding the release and discharge of the Indenture or the termination of this Lease Agreement.
Notwithstanding the foregoing, if all "gross proceeds" (within the meaning of Section 148(f)(4)(B)(i)(I) of the Code) of the Series 1996B Bonds are certified by the Company to the Trustee to have been expended within six months of the Issue Date for the governmental purpose for which the Series 1996B Bonds were issued, and the Company further certifies its reasonable expectation that no other gross proceeds will arise during the remainder of the term of the Series 1996B Bonds, the provisions of this Section 5.6 and Section 407 of the Indenture shall not be applicable except to the extent that any gross proceeds become available more than six months after the Issue Date. Moreover, the provisions of this Section 5.6 and Section 407 of the Indenture shall not apply if and to the extent that the Issuer, the Company and the Trustee receive a Non-Taxability Opinion regarding the failure to comply therewith.
Section 5.7 Investment of Fund Moneys. At the written direction of the
Company, any moneys held as part of the Bond Fund and the Bond Purchase Fund
(except for moneys therein (i) held pursuant to Section 403 of the Indenture,
(ii) to pay Unsurrendered Bonds (as defined in the Indenture) or (iii)
representing proceeds of a drawing under the Letter of Credit, which moneys
shall be either held in cash and not invested or invested only in Government
Obligations with a maturity of not to exceed 30 days or fewer, as needed) and
the Rebate Fund shall be invested or reinvested by the Trustee in Eligible
Investments (as defined in the Indenture). The Company will not issue, or permit
to be issued on its behalf, any instructions for the investments of any moneys
in the Rebate Fund, the Bond Purchase Fund or the Bond Fund if, as a result of
any such investment being made in accordance therewith, the Series 1996B Bonds
would be considered "arbitrage bonds" within the meaning of Section 148 of the
Code or "hedge bonds" within the meaning of Section 149(g) of the Code.
Additionally, the Issuer and the Company will continually comply with all
provisions of the Code necessary in order to prevent the Series 1996B Bonds from
being considered "arbitrage bonds" within the meaning of Section 148 of the Code
or "hedge bonds" within the meaning of Section 149(g) of the Code.
Any officer of the Issuer having responsibility for issuing the Series 1996B Bonds, in conjunction with the Company or any officer, employee or agent of or consultant to the Company, shall give an appropriate certificate of the Issuer pursuant to said Section 148 of the Code, for inclusion in the transcript of proceedings for the Bonds, setting forth the reasonable expectations of the Issuer as of the Issue Date regarding the amount and use of the proceeds of the Series 1996B Bonds and the facts, estimates and circumstances on which those expectations are based. The Company shall provide the Issuer with, and the Issuer's certificate may be premised on, a certificate of an appropriate officer, employee or agent of or consultant to the Company setting forth the reasonable expectations of the Company as of the Issue Date regarding the amount and use of the proceeds of the Series 1996B Bonds and the facts, estimates and circumstances on which those expectations are based.
Section 5.8 Letter of Credit; Alternate Credit Facility.
(a) On or before the Issue Date, the Company shall cause to be delivered to the Trustee the Initial Letter of Credit. The Company may
at any time and from time to time, but shall not be required to, deliver a Substitute Letter of Credit to the Trustee in substitution for the Existing Letter of Credit.
(b) The following provisions define the Company's alternative obligations with respect to a Substitute Letter of Credit, depending on the event prompting delivery thereof:
(1) The Company shall give the Trustee at least 45 days' prior written notice of a proposed Letter of Credit Substitution Date, which notice shall specify (A) the name of the issuer of the proposed Substitute Letter of Credit, (B) the branch address, contact person and phone number with respect to such issuer, (C) any short-term or long-term ratings assigned by any Rating Agency to the obligations of such issuer, (D) the name of the counsel to such issuer which shall render the opinion required pursuant to subsection (d)(3) of this Section 5.8 and (E) the proposed Letter of Credit Substitution Date. Not fewer than 10 days prior to a proposed Letter of Credit Substitution Date, the Company shall deliver to the Trustee a binding commitment for the issuance of such Substitute Letter of Credit and the Related Documentation.
(2) At least 30 days prior to the Stated Expiration Date
of the Existing Letter of Credit, the Company shall, unless it
has determined to let the Bonds become subject to Mandatory
Tender in connection with such Stated Expiration Date, furnish or
cause to be furnished to the Trustee either (A) a binding
commitment from the Bank for the issuance of an Extension Letter
of Credit, or (B) a binding commitment for the issuance of a
Substitute Letter of Credit from the issuer thereof, accompanied
by the information set forth in the first sentence of subsection
(b)(1) of this Section.
(3) If the Company intends that the Bonds be secured by a Letter of Credit following a Proposed Conversion Date (as defined in the Indenture), the Company shall, at the time it gives the notice required under Section 202(g) of the Indenture, furnish or cause to be furnished to the Trustee a binding commitment for the issuance of a Substitute Letter of Credit from the issuer thereof, accompanied by the information set forth in the first sentence of subsection (b)(1) of this Section.
(c) Each Substitute Letter of Credit delivered to the Trustee pursuant to this Section must meet the following criteria:
(1) such Substitute Letter of Credit shall be substantially in the same form and of the same tenor as the Initial Letter of Credit, including provision for the payment of interest on the Bonds (or the interest portion of the purchase price of Bonds tendered, or deemed tendered, for purchase) for a period of 120 days (A) at the Cap Rate (as defined in the Indenture), if the Bonds then bear interest at the Seven-Day Rate (as defined in the Indenture), or (B) at the Fixed Rate (as defined in the Indenture) then borne or about to be borne by the Bonds;
(2) the effective date of such Substitute Letter of Credit shall be (A) the Conversion Date, (B) the first Business Day of the calendar month in which the Stated Expiration Date is to occur or (C) the Letter of Credit Substitution Date, whichever shall have been the corresponding event prompting delivery of the Substitute Letter of Credit; and
(3) such Substitute Letter of Credit must have a Stated Expiration Date that is not sooner than one year after its effective date.
(d) Each Substitute Letter of Credit (other than any Extension Letter of Credit) delivered to the Trustee must be accompanied by the following Related Documentation, to the extent applicable:
(1) documentation satisfying one of the following three provisions:
(A) if the Bonds are then rated, written evidence
from each Rating Agency that maintains a rating with
respect to the Bonds that (i) such Rating Agency has
reviewed the proposed Substitute Letter of Credit, and
(ii) the substitution of the proposed Substitute Letter of
Credit will not, by itself, result in a reduction or
permanent withdrawal of its rating of the Bonds;
(B) if the Bonds are not then rated, written evidence from either Moody's or S & P to the effect that the short-term (if the Bonds then bear interest at the Seven-Day Rate) or long-term (if the Bonds then bear interest at the Fixed Rate) rating of the issuer of the proposed Substitute Letter of Credit is in the same category as or a higher category than the applicable rating of the issuer of the Existing Letter of Credit; or
(C) whether or not the Bonds are then rated, (i) written evidence from either Moody's or S & P to the effect that the short-term (if the Bonds then bear interest at the Seven-Day Rate) or long-term (if the Bonds then bear interest at the Fixed Rate) rating of the issuer of the proposed Substitute Letter of Credit is at least P-3 or A-3 (short-term) or Baa3 or BBB- (long-term), respectively, and (ii) a Non-Taxability Opinion specifically addressing (I) the reduction or permanent withdrawal of the rating on the Bonds, if the Bonds are then rated, or (II) if the Bonds are not then rated, the fact that the short-term or long-term rating of the issuer of the proposed Substitute Letter of Credit is in a lower category than the applicable rating of the issuer of the Existing Letter of Credit;
(2) a Non-Taxability Opinion with respect to the proposed substitution, further opining to the effect that such Substitute Letter of Credit is authorized by this Lease Agreement and the Indenture; and
(3) an opinion of counsel for the issuer of such Substitute Letter of Credit to the effect that (A) such
Substitute Letter of Credit is a valid, binding and enforceable
obligation of the issuer thereof; (B) use of the proceeds of a
drawing on such Substitute Letter of Credit to pay Debt Service
on the Bonds would not be avoidable as a preferential payment
under Section 547 of the Bankruptcy Code recoverable under
Section 550 thereof should the Company or the IDB become a debtor
in a proceeding commenced thereunder; and (C) the Substitute
Letter of Credit and the Bonds are not required to be registered
under the Securities Act of 1933, as amended, and the Indenture
is not required to be qualified under the Trust Indenture Act of
1939, as amended.
(e) At the close of business on the effective date of any Substitute Letter of Credit, the Trustee shall return the Existing Letter of Credit to the issuer thereof, provided that any draws on such Existing Letter of Credit made on or prior to such date have been honored. Any draws that, under the terms of the Indenture, are to be made on the Letter of Credit on or prior to the effective date of a Substitute Letter of Credit shall be made under the Existing Letter of Credit. Not later than the close of business on the effective date of a Substitute Letter of Credit, the Bank shall deliver to the Trustee written evidence that all obligations of the Company to the issuer of the Existing Letter of Credit for reimbursement of amounts drawn thereunder shall have been satisfied, and upon receipt of such evidence any Bank Bonds held by the Tender Agent (as both said terms are defined in the Indenture) under the Indenture for the benefit of the issuer of the Existing Letter of Credit shall be delivered to, or upon the order of, the Company.
(f) The Company may, at its option, provide for the delivery to the Trustee of an Alternate Credit Facility to supplement the Letter of Credit or to provide credit enhancement in place of a Letter of Credit. Any such Alternate Credit Facility shall be payable to the Trustee for the benefit of the Holders of the Bonds and shall have administrative provisions satisfactory to the Trustee. The preconditions for delivery of an Alternate Credit Facility shall be identical in substance to those detailed in this Section for delivery of a Substitute Letter of Credit, with such modifications, however, as shall be appropriate to comport with the form and character of the Alternate Credit Facility.
[END OF ARTICLE V]
ARTICLE VI
Section 6.1 Events of Default. Each of the following shall be an Event of Default under this Lease Agreement:
(a) Failure by the Company to make when due any payment of Basic Rent and continuation of such failure for a period of five days after written notice thereof shall have been given to the Company by the Issuer or the Trustee.
(b) Failure by the Company to make any other payments due hereunder or to observe and perform any other covenant, condition or agreement on its part to be observed or performed and continuation of such failure for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Company by the Issuer or the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice can be corrected but not within the applicable period, it shall not constitute an Event of Default if corrective action is instituted by the Company within the applicable period and diligently pursued until the failure is corrected.
(c) The occurrence of an Act of Bankruptcy; provided, however, that if any such petition or proceeding is filed against the Company, such filing shall not constitute an Event of Default hereunder unless such petition shall remain undismissed for a period of 120 days after filing; provided further, however, that the occurrence of an Event of Default under this subsection and the exercise of remedies upon any such occurrence shall be subject to any applicable limitations of federal or state law affecting or precluding such occurrence or exercise during the pendency of or immediately following any liquidation or reorganization proceedings.
(d) There shall occur an Event of Default under and as defined in the Indenture or the Reimbursement Agreement.
(e) Any representation or warranty made by the Company herein or any statement in any report, certificate, financial statement or other instrument furnished in connection with this Lease Agreement, any other Company Document or the issuance and sale of the Bonds shall at any time prove to have been false or misleading in any material respect when made or given.
Section 6.2 Remedies on Default. Whenever any such Event of Default shall have happened and be continuing, the Trustee, as assignee of the Issuer and on its behalf, or (but only as to any Unassigned Rights) the Issuer, may:
(a) Declare all installments of Basic Rent payable under this Lease Agreement for the remainder of the Lease Term to be immediately due and payable;
(b) Re-enter and take possession of the Project, without terminating this Lease Agreement, exclude the Company from possession thereof and sublease the Project or any part thereof, for the account of the Company, holding the Company liable for the difference in the rent and other amounts payable by such sublessee and the Rentals and other amounts payable by the Company hereunder;
(c) Terminate this Lease Agreement, exclude the Company from possession of the Project and lease the same for the account of the Issuer, holding the Company liable for all Rentals due up to the date such lease is made for the account of the Issuer;
(d) Take whatever action at law or in equity may appear necessary or desirable to collect the Rentals then due, whether by declaration or otherwise, or to enforce any obligation, covenant or agreement of the Company under this Lease Agreement or imposed by any applicable law.
The Issuer may, without consent of the Trustee, waive any Event of Default hereunder with respect to Unassigned Rights, and the Trustee may not, without the written consent of the Issuer, waive any Event of Default hereunder with respect to Unassigned Rights.
The provisions of this Section are subject to the limitation that any rescission by the Trustee, pursuant to Section 602 of the Indenture, of its declaration that all of the Bonds are immediately due and payable also shall constitute an annulment of any corresponding declaration made pursuant to paragraph (a) of this Section and a waiver and rescission of the consequences of that declaration and of the Event of Default with respect to which that declaration had been made; provided that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon.
Section 6.3 No Remedy Exclusive. No remedy herein conferred upon the Trustee or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed expedient.
Section 6.4 Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should default under any of the provisions of this Lease Agreement and the Issuer or the Trustee (in its own name or in the name and on behalf of the Issuer) should employ attorneys or incur other expenses for the collection of Rentals or the enforcement of performance or observance of any obligation or agreement on the part of the Company herein contained, the Company will on demand therefor pay to the Issuer and/or the Trustee the reasonable fees of such attorneys and such other reasonable expenses so incurred; and such amounts shall bear interest at the Interest Rate for Advances from the date of demand to the date of payment.
Section 6.5 No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
[END OF ARTICLE VI]
ARTICLE VII
Section 7.1 Prior Agreements Canceled. This Lease Agreement shall completely and fully supersede all other prior agreements, both written and oral, between the Issuer and the Company relating to the acquisition, construction or equipping of the Project, except that (a) the provisions of the Inducement Agreement have been reaffirmed and incorporated by reference herein and (b) the Lease Term specified in the Original Lease shall continue to confer, with respect to the Existing Facilities, the exemptions described in Section 4.7 hereof. Notwithstanding the preceding sentence, any covenants or obligations made in the Original Lease which are expressly stated therein to survive the termination of the Original Lease shall (unless superseded by a comparable provision herein) so survive. No party to any such prior agreement (except as hereinabove referenced) shall hereafter have any rights thereunder but shall look solely to this Lease Agreement for definition and determination of all of its rights, liabilities and responsibilities relating to the Project.
Section 7.2 Issuer's Liabilities Limited.
(a) The covenants and agreements contained in this Lease Agreement shall never constitute or give rise to a personal or pecuniary liability or charge against the general credit of the Issuer, any members of the Issuer or of its Board of Directors or any of its servants, agents or employees, and in the event of a breach of any such covenant or agreement, no personal or pecuniary liability or charge payable directly or indirectly from the general assets or revenues of the Issuer shall arise therefrom. Nothing contained in this Section, however, shall relieve the Issuer from the observance and performance of the covenants and agreements on its part contained herein.
(b) No recourse under or upon any covenant or agreement of this Indenture shall be had against any past, present or future incorporator, officer or member of the Board of Directors of the Issuer, or any of its servants, agents or employees, or of any successor corporation, either directly or through the Issuer, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Lease Agreement is solely a corporate obligation, and that no personal liability whatever shall attach to, or is or shall be incurred by, any incorporator, officer or member of the Board of Directors of the Issuer or any successor corporation, or any servants, agents or employees of the Issuer or any successor corporation, or any of them, under or by reason of the covenants or agreements contained in this Lease Agreement.
(c) The liability of the Issuer for payment of any money due under any contract or purchase order entered into by or assigned to it, or for any other costs incurred in connection with the acquisition, construction, improvement or equipping of, or other work on, the Project shall be limited solely to (i) the available proceeds of the Bonds, if and when issued, (ii) any money made available to the Issuer for such purpose by the Company or others, and (iii) any revenues or
other receipts derived by the Issuer from the Project, subject to prior encumbrances. The Company shall cause a conspicuous notice to that effect to appear on any such contract or purchase order.
Section 7.3 Execution Counterparts. This Lease Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 7.4 Binding Effect. This Lease Agreement shall inure to the benefit of, and shall be binding upon, the Issuer, the Company and their respective successors and assigns.
Section 7.5 Amendments. So long as any of the Bonds are outstanding, this Lease Agreement may be amended only with the consent of the Issuer and the Trustee and subject to the provisions of Article VII of the Indenture.
Section 7.6 Severability. In the event any provision of this Lease Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 7.7 Notices. Unless otherwise provided herein, all notices, certificates or other communications hereunder shall be in writing, shall be deemed given and shall be sufficiently given when delivered or mailed by registered or certified mail, postage prepaid, or sent by overnight courier service, telegram, telefax or other instantaneous transmission device, addressed as follows:
(a) if to the Issuer, at The Industrial Development Board of the City of Montgomery, Post Office Box 79, Montgomery, Alabama 36101, Attention: Chairman of the Board of Directors, Telefax No. (334) 265-4745;
(b) if to the Company, at KINPAK INC., c/o Ocean Bio-Chem, Inc., 4041 S.W. 47th Avenue, Ft. Lauderdale, FL 33314, Attention: President, Telefax No. (954) 587-2813;
(c) if to the Trustee, at Regions Bank, 60 Commerce Street, 2nd Floor, Montgomery, Alabama 36104, Attention: Corporate Trust Department, Telefax No. (334) 230-6150; and
(d) if to the Bank, at First Union National Bank of Florida, 200
East Broward Boulevard, 9th Floor, Ft. Lauderdale, FL 33301, Attention:
Debbie Gilchrist, Telefax No. (954) 467-5331.
Any party may, by notice given hereunder and under the Indenture, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 7.8 Governing Law. This Lease Agreement shall be deemed to be a contract made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State.
[END OF ARTICLE VII]
IN WITNESS WHEREOF, the Issuer and the Company have caused this Lease Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the date first hereinabove set forth.
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
( S E A L )
By: /s/ R. E. Thornton, Jr.
------------------------------------
Chairman of its Board of Directors
ATTEST:
/s/ [ILLEGIBLE]
---------------------------
Secretary
|
KINPAK INC.
By: /s/ Peter G. Dornau
------------------------------------
President
WITNESS:
/s/ [ILLEGIBLE]
---------------------------
Ast Secretary
|
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that R. E. Thornton, Jr., whose signature as Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing Restated Lease Agreement and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Lease Agreement, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this 16th day of December, 1996.
/s/ [ILLEGIBLE]
-------------------------------
NOTARY PUBLIC, State at Large
( S E A L ) My Commission Expires: Oct. 8, 1999
|
ACKNOWLEDGMENT OF COMPANY
STATE OF FLORIDA )
BROWARD COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Peter G. Dornau, whose signature as President of KINPAK INC., an Alabama corporation, is signed to the foregoing Restated Lease Agreement and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Lease Agreement, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal of office this 19 day of December, 1996. Produced Fla D.L. HD650-667-39-223.
/s/ MAIA WALTER
-------------------------------
NOTARY PUBLIC, State at Large
( S E A L ) My Commission Expires: Oct. 2, 2000
|
THIS INSTRUMENT PREPARED BY:
Roy S. Goldfinger, Esq.
Roy S. Goldfinger, P.C.
P. O. Box 2007
Montgomery, Alabama 36102-2007
(334) 832-4567
EXHIBIT A
DESCRIPTION OF LEASED REALTY
EXHIBIT 10.2
FIRST SUPPLEMENTAL LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
AND
KINPAK INC.
DATED
AS OF
MARCH 1, 1997
ROY S. GOLDFINGER, P.C.
MONTGOMERY, ALABAMA
BOND COUNSEL
THIS INSTRUMENT AMENDS AND SUPPLEMENTS THAT CERTAIN RESTATED LEASE AGREEMENT, DATED AS OF DECEMBER 1, 1996 AND RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN RLPY BOOK 1718, PAGE 621, BETWEEN THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY AS LESSOR AND KINPAK INC. AS LESSEE. CERTAIN RIGHTS OF THE BOARD UNDER SAID LEASE AGREEMENT, AS AMENDED AND SUPPLEMENTED HEREBY, HAVE BEEN ASSIGNED TO REGIONS BANK, AS TRUSTEE, PURSUANT TO A TRUST INDENTURE DATED AS OF DECEMBER 1, 1996 AND RECORDED IN SAID PROBATE OFFICE IN RLPY BOOK 1718, PAGE 679, AS AMENDED AND SUPPLEMENTED BY A FIRT SUPPLEMENTAL TRUST INDENTURE OF EVEN DATE HEREWITH.
FIRST SUPPLEMENTAL LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
AND
KINPAK INC.
INDEX
-----
Page
----
PARTIES.......................................................................1
RECITALS......................................................................1
Section 1. Definitions.......................................................2
Section 2. Interpretation....................................................3
Section 3. Captions and Headings.............................................4
Section 4. Representations by the Issuer.....................................4
Section 5. Representations and Covenants by the Company - General............4
Section 6. Representations and Covenants by the Company - Tax-Related........4
Section 7. Actions Under Section 144(a)(4) of the Code.......................7
Section 8. Agreement to Issue Series 1997 Bonds; Application of Proceeds.....8
Section 9. Exclusion from Gross Income.......................................8
Section 10. Rebate Fund Calculations & Payments...............................9
Section 11. Investment of Fund Moneys.........................................9
Section 12. Depreciation Method..............................................10
Section 13. Effect on Original Lease.........................................10
Section 14. Execution Counterparts...........................................10
SIGNATURES...................................................................11
ACKNOWLEDGMENTS..............................................................12
CONSENT OF TRUSTEE...........................................................13
CONSENT OF BANK..............................................................14
EXHIBIT A - Description of Leased Realty
i
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STATE OF ALABAMA ) MONTGOMERY COUNTY ) |
FIRST SUPPLEMENTAL LEASE AGREEMENT
This FIRST SUPPLEMENTAL LEASE AGREEMENT made and entered into as of March 1, 1997 (this "First Supplemental Lease") , between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, its successors and assigns (the "Issuer"), a public corporation organized under the laws of the State of Alabama (the "State"), and KINPAK INC. (formerly known as Kinbright, Inc.), an Alabama corporation, its successors and assigns (the "Company"), under the circumstances summarized in the following recitals (the capitalized terms not defined in the recitals being used therein as defined in Article I hereof or, if not otherwise defined herein, in the Original Lease hereinafter mentioned, which definitions are hereby incorporated by reference herein):
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, expand, own, lease, and dispose of properties to the end that the Issuer may be able to promote industry and develop trade by inducing manufacturing, industrial, commercial and research enterprises to locate in the State, or to enlarge and expand existing enterprises, or both, and further the use of the agricultural products and natural resources of the State.
B. On October 17, 1979, the Issuer issued the Prior Bonds pursuant to the Act and applied the proceeds thereof to acquire, construct and equip the Existing Facilities. On December 20, 1996, the Issuer issued inter alia the Series 1996A Bonds pursuant to the Act and the Original Indenture, the proceeds of which were to be applied (1) to renovate and upgrade the Existing Facilities and (2) to acquire, construct and equip the New Facilities. The Old Facilities and the New Facilities (collectively, and as more fully described in the Original Lease, the "Project") are situated on the Leased Realty as described in Exhibit A hereto.
C. In the Original Lease and the Original Indenture, the Issuer agreed to issue the Refunding Obligations in order to refund the Series 1996A Bonds, such issuance and refunding to occur as soon as all of the requirements of the Code to assure the non-Taxable status of the Refunding Obligations could be satisfied, including without limitation the requirement of obtaining an allocation of the State ceiling for private activity bonds (an "Allocation").
D. The Issuer has on January 8, 1997 received an Allocation in the amount of $4,000,000, allowing the issuance on a non-Taxable basis of Refunding Obligations in such amount, being equal to the outstanding amount of the Series 1996A Bonds.
E. The Issuer has adopted the Bond Resolution providing for the issuance of the Series 1997 Bonds and for the amending and supplementing of the Original Lease, to be accomplished hereby, and of the Original Indenture, to be accomplished by the First Supplemental Indenture to be entered into simultaneously herewith.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties to this First Supplemental Lease hereby formally covenant, agree and bind themselves as follows:
Section 1. Definitions. In addition to the words and terms elsewhere defined in this First Supplemental Lease or the Original Lease, or by reference to the Indenture or other document, unless the context or use clearly indicates another or different meaning or intent:
"Bond" or "Bonds" means, collectively, the Series 1996B Bonds and the Series 1997 Bonds.
"Bond Fund" means, individually or collectively, as the context may require, the Bond Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Bond Fund in respect of the Series 1997 Bonds created in the First Supplemental Indenture.
"Bond Purchase Fund" means, individually or collectively, as the context may require, the Bond Purchase Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Bond Purchase Fund in respect of the Series 1997 Bonds created in the First Supplemental Indenture.
"Bond Resolution" means the resolution adopted by the Board of Directors of the Issuer on January 22, 1997 authorizing the issuance of the Series 1997 Bonds and the execution and delivery of the Issuer Documents and related documents.
"Company Documents" means, individually or collectively, as the context may require, each or all of this First Supplemental Lease, the Company's consent to the First Supplemental Indenture, such amendments and/or supplements to the Reimbursement Agreement, the Placement Agency Agreement, the Remarketing Agreement, the Mortgage, the Assignment and the Pledge Agreement as the Bank may deem necessary or desirable in connection with the issuance of the Series 1997 Bonds, and such other documents or instruments as the Company may enter into in order to consummate the transactions contemplated hereby and thereby.
"Construction Fund" means the Construction Fund created in the First Supplemental Indenture.
"First Supplemental Indenture" means the First Supplemental Trust Indenture, dated as of the first day of the month in which the Issue Date occurs, between the Issuer and the Trustee, amending and supplementing the Original Indenture in connection with the issuance of the Series 1997 Bonds.
"Indenture" means the Original Indenture, as amended and supplemented by the First Supplemental Indenture and as the same may hereafter be further amended and supplemented.
"Initial Letter of Credit" means the Letter of Credit issued by the Bank and delivered to the Trustee on December 20, 1996, as the same has been modified in connection with the issuance of the Series 1997 Bonds.
"Issue Date" means the date of the initial authentication and delivery of the Series 1997 Bonds.
"Issuer Documents" means, individually or collectively, as the context may require, each or all of this First Supplemental Lease, the First Supplemental Indenture, such amendments and/or supplements to the Placement Agency Agreement, the Mortgage and the Assignment as the Bank may deem necessary or desirable in connection with the issuance of the Series 1997 Bonds, and such other documents as the Issuer may enter into in order to consummate the transactions contemplated hereby and thereby.
"Lease Agreement" means the Original Lease, as amended and supplemented by this First Supplemental Lease and as the same may hereafter be further amended and supplemented.
"Original Indenture" means the Trust Indenture dated as of December 1, 1996 between the Issuer and the Trustee.
"Original Lease" means the Restated Lease Agreement dated as of December 1, 1996 between the Issuer and the Company.
"Placement Memorandum" means the Private Placement Memorandum to be dated on or before the Issue Date pertaining to the private placement of the Bonds.
"Rebate Fund" means, individually or collectively, as the context may require, the Rebate Fund in respect of the Series 1996B Bonds created in the Original Indenture and/or the Rebate Fund in respect of the Series 1997 Bonds created in the First Supplemental Indenture.
"Refunding Fund" means the Refunding Fund created in the First Supplemental Indenture.
Section 2. Interpretation. The provisions of Section 1.2 of the Original Lease are hereby ratified and reaffirmed, except that, unless the context indicates otherwise, the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this First Supplemental Lease; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this First Supplemental Lease.
All references in the Original Indenture and the Original Lease to the Refunding Obligations shall be construed to refer to the Series 1997 Bonds, which are and constitute the Refunding Obligations; and references in the Original Lease to the Refunding Date shall be construed to refer to the Issue Date (as herein defined).
Section 3. Captions and Headings. The captions and headings in this First Supplemental Lease are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
Section 4. Representations by the Issuer. The Issuer ratifies and reaffirms the representations on its part set forth in Section 2.1 of the Original Lease, which are hereby incorporated by reference herein, except that references therein to "Issuer Documents" shall be construed, for purposes of this First Supplemental Lease, to mean "Issuer Documents" as herein defined.
Section 5. Representations and Covenants by the Company - General. The
Company ratifies and reaffirms the representations on its part set forth in
Section 2.2 of the Original Lease, which are hereby incorporated by reference
herein, except that references therein to "Company Documents" shall be
construed, for purposes of this First Supplemental Lease, to mean "Company
Documents" as herein defined.
Section 6. Representations and Covenants by the Company - Tax-Related.
The Company ratifies and reaffirms the representations on its part set forth in
Section 2.3 of the Original Lease regarding the Series 1996B Bonds, which are
hereby incorporated by reference herein. The Company acknowledges that the
proceeds of the Series 1997 Bonds, which are being applied to refund the Series
1996A Bonds, are also treated conceptually as being applied to the purposes
financed or to be financed by the proceeds of the Series 1996A Bonds, and
therefore that the non-Taxable status of the Series 1997 Bonds is in part
dependent on the continuing compliance, before and after the Issue Date, on the
part of the Series 1996A Bonds with certain requirements and provisions of the
Code. As such, the Company hereby incorporates by reference herein the
representations and statements contained in Section 2.4 of the Original Lease
relating to the Series 1996A Bonds, reaffirms the accuracy and completeness
thereof, represents that it has complied and will comply with the
representations and covenants therein, and further represents or reiterates
that:
(a) The acquisition and renovation of the Existing Facilities and the acquisition and construction of the New Facilities were not commenced (within the meaning of Section 144 of the Code) prior to February 20, 1996, being the date of adoption by the Issuer of the Inducement Resolution.
(b) Ninety-five percent (95%) or more of the net proceeds (within the meaning of the Code) of the Series 1996A Bonds were intended to be, and ninety-five percent (95%) or more of such net proceeds of the Series 1997 Bonds will be, used (i) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 144(a)(1) of the Code and (ii) to provide a "manufacturing facility" and facilities "directly related and ancillary" thereto, all within the meaning of Section 144(a)(12)(C) of the Code; provided that no proceeds expended or to be expended to pay Issuance Costs in respect of the Series 1996A Bonds or the Series 1997 Bonds were or will be counted as being within such 95%. The Company has not requested or authorized and will not request or authorize any disbursement pursuant to Section 4.1 of the Original Lease, which, if paid, resulted or would result in less than 95% of such proceeds of the Series 1996A Bonds or the Series 1997 Bonds, respectively, being so used.
(c) Not more than 25% of the net proceeds of the Series 1996A Bonds were, and not more than 25% of such proceeds of the Series 1997 Bonds will be, used to provide such "directly related and ancillary" facilities, as referred to in subsection (b) of this Section 6, and all such facilities have been and shall be located on the same site as the "manufacturing facility" referred to in said subsection (b).
(d) Any office space financed with proceeds of the Series 1996A Bonds or to be financed with proceeds of the Series 1997 Bonds is located within the Building constituting part of the Project, and not more than a de minimis amount of the functions to be performed in such space is not directly related to the day-to-day operations at the Project.
(e) Other than the Series 1996B Bonds, there have never been issued any "issues of bonds" with respect to "facilities", both as described in Section 144(a)(2) of the Code, (i) which facilities are to be or have been used by the Company or any other "principal user" of the Project or any "related person" to the Company or such other "principal user", as such terms are used and defined in Sections 144(a)(2)(B) and 144(a)(3) of the Code, respectively, and which are located within the incorporated area of the City; and (ii) which issues of bonds had to be taken into account in determining the aggregate face amount of the Series 1996A Bonds, or would have to be taken into account in determining the aggregate face amount of the Series 1997 Bonds, in either case as provided in Section 144(a)(2) of the Code.
(f) For each "test-period beneficiary" (as defined in Section 144(a)(10)(D) of the Code, and including any "related person" thereto) of the Project, the sum of (1) the aggregate authorized face amount of the Series 1997 Bonds allocated in accordance with Section 144(a)(10)(C) of the Code to such beneficiary, and (2) the aggregate outstanding principal amount of any other tax-exempt facility-related bonds as described in Section 144(a)(10)(B)(ii) of the Code, wherever and whenever issued, allocated to such beneficiary, does not exceed $40,000,000.
(g) The Series 1996A Bonds were not, and the Series 1997 Bonds
are not being, issued to finance facilities which are within or part of
"a single building, an enclosed shopping mall or a strip of offices,
stores, or warehouses using substantial common facilities" (within the
meaning of Section 144(a)(9) of the Code), any other facilities within
or part of which have heretofore been financed with obligations issued
and still outstanding under Section 144(a) of the Code or under prior
Section 103(b)(6) of the 1954 Code.
(h) In accordance with Section 147(b) of the Code, the average maturity of the Series 1996A Bonds did not, and the average maturity of the Series 1997 Bonds does not, exceed 120% of the average reasonably expected economic life of the facilities being financed thereby.
(i) None of the proceeds of the Series 1996A Bonds were, and none of the proceeds of the Series 1997 Bonds will be, used to provide any airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises; or any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet sports facility (including handball or racquetball court), hot tub facility, suntan facility or racetrack.
(j) None of the net proceeds of the Series 1996A Bonds were, and
none of such proceeds of the Series 1997 Bonds will be, used (i) to
provide a facility the primary purpose of which is retail food and
beverage services (except grocery stores), automobile sales or service,
or the provision of recreation or entertainment; or (ii) directly or
indirectly to provide residential real property within the meaning of
Section 144(a)(5) of the Code; less than 25% of such net proceeds were
or will be used (directly or indirectly) for the acquisition of land
(or any interest therein); and none of such net proceeds were or will
be used (directly or indirectly) for the acquisition of land (or any
interest therein) for farming purposes within the meaning of Section
147 of the Code.
(k) No portion of the proceeds of the Series 1996A Bonds were, and no portion of the proceeds of the Series 1997 Bonds will be, used to acquire existing property or any interest therein unless such acquisition meets the rehabilitation requirements of Section 147(d) of the Code.
(l) In accordance with Section 147(g) of the Code, not more than two percent (2%) of the proceeds of the Series 1996A Bonds were applied to pay Issuance Costs in respect of the Series 1996A Bonds or the Series 1996B Bonds, and the Company represents that any such Issuance Costs in excess of such limitation were paid from funds other than Series 1996A Bond proceeds.
(m) The Series 1996A Bonds were not, and the Series 1997 Bonds are not, "federally guaranteed" within the meaning of Section 149(b) of the Code.
(n) Other than the Bond Fund, it is not anticipated, as of the
Issue Date, that there will be created any "sinking fund" or "pledged
fund", both within the meaning of Section 1.148-1(c) of the Treasury
Regulations, with respect to the Series 1997 Bonds; and the moneys in
the Bond Fund and in any other such sinking fund or pledged fund that
is deemed to have been created will be invested in compliance with
Section 148 of the Code.
(o) The information furnished by the Company and used by the Issuer in preparing, with respect to the Series 1997 Bonds, the certification pursuant to Section 148 of the Code and the information statement pursuant to Section 149(e) of the Code is accurate and complete as of the Issue Date.
(p) After the expiration of any applicable temporary period under Section 148(d)(3) of the Code, at no time during any Bond Year will the aggregate amount of gross proceeds of the Series 1997 Bonds invested in higher yielding investments exceed 150% of the debt service on the Series 1997 Bonds for such Bond Year. The aggregate amount of gross proceeds of the Series 1997 Bonds invested in higher yielding investments, if any, will be promptly and appropriately reduced as the amount of outstanding Series 1997 Bonds is reduced; provided, however, that the foregoing shall not require the sale or disposition of any higher yielding investments if such sale or disposition would result in a loss in excess of the amount which, had a payment to the United States pursuant to Section 407 of the Original Indenture then been due, would have been so payable but for such sale or disposition.
The Company will not pay or agree to pay to a party, other than the United States, any portion of the Excess Earnings (computed as of the most recent prior Computation Date) through a transaction that reduces the aggregate amount earned on all nonpurpose investments in which gross proceeds of the Series 1997 Bonds are invested or that results in a smaller profit or a larger loss than would have resulted in an arm's length transaction in which the yield on the nonpurpose investment was not subject to any restriction.
The terms "bond year", "gross proceeds", "higher yielding investments", "yield" and "debt service" have the meanings assigned to them for purposes of said Section 148.
(q) All of the net proceeds of the Series 1997 Bonds will be used exclusively to retire the Series 1996A Bonds within 90 days of the Issue Date.
Section 7. Actions Under Section 144(a)(4) of the Code. The Issuer is issuing the Series 1997 Bonds pursuant to an election made by it in the Bond Resolution, at the Company's request, under Section 144(a)(4) of the Code. In connection with that election, the Company represents and covenants that:
(a) The sum of:
(i) the principal amount of the Series 1997 Bonds,
(ii) the outstanding face amount of the any other "issues of bonds", as referred to in Section 6(e) hereof, and
(iii) the amount of capital expenditures ("Capital
Expenditures") with respect to "facilities" (as defined in
Section 144(a)(4)(B) of the Code) located within the
incorporated area of the City, other than capital expenditures
(A) mentioned in Section 144(a)(4)(C) of the Code, or
(B) financed or to be financed from the proceeds of the Series 1997 Bonds or the other "issues of bonds", to the extent such other issues are outstanding, referred to in clause (ii) hereof,
made during the three-year period preceding the Issue Date,
does not exceed $10,000,000.
(b) During the three-year period following the Issue Date, the Company shall not make or cause or permit to be made Capital Expenditures in an amount which would cause the interest on the Series 1997 Bonds to become Taxable.
(c) In the event, on account of a sublease, management contract or other agreement relating to the Project, or any portion thereof, permitted by the terms of the Lease Agreement and of the Mortgage, any
Person other than the Company becomes a "principal user" of the Project
(as referred to in Section 6(e) hereof), the Company shall promptly
advise the Trustee of the identity of such Person and furnish to the
Trustee a copy of such sublease, management contract or other
agreement. In connection with any such sublease, management contract or
other agreement, the Company will require by covenant that any
sublessee, manager or user who is a "principal user" of the Project and
any "related person" thereto also shall comply with the covenants set
forth in subsections (b) and (c) of this Section and in subsections (i)
and (j) of Section 6 hereof as if those covenants were made herein by
such sublessee, manager, user or "related person" thereto, and will
require that any such "principal user" who is a "test-period
beneficiary" with respect to the Project (as referred to in Section
6(f) hereof) shall, prior to its becoming such "principal user", make
to the Company and the Trustee the representation set forth in said
Section 6(f) as to itself and any "related person" thereto.
Section 8. Agreement to Issue Series 1997 Bonds; Application of Proceeds. In order to provide moneys to refund the Series 1996A Bonds, the Issuer will proceed as promptly as practicable with the issuance and sale of the Series 1997 Bonds in the aggregate principal amount of $4,000,000, bearing interest, maturing and having the other terms and provisions set forth in the Indenture. The proceeds of sale of the Series 1997 Bonds shall be deposited in the Refunding Fund, for immediate application to the redemption of the Series 1996A Bonds. On the Issue Date, the Trustee shall draw on the Letter of Credit, in accordance with the provisions thereof and of the Indenture, in an amount sufficient to pay accrued interest on the Series 1996A Bonds to such redemption date. The proceeds of sale of the Series 1996A Bonds, which were deposited in the Construction Fund created under the Original Indenture, shall be transferred and deposited in the Construction Fund created under the First Supplemental Indenture, for application to pay or reimburse the prior payment of Project Costs as in the Lease Agreement and the Indenture provided.
Section 9. Exclusion from Gross Income. The Company hereby represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken, all actions that may be required of it, alone or in conjunction with the Issuer, for the interest on the Series 1997 Bonds to be and remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code.
Section 10. Rebate Fund Calculations and Payments. Within 20 days after each Computation Date, the Company shall calculate with respect to the Series 1997 Bonds the amount of Excess Earnings as of that Computation Date and shall notify the Trustee of that amount, whereupon the Trustee shall notify the Company in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund created under the First Supplemental Indenture is less than the amount of Excess Earnings (computed by taking into account the amount or amounts, if any, previously paid to the United States pursuant to Section 407 of the Original Indenture and this Section), the Company shall, within five days after the date of the aforesaid notice, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to the Excess Earnings (computed as aforesaid); provided no such payment shall be required with respect to earnings on a bona fide debt service fund during any Bond Year when the gross earnings on such fund during the Bond Year were less than $100,000. The obligation of the Company to
make such payments shall remain in effect and be binding upon the Company notwithstanding the release and discharge of the Indenture or the termination of the Lease Agreement.
Notwithstanding the foregoing, the provisions of this Section 10 and
Section 407 of the Original Indenture shall not apply if and to the extent that
the Issuer, the Company and the Trustee receive a Non-Taxability Opinion
regarding the failure to comply therewith.
Section 11. Investment of Fund Moneys. At the written direction of the Company, any moneys held as part of the Bond Fund and the Bond Purchase Fund (except for moneys therein (i) held pursuant to Section 403 of the Original Indenture, (ii) to pay Unsurrendered Bonds (as defined in the Original Indenture) or (iii) representing proceeds of a drawing under the Letter of Credit, which moneys shall be either held in cash and not invested or invested only in Government Obligations with a maturity of not to exceed 30 days or fewer, as needed), the Rebate Fund and the Construction Fund shall be invested or reinvested by the Trustee in Eligible Investments (as defined in the Original Indenture). The Company will not issue, or permit to be issued on its behalf, any instructions for the investments of any moneys in the Construction Fund, the Rebate Fund, the Bond Purchase Fund or the Bond Fund if, as a result of any such investment being made in accordance therewith, the Series 1997 Bonds would be considered "arbitrage bonds" within the meaning of Section 148 of the Code or "hedge bonds" within the meaning of Section 149(g) of the Code. Additionally, the Issuer and the Company will continually comply with all provisions of the Code necessary in order to prevent the Series 1997 Bonds from being considered "arbitrage bonds" within the meaning of Section 148 of the Code or "hedge bonds" within the meaning of Section 149(g) of the Code.
Any officer of the Issuer having responsibility for issuing the Series 1997 Bonds, in conjunction with the Company or any officer, employee or agent of or consultant to the Company, shall give an appropriate certificate of the Issuer pursuant to said Section 148 of the Code, for inclusion in the transcript of proceedings for the Series 1997 Bonds, setting forth the reasonable expectations of the Issuer as of the Issue Date regarding the amount and use of the proceeds of the Series 1997 Bonds and the facts, estimates and circumstances on which those expectations are based. The Company shall provide the Issuer with, and the Issuer's certificate may be premised on, a certificate of an appropriate officer, employee or agent of or consultant to the Company setting forth the reasonable expectations of the Company as of the Issue Date regarding the amount and use of the proceeds of the Series 1997 Bonds and the facts, estimates and circumstances on which those expectations are based.
Section 12. Depreciation Method. The Company acknowledges that it is aware of the provisions of Section 168(g) of the Code and that it will comply with said provisions, if and to the extent the same are applicable.
Section 13. Effect on Original Lease. Except as hereby amended and supplemented, all other provisions of the Original Lease are hereby ratified and reaffirmed.
Section 14. Execution Counterparts. This First Supplemental Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Issuer and the Company have caused this First Supplemental Lease to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the date first hereinabove set forth.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MONTGOMERY
( S E A L )
By: /s/ R. E. Thornton, Jr.
-----------------------------------
Chairman of its Board of Directors
ATTEST:
/s/ [Illegible]
----------------------
[Assistant] Secretary
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KINPAK INC.
By: /s/ Peter G. Dornau
------------------------------------
President
WITNESS:
/s/ [Illegible]
----------------------
Assistant Secretary
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STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that R. E. Thornton, Jr., whose signature as Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing First Supplemental Lease Agreement and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this 25th day of February, 1997.
/s/ Sal E. Brinsfield, Jr.
---------------------------------------
NOTARY PUBLIC, State at Large
( S E A L ) My Commission Expires: October 8, 1999
|
STATE OF FLORIDA )
BROWARD COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Peter G. Dornau, whose signature as President of KINPAK INC., an Alabama corporation, is signed to the foregoing First Supplemental Lease Agreement and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal of office this 25th day of February, 1997.
/s/ Catherine Nimas
---------------------------------------
NOTARY PUBLIC, State at Large
( S E A L ) My Commission Expires:July 12, 1997
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REGIONS BANK, in its capacity as the Trustee (as defined in the Original Lease) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as an amendment of the Original Lease, all pursuant to Article VII of the Original Indenture.
IN WITNESS WHEREOF, REGIONS BANK has caused this consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
REGIONS BANK
By: /s/ Robert B. Rinehart -------------------------------------- Robert B. Rinehart Vice President/Corporate Trust Officer |
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
|
I, the undersigned Notary Public in and for said County in said State, hereby certify that Robert B. Rinehart, whose name as Vice President/Corporate Trust Officer of Regions Bank, a banking corporation in the State of Alabama, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of said Consent, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal of office this 25th day of February, 1997.
/s/ Lois Lorne Koski
-----------------------------------
NOTARY PUBLIC State at Large
(SEAL) My Commission Expires:
|
FIRST UNION NATIONAL BANK OF FLORIDA, in its capacity as the Bank (as defined in the Original Lease) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as an amendment of the Original Lease, all pursuant to Article VII of the Original Indenture.
IN WITNESS WHEREOF, FIRST UNION NATIONAL BANK OF FLORIDA has caused this Consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ Debbie Gilchrist
------------------------------------
Debbie Gilchrist
Vice President
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STATE OF FLORIDA )
:
BROWARD COUNTY )
|
I, the undersigned Notary Public in and for said County in said State, hereby certify that Debbie Gilchrist, whose name as Vice President of First Union National Bank of Florida, a national banking association, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of said Consent, she, as such officer and with full authority, executed the same voluntarily for and as the act of said association.
Given under my hand and seal of office this 26 day of February, 1997.
/s/ Melissa Lynn Andrews
NOTARY PUBLIC State at Large
(SEAL) My Commission Expires: Oct. 20, 1998
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THIS INSTRUMENT PREPARED BY:
Roy S. Goldfinger, Esq.
Roy S. Goldfinger, P.C.
P. O. Box 2007
Montgomery, Alabama 36102-2007
(334) 832-4567
EXHIBIT 10.3
SECOND SUPPLEMENTAL LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
AND
KINPAK INC.
RELATING TO
$3,500,000
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(KINPAK INC. PROJECT) SERIES 2002
DATED
AS OF
JULY 1, 2002
ROY S. GOLDFINGER, P.C.
MONTGOMERY, ALABAMA
BOND COUNSEL
THIS INSTRUMENT AMENDS AND SUPPLEMENTS THAT CERTAIN RESTATED LEASE AGREEMENT, DATED AS OF DECEMBER 1, 1996 AND RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN RLPY BOOK 1718, PAGE 621, AS HERETOFORE AMENDED AND SUPPLEMENTED BY A FIRST SUPPLEMENTAL LEASE AGREEMENT DATED AS OF MARCH 1, 1997 AND RECORDED IN SAID PROBATE OFFICE IN RLPY BOOK 1735, PAGE 209, BOTH BETWEEN THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY AS LESSOR AND KINPAK INC. AS LESSEE.
SECOND SUPPLEMENTAL LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
AND
KINPAK INC.
INDEX
Page
----
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1 Definitions................................................... 2
Section 1.2 Interpretation................................................ 10
Section 1.3 Captions and Headings......................................... 10
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations by the Issuer................................. 11
Section 2.2 Representations and Covenants by the Company - General........ 11
Section 2.3 Representations and Covenants by the Company - Tax-Related.... 12
Section 2.4 Actions under Section 144(a)(4) of the Code................... 14
Section 2.5 Depreciation Method........................................... 16
ARTICLE III
LEASE PROVISIONS
Section 3.1 Reaffirmation of Demise....................................... 17
Section 3.2 Lease Term.................................................... 17
Section 3.3 Rentals....................................................... 17
Section 3.4 Obligations of Company Unconditional.......................... 18
Section 3.5 Assignment of Second Supplemental Lease and Revenues;
Mortgaging of Project................................ 19
Section 3.6 Prepayment of Rent; Redemption of Bonds....................... 19
Section 3.7 Continued Applicability of Certain Provisions of
Original Lease....................................... 19
ARTICLE IV
PROVISIONS RESPECTING THE 2002 PROJECT
Section 4.1 Agreement to Complete 2002 Project............................ 21
Section 4.2 Issuance of Bonds; Application of Bond Proceeds;
Other Incentives..................................... 21
Section 4.3 Completion of the 2002 Project................................ 22
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ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1 Obligations With Respect to Disclosure........................ 24
Section 5.2 Company Not to Adversely Affect Exclusion from
Gross Income......................................... 24
Section 5.3 Covenants under Other Company Documents....................... 24
Section 5.4 Rebate Fund Calculations and Payments......................... 24
Section 5.5 Investment of Fund Moneys..................................... 25
Section 5.6 Letter of Credit; Alternate Credit Facility................... 25
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default............................................. 29
Section 6.2 Remedies on Default........................................... 29
Section 6.3 No Remedy Exclusive........................................... 30
Section 6.4 Agreement to Pay Attorneys' Fees and Expenses................. 30
Section 6.5 No Additional Waiver Implied by One Waiver.................... 30
Section 6.6 Remedies Subject to Applicable Law............................ 30
ARTICLE VII
MISCELLANEOUS
Section 7.1 Effect of Second Supplemental Lease........................... 32
Section 7.2 Execution Counterparts........................................ 32
Section 7.3 Binding Effect................................................ 32
Section 7.4 Severability.................................................. 32
Section 7.5 Amendments.................................................... 32
Section 7.6 Notices....................................................... 32
Section 7.7 Governing Law................................................. 33
Section 7.8 No Interest in Certain Moneys................................. 33
SIGNATURES................................................................. 34
ACKNOWLEDGMENTS............................................................ 35
CONSENT OF TRUSTEE......................................................... 36
CONSENT OF BANK............................................................ 37
EXHIBIT A - Description of Realty
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STATE OF ALABAMA MONTGOMERY COUNTY |
SECOND SUPPLEMENTAL LEASE AGREEMENT
THIS SECOND SUPPLEMENTAL LEASE AGREEMENT made and entered into as of July 1, 2002 (this "Second Supplemental Lease") between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY (the "Issuer"), a public corporation organized under the laws of the State of Alabama (the "State"), and KINPAK INC., an Alabama corporation, its successors and assigns (the "Company"), under the circumstances summarized in the following recitals (the capitalized terms not defined in the recitals being used therein as defined in Article I hereof or, if not otherwise defined herein, in the Existing Lease hereinafter mentioned, which definitions are hereby incorporated by reference herein):
A. The Issuer has been heretofore organized under and is authorized by the Act to acquire, enlarge, improve, expand, own, lease, and dispose of properties to the end that the Issuer may be able to promote industry and develop trade by inducing manufacturing, industrial, commercial and research enterprises to locate in the State, or to enlarge and expand existing enterprises, or both, and further the use of the agricultural products and natural resources of the State.
B. Pursuant to and in furtherance of the public purposes expressed in the Act, the Issuer heretofore on October 17, 1979 issued its revenue bonds (all of which have been paid in full as of the date hereof) and applied the proceeds thereof to pay costs of a "project", within the meaning of the Act, consisting of the acquisition, construction and equipping of certain manufacturing facilities (the "Initial Facilities") which the Issuer leased to Kinark Corporation, a Delaware corporation ("Kinark"), pursuant to a lease agreement dated as of December 1, 1979 and recorded in the office of the Judge of Probate of the County (the "Probate Office") in RLPY Book 461, Page 566.
C. The Company succeeded to the position of Kinark as lessee of the Initial Facilities pursuant to two successive Assignments and Assumptions of Lease, the first dated as of February 27, 1996 among the Issuer, Kinark and Bio-Chem and recorded in the Probate Office in RLPY Book 1639, Page 276, the second dated as of December 1, 1996 among the Issuer, Bio-Chem and the Company and recorded in the Probate Office in RLPY Book 1718, Page 613.
D. At the request of the Company, the Issuer heretofore on December 20, 1996 issued certain revenue bonds on a Taxable basis (the "1996 Bonds") and applied the proceeds thereof to pay costs of an additional "project", within the meaning of the Act, consisting of the renovation and improvement of the Initial Facilities and the acquisition, construction and equipping of an expansion
thereto (the "1996 Project"). In connection with the issuance of the 1996 Bonds, the Issuer and the Company entered into the Restated Lease Agreement dated as of December 1, 1996, described on the cover page hereof (the "Original Lease"). The Initial Facilities, as improved and expanded by the 1996 Project, constitute the "Existing Facilities".
E. On March 3, 1997, the Issuer issued the 1997 Bonds on a non-Taxable basis to refund all the 1996 Bonds, in connection with which the Issuer and the Company entered into the First Supplemental Lease Agreement dated as of March 1, 1997, described on the cover page hereof (the "First Supplemental Lease"). The Original Lease, as amended and supplemented by the First Supplemental Lease, is herein referred to as the "Existing Lease".
F. In May 2000, the Company proposed to the Issuer the undertaking of the 2002 Project, constituting yet another "project" within the meaning of the Act. In support of such proposal, the Issuer adopted the Inducement Resolution and the Bond Resolution and is now prepared to proceed with the issuance of the Bonds pursuant to the Indenture and to apply the proceeds thereof to pay or reimburse a portion of the Project Costs. In connection with the foregoing, it is both necessary and desirable that the parties further amend and supplement the Existing Lease by entering into this Second Supplemental Lease.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter contained, the parties to this Second Supplemental Lease hereby formally covenant, agree and bind themselves as follows:
ARTICLE I
Section 1.1 Definitions. In addition to the words and terms elsewhere defined in this Second Supplemental Lease or the Existing Lease, or by reference to the Indenture or other document, unless the context or use clearly indicates another meaning or intent:
"Abatement Agreement" means the Inducement and Abatement Agreement dated as of September 28, 2000 between the Issuer and the Company.
"Act" means Article 4, Chapter 54, Title 11 of the Code of Alabama of 1975, as amended.
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the
Company or by the Issuer, as debtor, under any applicable bankruptcy, reorganization, insolvency or other similar law now or hereafter in effect.
"Affiliate" means, as to any Person, any other Person that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, that Person.
"Alternate Credit Facility" means an irrevocable letter of credit, a surety bond, an insurance policy or other credit facility delivered to the Trustee pursuant to Section 5.6(f) of this Second Supplemental Lease.
"Bank" means Regions Bank, Montgomery, Alabama, and its successors and assigns, as issuer of the Initial Letter of Credit, until such time, if any, as a Substitute Letter of Credit or Alternate Credit Facility shall become effective pursuant to Section 5.6 hereof, and thereafter "Bank" shall mean the issuer or provider of such Substitute Letter of Credit or Alternate Credit Facility.
"Basic Rent" means that portion of the Rentals payable hereunder in the amounts and at the times sufficient, giving effect to any credit herein provided for, to pay Debt Service on or Purchase Price of the Bonds.
"Bio-Chem" means Ocean Bio-Chem, Inc., a Florida corporation, its successors and assigns, of which the Company is a wholly-owned subsidiary.
"Bond" or "Bonds" means the $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 of the Issuer to be issued under the Indenture.
"Bond Counsel" means Roy S. Goldfinger, P.C., Montgomery, Alabama, or any other attorney or firm of attorneys nationally recognized on the subject of municipal bonds and acceptable to the Trustee.
"Bond Fund" means the Bond Fund created in the Indenture.
"Bond Payment Date" means each date (including any date fixed for redemption of Bonds) on which Debt Service is payable.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated July 22, 2002 among the Company, the Issuer and the Underwriter relating to the Bonds.
"Bond Purchase Fund" means the Bond Purchase Fund created in the Indenture.
"Bond Resolution" means the resolution adopted by the Board of Directors of the Issuer on July 11, 2002 authorizing the issuance of the Bonds and the execution and delivery of the Issuer Documents and related documents.
"Bond Year" means, during the period the Bonds remain outstanding, the
annual period currently provided for the computation of Excess Earnings under
Section 148(f) of the Code (except that the first and last Bond Years may be
less than 12 months long).
"Building" means, collectively, all structures and improvements now existing or hereafter expanded, constructed, reconstructed or made on the Realty, as they may at any time exist.
"Business Day" means any day other than (i) a Saturday or Sunday; (ii) a day on which banking institutions are required or authorized to remain closed in (A) the city in which the principal office of the Trustee is located, (B) the city in which the principal office of the Remarketing Agent is located, (C) the city in which the office of the Bank where drawings under the Letter of Credit are to be made is located; or (iii) a day on which the payment system of the Federal Reserve System is not operational.
"City" means the City of Montgomery, Alabama.
"Code" means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include relevant applicable temporary, proposed or final regulations thereunder and under any predecessor provisions of the Internal Revenue Code of 1954, as amended.
"Company Documents" means, individually or collectively, as the context may require, each or all of this Second Supplemental Lease, the Bond Purchase Agreement, the Credit Agreement, the Remarketing Agreement, the Mortgage, the Security Agreement and such other documents as the Company may enter into in order to consummate the transactions contemplated hereby and thereby.
"Completion Date" means the date of completion of the 2002 Project to be established by the Company in accordance with Section 4.3(b) hereof.
"Computation Date" means the last day of each fifth Bond Year and the date on which the final payment in full of all the Bonds is made.
"County" means Montgomery County, Alabama.
"Construction Fund" means the Construction Fund created in the Indenture.
"Credit Agreement" means the Credit Agreement of even date herewith among the Company, Bio-Chem, the Subsidiaries and the Bank, as issuer of the Initial Letter of Credit, as the same may hereafter be amended or supplemented; or any comparable agreement relating to a Substitute Letter of Credit or Alternate Credit Facility.
"DTC" means The Depository Trust Company, New York, New York.
"Debt Service" means, for any period or payable at any time, the principal, interest and any premium due on the Bonds for that period or payable at that time.
"Determination of Taxability" means, with respect to the Bonds, a determination that interest on any Bond is Taxable because of (i) the receipt by the Issuer, any Holder or any member of an "affiliated group", as that term is defined in Section 1504 of the Code, to which a Holder also belongs, of a "30-day letter", within the meaning of Treasury Regulations Section 601.105(d)(1)(iv), proposing a determination to that effect; or (ii) receipt by the Trustee or any Holder of a written opinion of Bond Counsel that there is substantial likelihood that such interest is Taxable; subject, however, in all such cases to the right on the part of the Company set forth in the Indenture to contest the same.
"Equipment" means any item of equipment, fixtures and tangible personal property located in or on the Building or the Realty, and any item of equipment, fixtures or tangible personal property acquired in substitution therefor or as a renewal or replacement thereof pursuant to the provisions of the Lease Agreement.
"Event of Default" means an Event of Default specified and defined in
Section 6.1 hereof.
"Excess Earnings" means, with respect to the proceeds of the Bonds, as of each Computation Date, an amount equal to the sum of (a) plus (b) where:
(a) is the excess of
(i) the aggregate amount earned from the Issue Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (a)), taking into account any gain or loss on the disposition of nonpurpose investments, over
(ii) the amount that would have been earned if such nonpurpose investments (other than amounts attributable to an excess described in this clause (a)) had been invested at a rate equal to the yield on the Bonds; and
(b) is any income attributable to the excess described in clause
(a), taking into account any gain or loss on the disposition of
nonpurpose investments.
The sum of (a) plus (b) shall be determined in accordance with Sections 148(f)(2) and 148(f)(4) of the Code. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
"Existing Letter of Credit" means, as of any particular time, the Letter of Credit or Alternate Credit Facility held by the Trustee at that time.
"Extension Letter of Credit" means a Substitute Letter of Credit from the same Bank which issued the Existing Letter of Credit, substantially identical to the Existing Letter of Credit except that it has a Stated Termination Date at least one year later than that of the Existing Letter of Credit.
"Final Determination" means a Determination of Taxability deemed final by reason of the termination or forfeiture of the Company's right under the Indenture to contest the same.
"Government Obligations" means (a) direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged, or (b) obligations issued by a Person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of, premium, if any, and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation by the United States of America.
"Governmental Authority" means the United States, any state or political subdivision thereof and any court, agency, department, commission, board, bureau or instrumentality of any of the foregoing.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond is registered on the books kept and maintained by the Registrar for the registration and transfer of Bonds.
"Indenture" means the Trust Indenture of even date herewith between the Issuer and the institution therein named as Trustee, as the same may hereafter be supplemented or amended.
"Independent Engineer" means an engineer or engineering firm registered and qualified to practice the profession of engineering under the laws of the State and not in the full-time employment of the Issuer or the Company.
"Inducement Resolution" means the resolution adopted by the Board of Directors of the Issuer on May 30, 2000 preliminarily approving the 2002 Project and the issuance of the Bonds.
"Initial Letter of Credit" means the initial Letter of Credit in the form attached to the Credit Agreement as Exhibit C and caused by the Company to be delivered to the Trustee on or prior to the Issue Date.
"Interest Payment Date" means, so long as the Bonds are outstanding, the first Business Day of each March, June, September and December, commencing on the first Business Day of September, 2002.
"Interest Rate for Advances" means the rate per annum which is two percent per annum (2%) in excess of (a), so long as Regions Bank remains the provider of the Letter of Credit, the Commercial Base Rate (as defined in the Credit Agreement), or (b), in the event an institution other than Regions Bank provides the Letter of Credit or Alternate Credit Facility, the "prime rate" as published from time to time in The Wall Street Journal.
"Issuance Costs" means, with respect to bonds, costs associated with the issuance thereof, including, but not limited to, (a) any placement agent fee or underwriters' spread; (b) counsel fees (including Bond Counsel, underwriters' counsel, Issuer's counsel, company counsel in the case of borrowings such as those for exempt facilities, as well as any other specialized counsel fees incurred in connection with the borrowing); (c) financial advisor fees; (d) rating agency fees; (e) trustee fees; (f) paying agent and certifying and authenticating agent fees related to issuance of such obligations; (g) accountant fees; (h) printing costs (for such obligations and of any preliminary and final offering materials); (i) costs incurred in connection with the required public approval process; and (j) costs of engineering and feasibility studies necessary to the issuance of such obligations.
"Issue Date" means the date of the initial authentication and delivery of the Bonds.
"Issuer Documents" means, individually or collectively, as the context may require, each or all of this Second Supplemental Lease, the Indenture, the Bond Purchase Agreement, the Remarketing Agreement, the Mortgage and such other documents as the Issuer may enter into in order to consummate the transactions contemplated hereby and thereby.
"Lease Agreement" means the Existing Lease as amended and supplemented by the Second Supplemental Lease and as the same may hereafter be further amended and supplemented.
"Lease Term" means the duration of the leasehold estate created in the Existing Lease as amended and extended in Section 3.2 hereof.
"Letter of Credit" means the Initial Letter of Credit and, unless the context or use indicates another or different meaning or intent, any Substitute Letter of Credit.
"Letter of Credit Substitution Date" means any Business Day specified by the Company pursuant to Section 5.6 hereof on which the Company proposes (other than by reason of an imminent Conversion Date or Seven-Day Rate Recommencement Date (as both said terms are defined in the Indenture) or the Stated Termination Date of the Existing Letter of Credit) to furnish a Substitute Letter of Credit (other than an Extension Letter of Credit) or Alternate Credit Facility in place of the then Existing Letter of Credit.
"Mandatory Tender" means a tender of Bonds required to be made by the provisions of the Indenture.
"Maximum Exemption Period", as found and determined in the Abatement Agreement, means a period of ten years, expiring on the tenth anniversary of the Issue Date.
"Moody's" means Moody's Investors Service, New York, New York.
"Necessary Authorizations" means, with respect to any given action or effect, all authorizations, consents, approvals, permits, licenses and exemptions of, filings and registrations with, and reports to, all Governmental Authorities which are necessary or required to accomplish such action or achieve such effect.
"1997 Bonds" means the Issuer's $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 issued under the 1996 Indenture.
"1996 Indenture" means the Trust Indenture dated as of December 1, 1996, as amended, between the Issuer and the 1996 Trustee, pursuant to which the 1997 Bonds were issued.
"1996 Trustee" means Regions Bank, Montgomery, Alabama, in its capacity as trustee under the 1996 Indenture.
"Non-Taxability Opinion" means, with respect to one or more given events or prospective events, an opinion of Bond Counsel to the effect that the occurrence of such event or events will not adversely affect the non-Taxable status of the interest on the Bonds.
"Optional Tender" means a tender of Bonds at the option of the Holder thereof pursuant to the provisions of the Indenture.
"Project" means the Existing Facilities as expanded and improved by the 2002 Project, consisting of the Realty, the Building and the Equipment (as the same may at any time exist), leased and to be leased to the Company pursuant to
the Lease Agreement for use as manufacturing facilities for the manufacture of aftermarket products for consumer marine, recreational vehicle and automotive markets or for such other purposes as may be consistent with the provisions of the Act and the Code and permitted by the Lease Agreement.
"Project Costs" means those costs of the 2002 Project (including
expenses incurred in connection with the issuance of the Bonds as limited in
Section 2.3(n) hereof) for which payment may be made as provided herein.
"Project Supervisor" means any agent of the Company, designated in writing by the Company, authorized to act for and on behalf of the Company in connection with any and all matters pertaining to the 2002 Project.
"Purchase Price" means, with respect to any Bond tendered for purchase by Optional Tender or Mandatory Tender, 100% of the principal amount thereof plus accrued interest thereon, if any, from the last preceding Interest Payment Date to the Tender Date.
"Rating Agency" means Moody's or S&P, their respective successors and assigns, and any other nationally recognized securities rating agency.
"Realty" means the real estate and interests therein constituting the site of the Building, as described in Exhibit A hereto, less any such real estate, interests in real estate and other rights as may be released from the Lease Agreement pursuant to the provisions thereof or taken by the exercise of the power of eminent domain.
"Rebate Fund" means the Rebate Fund created in the Indenture.
"Registrar" means the Registrar as defined in the Indenture.
"Related Documentation" means the documentation required to accompany a Substitute Letter of Credit or Alternate Credit Facility in accordance with the provisions of Section 5.6(d) hereof.
"Remarketing Agent" means the Remarketing Agent appointed in accordance with the Indenture, currently, Merchant Capital, L.L.C., Montgomery, Alabama.
"Remarketing Agreement" means the Remarketing Agreement of even date herewith among the Issuer, the Company, the Trustee and the Remarketing Agent, as the same may hereafter be amended or supplemented.
"Rentals" means the amounts required to be paid by the Company pursuant to Section 3.3 hereof.
"Revenues" means (a) the Basic Rent; (b) all other moneys received or to be received by the Issuer or the Trustee in respect of payment of the Basic Rent, including without limitation, moneys and investments in the Bond Fund or
Bond Purchase Fund and received by the Trustee from drawings made under the Letter of Credit or as a result of the remarketing of any Bonds, but excluding any moneys and investments in the Rebate Fund; (c) any moneys and investments in the Construction Fund; and (d) all income and profit from the investment of the foregoing moneys.
"S&P" means Standard & Poor's, New York, New York.
"SEC" means the Securities and Exchange Commission.
"State" means the State of Alabama.
"Stated Termination Date" means the date on which a Letter of Credit is stated to expire, unless extended in accordance with its terms.
"Subsidiaries" means the following wholly-owned subsidiaries of Bio-Chem, all of which are Florida corporations: Star-Brite Distributing, Inc.; Star Brite Distributing (Canada), Inc.; and Star Brite Automotive, Inc.
"Substitute Letter of Credit" means an irrevocable letter of credit delivered to the Trustee in substitution for the Existing Letter of Credit, in compliance with the requirements of Section 5.6(c) hereof and accompanied by the Related Documentation.
"Taxable" means, when used in reference to Bonds, that interest thereon is includable in the gross income of any Holder thereof for any reason other than the fact that such Holder is a "substantial user" of the Project or a "related person" as those terms are used in Section 147(a) of the Code. Interest on Bonds shall not be deemed "Taxable" because interest is includable in any calculation of income for purposes of any alternative minimum tax, any foreign branch profits tax or any other type of taxation other than the regular federal tax imposed on gross income.
"Tender Date" means any date for Optional Tender or Mandatory Tender of the Bonds, as the case may be.
"Trustee" means the trustee at the time serving as such under the Indenture, initially Regions Bank, Montgomery, Alabama.
"Trustee's Office" means the office from time to time designated by the Trustee, or its successor in trust, as its principal corporate trust office for purposes of discharging its trusts and duties under this Indenture, which office as of the Issue Date is located at 60 Commerce Street, Montgomery, Alabama.
"Trustee's Time" means Central Standard Time or Central Daylight Time, as the case may be.
"2002 Project" means a "project", within the meaning of the Act, consisting of (1) the construction of an approximately 70,000 square-foot addition to the Existing Facilities, and (2) the acquisition and installation within said addition and the Existing Facilities of new and additional manufacturing machinery and equipment.
"Unassigned Rights" means all of the rights of the Issuer to receive payments or reimbursement pursuant to Section 3.3(c) hereof, to be held harmless and indemnified pursuant to Section 5.3 of the Original Lease, to be reimbursed for attorney's fees and expenses pursuant to Section 6.4 hereof, to receive notices under the Lease Agreement and to give or withhold consent to amendments, supplements, modifications or termination of the Lease Agreement and of the Indenture pursuant to Section 7.5 hereof and Article VII of the Indenture, respectively.
"Underwriter" means Merchant Capital, L.L.C., Montgomery, Alabama.
"Unimproved", when used with reference to the Realty, means any part or parts of the Realty upon the surface of which no part of the Building rests.
Section 1.2 Interpretation. Any reference herein to the Issuer or to any member of the Board of Directors or officer thereof includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of the Code of Alabama of 1975, or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time; provided, however, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this provision, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Trustee or the Company under this Second Supplemental Lease, the Bonds, the Indenture or any other instrument or document entered into in connection with any of the foregoing, including without limitation, any alteration of the obligation to pay Debt Service in the amount and manner, at the times, and from the sources provided in the Indenture, except as permitted therein.
Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms "hereof", "hereby", "herein", "hereto", "hereunder" and similar terms refer to this Second Supplemental Lease; and the term "hereafter" means after, and the term "heretofore" means before, the effective date of this Second Supplemental Lease. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise.
Section 1.3 Captions and Headings. The captions and headings in this Second Supplemental Lease are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.
[END OF ARTICLE I]
ARTICLE II
Section 2.1 Representations by the Issuer. The Issuer makes the following representations as the basis for the undertakings on its part herein contained:
(a) The Issuer is duly incorporated under the provisions of the Act. Under the provisions of the Act the Issuer has the power to enter into the transactions contemplated by the Issuer Documents and to carry out its obligations thereunder. The Existing Facilities constitute and the 2002 Project will constitute a "project" within the meaning of the Act. The Issuer is not in default under any of the provisions contained in its Certificate of Incorporation or under the laws of the State. By proper corporate action the Issuer has duly authorized the execution, delivery and performance of the Issuer Documents.
(b) The Issuer hereby finds and determines that the issuance of the Bonds, the construction, acquisition and installation of the 2002 Project and the continued leasing of the Project to the Company are in furtherance of the objects and purposes of the Issuer and of the Act and will promote industry, develop trade and further the use of agricultural products and natural resources of the State.
(c) The execution, delivery and performance by the Issuer of the Issuer Documents are within the Issuer's corporate powers, and each such document, when executed and delivered, will constitute a legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by the application of general principles of equity.
Section 2.2 Representations and Covenants by the Company - General. The Company represents and covenants that:
(a) It is a corporation for profit duly organized, validly existing and in good standing under the laws and duly qualified to transact business in the State. The Company is the wholly-owned subsidiary of Bio-Chem.
(b) The execution, delivery and performance by the Company of the Company Documents are within the Company's powers, have been duly authorized by all necessary corporate action, and do not and will not violate the Company's Articles of Incorporation or By-Laws, both as
most recently amended, any resolution or other corporate action of the Company's Board of Directors, any provision of law, any rule or regulation to which it is subject, any order of any court or other governmental agency, or any indenture, agreement or other instrument to which the Company is a party or by which the Company or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company.
(c) The Company intends to operate the Project as manufacturing facilities for the manufacture of aftermarket products for consumer marine, recreational vehicle and automotive markets throughout the period the Bonds and the 1997 Bonds are outstanding and knows of no reason why the Project will not be so operated. If, in the future, there is a cessation of that operation, it will use its best efforts to resume that operation or accomplish an alternate use by the Company or others which will be consistent with the Act and the Code.
(d) To the best of its knowledge, the Company has obtained and will use its best efforts to maintain all Necessary Authorizations for the construction, acquisition and installation of the 2002 Project, as applicable, and has obtained or will when and as necessary obtain and will use its best efforts to maintain all Necessary Authorizations for the operation of the Project and for the due execution, delivery and performance by the Company of each of the Company Documents. In particular, all building permits required for any expansion or renovation of the Building have been or will when and as necessary be obtained and, once obtained, will be maintained in full force and effect, and all utility services (including water supply, storm and sanitary sewerage, electric and telephone facilities) necessary for the expansion and operation of the Building for the intended purposes are or will be available.
(e) Each of the Company Documents, when executed and delivered, will constitute a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by the application of general principles of equity.
(f) There is no pending or, to the best of its knowledge, threatened action, investigation or proceeding before any court, governmental agency or arbitrator against or affecting the Company or any Affiliate (i) to restrain or enjoin or seeking to restrain or enjoin the issuance or delivery of the Bonds or the collection or
payment of Revenues, (ii) in any way contesting or affecting any authority for the issuance of the Bonds or the validity of the Bonds or any of the Company Documents, or (iii) in any way contesting the existence or powers of the Company.
Section 2.3 Representations and Covenants by the Company - Tax-Related. The Company represents and covenants that:
(a) The acquisition and construction of the 2002 Project were not commenced (within the meaning of Section 144 of the Code) prior to April 1, 2000.
(b) Ninety-five percent (95%) or more of the net proceeds (within the meaning of the Code) of the Bonds will be used (i) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 144(a)(1) of the Code and (ii) to provide a "manufacturing facility", including facilities "directly related and ancillary" thereto, all within the meaning of Section 144(a)(12)(C) of the Code; provided that no proceeds expended to pay Issuance Costs in respect of the Bonds shall count as being within such 95%. The Company will not request or authorize any disbursement pursuant to Section 4.1 hereof, which, if paid, would result in less than 95% of such proceeds of the Bonds being so used.
(c) Not more than 25% of the 95% net proceeds of the Bonds referred to in subsection (b) of this Section 2.3 will be used to provide such "directly related and ancillary" facilities, as referred to in said subsection, and all such facilities shall be located on the same site as the "manufacturing facility" referred to in said subsection.
(d) Any office space being financed with proceeds of the Bonds is located within the Building constituting part of the Project, and not more than a de minimis amount of the functions to be performed in such space is not directly related to the day-to-day operations at the Project.
(e) Other than the 1997 Bonds, there have never been issued any
"issues of bonds" with respect to "facilities", both as described in
Section 144(a)(2) of the Code, (i) which facilities are to be or have
been used by the Company or any other "principal user" of the Project
or any "related person" to the Company or such other "principal user",
as such terms are used and defined in Sections 144(a)(2)(B) and
144(a)(3) of the Code, respectively, and which are located within the
incorporated area of the City; and (ii) which issues of bonds would
have to be taken into account in determining the aggregate face amount
of the Bonds as provided in Section 144(a)(2) of the Code.
(f) For each "test-period beneficiary" (as defined in Section 144(a)(10)(D) of the Code, and including any "related person" thereto) of the Project, the sum of (1) the aggregate authorized face amount of the Bonds and the 1997 Bonds allocated in accordance with Section 144(a)(10)(C) of the Code to such beneficiary, and (2) the aggregate outstanding principal amount of any other tax-exempt facility-related bonds as described in Section 144(a)(10)(B)(ii) of the Code, wherever and whenever issued, allocated to such beneficiary, does not exceed $40,000,000.
(g) The Bonds are not being issued to finance facilities which are within or part of "a single building, an enclosed shopping mall or a strip of offices, stores, or warehouses using substantial common facilities" (within the meaning of Section 144(a)(9) of the Code), any other facilities within or part of which have heretofore been financed with obligations issued and still outstanding under Section 144(a) of the Code or under prior Section 103(b)(6) of the Internal Revenue Code of 1954, as amended.
(h) In accordance with Section 147(b) of the Code, the average maturity of the Bonds does not exceed 120% of the average reasonably expected economic life of the facilities being financed thereby.
(i) None of the proceeds of the Bonds will be used to provide (i)
any private or commercial golf course, country club, massage parlor,
tennis club, skating facility (including roller skating, skateboard and
ice skating), racquet sports facility (including any handball or
racquetball court), hot tub facility, suntan facility, racetrack,
airplane, skybox or other private luxury box or health club facility;
(ii) any facility primarily used for gambling; (iii) any store the
principal business of which is the sale of alcoholic beverages for
consumption off premises; (iv) any facilities the primary purpose of
which is retail food and beverage services (except grocery stores),
automobile sales or service, or the provision of recreation or
entertainment; or (v) residential real property within the meaning of
Section 144(a)(5) of the Code.
(j) Less than 25% of the proceeds of the Bonds will be used directly or indirectly to acquire land or any interest therein, and none of the proceeds of the Bonds will be used to provide land which was, is or is to be used for farming purposes.
(k) No portion of the proceeds of the Bonds will be used to acquire existing property or any interest therein unless such acquisition meets the requirements of Section 147(d) of the Code.
(l) No amounts that are required to be paid to the United States pursuant to Section 407 of the Indenture will be used to make any payment to a party other than the United States through a transaction or a series of transactions that reduces the amount earned on any investment property or that results in a smaller profit or a larger loss on any investment property than would have resulted in an arm's length transaction in which the yield on the Bonds was not relevant to either party to the transaction.
The terms "investment property" and "yield" have the meanings assigned to them for purposes of Section 148 of the Code.
(m) The information furnished by the Company and used by the
Issuer and Bond Counsel in preparing (i) the certifications pursuant to
Section 148 of the Code referred to in Section 5.5 hereof and (ii) the
information required pursuant to Section 149(e) of the Code, is
accurate and complete as of the Issue Date.
(n) In accordance with Section 147(g) of the Code, not more than two percent (2%) of the proceeds of the Bonds shall be applied to pay Issuance Costs in respect of the Bonds, and the Company covenants to pay any such Issuance Costs in excess of such limitation from funds other than Bond proceeds.
(o) The Bonds are not "federally guaranteed" within the meaning of Section 149(b) of the Code.
Section 2.4 Actions under Section 144(a)(4) of the Code. The Issuer is issuing the Bonds pursuant to an election made by it, at the Company's request, under Section 144(a)(4) of the Code. In connection with that election, the Company represents and covenants that:
(a) The sum of:
(i) the principal amount of the Bonds,
(ii) the outstanding face amount of other "issues of bonds", if any, referred to in Section 2.3(e) hereof, and
(iii) the amount of capital expenditures ("Capital
Expenditures") with respect to "facilities" (as defined in
Section 144(a)(4)(B) of the Code) located within the incorporated
area of the City, other than capital expenditures
(A) mentioned in Section 144(a)(4)(C) of the Code, or
(B) financed or to be financed from the proceeds of the Bonds or the other "issues of bonds", to the extent such other issues are outstanding, referred to in clause (ii) hereof, made during the three-year period preceding the Issue Date, does not exceed $10,000,000.
(b) During the three-year period following the Issue Date, the Company shall not make or cause or permit to be made Capital Expenditures in an amount which would cause the interest on the Bonds to become Taxable.
(c) In the event, on account of a sublease, management contract or other agreement relating to the Project, or any portion thereof, permitted by the terms of the Lease Agreement, any Person other than the Company becomes a "principal user" of the Project (as referred to in Section 2.3(e) hereof), the Company shall promptly advise the Trustee of the identity of such Person and furnish to the Trustee a copy of such sublease, management contract or other agreement. In connection with any such sublease, management contract or other agreement, the Company will require by covenant that any sublessee, manager or user who becomes a "principal user" of the Project (and any "related person" thereto) also shall comply with the covenants set forth in subsections (a), (b) and (c) of this Section and in subsections (b), (c), (d), (i), (j) and (k) of Section 2.3 hereof as if those covenants were made herein by such sublessee, manager, user or "related person" thereto. The Company will further require that any such "principal user" who is a "test-period beneficiary" with respect to the Project (as referred to in Section 2.3(f) hereof) shall, prior to its becoming such "principal user", make to the Company and the Trustee the representation set forth in said Section 2.3(f) as to itself and any "related person" thereto.
Section 2.5 Depreciation Method. The Company acknowledges that it is aware of the provisions of Section 168(g) of the Code and that it will comply with said provisions, if and to the extent the same are applicable.
[END OF ARTICLE II]
ARTICLE III
Section 3.1 Reaffirmation of Demise. The Issuer has heretofore demised and leased the Existing Facilities to the Company, and the Issuer and the Company do hereby ratify and reaffirm the demise and lease thereof and of the 2002 Project, collectively comprising the Project, to the Company in accordance with the provisions of the Lease Agreement and upon and subject to the terms, conditions and provisions of the Lease Agreement, to each of which the Issuer and the Company and each of them do hereby separately and severally covenant and agree.
Section 3.2 Lease Term. Section 3.2 of the Original Lease is hereby amended such that the Lease Term, which commenced (as to the Company) on or about February 27, 1996 (when the Company, through Bio-Chem, succeeded to the position of Kinark as lessee of the Initial Facilities), shall be extended to continue until midnight of June 1, 2017, subject to the provisions of the Original Lease permitting earlier termination (which are hereby reaffirmed).
The Company has had possession of the Existing Facilities pursuant to the provisions of the Existing Lease and shall continue undisturbed in its possession of the Project pursuant to the Lease Agreement, subject to the inspection and other rights reserved therein. So long as the Company performs and observes all the covenants and agreements on its part contained in the Lease Agreement, it shall peaceably and quietly have, hold and enjoy the Project during the Lease Term subject to all the terms and provisions hereof.
Section 3.3 Rentals.
(a) In consideration of the lease of the Project, and in addition to and independent of the rental obligations under Section 3.3 of the Original Lease, the Company does hereby covenant and agree to pay to the Trustee, for the account of the Issuer, Basic Rent in respect of the Bonds in such amounts and at such times as shall be sufficient and timely to pay all Debt Service on or Purchase Price of such Bonds as the same shall be or become due and payable, whether at maturity, upon redemption, tender, acceleration or otherwise.
There shall be credited, (i) against any installment of such Basic Rent due on a Bond Payment Date in respect of Debt Service or on a Tender Date in respect of Purchase Price, any amount on deposit in the Bond Fund or the Bond Purchase Fund, respectively, by not later than 1:30 p.m. Trustee's Time on such Bond Payment Date or Tender Date, as the case may be, representing proceeds of a drawing under the Letter
of Credit pursuant to the Indenture; and (ii) against any installment
of such Basic Rent due on a Tender Date in respect of Purchase Price,
any amount on deposit in the Bond Purchase Fund by not later than 11:00
a.m. Trustee's Time on such Tender Date representing proceeds of the
remarketing of Bonds pursuant to the Indenture.
(b) The Company reaffirms and ratifies that it remains the intention of the parties hereto that the Lease Agreement be a net lease and that, until the Bonds are fully paid, Basic Rent shall be due in such amounts and at such times as shall be required, giving effect to any credits hereinabove provided for, to pay Debt Service on and Purchase Price of the Bonds as the same shall become due and payable. Any amount of Basic Rent not timely paid shall (to the extent legally enforceable) bear interest from the due date thereof until paid at the Interest Rate for Advances.
(c) In further consideration of the lease of the Project, the Company covenants and agrees to pay as additional Rental hereunder: (i) any and all costs and expenses incurred or to be paid by the Issuer in connection with the issuance and delivery of the Bonds or otherwise related to actions taken by the Issuer under this Second Supplemental Lease or the Indenture; and (ii) to the Trustee and the other Fiduciaries (as defined in the Indenture), their respective fees, charges and expenses for acting as such under the Indenture, as and when the same become due, provided that the Company may, without creating a default hereunder, contest in good faith the necessity for any extraordinary services or extraordinary expenses and the reasonableness of any such fees, charges or expenses.
Following the due date or the payment or incurring, as applicable, of any such costs, expenses or liability described in clauses (i) or (ii) above, such additional Rentals are payable upon written demand therefor, and if not paid upon such demand, shall bear interest from the due date or the date paid or incurred, as applicable, at the Interest Rate for Advances.
Section 3.4 Obligations of Company Unconditional. The obligation of the
Company to pay the Rentals (subject to its right to contest certain Rental under
Section 3.3(c)(ii) hereof), to make all other payments provided for herein and
to perform and observe the other agreements and covenants on its part herein
contained shall be absolute and unconditional, irrespective of any rights of
setoff, recoupment or counterclaim it might otherwise have against the Issuer or
any other Person. The Company will not suspend or discontinue any such payment
or fail to perform and observe any of its other agreements and covenants
contained herein or terminate the Lease Agreement for any cause whatsoever,
including, without limiting the generality of the foregoing, any failure to
complete the 2002 Project, any acts or circumstances that may constitute an
eviction or constructive eviction, failure of consideration or commercial frustration of purpose, any damage to or destruction of the Project, the invalidity of any provision of the Lease Agreement, the taking by eminent domain of title to or the right to temporary use of all or any of the Project, any change in the tax or other laws of the United States of America, the State or any political subdivision of either thereof, or any failure of the Issuer to perform and observe any agreement or covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with the Lease Agreement. Notwithstanding the foregoing, the Company may, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceeding, or take any other action involving third persons which the Company deems reasonably necessary, in order to secure or protect its rights of use and occupancy and its other rights under the Lease Agreement. Nothing contained herein shall be construed to be a waiver of any rights which the Company may have against the Issuer under the Lease Agreement or under any provision of law.
Section 3.5 Assignment of Second Supplemental Lease and Revenues; Mortgaging of Project. Except for Unassigned Rights, the Issuer has assigned its interest in and pledged any moneys receivable under this Second Supplemental Lease to the Trustee as security for payment of Debt Service on and Purchase Price of the Bonds. The Issuer has also joined in the Mortgage, for the purpose of securing the payment and performance by the Company of its obligations to the Bank under the Credit Agreement; provided that any assignment of its interest in and pledge of moneys receivable under this Second Supplemental Lease pursuant to the Mortgage shall be subordinated to the assignment and pledge to the Trustee pursuant to the Indenture. The Trustee shall have all rights and remedies herein accorded to the Issuer (except for Unassigned Rights) and any reference herein to the Issuer shall be deemed, with the necessary changes in detail, to include the Trustee, and the Trustee and the Holders are deemed to be third party beneficiaries of the covenants and agreements of the Company contained in this Second Supplemental Lease. Pursuant to Section 3.7 of the Original Lease, the Company hereby agrees and consents to the foregoing assignments and to the joining by the Issuer in the Mortgage. The remaining provisions of Section 3.7 of the Original Lease are hereby reaffirmed.
Section 3.6 Prepayment of Rent; Redemption of Bonds. The Company shall have the right at its option to prepay at any time all or any part of the Basic Rent payable under this Second Supplemental Lease. All Basic Rent so prepaid shall be credited against future payments of Basic Rent as the same become due unless prior to the date on which such credit is to be taken the Company directs such moneys to be used to purchase or redeem Bonds in the manner and to the extent provided in the Indenture. The amount necessary to redeem Bonds shall be deemed to include, in addition to the redemption price, all expenses necessary to effect the redemption and, if all Bonds are to be redeemed, all other
obligations under the Indenture, including the Trustee's and other Fiduciaries' fees, charges and expenses. The Company acknowledges that any such redemption to be effected in respect of the Bonds must be effected from a draw under the Letter of Credit, and that the Company must procure and furnish to the Issuer and the Trustee the written consent of the Bank thereto. At least 45 days prior to the proposed redemption date, the Company shall notify the Issuer and the Trustee, in writing, as to the proposed redemption, and the Issuer, upon receiving such notice, shall be obligated and hereby agrees to take all necessary action to have the payment made for the purpose of redeeming Bonds applied to the redemption of as many Bonds as such payment will permit under the redemption provisions of the Bonds and the Indenture.
Section 3.7 Continued Applicability of Certain Provisions of Original Lease. The provisions of Section 3.5 of the Original Lease pertaining to permissible subleasing by the Company are hereby reaffirmed, with such changes to the terms used in said Section 3.5 as are necessary to encompass this Second Supplemental Lease and the Project, provided that the term "Mortgage" as used therein shall mean the Mortgage as defined herein. The provisions of Section 3.9(a) of the Original Lease pertaining to the Company's option to terminate the Lease Agreement and purchase the Project are hereby reaffirmed, provided that the term "Bonds" as used therein shall mean the 1997 Bonds and the Bonds, collectively. The provisions of Section 3.10 of the Original Lease pertaining to the Company's option to purchase any Unimproved part of the Realty are hereby reaffirmed, provided that the term "Bonds" as used therein shall mean the 1997 Bonds and the Bonds, collectively. The provisions of Sections 3.11, 3.12 and 7.2 of the Original Lease are hereby reaffirmed.
The provisions of Sections 4.2, 4.3, 4.6 and 4.9 of the Original Lease
are hereby reaffirmed, with such changes to the terms used in said Sections as
are necessary to encompass the Bonds, the 2002 Project and this Second
Supplemental Lease; moreover, the term "Mortgage" as used therein shall mean the
Mortgage as defined herein. The provisions of Sections 4.7 of the Original Lease
are still effective as to the Existing Facilities; the items comprising the 2002
Project, however, shall, under present law, and by reason of the Abatement
Agreement, be exempt from all ad valorem taxation levied by the State or by any
political or taxing subdivision thereof, except such taxation (if any) as is
levied for educational purposes, but only until the expiration of the Maximum
Exemption Period. The provisions of Section 4.8 of the Original Lease, relating
to insurance required to be carried in respect of the Project, are hereby
reaffirmed, with appropriate changes to terms as hereinabove described;
provided, however, that the term "Bank" as used therein shall mean the Bank as
defined herein; provided further, however, that the Bank shall be named as loss
payee on any policy required to be carried pursuant to subsection (a) of said
Section 4.8. The provisions of Sections 4.10 and 4.11 of the Original Lease,
relating to damage, destruction and condemnation and the right of the Company to
purchase the Project as a result thereof, are hereby reaffirmed, again with any necessary changes in definitions to encompass this transaction; provided, however, that, so long as any of the Bonds or the 1997 Bonds remain outstanding, references in said Sections to the Trustee shall be deemed replaced by references to the Bank. The provisions of Section 4.12 of the Original Lease pertaining to additions to and removals from the Project of Equipment are hereby reaffirmed, except that the terms "Bank and "Mortgage" as used therein shall mean the Bank and the Mortgage as defined herein, respectively.
The provisions of Sections 5.1, 5.2 and 5.3 of the Original Lease are hereby reaffirmed, with such changes to the terms used in said Sections as are necessary to encompass the 2002 Project, the Bonds and the Trustee.
Whether or not certain provisions of the Original Lease are hereinabove enumerated, to the extent the subject matter thereof is amended or superseded by, inconsistent with or otherwise covered by provisions of this Second Supplemental Lease, the latter shall govern.
[END OF ARTICLE III]
ARTICLE IV
Section 4.1 Agreement to Complete 2002 Project. Pursuant to the Inducement Resolution and the Abatement Agreement and hereby reaffirmed, the Issuer authorized the Company to commence the planning, design, construction, acquisition and installation of the elements comprising the 2002 Project. In accordance with such authorization, the Company is proceeding with such construction, acquisition and installation, which the Company shall complete as promptly as is practicable.
Section 4.2 Issuance of Bonds; Application of Bond Proceeds; Other Incentives. In order to provide funds for payment or reimbursement of a portion of the Project Costs, the Issuer will proceed as promptly as practicable with the issuance and sale of the Bonds in the aggregate principal amount of $3,500,000, bearing interest, maturing and having the other terms and provisions set forth in the Indenture. The proceeds of sale of the Bonds shall be deposited in the Construction Fund, for application to payment or reimbursement of Project Costs, which shall, subject to any applicable restrictions or limitations prescribed under the Code, include:
(a) The acquisition, construction and installation, as applicable, of all real or personal properties constituting a "project" within the meaning of the Act or necessary in connection therewith, including architect's and engineer's fees incidental thereto;
(b) The purchase price of any land or any part of a building that may be acquired by purchase;
(c) All expenses in connection with the authorization, sale and issuance of revenue bonds to finance such acquisition, construction and installation;
(d) Interest on such revenue bonds for a reasonable time prior to, during and for a period not exceeding two years after completion of, such acquisition, construction and installation; and
(e) Any other costs necessary or incidental for the foregoing or permitted, either expressly or impliedly, under the provisions of the Act.
Payments from the Construction Fund shall be made in all such cases only upon advance submission of each payment requisition to the Trustee bearing the written approval of the Issuer, the Company and the Bank, and subject to the requirements of the Indenture and the Credit Agreement with respect to withdrawals from the Construction Fund.
In the event that, after reasonable request made to the Issuer by the Company, the Issuer fails or refuses to issue or execute a payment requisition for payment from the Construction Fund of any item that may under the terms of this Second Supplemental Lease be paid from the Construction Fund (including reimbursement to the Company as aforesaid), the Project Supervisor, who is hereby irrevocably appointed as agent for the Issuer for such purposes, may issue and execute, also for and in the name and behalf of the Issuer and without any approval of any officer, employee or other agent thereof, such payment requisition for payment from the Construction Fund.
Any payment requisition for any item of Project Costs not described in,
or the cost for which item is other than as described in, the information
furnished by the Company pursuant to Section 2.3(m) hereof for purposes of the
Issuer's preparation of Information Return Form 8038 filed by the Issuer in
connection with the issuance of the Bonds as required by Section 149(e) of the
Code, shall identify such items with particularity and shall be accompanied by
(i) evidence satisfactory to Bond Counsel that the average reasonably expected
economic life of the facilities being financed by the Bonds is not less than
5/6ths of the average maturity of the Bonds and (ii) a Non-Taxability Opinion
with respect to such disbursement.
In the Inducement Resolution, the Issuer agreed to cooperate with the Company in applying for and obtaining any Incentives (as defined therein) for which the Company and the 2002 Project may be eligible. The Issuer hereby reaffirms such commitment and in particular agrees, when so requested by the Company, to apply for an industrial development grant in accordance with Article 2, Chapter 10, Title 41, Code of Alabama 1975, as amended. All proceeds of such a grant (if and when received) shall be deposited in the Construction Fund and shall be applied to pay or to reimburse the Company for paying such Project Costs as the Company shall requisition in accordance with the provisions hereof and of the Indenture.
Section 4.3 Completion of the 2002 Project.
(a) If moneys representing proceeds of the Bonds and from other sources shall be insufficient to pay fully all sums required to complete the 2002 Project, the Company shall be obligated to complete the construction, acquisition and installation of the 2002 Project at its own expense and the Company shall pay any such deficiency either by making payments directly to the construction contractor or contractors or the suppliers of materials and equipment or by paying into the Construction Fund the moneys necessary to complete the 2002 Project, in which case the Issuer will proceed to complete the 2002 Project and the cost thereof will be paid from the Construction Fund. The Company shall save the Issuer whole and harmless from any obligation to pay any amount in excess of the money available therefor in the Construction Fund. The Company shall not by reason of the payment of such excess costs from its own funds (whether by direct payment thereof or payment
into the Construction Fund) be entitled to any diminution in the payment of Rentals hereunder.
(b) The Company shall on behalf of the Issuer notify the Trustee of the Completion Date of the 2002 Project by a certificate signed by the Project Supervisor stating:
(i) the date on which the construction, acquisition and installation of the 2002 Project were substantially completed (the "Completion Date");
(ii) that all other facilities necessary in connection with the 2002 Project have been acquired, constructed, improved and equipped;
(iii) that the construction, acquisition and installation of the 2002 Project and the acquisition, construction, improvement and equipping of those other facilities have been accomplished in such a manner as to conform with all applicable zoning, planning, buildings, environmental and other similar governmental regulations;
(iv) that all costs of that acquisition, construction, improvement and equipping then or theretofore due and payable have been paid; and
(v) the amounts (if any) which the Trustee shall retain in the Construction Fund for the payment of Project Costs not yet due or for liabilities which the Company is contesting or which otherwise should be retained.
Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. The Issuer and the Company will cooperate one with the other in causing such certificate to be furnished to the Trustee.
(c) Any moneys remaining in the Construction Fund after the Completion Date, other than amounts specified pursuant to Section 4.3(b)(v) above, shall, at the direction of the Project Supervisor, promptly be (i) used to acquire, construct, install, equip or improve such additional real or personal property in connection with the Project as is designated by the Project Supervisor and the acquisition, construction, installation, equipment and improvement of which will be permitted under the Act and the Code; (ii) paid into the Bond Fund to be applied to the payment of interest on the Bonds or the redemption of Bonds in accordance with their terms, and, until such application, to be invested as provided in Section 5.5 hereof at a yield not exceeding the yield on the Bonds; or (iii) applied to any combination of the foregoing as is provided in that direction. Any direction to apply
moneys from the Construction Fund pursuant to this subsection (c) shall be accompanied by a statement of the yield at which such moneys are to be invested and for what period and by a Non-Taxability Opinion with respect to such application and further opining to the effect that such application is permitted under the Act.
(d) Upon completion of the Project or at any time prior thereto upon the request of the Company, so long as it is not in default hereunder, the Issuer will assign to the Company all warranties and guaranties that may run to the Issuer of all contractors, subcontractors, suppliers, architects and engineers for the furnishing of labor, materials or equipment or for supervision or design in connection with the Project and any rights or causes of action against any of the foregoing.
[END OF ARTICLE IV]
ARTICLE V
Section 5.1 Obligations with Respect to Disclosure. For purposes of SEC Rule 15c2-12 (with terms used in this Section having the meanings given to them or incorporated by reference in said Rule), based on the fact that the authorized denominations of the Bonds are $100,000 and any integral multiple of $5,000 in excess thereof, the Company represents, to the best of its knowledge and belief, that the sale of the Bonds on the Issue Date is not subject to the requirements of said Rule.
Section 5.2 Company Not to Adversely Affect Exclusion from Gross Income. The Company hereby represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken, all actions that may be required of it, alone or in conjunction with the Issuer, for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code.
The Company agrees that it shall give prompt written notice to the Trustee of any event, circumstance or occurrence which to its knowledge causes or might cause a Determination of Taxability.
Section 5.3 Covenants Under Other Company Documents. The Company shall observe and perform all covenants and agreements to be observed or performed by the Company under the other Company Documents.
Section 5.4 Rebate Fund Calculations and Payments. Within 20 days after each Computation Date, the Company shall calculate with respect to the Bonds the amount of Excess Earnings as of that Computation Date and shall notify the Trustee of that amount, whereupon the Trustee shall notify the Company in writing of the amount then on deposit in the Rebate Fund. If such amount is less than the amount of Excess Earnings (computed by taking into account the amount or amounts, if any, previously paid to the United States pursuant to Section 407 of the Indenture and this Section), the Company shall, within five days after the date of the aforesaid notice, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to the Excess Earnings (computed as aforesaid); provided no such payment shall be required with respect to earnings on a bona fide debt service fund during any Bond Year when the gross earnings on such fund during the Bond Year were less than $100,000. The obligation of the Company to make such payments shall remain
in effect and be binding upon the Company notwithstanding the release and discharge of the Indenture or the termination of the Lease Agreement.
Notwithstanding the foregoing, the provisions of this Section 5.4 and
Section 407 of the Indenture shall not apply if and to the extent that the
Issuer, the Company and the Trustee receive a Non-Taxability Opinion regarding
the failure to comply therewith.
Section 5.5 Investment of Fund Moneys. At the written direction of the
Company, any moneys held as part of the Bond Fund and the Bond Purchase Fund
(except for moneys therein (i) held pursuant to Section 403 of the Indenture,
(ii) to pay Unsurrendered Bonds (as defined in the Indenture) or (iii)
representing proceeds of a drawing under the Letter of Credit, which moneys
shall be either held in cash and not invested or invested only in Government
Obligations with a maturity of not to exceed 30 days or fewer, as needed), the
Rebate Fund and the Construction Fund shall be invested or reinvested by the
Trustee in Eligible Investments (as defined in the Indenture). The Company will
not issue, or permit to be issued on its behalf, any instructions for the
investments of any moneys in the Construction Fund, the Rebate Fund, the Bond
Purchase Fund or the Bond Fund if, as a result of any such investment being made
in accordance therewith, the Bonds would be considered "arbitrage bonds" within
the meaning of Section 148 of the Code or "hedge bonds" within the meaning of
Section 149(g) of the Code. Additionally, the Issuer and the Company will
continually comply with all provisions of the Code necessary in order to prevent
the Bonds from being considered "arbitrage bonds" within the meaning of Section
148 of the Code or "hedge bonds" within the meaning of Section 149(g) of the
Code.
Any officer of the Issuer having responsibility for issuing the Bonds, in conjunction with the Company or any officer, employee or agent of or consultant to the Company, shall give an appropriate certificate of the Issuer pursuant to said Section 148 of the Code, for inclusion in the transcript of proceedings for the Bonds, setting forth the reasonable expectations of the Issuer as of the Issue Date regarding the amount and use of the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based. The Company shall provide the Issuer with, and the Issuer's certificate may be premised on, a certificate of an appropriate officer, employee or agent of or consultant to the Company setting forth the reasonable expectations of the Company as of the Issue Date regarding the amount and use of the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based.
(a) On or before the Issue Date, the Company shall cause to be delivered to the Trustee the Initial Letter of Credit. The Company may at any time and from time to time, but shall not be required to,
deliver a Substitute Letter of Credit to the Trustee in substitution for the Existing Letter of Credit.
(b) The following provisions define the Company's alternative obligations with respect to a Substitute Letter of Credit, depending on the event prompting delivery thereof:
(1) The Company shall give the Trustee at least 45 days' prior written notice of a proposed Letter of Credit Substitution Date, which notice shall specify (A) the name of the issuer of the proposed Substitute Letter of Credit, (B) the branch address, contact person and phone number with respect to such issuer, (C) any short-term or long-term ratings assigned by any Rating Agency to the obligations of such issuer, (D) the name of the counsel to such issuer which shall render the opinion required pursuant to subsection (d)(3) of this Section 5.6 and (E) the proposed Letter of Credit Substitution Date. Not fewer than 10 days prior to a proposed Letter of Credit Substitution Date, the Company shall deliver to the Trustee a binding commitment for the issuance of such Substitute Letter of Credit and the Related Documentation.
(2) At least 65 days prior to the Stated Termination Date
of the Existing Letter of Credit, the Company shall, unless it
has determined to let the Bonds become subject to Mandatory
Tender in connection with such Stated Termination Date, furnish
or cause to be furnished to the Trustee either (A) a binding
commitment from the Bank for the issuance of an Extension Letter
of Credit, or (B) a binding commitment for the issuance of a
Substitute Letter of Credit from the issuer thereof, accompanied
by the information set forth in the first sentence of subsection
(b)(1) of this Section 5.6.
(3) If the Company intends that the Bonds be secured by a Letter of Credit following a Proposed Conversion Date (as defined in the Indenture), the Company shall, at the time it gives the notice required under Section 202(g) of the Indenture, furnish or cause to be furnished to the Trustee a binding commitment for the issuance of a Substitute Letter of Credit from the issuer thereof, accompanied by the information set forth in the first sentence of subsection (b)(1) of this Section 5.6.
(c) Each Substitute Letter of Credit delivered to the Trustee pursuant to this Section must meet the following criteria:
(1) if such Substitute Letter of Credit will be effective during a Seven-Day Rate Period (as defined in the Indenture), such Substitute Letter of Credit shall be substantially in the same form and of the same tenor as the Initial Letter of Credit,
including provision for the payment of interest on the Bonds (or the interest portion of the purchase price of Bonds tendered, or deemed tendered, for purchase) for a period of 120 days at the maximum rate per annum, specified in such Substitute Letter of Credit, at which there has been calculated the amount available to be drawn thereunder with respect to interest on the Bonds;
(2) if such Substitute Letter of Credit will be effective during a Yearly Fixed Rate Period or the Permanent Fixed Rate Period (both as defined in the Indenture), such Substitute Letter of Credit shall be substantially in the same form and of the same tenor as the Initial Letter of Credit, except that such Substitute Letter of Credit must provide for the payment of (A) interest on the Bonds (or the interest portion of the purchase price of Bonds tendered, or deemed tendered, for purchase) for a period of 120 days at the rate per annum to be borne by the Bonds during such Yearly Fixed Rate Period or Permanent Fixed Rate Period, plus (B) an amount equal to 2% of the then principal amount of the Bonds, to enable the Trustee to pay the redemption premium on the Bonds in the event of the optional redemption thereof;
(3) the effective date of such Substitute Letter of Credit shall be (A) the Conversion Date, (B) the first Business Day of the calendar month in which the Stated Termination Date is to occur or (C) the Letter of Credit Substitution Date (which may in no event be later than the first Business Day of the calendar month in which the Stated Termination Date is to occur), whichever shall have been the corresponding event prompting delivery of the Substitute Letter of Credit; and
(4) such Substitute Letter of Credit must have a Stated Termination Date that is not sooner than one year after its effective date.
(d) Each Substitute Letter of Credit (other than any Extension Letter of Credit) delivered to the Trustee shall be accompanied by the following Related Documentation, if and to the extent applicable:
(1) written evidence from each Rating Agency (if any) that maintains a rating with respect to the Bonds of (A) the fact that such Rating Agency has reviewed the proposed Substitute Letter of Credit, (B) the rating or ratings, if any, assigned or to be assigned by such Rating Agency to the issuer of the proposed Substitute Letter of Credit and (C) the rating or ratings, if any, that such Rating Agency has assigned or would assign to the
Bonds (if any such ratings be then sought) by reason of the substitution;
(2) a Non-Taxability Opinion further opining to the effect that such Substitute Letter of Credit is authorized by this Second Supplemental Lease and the Indenture; and
(3) an opinion of counsel for the issuer of such Substitute Letter of Credit to the effect that (A) such Substitute Letter of Credit is a valid, binding and enforceable obligation of the issuer thereof; (B) use of the proceeds of a drawing on such Substitute Letter of Credit to pay Debt Service on or Purchase Price of the Bonds would not constitute an avoidable preference under Section 547 of the Bankruptcy Code recoverable under Section 550 thereof in the event of the filing of a petition thereunder by or against the Company or by the Issuer; and (C) the Substitute Letter of Credit and the Bonds are not required to be registered under the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended.
(e) At the close of business on the effective date of any Substitute Letter of Credit, the Trustee shall return the Existing Letter of Credit to the issuer thereof, provided that any draws on such Existing Letter of Credit made on or prior to such date have been honored. Any draws that, under the terms of the Indenture, are to be made on the Letter of Credit on or prior to the effective date of a Substitute Letter of Credit shall be made under the Existing Letter of Credit. Not later than the close of business on the effective date of a Substitute Letter of Credit, the Bank shall deliver to the Trustee written evidence that all obligations of the Company to the issuer of the Existing Letter of Credit for reimbursement of amounts drawn thereunder shall have been satisfied, and upon receipt of such evidence any Bank Bonds held by the Tender Agent (as both said terms are defined in the Indenture) under the Indenture for the benefit of the issuer of the Existing Letter of Credit shall be delivered to, or upon the order of, the Company.
(f) The Company may, at its option, provide for the delivery to the Trustee of an Alternate Credit Facility to supplement the Letter of Credit or to provide credit enhancement in place of a Letter of Credit. Any such Alternate Credit Facility shall be payable to the Trustee for the benefit of the Holders and shall have administrative provisions satisfactory to the Trustee. The preconditions for delivery of an Alternate Credit Facility shall be identical in substance to those detailed in this Section for delivery of a Substitute Letter of Credit, with such modifications, however, as shall be appropriate to comport with the form and character of the Alternate Credit Facility.
[END OF ARTICLE V]
ARTICLE VI
Section 6.1 Events of Default. Each of the following shall be an Event of Default under this Second Supplemental Lease:
(a) Failure by the Company to make when due any payment of Rentals or any other amount that has become due and payable under this Second Supplemental Lease.
(b) Failure by the Company to observe and perform any other covenant, condition or agreement on its part to be observed or performed under this Second Supplemental Lease and continuation of such failure for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Company by the Issuer or the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice can be corrected but not within the applicable period, it shall not constitute an Event of Default if corrective action is instituted by the Company within the applicable period and diligently pursued until the failure is corrected.
(c) The occurrence of an Event of Default under and as defined in
(1) the Existing Lease, (2) the Indenture or (3) any other Company
Document.
Section 6.2 Remedies on Default. Whenever any such Event of Default shall have happened and be continuing, the Trustee, as assignee of the Issuer and on its behalf, or (but only as to any Unassigned Rights) the Issuer, may:
(a) Declare all installments of Basic Rent payable under this Second Supplemental Lease for the remainder of the Lease Term to be immediately due and payable;
(b) Re-enter and take possession of the Project, without terminating the Lease Agreement, exclude the Company from possession thereof and sublease the Project or any part thereof, for the account of the Company, holding the Company liable for the difference in the rent and other amounts payable by such sublessee and the Rentals and other amounts payable by the Company hereunder;
(c) Terminate the Lease Agreement, exclude the Company from possession of the Project and lease the same for the account of the
Issuer, holding the Company liable for all Rentals due up to the date such lease is made for the account of the Issuer;
(d) Take whatever action at law or in equity may appear necessary or desirable to collect the Rentals then due, whether by declaration or otherwise, or to enforce any obligation, covenant or agreement of the Company under the Lease Agreement or imposed by any applicable law.
The provisions of this Section are subject to the further limitation that any rescission by the Trustee, pursuant to Section 602 of the Indenture, of its declaration that all of the Bonds are immediately due and payable also shall constitute an annulment of any corresponding declaration made pursuant to paragraph (a) of this Section and a waiver and rescission of the consequences of that declaration and of the Event of Default with respect to which that declaration had been made; provided, that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon; provided further, that the Issuer may, without consent of the Trustee, waive any Event of Default hereunder with respect to Unassigned Rights, and that the Trustee may not, without the written consent of the Issuer, waive any Event of Default hereunder with respect to Unassigned Rights.
Section 6.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Second Supplemental Lease or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed expedient.
Section 6.4 Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should default under any of the provisions of the Lease Agreement and the Issuer or the Trustee (in its own name or in the name and on behalf of the Issuer) should employ attorneys or incur other expenses for the collection of Rentals or the enforcement of performance or observance of any obligation or agreement on the part of the Company contained in the Lease Agreement, the Company will on demand therefor pay to the Issuer and/or the Trustee the reasonable fees of such attorneys and such other expenses so incurred; and such amounts shall bear interest at the Interest Rate for Advances from the date of demand to the date of payment.
Section 6.5 No Additional Waiver Implied by One Waiver. In the event any agreement contained in the Lease Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other breach hereunder.
Section 6.6 Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render the Lease Agreement invalid or unenforceable.
[END OF ARTICLE VI]
ARTICLE VII
Section 7.1 Effect of Second Supplemental Lease. The Existing Lease, except as hereby amended and supplemented and except to the extent inconsistent herewith, shall continue in full force and effect, and no prior written or oral agreements between the Issuer and the Company relating to the acquisition, construction, equipping or leasing of the 2002 Project shall have any force or effect, with the exception, however, of the Abatement Agreement.
Section 7.2 Execution Counterparts. This Second Supplemental Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 7.3 Binding Effect. This Second Supplemental Lease shall inure to the benefit of, and shall be binding upon, the Issuer, the Company and their respective successors and assigns.
Section 7.4 Severability. In the event any provision of this Second Supplemental Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 7.5 Amendments. So long as any of the Bonds are outstanding, the Lease Agreement may be further amended only with the consent of the Bank and the Trustee and subject to the provisions of Article VII of the Indenture and the 1996 Indenture.
Section 7.6 Notices. Unless otherwise provided herein, all notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, or sent by overnight courier service or by telegram, telefax, telex or other instantaneous transmission device, addressed as follows:
(a) If to the Issuer, at The Industrial Development Board of the City of Montgomery, P.O. Box 79, Montgomery, Alabama 36101, Attention:
Chairman of the Board of Directors;
(b) If to the Trustee, (i) by mail or telegram, at Regions Bank, 60 Commerce Street, Montgomery, Alabama 36104, Attention: Corporate Trust Department; and (ii) by Telefax, at (334) 230-6150;
(c) If to the Bank, (i) by mail or telegram, at Regions Bank, 8 Commerce Street, Montgomery, Alabama 36104, Attention: Timothy D. Riley, Vice President, with a copy to Regions Bank, 417 North 20th Street, Birmingham, Alabama 35203, Attention: International Department; and (ii) by Telefax, at (334) 832-8560, with a copy to (205) 326-7440;
(d) If to the Remarketing Agent, (i) by mail or telegram, at Merchant Capital, L.L.C., 250 Commerce Street, Montgomery, Alabama 36104, Attention: Michael P. Dunn; and (ii) by Telefax, at (334) 269-0902; and
(e) If to the Company, (i) by mail or telegram, at KINPAK INC.,
2780 Gunter Park Drive East, Montgomery, Alabama 36109, Attention:
Plant Manager, with a copy to Ocean Bio-Chem, Inc., 4041 S.W. 47th
Avenue, Ft. Lauderdale, Florida 33314, Attention: Chief Financial
Officer; and (ii) by Telefax, at (334) 277-2099, with a copy to (954)
587-2813.
Any of the foregoing parties may, by notice given hereunder, designate any further or different address or addresses to which subsequent notices, certificates, requests or other communications shall be sent.
Section 7.7 Governing Law. The Lease Agreement shall be deemed to be a contract made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State.
Section 7.8 No Interest in Certain Moneys. The Company and the Issuer each acknowledges that neither the Company nor the Issuer has any interest in the proceeds of the Letter of Credit or the account of the Bond Fund or the Bond Purchase Fund into which such proceeds are deposited. Any such moneys shall be in the custody of and held by the Trustee in trust for the benefit of the Holders of the Bonds.
[END OF ARTICLE VII]
IN WITNESS WHEREOF, the Issuer and the Company have caused this instrument to be duly executed and delivered as of the date first hereinabove mentioned.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MONTGOMERY
( S E A L )
By: /s/ F. Berry Grant
---------------------------------------
Vice Chairman of the Board of Directors
ATTEST:
/s/ [Illegible]
-------------------------
Assistant Secretary
|
KINPAK INC.
By /s/ Peter G. Dornau
----------------------------------------
President
|
WITNESS:
/s/ [Illegible] ------------------------- Assistant Secretary |
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that F. Berry Grant, whose signature as the Vice-Chairman of the Board of Directors of The Industrial Development Board of the City of Montgomery is signed to the foregoing instrument and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and seal of office this 22 day of July, 2002.
/s/ Roy S. Goldfinger ---------------------------------- NOTARY PUBLIC, State at Large My Commission Expires: May 12, 2005 |
( S E A L )
STATE OF ALABAMA )
MONTGOMERY COUNTY )
I, the undersigned Notary Public in and for said County in said State, hereby certify that Peter G. Dornau, whose signature as President of KINPAK INC., an Alabama corporation, is signed to the foregoing instrument, and who is known to me and known to be such officer, acknowledged before me on this day that, being informed of the contents of said Trust Indenture, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal of office this 22 day of July, 2002.
/s/ Roy S. Goldfinger
---------------------------------------
NOTARY PUBLIC, State at Large
( S E A L ) My Commission Expires: May 12, 2005
|
CONSENT OF TRUSTEE
REGIONS BANK, in its capacity as the Trustee (as defined in the Original Lease) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as an amendment of the Original Lease, all pursuant to Article VII of the 1996 Indenture.
IN WITNESS WHEREOF, REGIONS BANK has caused this consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
REGIONS BANK
By: /s/ Patsy Copeland -------------------------------- Patsy Copeland, Vice President |
STATE OF ALABAMA
MONTGOMERY COUNTY
I, the undersigned Notary Public in and for said County in said State, hereby certify that Patsy Copeland, whose name as Vice President of Regions Bank, an Alabama banking corporation, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument to which said Consent relates, she, as such officer and with full authority, executed the same voluntarily for and as the act of said banking corporation.
Given under my hand and seal of office this day of July, 2002.
/s/ Roy S. Goldfinger
---------------------------------------
NOTARY PUBLIC State at Large
( S E A L ) My Commission Expires: May 12, 2005
-----------------
|
CONSENT OF BANK
REGIONS BANK, in its capacity as the Bank (as defined in the Original Lease) and by its undersigned duly authorized officer, hereby acknowledges receipt of the foregoing instrument and consents to all its terms and provisions and to the execution, delivery and recordation thereof as an amendment of the Original Lease, all pursuant to Article VII of the 1996 Indenture.
IN WITNESS WHEREOF, REGIONS BANK has caused this Consent to be executed in its name and on its behalf as of the date of the acknowledgment made below.
REGIONS BANK
By: /s/ Timothy D. Riley
---------------------------------
Timothy D. Riley, Vice President
|
STATE OF ALABAMA
MONTGOMERY COUNTY
I, the undersigned Notary Public in and for said County in said State, hereby certify that Timothy D. Riley, whose name as Vice President of Regions Bank, an Alabama banking corporation, is signed to the foregoing Consent, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument to which said Consent relates, he, as such officer and with full authority, executed the same voluntarily for and as the act of said banking corporation.
Given under my hand and seal of office this day of July, 2002.
/s/ Roy S. Goldfinger
---------------------------------------
NOTARY PUBLIC State at Large
( S E A L ) My Commission Expires: May 12, 2005
|
EXHIBIT A
DESCRIPTION OF REALTY
EXHIBIT 10.4
CREDIT AGREEMENT
BY AND AMONG
OCEAN BIO-CHEM, INC.,
STAR-BRITE DISTRIBUTING, INC.,
STAR BRITE AUTOMOTIVE, INC.,
STAR BRITE DISTRIBUTING (CANADA), INC.,
KINPAK INC.
And
REGIONS BANK
DATED AS OF JULY 1, 2002
THIS INSTRUMENT PREPARED BY:
JOHN F. ANDREWS
CAPELL & Howard, P.C.
P. O. Box 2069
Montgomery, Alabama 36102-2069
(334) 241-8000
TABLE OF CONTENTS
Parties ......................................................1 Recitals ......................................................1
ARTICLE 1
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions...........................................2 Section 1.02 Effect of Headings and Table of Contents.............14 Section 1.03 Date of Credit Agreement.............................14 Section 1.04 Separability Clause..................................14 Section 1.05 Counterparts.........................................14 |
ARTICLE 2
ISSUANCE OF LETTERS OF
CREDIT; REIMBURSEMENT AND FEES
Section 2.01 Issuance of the Letters of Credit....................14 Section 2.02 Reimbursement........................................14 Section 2.03 Fees.................................................15 Section 2.04 Increased Costs......................................16 Section 2.05 Pledged Bonds........................................17 |
ARTICLE 3
REVOLVING LINE OF CREDIT
Section 3.01 Revolving Line of Credit ............................18 Section 3.02 Revolving Line of Credit Note........................19 Section 3.03 Prepayment of Revolving Line of Credit...............20 Section 3.04 Acceptance Fee.......................................20 |
ARTICLE 4
PAYMENTS, FEES, SECURITY
Section 4.01 Place and Time of Payments...........................20 Section 4.02 Late Payments........................................21 Section 4.03 Computation of Charges...............................21 Section 4.04 Statements of Account................................21 Section 4.05 Obligations of Borrowers Absolute....................21 Section 4.06 Security.............................................22 |
ARTICLE 5
CONDITIONS PRECEDENT TO
FUNDING OF CREDIT FACILITIES
Section 5.01 Conditions Precedent to Funding of Credit Facilities.22
Section 5.02 Additional Conditions for Disbursement
of 2002 Bond Proceeds..............................24
Section 5.03 Additional Conditions to Making Advances
under the Revolving Line of Credit.................24
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ARTICLE 6
REPRESENTATIONS AND COVENANTS
Section 6.01 General Representations of the Borrowers ............25
Section 6.02 Corporate Existence..................................28
Section 6.03 Accounting Records...................................28
Section 6.04 Reports to Bank......................................28
Section 6.05 Notice of Default....................................29
Section 6.06 Litigation Notice....................................29
Section 6.07 Covenants Regarding Financial Condition..............29
Section 6.08 Amendments to Financing Documents....................31
Section 6.09 Incorporation of Covenants by Reference..............31
Section 6.10 Payment of Taxes.....................................31
Section 6.11 Maintenance of Properties............................31
Section 6.12 Operation of Collateral..............................32
Section 6.13 Other Agreements.....................................32
Section 6.14 Encumbrances.........................................32
Section 6.15 Maintenance of Insurance.............................32
Section 6.16 Compliance with Environmental Laws...................32
Section 6.17 Damage and Destruction...............................33
(ii)
|
Section 6.18 Condemnation.........................................33 Section 6.19 Redemption of Bonds..................................34 Section 6.20 Banking Relationship.................................34 Section 6.21 Alabama River Dock Facility..........................34 |
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.01 Events of Default....................................35 Section 7.02 Remedies.............................................36 Section 7.03 Acceleration of Reimbursement........................37 Section 7.04 No Remedy Exclusive..................................38 Section 7.05 Agreement to Pay Attorneys' Fees.....................38 Section 7.06 No Additional Waiver Implied by One Waiver...........38 Section 7.07 Remedies Subject to Applicable Law...................38 Section 7.08 Waiver by Borrowers..................................38 Section 7.09 Set Off..............................................39 |
ARTICLE 8
MISCELLANEOUS
Section 8.01 No Waiver............................................39 Section 8.02 Entire Agreement.....................................39 Section 8.03 Review by Borrowers..................................39 Section 8.04 Waiver of Trial by Jury..............................39 Section 8.05 Notices..............................................40 Section 8.06 Indemnification......................................41 Section 8.07 Liability of the Bank................................41 Section 8.08 Continuing Obligation................................42 Section 8.09 Participation........................................42 Section 8.10 Governing Law........................................42 Section 8.11 Costs, Expenses and Taxes............................43 Testimonium .....................................................44 Signatures of Borrowers.................................................44 Signature of Bank .....................................................46 |
LIST OF EXHIBITS
Exhibit A Borrowing Base Certificate Exhibit B Equipment Exhibit C Legal Description of Real Property Exhibit D 2002 Letter of Credit Exhibit E Mortgage, Assignment of Leases and Security Agreement Exhibit F Request for a Revolving Line of Credit Advance Exhibit G Revolving Line of Credit Note Exhibit H Security Agreement Exhibit I Substitute Letter of Credit Exhibit J Extension Agreement |
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of July 1, 2002, is entered into by and
among OCEAN BIO-CHEM, INC. ("Ocean"), STAR-BRITE DISTRIBUTING, INC.
("Distributing"), STAR BRITE AUTOMOTIVE, INC. ("Automotive") and STAR BRITE
DISTRIBUTING (CANADA), INC. ("Canada"), corporations organized and existing
under the laws of the State of Florida, KINPAK INC., ("KINPAK") a corporation
organized and existing under the laws of the State of Alabama and REGIONS BANK,
an Alabama banking corporation (the "Bank"). Ocean, Distributing, Automotive,
Canada and KINPAK are herein sometimes referred to as the "Borrowers."
R E C I T A L S:
The Borrowers have requested that the Bank provide to the Borrowers the following credit facilities (the "Credit Facilities"): (i) a direct-pay irrevocable letter of credit (the "Substitute Letter") securing the payment of $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 currently outstanding in the principal amount of $3,280,000 (the "1997 Bonds") issued by The Industrial Development Board of the City of Montgomery (the "Board"), (ii) a direct-pay irrevocable letter of credit (the "Letter of Credit") securing the payment of $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 (the "2002 Bonds") to be issued by the Board, and (iii) a revolving working capital line of credit (the "Revolving Line of Credit") in the maximum amount outstanding at any time of $5,000,000.
The 1997 Bonds were issued pursuant to a Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997 (collectively, the "1997 Indenture") between the Board and Regions Bank as Trustee (in such capacity the "1997 Trustee"). The proceeds of the 1997 Bonds were used to refund certain prior revenue bonds of the Board, the proceeds of which were used to renovate and improve a manufacturing facility located in Montgomery, Alabama (the "Existing Facility") and currently leased by the Board to KINPAK pursuant to Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by First Supplemental Lease Agreement dated as of March 1, 1997 (collectively the "1997 Lease"). The Borrowers have requested that the Bank issue the Substitute Letter in substitution for the existing letter of credit heretofore issued by First Union National Bank of Florida securing the 1997 Bonds.
The 2002 Bonds will be issued pursuant to a Trust Indenture dated as of July 1, 2002 (the "2002 Indenture") between the Board and Regions Bank, as Trustee (acting in such capacity, the "2002 Trustee"). The Board will use the proceeds of the 2002 Bonds to finance (i) the construction of an approximately 70,000 square foot addition to the Existing Facility and the acquisition of certain machinery and equipment for use therein (collectively the "2002 Improvements") and (ii) the payment of a portion of the expenses of issuing the
2002 Bonds. KINPAK and the Board will enter into a Second Supplemental Lease Agreement dated as of July 1, 2002 pursuant to which KINPAK will lease the 2002 Improvements from the Board and KINPAK will agree to pay additional rent to the Board sufficient to pay the debt service on the 2002 Bonds. The Existing Facility as improved by the 2002 Improvements is herein referred to as the "Project." Regions Bank when acting in the capacity as both the 1997 Trustee and 2002 Trustee is herein referred to as the "Trustee."
As security for the payment of the 2002 Bonds, the Borrower will cause the Bank to issue the Letter of Credit in favor of the 2002 Trustee in the amount of (i) the aggregate principal amount of the 2002 Bonds, to enable the 2002 Trustee to pay the principal amount of the 2002 Bonds when due and to pay the principal portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase, plus (ii) interest on the 2002 Bonds for a period of 120 days at the rate of 12% per annum, to enable the 2002 Trustee to pay interest on the 2002 Bonds when due and to pay the interest portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase.
The Revolving Line of Credit will be made available by the Bank to the Borrowers pursuant to the terms hereof and the Borrowers will use the moneys drawn under the Revolving Line of Credit to provide working capital for the Borrowers' business operations. The obligations of the Borrowers under the Revolving Line of Credit will be evidenced by a promissory note of the Borrowers in favor of the Bank dated as of July 1, 2002.
As security for the Borrowers' obligations under this Agreement with respect to the Substitute Letter, the Letter of Credit and the Revolving Line of Credit the Borrowers are executing the Mortgage, Assignment of Leases and Security Agreement hereafter referred to. As additional security for the Borrowers' Line of Credit Obligations the Borrowers are executing the Security Agreement hereafter referred to.
ARTICLE 1
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in this Article. Singular terms shall include the plural as well as the singular and vice versa.
(2) All accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles, consistently applied. All references herein to "generally accepted accounting principles" refer to such principles as they exist at the date of application thereof.
(3) All references in this instrument to a designated "Article," "Section" or other subdivision are to the designated articles, sections, and subdivisions of this instrument as originally executed.
(4) The terms "herein," "hereof," and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular article, section or other subdivision.
(5) The term "person" shall include any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization and any government or any agency or political subdivision thereof.
(6) Capitalized terms not otherwise defined in this Article shall have the meaning assigned in the 1997 Indenture or the 2002 Indenture, as applicable.
(7) As used in this Agreement, the following terms shall have the following meanings unless the context hereof shall otherwise indicate:
"A Drawing" shall mean a drawing under the Substitute Letter or the Letter of Credit, as applicable, to pay the principal of the 1997 Bonds or the 2002 Bonds due to maturity, redemption, or acceleration.
"Account Receivable" shall mean a right to payment for goods sold or leased or for services rendered by the Borrowers.
"Actual/360 Basis" shall mean a method of computing interest on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360.
"Additional Project Equipment" shall mean all items of furniture, furnishings, fixtures, machinery, equipment or other personal property at any time installed in or about the Project and owned by the Borrowers, or any thereof, the costs of which are not paid by the Board from the proceeds of the Bonds, or are not otherwise Project Equipment.
"Advance" shall mean any amount advanced by the Bank to the Borrowers under the Revolving Line of Credit.
"Affiliate" shall mean any corporation, limited liability company, partnership or business association of which the Borrowers, or any thereof, directly or indirectly controls, or is controlled by or is under common control with the Borrowers, or any thereof, or a Subsidiary.
"Automotive" shall mean Star Brite Automotive, Inc., a corporation organized and existing under the laws of the State of Florida, its successors and assigns as permitted herein.
"B Drawing" shall mean a drawing under the Substitute Letter or the Letter of Credit, as applicable, to pay interest on the 1997 Bonds or the 2002 Bonds.
"Bank" shall mean Regions Bank, an Alabama banking corporation with a principal place of business in Montgomery, Alabama, and its successors and assigns.
"Base Rate" shall mean the variable rate of interest designated by the Bank periodically as the Bank's Commercial Base Rate. The Base Rate is not necessarily the lowest rate charged by the Bank. The Base Rate on the date of this Agreement is 4.75%.
"Board" shall mean The Industrial Development Board of the City of Montgomery, its successors and permitted assigns.
"Bonds" shall mean both the 1997 Bonds and the 2002 Bonds unless the context indicates that reference is made to only one or the other of such series of bonds.
"Borrowers" shall mean Ocean, Distributing, Automotive, Canada and KINPAK, or any one or more thereof, jointly and severally, unless the context clearly indicates to the contrary.
"Borrowing Base Certificate" shall mean the Borrowing Base Certificate in the form of Exhibit A hereto signed by Ed Anchel, or any other officer of Distributing or Ocean authorized by Ocean in writing to sign such instrument.
"Business Day" shall mean any day other than (i) a Saturday or Sunday; (ii) a day on which banking institutions are required or authorized to remain closed in (A) the city in which the principal office of the Trustee is located, (B) the city in which the principal office of the Remarketing Agent is located, or (C) the city in which the office of the Bank where drawings under the Letter of Credit are to be made is located; or (iii) a day on which the payment system of the Federal Reserve System is not operational.
"C Drawing" shall mean a drawing under the Substitute Letter or the Letter of Credit, as applicable, to pay the purchase price of Tendered Bonds.
"Canada" shall mean Star Brite Distributing (Canada), Inc., a corporation organized and existing under the laws of the State of Florida, its successors and assigns as permitted herein.
"Capital Expenditures" shall mean any expenditure for fixed assets or which is properly chargeable to capital account in accordance with generally accepted accounting principles.
"Closing Date" shall mean the date on which the initial Letter of Credit is issued by the Bank.
"Collateral" shall mean all property and rights mortgaged, assigned, pledged, or otherwise subject to the lien of the Mortgage or the Security Agreement and all other collateral from time to time securing the Obligations.
"Credit Agreement" or "Agreement" shall mean this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more instruments entered into pursuant to the applicable provisions hereof.
"Credit Amount" shall mean the maximum amount available to be drawn under the Substitute Letter or the Letter of Credit, as applicable, as reduced from time to time and reinstated from time to time pursuant to the terms and conditions thereof.
"Credit Facilities" shall mean, collectively, the Substitute Letter, the Letter of Credit and the Revolving Line of Credit.
"Debt" of any person shall mean (i) all indebtedness, whether or not represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (ii) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (iii) all capitalized lease obligations, and (iv) all indebtedness secured by any mortgage or pledge of, or lien on, property of such person, whether or not indebtedness secured thereby shall have been assumed, and (v) the aggregate amount available under any letter of credit issued for the account of the Borrowers, to the extent proceeds from such letter of credit are not required to be applied against any other Debt.
"Distributing" shall mean Star-Brite Distributing, Inc., a corporation organized and existing under the laws of the State of Florida, its successors and assigns as permitted herein.
"Eligible Account" shall mean and include only the net amount (after eliminating from the aggregate face amount thereof all payments, adjustments, discounts, credits and allowances applied thereto) of such Accounts Receivable which have been outstanding not more than 90 days from the date of invoice thereof, as the Bank shall deem eligible based on the following considerations. The Bank may exclude any Account Receivable from Eligible Accounts if:
(i) The subject goods have been shipped or delivered to a Purchaser on a bill-and-hold, guaranteed sale, consignment, approval or sale-or-return basis or subject to any other repurchase or return agreement; or
(ii) Any material part of the subject goods has been returned, rejected, lost or damaged; or
(iii) The Purchaser is located outside the United States, and the subject goods have not been shipped on the security of a banker's acceptance or letter of credit acceptable to the Bank and pledged to the Bank, or the Account Receivable is not payable in United States dollars; provided, however, Canadian Accounts Receivable totaling less than 20% of the Borrowers total outstanding Accounts Receivable may be used without compliance with this subsection (iii) so long as they meet the 90 day aging requirement; or
(iv) The Purchaser is also the Company's supplier or creditor; or
(v) The Account Receivable is not evidenced by an invoice in form acceptable to Bank; or
(vi) More than 75% in amount of the other Accounts Receivable of the Purchaser have been outstanding more than 90 days from the date of invoice thereof; or
(vii) The Account Receivable arises out of transactions with an employee, officer, agent, director, stockholder, affiliate or subsidiary of the Borrowers; or
(viii) The general credit worthiness and financial condition of the Purchaser are not reasonably acceptable to the Bank; or
(ix) Any of the representations and warranties set forth in the Security Agreement are not true and correct with respect to such Account Receivable.
"Eligible Inventory" shall mean and include only such Inventory of finished goods (not including supplies, parts or work-in-process) that is located at one of the locations specified in the Security Agreement as the place or place at which such goods are to be maintained, that is in good and saleable condition, that meets all standards imposed by any governmental agency, or department or subdivision thereof, having regulatory authority over such goods or over their use or sale, that is currently usable or saleable in the normal course of the Borrowers' business and that is not obsolete or unmerchantable, as the Bank, in the reasonable exercise of its judgment, shall deem eligible, based on such credit and collateral considerations as the Bank shall deem appropriate. Without limiting the generality of the foregoing, the Bank may exclude any Inventory from Eligible Inventory if any of the representations and warranties set forth in the Security Agreement are not true and correct with respect to such Inventory. The collateral value of Eligible Inventory shall be computed at the lower of cost (on a first-in, first-out basis) or market. Bulk raw materials, such as those stored in tanks and drums with a marketable resale value as determined by the Bank may be considered in determining inventory values.
"Equipment" shall mean the Project Equipment and the Additional Project Equipment. As of the delivery of the Lease Agreement, the Equipment is expected to consist of those items (whether or not fixtures) of furniture, furnishings, fixtures, machinery, equipment or other personal property that are generally described in Exhibit B hereto.
"Eurodollar Reserve Percentage" shall mean the percentage which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System, as such regulation may be amended from time to time, as the actual reserve requirement applicable to the Bank with respect to Eurocurrency Liabilities (as that term is defined in Regulation D), whether or not the Bank has any Eurocurrency Liabilities subject to such reserve requirement at that time. The Revolving Line of Credit Note Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" shall have the meanings stated in Section 7.01 hereof. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing.
"Existing Facility" shall mean the manufacturing facilities (land, buildings, other improvements, equipment, machinery, personal property and fixtures) owned by the Board and leased to KINPAK and located on the real property described in Exhibit C.
"Financing Documents" shall mean this Agreement, the Indentures, the Lease Agreement, the Mortgage, the Security Agreement and the Revolving Line of Credit Note.
"Financing Participants" shall mean the Borrowers, the Bank, the Trustee, the Board, the Remarketing Agent and the holders of the Bonds.
"Governmental Approvals" shall mean any authorization, consent, order, approval, license, lease, ruling, permit, tariff, rate, certification, validation, exemption, filing or registration by or with, or notice to, any Governmental Authority.
"Governmental Authority" shall mean any federal, state, municipal or other governmental department (including, without limitation, any department of buildings, fire, labor or health), commission, central bank, board, bureau, agency, court, tribunal or other instrumentality, domestic or foreign, and any arbitrator.
"Guaranteed Obligations" shall mean all guaranties, endorsements, assumptions and other contingent obligations in respect of, or to purchase or to otherwise acquire, Debt of others.
"Indentures" shall mean, collectively, the 1997 Indenture and the 2002 Indenture.
"Interest Expense" shall mean interest payable on Debt during the period in question.
"Inventory" shall mean goods, merchandise and other personal property wherever located now or hereafter held by the Borrowers for sale or lease or furnished or to be furnished under contracts of service or otherwise, raw materials, parts, finished goods, work-in-process and supplies and materials used or consumed, or to be used or consumed, in the Borrowers' present or any future business, and all such property the sale, lease or other disposition of which has given rise to accounts receivable and which has been returned to or repossessed or stopped in transit by the Borrowers.
"KINPAK" shall mean KINPAK INC., a corporation organized and existing under the laws of the State of Alabama, and its successors and assigns as permitted herein.
"Laws" shall mean all laws, statutes, codes, ordinances, orders, awards, judgments, decrees, injunctions, approvals, permits, franchises, requirements, regulations and licenses of any Governmental Authority.
"Lease Agreement" shall mean the Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by First Supplemental Lease Agreement dated as of March 1, 1997, and by Second Supplemental Lease Agreement dated as of July 1, 2002, between KINPAK and the Board relating to the Project, including any amendments or supplements to such instrument from time to time entered into pursuant to the applicable provisions thereof.
"Letter of Credit" shall mean the letter of credit with respect to the 2002 Bonds issued by the Bank in favor of the Trustee substantially in the form of Exhibit D hereto.
"Letters of Credit" shall mean, collectively, the Letter of Credit and the Substitute Letter.
"Liabilities" shall mean all Debt and all other items (including taxes accrued as estimated) which, in accordance with generally accepted accounting principles applied on a consistent basis, would be included in determining total liabilities as shown on the liabilities side of a balance sheet.
"LIBOR Base Rate" shall mean the simple per annum interest rate determined by the Bank as follows: On the LIBOR Interest Determination Date relating to each LIBOR Interest Period, the Bank shall obtain such number of offered quotations as the Bank deems appropriate and as are reasonably available in the London Interbank Borrowing Market at approximately 11:00 a.m. Montgomery, Alabama, time on the LIBOR Interest Determination Date relating to such LIBOR Interest Period, for deposits in Dollars in an amount approximately equal (to the nearest $50,000) to the principal amount of the Revolving Line of Credit that will be outstanding on the first day of such LIBOR Interest Period and for a length of time of approximately one month. The LIBOR Base Rate shall be the arithmetic average (rounded to the nearest one-sixteenth of one percent (1/16%)) of such offered quotations, as determined by the Bank.
"LIBOR Interest Determination Date" shall mean the date which is the second Business Day immediately preceding the first day of a LIBOR Interest Period.
"LIBOR Interest Period" shall mean a period of one month commencing on July 1, 2002 and each successive one month period thereafter, commencing on the first day of each calendar month thereafter. Notwithstanding the foregoing, however, any applicable LIBOR Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such LIBOR Interest Period shall end on the next preceding Business Day.
"Line of Credit Obligations" shall mean all indebtedness or obligations of the Borrowers to the Bank under or related to the Revolving Line of Credit.
"Lien" shall mean any mortgage, pledge, encumbrance, security interest, assignment or other charge of any kind, including, without limitation, any conditional sale agreement or other title retention agreement.
"Mortgage" shall mean the Mortgage, Assignment of Leases and Security Agreement from the Board and KINPAK to the Bank dated as of July 1, 2002, granting a lien on that portion of the Collateral constituting real property securing all of the extensions of credit under this Agreement, substantially in the form of Exhibit E hereto.
"Mortgaged Site" means the land described in Exhibit C hereto together with all buildings, structures, plants, and other facilities located thereon constituting real property and any additional land or other real property which under the terms hereof is or becomes part of the Collateral.
"Obligations" shall mean all indebtedness or obligations of the Borrowers to the Bank under this Agreement or secured by the Mortgage or the Security Agreement, including without limitation (i) the Borrowers' obligation to reimburse the Bank for draws made under the Letters of Credit and (ii) the Borrowers' obligation to pay fees and charges to the Bank for the issuance and continuation of the Letters of Credit and (iii) the Borrowers' obligations under the Revolving Line of Credit Note.
"Ocean" shall mean Ocean Bio-Chem, Inc., a corporation organized and existing under the laws of the State of Florida, and its successors and assigns as permitted herein.
"Opinion of Counsel" shall mean an opinion from an attorney or firm of attorneys with experience in the matter to be covered in the opinion.
"Pledged Bonds" shall mean the Bonds purchased pursuant to the optional or mandatory tender provisions of the Indentures with moneys drawn under the Letters of Credit.
"Project" shall mean, collectively, the Existing Facility, the 2002 Improvements, the Project Equipment and the Additional Project Equipment.
"Project Equipment" shall mean (i) all items (whether or not fixtures) of furniture, furnishings, fixtures, machinery, equipment or other personal property the costs of which, in whole or in part, are paid by the Board out of the proceeds of the Bonds and (ii) all items (whether or not fixtures) of furniture, fixtures, machinery, equipment
or other personal property at any time installed in or about the Project that are acquired by the Board or the Borrowers in substitution for or replacement of property theretofore constituting part of the Project Equipment and that, under the provisions of the Lease Agreement and the Indentures, are to constitute part of the Project Equipment.
"Purchaser" shall include any buyer or lessee of Inventory from the Borrowers, any customer for whom services have been rendered or goods sold or leased by the Borrowers and any other person who is now or may hereafter become obligated to the Borrowers on an Account Receivable.
"Receivables" shall mean and includes all Accounts Receivable and any and all other rights of the Borrowers to the payment of money or other forms of consideration of any kind (whether classified under the Uniform Commercial Code as accounts, contract rights, chattel paper, general intangibles, or otherwise) including, but not limited to, accounts receivable, letters of credit and the right to receive payment thereunder, chattel paper, tax refunds, insurance proceeds, contract rights, notes, drafts, instruments, documents, acceptances, and all other debts, obligations and liabilities due the Borrowers in whatever form and from whatever person or entity, whether or not related to the Borrowers' business operations wherever located, and further including all cash and noncash proceeds of any of the foregoing.
"Remarketing Agent" shall mean Merchant Capital, L.L.C. or its successor or successors as remarketing agent for the Bonds.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as of July 1, 2002 among the Remarketing Agent, the Trustee, the Board and KINPAK relating to the Bonds.
"Request for an Advance" shall mean a Request for a Revolving Line of Credit Advance in the form of Exhibit F hereto signed by Ed Anchel or any other officer of the Borrowers authorized by the Borrowers in writing to sign such instrument.
"Revolving Line of Credit" shall mean the revolving line of
credit provided to the Borrowers by the Bank as more fully described in
Section 3.01.
"Revolving Line of Credit Note" shall mean the Revolving Line of Credit Note of the Borrowers in favor of the Bank substantially in the form of Revolving Line of Credit Note attached hereto as Exhibit G.
"Revolving Line of Credit Note Rate" shall mean a simple per annum interest rate equal to the sum of (a) the quotient (rounded to the nearest one-sixteenth of one percent (1/16%)) of (i) the LIBOR Base
Rate divided by (ii) one minus the Eurodollar Reserve Percentage, stated as a decimal, plus 275 basis points. In the event of an Event of Default by the Company under the Revolving Line of Credit Note as defined in Section 7.01 hereof, the Revolving Line of Credit Note Rate shall be increased by 2% per annum above the rate otherwise applicable.
"Security Agreement" shall mean that certain Security Agreement dated as of July 1, 2002 between the Borrowers and the Bank substantially in the form of Security Agreement attached hereto as Exhibit H.
"Shareholders" shall mean any persons or entities that, as of the time in question, hold beneficial or legal title to any of the capital stock of the Borrowers.
"Subordinated Debt" shall mean Debt as to which payment of the
principal thereof and interest (and premium, if any) thereon shall be
(i) subordinated and subject in right of payment to the prior payment
in full of the Obligations of the Borrowers and (ii) deferred in any
event (including without limitation bankruptcy, reorganization or
similar proceedings with respect to the Borrowers) until payment in
full of all Obligations hereunder has been made.
"Subsidiary" shall mean any corporation, limited liability company, partnership, or other business association of which the Borrowers and/or one or more subsidiaries owns directly or indirectly, 50% or more of capital stock or equity interest.
"Substitute Letter" shall mean the letter of credit with respect to the 1997 Bonds issued by the Bank in favor of the 2002 Trustee substantially in the form of Exhibit I hereto.
"Tangible Net Worth" shall mean the sum of the amounts set forth on the balance sheet of Ocean as shareholders' equity (including without limitation the par or stated value of all outstanding capital stock, retained earnings, additional paid-in capital, capital surplus and earned surplus), plus (x) the outstanding amount of any Subordinated Debt, less the sum of (i) any surplus resulting from any write-up of assets, (ii) goodwill, (iii) patents, trademarks, copyrights, leasehold improvements not recoverable at the expiration of a lease, and deferred charges (including, but not limited to, unamortized debt, discount and expense, organization expenses, experimental and developmental expenses, but excluding prepaid expenses), (iv) any amounts at which shares of capital stock of such person appear on the asset side of the balance sheet and (v) any amounts due from or owed by any shareholder or Affiliate (other than amounts included under clause (x) above).
"Tendered Bonds" shall mean Bonds tendered (or deemed tendered) for purchase pursuant to the optional or mandatory tender provisions of the Indentures.
"Termination Date" shall mean the date on which the Substitute Letter or the Letter of Credit, as applicable, will by its terms expire, unless the Substitute Letter or the Letter of Credit is terminated on an earlier date in accordance with its terms.
"Trustee" shall mean Regions Bank, an Alabama banking corporation with a principal place of business in Montgomery, Alabama, in its capacity as trustee under the Indentures, and its successors and assigns.
"1997 Bonds" shall mean the $4,000,000 aggregate principal amount of Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 issued by the Board pursuant to the 1997 Indenture.
"1997 Indenture" shall mean that certain Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997, between the Board and the Trustee relating to the 1997 Bonds, including any amendments or supplements to such instrument from time to time entered into pursuant to the applicable provisions thereof.
"1997 Trustee" shall mean Regions Bank as trustee under the 1997 Indenture.
"2002 Bonds" shall mean the $3,500,000 aggregate principal amount of Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 issued by the Board pursuant to the 2002 Indenture.
"2002 Improvements" shall mean the approximately 70,000 square foot addition to the Existing Facility and the additional machinery and equipment for use therein to be purchased by the Board and financed by the proceeds of the 2002 Bonds.
"2002 Indenture" shall mean that certain Trust Indenture dated as of July 1, 2002, between the Board and the Trustee relating to the 2002 Bonds, including any amendments or supplements to such instrument from time to time entered into pursuant to the applicable provisions thereof.
"2002 Trustee" shall mean Regions Bank as trustee under the 2002 Indenture.
SECTION 1.02 EFFECT OF HEADINGS AND TABLE OF CONTENTS
The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.03 DATE OF CREDIT AGREEMENT
The date of this Agreement is intended as and for a date for the convenient identification of this Credit Agreement and is not intended to indicate that this Agreement was executed and delivered on said date.
SECTION 1.04 SEPARABILITY CLAUSE
If any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.05 COUNTERPARTS
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.
ARTICLE 2
ISSUANCE OF LETTERS OF
CREDIT; REIMBURSEMENT AND FEES
SECTION 2.01 ISSUANCE OF THE LETTERS OF CREDIT
(a) The Borrowers hereby request and instruct the Bank to issue the Letters of Credit substantially in the respective forms of Exhibits D and I hereto and the Letters of Credit are subject to the terms and conditions of this Agreement.
(b) The Letters of Credit shall be issued on the date of delivery of the 2002 Bonds to the original purchaser thereof from the Board.
SECTION 2.02 REIMBURSEMENT
(a) On each date that the Bank honors any A Drawing, B Drawing or C Drawing under the Letters of Credit, the Borrowers shall immediately reimburse the Bank for the amount of such draw.
(b) In the event that the Borrowers shall fail to reimburse the Bank on the day of each drawing under the Letters of Credit, the Borrowers shall pay to the Bank interest on the unreimbursed amount of each drawing at a variable per
annum rate equal to the Base Rate plus 2% from the date such drawing is paid by the Bank until the amount of such drawing is reimbursed in full to the Bank. Such interest shall be payable in arrears on the first day of each month following such drawing and on the date that such drawing is reimbursed in full to the Bank. Failure by the Borrowers to reimburse any such drawing shall nevertheless be a default hereunder, regardless of the payment of interest, and the Bank shall be entitled to immediately exercise all rights and remedies for a default of the Borrowers herein contained.
(c) No interest shall be payable with respect to any drawing if the Bank is reimbursed in full for such drawing by 12:00 noon (Montgomery, Alabama time) on the same date that such drawing is paid by the Bank.
(d) All amounts received by the Bank in respect of principal, premium or interest on Pledged Bonds shall be credited first against interest payable on the unreimbursed amount of the C Drawing with respect to such Pledged Bonds and the balance, if any, shall be credited against the amount of such C Drawing.
(e) Anything herein to the contrary notwithstanding, the Borrowers will not reimburse the Bank for any A Drawing, B Drawing or C Drawing until the same has been honored in full by the Bank, and no such reimbursement shall be prepaid.
SECTION 2.03 FEES
(a) The Borrowers agree to pay to the Bank an annual fee, payable in four installments, calculated at the rate of 1.12% per annum on the Credit Amount available to be drawn under the Letters of Credit (computed on the date each such installment is payable). Such fees shall be payable in advance on the date of issuance of the Letters of Credit for the period beginning on such date, and ending on September 1, 2002, and quarterly thereafter on each March 1, June 1, September 1 and December 1. Fees payable for the last quarterly payment shall be prorated based on the number of days during which the Letters of Credit are outstanding during such period.
(b) The Borrowers shall continue to pay the 1997 Trustee its annual fee of $2,500 in connection with the 1997 Bond issue. In addition, the Borrowers shall pay the 2002 Trustee a $2,500 acceptance fee on the date of closing and a $2,500 annual fee payable on the date of closing for the first year, and annually thereafter.
(c) In addition to the fees payable under subsection (a) above, the Borrowers shall pay to the Bank such amount as shall at the time of a transfer of the Letters of Credit then be the charge which the Bank is customarily making for transfers of similar letters of credit. Such charges shall be paid within ten days of receipt by the Borrowers of a written statement therefor.
(d) For each draw on the Letters of Credit the Borrowers shall pay a processing fee in the amount then customarily charged by the Trustee for draws under letters of credit similar to the Letters of Credit (currently $65) and the
customary drawing fee of the Bank's International Department for each drawing under the Letters of Credit (currently $100). The processing fee and the drawing fee shall be due on the date such draw is made.
(e) At closing, the Borrowers shall pay the Bank an acceptance fee of $17,699.60.
Section 2.04 Increased Costs
(a) If, after the date of delivery of this Agreement, any change in any Law or regulation or in the interpretation, administration or enforcement thereof by any court or Governmental Authority charged with the administration thereof or any action by any Governmental Authority (whether or not constituting or resulting from such change) shall either
(1) impose, modify or deem applicable any reserve, assessment, special deposit or similar requirement against letters of credit issued by the Bank, or
(2) impose on the Bank any other condition regarding this Agreement or the Letters of Credit,
and the result of any such event shall be to increase the cost to the Bank of issuing or maintaining the Letters of Credit (which increase in cost shall be the result of the Bank's reasonable allocation of the aggregate of such cost increases resulting from such events and shall be calculated without giving effect to any participation granted in the Letters of Credit), then, upon demand by the Bank, the Borrowers shall pay to the Bank from time to time, within 30 days of the Borrowers' receipt of the certificate referred to in paragraph 2.04(b) below, as specified by the Bank in writing, such additional amounts which shall be sufficient to compensate the Bank for the portion of such increased costs that are allocable to the Letters of Credit.
(b) The Bank shall deliver to the Borrowers a certificate as to such increased costs incurred by the Bank as a result of any event referred to in subsection (a) of this Section, and such certificate shall be conclusive, absent manifest error, as to the amount thereof. In making the determination contemplated by such certificate, the Bank may make such reasonable estimates, assumptions, allocations, and the like that the Bank deems to be appropriate.
(c) The Bank shall make a good faith effort to notify the Borrowers when the Bank becomes aware of circumstances that may in the future require the imposition of increased costs pursuant to this Section, but the failure to give such notice shall not preclude the imposition of such increased costs.
(d) If, after the date of this Agreement, the Bank shall have determined that the adoption or implementation of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Bank's capital, on this credit facility or otherwise, as a consequence of its obligations hereunder and under the Letters of Credit to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the Bank's policies with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time, promptly upon demand by the Bank, the Borrowers hereby agree to pay the Bank such additional amount or amounts as will compensate the Bank for such reduction. A certificate of the Bank claiming compensation under this subsection and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive absent manifest error. In determining any such amount, the Bank may use any reasonable averaging and attribution methods.
(e) Upon the occurrence of any of the events described in paragraphs 2.04(a) or (d) above, the Borrowers may, at their option, provide a substitute letter or letters of credit for the Letters of Credit, in which event the Bank will refund any prepaid letter of credit fees provided all Obligations relating to the Letters of Credit have been paid in full.
Section 2.05 Pledged Bonds
(a) As additional security for the performance of its obligations under this Agreement, KINPAK hereby pledges, assigns, hypothecates and transfers to the Bank all of its right, title and interest in and to the Pledged Bonds, and does hereby grant to the Bank a security interest in the Pledged Bonds and all amounts payable thereon and the proceeds thereof.
(b) If the Bank is reimbursed for the purchase price of Pledged Bonds with respect to which a C Drawing has been made, such Pledged Bonds shall be released from the pledge and assignment made hereby and shall be delivered to or upon the order of KINPAK.
(c) All payments of principal and interest on Pledged Bonds shall be made directly to the Bank. If, while the Bank or its designated agent holds Pledged Bonds, KINPAK shall receive any interest or principal payment in respect of such Pledged Bonds, KINPAK agrees to accept the same as agent for the Bank and to hold the same in trust on behalf of the Bank and to deliver the same forthwith to the Bank. All sums of money so paid in respect of principal, premium or interest on such Pledged Bonds which are received by KINPAK and paid to the Bank, or which shall be received directly by the Bank from the Trustee, shall be credited against the reimbursement obligation of the Borrowers as provided in Section 2.02(d).
(d) If an Event of Default exists, the Bank may, without notice, exercise all rights, privileges or options pertaining to any Pledged Bonds as if it were the absolute owner thereof, upon such terms and conditions as it may determine, all without liability except to account to the Borrowers for property actually received by it. In addition to the rights and remedies granted to it in this Agreement, the Bank or its designated agent shall have the authority to exercise all rights and remedies of a secured party under the Alabama Uniform Commercial Code. The Borrowers shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Pledged Bonds and the Collateral are insufficient to pay all amounts to which the Bank is entitled. The Bank shall have no duty to exercise any of such rights, privileges or options and shall not be responsible for any failure to do so or any delay in so doing.
(e) Except as contemplated herein, without the prior written consent of the Bank, KINPAK agrees that it will not sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Bonds, nor will it create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option or any other encumbrance with respect to any of the Pledged Bonds, or any interest therein, or any proceeds thereof, except for the lien and security interest provided for by this Agreement.
(f) KINPAK further agrees to do or cause to be done all such other reasonable acts and things as may be necessary to make any disposition or sale of any portion or all of the Pledged Bonds permitted by this Agreement valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts or governmental authorities having jurisdiction over any such disposition or sales, all at KINPAK's expense.
ARTICLE 3
REVOLVING LINE OF CREDIT
SECTION 3.01 REVOLVING LINE OF CREDIT
(a) From and after the date of this Agreement to and including May 31, 2003, the Bank agrees, upon the terms and subject to the conditions of this Agreement, to lend to the Borrowers, and the Borrowers may from time to time borrow from the Bank and repay and reborrow, up to a maximum aggregate principal amount at any one time outstanding under the Revolving Line of Credit Note of $5,000,000. In no event will Advances be made at such times or in such amounts that the aggregate principal amount of all such Advances hereunder at any one time outstanding would exceed the lesser of $5,000,000 and (i) 80% of the then Eligible Accounts, plus (ii) 50% of the then Eligible Inventory. Each Advance under this Agreement will be made upon the written request or, at the option of the Bank, oral request, of the Borrowers to the Bank, which request shall, if written, be in the form of a Request for an Advance and, if oral, shall contain the same certification and information as a Request for an Advance and shall be confirmed by a facsimile of a Request for an Advance followed by the original thereof. All requests for Advances (and the facsimile concerning any oral Request for an Advance) shall be received by the Bank no later than 12:00 noon of the Business Day on which the Advance is to be made. To induce the Bank to accept oral requests for Advances, the Borrowers agree that the Bank may rely on instructions given by telephone by any person purporting to be authorized to act on behalf of the Borrowers , and the Borrowers agree to indemnify and hold harmless the Bank against all damages, losses, costs and expenses (including attorney's fees) arising out of or relating to the reliance by the Bank on any oral request for Advances. Provided the same is a Business Day, on the date of
the requested Advance, upon satisfaction of the conditions specified in Article 5, the Bank shall make the amount of the Advance available to the Borrowers by crediting the proceeds thereof to the general deposit account in the name of one or more of the Borrowers, as designated in writing by certificate signed by all of the Borrowers, in the Bank. If the date of the requested Advance is not a Business Day, the Advance shall be made on the first Business Day thereafter, upon the satisfaction of the conditions specified in Article 5. No Advance shall be in an amount less than $1,000. Not more than one request for an Advance shall be made on any day.
(b) The Bank may, upon the annual written request of the Borrowers and in the Bank's sole and absolute discretion, renew the Revolving Line of Credit. Any such renewal shall be for a term of one year, or such other term as the Bank shall agree upon, measured from the date of the amendment to this Agreement reflecting such renewal. The terms and conditions upon which such renewal is granted, shall be subject to the Bank's sole and absolute discretion. Neither delay in the Bank's response, nor the Bank's failure to respond, to the Borrowers' request for a renewal of the Revolving Line of Credit shall be deemed to constitute the Bank's approval of or consent to any such renewal. Any such renewal shall only be binding upon the Bank if expressly approved or consented to by the Bank in writing. Attached hereto as Exhibit J is a form of Extension Agreement which may be used to evidence extensions of the Revolving Line of Credit.
(c) Not later than Friday of each week, the Borrowers shall deliver to the Bank a Borrowing Base Certificate effective as of the end of the preceding week setting forth the Borrowers Eligible Accounts and Eligible Inventory..
(d) If any Borrowing Base Certificate shows that the aggregate
principal amount of all Advances hereunder exceeds the lesser of $5,000,000 and
(i) 80% of the then Eligible Accounts, plus (ii) 50% of the then Eligible
Inventory, the amount of such excess shall be paid by the Borrowers to the Bank
within 15 days of the date of such Borrowing Base Certificate.
SECTION 3.02 REVOLVING LINE OF CREDIT NOTE
The Revolving Line of Credit shall be in the maximum principal amount of $5,000,000. A form of the Revolving Line of Credit Note is attached hereto as Exhibit G. The Revolving Line of Credit Note shall evidence the obligations of the Borrowers under the Revolving Line of Credit. The Revolving Line of Credit Note shall be payable in full on June 1, 2003, unless such maturity date is extended as provided in Section 3.01(b), in which event the Revolving Line of Credit Note shall be payable in full on such extended maturity date. All amounts outstanding under the Revolving Line of Credit Note shall bear interest from the date of the Revolving Line of Credit Note until the latter of payment in full and termination of the obligation of the Bank to make Advances at the rate per annum (computed on an Actual/360 Basis) equal to the Revolving Line of Credit Note Rate. Such interest shall be payable monthly on the fifth day of each month in each year and upon payment in full. The Borrowers agree to repay the Revolving Line of Credit in accordance with the terms contained herein and in the Revolving Line of Credit Note. The Revolving Line of Credit Note shall be valid and enforceable as to the aggregate amount of the Revolving Line of Credit outstanding from time to time, whether or not the full amount of the Revolving Line of Credit is actually advanced by the Bank to the Borrowers.
SECTION 3.03 PREPAYMENT OF REVOLVING LINE OF CREDIT
The Revolving Line of Credit may be prepaid in full at any time without premium or penalty by, but only by the Borrowers' delivery to the Bank of at least 30 days advance written notice of the Borrowers' intent to prepay the Revolving Line of Credit. The fact that no amount may be outstanding under the Revolving Line of Credit Note at any point in time shall not be deemed to constitute the Borrowers' intent, or notice of the Borrowers' intent, to prepay the Revolving Line of Credit.
SECTION 3.04 ACCEPTANCE FEE
At closing, the Borrowers shall pay the Bank an acceptance fee of $5,000.
ARTICLE 4
PAYMENTS, FEES, SECURITY
SECTION 4.01 PLACE AND TIME OF PAYMENTS
(a) All payments by the Borrowers to the Bank hereunder shall be made in lawful currency of the United States and in immediately available funds to the Bank at its hand delivery address set forth in Section 8.05 hereof or at such other address within the continental United States as shall be specified by the Bank by notice to the Borrowers.
(b) All amounts payable by the Borrowers to the Bank hereunder for which a payment date is expressly set forth herein (including without limitation payments due pursuant to Sections 2.02, 2.03 and 3.02) shall be payable without notice or written demand by the Bank. All amounts payable by the Borrowers to the Bank hereunder for which no payment date is expressly set forth herein shall be payable on written demand by the Bank to the Borrowers.
(c) The Bank may, at its option, send written notice to the Borrowers of amounts payable pursuant to Sections 2.02, 2.03 and 3.02, but the failure to send such notice shall not affect or excuse the Borrowers' obligation to make payment of the amounts required by such Sections on the due date specified in such Sections.
(d) Payments which are due on a day which is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate.
SECTION 4.02 LATE PAYMENTS
Except as provided in Section 2.02(b) relating to reimbursements of amounts drawn under the Letters of Credit, with respect to all amounts payable to the Bank by the Borrowers pursuant to this Article (i) which are not paid within 10 days of the due date, in the case of amounts payable on a specified date, or (ii) which are not paid within 10 days of written notice to the Borrowers, in the case of amounts payable on demand, the Borrowers agree to pay to the Bank on demand interest at a variable per annum rate equal to the Base Rate plus 2%, for each day from the specified date of payment, or the date of written demand for payment, as the case may be, to the date payment is made.
SECTION 4.03 COMPUTATION OF CHARGES
The interest and charges provided for in this Agreement based upon annual rates shall be computed on an Actual/360 Day Basis. All interest rates based upon the LIBOR Base Rate shall change when and as the LIBOR Base Rate shall change, effective on the opening of business on the date of any such change.
SECTION 4.04 STATEMENTS OF ACCOUNT
The Bank will account to the Borrowers with a statement of charges and payments made pursuant to this Agreement.
SECTION 4.05 OBLIGATIONS OF BORROWERS ABSOLUTE
The obligations of the Borrowers under this Agreement and the Revolving Line of Credit Note 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:
(1) any lack of validity or enforceability of the Letters of Credit, the Bonds or any of the Financing Documents or the impairment, termination or cancellation of the Lease Agreement by virtue of the doctrine of merger of interests or any similar principle of Alabama law;
(2) any amendment or waiver of, or any consent to or departure from, the Letters of Credit or any of the Financing Documents;
(3) the existence of any claim, set-off, defense or other rights which the Borrowers may have at any time against any of the Financing Participants or any other person or entity, whether in connection with this Agreement, the Letters of Credit, the Bonds or any other Financing Document, or any unrelated transaction;
(4) any statement or any other document presented under the Letters of Credit proves to be forged, fraudulent, invalid or insufficient in any respect or any statement therein proves to be untrue or inaccurate in any respect whatsoever;
(5) payment by the Bank under the Letters of Credit against presentation of a draft or certificate which does not comply with the terms of such Letters of Credit, provided such payment shall not have constituted gross negligence or willful misconduct by the Bank; and
(6) as to the obligations of the Company arising under the Revolving Line of Credit Note or out of or relating to payment of the Letters of Credit, any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, provided the same shall not have constituted gross negligence or willful misconduct by the Bank.
No act of commission or omission of any kind at any time on the part of the Bank in respect of any matter whatsoever, except for the gross negligence or willful misconduct of the Bank, shall in any way affect or impair any right, power or benefit of the Bank under this Agreement and, to the extent permitted by applicable law, no setoff, claim, reduction, diminution of any obligation, or any defense of any kind or nature which the Borrowers may have against the Bank, except for the gross negligence or willful misconduct of the Bank, shall be available against the Bank in any suit or action brought by the Bank to enforce any right, power or benefit under this Agreement.
SECTION 4.06 SECURITY
All Obligations of the Borrowers hereunder and under the other Financing Documents shall be secured by the Mortgage. All Line of Credit Obligations are additionally secured by the Security Agreement. It is the intent hereof that all Obligations of the Borrowers to the Bank shall be fully cross defaulted. A default by the Borrowers under any of the Obligations shall be a default under all of the Obligations and the Bank may exercise any and all remedies, as applicable, under any or all of the Financing Documents.
ARTICLE 5
CONDITIONS PRECEDENT TO
FUNDING OF CREDIT FACILITIES
SECTION 5.01 CONDITIONS PRECEDENT TO FUNDING OF CREDIT FACILITIES
The obligation of the Bank to issue the Letters of Credit and to make Advances under the Revolving Line of Credit is subject to the receipt by the Bank of the following documents, each of which shall be satisfactory to the Bank in form and substance:
(1) Signed copies of each of the Financing Documents.
(2) Copies of all necessary satisfactions and releases to encumbrances to the Collateral.
(3) A Phase I environmental study acceptable to the Bank on the Mortgaged Site and, if indicated by any Phase I study, such additional environmental studies and compliance as shall be acceptable to the Bank.
(4) An appraisal of the Collateral acceptable to the Bank indicating real and personal properties (excluding Receivables and Inventory) securing the Obligations having a current value in an amount which will support the Letters of Credit based upon an 80% loan-to-value for real property and an 65% loan-to-value for any portion of the machinery and equipment not covered by the real estate appraisal.
(5) A hazard insurance binder or policy on the Project in an amount of the full replacement cost thereof. The amount of insurance must at all times equal or exceed the aggregate outstanding Credit Amount for the Substitute Letter and the Letter of Credit. The Borrowers shall provide in each instance a mortgagee endorsement to such insurance naming the Bank as mortgagee.
(6) Certificate of general liability and workmen's compensation insurance of the Borrowers .
(7) A survey of the real property which will be mortgaged as Collateral for the Obligations.
(8) A mortgagee title insurance binder from a company acceptable to the Bank in the aggregate amount of not less than the appraised value of the real property used as Collateral.
(9) UCC-1 Financing Statements relating to the Mortgage and the Security Agreement.
(10) Corporate resolutions of each the Borrowers authorizing this Agreement, the Revolving Line of Credit Note, the Mortgage, the Security Agreement and all related loan documents.
(11) A legal opinion of Roy S. Goldfinger, P.C., counsel to the Borrowers, as to the due authorization, issuance and enforceability of the Financing Documents acceptable to the Bank and its counsel.
(12) Such other loan documents as may reasonably be required by the Bank or its counsel.
(13) A copy of the construction contract for the construction of the 2002 Improvements and a copy of the building permit therefor.
(14) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Bank or its counsel may reasonably request to evidence (i) compliance by the Board and the Borrowers with legal requirements, (ii) the truth and accuracy, as of the date of delivery of this Agreement, of the representations of the Board and the Borrowers contained in the Financing Documents, and (iii) the due performance or satisfaction by the Board and the Borrowers at or prior to the date of delivery of this Agreement, of all agreements then required to be performed and all conditions then required to be satisfied by them pursuant to the Financing Documents.
SECTION 5.02 ADDITIONAL CONDITIONS FOR DISBURSEMENTS OF 2002 BOND PROCEEDS
The proceeds of the 2002 Bonds shall be advanced by the 2002 Trustee only upon receipt by the 2002 Trustee of the written approval of each disbursement by the Bank and only for (i) the payment of the costs of issuance of the 2002 Bonds and the closing of the Credit Facilities and (ii) the cost of the 2002 Improvements as more fully provided in the 2002 Indenture and the Lease Agreement. At the time of each disbursement request, the Borrowers shall furnish the Bank invoices and other evidence satisfactory to the Bank that payment is due for the requested payment.
SECTION 5.03 ADDITIONAL CONDITIONS TO MAKING ADVANCES UNDER THE REVOLVING LINE OF CREDIT
The obligation of the Bank to make Advances under the Revolving Line of Credit is subject to the additional following conditions precedent:
(a) At the time of each Advance hereunder, the representations and warranties set forth in Article 6 shall be true and correct on and as of such time with the same effect as though such representations and warranties had been made on and as of such time, except to the extent that such representations and warranties expressly relate to an earlier date.
(b) On and as of the date of each Advance hereunder, the Borrowers shall be in compliance with all the terms and provisions set forth herein on each of their parts to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute an Event of Default, shall have occurred and be continuing.
(c) On and as of the date of each Advance hereunder, the aggregate principal amount of all Advances under the Revolving Line of Credit Note then outstanding, plus the amount of the requested Advance shall not exceed the lesser of $5,000,000 and (i) 80% of the then Eligible Accounts, plus (ii) 50% of the then Eligible Inventory.
(d) The Bank shall have received a Request for an Advance dated not more than three Business Days before the date on which the Advance is to be made.
ARTICLE 6
REPRESENTATIONS AND COVENANTS
SECTION 6.01 GENERAL REPRESENTATIONS OF THE BORROWERS
Each of the Borrowers makes the following representations and warranties as the basis for the undertakings on its part herein contained:
(1) It is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida (with the exception of KINPAK which is a corporation duly organized, validly existing and in good standing under the laws of the State of Alabama), and each is authorized to do business in all jurisdictions in which the character of its properties or the nature of its business requires such qualifications or authorization.
(2) It has the corporate power and authority to own its properties and assets and to carry on its business as now being conducted and as now proposed to be conducted.
(3) Its financial statements that have been furnished to the Bank are complete and correct in all material respects and fairly present its financial condition as of the date or dates indicated and for the periods involved in accordance with generally accepted accounting principles applied on a consistent basis. There has been no materially adverse change in its financial condition or operations since the date of its most recent financial statements furnished to the Bank.
(4) It has good and marketable title to all its properties and assets reflected on its most recent balance sheet furnished to the Bank, except for such properties and assets (valued in the aggregate, at the time of their disposition, at not in excess of $200,000) as have been disposed of since the date of such balance sheet as no longer used or useful in the conduct of its business or as have been disposed of in the ordinary course of its business. All such properties and assets are free and clear of liens of any nature, except as disclosed in such financial statements.
(5) It has filed or caused to be filed all federal, state and local tax returns which are required to be filed by it as of the date hereof, and has paid or caused to be paid all taxes as shown on such returns or on any assessments received by it to the extent that such taxes have become due and payable.
(6) It has not used, and does not intend to use, any part of the proceeds of the Bonds, and has not incurred any indebtedness to be reduced, retired, or purchased by it out of such proceeds, for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, and it does not own and has no intention of acquiring any such margin stock.
(7) The execution and delivery of the Financing Documents to which it is a party does not involve any prohibited transaction within the meaning of the Employee Retirement Income Security Act of 1974, as amended (ERISA), of the Internal Revenue Code. It has fulfilled its obligations, if any, under minimum funding standards of ERISA and is in compliance in all material respects with the applicable provisions of ERISA.
(8) It has full legal power to consummate the transactions contemplated by the Financing Documents to which it is a party.
(9) By proper action of its Board of Directors it has duly authorized the execution and delivery of the Financing Documents to which it is a party and the consummation of the transactions contemplated therein.
(10) It has obtained all consents, approvals, authorizations, and orders of governmental authorities that are required to be obtained by it as a condition to the execution and delivery of the Financing Documents to which it is a party.
(11) The execution and delivery by it of the Financing Documents to which it is a party and the consummation by it of the transactions contemplated therein do not and will not (i) conflict with, be in violation of, or constitute (upon notice or lapse of time or both) a default under its certificate of incorporation or bylaws or any indenture, mortgage, deed of trust or other contract, agreement or instrument to which it is a party or is subject, or any resolution, order, rule, regulation, writ, injunction, decree or judgment of any governmental authority or court having jurisdiction over it which would result in a material adverse effect on the business or operations of the Borrower or (ii) result in or require the creation or imposition of any lien of any nature upon or with respect to any of its properties now owned or hereafter acquired, except as contemplated by the Financing Documents.
(12) The Financing Documents to which it is a party constitute legal, valid, and binding obligations of the Borrower and are enforceable against it in accordance with the terms of such instruments, except as enforcement thereof may be limited by (i) bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors' rights and (ii) general principles of equity, regardless of whether such enforceability is considered in a proceeding at equity or at law.
(13) There is no action, suit, proceeding, inquiry or investigation pending before any court or governmental authority, or, to the best of the Borrower's knowledge, threatened against it or affecting it or its properties, that (i) involves the consummation of the transactions contemplated by, or the validity or enforceability of, any of the Financing Documents or (ii) could have a materially adverse impact upon its financial condition or operations.
(14) Neither the Borrower nor any of its Collateral is in violation of any easements, covenants or restrictions affecting any the Collateral, the violation of which could have a material adverse effect on the business or operations of the Borrower.
(15) It has obtained all necessary licenses, franchises, permits, certificates of need and other authorizations necessary for the operation of the Collateral under applicable laws, ordinances, and regulations, except where the failure to do so would not have a material adverse affect on the business or operations of the Borrower.
(16) Neither the Collateral nor the Borrower is in material violation of, or subject to, any existing, pending, or to the Borrower's knowledge, threatened investigation or inquiry by any governmental authority or any remedial obligations under any applicable laws, rules or regulations pertaining to health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and there are no facts, conditions or circumstances known to it which are likely to result in any such investigation or inquiry if such facts, conditions and circumstances, if any, were fully disclosed to the applicable governmental authority, and the Borrower will promptly notify the Bank if the Borrower becomes aware of any such facts, conditions or circumstances or any such investigation or inquiry; the Borrower has obtained all material permits, licenses, or similar authorizations to construct, occupy, operate or use any buildings, improvements, fixtures or equipment in connection with the Collateral constructed or to be constructed by reason of any environmental laws, rules or regulations; no oil, toxic or hazardous substances, solid wastes, irritants, contaminants, or infectious or medical wastes have been disposed of or released at the site of the Collateral, except in the ordinary course of business and in compliance
with all applicable laws and regulations, and the Borrower agree that it will not in its use of such property dispose of or release oil, toxic or hazardous substances, solid wastes, irritants, contaminants, or infectious or medical wastes on such property except in the ordinary course of business and in compliance with all applicable laws and regulations, (the terms "hazardous substance" and "release" shall have the meanings specified in CERCLA, and the terms "solid waste" and "disposal," "dispose" or "disposed" shall have the meanings specified in RCRA, except that if such acts are amended to broaden the meanings thereof, the broader meaning shall apply herein).
(17) No proceedings are pending, or, to the best of the Borrower's knowledge, threatened, to acquire any power of condemnation or eminent domain, with respect to the Collateral or any interest therein, or to enjoin or similarly prevent or restrict the operation of the Collateral in any manner.
(18) The Borrowers' chief executive offices are located at 4041 S.W. 47th Avenue, Ft. Lauderdale, Florida 33314.
(19) It has no claim, defense or right of setoff against any of the Obligations.
(20) Its fiscal year ends December 31.
SECTION 6.02 CORPORATE EXISTENCE
The Borrowers shall do or cause to be done all things necessary to keep their corporate existences in full force and effect and shall not merge with any other corporation or other entity or dissolve or transfer all or substantially all their assets to any other person without the prior written consent of the Bank. The Borrowers will not allow any other corporation to merge into them without the prior written consent of the Bank.
SECTION 6.03 ACCOUNTING RECORDS
The Borrowers will maintain proper books of record and account, in which full and correct entries regarding their business and affairs will be made in accordance with generally accepted accounting principles consistently applied.
SECTION 6.04 REPORTS TO BANK
During the term of this Agreement, Ocean covenants that, unless waived by the Bank it will provide to the Bank the following:
(1) Within 30 days after the end of each calendar month an unaudited income and expense statement and balance sheet of Ocean and its consolidated Subsidiaries certified by the chief financial officer of Ocean;
(2) Within 120 days after the end of each fiscal year, consolidated and consolidating statements of income and retained earnings of Ocean and its consolidated Subsidiaries for such fiscal year, and a balance sheet of Ocean and its consolidated Subsidiaries as of the end of such fiscal year, audited by an independent certified public accountant selected by Ocean and acceptable to the Bank;
(3) Within 30 days after the filing thereof, a copy of each of the Borrowers' Federal income tax returns.
(4) Within a reasonable period of time, after request, such other information or documents as the Bank may reasonably request.
SECTION 6.05 NOTICE OF DEFAULT
Promptly after the Borrowers or any officer of the Borrowers become aware of any material default (as defined below in this Section), the Borrowers will deliver to the Bank a written notice specifying the nature and period of existence thereof and the action being taken and proposed to be taken with respect thereto. For purposes of this Section, a "material default" means the existence of an event of default under any of the Financing Documents or under any instrument evidencing or securing any other indebtedness or contingent liability of the Borrowers or any Subsidiaries of the Borrowers, or the occurrence and continuation of any event which, with notice or lapse of time or both, would constitute an event of default under any of the Financing Documents or under any instrument evidencing or securing any other indebtedness or contingent liability of the Borrowers or any Subsidiaries of the Borrowers.
SECTION 6.06 LITIGATION NOTICE
Promptly after the Borrowers or any officer of the Borrowers become aware of the existence of any material litigation (as defined below in this Section), the Borrowers will deliver to the Bank a written notice specifying the nature and period of existence thereof and the action being taken and proposed to be taken with respect thereto. For purposes of this Section, "material litigation" means any action, suit, proceeding, inquiry or investigation pending before any court or governmental authority, or threatened against the Borrowers or affecting the Borrowers or any of their Subsidiaries or the Borrowers' or any Subsidiary's properties, that (i) involves the consummation of the transactions contemplated by, or the validity or enforceability of, any of the Financing Documents or (ii) could have a materially adverse impact upon the financial condition or operations of the Borrowers or any of their Subsidiaries.
SECTION 6.07 COVENANTS REGARDING FINANCIAL CONDITION
(a) The Borrowers hereby covenant and agree
(1) Adjusted Leverage Ratio. Borrowers on a consolidated basis will maintain at all times an Adjusted Leverage Ratio of no more than 2.5 to 1.0. As used herein "Adjusted Leverage Ratio" means the ratio of Liabilities plus Guaranteed Obligations, less any Subordinated Debt, divided by Tangible Net Worth.
(2) Fixed Charge Coverage Ratio. Borrowers on a consolidated basis will maintain at all times a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00 As used herein "Fixed Charge Coverage Ratio" means the ratio of net income plus depreciation, Interest Expense and rent and lease expense to current maturities of long-term debt plus Interest Expense and rent and lease expense.
(3) Current Ratio. Borrowers on a consolidated basis will maintain at all times a Current Ratio of no less than 1.5 to 1.0. As used herein "Current Ratio" means the ratio of current assets to current liabilities.
(4) Disposition of Assets. Borrowers will not, other than in the ordinary course of business, sell, lease, transfer or otherwise dispose of any substantial part of their properties and assets; provided, however, that Borrowers may sell, lease, transfer or otherwise dispose of any of their properties or assets not used in the manufacturing operations at the Project if as a result of such sale, lease, transfer or disposal, an event of default under any of the Financing Documents, or any circumstance that with notice or lapse of time or both would constitute an event of default under any of the Financing Documents, does not exist.
(5) Sale or Encumbrance of Receivables. Borrowers will not sell, assign, discount, pledge or otherwise encumber any of their Receivables or any promissory note held by them, with or without recourse, other than the discount of notes in the ordinary course of business for collection.
(6) Liens or Security Interests. Borrowers will not grant any lien on or security interest in, or otherwise encumber, any of the Collateral, and, except for liens for taxes not yet due and payable or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves are being maintained by Borrowers and those liens disclosed to the Bank by Borrowers in writing prior to the execution of this Agreement, Borrowers shall not permit to exist any lien, security interest or other encumbrance on any of the Collateral.
(b) Except as otherwise expressly provided in this Section, (i) Borrowers shall cause each of their Subsidiaries to observe and perform each of the covenants and agreements of this Section to be observed and performed by Borrowers , and (ii) all computations required in connection with the financial covenants contained in this Section shall be made for Borrowers and their Subsidiaries on a combined or consolidated basis, after elimination of intercompany items. Compliance with financial covenant ratios shall be in accordance with generally accepted accounting principles. Compliance with the ratios will be based on information reflected on the Borrowers' year-end financial statements commencing with fiscal year end 2002.
SECTION 6.08 AMENDMENTS TO FINANCING DOCUMENTS
Unless the Bank shall otherwise consent in writing (which consent may be granted or refused in the Bank's reasonable discretion), the Borrowers agree not to enter into or consent to or effectuate any amendment to or assignment of any of the Financing Documents.
SECTION 6.09 INCORPORATION OF COVENANTS BY REFERENCE
The Borrowers agree that they will perform and comply with each and every covenant and agreement required to be performed or observed by them in the Financing Documents, which provisions, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety. To the extent that any such incorporated provision permits the Trustee or the holders of one or more Bonds or any other person to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the Trustee or the holders of one or more Bonds or any other person, for purposes of this Agreement, such provision shall be complied with only if it is waived by the Bank and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable and satisfactory to the Bank. No amendment to such covenants and agreements or defined terms made pursuant to any of the Financing Documents shall be effective to amend such covenants and agreements and defined terms as incorporated by reference herein without the consent of the Bank.
SECTION 6.10 PAYMENT OF TAXES
The Borrowers will pay or cause to be paid as they become due and payable, prior to penalty or the expiration of applicable grace periods, all taxes, assessments and other governmental charges lawfully levied or assessed or imposed upon them or their properties or any part thereof or upon any income therefrom; provided, that the Borrowers shall not be required to pay and discharge or cause to be paid and discharged any such tax, assessment or governmental charge to the extent that the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings, the Borrowers promptly notify the Bank of such contest and the Borrowers shall have established and maintain with the Bank security satisfactory to the Bank, or established reserves with respect thereto in accordance with generally accepted accounting principles, against any loss, damage or injury that may result if the Borrowers are unsuccessful in such contest.
SECTION 6.11 MAINTENANCE OF PROPERTIES
The Borrowers will cause all their properties necessary or useful in the conduct of their business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, alterations, betterments and improvements thereof, all as in the judgment of the Borrowers may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times.
SECTION 6.12 OPERATION OF COLLATERAL
The Borrowers will conduct the operation of the Collateral at all times in a prudent manner in compliance with applicable laws and regulations relating thereto and will maintain in effect all material licenses, permits, and certificates necessary for the use and operation of the Collateral.
SECTION 6.13 OTHER AGREEMENTS
The Borrowers shall not enter into any agreement containing any provision which would be violated or breached by the performance of their obligations hereunder or under the Financing Documents or under any instrument or document delivered or to be delivered by them hereunder or in connection therewith.
SECTION 6.14 ENCUMBRANCES
The Borrowers shall not create or suffer to exist any assignment, mortgage, pledge, security interest, conditional sale or other title retention agreement, lien, charge or encumbrance upon any of the Collateral, except as permitted in the Mortgage and the Security Agreement.
SECTION 6.15 MAINTENANCE OF INSURANCE
The Borrowers will at all times maintain and keep in force insurance of the types and in the amounts customarily carried in lines of business similar to the Borrowers' and such other insurance as the Bank may reasonably require, including, without limitation, fire, public liability, casualty, property damage, flood damage, and worker's compensation insurance, which insurance shall be carried with the Borrowers' current insurers and in current amounts or such other company or companies and in such other amounts as are satisfactory to the Bank; provided, however, all property insurance on the Project shall at all times be in amounts equal to the full insurable value of the property insured and the insurer shall provide to the Bank a mortgagee endorsement with respect thereto. The Borrowers shall deliver to the Bank from time to time at the Bank's request copies of all such insurance policies and certificates of insurance and schedules setting forth all insurance then in effect.
SECTION 6.16 COMPLIANCE WITH ENVIRONMENTAL LAWS
The Borrowers will at all times maintain all of their real property and business operations in compliance with all applicable present and future federal, state and local environmental laws, regulations and court or administrative orders relating to pollution control and environmental contamination unless such failure to comply would not have a material adverse effect on the Borrowers; and immediately notify the Bank of any knowledge, notice, actions, lien or other similar action alleging either the location of any hazardous substances or the violation of any environmental laws with respect to such real property.
SECTION 6.17 DAMAGE AND DESTRUCTION
(a) If before the Obligations are paid in full, all or any portion of the Collateral is damaged or destroyed by fire, explosion or other hazard, and if the Borrowers , within ten days after the event causing such damage or destruction, advise the Bank in writing that in the Borrowers' opinion the Collateral can be restored within six months after such event to substantially the same operating utility that it had prior to such event, then at the Borrowers' request the net proceeds of insurance resulting from such damage or destruction shall be given to the Borrowers to be used, to the extent necessary, for the purpose of reconstructing any damaged portion of the Collateral or remedying a loss thereof, provided, however, that if the damage or loss is of an amount in excess of $250,000 such proceeds shall be held by the Bank prior to reconstruction or reinvestment in the Collateral and paid over to the Borrowers only upon delivery of invoices or other appropriate documentation. Any net proceeds of insurance that are not paid to the Borrowers pursuant to the preceding sentence shall be applied by the Bank toward prepayment of the Obligations, in any order, whether or not then due.
(b) If before all Obligations are paid in full, all or any portion of the Collateral is damaged or destroyed by fire, explosion or other hazard, and if the Borrowers fail to advise the Bank, within ten days after the event causing such damage or destruction, that in the Borrowers' opinion the Collateral can be restored within six months after the event causing such damage or destruction to substantially the same operating utility it had prior to such event, then at the option of the Bank, the net proceeds of insurance resulting from such damage or destruction shall be paid to the Bank and applied toward prepayment of the Obligations, in any order, whether or not then due.
SECTION 6.18 CONDEMNATION
If before all Obligations are paid in full, title to, or the temporary use of, the Collateral or any portion thereof is taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the proceeds received by the Borrowers and/or the Bank from any award in such eminent domain proceedings shall be applied and certain related actions shall be taken as follows:
(1) if in the Bank's reasonable opinion exercised in good faith such taking does not significantly impair the operating utility of the Collateral, then the proceeds of such award shall be paid to the Borrowers;
(2) if in the Bank's reasonable opinion exercised in good faith such taking significantly impairs the operating utility of the Collateral and
(A) in the Borrowers' opinion, repairs, restorations, modifications, relocations, rearrangements and acquisitions of substitute facilities and improvements can be made within three months after such taking to the extent necessary to restore the Collateral to substantially the same operating utility that it had prior to such taking and the Borrowers agree to make such restoration and pay all of the costs thereof in excess of the proceeds of such award, then the proceeds of such award shall be paid to the Borrowers; or
(B) in the Borrowers' opinion, the Collateral cannot within three months after such taking be restored to substantially the same operating utility that it had prior to such taking, or if the Borrowers do not agree to undertake such restoration and pay the costs thereof in excess of the proceeds of such award, then the proceeds of such award shall be paid to the Bank and applied toward prepayment of the Obligations, in any order, whether or not then due.
SECTION 6.19 REDEMPTION OF BONDS
KINPAK agrees to cause the Board to redeem outstanding Bonds in accordance with the terms of the Indentures and the Bonds.
SECTION 6.20 BANKING RELATIONSHIP
Borrowers shall maintain a banking relationship with the Bank for the purpose of the deposit of all Advances and payment of all reimbursement obligations under the Credit Agreement.
SECTION 6.21 ALABAMA RIVER DOCK FACILITY
KINPAK currently leases certain dock facilities located on the Alabama River from the State of Alabama, but as of the date hereof is not using such facilities in its business operations. KINPAK agrees that if at any time in the future during which any of the Obligations are outstanding KINPAK again uses such dock facilities as a part of its business operations, KINPAK will grant to the Bank a collateral assignment of and mortgage on its leasehold interest in such dock facilities.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01 EVENTS OF DEFAULT
Any one or more of the following shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(1) (i) default in any payment required under Articles 2 as and when the same become due and payable, or (ii) default in any payment required under Article 3, as and when the same shall become due and payable and the expiration of 10 days thereafter; or
(2) default in the performance, or breach, of any covenant, condition or agreement on the part of the Borrowers contained in Sections 6.02, 6.07 or 6.08 hereof; or
(3) default in the performance, or breach, of any covenant or warranty of the Borrowers in this Agreement (other than a covenant or warranty, a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Borrowers by the Bank a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a notice of default hereunder; or
(4) the filing of a petition in bankruptcy (or the other commencement of a bankruptcy or similar proceeding) by any of the Borrowers under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect; or
(5) the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) against any of the Borrowers under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect, and such petition shall not be discharged or dismissed within 90 days after the date on which such petition was filed; or
(6) any Borrower (a) applies for or consents to the appointment
of a receiver for all or a substantial part of its property or assets,
(b) admits in writing its inability to pay its debts as such debts
become due or (c) makes a general assignment for the benefit of its
creditors; or
(7) any representation or warranty made by the Borrowers herein or in any document, instrument or certificate furnished to the Bank in connection with the issuance of the Letters of Credit or the consummation of the transactions contemplated by the Financing Documents shall at any time prove to have been false or incorrect in any material respect as of the time made; or
(8) the occurrence of an event of default, as therein defined, under any other Financing Document and the expiration of the applicable grace period, if any, specified therein; or
(9) the rendering against the Borrowers of a final judgment, decree or order for the payment of money in excess of $250,000 and the continuance of such judgment, decree or order unsatisfied and in effect for any period of 45 consecutive days without a stay of execution.
SECTION 7.02 REMEDIES
(a) Upon the occurrence of any Event of Default, the Bank shall have the absolute right and at its option and election and in its sole discretion to exercise alternatively or cumulatively any or all of the remedies set forth in this Section 7.02.
(b) Without limitation upon the provisions of paragraph (a) above, if any Event of Default shall have occurred and be continuing, the Bank may exercise any of the following remedies:
(1) give written notice of an Event of Default under this Agreement to the 2002 Trustee directing the 2002 Trustee to effect a mandatory tender of the 2002 Bonds as provided in Section 302 of the 2002 Indenture; or
(2) give written notice of an Event of Default under this Agreement to the 1997 Trustee directing the 1997 Trustee to "accelerate the 1997 Bonds" pursuant to Section 601(f) of the 1997 Indenture, whereupon an event of default shall occur under the 1997 Indenture, and the 1997 Trustee shall declare the 1997 Bonds immediately due and payable and shall make a draw under the Substitute Letter to pay the principal of the 1997 Bonds and the interest thereon to the date of such declaration; or
(3) give written notice of an Event of Default under this Agreement to the 2002 Trustee directing the 2002 Trustee to "accelerate the 2002 Bonds" pursuant to Section 602 of the 2002 Indenture,
whereupon an event of default shall occur under the 2002 Indenture, and the 2002 Trustee shall declare the 2002 Bonds immediately due and payable and shall make a draw under the Letter of Credit to pay the principal of the 2002 Bonds and the interest thereon to the date of such declaration; or
(4) upon notice to the Borrowers, declare all amounts, if any, not otherwise immediately due under this Agreement or the Revolving Line of Credit Note to be, and all such amounts shall thereupon become, due and payable to the Bank, without presentment, demand, protest, or other notice of any kind, all of which are expressly waived, anything in this Agreement, the Revolving Line of Credit Note, the Mortgage or the Security Agreement to the contrary notwithstanding; or
(5) exercise its banker's lien or right of set-off; or
(6) proceed to protect its rights by suit in equity, action at law or other appropriate proceedings, whether for the specific performance of any covenant or agreement of the Borrowers herein contained or in aid of the exercise of any power or remedy granted to the Bank under any Financing Document; or
(7) exercise all of its rights, remedies and power under the Mortgage, the Security Agreement and all other Collateral.
SECTION 7.03 ACCELERATION OF REIMBURSEMENT
If an Event of Default exists under this Agreement and the maturity of the Bonds has not been accelerated pursuant to Section 601(f) of the 1997 Indenture or Section 602 of the 2002 Indenture, the Borrowers agree to pay to the Bank, promptly upon demand by the Bank therefor, an amount equal to the maximum amount available to be drawn under the Letters of Credit. All amounts so paid to the Bank (or recovered by the Bank by legal or other action in the event the Borrowers shall fail or refuse to make payment as required by this Section) shall be held by the Bank in reserve as security for reimbursement for any draws the Bank may be required to pay under the Letters of Credit with respect to which an acceleration has not occurred. The Bank may maintain any reserve held under the terms of this Agreement in any manner the Bank may see fit, and the Bank shall invest the same in such investment or investments (including but not limited to certificates of deposit issued by the Bank) as the Bank may choose, subject to any applicable arbitrage restriction or regulation. The Bank shall not be required to pay, or to account to the Borrowers or anyone else for, any interest or other earnings on any reserve at any time held by the Bank under this Agreement, except that any income or profits from any investment of such reserve made by the Bank shall become a part of such reserve. At such time as all of the Obligations have been paid in full and the Letters of Credit have been terminated, all amounts remaining in such reserve (if any) shall be paid to the Borrowers.
SECTION 7.04 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 every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed expedient.
SECTION 7.05 AGREEMENT TO PAY ATTORNEYS' FEES
If the Borrowers should default under any of the provisions of this Agreement and the Bank should employ attorneys or incur other expenses for the collection of any payments due hereunder or the enforcement of performance or observance of any agreement or covenant on the part of the Borrowers herein contained, the Borrowers will, within 15 days of the Borrowers' receipt of demand therefor, pay to the Bank the reasonable fees of such attorneys and such other reasonable expenses so incurred.
SECTION 7.06 NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER
If any agreement contained in this Agreement should be breached by the Borrowers and thereafter waived by the Bank, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
SECTION 7.07 REMEDIES SUBJECT TO APPLICABLE LAW
All rights, remedies and powers provided by this Article may be exercised only to the extent the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Agreement invalid or unenforceable.
SECTION 7.08 WAIVER BY BORROWERS
The Borrowers hereby waive, as to the enforceability of this Agreement, except as set forth herein or in any of the other Financing Documents, presentation and demand for payment (or protest of nonpayment) of the Obligations or, until the Obligations have been fully paid, any rights of subrogation they may have against others by reason of performance under this Agreement.
SECTION 7.09 SET OFF
In addition to all Liens upon, and rights of set-off against, any moneys, securities or other property of the Borrowers given to the Bank by law, the Bank shall have a Lien upon and a right of set-off against all moneys, securities and other property of the Borrowers now or hereafter in the possession of, or on deposit with, the Bank, whether held in a general or special account or deposit, for safekeeping or otherwise, to secure the obligations of the Borrowers under this Agreement; and every such Lien and right of set-off may be exercised without demand upon or notice to the Borrowers.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01 NO WAIVER
No failure or delay on the part of the Bank in exercising any right, power or remedy hereunder shall be construed as a waiver of such; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof. The remedies herein provided are cumulative and not exclusive of any other remedies provided by law.
SECTION 8.02 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings and agreements with respect thereto.
SECTION 8.03 REVIEW BY BORROWERS
The Borrowers expressly acknowledge that they have had an adequate opportunity to review this Agreement and all documents related thereto, that they are under no compulsion to execute this Agreement or any instruments contemplated herein, that they have not in any way relied upon the advice or recommendations of the Bank, its officers, shareholders, directors, employees, or attorneys, except as set forth in this Agreement.
SECTION 8.04 WAIVER OF TRIAL BY JURY
TO THE EXTENT LEGALLY ENFORCEABLE, THE BANK AND THE BORROWERS IRREVOCABLY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY COURT IN ANY ACTION: (a) THE BANK BRINGS TO COLLECT AMOUNTS OWED THE BANK UNDER THIS AGREEMENT AND (b) ALLEGING THAT (i) THE BANK HAS BREACHED THIS AGREEMENT, OR ANY AGREEMENT RELATING TO THIS AGREEMENT, (ii) THE BANK HAS BREACHED ANY OTHER AGREEMENT, EXPRESS OR IMPLIED, (iii) THE BANK OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS HAVE ACTED WRONGFULLY, NEGLIGENTLY OR OTHERWISE TORTIOUSLY WITH RESPECT TO THE BORROWERS.
To the extent that any court of competent jurisdiction determines that such jury waiver is inapplicable or unenforceable with respect to any claim or dispute, such claim or dispute shall be submitted to and settled by final and binding arbitration under the Federal Arbitration Act or other applicable law pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Such proceeding shall be held before a single arbitrator who is an active attorney or retired judge. The party against which the decision is rendered shall pay the costs and reasonable attorneys' fees of the prevailing party for any arbitration proceeding.
SECTION 8.05 NOTICES
(a) Any request, demand, authorization, direction, notice, consent, or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrowers or the Bank shall be sufficient for every purpose hereunder if in writing and (except as otherwise provided in this Agreement) either (i) delivered personally to the party or, if such party is not an individual, to an officer, partner, member or other legal representative of the party to whom the same is directed, or (ii) mailed by registered or certified mail, postage prepaid and addressed as follows:
If to the Borrowers:
Hand delivery and mailing address:
c/o Ocean Bio-Chem, Inc.
4041 S.W. 47th Avenue
Ft. Lauderdale, Florida 33314
Attention: Mr. Edward Anchel
If to the Bank:
Hand delivery address:
Regions Bank
8 Commerce Street
Montgomery, Alabama 36104
Attention: Mr. Timothy D. Riley
Mailing address:
Regions Bank
Post Office Box 511
Montgomery, Alabama 36101-0511
Attention: Mr. Timothy D. Riley
Any of such parties may specify a different address for the receipt of such documents by mail by giving notice of the change in address to the other party as provided in this Section.
(b) Any such notice or other document shall be deemed to be received
(i) as of the date delivered, if delivered personally in accordance with
subsection (a) of this Section, or (ii) as of three days after the date
deposited in the mail, if mailed in accordance with subsection (a) of this
Section.
SECTION 8.06 INDEMNIFICATION
(a) The Borrowers agree to defend, indemnify, and hold harmless the Bank, its directors, officers, employees, and agents (the "Indemnitees") from and against any and all claims, demands, judgments, damages, actions, causes of action, injuries, orders, penalties, reasonable costs and expenses, (including without limitation, costs of court and reasonable attorney's fees) of any kind whatsoever in connection with the execution and delivery or transfer of or payment or failure to pay under the Letters of Credit; provided, however, said indemnities shall not apply to any claims, damages, lawsuits, liabilities, costs, or expenses to the extent, but only to the extent, caused by (i) the willful misconduct or negligence of the Bank in determining whether a draft or certificate presented under the Letters of Credit complied with the terms of the Letters of Credit; or (ii) the Bank's negligent or willful failure to pay under the Letters of Credit after presentation to it by the Trustee of a draft and certificate strictly complying with the terms and conditions of the Letters of Credit.
(b) The Borrowers shall indemnify and hold the Bank harmless from and against any fines, charges, expenses, fees, attorney fees and costs incurred by the Bank in the event the Borrowers or the Collateral (whether or not due to any fault of the Borrowers) is hereafter determined to be in violation of any environmental laws, rules or regulations applicable thereto, including, without limitation, those described in Section 6.01(16) of this Agreement, but only with respect to such violations that occur or exist prior to foreclosure of the Mortgage or transfer of deed in lieu of foreclosure, and this indemnity shall survive any foreclosure of the Mortgage or deed in lieu of foreclosure and repayment of the Obligations.
SECTION 8.07 LIABILITY OF THE BANK
For the exclusive benefit of the Bank and as between the Bank and the Borrowers only, the Borrowers assume all risks of, but shall not be liable or responsible to the Bank or any other person or entity for damages arising out of, the acts or omissions of the Trustee and any transferee of the Letters of Credit with respect to the Trustee's or such transferee's use of the Letters of Credit. Neither the Bank nor any of its officers or directors shall be liable or responsible for: (i) the use which may be made of the Letters of Credit or for any acts or omissions of the Trustee and any such transferee in connection therewith; (ii) 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, fraudulent or forged; (iii) payment by the Bank under the Letters of Credit against presentment of documents which do not strictly comply with the terms of the Letters of Credit, including but not limited to, failure of any documents to bear any reference or adequate reference to the Letters of Credit; or (iv) any other circumstances whatsoever in making or failing to make payment under the Letters of Credit, except only that the Borrowers shall have a claim against the Bank, and the Bank shall be liable to the Borrowers, to the extent, but only to the extent, of any damages suffered by the Borrowers which were caused by (A) the Bank's willful misconduct or gross negligence in determining whether documents presented under the Letters of Credit comply with the terms of the Letters of Credit or (B) the Bank's willful or negligent failure to pay under the Letters of Credit after the presentation to it by the Trustee of a draft and certificate strictly complying with the terms and conditions of the Letters 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.
SECTION 8.08 CONTINUING OBLIGATION
This Credit Agreement is a continuing obligation and shall (i) be binding upon the Borrowers and the Bank, their successors and assigns, and (ii) inure to the benefit of and be enforceable by the Borrowers and the Bank and their successors and assigns; provided, that the Borrowers may not assign all or any part of this Credit Agreement without the prior written consent of the Bank.
SECTION 8.09 PARTICIPATION
The Borrowers understand that the Bank may from time to time enter into a participation agreement or participation agreements with one or more participants pursuant to which each such participant shall be given a participation in the Obligations; provided, however, that (a) the Bank shall remain solely responsible for the performance of its obligations hereunder, the Bank shall continue to deal with the Borrowers in all matters connected herewith, and the Borrowers shall continue to deal solely and directly with the Bank in all matters connected herewith, and (b) the entering into such participation agreements shall not result in the imposition of additional costs on the Borrowers Except as otherwise permitted in this Section 8.09, the Bank will not assign any of its rights or delegate any of its duties or responsibilities with respect to the Obligations without the prior written consent of the Borrowers.
SECTION 8.10 GOVERNING LAW
This Agreement, all other Financing Documents and the Letters of Credit shall be governed by and construed in accordance with the laws of the State of Alabama.
SECTION 8.11 COSTS, EXPENSES AND TAXES
The Borrowers agree to pay at the time of the execution hereof (i) the reasonable costs and expenses in connection with the preparation, execution, and delivery of this Agreement and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Bank with respect thereto, and (ii) after the occurrence of an Event of Default, or the occurrence of an event which the Bank reasonably believes may lead to an Event of Default, the reasonable fees and out-of-pocket expenses of counsel for the Bank with respect to advising the Bank as to its rights and responsibilities under this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed and delivered by their duly authorized officers.
OCEAN BIO-CHEM, INC.
(SEAL)
By: /s/ Peter Dornau
------------------------
Its President
------------------------
ATTEST:
/s/ Ed Anchel
-------------------------------
Its Asst. Secretary
---------------------------
|
STAR-BRITE DISTRIBUTING, INC.
(SEAL)
By: /s/ Peter Dornau
------------------------
Its President
------------------------
ATTEST:
/s/ Ed Anchel
-------------------------------
Its Asst. Secretary
---------------------------
|
STAR BRITE AUTOMOTIVE, INC.
(SEAL)
By: /s/ Peter Dornau
------------------------
Its President
------------------------
ATTEST:
/s/ Ed Anchel
-------------------------------
Its Asst. Secretary
---------------------------
STAR BRITE DISTRIBUTING (CANADA), INC.
(SEAL)
By: /s/ Peter Dornau
------------------------
Its President
------------------------
ATTEST:
/s/ Ed Anchel
-------------------------------
Its Asst. Secretary
---------------------------
|
KINPAK INC.
(SEAL)
By: /s/ Peter Dornau
------------------------
Its President
------------------------
ATTEST:
/s/ Ed Anchel
-------------------------------
Its Asst. Secretary
---------------------------
|
(BORROWERS)
REGIONS BANK
By: /s/ Timothy O. Riley
-----------------------
Its Vice President
-----------------------
|
(Bank)
EXHIBIT A
TO
CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
Accounts Receivable $
------------
Less Those More Than 90 Days ($ )
------------
Accounts Receivable Not More
Than 90 Days $
------------
Less payments, Adjustments, etc.
on Eligible Accounts ($ )
------------
Eligible Accounts $
------------
80% Advance Rate x .80
------------
Accounts Receivable
Borrowing Base $
-----------
Eligible Inventory $
------------
50% Advance Rate x .50
------------
Inventory Borrowing Base $
-----------
Total Borrowing Base $ *
-----------
Less Outstanding Balance
on Revolving Line of Credit ($ )
-----------
Available to Draw $
----------
|
* Shall not exceed $5,000,000
I certify the above information is true and correct and accurately reflects the books and records of ___________________________. as of this the ______ day of ___________________, _____.
EXHIBIT B
TO
CREDIT AGREEMENT
EXHIBIT C
TO
CREDIT AGREEMENT
Lot 3-3A-1, according to the Map of a Replat of Lot 3-3A, Gunter Industrial Park, which said Replat appears of record in Plat Book 29 at Page 150 in the Office of the Judge of Probate of Montgomery County, Alabama, being a Replat of Lot 3-3 of Gunter Industrial Park Plat 3 and Lot 3-4B of the Replat of Lot 3-4 of Gunter Industrial Park Plat 3, lying in Section 2, Township 16 North, Range 18 East, and Section 35, Township 17 North, Range 18 East, Montgomery County, Alabama.
EXHIBIT D
TO
CREDIT AGREEMENT
(2002 Letter of Credit)
EXHIBIT E
TO
CREDIT AGREEMENT
(Mortgage, Assignment of Leases and Security Agreement)
EXHIBIT F
TO
CREDIT AGREEMENT
(Request for a Revolving Line of Credit Advance)
EXHIBIT G
TO
CREDIT AGREEMENT
(Revolving Line of Credit Note)
EXHIBIT H
TO
CREDIT AGREEMENT
(Security Agreement)
EXHIBIT I
TO
CREDIT AGREEMENT
(Substitute Letter of Credit)
EXHIBIT J
TO
CREDIT AGREEMENT
EXTENSION AGREEMENT
This Extension Agreement (the "Extension Agreement") made as of the _____ day of _________________, 20____ between Regions Bank, an Alabama state bank with a principal office located at Montgomery, Alabama (the "Bank") and Ocean Bio-Chem, Inc. of 4041 S.W. 47th Avenue, Ft. Lauderdale, Florida 33314 and certain affiliated entities hereinafter referred to.
RECITALS:
1. As of July 1, 2002, that certain Credit Agreement (the "Credit Agreement") was executed among the Bank, Ocean Bio-Chem, Inc. and certain affiliated entities named therein (collectively, the "Borrowers") providing for a Revolving Credit Loan (as defined in the Credit Agreement) in the amount of up to $5,000,000 for a period ended May 31, 2003 at the variable rate of interest therein set forth.
2. The Credit Agreement provides for extension of the Revolving Credit Loan term for successive periods of up to one year each in such amounts as the Bank may approve, to be effective by execution by the Borrowers and the Bank of an Extension Agreement in the form hereof.
3. The Bank and the Borrowers, by execution of this Extension Agreement seek to extend the Revolving Credit Loan for the period and in the amount hereinafter indicated.
AGREEMENTS:
1. Definitions. All capitalized terms used herein are as defined in the Loan Agreement unless otherwise stated.
2. Extension of Term and Amount. The Revolving Credit Loan is hereby extended as provided in Section 3.01(b) of the Credit Agreement, subject to the terms and conditions of the Credit Agreement. The maximum principal amount of the Revolving Credit Loan outstanding at any time shall not exceed $___________. The Termination Date of the Revolving Credit Loan pursuant to this Extension Agreement is __________________, subject to prepayment and acceleration pursuant to the terms of the Credit Agreement.
3. Ratification of Loan Agreement. The terms and conditions of the Credit Agreement relating to the Revolving Credit Loan, including the Revolving Credit Note Rate, prepayment provisions, and method of making advances are expressly ratified and affirmed hereby and shall apply with the same force and effect to extensions of credit made under this Extension Agreement as to advances made during the initial term.
4. Security. It is expressly agreed, as provided in the Credit Agreement, that any and all borrowing pursuant to this Extension Agreement is secured according to the terms of such Credit Agreement and all security documents executed in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this instrument on this the ______ day of ______________________, 20____.
OCEAN BIO-CHEM, INC.
STAR-BRITE DISTRIBUTING, INC.
STAR BRITE AUTOMOTIVE, INC.
STAR BRITE DISTRIBUTING (CANADA), INC.
KINPAK INC.
(Borrowers)
REGIONS BANK
EXHIBIT 10.5
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement is made as of this 1st day of June, 2004, by and among Ocean Bio-Chem, Inc., Star-Brite Distributing, Inc., Star Brite Automotive, Inc., Star Brite Distributing (Canada), Inc. and KINPAK INC. (collectively, the "Borrowers") and Regions Bank, Montgomery, Alabama, an Alabama state banking corporation (the "Bank").
R E C I T A L S:
WHEREAS, the Borrowers and the Bank have heretofore entered into a Credit Agreement dated the 1st day of July, 2002 (the "Credit Agreement") relating to among other things a revolving line of credit loan in the principal amount of $5,000,000 (the "Revolving Line of Credit"); and
WHEREAS, pursuant to the Credit Agreement, the Borrowers issued their Revolving Line of Credit Note dated July 1, 2002 in the original principal amount of $5,000,000 (the "Revolving Line of Credit Note"); and
WHEREAS, the term of the Revolving Line of Credit Note has heretofore been extended to June 1, 2004 and currently herewith is being extended to June 1, 2005; and
WHEREAS, the parties hereto wish to modify the terms of the Credit Agreement, the Revolving Line of Credit Note and all documents securing the Revolving Line of Credit Note and the Credit Agreement by increasing the principal amount of the Revolving Line of Credit and the Revolving Line of Credit Note from $5,000,000 to $6,000,000.
NOW THEREFORE, for value received and in consideration of the premises, it is hereby agreed as follows:
1. The principal amount of the Revolving Line of Credit Note is hereby increased from $5,000,000 to $6,000,000.
2. The Revolving Line of Credit Note is hereby amended and restated to read as Exhibit A to this Amendment No. 1 to Credit Agreement. The Revolving Line of Credit Note as amended and restated is herein called the "Restated Revolving Credit Note." The Restated Revolving Credit Note shall hereafter evidence the obligations of the Borrowers to the Bank as evidenced by the Revolving Line of Credit Note, as herein modified. Upon the execution and delivery of the Restated Revolving Credit Note, the Revolving Line of Credit Note shall be marked "CANCELLED" and returned to the Borrowers.
3. All references in the Credit Agreement and the Security Agreement (as defined in the Credit Agreement) and all other documents or instruments securing the Restated Revolving Credit Note are hereby amended and modified to refer to the Restated Revolving Credit Note and said documents are all further amended and modified as shall be necessary to reflect the provisions of the Restated Revolving Credit Note.
4. All instruments providing security for the Revolving Line of Credit shall continue to provide security for the Revolving Line of Credit as increased in amount as provided herein.
5. All other terms and conditions of the Credit Agreement and all related documents are hereby ratified and confirmed.
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to Credit Agreement to be executed by its duly authorized officers as of June 1, 2004.
OCEAN BIO-CHEM, INC.
(SEAL)
By: /s/ Peter G. Dornau
-----------------------------
ATTEST: Its President
-----------------------------
/s/ Edward Anchel
------------------------------
Its Assistant Secretary
--------------------------
|
STAR-BRITE DISTRIBUTING, INC.
(SEAL)
By: /s/ Peter G. Dornau
-----------------------------
ATTEST: Its President
-----------------------------
/s/ Edward Anchel
------------------------------
Its Assistant Secretary
--------------------------
|
STAR BRITE AUTOMOTIVE, INC.
(SEAL)
By: /s/ Peter G. Dornau
-----------------------------
ATTEST: Its President
-----------------------------
/s/ Edward Anchel
------------------------------
Its Assistant Secretary
--------------------------
|
STAR BRITE DISTRIBUTING (CANADA), INC.
(SEAL)
By: /s/ Peter G. Dornau
-----------------------------
ATTEST: Its President
-----------------------------
/s/ Edward Anchel
------------------------------
Its Assistant Secretary
--------------------------
|
KINPAK INC.
(SEAL)
By: /s/ Peter G. Dornau
-----------------------------
ATTEST: Its President
-----------------------------
/s/ Edward Anchel
------------------------------
Its Assistant Secretary
--------------------------
|
(BORROWERS)
REGIONS BANK
By: /s/ Timothy O'Riley
------------------
Its Vice President
|
(BANK)
EXHIBIT 10.6
MORTGAGE, ASSIGNMENT OF LEASES
AND SECURITY AGREEMENT
BY AND AMONG
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
AND
KINPAK INC.,
IN FAVOR OF
REGIONS BANK
DATED AS OF
JULY 1, 2002
THIS INSTRUMENT PREPARED BY
JOHN F. ANDREWS
CAPELL & HOWARD, P.C.
P. O. BOX 2069
MONTGOMERY, AL 36102-2069
(334) 241-8000
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
MORTGAGE, ASSIGNMENT OF LEASES
AND SECURITY AGREEMENT
|
THIS MORTGAGE, ASSIGNMENT OF LEASES AND SECURITY AGREEMENT dated as of July 1, 2002, is entered into by KINPAK INC., an Alabama corporation (herein called "KINPAK") and THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MONTGOMERY, an Alabama public corporation (herein called the "Board" and together with KINPAK, the "Mortgagors"), for the benefit of REGIONS BANK, an Alabama banking corporation with a principal place of business in Montgomery, Alabama (herein called the "Bank");
R E C I T A L S
The Mortgagors have requested that the Bank provide to KINPAK and the
following affiliated parties: Ocean Bio-Chem, Inc., Star-Brite Distributing,
Inc., Star Brite Automotive, Inc. and Star Brite Distributing (Canada), Inc.
(collectively with KINPAK, the "Borrowers") the following credit facilities (the
"Credit Facilities"): (i) a direct-pay irrevocable letter of credit (the
"Substitute Letter") securing the payment of $4,000,000 Industrial Refunding
Revenue Bonds (KINPAK INC. Project) Series 1997 currently outstanding in the
principal amount of $3,280,000 (the "1997 Bonds") issued by the Board, (ii) a
direct-pay irrevocable letter of credit (the "Letter of Credit") securing the
payment of $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project)
Series 2002 (the "2002 Bonds") issued by the Board concurrently herewith, and
(iii) a revolving working capital line of credit (the "Revolving Line of
Credit") in the maximum amount outstanding at any time of $5,000,000.
The 1997 Bonds were issued pursuant to a Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997 (collectively, the "1997 Indenture") between the Board and Regions Bank as Trustee (in such capacity the "1997 Trustee"). The proceeds of the 1997 Bonds were used to refund certain prior revenue bonds of the Board, the proceeds of which were used to renovate and improve a manufacturing facility located in Montgomery, Alabama (the "Existing Facility") currently leased by the Board to KINPAK pursuant to Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by First Supplemental Lease Agreement dated as of March 1, 1997 (collectively the "1997 Lease"). The Borrowers have requested that the Bank issue the Substitute Letter in substitution for the existing letter of credit heretofore issued by First Union National Bank of Florida securing the 1997 Bonds.
The 2002 Bonds are being issued pursuant to a Trust Indenture dated as of July 1, 2002 (the "2002 Indenture") between the Board and Regions Bank, as Trustee (acting in such capacity, the "2002 Trustee"). The Board will use the proceeds of the 2002 Bonds to finance (i) the construction of an approximately 70,000 square foot addition to the Existing Facility and the acquisition of certain machinery and equipment for use therein (collectively the "2002 Improvements") and (ii) the payment of a portion of the expenses of issuing the 2002 Bonds. KINPAK and the Board will enter into a Second Supplemental Lease Agreement dated as of July 1, 2002 pursuant to which KINPAK will lease the 2002 Improvements from the Board and KINPAK will agree to pay additional rent to the Board sufficient to pay the debt service on the 2002 Bonds. The Existing Facility as improved by the 2002 Improvements is herein referred to as the "Project." Regions Bank when acting in the capacity as both the 1997 Trustee and 2002 Trustee is herein referred to as the "Trustee."
As security for the payment of the 2002 Bonds, the Borrower will cause the Bank to issue the Letter of Credit in favor of the 2002 Trustee in the amount of (i) the aggregate principal amount of the 2002 Bonds, to enable the 2002 Trustee to pay the principal amount of the 2002 Bonds when due and to pay the principal portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase, plus (ii) interest on the 2002 Bonds for a period of 120 days at the rate of 12% per annum, to enable the 2002 Trustee to pay interest on the 2002 Bonds when due and to pay the interest portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase.
The Revolving Line of Credit will be made available by the Bank to the Borrowers pursuant to the terms hereof and the Borrowers will use the moneys drawn under the Revolving Line of Credit to provide working capital for the Borrowers' business operations. The obligations of the Borrowers under the Revolving Line of Credit will be evidenced by a promissory note of the Borrowers in favor of the Bank dated as of July 1, 2002.
The Substitute Letter , the Letter of Credit and the Revolving Line of Credit are being issued pursuant to a Credit Agreement dated as of July 1, 2002 by and among the Borrowers and the Bank (the "Credit Agreement").
As security for the Borrowers' obligations under the Credit Agreement with respect to the Substitute Letter, the Letter of Credit and the Revolving Line of Credit the Board and KINPAK are executing this Mortgage, Assignment of Leases and Security Agreement (this "Mortgage") in favor of the Bank.
NOW, THEREFORE, for value received and in consideration of the foregoing recitals and to induce the Bank to enter into the Credit Agreement and to issue the Substitute Letter , the Letter of Credit and make available the Revolving Line of Credit, and to secure the prompt payment of all amounts due by the Borrowers under the Credit Agreement, the Credit Facilities and the documents and instruments securing the same, including, without limitation, this Mortgage, and also to secure the full and complete performance of each and every obligation, covenant, duty and agreement of the Mortgagors contained in this Mortgage, the Mortgagors agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them in this Article. Singular terms shall include the plural as well as the singular and vice versa.
(b) All references in this instrument to designated "articles," "sections" and other subdivisions are to the designated articles, sections and subdivisions of this instrument as originally executed.
(c) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular article, section or other subdivision.
(d) The term "person" shall include any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization and any government or any agency or political subdivision thereof.
(e) Capitalized term not otherwise defined herein shall have the meanings assigned in the Credit Agreement.
"ADDITIONAL PROJECT EQUIPMENT" means all items of furniture, furnishings, fixtures, machinery, equipment or other personal property at any time installed in or about the Project owned by the Borrowers, or any thereof, the costs of which are not paid by the Board from the proceeds of the Bonds, or are not otherwise Project Equipment.
"BANK" means Regions Bank, an Alabama banking corporation with a principal place of business in Montgomery, Alabama, and its successors and assigns.
"BOARD" means The Industrial Development Board of the City of Montgomery, a public corporation organized under the laws of the State of Alabama, and its successors and assigns.
"BONDS" means the 1997 Bonds and the 2002 Bonds.
"COLLATERAL" means all property and rights mortgaged, assigned, pledged or otherwise subject to the lien of this Mortgage.
"CONDEMNATION AWARDS" has the meaning stated in the third Granting Clause of Article II.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as of July 1, 2002, between the Borrowers and the Bank, including any amendments or supplements to such instrument entered into pursuant to the applicable provisions thereof.
"CREDIT FACILITIES" means, collectively, the Substitute Letter , the Letter of Credit and the Revolving Line of Credit.
"EQUIPMENT" means the Project Equipment and the Additional Project Equipment.
"EVENT OF DEFAULT" has the meanings stated in Section 7.1 hereof. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing.
"EXISTING FACILITY" means the manufacturing facilities (land, buildings, other improvements, equipment, machinery, personal property and fixtures) owned by the Board and leased to KINPAK and located on the real property described in Exhibit A.
"FINANCING DOCUMENTS" shall mean this Mortgage, the Indentures, the Lease Agreement, the Credit Agreement, the Security Agreement and the Revolving Line of Credit Note.
"INDENTURES" shall mean, collectively, the 1997 Indenture and the 2002 Indenture.
"KINPAK" means KINPAK INC., an Alabama corporation, and its successors and assigns.
"LEASE AGREEMENT" shall mean the Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by First Supplemental Lease Agreement dated as of March 1, 1997, and by Second Supplemental Lease Agreement dated as of July 1, 2002, between KINPAK and the Board relating to the Project, including any amendments or supplements to such instrument from time to time entered into pursuant to the application provisions thereof.
"LETTER OF CREDIT" means the letter of credit with respect to the 2002 Bonds to be issued by the Bank in favor of the Trustee, as more fully described in the Credit Agreement.
"LETTERS OF CREDIT" shall mean, collectively, the Letter of Credit and the Substitute Letter.
"MORTGAGE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more instruments entered into pursuant to the applicable provisions hereof.
"MORTGAGED SITE" has the meaning stated in the first Granting Clause of Article II.
"MORTGAGORS" means KINPAK and the Board.
"OBLIGATIONS" shall mean all indebtedness or obligations of the Borrowers to the Bank under the Credit Agreement or secured by this Mortgage or
the Security Agreement, including without limitation (i) the Borrowers'
obligation to reimburse the Bank for draws made under the Letters of Credit,
(ii) the Borrowers' obligation to pay fees and charges to the Bank for the
issuance and continuation of the Letters of Credit and (iii) the Borrowers'
obligations under the Revolving Line of Credit Note and all renewals and
extensions of any or all of the obligations of the Borrowers described herein
(including, without limitation, comparable obligations assumed or undertaken
with respect to any renewal or extension of, or any substitute for, the Letters
of Credit, whether or not any renewal or extension agreement is executed in
connection therewith).
"PERMITTED ENCUMBRANCES" means those restrictions, exceptions, reservations, conditions, limitations, interests and other matters that are identified in Exhibit B to this Mortgage.
"PERSONAL PROPERTY AND FIXTURES" has the meaning set forth in the second Granting Clause of Article II.
"PROJECT" means collectively, the Existing Facility, the 2002 Improvements, the Project Equipment and the Additional Project Equipment.
"PROJECT EQUIPMENT" means (i) all items (whether or not fixtures) of furniture, furnishings, fixtures, machinery, equipment or other personal property the costs of which, in whole or in part, are paid by the Board out of the proceeds of the Bonds and (ii) all items (whether or not fixtures) of furniture, fixtures, machinery, equipment or other personal property at any time installed in or about the Project that are acquired by the Board or the Borrowers in substitution for or replacement of property theretofore constituting part of the Project Equipment and that, under the provisions of the Lease Agreement and the Indentures, are to constitute part of the Project Equipment.
"REAL PROPERTY" means the real property, described on Exhibit A.
"RENTS" has the meaning stated in the fifth Granting Clause of Article II.
"REVOLVING LINE OF CREDIT" has the meaning set forth in the Recitals hereto.
"REVOLVING LINE OF CREDIT NOTE" means the Revolving Line of Credit Note of even date herewith of the Borrowers in favor of the Bank evidencing the Revolving Line of Credit.
"SECURITY AGREEMENT" means the Security Agreement of even date herewith between the Borrowers and the Bank.
"SPECIAL FUNDS" means all funds and accounts established pursuant to the Indentures.
"SUBLEASES" has the meaning stated in the fifth Granting Clause of Article II.
"SUBSTITUTE LETTER" shall mean the letter of credit with respect to the 1997 Bonds issued by the Bank in favor of the Trustee.
"TRUSTEE" shall mean Regions Bank, an Alabama banking corporation with a principal place of business in Montgomery, Alabama, in its capacity as trustee under the Indentures, and its successors and assigns.
"1997 BONDS" shall mean the $4,000,000 aggregate principal amount of Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 issued by the Board pursuant to the 1997 Indenture.
"2002 BONDS" shall mean the $3,500,000 aggregate principal amount of Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 issued by the Board pursuant to the 2002 Indenture.
"2002 IMPROVEMENTS" shall mean the approximately 70,000 square foot addition to the Existing Facility and the additional machinery and equipment for use therein to be purchased by the Board and financed by the proceeds of the 2002 Bonds.
"1997 INDENTURE" shall mean that certain Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997, between the Board and the Trustee relating to the 1997 Bonds, including any amendments or supplements to such instrument from time to time entered into pursuant to the applicable provisions thereof.
"2002 INDENTURE" shall mean that certain Trust Indenture dated as of July 1, 2002, between the Board and the Trustee relating to the 2002 Bonds, including any amendments or supplements to such instrument from time to time entered into pursuant to the applicable provisions thereof.
"1997 TRUSTEE" shall mean Regions Bank as trustee under the 1997 Indenture.
"2002 TRUSTEE" shall mean Regions Bank as trustee under the 2002 Indenture.
SECTION 1.2 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.3 DATE OF MORTGAGE. The date of this Mortgage is intended as and for a date for the convenient identification of this Mortgage and is not intended to indicate that this Mortgage was executed and delivered on said date.
SECTION 1.4 SEPARABILITY CLAUSE. If any provision in this Mortgage shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.5 GOVERNING LAW. This Mortgage shall be construed in accordance with and governed by the laws of the State of Alabama.
SECTION 1.6 COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.
ARTICLE II
GRANTING CLAUSES
The Mortgagors have bargained and sold and do hereby grant, bargain, sell and convey to the Bank, its successors and assigns, the property and interests in property, present and future, described in the following Granting Clauses, and have granted and do hereby grant to the Bank a security interest in said property and interests in property:
I
(MORTGAGED SITE AND BUILDINGS)
All right, title and interest, present and future in the real property and interests therein described in Exhibit A attached hereto, together with all easements, permits, licenses, rights-of-way, contracts, leases, tenements, hereditaments, appurtenances, rights, privileges, options and immunities pertaining or applicable to said real property and interests therein, together with all buildings, structures and improvements now or hereafter located on such real property (herein referred to as the "Mortgaged Site").
II
(PERSONAL PROPERTY AND FIXTURES)
The Personal Property and Fixtures and all other personal property and fixtures (i) acquired or to be acquired by the Mortgagors with proceeds of the Bonds or (ii) located on, in or about the Project in which the Board or KINPAK have any interest, including all substitutions and replacements for such personal property and fixtures and the proceeds thereof. As of the date hereof the Personal Property and Fixtures includes, without limitation, the personal property described on Exhibit C attached hereto.
III
(CONDEMNATION AWARDS AND INSURANCE PROCEEDS)
All awards or payments, including all interest thereon, together with the right to receive the same, that may be made to the Mortgagors with respect to the Collateral as a result of the exercise of the right of eminent domain, any damage to or destruction of the Collateral or any part thereof, or any other injury to or decrease in the value of the Collateral (herein referred to as "Condemnation Awards"), and all right, title and interest of the Mortgagors in
and to any policies of insurance (and the proceeds thereof) with respect to any damage to or destruction of the Collateral.
IV
(SPECIAL FUNDS)
KINPAK's right, title and interest in and to money and investments from time to time on deposit in, or forming a part of, the funds and accounts established under the Indentures (herein referred to as the "Special Funds"), subject to the prior lien of the Indentures with respect to the Special Funds and the provisions of the Indentures permitting the application thereof for the purposes and on the terms and conditions set forth therein.
V
(LEASES AND RENTS)
(a) All written or oral leases or other agreements for the use or occupancy of all or any portion of the Collateral with respect to which KINPAK is the lessor and any and all extensions and renewals thereof, now or hereafter existing, (collectively referred to as the "Subleases");
(b) Any and all guaranties of performance by lessees under the Subleases;
(c) The immediate and continuing right to collect and receive all the
rents, income, receipts, revenues, issues and profits now due or that may
hereafter become due or to which KINPAK may now be or may hereafter (including
during the period of redemption, if any) become entitled to demand or claim,
arising or issuing from or out of the Subleases or from or out of the minimum
rents, additional rents, percentage rents, common area maintenance charges,
parking charges, tax and insurance premium contributions, liquidated damages
upon default, the premium payable by any lessee upon the exercise of any
cancellation privilege provided for in any of the Subleases, and all proceeds
payable under any policy of insurance covering loss of rents resulting from
untentability caused by destruction or damage to the Collateral, together with
any and all rights and claims of any kind that KINPAK may have against any such
lessee under the Subleases or against any sublessees or occupants of the
Collateral [all such moneys, rights and claims described in this subparagraph
(c) being hereinafter referred to as the "Rents"]; provided, however, that so
long as no Event of Default has occurred under this Mortgage, KINPAK shall have
the right under a license granted hereby (but limited as provided in Section 8.7
below) to collect, receive and retain the Rents (but not prior to accrual
thereof); and
(d) Any award, dividend or other payment made hereafter to KINPAK in any court procedure involving any of the lessees under the Subleases in any bankruptcy, insolvency or reorganization proceeding in any state or federal court and any and all payments made by lessees in lieu of rent, KINPAK hereby appointing the Bank as its irrevocable attorney-in-fact to appear in any action and collect any such award, dividend or other payment.
VI
(OTHER PROPERTY)
Any and all other real or personal property of every kind and nature from time to time hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred to the Bank as and for additional security hereunder by KINPAK or the Board, or by anyone in the behalf of, or with the written consent of, KINPAK or the Board.
VII
(REVENUES)
All revenues and receipts derived by the Board from the leasing or sale of the Mortgaged Site or the Equipment, including, without limitation, all right, title and interest of the Board in and to the Lease Agreement (not including, however, the Board's rights to indemnification and reimbursement of expenses); provided, however, that nothing contained in this clause shall impair, diminish or otherwise affect the Board's obligations under the Lease Agreement or impose any such obligations upon the Bank.
VIII
(LEASEHOLD ESTATE)
All right, title and interest of KINPAK in and to its leasehold estate under the Lease Agreement, together with all rights, privileges and options set forth therein, including, without limitation, its purchase option and all right, title and interest of KINPAK upon the exercise of said option.
IX
(CONTRACT RIGHTS)
All right, title and interest of the Mortgagors in and to any plans and specifications for the Project, together with all contracts or other rights pertaining to the expansion, improvement and equipping of the Project.
All of the property described in the foregoing Granting Clauses I through IX, inclusive, is herein sometimes together referred to as the "Collateral."
TO HAVE AND TO HOLD the Collateral, together with all the rights, privileges and appurtenances thereunto belonging, unto the Bank, its successors and assigns, forever.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into the Credit Agreement and to issue the Substitute Letter and the Letter of Credit and make available the Revolving Line of Credit, the Mortgagors represent and warrant that:
(a) Valid Title, etc. The Board is lawfully seized of an indefeasible estate in fee simple in and to, and has good title to, the Real Property and the Project Equipment; KINPAK holds a valid leasehold estate in the Real Property and the Project Equipment pursuant to the Lease Agreement and has good title to the Additional Project Equipment; the Mortgagors have a good right to sell and mortgage, and grant a security interest in, the Collateral; the Collateral is subject to no liens, encumbrances or security interests other than Permitted Encumbrances; and the Mortgagors will forever warrant and defend the title to the Collateral unto the Bank against the claims of all persons whomsoever, except those claiming under Permitted Encumbrances. It is expressly understood and agreed that, with respect to the Special Funds only, the lien and security interest created by this Mortgage is junior and subordinate to the lien and security interest created by the Indentures.
(b) Maintenance of Lien Priority. The Mortgagors shall take all steps necessary to preserve and protect the validity and priority of the liens on and security interests in the Collateral created hereby. The Mortgagors shall execute, acknowledge and deliver such additional instruments as the Bank may deem necessary in order to preserve, protect, continue, extend or maintain the lien and security interest created hereby as a lien on and security interest in the Collateral subject only to Permitted Encumbrances, except as otherwise permitted under the terms of this Mortgage. All costs and expenses incurred in connection with the protection, preservation, continuation, extension or maintaining of the liens and security interests hereby created shall be paid by the Mortgagors.
(c) Toxic or Hazardous Substances. No toxic or hazardous substances (including, without limitation, asbestos) have been located, stored or dumped on the Mortgaged Site, or used in connection with, or in the construction or operation of the Collateral, or any part thereof except in compliance with applicable law.
ARTICLE IV
COVENANTS OF MORTGAGORS
SECTION 4.1 PAYMENT OF TAXES AND OTHER ASSESSMENTS. The Mortgagors will pay or cause to be paid all taxes, assessments and other governmental, municipal or other public dues, charges, fines or impositions imposed or levied upon the Collateral or on the interests created by this Mortgage or with respect to the filing of this Mortgage, and any tax or excise on rents or other tax, however described, assessed or levied by any state, federal or local taxing authority as a substitute, in whole or in part, for taxes assessed or imposed on the
Collateral or on the lien and other interests created by this Mortgage, and at least 10 days before said taxes, assessments and other governmental charges become delinquent, the Mortgagors will deliver receipts therefor to the Bank or, in the case of mortgage filing privilege taxes (if any), pay to the Bank an amount equal to the taxes. The Mortgagors may, at their own expense, in good faith contest any such taxes, assessments and other governmental charges and, in the event of any such contest, may permit the taxes, assessments or other governmental charges so contested to remain unpaid during the period of such contest and any appeal therefrom, provided that during such period enforcement of such contested items shall be effectively stayed. If any tax or assessment is levied, assessed or imposed by any governmental authority on the Bank as a legal holder of any of the Obligations or any interest in this Mortgage (other than federal and state income taxes), then unless all such taxes and assessments are paid by the Mortgagors promptly after they become due and payable, but in any event before they become delinquent (and, in the opinion of counsel for the Bank, such payment by the Mortgagors is lawful and does not place the Bank in violation of any law), the Bank may, at its option, declare the existence of an Event of Default under this Mortgage.
SECTION 4.2 INSURANCE. (a) The Mortgagors shall keep the Collateral insured (or cause the Collateral to be kept insured) against loss or damage by fire, windstorm, extended coverage perils, vandalism, malicious mischief and such other hazards, casualties or other contingencies as from time to time may be required by the Bank (including, but not limited to, builder's risk during the period of construction of the expansion of the Project and business interruption insurance), in such amounts, in such manner and in such companies as the Bank may reasonably approve, including but not limited to all insurance required to be maintained under the terms of the Financing Documents. All such policies shall name the Bank as a named insured and provide that any losses payable thereunder shall (pursuant to loss payable clauses, in form and content acceptable to the Bank, to be attached to each policy) be payable to the Bank, and provide that the insurance provided thereby, as to the interest of the Bank, shall not be invalidated by any act or neglect of the Mortgagors, nor by the commencement of any proceedings by or against the Mortgagors in bankruptcy, insolvency, receivership or any other proceedings for the relief of a debtor, nor by any foreclosure, repossession or other proceedings relating to the property insured, nor by any occupation of such property or the use of such property for purposes more hazardous than permitted in the policy. The Mortgagors shall furnish to the Bank insurance certificates, in form and substance satisfactory to the Bank, evidencing compliance by them with the terms of this Section and, upon the request of the Bank at any time, the Mortgagors shall furnish the Bank with photostatic copies of the policies required by the terms of this Section. The Mortgagors will cause each insurer under each of the policies to agree (either by endorsement upon such policy or by letter addressed to the Bank) to give the Bank at least 30 days' prior written notice of the cancellation of such policies in whole or in part or the lapse of any coverage thereunder. The Mortgagors agree that they will not take any action or fail to take any action which action or inaction would result in the invalidation of any insurance policy required hereunder.
(b) If the Collateral or any part thereof is damaged or destroyed by fire or other casualty, KINPAK shall, as promptly as practicable, comply with the provisions of Section 6.17 of the Credit Agreement. The Board hereby consent to the provisions of Section 6.17 and agrees to be bound by the terms thereof.
SECTION 4.3 CONDEMNATION AWARDS. The entire proceeds of any
Condemnation Award shall be applied as provided in Section 6.18 of the Credit
Agreement. The Board and Properties hereby consent to the provisions of said
Section 6.18 and agree to be bound by the terms thereof.
SECTION 4.4 WASTE, DEMOLITION, ALTERATION OR REPLACEMENT. The Mortgagors will cause the Collateral and every part thereof to be maintained, preserved and kept in safe and good repair, working order and condition, reasonable wear and tear excepted, will not commit or permit waste thereon, will not remove, demolish or materially alter the design or structural character of any building now or hereafter erected on the Mortgaged Site without the express prior written consent of the Bank, will comply with all laws and regulations of any governmental authority with reference to the Collateral and the manner and use of the same, and will from time to time make all necessary and proper repairs, renewals, additions and restorations thereto so that the value and efficient use thereof shall be preserved and maintained.
SECTION 4.5 COMPLIANCE BY MORTGAGORS WITH TERMS OF OTHER FINANCING DOCUMENTS. The Mortgagors shall comply, fully and faithfully, with all of their respective obligations under the other Financing Documents. If the Mortgagors fail or refuse to do so, the Bank may, but shall not be required to, perform any and all of such obligations of the Mortgagors under the other Financing Documents, including but not limited to the payment of any or all sums due from the Mortgagors thereunder. Any sums so paid by the Bank shall constitute part of the Obligations and shall be secured hereby.
ARTICLE V
TRANSFER OF, OR LIENS ON, COLLATERAL
The Mortgagors covenant and agree that they will not, without the express prior written consent of the Bank, sell, transfer, convey or otherwise dispose of, or create, or permit or suffer to exist, any lien, security interest or other encumbrance (other than Permitted Encumbrances) on, all or any part of the Collateral (including but not limited to any leases and rents) or any interests therein, it being understood and agreed that a violation by the Mortgagors of the provisions of this Article V shall constitute an Event of Default under this Mortgage. Any sale, transfer, conveyance, other disposition or act of creating, permitting or suffering to exist any lien, security interest or other encumbrance in violation of this Article V shall be null, void and of no effect.
ARTICLE VI
DEFEASANCE
If (i) the Mortgagors shall pay in full and discharge all the
Obligations; and (ii) the Mortgagors shall then have kept and performed each and
every obligation, covenant, duty, condition and agreement herein or in the
Credit Agreement and the Credit Facilities imposed on or agreed to by them; and
(iii) the Letters of Credit shall then be terminated; then this Mortgage and the
grants and conveyances contained herein shall become null and void, and the Collateral shall revert to the Mortgagors, and the entire estate, right, title and interest of the Bank shall thereupon cease; and the Bank shall, upon the request of the Mortgagors and at the Mortgagors' cost and expense, deliver to the Mortgagors proper instruments acknowledging satisfaction of this instrument and terminating all financing statements filed in connection herewith; otherwise, this Mortgage shall remain in full force and effect. Notwithstanding anything to the contrary contained in this Article VI or elsewhere in this Mortgage, it is expressly understood and agreed that, although there may be from time to time occasions when no Obligations shall be outstanding, this Mortgage and the lien hereof and security interests created thereby shall nevertheless remain in full force and effect, and none of the estate, right, title and interest of the Bank passing by this Mortgage shall divest nor shall the Collateral revert to the Mortgagors so long as any one or more or all of the following circumstances exist:
(a) the Bank has any obligation to issue the Letter of Credit; or
(b) the Letters of Credit have been issued and are outstanding; or
(c) any Obligations are outstanding or the Obligations have been outstanding at any point during the previous 90 day period or any payment of the Obligations is subject to being set aside under any provision of the United States Bankruptcy Code or any statute or law governing payments to creditors.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. Any one or more of the following shall constitute an event of default (an "Event of Default") under this Mortgage (whatever the reason for such event and whether it shall be voluntary or involuntary, or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) an event of default under the Credit Agreement; or
(b) default in the performance, or breach, of any covenant,
condition or agreement on the part of the Mortgagors contained in
Section 4.1 or 4.2 or Article V hereof; or
(c) default in the performance, or breach, of any covenant or warranty of the Mortgagors in this Mortgage (other than a covenant or warranty, a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Mortgagors by the Bank a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "notice of default" hereunder; or
(d) the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against any of the Mortgagors under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect; or
(e) any representation or warranty made by the Mortgagors herein or in any document, instrument or certificate furnished to the Bank in connection with the issuance of the Letters of Credit or the consummation of the transactions contemplated by the Financing Documents shall at any time prove to have been false or incorrect in any material respect as of the time made; or
(f) the occurrence of an event of default, as therein defined, under any other Financing Document and the expiration of the applicable grace period, if any, specified therein; or
(g) the rendering against the Borrowers, or any of them, of a final judgment, decree or order for the payment of money in excess of $250,000 and the continuance of such judgment, decree or order unsatisfied and in effect for any period of 45 consecutive days without a stay of execution; or
(h) the interest of the Bank in the Collateral shall become endangered by reason of the enforcement of any prior lien or encumbrance thereon (other than Permitted Encumbrances or the lien of the Indenture with respect to the Special Funds); or
(i) the lien or security interest created by this Mortgage is invalid or unenforceable as to any part of the Obligations or is invalid or unenforceable as to any part of the Collateral.
ARTICLE VIII
RIGHTS OF BANK UPON DEFAULT
SECTION 8.1 ACCELERATION OF INDEBTEDNESS, ETC. If an Event of Default exists, the Bank may notify the Trustee that an "Event of Default" under the Credit Agreement (as therein defined) has occurred and is continuing (it being understood that the occurrence of an Event of Default hereunder shall constitute an "Event of Default" under the Credit Agreement) and may, by notice to the Mortgagors, effective upon dispatch, declare all of the Obligations, including but not limited to the obligation of the Mortgagors to reimburse the Bank under the Credit Agreement, to be forthwith due and payable, whereupon all the Obligations shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Mortgagors, and the Bank may immediately enforce payment of all such amounts and exercise any or all of its rights and remedies under this Mortgage and the Credit Agreement.
SECTION 8.2 OPERATION OF COLLATERAL BY BANK. In addition to all other rights herein and in the Credit Agreement conferred on the Bank, if an Event of Default exists, the Bank (or any person, firm or corporation designated by the Bank) may, but shall not be obligated to, enter upon and take possession of any or all of the Collateral, exclude the Mortgagors therefrom, and hold, use, administer, manage and operate the same to the extent that the Mortgagors could do so, without any liability to the Mortgagors resulting therefrom; and the Bank may collect, receive and receipt for all proceeds accruing from such operation and management, make repairs and purchase needed additional property, and exercise every power, right and privilege of the Mortgagors with respect to the Collateral.
SECTION 8.3 JUDICIAL PROCEEDINGS; RIGHT TO RECEIVER. If an Event of Default exists, the Bank, in lieu of or in addition to exercising the power of sale hereinafter given, may proceed by suit for a foreclosure of its lien on and security interest in the Collateral, to sue the Mortgagors for damages on account of or arising out of said default or breach, or to sue the Mortgagors for specific performance of any provision contained herein, or to enforce any other appropriate legal or equitable right or remedy, whether under this Mortgage, the Credit Agreement or otherwise. The Bank shall be entitled, as a matter of right, upon bill filed or other proper legal proceedings being commenced for the foreclosure of this Mortgage, to the appointment by any competent court or tribunal, without notice to the Mortgagors or any other party, of a receiver of the rents, issues and profits of the Collateral, with power to lease and control the Collateral and with such other powers as may be deemed necessary, subject to the rights of the Trustee under the Indenture.
SECTION 8.4 FORECLOSURE SALE. This Mortgage shall be subject to foreclosure and may be foreclosed as now provided by law in case of past due mortgages, and the Bank shall be authorized, at its option, whether or not possession of the Collateral is taken, after giving 21 days notice by publication once a week for three consecutive weeks of the time, place and terms of each such sale by publication in some newspaper published in Montgomery County, Alabama, to sell the Collateral (or such part or parts thereof as the Bank may from time to time elect to sell) in front of the courthouse door of such county, at public outcry, to the highest bidder for cash. The Bank, its successors and assigns, may bid at any sale or sales had under the terms of this Mortgage and may purchase the Collateral, or any part thereof, if the highest bidder therefor. The purchaser at any such sale or sales shall be under no obligation to see to the proper application of the purchase money. At any foreclosure sale any part or all of the Collateral, real, personal or mixed, may be offered for sale in parcels or en masse for one total price, the proceeds of any such sale en masse to be accounted for in one account without distinction between the items included therein or without assigning to them any proportion of such proceeds, the Mortgagors hereby waiving the application of any doctrine of marshalling or like proceeding. If the Bank, in the exercise of the power of sale herein given, elects to sell the Collateral in parts or parcels, sales thereof may be held from time to time, and the power of sale granted herein shall not be fully exercised until all of the Collateral not previously sold shall have been sold or all the Obligations shall have been paid in full. The Mortgagors hereby waive any equitable rights otherwise available to any of them with respect to marshalling of assets hereunder.
SECTION 8.5 PERSONAL PROPERTY AND FIXTURES. (a) The Bank shall have and may exercise with respect to any or all of the Personal Property and Fixtures
all rights, remedies and powers of a secured party under the Alabama Uniform Commercial Code with reference to the Personal Property and Fixtures or any other items in which a security interest has been granted herein, including, without limitation, the right and power to sell at public or private sale or sales or otherwise dispose of, lease or utilize the Personal Property and Fixtures and any part or parts thereof in any manner, to the fullest extent authorized or permitted under the Alabama Uniform Commercial Code after default hereunder, without regard to preservation of the Personal Property and Fixtures or its value and without the necessity of a court order. The Bank shall have, among other rights, the right to take possession of the Personal Property and Fixtures and to enter upon any premises where the same may be situated for the purpose of repossessing the same without being guilty of trespass and without liability for damages occasioned thereby and to take any action deemed appropriate or desirable by the Bank, at its option and in its sole discretion, to repair, restore or otherwise prepare the Personal Property and Fixtures for sale or lease or other use or disposition. To the extent permitted by law, the Mortgagors expressly waive any notice of sale or any other disposition of the Personal Property and Fixtures and any rights or remedies of the Bank with respect to, and the formalities prescribed by law relative to, the sale or disposition of the Personal Property and Fixtures or to the exercise of any other right or remedy of the Bank existing after default. To the extent that such notice is required and cannot be waived, the Mortgagors agree that if such notice is given to the Mortgagors in accordance with the provisions of Section 9.8 hereof at least 5 days before the time of the sale or other disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving said notice.
(b) The Mortgagors agree that the Bank may sell or dispose of the Personal Property and Fixtures in accordance with the rights and remedies granted under this Mortgage with respect to the real property covered hereby. The Mortgagors hereby grant to the Bank the right, at its option after default by the Mortgagors, to transfer at any time to itself or its nominee the Personal Property and Fixtures or any part thereof and to receive the moneys, income, proceeds and benefits attributable to the same and to hold the same as additional Collateral or to apply it on the Obligations in such order and manner as the Bank may elect. The Mortgagors covenant and agree that all recitals in any instrument transferring, assigning, leasing or making other disposition of the Personal Property and Fixtures or any part thereof shall be full proof of the matters stated therein, and no other proof shall be required to establish the legal propriety of the sale or other action taken by the Bank and that all prerequisites of sale shall be presumed conclusively to have been performed or to have occurred.
SECTION 8.6 CONVEYANCE AFTER SALE. The Mortgagors hereby authorize and empower the Bank or the auctioneer at any foreclosure sale had hereunder, for and in the name of the Mortgagors, to execute and deliver to the purchaser or purchasers of any of the Collateral sold at foreclosure good and sufficient deeds of conveyance or bills of sale thereto.
SECTION 8.7 RENTS AND SUBLEASES. (a) If an Event of Default exists, the Bank, at its option, shall have the right, power and authority to exercise and enforce any or all of the following rights and remedies with respect to Rents and Subleases:
(i) to terminate the license granted to the Mortgagors in Article II hereof to collect the Rents and, without taking possession,
in the Bank's own name to demand, collect, receive, sue for, attach and levy the Rents, to give proper receipts, releases and acquittances therefor and, after deducting all necessary and reasonable costs and expenses of collection, including reasonable attorney's fees, to apply the net proceeds thereof to the Obligations in such order and amounts as the Bank may choose (or hold the same in a reserve as security for the Obligations);
(ii) without regard to the adequacy of the security, with or without any action or proceeding, through any person or by agent, or by a receiver to be appointed by court, to enter upon, take possession of, manage and operate the Collateral or any part thereof for the account of the Mortgagors, make, modify, enforce, cancel or accept surrender of any Sublease, remove and evict any lessee, increase or reduce rents, decorate, clean and make repairs, and otherwise do any act or incur any costs or expenses the Bank shall deem proper to protect the security hereof, as fully and to the same extent as the Mortgagors could do if in possession, and in such event to apply any funds so collected to the operation and management of the Collateral (including payment of reasonable management, brokerage and attorney's fees) and payment of the Obligations in such order and amounts as the Bank may choose (or hold the same in reserve as security for the Obligations);
(iii) to take whatever legal proceedings may appear necessary or desirable to enforce any obligation, covenant or agreement of the Mortgagors under this Mortgage.
(b) The collection of the Rents and application thereof (or holding thereof in reserve) as aforesaid or the entry upon and taking possession of the Collateral, or both, shall not cure or waive any default or waive, modify or affect any notice of default under this Mortgage, or invalidate any act done pursuant to such notice, and the enforcement of such right or remedy by the Bank, once exercised, shall continue for so long as the Bank shall elect, notwithstanding that the collection and application aforesaid of the Rents may have cured the original default. If the Bank shall thereafter elect to discontinue the exercise of any such right or remedy, the same or any other right or remedy hereunder may be reasserted at any time and from time to time following any subsequent default.
SECTION 8.8 APPLICATION OF PROCEEDS. All payments then held or thereafter received by the Bank as proceeds of the Collateral, as well as any and all amounts realized by the Bank in connection with the enforcement of any right or remedy under or with respect to this Mortgage, shall be applied by the Bank as follows:
(a) to reimburse the Bank for any payments made by the Bank under the Letters of Credit, to sums due the Bank under the Revolving Line of Credit Note, to accrued but unpaid commissions, fees, costs and charges under the Credit Agreement, and to the payment of all costs and expenses of any kind then or thereafter at any time reasonably incurred by the Bank in exercising its rights under this Mortgage and under the
Credit Agreement or otherwise reasonably incurred by the Bank in collecting or enforcing payment of the Obligations, as well as to the payment of any other amount then or thereafter at any time owing by the Mortgagors to the Bank under the Credit Agreement or under this Mortgage, all in such priority as among such principal, interest, costs, fees, expenses and other amounts as the Bank shall elect;
(b) any balance remaining after payment in full of all amounts referred to in subparagraph (a) above shall be applied by the Bank to any other Obligations or sums then owing by the Mortgagors to the Bank;
(c) any balance remaining after payment in full of all amounts referred to in subparagraphs (a) and (b) above shall be held by the Bank as a cash collateral reserve against the making of any payment under the Letters of Credit (if then outstanding); and
(d) any balance remaining after payment in full of all amounts referred to in subparagraphs (a), (b) and (c) above shall be paid by the Bank to the Mortgagors or to whoever else may then be legally entitled thereto.
SECTION 8.9 MULTIPLE SALES. The Bank shall have the option to proceed with foreclosure, either through the courts or by proceeding with foreclosure as provided for in this Mortgage, but without declaring all of the Obligations due. Any such sale may be made subject to the unmatured part of the Obligations, and such sale, if so made, shall not in any manner affect the unmatured part of the Obligations, but as to such unmatured part of the Obligations this Mortgage shall remain in full force and effect as though no sale had been made under the provisions of this Section. Several sales may be made under the provisions of this Section without exhausting the right of sale for any remaining part of the Obligations whether then matured or unmatured, the purpose hereof being to provide for a foreclosure and sale of the Collateral for any matured part of the Obligations without exhausting any power of foreclosure and the power to sell the Collateral for any other part of the Obligations, whether matured at the time or subsequently maturing.
SECTION 8.10 WAIVER OF APPRAISEMENT LAWS. The Mortgagors waive, to the fullest extent permitted by law, the benefit of all laws now existing or hereafter enacted providing for (i) any appraisement before sale of any portion of the Collateral (commonly known as appraisement laws) or (ii) any extension of time for the enforcement of the collection of the Obligations or any creation or extension of a period of redemption from any sale made in collecting the Obligations (commonly known as stay laws and redemption laws).
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 WAIVER, ELECTION, ETC. The exercise by the Bank of any option given under the terms of this Mortgage shall not be considered as a waiver of the right to exercise any other option given herein, and the filing of
a suit to foreclose the lien and security interest granted by this Mortgage, either on any matured portion of the Obligations or for the whole of the Obligations, shall not be considered an election so as to preclude foreclosure under power of sale after a dismissal of the suit; nor shall the publication of notices for foreclosure preclude the prosecution of a later suit thereon. No failure or delay on the part of the Bank in exercising any right, power or remedy under this Mortgage shall operate as a waiver thereof, not shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder. The remedies provided in this Mortgage and in the Credit Agreement are cumulative and not exclusive of any remedies provided by law. No amendment, modification, termination or waiver of any provisions of this Mortgage or the Credit Agreement, nor consent to any departure by the Mortgagors therefrom, shall be effective unless the same shall be in writing and signed by any person having the office of Senior Vice President or higher of the Bank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Mortgagors in any case shall entitle the Mortgagors to any other or further notice or demand in similar or other circumstances.
SECTION 9.2 LANDLORD-TENANT RELATIONSHIP. Any sale of the Collateral under this Mortgage shall, without further notice, create the relationship of landlord and tenant at sufferance between the purchaser and the Mortgagors.
SECTION 9.3 ENFORCEABILITY. If any provision of this Mortgage is now or at any time hereafter becomes invalid or unenforceable, the other provisions hereof shall remain in full force and effect, and the remaining provisions hereof shall be construed in favor of the Bank to effectuate the provisions hereof.
SECTION 9.4 APPLICATION OF PAYMENTS. If the lien or the security interest created by this Mortgage is invalid or unenforceable as to any part of the Obligations or is invalid or unenforceable as to any part of the Collateral, the unsecured or partially secured portion of the Obligations shall be completely paid prior to the payment of the remaining and secured or partially secured portion of the Obligations, and all payments made on the Obligations, whether voluntary or under foreclosure or other enforcement action or procedures, shall be considered to have been first paid on and applied to the full payment of that portion of the Obligations that is not secured or not fully secured by the lien or security interest created hereby.
SECTION 9.5 ADVANCES BY BANK. If the Mortgagors shall fail to comply with the provisions hereof with respect to the securing of insurance, the payment of taxes, assessments and other charges, the keeping of the Collateral in repair, or any other term or covenant herein contained, the Bank may (but shall not be required to) make advances to perform the same, and where necessary enter or take possession of the Collateral for the purpose of performing any such term or covenant. The Mortgagors agree to repay all sums advanced upon demand, with interest from the date such advances are made, at the rate provided in Section 2.6 of the Credit Agreement (to the fullest extent permitted by applicable law), and all sums so advanced, with interest, shall be secured hereby.
SECTION 9.6 RELEASE OR EXTENSION BY BANK. The Bank, without notice, may release any part of the Collateral or any person liable for the Obligations
without in any way affecting the rights of the Bank hereunder as to any part of the Collateral not expressly released and may agree with any party with an interest in the Collateral to extend the time for payment of all or any part of the Obligations or to waive the prompt and full performance of any term, condition or covenant of this Mortgage or the Credit Agreement.
SECTION 9.7 PARTIAL PAYMENTS. Acceptance by the Bank of any payment of less than the amount due on the Obligations shall be deemed acceptance on account only, and the failure of the Mortgagors to pay the entire amount then due shall be and continue to constitute an Event of Default, and at any time thereafter and until the entire amount due on the Obligations has been paid, the Bank shall be entitled to exercise all rights conferred on it by the terms of this Mortgage in case of the existence of an Event of Default.
SECTION 9.8 ADDRESSES FOR NOTICES. (a) Any request, demand, authorization, direction, notice, consent or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagors or the Bank shall be sufficient for every purpose hereunder if in writing and (except as otherwise provided in this Mortgage) either (i) delivered personally to the party or, if such party is not an individual, to an officer, partner or other legal representative of the party to whom the same is directed, or (ii) mailed by certified mail, postage prepaid and addressed as follows:
(i) if to the Board at P. O. Box 79, Montgomery, Alabama 36101;
(ii) if to KINPAK at c/o Ocean Bio-Chem, Inc., 4041 S.W. 47th Avenue, Ft. Lauderdale, Florida, 33314, Attention: Edward Anchel;
(iii) if to the Bank, at 8 Commerce Street, Montgomery, Alabama 36104, Attention: Timothy D. Riley.
The Board, KINPAK and the Bank may specify a different address for the receipt of such documents by mail by giving notice of the change in address to the other parties identified in this subsection.
(b) Any such notice or other document shall be deemed to be received
(i) as of the date delivered, if delivered personally in accordance with
subsection (a) of this Section, or (ii) as of 3 days after the date deposited in
the mail, if mailed in accordance with subsection (a) of this Section.
SECTION 9.9 CONSTRUCTION OF MORTGAGE. This Mortgage may be construed as a mortgage, chattel mortgage, conveyance, assignment, security agreement, pledge, financing statement, hypothecation or contract, or any one or more of them in order fully to effectuate the lien hereof and security interest created hereby and the purposes and agreements herein set forth.
SECTION 9.10 MORTGAGE TO CONSTITUTE SECURITY AGREEMENT. This Mortgage shall constitute a security agreement under the Alabama Uniform Commercial Code to the extent that such Code is applicable to the creation of a security interest in the Collateral or parts thereof.
SECTION 9.11 APPLICABLE ENVIRONMENTAL LAW COVENANT. As used herein, the term "Applicable Environmental Law" means any statutory law or case law pertaining to health or the environment, or petroleum products, or oil substances, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as codified at 42 U.S.C. ss. 9601 et seq. (1982), and the Hazardous Wastes Management Act of 1978, as codified at Ala. Code ss.ss. 22-30-1 et seq. (1984 and Supp. 1986); the terms "hazardous substance" and "release" have the meanings specified in CERCLA; provided, in the event CERCLA is amended to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment; and provided, to the extent that the laws of the State of Alabama establish a meaning of "hazardous substance" or "release" which is broader than that specified in CERCLA, such broader meaning shall apply. KINPAK represents and warrants to the Bank that the Mortgaged Site, and KINPAK are not in violation of or subject to any existing, pending or threatened investigation or inquiry by any governmental authority or any response costs or remedial obligations under any Applicable Environmental Law, and this representation and warranty would continue to be true and correct following disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to the Mortgaged Site; that KINPAK has not obtained and is not required to obtain any permits, licenses or similar authorizations to construct, occupy, operate or use any buildings, improvements, fixtures or equipment forming a part of the Mortgaged Site by reason of any Applicable Environmental Law; that KINPAK has taken all steps necessary to determine and have determined that no petroleum products, oil or hazardous substances have been disposed of or released on the Mortgaged Site; and that the use which KINPAK has made, makes or intend to make of the Mortgaged Site will not result in the location on or disposal or other release of any petroleum products, oil or hazardous substances on or to the Mortgaged Site. KINPAK and Properties hereby agree to pay any fines, charges, fees, expenses, damages, losses, liabilities and response costs arising from or pertaining to the application of any such Applicable Environmental Laws to the Mortgaged Site. KINPAK may, however, upon first furnishing to the Bank such security as shall be reasonably satisfactory to the Bank for the payment of all such fines, charges, fees, expenses, damages, losses, liabilities and response costs and expenses which may be incurred in pursuing any contest of such fines, charges, fees, expenses, damages, losses, liabilities and response costs, in good faith contest, at KINPAK's expense, the validity of any such fines, charges, fees, expenses, damages, losses, liabilities or response costs provided that KINPAK pursues any such contest with diligence and pays any such fines, charges, fees, expenses, damages, losses, liabilities and response costs promptly upon final resolution of such contest. KINPAK further agrees to indemnify and forever save the Bank harmless from any and all judgments, fines, charges, fees, expenses, damages, losses, liabilities, response costs and attorney's fees and expenses arising from the application of any such Applicable Environmental Law to the Mortgaged Site or the Bank; and this indemnity shall survive any repayment or foreclosure of this Mortgage or the taking by the Bank of a deed in lieu of foreclosure but only as to any state of facts existing as of or prior to the date of such repayment or foreclosure of this Mortgage or taking by the Bank of a deed in lieu of foreclosure. KINPAK agrees to notify the Bank in the event that any governmental agency or other entity notifies KINPAK that it may not be in compliance with any Applicable Environmental Law. KINPAK agrees to permit the Bank to have access to the Mortgaged Site at all reasonable times in order to conduct, at the Bank's expense, any tests which the Bank deems necessary to
ensure that KINPAK and the Mortgaged Site are in compliance with all Applicable Environmental Laws.
SECTION 9.12 LIMITED LIABILITY OF BOARD. No provision hereof shall be construed to impose a charge against the general credit of the Board or any personal or pecuniary liability upon the Board or give rise to or impose a lien or charge upon any of its property other than its interest in the Collateral. All obligations incurred by the Board hereunder are payable solely from the revenues and receipts to be derived from any leasing or sale of the Project or the Mortgaged Site or any of the other Collateral, including insurance proceeds and condemnation awards. The City of Montgomery is not liable for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever which is undertaken by the Board. No agreement of the Board shall be construed to constitute an indebtedness of the City of Montgomery within the meaning of any constitutional or statutory provision whatsoever. Further, none of the directors, officers, employees or agents of the Board shall have any personal or pecuniary liability whatsoever hereunder or any liability for the breach by the Board of any of the agreements on its part herein contained.
IN WITNESS WHEREOF, the Mortgagors have caused this instrument to be duly executed as of the year and day first above written.
KINPAK INC.
(SEAL)
By /s/ Peter G. Dornau
-----------------------
Its President
ATTEST:
/s/ Ed Anchel
-----------------------
Its Secretary
|
STATE OF Alabama )
:
Montgomery COUNTY )
I, the undersigned authority, a Notary Public in and for said County in said State, hereby certify that Peter G. Dornau, whose name as President of KINPAK Inc., an Alabama corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal, this 26 day of July, 2002.
/s/ Roy S. Goldfinger
--------------------------------------
Notary Public
(SEAL)
My Commission Expires:May 12, 2005
|
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
(SEAL)
By /s/ F. Berry Grant
---------------------------------
Its Vice Chairman
ATTEST:
/s/ [Illegible]
------------------------------------
Its Secretary or Assistant Secretary
|
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
|
I, the undersigned authority, a Notary Public in and for said County in said State, hereby certify that F. Berry Grant, whose name as Vice Chairman of The Industrial Development Board of the City of Montgomery, an Alabama public corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the said instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal this 22 day of July, 2002.
/s/ Roy S. Goldfinger
--------------------------------------
Notary Public
(SEAL)
My Commission Expires:May 18, 2005
|
EXHIBIT A
TO
MORTGAGE, ASSIGNMENT OF LEASES
AND SECURITY AGREEMENT
Lot 3-3A-1, according to the Map of a Replat of Lot 3-3A, Gunter Industrial Park, which said Replat appears of record in Plat Book 29 at Page 150 in the Office of the Judge of Probate of Montgomery County, Alabama, being a Replat of Lot 3-3 of Gunter Industrial Park Plat 3 and Lot 3-4B of the Replat of Lot 3-4 of Gunter Industrial Park Plat 3, lying in Section 2, Township 16 North, Range 18 East, and Section 35, Township 17 North, Range 18 East, Montgomery County, Alabama.
EXHIBIT B
TO
MORTGAGE, ASSIGNMENT OF LEASES
AND SECURITY AGREEMENT
Exceptions shown on Schedule B-Section 2 of Commitment for Title Insurance Commitment No. 29517-5 dated July 15, 2002, issued by Lawyers Title Insurance Corporation.
EXHIBIT C
TO
MORTGAGE, ASSIGNMENT OF LEASES
AND SECURITY AGREEMENT
EXHIBIT 10.7
SECURITY AGREEMENT
BY AND AMONG
OCEAN BIO-CHEM, INC.,
STAR-BRITE DISTRIBUTING, INC.,
STAR BRITE AUTOMOTIVE, INC.,
STAR BRITE DISTRIBUTING (CANADA), INC.
AND KINPACK INC.
AND
REGIONS BANK
DATED AS OF JULY 1, 2002
THIS INSTRUMENT PREPARED BY
JOHN F. ANDREWS
CAPELL & HOWARD, P.C.
P. O. BOX 2069
MONTGOMERY, AL 36102-2069
(334) 241-8000
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of July 1, 2002, is entered into by
and among OCEAN BIO-CHEM, INC. ("Ocean"), STAR-BRITE DISTRIBUTING, INC.
("Distributing"), STAR BRITE AUTOMOTIVE, INC. ("Automotive") and STAR BRITE
DISTRIBUTING (CANADA), INC. ("Canada"), corporations organized and existing
under the laws of the State of Florida, KINPAK INC., ("KINPAK") a corporation
organized and existing under the laws of the State of Alabama and REGIONS BANK,
an Alabama banking corporation (the "Bank"). Ocean, Distributing, Automotive,
Canada and KINPAK are herein sometimes referred to as the "Borrowers."
R E C I T A L S:
The Borrowers have requested that the Bank provide to the Borrowers the following credit facilities (the "Credit Facilities"): (i) a direct-pay irrevocable letter of credit (the "Substitute Letter") securing the payment of $4,000,000 Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 currently outstanding in the principal amount of $3,280,000 (the "1997 Bonds") issued by The Industrial Development Board of the City of Montgomery (the "Board"), (ii) a direct-pay irrevocable letter of credit (the "Letter of Credit") securing the payment of $3,500,000 Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 (the "2002 Bonds") to be issued by the Board, and (iii) a revolving working capital line of credit (the "Revolving Line of Credit") in the maximum amount outstanding at any time of $5,000,000.
The 1997 Bonds were issued pursuant to a Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997 (collectively, the "1997 Indenture") between the Board and Regions Bank as Trustee (in such capacity the "1997 Trustee"). The proceeds of the 1997 Bonds were used to refund certain prior revenue bonds of the Board, the proceeds of which were used to renovate and improve a manufacturing facility located in Montgomery, Alabama (the "Existing Facility") and currently leased by the Board to KINPAK pursuant to Restated Lease Agreement dated as of December 1, 1996, as amended and supplemented by First Supplemental Lease Agreement dated as of March 1, 1997 (collectively the "1997 Lease"). The Borrowers have requested that the Bank issue the Substitute Letter in substitution for the existing letter of credit heretofore issued by First Union National Bank of Florida securing the 1997 Bonds.
The 2002 Bonds will be issued pursuant to a Trust Indenture dated as of July 1, 2002 (the "2002 Indenture") between the Board and Regions Bank, as Trustee (acting in such capacity, the "2002 Trustee"). The Board will use the proceeds of the 2002 Bonds to finance (i) the construction of an approximately 70,000 square foot addition to the Existing Facility and the acquisition of certain machinery and equipment for use therein (collectively the "2002 Improvements") and (ii) the payment of a portion of the expenses of issuing the 2002 Bonds. KINPAK and the Board will enter into a Second Supplemental Lease
Agreement dated as of July 1, 2002 pursuant to which KINPAK will lease the 2002 Improvements from the Board and KINPAK will agree to pay additional rent to the Board sufficient to pay the debt service on the 2002 Bonds. The Existing Facility as improved by the 2002 Improvements is herein referred to as the "Project." Regions Bank when acting in the capacity as both the 1997 Trustee and 2002 Trustee is herein referred to as the "Trustee."
As security for the payment of the 2002 Bonds, the Borrower will cause the Bank to issue the Letter of Credit in favor of the 2002 Trustee in the amount of (i) the aggregate principal amount of the 2002 Bonds, to enable the 2002 Trustee to pay the principal amount of the 2002 Bonds when due and to pay the principal portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase, plus (ii) interest on the 2002 Bonds for a period of 120 days at the rate of 12% per annum, to enable the 2002 Trustee to pay interest on the 2002 Bonds when due and to pay the interest portion of the purchase price of 2002 Bonds tendered (or deemed tendered) for purchase.
The Revolving Line of Credit will be made available by the Bank to the Borrowers pursuant to the terms hereof and the Borrowers will use the moneys drawn under the Revolving Line of Credit to provide working capital for the Borrowers' business operations. The obligations of the Borrowers under the Revolving Line of Credit will be evidenced by a promissory note of the Borrowers in favor of the Bank dated as of July 1, 2002.
The Substitute Letter, the Letter of Credit and the Revolving Line of Credit are being issued pursuant to a Credit Agreement dated as of July 1, 2003 by and among the Borrowers and the Bank (the "Credit Agreement").
As security for the Borrowers' obligations under this Agreement with respect to the Revolving Line of Credit the Borrowers are executing this Security Agreement (this "Security Agreement") in favor of the Bank, whereby the Bank is being granted a security interest in all receivables and inventory of the Borrowers.
NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the nature and adequacy of which Borrowers and the Bank acknowledge as sufficient and proper to make this Agreement binding, the parties hereto, intending to be legally bound, do state and agree as follows:
1. Meaning of terms used herein:
(a) "Account Debtor" means a person or entity who is obligated on a Receivable.
(b) "Borrowers" means the Borrowers jointly and each of the Borrowers severally.
(c) "Chattel Paper" means a writing or writings which evidence both a debt and a security interest in or lease of goods.
(d) "Contract Rights" means any rights under contracts not yet earned by performance and not yet evidenced by an Instrument or Chattel Paper.
(e) "Credit Agreement" shall have the meaning set forth in the Recitals hereto.
(f) "Credit Facilities" means collectively, the Substitute Letter, the Letter of Credit, and the Revolving Line of Credit .
(g) "Document" means a bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the Document and the goods it covers, whether negotiable or non-negotiable.
(h) "Instrument" includes all negotiable instruments, documentary drafts, Chattel Paper and other writings which evidence a right to payment of money for goods and inventory sold or leased or for services rendered.
(i) "Inventory" means all inventory of every nature and description belonging to the Borrowers wherever located and whether now owned or in existence or hereafter acquired, held for sale or lease or to be furnished under contracts of service, and all work in progress, finished goods, parts, materials and supplies of every nature and description produced, used or consumed in the Borrowers' business.
(j) "Letter of Credit" shall have the meaning set forth in the Recitals hereto.
(k) "Letters of Credit" means the Letter of Credit and the Substitute Letter collectively.
(l) "Line of Credit Obligations" means all indebtedness or obligations of the Borrowers to the Bank under or related to the Revolving Line of Credit.
(m) "Receivables" means and includes any and all rights of the Borrowers to the payment of money or other forms of consideration of any kind (whether classified under the Uniform Commercial Code as accounts, contract rights, chattel paper, general intangibles, or otherwise) including, but not limited to, accounts receivable, letters of credit and the right to receive payment thereunder, chattel paper, tax refunds, insurance proceeds, contract rights, notes, drafts, instruments, documents, acceptances, and all other debts, obligations and liabilities due Borrowers in whatever form and from whatever person or entity and further including all cash and noncash proceeds of any of the foregoing.
(n) "Revolving Line of Credit" shall have the meaning set forth in the Recitals hereto.
(o) "Security Interest" means an interest in tangible or intangible property that secures payment or performance of an obligation or payment of a liability.
(p) "Substitute Letter " shall have the meaning set forth in the Recitals hereto.
(q) "Uniform Commercial Code" means the Alabama Uniform Commercial Code.
2. The Bank is lending, and will from time to time lend, to Borrowers on terms and in amounts as requested by Borrowers, under and pursuant to the terms of the Credit Agreement. Borrowers hereby grants to the Bank to secure all of Borrowers' Line of Credit Obligations under the Credit Agreement, the Credit Facilities and all documents and instruments securing the same a Security Interest under the Uniform Commercial Code in all of Borrowers' right, title and interest in and to each of the following, wherever located and whether now or hereafter existing or now owned or hereafter acquired or arising (herein collectively referred to as the "Collateral"):
(a) All Receivables of Borrowers, whether existing at the date of this Agreement or arising at any time hereafter during the term of this Agreement;
(b) All Inventory of Borrowers, including all Inventory of the Borrowers at the date of execution of this Agreement and all Inventory at any time hereafter acquired by the Borrowers;
(c) All Instruments and Contract Rights, whether now existing or arising hereafter;
(d) All Documents, policies and certificates of insurance, securities, Chattel Paper and other documents and instruments evidencing or pertaining to any and all items of Collateral;
(e) All products and proceeds of any item of Collateral;
(f) All files, correspondence, computer programs, tapes, disks and related data processing software which contain information identifying or pertaining to any of the Receivables, the Inventory or any Account Debtor or showing the amounts thereof or payments thereon or the collection thereof.
3. Upon an Event of Default, as such term is defined in the Credit Agreement (an "Event of Default"), the Bank is hereby expressly authorized and empowered to, in its sole and absolute option and election, take any one or more of the actions or remedies set forth in Section 7.02 of the Credit Agreement in order to enable it to realize upon the Collateral, but the Bank shall under no circumstances be under any duty whatsoever to take any of such actions or remedies.
4. In confirmation of the Security Interest accorded the Bank in Borrowers' Receivables and Inventory, Borrowers expressly assign and transfer to the Bank all Borrowers' existing and future Receivables and Inventory and
Borrowers will comply with any request for specific written assignments of any designated Receivables, Inventory, Contract Rights or Instruments which the Bank might request as further evidence of such assignments (such assignments being in addition and supplementary to the assignment herein), but all of Borrowers' existing and future Receivables and Inventory are hereby expressly assigned without any such specific writing.
5. Borrowers warrant that the Security Interest in the Collateral herein granted constitutes a valid and perfected first security interest in the Collateral, subject to no prior or superior lien, security interest or other encumbrance of any kind whatsoever, except as set forth on Exhibit A hereto, in respect of any of the Collateral, including any after acquired Collateral. At such time as the indebtedness is repaid which is secured by the security interests listed on Exhibit A, Borrowers agree to take such action as is necessary to obtain the release of such security interests.
6. Borrowers hereby expressly affirm each and every financial or other covenant in the Credit Agreement. Borrowers hereby further expressly affirm each and every representation and warranty contained in the Credit Agreement.
7. So long as any Line of Credit Obligation to the Bank is outstanding, Borrowers will not, without the prior written consent of the Bank, pledge or grant any security interest in any Receivables, Inventory, Instruments, Contract Rights or other Collateral to anyone except the Bank, or permit any lien, security interest, attachment, claim or other encumbrance to attach to any of the forgoing or permit any levy to be made thereon, or any financing statement (except the Bank's statement) to be on file with respect thereto.
8. Borrowers warrant that it has, and at all times hereinafter will have, full power and lawful authority, corporate and other, to pledge, assign, transfer and grant a security interest in the Collateral in the manner and form herein done and intended, except as disclosed in writing to the Bank.
9. Borrowers represent that all of its books and records concerning all of its accounts have their situs in an office located at 4041 S.W. 47th Avenue, Ft. Lauderdale, Florida 33314. Borrowers will immediately advise the Bank in writing of the opening of any new place of business or of any change in the location of a place where its books and records concerning its Receivables and Inventory are kept.
10. Unless the Bank notifies Borrowers in writing that it waives any one or more of the following requirements, during the term of the Credit Agreement Borrowers will:
(a) comply with all of the terms and provisions of the Credit Agreement of even date herewith;
(b) collect its Receivables, including Instruments, and its Contract Rights only in the ordinary course of business;
(c) keep accurate and complete records of its Inventory, Receivables, Instruments, Documents and Contract Rights, and promptly advise the Bank of any substantial change in the Collateral and of any occurrence or event which would have a material adverse effect on the value of the Collateral;
(d) pay and discharge when due all taxes, levies and other charges on the Collateral, except that Borrowers may defer payment pending the bona fide contest of any claim unless the Bank shall be of the opinion that by such action the property of the Borrowers, or any part thereof shall be materially endangered or shall be subject to loss or forfeiture, in which event any such payment then due shall not be deferred;
(e) keep its Inventory insured for the benefit of the Bank (to whom loss shall be payable) in such amounts, in such companies, and against such risks as may be reasonably satisfactory to the Bank, pay the cost of all such insurance, and deliver certificates evidencing such insurance to the Bank; and
(f) join with the Bank in executing financing statements, continuation statements, notices, affidavits, or similar instruments in form satisfactory to the Bank and such other instruments as the Bank may from time to time request and pay the cost of filing the same in any public office deemed advisable by the Bank.
11. Borrowers shall promptly notify the Bank of any material claim, lien, security interest or other encumbrance made or asserted against any of the Collateral or any suit, action or proceeding affecting any Collateral which may adversely affect the Security Interest granted under this Agreement, and Borrowers shall, at their expense, defend the Collateral against any and all claims, liens, security interests or other encumbrances and any such suit, action or proceeding.
12. If at any time any warranty, representation, certificate or statement made to the Bank by Borrowers is not true, or if any Event of Default shall occur or if Borrowers shall fail to observe or perform any term hereof and failure to observe or perform shall continue for a period of 30 days after receipt of notice thereof from the Bank, or such longer period as may be reasonably necessary to cure such failure so long as the Borrowers are diligently pursuing such cure, all Line of Credit Obligations of Borrowers shall, at the election of the Bank, immediately become due and payable, and the Bank may at any time thereafter in addition to any other rights and remedies which it may have, immediately and without demand, exercise any and all of the rights and remedies granted to a secured party upon default under the Alabama Uniform Commercial Code. If in any event of the sale, lease or other disposition of the Collateral the proceeds thereof are insufficient to pay all amounts to which the Bank is legally entitled, Borrowers will be liable for the deficiency, together with interest thereon, and the reasonable fees of any attorneys employed by the Bank to collect such deficiency. To the extent permitted by applicable law, Borrowers waives all claims, damages and demands against the Bank arising out of the repossession, removal, retention or sale of the Collateral.
13. Borrowers waive protest of all Instruments at any time held by the Bank on which Borrowers are in any way liable, notice of nonpayment at maturity of any and all Receivables, and except where required hereby, notice of action taken by the Bank; and hereby ratifies and confirms whatever the Bank may lawfully do in accordance with the terms hereof.
14. Borrowers release the Bank from any claims for loss or damage caused by any failure to collect any Receivables or by any act or omission on the part of the Bank, its officers, agents and employees.
15. The provisions of this Agreement shall be in addition to those of the Credit Agreement, any note or evidence of liability of Borrowers held by the Bank or any assignment, pledge or guaranty, all of which shall be construed as one instrument. To the extent that any of the terms hereof are in conflict with any of the terms of the Credit Agreement, the terms of the Credit Agreement shall control.
16. The rights and duties of all parties to this Agreement shall be governed by the laws of the State of Alabama, particularly the Alabama Uniform Commercial Code.
17. This Agreement is binding upon all successors, assigns, transferees, receivers and trustees of each party hereto.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed and delivered by their duly authorized officers.
OCEAN BIO-CHEM, INC.
(SEAL)
By: /s/ Peter G. Dornau
-------------------
Its President
-------------------
ATTEST:
/s/ Ed Anchel
---------------------------
Its Asst. Secretary
-----------------------
|
STAR-BRITE DISTRIBUTING, INC.
(SEAL)
By: /s/ Peter G. Dornau
-------------------
Its President
-------------------
ATTEST:
/s/ Ed Anchel
---------------------------
Its Asst. Secretary
-----------------------
|
STAR BRITE AUTOMOTIVE, INC.
(SEAL)
By: /s/ Peter G. Dornau
-------------------
Its President
-------------------
ATTEST:
/s/ Ed Anchel
---------------------------
Its Asst. Secretary
-----------------------
|
STAR BRITE DISTRIBUTING (CANADA), INC.
(SEAL)
By: /s/ Peter G. Dornau
-------------------
Its President
-------------------
ATTEST:
/s/ Ed Anchel
---------------------------
Its Asst. Secretary
-----------------------
|
KINPAK INC.
(SEAL)
By: /s/ Peter G. Dornau
-------------------
Its President
-------------------
ATTEST:
/s/ Ed Anchel
---------------------------
Its Asst. Secretary
-----------------------
|
(BORROWERS)
REGIONS BANK
By: /s/ Timothy O'Riley
-------------------
Its Vice President
-------------------
|
(BANK)
EXHIBIT A
TO
SECURITY AGREEMENT
Such UCC-1 financial statement filings as shall have been approved by the Bank:
None
EXHIBIT 10.8
CREDIT AGREEMENT
IRREVOCABLE LETTER OF CREDIT NO. 24057
DATED JULY 22, 2002
Beneficiary:
Regions Bank
as Trustee under the Indenture
referred to below
60 Commerce Street
Montgomery, Alabama 36104
Attention: Corporate Trust Department
Dear Sirs:
1. For the account of Ocean Bio-Chem, Inc., Star-Brite Distributing, Inc., Star Brite Automotive, Inc., Star Brite Distributing (Canada) Inc., corporations organized under the laws of the State of Florida, and KINPAK INC., a corporation organized under the laws of the State of Alabama (collectively, the "Borrowers"), we hereby authorize you to draw on us at sight, as hereinafter provided, an amount not exceeding $3,441,754 (such amount, as reduced from time to time pursuant to paragraph 6 below and as reinstated from time to time pursuant to paragraphs 10 and 11 below, being herein called the "Credit Amount").
2. This Letter of Credit is irrevocable and is issued to you, as trustee under the Trust Indenture dated as of December 1, 1996, as amended and supplemented by First Supplemental Trust Indenture dated as of March 1, 1997 (collectively, the "Indenture") between you and The Industrial Development Board of the City of Montgomery, a public corporation organized under the laws of the State of Alabama (the "Issuer"), pursuant to which Indenture $4,000,000 in aggregate principal amount of the Issuer's Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series 1997 dated March 3, 1997 (the "Bonds") were issued. Of the Bonds, $3,280,000 in aggregate principal amount are outstanding as of the date hereof. This Letter of Credit is issued pursuant to various credit and security documents between us and the Borrowers , including that certain Credit Agreement dated as of July 1, 2002 (the "Credit Agreement"). Capitalized terms used herein without definition shall have the respective meanings assigned to them in the Credit Agreement.
3. Of the Credit Amount, (i) up to $3,280,000, which is an amount equal to the principal amount of the Bonds (the "Principal Portion"), may be drawn with respect to payment of the unpaid principal amount of the Bonds, or payment of the principal portion of the purchase price of Bonds tendered (or deemed tendered) to you for purchase in accordance with the optional or mandatory tender provisions of the Indenture ("Tendered Bonds") and (ii) up to $161,754, which is an amount equal to the maximum amount of interest payable on the currently outstanding Bonds at the rate of 15% per annum for a period of 120 days, computed on the basis of a 365 day year (the "Interest Portion"), may be
drawn with respect to payment of accrued but unpaid interest on the Bonds, or payment of the interest portion of the purchase price of Tendered Bonds. This Letter of Credit does not apply to any interest that may accrue on the Bonds after the Bonds become due (whether by maturity, redemption, acceleration or otherwise), or to any premium due upon redemption of the Bonds.
4. Funds under this Letter of Credit are available to you against your sight draft(s), drawn on Regions Bank, Birmingham, Alabama stating on their face: "Drawn under Regions Bank Irrevocable Letter of Credit No. 24057 accompanied by your written certificate signed by your authorized officer, appropriately completed, in the form of Appendix A, B or C hereto, as indicated below. Presentation of such drafts and certificates shall be made at our office located at
Regions Bank 417 North 20th Street Birmingham, Alabama 35203
or at any other office which may be designated by us by written notice delivered to you (the office address specified above and any other office so designated by us being herein called our "Principal Office"). We hereby agree that each draft drawn under and in compliance with the terms of this Letter of Credit will be duly honored by us with our own funds upon due delivery of the certificates, as specified below, if presented at our Principal Office on or before the expiration date hereof. All payments made by us pursuant to this Letter of Credit will be made with our own funds.
5. If a drawing is made by you hereunder at or prior to 10:00 a.m. (Birmingham, Alabama time) on a Business Day, and provided that the documents so presented conform to the terms and conditions hereof, payment shall be made to you, or to your designee, of the amount specified, in immediately available funds, not later than 1:30 p.m. (Birmingham, Alabama time) on the same business day. If a drawing is made by you hereunder after 10:00 a.m. (Birmingham, Alabama time) on a business day, and provided that the documents so presented conform to the terms and conditions hereof, payment shall be made to you, or to your designee, of the amount specified, in immediately available funds, not later than 1:30 p.m. (Birmingham, Alabama time) on the next succeeding business day. Payment under this Letter of Credit may be made by deposit of immediately available funds into a designated account that you maintain with us.
6. Multiple drawings may be made hereunder, provided that drawings honored by us hereunder shall not, in the aggregate, exceed the Credit Amount. The Credit Amount shall be reduced as follows:
(a) Payment by us of drawings with respect to principal due upon maturity, redemption or acceleration of the Bonds shall pro tanto reduce the Principal Portion of the Credit Amount, without reinstatement.
(b) Payment by us of drawings with respect to interest due on the Bonds shall pro tanto reduce the Interest Portion of the Credit Amount, subject to reinstatement as provided in paragraph 10 below.
(c) Payment by us of drawings with respect to the purchase of Tendered Bonds shall pro tanto reduce the Principal Portion of the Credit Amount, to the extent of the principal portion of the purchase price so drawn, and shall pro tanto reduce the Interest Portion of the Credit Amount, to the extent of the interest portion of the purchase price so drawn, in each case subject to reinstatement as provided in paragraph 11 below.
(d) At any time after the principal amount of the Bonds outstanding is reduced as a result of payment of the principal of Bonds due upon maturity or redemption, the Interest Portion of the Credit Amount may be reduced by delivery to us of written notice in the form of Appendix A hereto from you certifying the maximum amount of interest that would be payable on the Bonds then outstanding for a period of 120 days at the rate of 15% per annum, computed on the basis of a 365 day year (the "Maximum Interest Coverage"). Upon receipt by us of such notice from you, the Interest Portion of the Credit Amount shall be reduced to the Maximum Interest Coverage so certified by you and shall not thereafter be increased or reinstated to an amount in excess of such Maximum Interest Coverage. If, on the date of receipt of such notice by us, the Interest Portion of the Credit Amount then available for drawing hereunder is less than the Maximum Interest Coverage so certified (as a result of draws against the Interest Portion for which no reinstatement has become effective), the Interest Portion shall not thereafter be increased or reinstated to an amount greater than the Maximum Interest Coverage so certified by you.
7. For drawings under the Principal Portion to pay principal of the Bonds due upon maturity, redemption or acceleration, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix A (an "A Drawing").
8. For drawings under the Interest Portion to pay the interest due on the Bonds, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix B (a "B Drawing").
9. For drawings under the Principal Portion and (if applicable) the Interest Portion to pay the purchase price of Tendered Bonds, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix C (a "C Drawing").
10. On the day of payment by us of any B Drawing hereunder, the Interest Portion of the Credit Amount will be automatically reinstated by the amount of such B Drawing; provided, however, that the Interest Portion shall never be reinstated to an amount in excess of the Maximum Interest Coverage, as certified in the most recent notice with respect to Maximum Interest Coverage received by us pursuant to paragraph 6 above.
11. Upon receipt by us of funds adequate and available to reimburse us for a C Drawing with respect to any Tendered Bond or Bonds ("Reimbursement Funds"), (i) the Principal Portion shall be reinstated by the amount of the principal portion of the purchase price of such Tendered Bond or Bonds, and (ii) the Interest Portion shall be reinstated by the amount of the interest portion of the purchase price of such Tendered Bond or Bonds; provided, however, that the Interest Portion shall never be reinstated to an amount in excess of the Maximum Interest Coverage, as certified in the most recent notice with respect to Maximum Interest Coverage received by us pursuant to paragraph 6 above. Bonds with respect to which we receive such Reimbursement Funds shall no longer be considered "Pledged Bonds" for purposes of the Indenture and the Credit Agreement. We shall promptly notify you of the receipt by us of all Reimbursed Funds, such notice to be in the form of Appendix D hereto.
12. Reductions of the Credit Amount provided for in paragraph 6 above shall reduce the amounts which you may draw hereunder notwithstanding:
(a) the fact that such reduction is the result of a payment under this Letter of Credit against presentation of a sight draft or certificate which does not substantially comply with the terms of this Letter of Credit (including without limitation (i) the fact that any draft or certificate presented upon this Letter of Credit, or any endorsement thereon, proves to be forged, fraudulent, invalid, unenforceable or insufficient in any respect or any statement therein is inaccurate in any respect whatever or (ii) the failure of any document to bear reference, or to bear adequate reference, to this Letter of Credit);
(b) the use to which this Letter of Credit may be put or any acts or omissions of the Trustee in connection therewith; or
(c) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing, in making payment under this Letter of Credit;
provided that such payment shall not constitute gross negligence or willful misconduct by us. In furtherance and not in limitation of the foregoing, we 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.
13. Only you, as trustee under the Indenture, may make a drawing under this Letter of Credit. Upon the payment to you or your account of the amount specified in sight drafts drawn hereunder, we shall be fully discharged of our obligation under this Letter of Credit with respect to such sight drafts and we shall not thereafter be obligated to make any further payments under this Letter of Credit in respect of such sight drafts to you or any other person who may have made or makes a demand for payment of principal or interest with respect to any Bond.
14. This Letter of Credit shall be effective immediately and shall automatically terminate upon the earliest of:
(a) the date of our honoring of the final drawing available to be made hereunder; or
(b) the date of our receipt of a certificate in the form of Appendix E hereto appropriately completed and purportedly signed by your duly authorized officer; or
(c) thirty (30) days after receipt by you of written notice from us (i) stating that an Event of Default, as defined in the Credit Agreement, has occurred and is continuing and (ii) directing that the Bonds be declared due and payable pursuant to Section 601(g) of the Indenture; or
(d) fifteen (15) calendar days following the date that the Bonds have been converted to bear the Fixed Rate (as defined in the Indenture); or
(e) our close of business on July 31, 2005 (the "Stated Expiration Date").
The Stated Expiration Date of this Letter of Credit will be extended automatically for successive one-year periods unless at least sixty (60) days prior to the then current Stated Expiration Date the Bank gives written notice, in the form of Appendix G hereto, to the Trustee and the Borrowers by courier letter notice, that the Bank elects not to so extend the Stated Expiration Date of this Letter of Credit. Upon the expiration or other termination of this Letter of Credit you shall immediately deliver the same to us for cancellation.
15. You may transfer your rights in their entirety (but not in part) to any transferee who has succeeded you as trustee under the Indenture, and such transferred rights may be successively transferred. Such transfer shall be effected upon the presentation to us of this Letter of Credit accompanied by a transfer letter in the form attached hereto as Appendix F. Upon presentation of such documents to us, we shall forthwith issue an irrevocable Letter of Credit to your transferee with provisions consistent with this Letter of Credit.
16. Except as specifically set forth herein, this Letter of Credit is subject to the International Standby Practices 1998, as promulgated by the Institute of International Banking Law and Practice, Inc. ("ISP98"). This Letter of Credit shall be deemed to be a contract made under the laws of the State of Alabama and shall, as to matters not governed by the ISP98, be governed by and construed in accordance with the laws of the State of Alabama, except Section 7-5-108(b) and (c) of the Code of Alabama 1975, as amended, shall not apply hereto.
17. All documents, notices and other communications (hereinafter "documents") provided or permitted by this Letter of Credit to be given or presented to us shall be personally delivered to us at our Principal Office or shall be sent to us by telecopy (in which case draft requirements are waived) to the following number:
Telecopy No. (205) 326 7779
or such other telex, telecopy, or facsimile number as we shall specify by written notice to you. For purposes of this Letter of Credit, a document shall be "presented" or a "presentation" of a document shall be made in accordance with the terms hereof only when such document is actually received by our International Department at our Principal Office, whether presented in person or by telecopy as provided above. You may verify our receipt of documents delivered by telecopy by telephone inquiry at (205) 326 7283, or at such other telephone number as we shall specify by written notice to you.
18. All documents, notices and other communications provided or permitted by this Letter of Credit to be given or presented to you shall be personally delivered to you at 60 Commerce Street, Montgomery, Alabama 36104, Attention: Corporate Trust Department, or at any other address which may be designated by you by written notice delivered to us, or shall be sent to you by telecopy to the following number: Telecopy No. (334) 230 6150, or such other telex, telecopy, or facsimile number as you shall specify by written notice to us.
19. 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), except only the certificates and the sight drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such sight drafts.
20. This Letter of Credit may not be amended or modified in any way unless there has been first delivered to the Trustee, the Company and the Remarketing Agent an Opinion of Bond Counsel that such action will not, whether solely or in conjunction with any other fact or circumstance, cause the interest on the Bonds to be or become taxable. This Letter of Credit is executed as of the date and year first above written.
Very truly yours,
REGIONS BANK
By: /s/ L. Annette Veazey
---------------------
Name: L. Annette Veazey
Title: Vice President
|
APPENDIX A
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
CERTIFICATE FOR A DRAWING
Regions Bank as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with reference to Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Principal Portion of the Letter of Credit in the amount of $________________ to be used for the payment of unpaid principal on the Bonds due upon maturity, redemption or acceleration. Such amount is due and payable with respect to the principal of the Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate that is allocable to the payment of principal of the Bonds does not exceed the amount available on the date hereof to be drawn under the Principal Portion of the Letter of Credit
(4) After the Bonds with respect to which this draw is made are retired, the aggregate principal amount of Bonds outstanding under the Indenture will be $_______________. After payment by you of this drawing (and any B Drawing submitted by us for payment on the same date), the Maximum Interest Coverage (as defined in paragraph 6(d) of the Letter of Credit) will be $________________.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duty authorized officer on this _____ day of ________________, _______-.
REGIONS BANK
as Trustee
APPENDIX B
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
CERTIFICATE FOR B DRAWING
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with reference to Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Interest Portion of the Letter of Credit in the amount of $____________________ to be used for the payment of unpaid interest due on the Bonds. Such amount is due and payable with respect to interest on the Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate does not exceed the amount available on the date hereof to be drawn under the Interest Portion of the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this ________ day of _______________, ______.
REGIONS BANK
as Trustee
APPENDIX C
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
CERTIFICATE FOR C DRAWING
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with respect to Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit in the amount of $_______________ to be used to pay the purchase price of Tendered Bonds. Of the aggregate amount drawn, $________________ is drawn under the Interest Portion of the Letter of Credit to pay the interest portion of such purchase price and $_________________ is drawn under the Principal Portion of the Letter of Credit to pay the principal portion of such purchase price. The aggregate amount so drawn is due and payable with respect to the purchase price of Tendered Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate does not exceed the amount available on the date hereof to be drawn under the Letter of Credit; the amount designated above as drawn against the Interest Portion does not exceed the amount available on the date hereof to be drawn under the Interest Portion of the Letter of Credit; and the amount designated above as drawn against the Principal Portion does not exceed the amount available on the date hereof to be drawn under the Principal Portion of the Letter of Credit.
(4) This C Drawing is being made to pay the purchase price of the following Tendered Bonds:
Certificate Number Principal (if applicable) Amount ------------------ --------- ------------------ --------- ------------------ --------- ------------------ --------- |
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this _______ day of _______________, _____.
REGIONS BANK
as Trustee
APPENDIX D
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
REIMBURSEMENT NOTICE
Regions Bank (the "Bank") hereby certifies to Regions Bank, as Trustee (the "Trustee"), with respect to Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Bank has received reimbursement of amounts due to us because of a C Drawing made on the Letter of Credit by that certain draft dated ___________ in the amount of $___________________ with respect to the following TenderedBonds:
Certificate Number Principal
(if applicable) Amount
------------------ ---------
------------------ ---------
------------------ ---------
Total $
|
(2) The Principal Portion shall be reinstated by $__________________, which was the amount of the principal portion of the purchase price of the Tendered Bonds referred to in paragraph (1) above.
(3) The Interest Portion shall be reinstated by $_________________, which was the amount of the interest portion of the purchase price of the Tendered Bonds referred to in paragraph (1) above.
IN WITNESS WHEREOF, the Bank has caused this certificate to be executed and delivered by its duly authorized officer on this ____ day of _______________, ______.
REGIONS BANK
as Trustee
APPENDIX E
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
CERTIFICATE FOR CANCELLATION
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with respect to Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Letter of Credit is hereby delivered to the Bank for cancellation because:
(a) the Bonds have been fully paid, or provision for such payment has been made, in accordance with the terms of Article VIII of the Indenture; or
(b) the terms and conditions of the Indenture (and the Restated Lease Agreement referred to in the Indenture) for the acceptance by the Trustee of a Substitute Letter of Credit or an Alternate Credit Facility and the cancellation of the Letter of Credit have been satisfied.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this ______ day of _______________, ____.
REGIONS BANK
as Trustee
APPENDIX F
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
TRANSFER LETTER
Regions Bank
8 Commerce Street
Montgomery, Alabama 36104
Gentlemen:
With reference to your Irrevocable Letter of Credit No. 24057 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit), we hereby transfer to ____________________________ all right, title and interest of the undersigned in and to the Letter of Credit.
We hereby certify that the transferee is the successor trustee under the Indenture.
Please notify the transferee of this transfer.
The Letter of Credit (including amendments to this date, if any) is returned herewith, and we request that you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit, as required by the terms of the Letter of Credit. This transfer shall be void and of no effect if you fail to issue such a letter of credit to the transferee.
Very truly yours,
REGIONS BANK
as Trustee
APPENDIX G
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24057
CERTIFICATE DENYING EXTENSION OF
STATED EXPIRATION DATE OF LETTER OF CREDIT
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
To: Regions Bank, as Trustee
417 North 20th Street
Birmingham, AL 35203
Re: Irrevocable Transferable Letter of Credit No. 24057
The undersigned hereby certifies to Regions Bank, as Trustee (the "Trustee") with reference to Irrevocable Transferable Letter of Credit No. 24057 (the "Letter of Credit") issued by Regions Bank (the "Bank") in favor of the Trustee and for the account of Ocean Bio-Chem, Inc., et al, that the Bank has elected not to grant a one-year extension of the current Stated Expiration Date of the Letter of Credit, which is _________________ _____, ______.
IN WITNESS WHEREOF, the Bank has executed and delivered this Certificate as of the _____ day of ____________, _____, which is a date at least 60 days prior to the current Stated Expiration Date of the Letter of Credit.
REGIONS BANK
EXHIBIT 10.9
CREDIT AGREEMENT
IRREVOCABLE LETTER OF CREDIT NO. 24058
Dated July 22, 2002
Beneficiary:
Regions Bank
as Trustee under the Indenture
referred to below
60 Commerce Street
Montgomery, Alabama 36104
Attention: Corporate Trust Department
Dear Sirs:
1. For the account of Ocean Bio-Chem, Inc., Star-Brite Distributing, Inc., Star Brite Automotive, Inc., Star Brite Distributing (Canada) Inc., corporations organized under the laws of the State of Florida, and KINPAK INC., a corporation organized under the laws of the State of Alabama (collectively, the "Borrowers"), we hereby authorize you to draw on us at sight, as hereinafter provided, an amount not exceeding $3,638,083, (such amount, as reduced from time to time pursuant to paragraph 6 below and as reinstated from time to time pursuant to paragraphs 10 and 11 below, being herein called the "Credit Amount").
2. This Letter of Credit is irrevocable and is issued to you, as trustee under the Trust Indenture dated as of July 1, 2002 (the "Indenture"), between you and The Industrial Development Board of the City of Montgomery, a public corporation organized under the laws of the State of Alabama (the "Issuer"), pursuant to which Indenture $3,500,000 in aggregate principal amount of the Issuer's Industrial Development Revenue Bonds (KINPAK INC. Project) Series 2002 dated the date of delivery and payment therefor (the "Bonds") are being issued. This Letter of Credit is issued pursuant to various credit and security documents between us and the Borrowers , including that certain Credit Agreement dated as of July 1, 2002 (the "Credit Agreement"). Capitalized terms used herein without definition shall have the respective meanings assigned to them in the Credit Agreement.
3. Of the Credit Amount, (i) up to $3,500,000, which is an amount equal to the principal amount of the Bonds (the "Principal Portion"), may be drawn with respect to payment of the unpaid principal amount of the Bonds, or payment of the principal portion of the purchase price of Bonds tendered (or deemed tendered) to you for purchase in accordance with the optional or mandatory tender provisions of the Indenture ("Tendered Bonds") and (ii) up to $138,083, which is an amount equal to the maximum amount of interest payable on the Bonds at the rate of 12% per annum for a period of 120 days, computed on the basis of a 365 day year (the "Interest Portion"), may be drawn with respect to payment of accrued but unpaid interest on the Bonds, or payment of the interest portion of the purchase price of Tendered Bonds. This Letter of Credit does not apply to any interest that may accrue on the Bonds after the Bonds become due (whether by maturity, redemption, acceleration or otherwise), or to any premium due upon redemption of the Bonds.
4. Funds under this Letter of Credit are available to you against your sight draft(s), drawn on Regions Bank, Birmingham, Alabama stating on their face: "Drawn under Regions Bank Irrevocable Letter of Credit No. 24058" accompanied by your written certificate signed by your authorized officer, appropriately completed, in the form of Appendix A, B or C hereto, as indicated below. Presentation of such drafts and certificates shall be made at our office located at
Regions Bank
417 North 20th Street
Birmingham, Alabama 35203
or at any other office which may be designated by us by written notice delivered to you (the office address specified above and any other office so designated by us being herein called our "Principal Office"). We hereby agree that each draft drawn under and in compliance with the terms of this Letter of Credit will be duly honored by us with our own funds upon due delivery of the certificates, as specified below, if presented at our Principal Office on or before the expiration date hereof. All payments made by us pursuant to this Letter of Credit will be made with our own funds.
5. If a drawing is made by you hereunder at or prior to 10:00 a.m. (Birmingham, Alabama time) on a Business Day, and provided that the documents so presented conform to the terms and conditions hereof, payment shall be made to you, or to your designee, of the amount specified, in immediately available funds, not later than 1:30 p.m. (Birmingham, Alabama time) on the same business day. If a drawing is made by you hereunder after 10:00 a.m. (Birmingham, Alabama time) on a business day, and provided that the documents so presented conform to the terms and conditions hereof, payment shall be made to you, or to your designee, of the amount specified, in immediately available funds, not later than 1:30 p.m. (Birmingham, Alabama time) on the next succeeding business day. Payment under this Letter of Credit may be made by deposit of immediately available funds into a designated account that you maintain with us.
6. Multiple drawings may be made hereunder, provided that drawings honored by us hereunder shall not, in the aggregate, exceed the Credit Amount. The Credit Amount shall be reduced as follows:
(a) Payment by us of drawings with respect to principal due upon maturity, redemption or acceleration of the Bonds shall pro tanto reduce the Principal Portion of the Credit Amount, without reinstatement.
(b) Payment by us of drawings with respect to interest due on the Bonds shall pro tanto reduce the Interest Portion of the Credit Amount, subject to reinstatement as provided in paragraph 10 below.
(c) Payment by us of drawings with respect to the purchase of Tendered Bonds shall pro tanto reduce the Principal Portion of the Credit Amount, to the extent of the principal portion of the purchase price so drawn, and shall pro tanto reduce the Interest Portion of the Credit Amount, to the extent of the interest portion of the purchase price so drawn, in each case subject to reinstatement as provided in paragraph 11 below.
(d) At any time after the principal amount of the Bonds outstanding is reduced as a result of payment of the principal of Bonds due upon maturity or redemption, the Interest Portion of the Credit Amount may be reduced by delivery to us of written notice in the form of Appendix A hereto from you certifying the maximum amount of interest that would be payable on the Bonds then outstanding for a period of 120 days at the rate of 12% per annum, computed on the basis of a 365 day year (the "Maximum Interest Coverage"). Upon receipt by us of such notice from you, the Interest Portion of the Credit Amount shall be reduced to the Maximum Interest Coverage so certified by you and shall not thereafter be increased or reinstated to an amount in excess of such Maximum Interest Coverage. If, on the date of receipt of such notice by us, the Interest Portion of the Credit Amount then available for drawing hereunder is less than the Maximum Interest Coverage so certified (as a result of draws against the Interest Portion for which no reinstatement has become effective), the Interest Portion shall not thereafter be increased or reinstated to an amount greater than the Maximum Interest Coverage so certified by you.
7. For drawings under the Principal Portion to pay principal of the Bonds due upon maturity, redemption or acceleration, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix A (an "A Drawing").
8. For drawings under the Interest Portion to pay the interest due on the Bonds, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix B (a "B Drawing").
9. For drawings under the Principal Portion and (if applicable) the Interest Portion to pay the purchase price of Tendered Bonds, your drafts must be accompanied by your written certificate signed by your authorized officer and appropriately completed in the form of Appendix C (a "C Drawing").
10. On the day of payment by us of any B Drawing hereunder, the Interest Portion of the Credit Amount will be automatically reinstated by the amount of such B Drawing; provided, however, that the Interest Portion shall never be reinstated to an amount in excess of the Maximum Interest Coverage, as certified in the most recent notice with respect to Maximum Interest Coverage received by us pursuant to paragraph 6 above.
11. Upon receipt by us of funds adequate and available to reimburse us for a C Drawing with respect to any Tendered Bond or Bonds ("Reimbursement Funds"), (i) the Principal Portion shall be reinstated by the amount of the
principal portion of the purchase price of such Tendered Bond or Bonds, and (ii) the Interest Portion shall be reinstated by the amount of the interest portion of the purchase price of such Tendered Bond or Bonds; provided, however, that the Interest Portion shall never be reinstated to an amount in excess of the Maximum Interest Coverage, as certified in the most recent notice with respect to Maximum Interest Coverage received by us pursuant to paragraph 6 above. Bonds with respect to which we receive such Reimbursement Funds shall no longer be considered "Pledged Bonds" for purposes of the Indenture and the Credit Agreement. We shall promptly notify you of the receipt by us of all Reimbursed Funds, such notice to be in the form of Appendix D hereto.
12. Reductions of the Credit Amount provided for in paragraph 6 above shall reduce the amounts which you may draw hereunder notwithstanding:
(a) the fact that such reduction is the result of a payment under this Letter of Credit against presentation of a sight draft or certificate which does not substantially comply with the terms of this Letter of Credit (including without limitation (i) the fact that any draft or certificate presented upon this Letter of Credit, or any endorsement thereon, proves to be forged, fraudulent, invalid, unenforceable or insufficient in any respect or any statement therein is inaccurate in any respect whatever or (ii) the failure of any document to bear reference, or to bear adequate reference, to this Letter of Credit);
(b) the use to which this Letter of Credit may be put or any acts or omissions of the Trustee in connection therewith; or
(c) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing, in making payment under this Letter of Credit;
provided that such payment shall not constitute gross negligence or willful misconduct by us. In furtherance and not in limitation of the foregoing, we 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.
13. Only you, as trustee under the Indenture, may make a drawing under this Letter of Credit. Upon the payment to you or your account of the amount specified in sight drafts drawn hereunder, we shall be fully discharged of our obligation under this Letter of Credit with respect to such sight drafts and we shall not thereafter be obligated to make any further payments under this Letter of Credit in respect of such sight drafts to you or any other person who may have made or makes a demand for payment of principal or interest with respect to any Bond.
14. This Letter of Credit shall be effective immediately and shall automatically terminate upon the earliest of:
(a) the date of our honoring of the final drawing available to be made hereunder; or
(b) the date of our receipt of a certificate in the form of Appendix E hereto appropriately completed and purportedly signed by your duly authorized officer; or
(c) thirty (30) days after receipt by you of written notice from us (i) stating that an Event of Default, as defined in the Credit Agreement, has occurred and is continuing and (ii) directing that the Bonds be declared due and payable pursuant to Section 601(g) of the Indenture; or
(d) fifteen (15) calendar days following the date that the Bonds have been converted to bear the Fixed Rate (as defined in the Indenture); or
(e) our close of business on July 31, 2005 (the "Stated Expiration Date").
The Stated Expiration Date of this Letter of Credit will be extended automatically for successive one-year periods unless at least sixty (60) days prior to the then current Stated Expiration Date the Bank gives written notice, in the form of Appendix G hereto, to the Trustee and the Borrowers by courier letter notice, that the Bank elects not to so extend the Stated Expiration Date of this Letter of Credit. Upon the expiration or other termination of this Letter of Credit you shall immediately deliver the same to us for cancellation.
15. You may transfer your rights in their entirety (but not in part) to any transferee who has succeeded you as trustee under the Indenture, and such transferred rights may be successively transferred. Such transfer shall be effected upon the presentation to us of this Letter of Credit accompanied by a transfer letter in the form attached hereto as Appendix F. Upon presentation of such documents to us, we shall forthwith issue an irrevocable Letter of Credit to your transferee with provisions consistent with this Letter of Credit.
16. Except as specifically set forth herein, this Letter of Credit is subject to the International Standby Practices 1998, as promulgated by the Institute of International Banking Law and Practice, Inc. ("ISP98"). This Letter of Credit shall be deemed to be a contract made under the laws of the State of Alabama and shall, as to matters not governed by the ISP98, be governed by and construed in accordance with the laws of the State of Alabama, except Section 7-5-108(b) and (c) of the Code of Alabama 1975, as amended, shall not apply hereto.
17. All documents, notices and other communications (hereinafter "documents") provided or permitted by this Letter of Credit to be given or presented to us shall be personally delivered to us at our Principal Office or shall be sent to us by telecopy (in which case draft requirements are waived) to the following number:
Telecopy No. (205) 326 7779
or such other telex, telecopy, or facsimile number as we shall specify by written notice to you. For purposes of this Letter of Credit, a document shall be "presented" or a "presentation" of a document shall be made in accordance
with the terms hereof only when such document is actually received by our International Department at our Principal Office, whether presented in person or by telecopy as provided above. You may verify our receipt of documents delivered by telecopy by telephone inquiry at (205) 326 7283, or at such other telephone number as we shall specify by written notice to you.
18. All documents, notices and other communications provided or permitted by this Letter of Credit to be given or presented to you shall be personally delivered to you at 60 Commerce Street, Montgomery, Alabama 36104, Attention: Corporate Trust Department, or at any other address which may be designated by you by written notice delivered to us, or shall be sent to you by telecopy to the following number: Telecopy No. (334) 230 6150, or such other telex, telecopy, or facsimile number as you shall specify by written notice to us.
19. 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), except only the certificates and the sight drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such sight drafts.
20. This Letter of Credit may not be amended or modified in any way unless there has been first delivered to the Trustee, the Company and the Remarketing Agent an Opinion of Bond Counsel that such action will not, whether solely or in conjunction with any other fact or circumstance, cause the interest on the Bonds to be or become taxable. This Letter of Credit is executed as of the date and year first above written.
Very truly yours,
REGIONS BANK
By: /s/ L. Annette Veazey
---------------------
Name: L. Annette Veazey
Title: Vice President
|
APPENDIX A
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
CERTIFICATE FOR A DRAWING
Regions Bank as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with reference to Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Principal Portion of the Letter of Credit in the amount of $________________ to be used for the payment of unpaid principal on the Bonds due upon maturity, redemption or acceleration. Such amount is due and payable with respect to the principal of the Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate that is allocable to the payment of principal of the Bonds does not exceed the amount available on the date hereof to be drawn under the Principal Portion of the Letter of Credit
(4) After the Bonds with respect to which this draw is made are retired, the aggregate principal amount of Bonds outstanding under the Indenture will be $_______________. After payment by you of this drawing (and any B Drawing submitted by us for payment on the same date), the Maximum Interest Coverage (as defined in paragraph 6(d) of the Letter of Credit) will be $________________.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duty authorized officer on this _____ day of ________________, _______-.
REGIONS BANK
as Trustee
APPENDIX B
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
CERTIFICATE FOR B DRAWING
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with reference to Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Interest Portion of the Letter of Credit in the amount of $____________________ to be used for the payment of unpaid interest due on the Bonds. Such amount is due and payable with respect to interest on the Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate does not exceed the amount available on the date hereof to be drawn under the Interest Portion of the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this ________ day of _______________, ______.
REGIONS BANK
as Trustee
APPENDIX C
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
CERTIFICATE FOR C DRAWING
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with respect to Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit in the amount of $_______________ to be used to pay the purchase price of Tendered Bonds. Of the aggregate amount drawn, $________________ is drawn under the Interest Portion of the Letter of Credit to pay the interest portion of such purchase price and $_________________ is drawn under the Principal Portion of the Letter of Credit to pay the principal portion of such purchase price. The aggregate amount so drawn is due and payable with respect to the purchase price of Tendered Bonds, or will be due and payable on the date that the Bank is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this certificate does not exceed the amount available on the date hereof to be drawn under the Letter of Credit; the amount designated above as drawn against the Interest Portion does not exceed the amount available on the date hereof to be drawn under the Interest Portion of the Letter of Credit; and the amount designated above as drawn against the Principal Portion does not exceed the amount available on the date hereof to be drawn under the Principal Portion of the Letter of Credit.
(4) This C Drawing is being made to pay the purchase price of the following Tendered Bonds:
Certificate Number Principal (if applicable) Amount ------------------ --------- ------------------ --------- ------------------ --------- ------------------ --------- |
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this _______ day of _______________, _____.
REGIONS BANK
as Trustee
APPENDIX D
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
REIMBURSEMENT NOTICE
Regions Bank (the "Bank") hereby certifies to Regions Bank, as Trustee (the "Trustee"), with respect to Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Bank has received reimbursement of amounts due to us because of a C Drawing made on the Letter of Credit by that certain draft dated ___________ in the amount of $___________________ with respect to the following Tendered Bonds:
Certificate Number Principal
(if applicable) Amount
------------------ ---------
------------------ ---------
------------------ ---------
Total $
|
(2) The Principal Portion shall be reinstated by $__________________, which was the amount of the principal portion of the purchase price of the Tendered Bonds referred to in paragraph (1) above.
(3) The Interest Portion shall be reinstated by $_________________, which was the amount of the interest portion of the purchase price of the Tendered Bonds referred to in paragraph (1) above.
IN WITNESS WHEREOF, the Bank has caused this certificate to be executed and delivered by its duly authorized officer on this ____ day of _______________, ______.
REGIONS BANK
as Trustee
APPENDIX E
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
CERTIFICATE FOR CANCELLATION
Regions Bank, as trustee (the "Trustee"), hereby certifies to Regions Bank (the "Bank"), with respect to Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit) issued by the Bank in favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Letter of Credit is hereby delivered to the Bank for cancellation because:
(a) the Bonds have been fully paid, or provision for such payment has been made, in accordance with the terms of Article VIII of the Indenture; or
(b) the terms and conditions of the Indenture (and the Second Supplemental Lease referred to in the Indenture) for the acceptance by the Trustee of a Substitute Letter of Credit or an Alternate Credit Facility and the cancellation of the Letter of Credit have been satisfied.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed and delivered by its duly authorized officer on this ______ day of _______________, ____.
REGIONS BANK
as Trustee
APPENDIX F
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
TRANSFER LETTER
Regions Bank
8 Commerce Street
Montgomery, Alabama 36104
Gentlemen:
With reference to your Irrevocable Letter of Credit No. 24058 (the "Letter of Credit"; capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Letter of Credit), we hereby transfer to ____________________________ all right, title and interest of the undersigned in and to the Letter of Credit.
We hereby certify that the transferee is the successor trustee under the Indenture.
Please notify the transferee of this transfer.
The Letter of Credit (including amendments to this date, if any) is returned herewith, and we request that you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit, as required by the terms of the Letter of Credit. This transfer shall be void and of no effect if you fail to issue such a letter of credit to the transferee.
Very truly yours,
REGIONS BANK
as Trustee
APPENDIX G
TO
REGIONS BANK
IRREVOCABLE LETTER OF CREDIT NO. 24058
CERTIFICATE DENYING EXTENSION OF
STATED EXPIRATION DATE OF LETTER OF CREDIT
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
To: Regions Bank, as Trustee
417 North 20th Street
Birmingham, AL 35203
Re: Irrevocable Transferable Letter of Credit No. 24058
The undersigned hereby certifies to Regions Bank, as Trustee (the "Trustee") with reference to Irrevocable Transferable Letter of Credit No. 24058 (the "Letter of Credit") issued by Regions Bank (the "Bank") in favor of the Trustee and for the account of Ocean Bio-Chem, Inc., et al, that the Bank has elected not to grant a one-year extension of the current Stated Expiration Date of the Letter of Credit, which is _________________ _____, ______.
IN WITNESS WHEREOF, the Bank has executed and delivered this Certificate as of the _____ day of ____________, _____, which is a date at least 60 days prior to the current Stated Expiration Date of the Letter of Credit.
REGIONS BANK
EXHIBIT 10.10
EXHIBIT J
To
Credit Agreement
EXTENSION AGREEMENT
This Extension Agreement(the "Extension Agreement") made as of the 31 day of May, 2003 between Regions Bank, an Alabama state bank with a principal office located at Montgomery, Alabama (the "Bank") and Ocean Bio-Chem, Inc. of 4041 S. W.47th Avenue, Ft. Lauderdale, Florida 33314 and certain affiliated entities hereinafter referred to.
RECITALS:
1. As of July 1, 2002, that certain Credit Agreement (the "Credit Agreement") was executed among the Bank, Ocean Bio-Chem, Inc. and certain affiliated entitles named therein (collectively, the "Borrowers") providing for a Revolving Credit Loan (as defined in the Credit Agreement) in the amount of up to $5,000,000 for a period ended May 31, 2003 at the variable rate of interest therein set forth.
2. The Credit Agreement provides for extension of the Revolving Credit Loan term for successive periods of up to one year each in such amounts as the Bank may approve, to be effective by execution by the Borrowers and the Bank of an Extension Agreement in the form hereof.
3. The Bank and the Borrowers, by execution of this Extension Agreement seek to extend the Revolving Credit Loan for the period and in the amount hereinafter indicated.
AGREEMENTS:
1. Definitions. All capitalized terms used herein are as defined in the Loan Agreement unless otherwise stated.
2. Extension of Term and Amount. The Revolving Credit Loan is hereby extended as provided in Section 3.01(b) of the Credit Agreement, subject to the terms and conditions of the Credit Agreement. The maximum principal amount of the Revolving Credit Loan outstanding at any time shall not exceed $5,000,000. The Termination Date of the Revolving Credit Loan pursuant to this Extension Agreement is 06/01/04 , subject to prepayment and acceleration pursuant to the terms of the Credit Agreement.
3. Ratification of Loan Agreement. The terms and conditions of the Credit Agreement relating to the Revolving Credit Loan, including the Revolving Credit Note Rate, prepayment provisions, and method of making advances are expressly ratified and affirmed hereby and shall apply with the same force and effect to extensions of credit made under this Extension Agreement as to advances made during the initial term. 4.
4. Security. It is expressly agreed, as provided in the Credit Agreement, that any and all borrowing pursuant to this Extension Agreement is secured according to the terms of such Credit Agreement and all security documents executed in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this instrument on this the 31 day of May , 2003.
OCEAN BIO-CHEM, INC.
(SEAL)
By: /s/ Peter G. Dornau
--------------------
Its President
ATTEST:
/s/ Edward Anchel
--------------------
Its Asst. Secretary
|
STAR-BRITE DISTRIBUTING, INC.
(SEAL)
By: /s/ Peter G. Dornau
--------------------
Its President
ATTEST:
/s/ Edward Anchel
--------------------
Its Asst. Secretary
|
STAR BRITE AUTOMOTIVE, INC.
(SEAL)
By: /s/ Peter G. Dornau
--------------------
Its President
ATTEST:
/s/ Edward Anchel
--------------------
Its Asst. Secretary
|
STAR BRITE DISTRIBUTING (CANADA), INC.
(SEAL)
By: /s/ Peter G. Dornau
--------------------
Its President
ATTEST:
/s/ Edward Anchel
--------------------
Its Asst. Secretary
|
KINPAK INC.
(SEAL)
By: /s/ Peter G. Dornau
--------------------
Its President
ATTEST:
/s/ Edward Anchel
--------------------
Its Asst. Secretary
|
(Borrowers)
REGIONS BANK
By: /s/ Timothy O. Riley
--------------------
Its Vice President
|
EXHIBIT 10.14
FUNDAMENTAL LEASE PROVISIONS
THIS LEASE AGREEMENT, made and entered into this 1st day of May, 1998, by and between PEJE, INC., as Landlord, and:
TENANT: STAR BRITE DISTRIBUTING, INC.
MAILING ADDRESS: 4041 S.W. 47 Avenue,
Ft. Lauderdale, FL 33314
PHONE: 954-587-6280
LEASED PREMISES:
BUILDING: TRACT TWELVE, NEW TOWN COMMERCE CENTER
ADDRESS: 4151 S.W. 47 Avenue,
Ft. Lauderdale, FL 33314
LEASE TERM: TEN YEARS
ANNUAL MINIMUM RENT: $94,800.00
(Notwithstanding the provisions of Paragraph 4.4, the
rent shall be adjusted annually higher or lower for
all assessments set forth in Paragraph 4.5 shall be
considered additional rent.)
Lessee has the right to sublet all or a portion of
the space covered by the lease.
The lessor has a secondary secured interest in lessee
accounts receivable and inventory as collateral for
the lease.
LEASED AREA: 12,000+ Square Feet (6,000 sq. ft.
finished office)
PERMITTED USE: Office/Distribution
1ST MONTH'S MINIMUM RENT: $7,900.00
474.00 State Sales Tax
---------
$8,374.00 Total
EXHIBITS: The exhibits listed in this section
and attached to this Lease are
hereby incorporated in and made
a part of this Lease.
EXHIBIT "A": Site Plan
|
*Plus Sales Tax
WITNESSETH:
FOR VALUE RECEIVED, it is hereby agreed that:
ONE
PREMISES: The Landlord, by these presents does hereby lease and rent unto the
said Tenant, and said Tenant hereby agrees to lease and take upon the terms and
conditions which hereinafter appear, hereinafter called demised premises being a
part of NEW TOWN COMMERCE CENTER located in the County of BROWARD and State of
Florida. (Said space according to the Site Plan Exhibit "A".) Tenant agrees that
at all times during the term of this lease it shall at its own cost and expense:
A) Obtain and maintain in effect all permits and licenses necessary for the
operation of Tenant's business as herein provided. B) To comply with all
reasonable rules and regulations for the use and occupancy of the of the
Building as Landlord, in its sole discretion from time to time promulgates for
the best interest of the Building. Landlord shall have no liability for
violation by any other tenant of the Building of any rules or regulations nor
shall such violation of the waiver thereof excuse Tenant from compliance. C) Be
responsible for and shall pay before delinquency all municipal, county or state
taxes assessed during the term of this lease against any leasehold interest or
property of any kind owned by or placed in, upon or about the leased premises by
the Tenant. D) Neither encumber nor obstruct the sidewalks adjoining said
premises nor allow the same to be obstructed or encumbered in any manner, and
keep said sidewalks free of rubbish and dirt. The Tenant shall not place or
cause to be placed any merchandise, vending machines, or anything on the
sidewalk or exterior of premises without written consent of the Landlord,
including an individual dumpster.
2.1 Construction of Leasehold Improvements. Any improvements to the Premises shall be constructed by the Landlord at the sole cost and expense of the Tenant (Tenant's Work) no later than (5) working days after the execution of this Lease by the Tenant: (i) Tenant shall furnish Landlord with a preliminary Space Plan for the Premises, in form acceptable to Landlord's Space Planner drawn to a scale of one-quarter inch (1/4") equals one (1) foot, or (ii) Landlord and Tenant, or their representative, shall meet together with Landlord's Space Planner for the purpose of preparing a preliminary Space Plan for the Premises. Within ten (10) working days from Landlord's receipt of the preliminary Space Plan, Landlord shall prepare and furnish to Tenant an estimated cost of construction of Tenant's work, including in the estimate separate entries for labor, material and a supervisory fee in the amount of ten per cent (10%) of labor and material. No later than five (5) working days after submission of Landlord's estimate of construction cost to Tenant, as set forth above, Tenant shall either agree to the estimate and authorize Landlord to proceed with the Work or furnish to Landlord specific objections to the cost for Tenant's Work and to a final Space Plan, Landlord and Tenant shall execute an Addendum to this Lease, in the form attached hereto as Exhibit "D" incorporating into the Addendum the agreed-upon Space Plan for the Premises, and setting forth the agreed cost of construction. If Landlord and Tenant are unable to agree upon a Space Plan or construction cost for Tenant's Work within ten (10) days from the execution of this Lease by the Tenant, then Landlord shall have the right to terminate this Lease upon (3) days written notice to Tenant and, thereupon, to re-let the Premises. The agreed cost of construction of Tenant's Work shall be paid by Tenant to Landlord as set forth in Exhibit "D" hereof.
2.2 Ownership of Improvements. All improvements to the Premises shall remain the property of the Landlord. In no event shall Tenant make any improvements or alterations to the Premises, including the installation and removal of trade fixtures, without the prior written consent of Landlord.
FIXTURES: All improvements installed by Tenant shall be new or completely reconditioned. Tenant shall not make or cause to be made any alterations, additions or improvements, or install or cause to be installed any trade fixtures, exterior signs, floor coverings or make any changes to the office without first obtaining Landlord's written approval and consent. Tenant shall present to the Landlord plans and specifications for such work at the time approval is sought. All alterations, decorations, additions or improvements made by the Tenant, or made by the Landlord on the Tenant's behalf by agreement under the Lease shall remain the proper of the Lessor. The Tenant shall at all times maintain fire insurance with extended coverage in the name of the Landlord and the Tenant, in an amount adequate to cover the cost of replacement of all alternations, decorations, additions or improvements in the event of fire or extended coverage loss. Tenant shall deliver to the Landlord certificates of such fire insurance policies, which shall contain a clause requiring the insurance to give Landlord ten (10) days notice of cancellation of such policies if said insurance company would agree to such a clause. Such alterations, decorations, additions and improvements shall not be removed from the premises without prior consent in writing from the Landlord.
If after default in payment of rent or violation of any other provisions of this Lease, or upon the expiration of this Lease, the Tenant moves out or is dispossessed and fails to remove any trade fixtures, signs, or other property prior to such said default, removal, expiration of warrant then and in that event, the said fixtures, signs and property shall be deemed abandoned by Tenant and shall become the property of the Landlord, or Landlord may notify Tenant to remove same at Tenant's own cost and expense, and upon the failure of Tenant to do so, Landlord may, in addition to any other remedies available to it, remove said property as the duly authorized agent of Tenant at Tenant's expense.
THREE
3.1 N/A
FOUR
4.1 Rental Payment. All rent and other charges payable to the Landlord under any provision of this lease shall be paid to the Landlord, or as the Landlord may otherwise designate, in lawful money of the United States at the address of the Landlord or at such other place as the Landlord in writing may designate, without any set-off or deduction whatsoever, and without any prior demand therefore. In addition to the payment of the Rent and other charges, the Tenant shall also pay to the Landlord, at the time of payment of such Rent and other charges, all sales taxes payable by virtue of any such payments. Rent for any period begins during the term hereof which is for less than (1) month shall be prorated portion of the monthly installment.
4.2 Annual Minimum Rent. The Tenant shall pay the Annual Minimum Rent, which is subject to adjustments as hereinafter set forth, in equal monthly installments in advance of the first day of each calendar month included in the Lease Term. The first monthly installment shall be paid on the signing of this Lease if not previously delivered. Tenant acknowledges that late payment by Tenant to Landlord of Rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which would be extremely difficult and impractical to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any Mortgage or Trust Deed covering the Premises. Therefore,
4.3 In the event Tenant is late in the payment of rent or other sume of money required to paid under this Lease, Tenant agrees to pay to Landlord a late charge of five cents of each dollar of each payment five (5) days or more in arrears. Said payment shall be to cover extra expenses incurred by Landlord in handling delinquent payments. In addition to the late charge referred to above, any and all payments in arrears for more than ten (10) days shall bear interests, payable as rent to the Landlord at the highest interest rate the Landlord is allowed to charge under applicable law; provided however, that said interest rate shall in no event exceed 18% per annum. The provisions of this section are cumulative and shall in no way restrict the other remedies available to Landlord in the event of Tenant's default as provided in this Lease.
4.4 A two (2%) per cent increase on the yearly anniversary of such lease for the term of the Lease.
4.5 Additional Assessments. It is understood that, in addition to the Annual Minimum Rent and Adjustment of Annual Minimum Rent, Tenant shall pay to Landlord its prorated share of all taxes, assessments, insurance premiums, operating charges, maintenance charges, and any other charges, costs and expenses which arise from the ownership, occupancy or use of the Parcel or any part thereof, including the maintenance of exterior walls, roof areas and the structural integrity of buildings located upon the Parcel. For the purposes of this Lease, the term "Parcel" shall mean the contiguous property set forth in Exhibit "A" together with all improvements located or to be located thereon. The Tenant agrees to pay the Additional Assessments, as set forth above in monthly payments in advance during the Term of this Lease as may be estimated by the Landlord. At the end of each calendar year, the Landlord shall advise the Tenant of the Tenant's share of the Additional Assessments payable for such calendar year as computed based upon the cost thereof to the Landlord. If there shall have been an underpayment by the Tenant, the Tenant shall pay the difference within ten (10) days; if there shall have been an overpayment by the Tenant, the Tenant shall be given credit towards the next due payment of its share of Additional Assessments. At the end of each calendar year, the Tenant shall have the right to require Landlord to substantiate, by written itemization, the Landlord's computation of Tenant's Additional Assessments. Landlord shall furnish such an itemization to Tenant within thirty (30) days from Tenant's written request for itemization.
FIVE
5.1 ALTERATIONS: A) Tenant may, at its expense, make such alterations and improvements to the demised premises and install interior partitions as it may require, provided that the written approval of the Landlord and any necessary building permits be first obtained (said approval not to be unreasonably withheld) and that such improvements and alterations are done in a workmanlike manner, in keeping with all building codes and regulations, and in no way harm the structure of the demised premises, provided that at the expiration of this lease or any extension thereof, Tenant, at its expense, restores the within demised premises to its original condition and repairs any damage to the premises resulting from the installation or removal of such partitions, fixtures, or equipment as may have been installed by Tenant if requested to do so by Landlord.
5.2 The Landlord shall not be liable for any labor or materials furnished or to be furnished to the Tenant upon credit, and no mechanic's or other lien for any such labor or materials shall attach to or effect the reversion or other estate of interest of the Landlord in and to the leased property. Whenever any mechanic's lien shall have been filed against the leased property based upon any act or interest of the Tenant or of anyone claiming through the Tenant, or if any security agreement shall have been filed for or effecting any materials, machinery, or fixtures used in the construction, repair or operation thereof or annexed thereto by the Tenant, the Tenant shall immediately take such action by bonding, deposit, or payment as will remove the lien within ten (10) days after notice to the Tenant, Landlord may pay the amount of such mechanic's lien or security agreement or discharge the same by deposit, and the amount so paid or deposited, with interest thereon, shall be deemed additional rent reserved under this Lease and shall
be payable forthwith with interest at the highest legal rate from the date of such advance, and with the same remedies to the Landlord as in the case of default in the payment of rent as herein provided.
SIX
B) Upon commencement of this Lease, Tenant shall at all times keep the leased premises and all partitions, doors, fixtures, equipment and appurtenances thereof (including lighting and plumbing fixtures, and A/C system) in good order, condition and repair except for structural portions of the premises which shall be maintained by Landlord, but if Landlord is required to make repairs to structural portions by reason of the acts or omissions of Tenant, its agents, employees or invitees, Landlord may add the cost of such repairs to the rent which shall thereafter become due.
SEVEN
LANDLORD/TENANT RESPONSIBILITY TO PREMISES: Landlord agrees, unless damage to the same is caused by the acts of Tenant, its agents, employees or invitees, to keep in good order the roof, exterior walls (exclusive of all glass, including plate glass), and water, sewer, and sprinkler system (if any) but not fixtures pertaining to such systems. Landlord gives to Tenant exclusive control of premises and shall be under no obligation to inspect said premises. Tenant shall at once report in writing to Landlord, any defective condition known to him which Landlord is required to repair, and failure to so report such defects shall make Tenant responsible to Landlord for any additional liability incurred by Landlord by reason of such defect.
Notwithstanding any provision in this Lease to the contrary; Landlord shall not be responsible or liable to Tenant for any injury or damage from acts or omissions of persons occupying the property adjoining the leased premises or any part of the building of which the leased premises is a part of, for any injury or damage resulting to the Tenant, or its property, from bursting, stoppage, or leaking of water, gas, sewer or steam pipes, or from any structural defect in the roof, exterior walls or the like.
EIGHT
USE: A) Premises shall be used for permitted use only.
Premises shall not be used for any illegal purposes, nor in any manner to create any nuisance or trespass, nor in any manner to vitiate the insurance or increase the rate of insurance on premises.
B) Tenant will not at any time use or occupy the demised premises in violation of the certificate of occupancy issued for the building of which the demised premises form a part, and in the event that any governmental authority having jurisdiction thereof shall hereafter at any time contest and/or declare by notice, violation, order or in any manner whatsoever that the premises hereby demised are used for a purpose which is a violation of such certificate of occupancy, Tenant shall upon five (5) days written notice from Landlord, immediately discontinue such use of said premises.
C) Tenant agrees that Landlord shall have the right to prohibit the continued use by Tenant of any unethical or unfair method of business operation, advertising or interior display, if, in Landlord's opinion, the continued use thereof would impair the reputation of the NEW TOWN COMMERCE CENTER as a desirable place to shop or is otherwise out of harmony with the general character thereof, and upon notice from Landlord, Tenant shall forthwith refrain from or discontinue such activities.
NINE
CONDITIONS TO GRANT: Tenant expressly covenants that it will not assign, mortgage or encumber this Agreement nor under-let, suffer or permit the demised premises or any part thereof to be used by other without the prior written consent of Landlord in each instance. Such consent not to be unreasonably withheld.
If this Lease be assigned or if the demised premises or any part thereof be under-let or occupied by anyone other than Tenant without the express written consent of Landlord having been obtained, Landlord may collect rent from the assignee, under tenant or occupant and apply the net amount collected to all rent herein reserved, but no assignment, under-letting, occupancy or collection shall be deemed a waiver of this
covenant or the acceptance of the assignee, under-tenant, or occupant as Tenant, or a release of the performance of the covenants on Tenant's part herein contained.
In the event the Landlord's written consent is given to an assignment or sub-letting, the Tenant shall nevertheless remain liable to perform all covenants and conditions thereto and to guarantee such performance by his assignee or sub-tenant.
TEN
QUIET ENJOYMENT: The Landlord covenants that the Tenant, upon payment of the rent and additional rent above reserved, upon the due performance of the covenants and agreements herein contained, shall and may at all times during the term hereby granted peaceably and quietly have, hold and enjoy the demised premises for the term of this Lease. However, the Landlord shall have no liability whatsoever to the Tenant for any breach of the covenant occasioned by the acts or omissions of any transferee, successor, or assignee of the Tenant.
ELEVEN
TENANT NEGLECT: If Tenant refuses or neglects to repair property as required hereunder to the reasonable satisfaction of Landlord as soon as reasonably possible after written demand, Landlord may make such repair without liability to Tenant for any loss or damage that may accrue to Tenant's merchandise, fixtures, or other property or to Tenant's business by reason thereof, and upon completion thereof, Tenant shall pay Landlord's costs for making such repairs plus twenty percent for overhead, upon presentation of bill thereof, as additional rent payable with the next rent payment due under this lease. Said bill shall include interest at the highest legal rate on said cost from the date of completion of repairs by Landlord.
TWELVE
UTILITIES: The Tenant shall pay directly all charges for electric, telephone and any other utilities used or consumed in the premises which are separately metered to the premises. Landlord shall provide each building with water and sewer utility services. A dumpster(s) will be provided for refuse collection and Tenant shall pay to Landlord on a monthly basis in advance Tenant's portion of the water, sewer, and refuse collection charges for the Building as may be estimated by the Landlord. This charge shall be Additional Rent under the Lease. In the event that Tenant shall fail or refuse to pay any utility charges individually metered to Tenant, the Landlord may, but shall not be obligated to, pay such charges, and Tenant shall reimburse the Landlord on demand. If Tenant uses water or produces refuse in excess of normal office/warehouse use, Landlord, in its discretion may allocate Tenant the increased cost of such services as measured or estimated by Landlord, and Tenant shall pay Landlord, on demand, any increased cost so measure or estimated.
THIRTEEN
INSURANCE: Tenant shall, from the date that Tenant enters into possession of the demised premises, and throughout the term of this Lease, at its sole cost and expense, provide and keep in full force and effect for the benefit of Landlord and/or any firms, persons or corporation designated by Landlord having an interest in the Building in such insurance company or companies as may be acceptable to Landlord the following:
A) All plate and other glass insurance.
B) General liability insurance in standard form in respect to the demised premises, protecting the Landlord and others named against any liability whatsoever occasioned by accident or disaster on, in, or about the demised premises or any appurtenances thereto, and on, in, or about the sidewalks immediately adjoining the demised premises, with limits of liability of not less than $100,000.00 for one person in one accident and $300,000.00 or two or more persons in one accident, and property damage insurance in an amount not less than $100,000.00
C) Contents insurance covering all of the Tenant's stock-in-trade fixtures, furniture, furnishings, floor coverings, equipment and the like in an amount equal to eighty percent (80%) of the replacement value.
All premiums on all policies referred to in this section shall be paid by Tenant. Duplicate originals of such policies shall be delivered to Landlord on any other names pursuant to this section immediately upon receipt thereof from the insurance company or companies but in no event later than the commencement date of this Lease. Duplicate originals of renewal policies or new policies replacing any policies expiring during the term hereof shall be delivered to Landlord at least twenty (20) days before the date of expiration of the old or replaced policies, together with proof satisfactory to Landlord that the full premiums have been paid by Tenant on the new policies. Premiums on policies shall not be financed in any manner whereby the lend, on default or otherwise, shall have the right or privilege of surrendering or canceling the policies. Each insurance policy required hereunder shall by its terms provide that it shall not be modified without the prior written consent of the Landlord and shall not be canceled unless ten (10) days notice thereof is given by the insurer to the Landlord if such clause is placed in the policy.
Each party hereto does hereby remise, release and discharge the other party hereto and any officer, agent, employee or representative on such party, of and from any liability whatsoever hereafter arising from loss, damage, or injury caused by fire or other casualty for which insurance (permitting waiver of liability and containing a waiver of subrogation) is carried by the injured party at the time of such loss, damage or injury to the extent of any recovery by the injured under such insurance.
FOURTEEN
INSURANCE DEFAULT BY TENANT: On default by Tenant in obtaining any insurance required hereunder or delivering any policies or paying the premiums or other charges thereon as aforesaid, it shall be the privilege though not the obligation, of Landlord to effect fully such insurance and likewise to pay any premiums or charges thereon. All sums so paid by Landlord with all costs and expenses incurred by Landlord in connection therewith, together with interest thereon at the highest legal rate from respective dates of Landlord's making of each such payment, shall constitute additional rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.
Tenant agrees that it will not keep, use, sell or offer for sale in or upon the leased premises any article which may be prohibited by the standard form of fire insurance policy. Tenant agrees to pay promptly upon Landlord's demand any increase in premiums for fire and extended coverage insurance that may be charged during the term of this lease on the amount of such insurance which may be carried by Landlord on said premises or the building of which they are such a part, resulting from the type of merchandise sold by Tenant in the leased premises, whether or not increased premiums are the result of Tenant's use of the leased premises. A schedule issued by the organization making the insurance rate on the leased premises showing the various components of such rate shall be conclusive evidence of the several items and charges which make up the fire insurance rate on the leased premises. The Tenant, as additional rent, shall also pay any additional premium on the rent insurance policy that may be carried by the Landlord for the protection against rent loss through fire if said additional results from Tenant's occupancy.
FIFTEEN
DESTRUCTION OF PREMISES: If all or part of the leased premises is damaged or destroyed by fire or other casualty, this Lease and all of its terms, covenants and conditions shall, subject to the provisions hereinafter set forth, continue in full force and effect.
A) In the event that the leased premises is damaged, the proceeds of insurance coverage and additional monies if required, are to be used by the Landlord to rebuild the leased premises if the term of this Lease shall have at least three (3) years to run or in the event that said Lease is in its last three (3) years provided that the Tenant herein agrees to extend the term of this Lease dealing with Option to Renew, if any, then and in that event the Landlord shall repair and rebuild the leased premises with reasonable diligence.
B) To the extent that the loss or destruction of the leased premises of the office building of which it is a part substantially interferes with the operation of the Tenant's business, thus requiring the Tenant to temporarily close its business to the public, the fixed minimum rental shall be abated from the date of such closing, to the date the damage shall have been substantially repaired, so as to enable the Tenant to continue its business.
C) Tenant acknowledges and agrees that Landlord will not carry insurance of any kind on Tenant's furniture and furnishings or on any trade fixtures, equipment, improvements or appurtenances removable by Tenant under the provisions of this Lease, and that Landlord shall not be obligated to repair any damage thereto or replace the same.
SIXTEEN
SUBORDINATION: This Lease is subject and subordinate to all ground or underlying leases which may not affect the real property of which the demised premises form a part and to all mortgages which may now affect such leases or the real property of which the demised premises form a part. Tenant further agrees to subordinate to any first mortgage hereinafter placed upon the premises provided the mortgage payments do not exceed the rental income of the total property mortgaged. This clause shall be self-operative and no further instrument of subordination shall be required by mortgages. In confirmation of such subordination, Tenant shall execute promptly any certificate that Landlord or mortgagee may request. Tenant hereby constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any such certificate for an on behalf of Tenant.
Tenant agrees that at any time, and from time to time within fifteen
(15) days following written notice from Landlord it will execute, acknowledge
and deliver to Landlord or any proposed mortgagee or purchaser, in recordable
form a statement in writing certifying that this Lease is unmodified and in full
force and effect (or if there shall have been modifications; that the same is in
full force and effect as modified and stating the modifications), that there are
no defenses or offsets thereto (or stating those claimed by Tenant) and the
dates to which the rent and other charges have been paid in advance, if any, and
stating whether or not the Landlord is in default and setting forth such other
matters and information as may be reasonably required from a prospective
mortgagee or purchaser of the office building it being intended that any such
statement delivered pursuant of the fee or any mortgagee thereof or any assignee
of any mortgage upon the fee of the demised premises.
SEVENTEEN
CONDEMNATION: If the whole of the leased premises shall be taken or condemned by any competent authority for any public or quasi-public use or purpose, the term of this lease shall terminate and cease from the date when possession shall be so taken and Tenant shall have no claim for the value of the land and building located thereon, but Tenant shall have the right to seek all business damages as provided by Florida law. If only a portion of the leased premises shall be taken or condemned by a competent authority for a public or quasi-public uses or purpose, and if;
A) the part so taken includes the building or any substantial part thereof, or if
B) the part so taken shall consist of any of the total required parking area unless Landlord is able to provide other suitable parking in an amount equal to the taking.
Tenant may elect at any time prior to or within sixty days after the date of possession of the premises shall be required by the condemning authority to terminate this Lease by written notice to the Landlord. If the Tenant does not exercise such options to terminate this Lease within such a period of time, Landlord with reasonable promptness shall make the necessary repairs to and alterations of the improvements on the leased premises to the extent that they have been necessitated by such condemnation. To the extent that the Tenant's possession of the leased premises may be impaired, the rent herein above specified shall be abated during any period of non-occupancy. Upon re-occupancy by the Tenant, rent shall again be paid, but Landlord and Tenant agree that if a portion of the building, or if any of the total required parking spaces is taken by the condemning authority, that the rent shall be reduced proportionately by the taking.
In the event all or part of the demised premises shall be taken or expropriated by a public or quasi-public authority and the compensation therefore is not allocated between the respective interest of Landlord and Tenant and, provided further, that Landlord and Tenant agree that each immediately shall appoint an arbitrator. Said arbitrators shall be members of the Arbitration Association and/or licensed real estate brokers. Said arbitrators shall appoint one additional arbitrator within seven days and said three arbitrators shall then constitute an arbitration panel which shall determine the allocation of the compensation award between Landlord and Tenant. The sole duty of the panel shall be such allocation, and it shall have no power to review fair market values established for the whole of the take. The decision of said panel shall be reduced to writing and signed in duplicate delivered to each of the parties, and such decision shall be final and conclusive upon both Landlord and Tenant. All costs and expenses of said arbitration proceeding shall be divided equally between Landlord and Tenant.
EIGHTEEN
INDEMNIFICATION OF LESSOR: Tenant will indemnify Landlord and save it harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage of property arising from or out of any occurrence, in, upon, or at the leased premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, lessees or concessionaires. In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless.
NINETEEN
BROKER'S COMMISSION: Tenant represents and warrants that there are no claims for brokerage commission or finders fees in connection with the execution of this Lease, and Tenant agrees to indemnify the Landlord against and hold it harmless from all liabilities arising from any such claim (including, without limitation, the cost of counsel fees in connections therewith).
TWENTY
PARKING AND COMMON AREA: Landlord is to provide adequate parking spaces for leased premises.
All common areas and facilities not within the lease premises which Tenant may be permitted to use and occupy are to be used and occupied under revocable license, and if any such license be revoked, or if the amount of such areas be diminished, Landlord shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation or diminution of such areas be deemed constructive or actual eviction.
TWENTY-ONE
DEFAULT: If Tenant shall default in the payment of any rent or other payments required by Tenant or any part thereof, and if such default shall continue for five (5) days after the payment shall be due; or if Tenant shall default in the performance or observance of any other agreements or condition on its part to be performed or observed, and if Tenant shall fail to cure said default within three (3) days after written notice of said default from Landlord; or if any person shall levy upon, take, or attempt to take this Leasehold interest or any part thereof upon execution, attachment, or other process of law; or if Tenant shall default with respect to any other lease between it and Landlord; or if the premises shall be deserted, with respect to any other lease between it and Landlord; or if the premises shall be deserted, vacated, abandoned, or if this Lease or any interest therein shall by operation of law devolve upon or pass to any person or persons other than Tenant; then, in any of said cases, Landlord lawfully may immediately, or at any time thereafter and without any further notice or demand, terminate this Lease and Tenant will forthwith quit and surrender the demised premises, but Tenant shall remain liable as hereinafter provided.
If this Lease shall be terminated as provided in this Section:
A) The Landlord may immediately, or at any time thereafter, re-enter and resume possession of the demised premises and remove all persons and property therefrom either by summary dispossess proceedings or by a suitable action or proceeding at law or in equity, or by force or otherwise, without
being liable for any damages thereof. No re-entry by the Landlord shall be deemed an acceptance of a surrender of this Lease.
B) The Landlord may re-let the whole or any part of the demised premises for a period equal to, or greater, for less than the remainder of the term of this Lease, at such rental and upon such terms and conditions as the Landlord shall deem reasonable, to any tenant or tenants which it may deem equitable and satisfactory for any use and purpose which is may deem appropriate. In no event shall the Landlord be liable in any respect for failure to re-let the demised premises or in the event of such re-letting, for failure to collect the rent thereunder. Any sums received by the Landlord on a re-letting in excess of the rent reserved in the Lease shall belong to the Landlord.
C) Landlord shall have the right without terminating or canceling this Lease to declare all amounts and rents due under this Lease for the remainder of the existing term (or any applicable extension or renewal thereof) to be immediately due and payable, and thereupon all rents and other charges due hereunder to the end of the initial term or any renewal term, if applicable, shall be accelerated.
TWENTY-TWO
SIGNS: No signs shall be permitted without Lessor's consent.
TWNETY-THREE
FORCE MAJEURE: In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason, of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature, not the fault of the party delayed in performing work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of such delay. The provisions of this section shall not operate to excuse Tenant from the prompt payment of rent, percentage rent, additional rent or any other payments required by the terms of this Lease.
TWENTY-FOUR
24.1 HOLDING OVER: If the Tenant shall occupy premises with consent of
the Landlord after the expiration of this Lease, and rent is accepted from said
Tenant, such occupancy and payment shall be construed as an extension of this
Lease for the term of one (1) month only from the date of such expiration, and
occupation thereafter shall operate to extend the term of this Lease for but one
(1) month at a time unless other terms of such extension are endorsed hereon in
writing and signed by the parties hereto. In such event, if either Landlord or
Tenant desires to terminate said occupancy at the end of the month after the
termination of this Lease, the party so desiring to terminate the same shall
give the other party at least thirty (30) days written notice to that effect.
24.2 Upon the expiration or other termination of the Lease Term, Tenant agrees to quit and surrender to the Landlord the premises, broom clean, in good order and condition, ordinary wear and tear excepted, and, if demanded by Landlord, to restore the premises to the condition in which they were prior to the installation of articles so removed. All property not so removed shall be deemed to have been abandoned by the Tenant and may be retained or disposed of by the Landlord, as the Landlord shall desire.
TWENTY-FIVE
GENERAL CONDITIONS: This Lease shall be subject to the following general conditions:
A) Landlord and Tenant both agree that the prevailing party in any litigation arising out of this Lease shall be entitled to reasonable attorney's fees and cost incurred in the defense or prosecution of any provision or condition of this Lease.
B) Landlord hereby reserves the right to make alterations or additions to the building in which the premises are contained and to build adjoining the same. Landlord also reserves the right to construct other offices or improvements in the office. Building from time to time to make alterations thereof or additions thereto and to build additional offices on any such building and to build adjoining same.
C) If any excavation shall be made upon adjacent to the leased premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation license to enter upon the leased premises for the purpose of doing such work, as Landlord shall deem necessary to preserve the wall or the building of which the leased premises form a part injury or damage and to support the same by proper foundations and the Landlord shall be responsible for any an all damages caused by the negligent acts of its employees and/or agents.
D) No failure of Landlord to exercise any power given Landlord hereunder, or to insist upon strict compliance by Tenant with its obligation, hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to demand compliance with the terms.
E) It is understood and agreed by the parties hereto that this Lease contains all of the covenants, agreements, terms, provisions and conditions relating to the leasing of the demised premises, and that the Landlord has not made and is not making, and the Tenant is executing and delivering this lease is not relying upon any warranties, representations, promises or statements, except to the extent that the same may expressly be set forth in this Lease.
F) Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any clause, or in the event of Landlord obtaining possession of the leased premises by reason of the violation of Tenant of any of the covenants or conditions of this Lease, or otherwise.
G) All rights and liabilities herein given to or imposed upon the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors, and assigns of the said parties and if there shall be more than one tenant, they shall all be bound jointly and severally by the terms, covenants and agreement herein.
H) Landlord may card the premises "For Sale" at any time and "For Rent" thirty (30) days before the termination of this Lease. Landlord may enter the premises at reasonable hours to exhibit same to prospective purchasers or tenants and to make repairs required of landlord under the terms thereof, or to make repairs to Landlord's adjoining property, if any.
I) In cases in which this Lease provides for the settlement of a dispute or questions of arbitration, the same shall be settled by arbitration before three arbitrators (unless the landlord and Tenant shall agree to one arbitrator) designated by the American Arbitration Association and in accordance with the rules of such association. The expenses of arbitration proceedings conducted hereunder shall be borne equally by the parties.
TWENTY-SIX
NOTICES: Tenant hereby appoints as his agent to receive service of all dispossessory or distraint proceedings and notice thereunder and all notices required under this Lease, the person in charge leased premises at the time of occupying said premises; and if no person is in charge of or occupying said premises, then such service of notice may be made by attaching the same on the main entrance of said premises. A copy of all notices under this Lease shall also be sent to Tenant's last known address, if different from said premises.
Any written notice required by this Lease must be served by certified or registered mail, post prepaid, addressed to the intended recipient, at the address first herein above given or at such other address as said party may designate from time to time by written notice.
TWENTY-SEVEN
RECORDING OF LEASE: Landlord or Tenant in order to protect the benefits of this Lease for the Landlord or Tenant, may whenever Landlord or Tenant deem necessary, record this Lease and abstracts and memorandums thereof, whether required or permitted by law, in whatever States of jurisdiction in which the same is recordable and the party recording the lease shall bear all costs and expenses including but not limited to, the recordation. Simultaneously, with the execution of this lease, the parties agree to execute a memorandum of Lease for recording purposes.
TWENTY-EIGHT
VALIDITY OF LEASE: This Lease and the attached exhibits contain the entire agreement between the parties and shall not be modified in any manner except by an instrument, in writing, executed by both parties. If any term or provision of this Lease, of the application thereof, to any person or circumstance shall to any extent, be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Lease shall be valid and be enforced to the fullest extend permitted by law.
TWENTY-NINE
CAPTIONS AND SECTION NUMBERS: The captions, section numbers, article numbers and index appearing in this Lease are inserted only as a matter of convenience and in no way define limit, construe of this Lease not in any way affect this Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the day and year first above written to this Lease Agreement.
/s/ Patricia Cappella /s/ Peter G. Dornau
---------------------------------- -------------------------------
WITNESS LANDLORD - PEJE, INC. , President
/s/ Casandra Chartrand
---------------------------------- -------------------------------
WITNESS LANDLORD-PEJE, INC., Secretary
/s/ Peter G. Dornau
--------------------------------
TENANT-STAR BRITE DISTRIBUTING
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STATE OF FLORIDA
COUNTY OF BROWARD
I HEREBY CERTIFY that on this day before me, an officer duly authorized in the State aforesaid and in the County aforesaid to take acknowledgments, personally appeared Peter G. Dornau and _______________________ under the laws of the State of Florida to me known to be the persons described in and who executed the foregoing Lease and who acknowledged before me that they executed the same.
Witness my hand and official seal in the County and State last aforesaid this 1st day of May, 1998.
/s/ Catherine Niman ---------------------------------------- Notary Public, State of Florida at Large My Commission Expires: |
STATE OF FLORIDA
COUNTY OF BROWARD
I HEREBY CERTIFY that on this day before me, an officer duly authorized in the County aforesaid to take acknowledgements, personally appeared __________ _____________.
Witness my hand and official seal in the County and State last aforesaid this ______day of ____________, 1998.
EXHIBIT 21
The following is a list of the Registrant's subsidiaries:
Name: Ownership %
Star brite Distributing, Inc. 100
Star brite Distributing Canada, Inc. 100
D & S Advertising Services, Inc. 100
Star brite Staput, Inc. 100
Star brite Service Centers, Inc. 100
Star brite Automotive, Inc. 100
Kinpak Inc. 100
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EXHIBIT 23.1
We have issued our report dated March 8, 2005, accompanying the consolidated financial statements and schedule included in the annual report of Ocean Bio-Chem, Inc. on Form 10-K as of December 31, 2004 and for the year then ended. We hereby consent to the incorporation by reference of the aforementioned report in the Registration Statement of the Company on Form S-8 filed with the Securities and Exchange Commission ("SEC') on February 2, 2004 (File No. 333-112440) registering the resale of shares issued under the Company's 1991 Incentive Stock Option Plan, 1992 Incentive Stock Option Plan and 1994 Incentive Stock Option Plan.
/s/ Levi Cahlin & Co. ----------------------- Ft. Lauderdale, Florida March 8, 2005 |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
We have issued our report dated March 25, 2004, accompanying the consolidated financial statements and schedules included in the annual report of Ocean Bio-Chem, Inc. on Form 10-K as of December 31, 2003 and for the years ended December 31, 2003 and 2002. We hereby consent to the incorporation by reference of the aforementioned report in the Registration Statement of the Company on Form S-8 filed with the Securities and Exchange Commission ("SEC") on February 2, 2004 (File No. 333-112440) registering the resale of shares issued under the Company's 1991 Incentive Stock Option Plan, 1992 Incentive Stock Option Plan and 1994 Incentive Stock Option Plan.
/s/ Berkovits, Lago and Company, LLP ------------------------------------ Fort Lauderdale, Florida March 28, 2005 |
EXHIBIT 31.1
CERTIFICATIONS PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Peter G. Dornau, certify that:
1. I have reviewed this annual report on Form 10-K of Ocean Bio-Chem, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period of this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/ Peter G. Dornau
---------------------------
Peter G. Dornau
Chief Executive Officer and
Date: March 30, 2005 Chairman of the Board
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EXHIBIT 31.2
CERTIFICATIONS PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Edward Anchel, certify that:
1. I have reviewed this annual report on Form 10-K of Ocean Bio-Chem, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period of this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/ Edward Anchel
-----------------------
Edward Anchel
Date: March 30, 2005 Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION
Pursuant to 18U.S.C. Section 1350, the undersigned officers of Ocean Bio-Chem, Inc. (the "Company"), hereby certify that the Company's Annual Report on Form 10-K for the year ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
Dated: March 30, 2005
/s/ Peter G. Dornau
--------------------------------------
Chairman of the Board of
Directors and Chief Executive Officer
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EXHIBIT 32.2
CERTIFICATION
Pursuant to 18U.S.C. Section 1350, the undersigned officers of Ocean Bio-Chem, Inc. (the "Company"), hereby certify that the Company's Annual Report on Form 10-K for the year ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
Dated: March 30, 2005
/s/ Edward Anchel
-----------------------
Edward Anchel
Chief Financial Officer
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