EXHIBIT 10.1
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RESTATED LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF MONTGOMERY
AND
KINPAK INC.
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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
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DATED
AS OF
DECEMBER 1, 1996
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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.
<PAGE>
RESTATED LEASE AGREEMENT
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MONTGOMERY
AND
KINPAK INC.
INDEX
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Page
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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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<PAGE>
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
<PAGE>
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:
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<PAGE>
ARTICLE I
DEFINITIONS
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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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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
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<PAGE>
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.
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"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. .
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<PAGE>
"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]
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ARTICLE II
REPRESENTATIONS AND COVENANTS
-----------------------------
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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
(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
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<PAGE>
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%.
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<PAGE>
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
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<PAGE>
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 dis
