HomeMy WebLinkAbout1995-06-27; Industrial Development Authority; 003 Exhibit 4; Bond Purchase ContractBOND PURCHASE CONTRACT
Between
INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF CARLSBAD
and
FIRST INTERSTATE BANK OF CALIFORNIA
and CIP LIMITED, L.P., A CALIFORNIA LIMITED PARTNERSHIP
Dated as of July 1, 1995
LA01/79335.2
6-1-95
TABLE OF CONTENTS
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5.
6.
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8.
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10.
11.
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13. 14.
15.
16 . 17.
Issuance, Purchase and Sale of the Bonds . . . . Closing . . . . . . . . . . . . . . . . . . . . Representations and Warranties of the Authority Representations, Warranties and Agreements of the Borrower . . . . . . . . . . . . . . . . Representations and Warranties of the Purchaser Conditions of Sale and Purchase . . . . . . . . Cancellation of Purchaser's Obligation . . . . . Termination . . . . . . . . . . . . . . . . . . Disbursement of Loan Proceeds . . . . . . . . . Events of Defaults and Remedies . . . . . . . . Payment of Expenses . . . . . . . . . . . . . . Purchaser's Right to Put Bonds . . . . . . . . . Notices . . . . . . . .. . . . . . . . . . . . Successors and Assigns . . . . . . . . . . . . . Governing Law . . . . . . . . . . . . . . . . .
Arbitration . . . . . . . . . . . . . . . . . . Counterparts . . . . . . . . . . . . . . . . . .
EXHIBIT A EXHIBIT B
EXHIBIT C EXHIBIT D EXHIBIT E
FORM OF BOND COUNSEL OPINION
FORM OF BORROWER'S COUNSEL OPINION CONSTRUCTION SCHEDULE DESCRIPTION OF PROJECT AND PROPERTY DEFINITIONS
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INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF CARLSBAD INDUSTRIAL REVENUE BONDS (ASYMTEK PROJECT) SERIES 1995
BOND PURCHASE CONTRACT
This Bond Purchase Contract (the "contract ") is made as of July 1, 1995 by and among the Industrial Development Authority of the City of Carlsbad (the "author itv"), a public instrumentality of the State of California (the *State@@), CIP Limited, L.P., a California Limited Partnership qualified to do business in the State ("porro wan), and First Interstate Bank of
California, a State banking corporation (the "Purchasey") and is for the purchase by the Purchaser and sale by the Authority of $2,070,000.00 principal amount of Industrial Development Authority of the City of Carlsbad Industrial Revenue Bonds (Asymtek Project) Series 1995 (the @@mn), to be issued under and pursuant to the provisions of the California Industrial Development Financing Act, as amended, (commencing with Government Code Section 91500) (the w&&H). Upon execution by the parties hereto, this Contract shall be in full force and effect in accordance with its terms and shall be binding upon the Authority, the Borrower and the Purchaser. All capitalized terms used and not otherwise defined herein shall have the meaning ascribed thereto in Exhibit E attached hereto.
1. Xssuance. Purchase and Sale of the Bonds.
Upon the terms and conditions and upon the basis of the representations herein set forth, the Purchaser hereby agrees to purchase from the Authority, and the Authority hereby agrees to issue and to sell to the Purchaser, the Bonds in an aggregate principal amount of $2,070,000.00 at a purchase price of 100% of
the principal amount thereof plus interest accrued thereon, if any, from the date thereof to the Closing Date referred to in Section 2 hereof. The Bonds shall mature at the times and in the amounts and bear interest at the rate or rates set forth in, and shall otherwise be as described in, and shall be issued and secured under and pursuant to, an Indenture of Trust, dated as of July 1, 1995 (the @@JndentureH), to be entered into between the Authority and First Interstate Bank of California, as Trustee (the "TJusteen). provided herein the Indenture and a Loan Agreement, dated as of July 1, 1995, between the Authority and the Borrower (the
ent") substantially in the form previously submitted to the Purchaser with only such changes therein as shall be mutually agreed upon.
The Authority agrees to execute and deliver as
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2. Closinq.
Delivery of and payment for the Bonds (the W~O~~~) shall be made at the office of California, at a.m. on July 1, 1995, or at such other place, time or date as the parties hereto mutually agree upon (such time and
At the Closing, delivery of the Bonds shall be made to the Purchaser against payment of the purchase price in immediately available funds to or upon the order of the Trustee, and at the Closing all of the other documents set forth in Section 6(d) hereof shall be delivered to the Purchaser, The Bonds shall be delivered in fully registered form as one fully registered bond in the denomination of $2,070,000.00 registered in the name of the Purchaser.
date of Closing being herein referred to as the "Closina Date "1
3. pen-esentations and Warranties of the Authoritv.
The Authority represents and warrants to and agrees with the Purchaser and the Borrower that:
(a) The representations and warranties of the Authority contained in Section 2.1 of the Agreement are, and as of the Closing Date will be, true and correct in all material respects.
(b) The Authority is and will be on the Closing Date duly existing as a public instrumentality of the State created and existing under the Act with full power pursuant to the Act to provide financing for certain projects,
(c) Purchaser at the Closing in accordance with the provisions of this Contract, the Bonds will have been duly authorized, executed, authenticated, issued and delivered and will constitute valid and binding special, limited obligations of the Authority in conformity with the Act, this Contract and the Indenture, and will be entitled to the benefit and security of the Indenture and the Agreement.
When delivered to and paid for by the
(d) The execution and delivery of the Indenture,
the Agreement and this Contract have been duly authorized by the Authority, and on the Closing Date each of the foregoing will be in full force and effect.
(e) The Authority has full legal right, power and authority to enter into the Indenture, the Agreement and this Contract, to issue the Bonds and to carry out and consummate all other transactions contemplated thereby and hereby, and the Authority has complied with the provisions of the Act in all matters relating to such transactions.
(f) The Authority is not in breach of or default under any applicable law or administrative regulation of the State or any loan agreement, note, lease, resolution, agreement
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or other instrument to which the Authority is a party or io otherwise subject. the Bonds, the Indenture and the Agreement, and compliance with the provisions hereof and thereof, will not conflict with or constitute on the part of the Authority a violation of the law of the State or a violation, breach of or default under any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Authority io a party
or by which the Authority is bound, or, to the knowledge of the Authority, any order, rule or regulation of any court, governmental agency or body having jurisdiction over the Authority or any of its activities or properties, and all consents, approvals, authorizations and orders of government or regulatory authorities which are required to be obtained by the Authority for the consummation of the transactions contemplated hereby and thereby have been obtained.
the sale of the Bonds and the Revenues, as defined in the Indenture, for the purposes specified and in the manner provided in the Indenture and in the Agreement. Pursuant to the Agreement the Authority intends to loan to the Borrower the proceeds from the sale of the Bonds, which the Borrower is required to use to pay for the cost of acquiring, improving and equipping a manufacturing facility described in gxh ibit D -& hereto (the "project") situated on the real property described in Exhibit 0-2 hereto (the "=ertvn).
(h) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or, to the knowledge of the Authority, threatened against the Authority affecting the corporate existence of the Authority, or seeking to prohibit,
restrain or enjoin the acquisition, improving and equipping of the Project or the sale, issuance or delivery of the Bonds or the pledge of Revenues of the Authority pledged or to be pledged to pay the principal of, premium, if any, and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, this Contract, the Indenture, or the Agreement, or contesting the powers of the Authority or any authority for the issuance of the Bonds or the execution and delivery of this Contract, the Indenture or the Agreement, nor, to the knowledge of the Authority, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds, the Indenture, the Agreement or this Contract.
The execution and delivery of this Contract,
(g) The Authority will apply the proceeds from
(i) Any certificate signed by the Authority and delivered to the Purchaser shall be deemed a representation and warranty by the Authority to the Purchaser as to the statements made therein.
The Authority agrees that all representations, warranties and covenants made by it herein, and in any certificates or other instruments delivered pursuant hereto or in
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connection herewith, shall be deemed to have been relied upon by the Purchaser notwithstanding any investigation heretofore or hereafter made by the Purchaser or on its behalf, and that all representations, warranties and covenants made by the Authority herein and therein and all of the Purchaser's rights hereunder and thereunder shall survive the delivery of the Bonds. It is specifically understood and agreed that the Authority makes no representation as to the financial position or business condition of the Borrower or as to the value of the Project, and does not represent or warrant as to any of the statements, materials (financial or otherwise), representations or certifications heretofore or hereafter furnished or made by the Borrower in connection with the sale of the Bonds, or as to the correctness, completeness or accuracy of such statements.
4. Presentations. Warees and Acfrewts of the Borrow=.
In consideration of the loan from the Authority of the Bond proceeds (the nLOann), and the purchase of the Bonds by the Purchaser to provide such proceeds, and the execution and delivery of this Contract, the Borrower represents, warrants and covenants to and with the Authority and the Purchaser, as follows:
(a) The representations and warranties of the Borrower contained in Section 2.2 of the Agreement are, and as of the Closing Date will be, true and correct in all material respects.
(b) The financial statements of the Borrower, its constituent general partner(s) and Jeffrey C. Hamann, as an individual and Trustee of the J. C. Hamann Family Trust, UTD 12/23/83, Gregg Hamann, as an individual and Trustee of the Gregg Hamann Family Trust, UTD 4/25/86 and Daniel M. Whitaker, as an individual and Daniel M. Whitaker and/or Dona C. Whitaker, as Co- Trustees of the Whitaker Family Trust, UTD 10/22/79, as Amended and Restated 12/22/83 (collectively, the nEuarantoyn) heretofore delivered to the Purchaser present fairly the financial position of the Borrower, the general partner(s) and the Guarantor as of the dates indicated with respect to the periods involved. Since the respective dates of such financial statements, no material adverse change has occurred in the financial position of Borrower, any of the general partner(s) and the Guarantor, other than as disclosed in writing to the Purchaser, and the Borrower, any of the general partner(s) and the Guarantor have not incurred any material liabilities other than in the ordinary course of business or as provided for or contemplated herein or disclosed in writing to the Purchaser and has not incurred any indebtedness which is secured by, or might give rise to, a lien or claim against the Project, the proceeds of the Loan, or other assets of Borrower .
(c) To the best of the Borrower's knowledge there is no action, arbitration, suit, proceeding, inquiry or investigation at law or in equity or before or by any public
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board or body pending or threatened against or affecting the Borrower, the Guarantor, the Property or the Project or any basis therefor, wherein an unfavorable decision, ruling or finding would materially, adversely affect the validity or enforceability. of the Bonds, the Indenture, the Agreement, this Contract, the Unconditional Guaranty Agreement dated July 1, 1995 between the Borrower, Guarantor and the Purchaser (the "Guarantv Aureement") or any of the other Loan Documents or the construction, use, occupancy or operation of the Project or any part thereof.
(d) The Agreement, the Guaranty Agreement, the other Loan Documents, and this Contract, when executed and delivered by the Borrower will be the legal, valid and binding obligations of the Borrower and the Guarantor, as the case may be, enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, reorganization, insolvency or other laws affecting the enforcement of creditors' rights or by the application of equitable principles where equitable remedies are sought.
(e) The execution and delivery of the Agreement, the Guaranty Agreement, the other Loan Documents and this Contract, and the performance by the Borrower of its obligations under the foregoing, do not and will not violate the Partnership Agreement of the Borrower or any court order by which the Borrower is bound, and such actions do not and will not constitute a default under any material agreement, indenture, mortgage, lease, note or other obligation or instrument to which the Borrower is a party or by which it is bound or to which any of its property is Subject, and no approval or other action by any governmental authority or agency is required in connection therewith, except approvals which have been obtained.
(f) The Borrower will deliver or cause to be
delivered all opinions, certificates and other documents required to be delivered by Borrower under this Contract, including but not limited to an opinion of its counsel dated as of the Closing Date, covering among other things the due authorization, execution and delivery of this Contract.
(9) The Borrower has not taken or omitted to take, and will not take or omit to take, any action the taking or omission of which will in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that provided in the Agreement.
(h) To the best knowledge of the Borrower, the Borrower is not a party to or bound by any contract, agreement or other instrument, or subject to any judgment, order, writ, injunction, decree, rule or regulation which, in the reasonable opinion of the Borrower, materially adversely affects, or in the future may, as far as the Borrower can now reasonably foresee, materially adversely affect, the business, operations, properties, assets or condition, financial or otherwise, of the Borrower or the Project.
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(i) To the best knowledge of the Borrower, neither this Contract, the Guaranty Agreement, nor any other document, certificate or statement furnished to the Purchaser or the Authority by or on behalf of the Borrower contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading or incomplete. The Borrower understands and agrees that the Purchaser has relied upon the representations, warranties and other provisions in this Contract, the Guaranty Agreement, and such other documents as an inducement to purchase the Bonds.
any acti person,
(j) The Borrower has not taken and will not take .on, and the Borrower knows of no action that any other firm or corporation has taken or intends to take, which would cause interest on the Bonds not to be excluded from the gross income of the holders thereof for federal income tax purposes .
(k) Subject to the terms and conditions of this
The Borrower will Contract, the Borrower agrees to pay the expenses contemplated to be paid by it pursuant to Section 11 hereof. also pay reasonable accountants' fees for the preparation of any annual or other audits, reports or summaries thereof required by the Indenture, and any and all reasonable expenses incurred by the Authority's counsel or bond counsel in connection with any litigation which may at any time be instituted involving the Project or the Bonds.
restrictive covenants, the Plans and Specifications have been ap- proved by all Governmental Authorities which have jurisdiction over the Property or construction thereon and the beneficiaries of any such covenants. Borrower has all authorizations, consents and licenses, including, without limitation, building permits, annexation agreements, plot plan approvals, subdivision approvals, environmental approvals (including an environmental impact report or valid negative declaration if required under applicable law), sewer and water permits and zoning and land use entitlements which are necessary for the construction and operation of the Project in accordance with the Plans and Specifications and in accordance with all applicable building, environmental, subdivision, land use and zoning laws. The Property consists of legal and separate lot(s) under the Cali- fornia Subdivision Map Act (California Government Code Sections
66410-66499.37, as amended from time to time) and for tax assessment purposes. be in full compliance with all applicable laws and regulations. The Property presently complies fully and the Project, when completed, will fully comply with all restrictive covenants and all applicable laws and regulations, including without limitation, all building codes, Environmental Laws, the Americans With Disabilities Act (Public Law 101-336) and the California Fair Housing Act of 1992.
(1) To the extent required by applicable laws or
All construction of the Improvements shall
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(m) On a line-by-line and total basis, the Project Costs shown on the Funds Accounts are true, correct and complete, and represent the total of all costs, expenses and fees which Borrower expects to pay or may be or become obligated to pay to construct, occupy and operate the Project through the maturity date of the Loan.
(n) Telephone services, gas, electric power, storm sewers, sanitary sewers and water facilities are or will be available to the Property, adequate to serve the Project, exist at the boundary of the Project and are not subject to any conditions, other than normal charges to the utility supplier, which would limit the use of such utilities. Borrower has obtained letters from utility providers evidencing a commitment to serve the Project with all utilities necessary for the
construction and operation of the Project. All streets and ease- ments necessary for construction and operation of the Project for its intended purpose are available to the boundaries of the Property.
(0) Borrower is now and shall continue to be the sole owner of the Collateral free from any adverse lien, security interest or adverse claim of any kind whatsoever, except for liens or security interests in favor of the Purchaser.
(p) No condemnation or other like proceedings are pending or threatened against the Project which would impair the full utilization of the Project in any manner whatsoever. casualty has occurred to the Project. No
(q) No construction of any kind has commenced on the Property other than has been consented to by the Purchaser in writing.
(r) There is no default, Potential Default or Event of Default on the part of Borrower under this Contract, the Agreement, the Guaranty Agreement or any other Loan Document.
(s) All executed leases for space in the Project, if any, have been delivered to the Purchaser for approval and are in full force and effect. There are no defaults under any of the provisions thereof and all conditions to the effectiveness and continuing effectiveness thereof required to be satisfied as of the date hereof have been satisfied.
(t) There are no Hazardous Substances in existence or constructed, released, deposited, stored, disposed, placed or located in, on or under the Property or the existing Improvements that do not comply with applicable Environmental Laws. There are no underground storage tanks located at the Property. The Property and any Improvements thereon are and, upon its completion, the Project will be free of Hazardous Substances and in full compliance with all Environmental Laws.
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(u) There are no defects, facts or conditions affecting the Property which would make it unsuitable for the construction, operation, use or sale of the Project.
(v) Borrower shall not permit any lien, levy, at- tachment or restraint to be made or filed against the Property or the Project or permit any receiver, trustee or assignee for the benefit of creditors to be appointed to take possession of the Property or any portion of the Project, except for lien claims filed or asserted against the Property or the Project and concerning which Borrower is in full compliance with the provi- sions of subparagraph (bb) below regarding the contesting of liens.
(w) Borrower shall comply with, and when completed, the Project shall comply with all applicable laws, statutes, regulations, codes and requirements (including without limitation, all Environmental Laws, building, zoning and use laws, requirements, regulations and ordinances, the American With Disabilities Act and the California Fair Housing Act of 1992), all restrictive covenants and all obligations created by private contracts and leases which affect ownership, construction, equip- ping, fixturing, use or operation of the Project. If requested by the Authority or the Purchaser, Borrower shall deliver to the Authority or the Purchaser, promptly after receipt thereof, copies of all permits and approvals received from any governmental authority relating to the construction, uoe, occupancy or operation of the Project.
(x) During normal business hours and, in the event of an emergency, at any time, Borrower shall permit the Purchaser and the Purchaser's representatives, inspectors and consultants to (i) enter upon the Property, (ii) inspect the Project and materials to be used therein, and (iii) examine all contracts, books, records, Plans and Specifications and shop drawings relating to the Project, whether in the possession of Borrower, Borrower's general contractor or Borrower's contractors, subcontractors, representatives or consultants, and make copies of any such items at the Purchaser's expense.
Construction of the Project has commenced. Borrower shall cause the construction of the Project to comply with the Construction Schedule attached hereto as Exhibit C so that Substantial Completion of the Project shall occur on or before the Completion Date. subparagraph (bb) regarding the contesting of liens, all construction shall be free and clear of defects in and liens or claims for liens for materials supplied or labor or services performed in connection with the Project.
Borrower shall proceed with diligence to correct all defects in the Project and any departure from the Plans and Specifications except as approved by the Purchaser or permitted under subparagraph (aa) below. The disbursement of any Loan proceeds
(y)
Subject to the provisions of
(2) Within five (5) days after notice thereof,
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shall not constitute a waiver of the Purchaser's right to require compliance with this covenant with respect to any such defect or departure from the Plans and Specifications.
compliance with the Plans and Specifications. Except as provided in subparagraph (ii) below, Borrower shall not change the Plans and Specifications without obtaining the prior written consent of the Purchaser.
(aa) (i) The Project shall be constructed in
(ii) Borrower shall not, without Me prior written approval of the Purchaser, permit the performance of any work pursuant to, or request a disbursement for, and the Purchaser shall have no obligation to make a disbursement for any work arising out of any change in the Plans and Specifications which would result in a material change in the Plans and Specifications, Construction Schedule, General Contract or other construction contract (as determined by the Purchaser in its sole discretion) cost or amount of the General Contract or any other construction contract without the Purchaser's prior written consent or delivery of evidence to the Purchaser that Borrower has invested funds other than Loan proceeds in the amount necessary to pay such increased cost.
Borrower shall not agree to any increases in the
(ab) (i) Borrower shall promptly discharge or cause to be discharged any mechanics' or materialmen's liens or claims of lien filed or otherwise asserted against the Property, the Project or any funds due the General Contractor, or any stop notices received by the Purchaser or the Authority, and any proceedings for the enforcement of any thereof to be promptly dismissed; provided, however, that Borrower shall have the right to contest in good faith and with diligence the validity of any such liens or claims upon providing a security bond issued by a surety acceptable to the Purchaser in the Purchaser's sole discretion which pursuant to applicable law is sufficient to release such lien or claim of lien. The Purchaser shall not be required to make any further disbursements of the Loan until all such mechanics' or materialman's liens, clahs of lien or stop notices have been bonded against to the Purchaser's satisfaction. In the case of stop notices, Borrower shall have the right to contest, in good faith and vith diligence, the validity of any stop notice, provided that Borrower shall immediately provide to the Purchaser a bond from a surety acceptable to the Purchaser in its sole discretion and in form and amount sufficient to release such stop notice. The Purchaser shall have no obligation to make any further disbursements of the Loan until all such mechanic's or materialmen's liens, claims of lien and stop notices have been fully released, discharged or bonded against to the Purchaser's satisfaction.
(ii) If (i) Borrower fails to promptly discharge or contest liens, claims of lien or stop notices and provide the bond in the manner provided in subparagraph (bb)(i) above or (ii) after having complied with the provisions of
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subparagraph (bb)(i) above there is an adverse conclusion to any such contest and Borrower does not cause any final judgment or -- decree to be immediately satisfied and the lien or stop notice to
G be discharged, then the Purchaser may, but shall not be required
to, procure the release and discharge of any such lien or stop notice and any judgment or decree thereon, and in furtherance thereof may, in its sole discretion, affect any settlement or compromise or furnish any security or indemnity as may be required by the Title Company. Purchaser in connection with the provisions of this subparagraph
(bb)(ii) shall be deemed to constitute a disbursement of the Loan. In settling, compromising or arranging for the discharge
of any liens or stop notices under this subparagraph (bb)(ii), the Purchaser shall not be required to establish or confirm the validity or amount of the lien or stop notice.
All amounts expended by the
(ac) Borrower shall not, without the prior written consent of the Purchaser, acquire any other ventures or undertake any other developments. any general partner in Borrower may be assigned, transferred, hypothecated, pledged or disposed of in any manner, whether voluntarily or by operation of law, without the prior written consent of the Purchaser. Borrower will not suffer or permit any amendments to Borrower's partnership agreement without the prior written consent of the Purchaser. Borrower shall not, without the prior written consent of the Purchaser, make any distribution of Borrower's assets to any constituent partner or shareholder of Borrower, as the case may be, including, without limitation, repayment of any loans made by a partner or shareholder to Borrower or any accrued interest thereon, return of capital contributions and distributions upon termination, liquidation or dissolution of Borrower. its existence and all rights and franchises material to its business .
No partnership interest in Borrower or
Borrower shall maintain and preserve
(ad) (i) Within ninety (90) days after the end of
each fiscal year of Borrower, Borrower shall provide to the Purchaser annual financial statements of Borrower, and certified as true and complete without qualification by Jeffrey C. Hamann.
(ii) immediately succeeding the quarter in which the first tenant in
the Project begins paying rent,under an executed lease, the Purchaser shall receive cash flow statements in form satisfactory to the Purchaser showing actual sources and uses of cash during the preceding fiscal quarter and an up-dated projected cash flow statement for the Project through the maturity date of the Loan. The Purchaser shall receive said reports within thirty (30) days after the end of each fiscal quarter and each report shall be duly certified to be true and complete by Jeffrey C. Hamann.
of each fiscal year, the Purchaser shall receive annual financial statements from each Guarantor, in the form described in subparagraph (ad) (i) above.
Commencing in the fiscal quarter
(iii) Within ninety (90) days after the end
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(ae) Borrower shall pay all expenses, costs and disbursements of every kind and nature incurred by or on behalf of Borrower during the term of the Loan with respect to the operation, maintenance and management of the Project. Borrower shall pay any and all valid claims of any brokers or agents with whom it has dealt who claim a right to any fees in connection with arranging the financing of the Project, and shall indemnify, defend and hold the Purchaser harmless from such claims, whether or not they are valid.
(ai) Borrower shall give the Purchaser prompt written notice of any action or proceeding commenced or threatened against Borrower, the.Property, the Project or any Guarantor and will deliver to the Purchaser copies of all notices, and other information regarding such proceeding or action promptly upon receipt or transmittal thereof.
(ag) Borrower shall execute and deliver from time to time, promptly after any request therefor by the Purchaser, any and all instruments, agreements and documents and shall take such other action as may be necessary or desirable in the opinion of the Purchaser to maintain, perfect or insure the Purchaser's security provided for herein and in the Agreement, and in the other Loan Documents, including, without limitation, the execution of such amendments to the foregoing documents, all as the Purchaser shall reasonably require, and shall pay all fees and expenses (including reasonable attorneys' fees) related thereto. Promptly upon the request of the Purchaser, Borrower shall execute and deliver a certification of non-foreign status consistent with the requirements of Section 1445 of the Internal Revenue Code.
(ah) (i) Borrower shall, at its own expense, comply and cause all persons entering the Property to comply with all Environmental Laws applicable to the Project. Borrower shall immediately advise the Purchaser in writing of any (i) discovery of Hazardous Substances on the Property; or (ii) claim, action or order threatened or instituted by any third party (including governmental authorities) against the Project or Borrower relating to damages, cost recovery, loss or injury resulting from any Hazardous Substances. Borrower shall provide the Purchaser with copies of all communications with any third party (including
governmental authorities) relating,to any Environmental Law or any claim, action or order relating to Hazardous Substances at, on, under or in the Project. The Purchaser shall have the right, at Borrower's expense, to retain a professional environmental consultant to conduct an investigation of the Project with respect to Hazardous Substances or its compliance with Environmental Laws. Borrower hereby grants to the Purchaser, its agents, employees, consultants.and contractors, an irrevocable license and authorization to enter upon and inspect the Project and to conduct such tests and investigations on the Project as the Purchaser, in its sole discretion, determines necessary. If any remedial action is required to bring the Project into compliance with Environmental Laws, Borrower shall immediately - 11 -
notify the Purchaser of such situation and shall prepare a written plan setting forth a description of such situation (and all environmental reports relating thereto) and the remedial action that Borrower proposes to implement to bring the Project into compliance with all Environmental Laws. Borrower shall, at its own expense, thereafter diligently and continuously pursue the remediation of the condition necessary to bring the Project into compliance with all Environmental Laws.
(ii) Borrower agrees to protect, indemnify, defend, save and hold harmless the Purchaser, its directors, officers, agents and employees from and against any'and all loss, liability, expense or damage of any kind or nature and from any suits, claims or demands, including (i) all consequential damages; (ii) all damages to any natural resources, and the costs of any required or necessary repair, clean up, response cost, or remediation of the Property and the Project, and the preparation and implementation of any closure, remedial or other required plans; and (iii) all costs and expenses incurred in connection with clauses (i) and (ii), including reasonable attorneys' fees and costs, whether in suit or not, to the extent arising directly or indirectly, in whole or in part, out of (a) the existence or alleged existence of any Hazardous Substances on or under the Property or in any of the Improvements, (b) the removal of or failure to remove any Hazardous Substances from the Property or the Improvements, or (c) any activity involving Hazardous Substances with respect to the Property carried on or undertaken on or off the Project, whether prior to or during the term of the Loan, and whether by Borrower or any predecessor-in-title or any employees, agents, contractors or subcontractors of Borrower or any predecessor-in-title, or any third parties occupying or present on the Property. The foregoing indemnity shall apply to any residual contamination on or under the Project that occurs prior to or during the term of the Loan and to any contamination of any property or natural resources arising in connection with any activity involving Hazardous Substances with respect to the Property that occurs prior to or during the term of the Loan, irrespective of whether any of such activities were or will be undertaken in accordance with applicable Environmental Laws. Upon receiving knowledge of any suit, claim or demand asserted by a third party that the Purchaser believes is covered by this indemnity, the Purchaser shall give Borrower notice of the matter and an opportunity to defend it, at Borrower's sole cost and expense, with legal counsel satisfactory to the Purchaser. The Purchaser may also require Borrower to so defend the matter. The obligations of Borrower under this subsection (b) shall survive the closing of the Loan and the repayment thereof.
Purchaser shall have the right to approve or disapprove all leases in the Project and all tenants and guarantors under said leases. Project without the Purchaser's prior written approval. copies of all leases shall be submitted, together with such
To the fullest extent permitted by law,
(ai) Except as may be hereinafter provided, the
Borrower shall not enter into any lease of space in the Complete
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financial information on the tenant and each guarantor thereunder (if any) as the Purchaser shall reasonably request, for the Purchaser's approval. Borrower shall, within ten (10) days after a request therefor, deliver to the Purchaser an estoppel certificate, in form and substance satisfactory to the Purchaser, from such tenant or tenants as the Purchaser shall specify.
the Purchaser's election, (i) all leases shall be assigned to the Purchaser as additional collateral for the Loan, and (ii) all leases shall be subordinated to the lien of the Deed of Trust. The foregoing assignment and subordination shall be effectuated using forms supplied by the Purchaser.
At
(aj) Borrower shall use the proceeds from the Loan only to complete the Improvements, and except to the extent of proposed borrowings heretofore disclosed to the Purchaser, if any, it shall not require and shall not avail itself of any additional extension of credit for such purpose.
The Borrower agrees that all representations, warranties and covenants made by it herein, and in any certificates or other instruments delivered pursuant hereto or in connection herewith, shall be deemed to have been relied on by the Authority and the Purchaser, and to constitute an inducement to the Authority to issue and sell the Bonds and to the Purchaser to purchase the Bonds. The Borrower acknowledges and agrees that such reliance shall be made notwithstanding any investigation heretofore or hereafter made by such parties or on its behalf and all representations, warranties and covenants made by the Borrower herein and therein and all of their rights hereunder and thereunder shall survive delivery or payment of the Bonds.
5. esentations and Warranties of the Purchaser.
and the Borrower that: The Purchaser represents and warrants to the Authority
(a) The Purchaser has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the purchase of the Bonds .
The Purchaser is aware that the business of the Borrower involves certain economic variables and risks that could affect adversely the security for its investment in the Bonds, and it is able to bear the economic risk of such investment.
I.
(b)
(c) The Purchaser understands that the Bonds are payable as to principal, premium, if any, and interest solely out of payments made by or on behalf of the Borrower to the Authority, including repayment of the loan of the proceeds from the sale of the Bonds.
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(d) The Purchaser understands that the Bonds are
not secured by any obligations or pledge of any moneys received or to be received from taxation or from the State or any political subdivision or taxing district or other instrumentality thereof (including, without implied limitation, the Authority or the City of Carlsbad), and that the Bonds do not now and shall never represent or constitute general obligations of the Authority or debt or bonded indebtedness of the State or any political subdivision or other instrumentality thereof for the payment of principal of, premium, if any, or interest on the Bonds
(e) The Purchaser has received material information with respect to the Bonds and with respect to the Borrower and the Project, but in due diligence, it has made its own inquiry and analysis with respect to the Bonds and the security therefor, the Project, the Borrower and other material factors affecting the security for and payment of the Bonds, and has examined drafts in substantially final form of the basic legal documents relating to the Bonds.
(f) The Purchaser acknowledges that it hao either been supplied with or has had access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and it has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Borrower, the Project, the Bonds and the security therefor, so that as a reasonable investor it has been able to make its decision to purchase the Bonds. The Purchaser hereby expressly waives the right to receive any such information from the Authority, and relieves the Authority of any liability for failure to provide any such information, or for the inclusion of any untrue fact in any such information in any of the documents,
representations or certifications to be provided by the Borrower, or for the failure to include any fact therein.
(9) The Purchaser understands that the Bonds and the Guaranty Agreement (i) are not being registered or otherwise qualified for sale under the nBlue Skyn laws and regulations of
any state, (ii) will not be listed on any stock or other securities exchange, (iii) will carry no rating from any rating service, and (iv) will be issued in marketable form but may not be readily marketable at the time of the original delivery thereof. The Purchaser further understands that the Bonds and the Guaranty Agreement have not been registered under the Securities Act of 1933, as amended, and that euch registration is not legally required.
own account or for a trust account for investment and not with a view toward or for sale in connection with any distribution thereof. Purchaser will not offer, sell, transfer or dispose of the Bonds, or any portion thereof, without assuring that such
(h) The Purchaser is purchasing the Bonds for its
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sale or disposition complies with the Securities Act of 1933, as amended, and all applicable state securities laws.
6. Conditiqns of Sale Bnd Purchase.
The Authority's obligation to deliver the Bonds and to accept payment therefor shall be conditioned upon the purchase of and payment for all of the $2,070,000.00 aggregate principal amount of the Bonds in accordance herewith on the Closing Date. The obligation of the Purchaser to purchase and pay for the Bonds is and shall be subject to the representations and warranties of the Authority and the Borrower'herein being true and correct in '
all material respects at the Closing Date, to the certificates made pursuant to the provisions hereof being true and correct in all material respects at the Closing Date, to the performance by the Authority and Borrower of their respective obligations hereunder, and to the following further conditions:
Agreement, the Guaranty Agreement, the Loan Documents and this
Contract shall be in full force and effect as valid and binding agreements between or among the various parties thereto and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Purchaser, and the Authority shall have duly adopted and there shall be in full force and effect such documents as, in the opinion of Stradling, Yocca, Carlson (I Rauth (herein called nBond Counseln) shall be necessary in connection with the transactions contemplated hereby.
(a) At the Closing Date, the Indenture, the
(b) No litigation shall be threatened or pending in any court (i) to restrain or enjoin the issuance or delivery of the Bonds or the payment, collection or application of the proceeds thereof or loan repayments and other moneys assigned, pledged or to be pledged under the Indenture, or (ii) in any way questioning or affecting the validity of the Bonds or any provisions of the Indenture, the Agreement, the Guaranty Agreement, the Loan Documents or this Contract, or any proceedings taken by the Authority with respect to the foregoing, or (iii) questioning the creation, organization or existence of the Authority, or the Authority's power to lend moneys for the acquisition, improving or equipping of the Project, or (iv) questioning the Borrower's or the Guarantor's legal capacity and power to enter into and perform under the terms of the Agreement, the Guaranty Agreement, the other Loan Documents or this Contract
(the "Bpyrower 's Documents "1
(c) The market value of the Bonds shall not have been materially adversely affected by reason of the fact that between the date hereof and the Closing Date (i) legislation shall have been enacted by the Congress or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, (ii) a decision shall have been - 15 -
rendered by a Court of the United States, or the United States Tax Court, or (iii) an order, ruling, regulation or official statement shall have been made by the Treasury Department of the United States or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such revenues or other income as would be derived by the Authority under the Agreement or such interest on the Bonds as would be received by the owners and holders thereof, other than a person who, within the meaning of Section 147 of the Internal Revenue Code of 1986, as amended and the regulations thereunder, is a nsubstantial user" of the Project or a "related personm.
At or prior to the Closing, the Purchaser shall receive the following documents: (d)
(1) the opinions, dated the Closing Date of (i) Bond Counsel in the form set forth in Exhibit A hereto; and (ii) counsel for the Borrower in the form set forth in wit B hereto;
(2) the certificate of the Borrower, dated
the Closing Date, to the effect that (i) the representations and warranties of the Borrower herein are true and correct in all material respects as of the Closing Date; (ii) the Borrower has complied with all agreements and satisfied all conditions to be performed or satisfied by it at or prior to the Closing Date; (iii) no default or Event or Default, as defined in the Indenture, has occurred and is continuing and no event has occurred and is continuing which, with lapse of time or the giving of notice, or both, would constitute such a default or Event of Default;
(iv) since the date of the most recent financial statements supplied to Purchaser, no material and adverse change has occurred in the business or financial condition of the Borrower, other than as disclosed in writing to the Purchaser; (v) the Borrower has not, sime the date of the most recent financial statements supplied to Purchaser, incurred any material liabilities other than in the ordinary course of business or as provided for or contemplated herein or as disclosed in writing to the Purchaser; and (vi) there is no action or proceeding pending or, to the best knowledge of the Borrower, threatened with regard to a prospective dissolution or liquidation of the Borrower and there is no action or proceeding pending or, to the best knowledge of the Borrower, threatened by or against the Borrower affecting the validity and enforceability of the terms of the Borrower's Documents.
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(3) a certificate signed by the Authority, dated the Closing Date, to the effect that (i) on and as of the Closing Date, each of the representations and warranties of the Authority contained in this Contract is true, accurate and complete and all agreements of the Authority herein provided and contemplated to be performed on or prior to the date'of such certificate have been so performed; (ii) the Bonds, the Indenture, agreements and documents required to be executed and delivered by the Authority have been duly authorized, executed and delivered by the Authority in order to carry out, give effect to and consummate the transactions contemplated hereby, and as of the date of such certificate each is in full force and effect, and certain rights, title and interest inuring to the Authority under the Agreement, including the loan repayment installments due under the Agreement, have been assigned to the Trustee for the benefit of the holders of the Bonds; and (iii) no litigation is pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting the validity or affecting the authority for the issuance of the Bonds and the execution and delivery of the Indenture and the Agreement;
such certificates and other documents as may reasonably be required by Bond Counsel in order to make a determination that interest on the Bonds is excluded from gross income for federal
tax purposes;
(4)
(5) duly executed counterparts of the Agreement, the Guaranty Agreement, the other Loan Documents, the Indenture and this Contract, all such documents to be in satisfactory form and substance to the Purchaser and its counsel in the exercise of their reasonable discretion;
(6) advice from a title insurer to the effect that a search of the public records discloses no conditional sales contracts, chattel mortgages, leases of personalty, financing statements or title retention agreements filed or recorded against the Project, the Property, or the Borrower with respect to the Project;
(7) certified copies of the Partnership resolutions of the Borrower authorizing the execution and delivery of the Borrower's Documents ;
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(8) such additional instruments as may be reasonably required by the Purchaser to create and perfect a valid security interest in favor of the Purchaser with respect to the real and personal property associated with the Project;
reputable insurance companies acceptable to Purchaser insuring the full insurable value of the Project for fire and extended protection and such other risks, including business interruption and worker's compensation, as shall reasonably be
required by Purchaser, along with Form 438-BFU naming the Purchaser as loss payee under such
insurance policies, showing all premiums paid for a period of not less than 6 months after the Closing Date;
(9) certificates of insurance issued by
(10) a completed Phase I Environmental Report covering the Property and the Project, the contents of which are satisfactory to the Purchaser in its discretion;
(11) an UTA lender's title insurance policy issued by a title insurance company satisfactory to the Purchase insuring the Deed of Trust as a first lien on the Property, in the amount of
$2,070,000.00, subject only to such exemptions and exclusions acceptable to the Purchaser in its sole discretion, along with such ALTA endorsements as the Purchaser may deem necessary to protect the security under the Deed of Trust;
and Attornment Agreement executed by Asymptotic Technologies, Inc.;
(12) the Lease Subordination-Nondisturbance
(13) the Lease Occupancy Statement executed
(14) an Assignment of Rents, Leases, Income
by Asymptotic Technologies, Inc.;
and Profit executed by the Borrower;
(15) an Environmental Questionnaire and
Environmental Indemnity executed by the Borrower;
(16) Borrower's Partnership Agreement and all amendments thereto, a certified copy of Borrower's Certificate of Limited Partnership (Form LP-l), as the same may have been amended (with the appropriate Form LP-2) ;
and other project documents, along with the (17) Assignments of Plans and Specifications
- 18 -
consent of the architect or other party to such project documents;
(18) such additional certificates and other documents as the Purchaser may reasonably request to evidence performance of or compliance with the provisions of this Contract and the transactions contemplated hereby, all such certificates and other documents to be satisfactory in form and substance to the Purchaser and its counsel in the exercise of their reasonable discretion;
(e) At the' Closing Date, no default or Event of Default, as defined in the Indenture, shall have occurred and be continuing, and no event shall have occurred and be continuing which, with the lapse of time or the giving of notice or both, would constitute such a default or Event of Default.
(f) Borrower shall have provided to the Purchaser satisfactory evidence that Borrower has deposited sufficient funds into the Borrower's Funds Account to put the Loan "in balance" as required pursuant to Section 9(e) hereof.
(g) Borrower shall have delivered to the Purchaser and the Purchaser shall have approved copies of all documents, agreements, instruments, policies and other materials relating to the Project requested by the Purchaser, including without limitation, appraisals; the General Contract; all design, architect's, engineering, brokerage and construction contracts; surveys; Plans and Specifications; environmental reports and investigations and the budget reflected on the Funds Account, set forth in such detail as the Purchaser may require.
(h) If required by the Purchaser, Borrower shall have delivered to the Purchaser and the Purchaser shall have approved the form and content of all construction or performance bonds covering any contractor from a surety with at least an "A" rating and which is otherwise reasonably acceptable to the Purchaser, together with an assignment of each thereof to the Purchaser and the consent of the surety to each such assignment, all in form and substance approved by the Purchaser.
(i) Borrower shall have obtained, and provided to the Purchaser evidence satisfactory to the Purchaser (including such certifications as the Purchaser may require) of all authorizations, including building permits, annexation agreements, development agreements, subdivision approvals, environmental approvals, sewer and water permits, vault permits, encroachment permits, driveway access and curb cut authorizations, and zoning and land use entitlements, and all other approvals, consents, permits and licenses issued or to be issued by any governmental authority and required for the Project in accordance with the Plans and Specifications and in accordance with all applicable laws, ordinances and regulations, and all of the same shall remain in full force and effect.
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(j) On the Closing Date, Borrower shall have paid the Bond Purchase Fee in an amount equal to one percent (1.5) of the total principal amount of the Bond and all other costs and expenses to be paid by Borrower in connection with the Loan, including without limitation, all appraisal fees, engineering fees, inspection fees, attorneys' fees, title insurance fees.
approved in writing copies of any modifications to the Plans and Specifications and Funds Accounts proposed or executed prior to the Closing Date.
(k) The Purchaser shall have received and
(1) The Purchaser shall have received evidence satisfactory to the Purchaser, which may be in the form of letters from utility companies and local authorities, that all utilities necessary for the construction and operation of the Project are available to the boundary of the Project and are adequate to serve the Project and that all conditions to Borrower's ability to utilize such utilities have been satisfied.
approved all financial statements of Borrower, of the general partner of Borrower and of Guarantor and of such other parties as are required by the Purchaser.
Borrower shall have provided to the Purchaser and the Purchaser shall have approved the Construction Schedule.
(m) The Purchaser shall have received and
(n)
(0) The Purchaser shall have received and approved UCC-1 financing statement search certifications with respect to Borrower, its general partner, and Guarantor, together with copies of all financing statements revealed thereby.
(p) The Purchaser shall have received and approved a current list of all construction material contracts and subcontracts which have been or are intended to be executed as of the date of the initial disbursement.
(9) The Purchaser shall have received and approved a list, certified by Borrower and the General Contractor as true and correct, of all personalty (including, but not limited to, equipment to be used in connection with the work) located (or to be located during the course of construction) on the Property and not owned (or not to be owned) by Borrower.
approved a copy of the contract with the General Contractor, all other direct contracts with respect to any work in connection with the Project, and each significant subcontract (as determined by the Purchaser) entered into or to be entered into with respect to the Project.
(r) The Purchaser shall have received and
(s) The Purchaser shall have received and approved a copy of the General Contractor's license.
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(t) The Purchaser shall have received and approved a list, certified by Borrower and the General Contractor, of all personalty (including, but not limited to, materials, fixtures, installations and fabrications) to be incorporated into the Project and that are to be stored, assembled, manufactured or otherwise located off-site after the same have become the property of Borrower or after funds for the purchase of the same have been advanced by the Purchaser. Each disbursement request containing a request for funds to pay for any item which is not then located on-site shall specifically note the fact that the Item(s) in question are located off-site, and the Purchaser may decline to advance funds with respect to the same unless and until the Purchaser has received all documentation required by the Purchaser to assure that the
Purchaser's security interest as to such item(s) is of a first priority and fully perfected.
(u) No stop notice shall have been received by the Purchaser, which the Purchaser believes may require the withholding of any disbursement.
(v) No mechanics' liens shall have been recorded against the Property unless there has been issued a surety bond adequate to release the Project from the lien thereof in accordance with Civil Code Section 3143.
(w) The Purchaser does not then reasonably believe that the disbursement might be junior in priority to mechanic's or material supplier's liens or any intervening or other liens on the Property.
7. Cancellation of Purchaser's Obliaatiorl.
The Purchaser shall have the right to cancel its obligation to purchase the Bonds if, between the date hereof and the Closing Date, (i) an actual or tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation shall be favorably reported by such a committee or be passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or be enacted by the Congress of the United States, or a decision by a court established under Article I11 of the Constitution of the United States or by the Tax Court of the United States shall be rendered, or a ruling, regulation or order of the Treasury Department of the United States or the Internal Revenue Service shall be made or proposed, having the purpose or effect of imposing federal income taxation, or any other event shall have occurred which results in the imposition of federal income taxation, upon revenues or other income of the general character to be derived by the Authority or by any similar body or upon interest received on obligations of the general character of the Bonds, or on the Bonds, which,-in the reasonable opinion of the Purchaser, materially adversely affects the Bonds; (ii) any - 21 -
legislation shall be favorably reported by a committee of the
legislature, or any ordinance, rule or regulation shall be enacted by any governmental body, department or agency in the State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the reasonable opinion of the Purchaser, materially adversely affects the Bonds; (iii) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all the underlying obligations, as contemplated hereby, is in violation or would be in violation of any provision of the federal securities laws, as amended and as then in effect; (iv) legislation shall be enacted by the Congress of the United States of America to the effect that obligations of the general character of the Bonds, or the Bonds, including all the underlying obligations, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or are not exempt from the regietration requirements of the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; (v) a general banking moratorium shall have been established by federal or California authorities; (vi) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the Borrower; or (vii) a war involving the United States shall have been declared, or any conflict involving the armed forces of the United States shall have occurred or escalated, or any other national emergency relating to the effective operations of government or the financial community shall have occurred, which, in the opinion of the Purchaser, materially adversely affects the Bonds
If the conditions to'the Purchaser's obligations contained in this Contract are not satisfied or if the Purchaser's obligations shall be terminated for any reason permitted by this Contract, this Contract shall terminate and neither the Purchaser nor the Authority nor the Borrower shall have any further obligation hereunder, except that the Borrower shall remain responsible for the expenses to be paid by it under Section 11 hereof.
9. Pisb-t of -an Proceeds.
The proceeds of the Loan will be disbursed by the Trustee in accordance with the provisions of the Indenture and the Loan Agreement. Disbursements will be made (i) on the Date of Delivery and (ii) upon completion of the Project and satisfaction of the conditions set forth in Section 9(h) below upon submission to the Trustee of a requisition meeting the '
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requirements set forth in the Indenture, with the written approval of the Purchaser, subject to satisfaction of the conditions set forth in the Section 9 as follows:
The approval of the Purchaser is
(a) Borrower shall use disbursements of the Loan only for the payment of or reimbursement for Project Costs as shown on the Funds Accounts and as may be approved by the Purchaser from time to time pursuant to Section 9fb) beloy , such payment of or reimbursement for Project Costs. hereof, Project Costs consist of the total of all the interest, costs, expenses and fees listed as *Direct Costs* and *Indirect Costs* in the Funds Accounts.
As of the date
(b) be evidenced by an amended Funds Accounts approved by the Purchaser in its sole discretion, with the modified Project Costs shown in the Funds Accounts. The Purchaser shall have the right, in its sole discretion, to increase or decrease the allocation to the contingency, interest reserve or other category in each Funds Account and to determine whether any item of cost or expense for which Borrower requests a disbursement constitutes a Project Cost and to which Funds Account such cost or expense shall be applied. The maximum amount that the Purchaser shall be obligated to disburse for any item of Project Costs shall not exceed the amount designated for such item on the then-current Fund8 Account.
All modifications to the Funds Accounts will
(c) Requests shall be evidenced by the Draw Request Documents.
(d) Provided that: (a) no Event of Default, Potential Default or Potential Balancing Default exists under this Contract or any of the other Loan Documents; (b) all of the conditions set forth in subparagraph (g) below have been satisfied; then the Purchaser shall give its written approval of the disbursement request to Borrower within ten (10) Business Days after receipt of the Draw Request Documents. The Purchaser shall have no obligation hereunder to issue *set aside" letters. As used herein, "set aside" letters shall mean letters to governmental agencies, contractors or other third parties pursuant to which the Purchaser agrees to allocate Loan proceeds for the construction of certain improvements.
(e) As a material condition to the making of the Loan and as a condition precedent to the Purchaser's duty to disburse proceeds of the Loan, Borrower shall pay all Project Costs in excess of the Loan Amount. The Purchaser shall be obligated to make the final disbursement of proceeds of the Loan only when the Loan is balance" only at such times as Borrower has invested sufficient funds into the payment of Project Costs (as same may be modified pursuant to subparagraph (b) above so that, in the Purchaser's sole judgment, the undisbursed portion of the Loan plus any funds deposited by Borrower into the Borrower's Fund Account shall be
balance.a The Loan shall be
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sufficient to fully complete and operate the Project and pay all Project Costs (including without limitation, all interest and all other sums which may accrue or be payable under any Loan Documents) until the Maturity Date.
(f) The Purchaser shall have no obligation to approve any disbursement for Stored Materials unless Borrower establishes to the Purchaser8s satisfaction that (i) the Purchaser8s security interest in the Stored Materials is properly protected, and (ii) the Stored Materials shall be (x) adequately insured, (y) protected against theft or damage, and (z) free of liens or claims of third parties.
(g) No disbursement of Loan proceeds shall be made unless Borrower shall have satisfied all of the following conditions:
(i) No Event of Default, Potential Balancing Default or Potential Default exists;
(ii) The Loan is "in balanceW as required in subparagraph (e) above;
(iii) approved true, correct and complete copies all of the following items:
The Purchaser has received and
(1) A completed set of Draw Request Documents executed by an authorized representative of Borrower.
(2) Copies of such certificates, invoices, or orders as the Purchaser may request, all in form and substance satisfactory to the Purchaser.
(iv) time to time to cause an inspection and examination of the progress of construction. inspection must show that the construction is proceeding diligently in accordance with the Plans and Specifications. of the costs and expenses of the Purchaser incurred in such inspections and examinations.
(h)
The Purchaser shall have the right from
The
Borrower shall have paid all
In addition to satisfying the conditions set forth in subparagraph (g) above, no final disbursement of Loan proceeds and no disbursement of retainage under any construction contract shall be made unless Borrower shall have satisfied all of the following conditions:
(i) All Improvements shall be Substantially Complete in accbrdance with the Plans and Specifications and the Purchaser shall have received such written certifications from the - 24 -
Project architect, if any, the General Contractor and such other parties as the Purchaser may require that the Improvements conform to the Plans and Specifications. upon Substantial Completion, the Purchaser shall have the right to withhold an amount equal to 150% of the cost to complete all such punch-list items, which holdback shall be disbursed upon lien-free completion of the punch-list items.
If punch-list items exist
(ii) Either (a) sixty-five (65) days shall have elapsed since the filing for record of a valid notice of completion.for all work; or (b) thirty-five (35) days shall have elapsed since the filing for record of a valid notice of completion for all Improvements and the furnishing by the General Contractor of a release of its lien
rights.
(iii) Borrower shall have provided the Purchaser (i) a copy of the recorded certificates of occupancy or other written confirmation that the Project meets the requirements of all Governmental Authorities having jurisdiction over the Project and can be occupied in accordance with the terms and conditions under which the Project was appraised, (ii) a copy of a recorded valid notice of completion of the Project as provided or
permitted by law, and the expiration of all other applicable lien periods; and (iii) no stop notice shall have been received which the Purchaser believes requires withholding of any disbursement.
(iv) The Purchaser shall have received a final lien waiver and release from the General Contractor and, if requested by the Purchaser, from each subcontractor covering the full amount of any disbursehents.
The Purchaser shall have received at its option, to be exercised at its sole discretion, a preliminary title report approved by the Purchaser and assurances satisfactory to the Purchaser in its sole discretion that the Title Company is prepared to issue its full ALTA policy of title insurance with CLTA Endorsements 100, 101.2,
101.6, 116.1 and other equivalent endorsements satisfactory to the -chaser, updating the Title Insurance Policy as of the date of the final disbursement and insuring the continued priority of the Deed of Trust and containing no exceptions to title not earlier or then approved by the Purchaser .
(v)
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..
(vi) The Purchaser shall have received collateral assignments of all manufacturer's and supplier's warranties and construction guaranties, with consents from each manufacturer and supplier as required by the Purchaser, all in form acceptable to the Purchaser.
(vii) The Purchaser shall have received and approved copies of as-built plans and specifications for the Improvements, certified as true and complete by Borrower, the General Contractor, and such other parties as the Purchaser may require.
10. Dents of Defaults and Remedies.
Upon written notice from the Purchaser to Borrower (except for the occurrence of any monetary event of default described in subparagraphs (i) , (iv) , (viii) through (xiv) , inclusive, in which event no notice shall be required) and, in the case of the events described in subparagraphs (i) and (ii), other than the failure to make any payments under any Loan Document, the expiration of the cure period provided in subparagraph 1O(c) below, the occurrence of one or more of the following shall constitute an Event of Default under this Agreement:
(i) the occurrence of an Event of Default under any of the Loan Documents;
(ii) a material default by Borrower under the General Contract or any other material construction contract;
(iii) if any representation or warranty made by Borrower at the date hereof or at the date of any disbursement of the Loan shall be materially false or materially misleading;
(iv) failure to deposit with the Purchaser in cash, the amount necessary to put the Loan "in balance" within the time period .. specified in Section 9m;
institute action, which in the sole opinion of the Purchaser, will adversely affect Borrower's condition, operations, or ability to repay the Loan if such action remains effective for more than thirty (30) days;
(v) any Governmental Authorities take or
(vi) the Purchaser fails to have a legal, valid, binding, and enforceable first priority lien acceptable to the Purchaser on the Property, Improvements and Collateral; - 26 -
(vii) a stop notice affecting the balance of the Loan proceeds is served on the Purchaser, unless and until a bond in form and substance satisfactory to the Purchaser, issued by a surety acceptable to the Purchaser in its sole discretion, is furnished to the Purchaser within the time period specified by the Purchaser;
(viii) the bankruptcy or insolvency of the General Contractor or the withdrawal or termination of the General Contractor from proceeding with construction of the Project;
(ix) the assets, liabilities or financial position of Borrower, any general partner in Borrower or any Guarantor;
insolvency or a material adverse change in
(x) the commencement by any partner in Borrower of any action or proceeding which seeks as one of its remedies the dissolution of Borrower or any partner in Borrower;
(xi) if any Governmental Authority, or any court at the instance thereof, shall assume control over the affairs or operations of, or a receiver or trustee shall be appointed over or of any substantial part of, or a writ or order of attachment or garnishment shall be issued or made against any substantial part of the property of Borrower or any Guarantor;
(xii) if Borrower or any Guarantor shall admit in writing its inability to pay its debts when due, or shall make an assignment for the benefit of creditors; or Borrower or any Guarantor shall apply for or consent to the appointment of any receiver, trustee or similar officer for Borrower or any Guarantor, as the case may
be, or for all or any substantial part of their respective property; or Borrower or any Guarantor shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debts, dissolution, liquidation, or similar proceedings relating to Borrower or any Guarantor, as the case may be, or under the laws of any jurisdiction;
(xiii) if a receiver, trustee or similar officer shall be appointed for Borrower or any Guarantor and for all or any substantial part of their respective property without the application or consent of Borrower or any Guarantor, as the case may be, and such appointment shall continue undischarged for a period of forty-five (45) days (whether or not consecutive); or any bankruptcy, insolvency, reorganization, arrangements, readjustment of debt, dissolution,
.. 27 -
liquidation or similar proceedings shall be instituted (by petition, application or otherwise) against Borrower or any Guarantor and shall remain undismissed for a period of forty-five (45) days (whether or not consecutive) ;
(xiv) any transfer of the Trust Estate (as defined in the Deed of Trust) or any portion thereof without the prior written consent of the Purchaser; or
a period of thirty (30) days and the Purchaser has not excused such discontinuation, or if the Purchaser has excused the discontinuation, work is not commenced and completed within the period specified by the Purchaser.
(xv) work is discontinued on the Improvements for
(i) Notwithstanding any provision to the contrary herein or in any of the other Loan Documents, upon the happening of any Event of Default under this Agreement, or upon an Event of Default under any of the other Loan Documents: (i) the Purchaser's obligation to make further disbursements of the Loan shall cease; (ii) the Purchaser shall, at its option, have the rights and remedies provided in the Loan Documents, including, without limitation, the option to declare all out- standing indebtedness to be immediately due and payable without presentment, demand, protest or further notice of any kind, to apply any of Borrower's funds in its possession to the outstanding indebtedness under the Note whether or not such indebtedness is then due, and to obtain the appointment of a receiver, (iii) the Purchaser shall have the right to cause an independent contractor selected by the Purchaser to enter into possession of the Property and to perform any and all work and labor necessary for the completion of the Project substantially in accordance with the Plans and Specifications and to perform Borrower's obligations under this Agreement; (iv) the Purchaser may pursue any remedies available to it pursuant to California Code of Civil Procedure 726.5; and (v) all outstanding indebtedness under the Loan shall bear interest at the Default Rate. All sums expended by the Purchaser for such purposes shall be deemed to have been disbursed to and borrowed by Borrower and shall be secured by the Deed of Trust and the other Loan Documents *left off here* .
(ii) Borrower hereby constitutes and appoints the Purchaser, or an independent contractor selected by the Purchaser, as its true and lawful attorney-in-fact with full power of substitution to perform Borrower's obligations under this Agreement and upon the occurrence of an Event of Default to take all such - 28 -
actions as the Purchaser deems necessary to complete the Project, including without limitation, any of the following in the name of the Borrower: (i) to use any of the funds of Borrower, including any balance of the . Loan and any funds which may be held by the Purchaser for Borrower; (ii) to make such additions, changes and corrections in the Plans and Specifications as shall be
necessary or desirable to complete the Project; (iii) to employ any consultants, contractors, subcontractors, attorneys, agents, architects and inspectors and enter into contracts required for the completion of the Project; (iv) to pay, settle or compromise all existing bills and claims which are or may be liens against the Property or the Project or may be necessary or desirable for the completion of the Project; (v) to execute all applications and certificates necessary for the completion of the Project; and (vi) to take such action and require such performance as it deems necessary under any of the bonds or insurance policies to be furnished hereunder. It is understood and agreed that the foregoing power of attorney shall be deemed to be a power coupled with an interest which cannot be
revoked until repayment in full of the Loan.
(iii) The remedies of the Purchaser as provided herein or in any other Loan Document, or any one or more of them, or at law or equity, shall be cumulative and concurrent, and may be pursued singly, successively or together at the sole discretion of the Purchaser, and may be exercised as often as occasion thereof shall occur.
(c) -. Only non-monetary defaults set forth in Sections lO(a) (i) and lO(a) (ii) are curable and shall be deemed cured if:
(i) Borrower commences to cure said default within ten (10) days of receipt of the Purchaser's notice of default and diligently proceeds to cure the same; and
(ii)
(30) days after receipt of the Purchaser's notice or if such default is not reasonably capable of being cured within such thirty (30) day period, Borrower diligently and continuously proceeds to cure such default within such time as the Purchaser, in its sole discretion, deems to be reasonable.
Borrower cures such default within thirty
11. w.
All reasonable expenses and costs of the Authority incident to the performance of its obligations in connection with the authorization, issuance and sale of the Bonds to the Purchaser may be paid from the proceeds of the Bonds, and to the - 29 -
extent not so paid shall be paid by the Borrower, including the following (i) any costs of printing of the Bonds, the Indenture, the Agreement, the Guaranty Agreement, this Contract and all other related documents and ancillary papers, in reasonable quantities, including any photocopying thereof and (ii) fees and expenses of Bond Counsel, and the Authority,
As provided in Section 4,0l(b)(1) of the Indenture, the Purchaser shall have the right to require the redemption of the Bonds on such date as the Purchaser determines that it no longer receives a tax benefit from the tax-exempt status of the interest paid on the bonds. The Purchaser agrees to notify the Borrower by not later than 60 days prior to such redemption date whether it intends to elect to have,the Bonds redeemed. makes such an election, the Purchaser may, in its sole discretion, notify the Borrower that the Purchaser will take one or more of the following actions, or such other actions as it and the Borrower may mutually agree:
If the Purchaser
(a) the Purchaser may issue a term loan to the Borrower secured by the Project and the Property in a principal amount equal to the lesser of: (i) the then outstanding principal amount of the Bonds, or (ii) 759 of the appraised value of the Project and the Property, the proceeds of which term loan would be used by the Borrower to pay off the Loan and thus pay in full the principal and interest due under the Bonds;
(b) the Purchaser may use its best efforts to sell the Bonds to another institutional investor, which would agree to waive or cancel the redemption of the Bonds;
(c) the Purchaser may agree to provide to a subsequent purchaser of the Bonds a standby letter of credit to guarantee the payment of the Bonds, and may then use its best efforts to find a new owner of the Bonds who would waive redemption of the Bonds.
The Borrower shall negotiate with the Purchaser in good faith the terms and conditions of any agreement relating to the options described in subparagraphs (a) through (c) above and shall pay all costs and fees associated therewith,
13. Notices.
Any notice or other communication to be given to the parties hereto under this Contract may be given by delivering the same in writing at their respective addresses set forth as
fOllOW6: ..
To the Authority: The Industrial Development Authority of the City of Carlsbad
2075 Us Palmas Drive Carlsbad, CA 92009 - 30 -
Attention: Cynthia Haas
To the Borrower: CIP Limited, L.P. 475 W. Bradley Avenue El Cajon, CA 92020 Attention: Jeffrey C. Hamann
To the Purchaser: First Interstate Bank of California
401 B Street, Suite 304 (A-129) San Diego, CA 92101 Attention: Jeffrey Stites
14. Successors and Assi-. .
This Contract is made solely for the benefit of, and shall be binding upon, the Authority, the Borrower and the Purchaser, including the successors or assigns of the business of the Authority or the Purchaser, and no other person shall acquire or have any right hereunder or by virtue hereof. Under no circumstances shall the rights of Borrower hereunder or under the Loan Agreement be assigned by Borrower, and any attempt to assign or hypothecate such rights and obligations shall be null and void.
Representations, warranties and agreements of the Authority in this Contract shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Purchaser and shall survive the delivery of and payment for the Bonds. The representations, warranties, covenants and indemnities of the Borrower contained in this Contract shall survive the Closing under this Contract, the sale of the Bonds to the Purchaser, and any investigation by the Authority or the Purchaser of any matters described in or related to the transactions covered by this Contract, the Indenture, the Agreement or related documents.
15. Eovernina La W.
This Contract shall be governed by and construed in accordance with the laws of the State of California.
16. bitration.
. Upon the demand of any party (nParty/Partiesn), to a Document (as defined below), whether made before the institution of any judicial proceeding or not more than 60 days after service of a complaint, third party complaint, cross-claim or counterclaim or any answer thereto or any amendment to any of the above, any Dispute (as defined below) shall be resolved by binding arbitration in accordance with the terms of this arbitration program ("Arbitration Program"). A "Dispute" shall include any action, dispute, claim or controversy of any kind, whether founded in contract, tort, statutory or common law, equity, or otherwise, now existing or hereafter . arising between any of the Parties arising out of, pertaining to
.. (a) Blndlna ArbitXation
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or in connection with any agreement, document or instrument to which this Arbitration Program is attached or in which it appears or is referenced or any related agreements, documents, or instruments ("Documentsn). Any Party who fails to submit to binding arbitration following a lawful demand by another Party shall bear all costs and expenses, including reasonable attorneys' fees (including those incurred in any trial, bankruptcy proceeding or on appeal), incurred by the other Party in obtaining a stay of any pending judicial proceeding and compelling arbitration of any Dispute. The Parties agree that any agreement, document or instrument which includes, attaches to or incorporates this Arbitration Program represents a transaction involving commerce as that term is used in the Federal Arbitration Act, Title 9 United States Code (nFMm). TEE PARTIES UNDERSTAXD TEAT BY THIS AGREEMENT THEY HAVE DECIDED TEAT THEIR DISPUTES BHALL BE RESOLVED BY BINDING ~ITRATIODI RATHER 3" IN COURT, AND ONCE DECIDED BY ARBITRATION NO DISPUTE CAM LATER BE BROUGgT, PILED OR PURSUED IN COURT.
(b) Gover&a Rulesb Arbitrations conducted pursuant to this Arbitration Program shall be administered by the American Arbitration Association (nAAAn), or other mutually agreeable administrator ("Administratorn) in accordance with the terms of
this Arbitration Program and the Commercial Arbitration Rules of the MA. Proceedings hereunder shall be governed by the provisions of the FAA. The arbitrator(s) shall resolve all Disputes in accordance with the applicable Substantive law designated in the Documents. Judgment upon any award rendered hereunder may be entered in any court having jurisdiction; provided, however, that nothing herein shall be construed to be a waiver by any Party that is a bank of the protections afforded pursuant to 12 U.S.C. 91 or any similar applicable state law.
(c) Arbitrator Po wers and Ouglifications ; Awara . The
Parties agree to select a neutral qualified arbitrator or a panel of three qualified arbitrators to resolve any Dispute hereunder. nQualifiedn means a retired judge or practicing attorney, with not less than 10 years practice in commercial law, licensed to practice in the state of the applicable substantive law designated in the Documents. A Dispute in which the claims or amounts in controversy do not exceed $1,000,000, shall be decided by a single arbitrator. A single arbitrator shall have authority to render an award up to but not to exceed $1,000,000.00 including all damages of any kind whatsoever, costs, fees, attorneys' fees and expenses. Submission to a single arbitrator shall be a waiver of all Parties' claims to recover more than
$1,000,000.00. A Dispute involving claims or amounts in controversy exceeding $1,000,000.00 shall be decided by a majority vote of a panel of three qualified arbitrators. All three arbitrators on the arbitration panel must actively participate in all hearings and deliberations. The arbitrator(s) shall be empowered to, at the written request of any Party in any Dispute, 1) to consolidate in a single proceeding any multiple party claims that are substantially identical or based upon the same underlying transaction; 2) to consolidate any claims and
.
- 32 -
Disputes between other Parties which arise out of or relate to the subject matter hereof, including all claims by or against borrowers, guarantors, sureties and/or owners of collateral; and
3) to administer multiple arbitration claims as class actions in accordance with Rule 23 of the 'Federal Rules of Civil Procedure. In any consolidated proceeding the first arbitrator(s) selected in any proceeding shall conduct the consolidated proceeding unless disqualified due to conflict of interest. The arbitrators(s) shall be empowered to resolve any dispute regarding the terms of this arbitration clause, including questions about the arbitrability of any Dispute, but shall have no power to change or alter the terms of the Arbitration Program. The prevailing Party in any Dispute shall be entitled to recover its reasonable attorneys' fees in any arbitration, and the arbitrator(s) shall have the power to award such fees. The award of the arbitrator(s) shall be in writing and shall set forth the factual and legal basis for the award.
(dl Peal Pronertv CollateraJL . Notwithstanding the provisions of subparagraphs (a) through (c), no Dispute shall be
submitted to arbitration without the consent of all Parties if, at the time of the proposed submission, such Dispute arises from or relates to an obligation which is secured directly or indirectly and in whole or in part by real property collateral. If all Parties do not consent to submission of such a Dispute to arbitration, the Dispute shall be determined as provided in Paragraph 5.
(e) Judicial Reference. At the request of any Party, a Dispute which is not submitted to arbitration as provided and limited in subparagraphs (a) through (d) shall be determined by a reference in accordance with California Code of Civil Procedure Section 638 et seq. shall designate to the court a referee or referees selected under the auspices of the AAA, unless otherwise agreed to in writing by all parties. With respect to a Dispute in which the amounts in controversy do not exceed $1,000,000, a single referee shall be chosen and shall resolve the Dispute. The referee shall have authority to render an award up to but not to exceed $1,000,000, including all damages of any kind whatsoever, including costs, fees and expenses. A Dispute involving amounts in controversy exceeding $1,000,000 shall be decided by a majority vote of a panel of three referees (a wReferee Panelw), provides, however, that all three referees on the Referee Panel must actively participate in all hearings and deliberations. including any Referee Panel, may grant any remedy of relief deemed just and equitable and within the scope of this Arbitration Program and may also grant such ancillary relief as is necessary to make effective.any award. of the Referee Panel, or the referee if there is a single referee, shall be a retired judge. Judgment upon the award rendered by such referee(s) shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645. Determinations and awards by a referee or Referee Panel shall be binding on all
If such an election is made, the Parties
Referees,
The presiding referee
- 33 -
Parties and shall not be Subject to further review or appeal except as allowed by applicable law.
(f) preservation of Remedies. No provision of, nor the exercise of any rights under, this Arbitration Program shall limit the right of any Party to: (1) foreclose against and/or sale of any real or personal property collateral or other security, or obtain a personal or deficiency award; (2) exercise self-help remedies (including repossession and setoff rights); or
(3) obtain provisional or ancillary remedies such as injunctive relief, sequestration, attachment, replevin, garnishment, or the appointment of a receiver from h court having jurisdiction. rights can be exercised at any time except to the extent ouch action is contrary to a final award or decision in any
arbitration proceeding. The institution and maintenance of an action as described above shall not constitute a waiver of the
right of any Party to submit the Dispute to arbitration, nor render inapplicable the compulsory exercise of any self-help, auxiliary or other rights under this paragraph shall be a Dispute hereunder.
Such
(g) Miscellaneous . All statutes of limitation applicable to any Dispute shall apply to any proceeding in accordance with this Arbitration Program. The Parties agree, to the maximum extent practicable, to take any action necessary to conclude an arbitration hereunder within 180 days of the filing of a Dispute with the Administrator. The arbitrator(6) shall be empowered to impose sanctions for any Party's failure to proceed within the times established herein. Arbitrations shall be conducted in the state of the applicable substantive law designated in the Documents. The provisions of this Arbitration Program shall survive a termination, amendment, or expiration hereof or of the Documents unless the Parties otherwise expressly agree in writing. Each Party agrees to keep all Disputes and arbitration proceedings strictly confidential, except for disclosures of information required in the ordinary course of business of the Parties or as required by applicable law or
regulation. declared invalid by any court, the remaining provisions shall not be affected thereby and shall remain fully enforceable.
If any provision of this Arbitration Program is
17 . Counterparta.
This Contract may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same agreement.
.
IN WITNESS WHEREOF the parties have entered into and executed this Contract as of the date first above written.
INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF CARLSBAD
By:
wPurchasern
FIRST INTERSTATE BANK OF CALIFORNIA
By: Its:
[signatures continued on next page]
- 35 -
"Borrower"
CIP LIMITED, LOP., A CALIFORNIA LIMITED PARTNERSHIP
Bv its General Partner:
Whammy, Inc. A California corporation
By:
By:
By:
..
By:
By:
By:
Jeffrey C. Hamann, President
Daniel M. Whitaker, Secretary
Jeffrey C. Hamann, as an individual and as Trustee of the J.C. Hamann Family Trust, UTD 4/25/86
Gregg ~amann, as an individual and as Trustee of the Gregg Hamann Family
Trust, UTD 4/25/86
Daniel M. Whitaker as an individual
Daniel M. Whitaker and/or Dona C. Whitaker, Co- Trustees of the Whitaker Family Trust, UTD
as Amended and Restated 12/22/83
10/22/79,
..
- 36 -
EXHIBIT B
FORM OF BOND COUNSEL OPINION
[FORM OF BORROWER'S COUNSEL OPINION]
Industrial Development Authority .. of the City of Carlsbad
First Interstate Bank of California
Re: Industrial Devel oDment Authoritv of the Citv of Carlsbad
Indu str ial Revenue Bond s (Asvmtek Pro7 'ectl Series 1995
Dear Sirs:
This opinion is being delivered to you in connection with the issuance by the Industrial Development Authority of the City of Carlsbad (the "JiuthoritP) of $2,070,000.00 principal amount of its Industrial Revenue Bonds (Asymtek Project) Series 1995 (the @'Bonds"), issued to finance the acquisition, improvement and equipping of a manufacturing facility (the "pro iect") by CIP
Limited, L.P., a California limited partnership qualified to do business in the State of California (the "Borrowex*@). I have acted as counsel to the Borrower in this transaction and, as such counsel, am familiar with the Borrower's [governing documents] as amended to date and with the action taken by the Borrower in connection with the issuance of the Bonds.
In that connection, as counsel to the Borrower, I have examined the originals, or copies certified or otherwise identified to my satisfaction, of such documents, corporate records and other instruments as I have deemed necessary or appropriate for the purposes of this opinion, including:
"contract") among the Authority, the Borrower and First Interstate Bank of California (the "Purchaser*@); and
(i) The Bond Purchase Contract dated July 1, 1995 (the
(ii) The Loan Agreement dated as of July 1, 1995, (the by and between the Authority and the Unconditional Guaranty Agreement dated as of
1
..
MOW9335
July 1, 1995 between the Purchaser, the Borrower and the Guarantors described therein (the "Guarantv Aareemex&"), and the Deed of Trust issued by the Borrower dated July 1, 1995, (the "Deed");
(iii) The Indenture of Trust dated as of July 1, 1995, (the "Jndenture") between the Authority and [First Interstate Bank of California] as Trustee (the "pustee");
(iv) Such other records, certificates and documents a8 I have considered necessary or appropriate for the purpose of the opinion hereinafter rendered.
Based upon the foregoing, I am of the opinion that:
The obligor is a California limited partnership duly organized, validly existing and in good standing under the law of said state and is qualified to do business and is in good standing in the State of California and in every county in which it is currently doing business. The Borrower has full power to own and encumber its properties and assets and conduct its business as now conducted; and that, to the best of my knowledge, after due inquiry, the Borrower has duly and validly obtained all certificates, licenses and permits from all public authorities, federal, state, and local, as are now required by such authorities which are necessary to enable the Borrower to carry on its business as now conducted or where the failure to obtain any such certificates, licenses and permits would have a material adverse effect on the financial condition of the Borrower.
1.
2. The Borrower has the full power and authority to execute and deliver and perform its obligations under the Contract, the Agreement, and the Guaranty Agreement and the Deed of Trust (collectively, the YBorro wer 's Documents ") and to engage
in the transactions contemplated by the Borrower's Documents; and the Borrower's Documents have been duly authorized, executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms (except insofar as enforcement thereof may be limited by any applicable bankruptcy, insolvency, reorganization or similar laws or judicial decisions affecting the rights of
creditors generally or by the application of equitable principles where equitable remedies are sought).
Neither the execution nor delivery by the Borrower of the Borrower's Documents, or the execution nor the delivery by the Guarantor of the Guaranty Agreement or the consummation by the Borrower of any of the transactions contemplated by the Borrower's Documents, nor the fulfillment of the terms thereof, nor the fulfillment by the Guarantor of the terms of the Guaranty Agreement, will, in any material respect, conflict with or result
3.
2
in a breach of, or constitute a default under, the terms of any indenture, note, mortgage, deed of trust, agreement or other instrument known to me to which the Borrower [or the Guarantor] is a party or by which any of them are bound or any order or regulation known to me to be applicable to any of them of any court, regulatory body, administrative agency or other governmental body having jurisdiction over them.
there is no action, suit, arbitration, proceeding or
investigation at law or in equity before or by any court or governmental agency or body pending or threatened against or affecting the Borrower (i) which would result in any material adverse change in the position or prospects of the Borrower or which would materially adversely affect the properties of the Borrower, or (ii) which seeks to restrain or enjoin the issuance or delivery of the Bonds or the collection of the payments to be made pursuant to the Indenture, or the Borrower's Documents, or in any way contests or affects the validity of the Bonds, the Borrower's Documents or the Indenture, or contests the powers of the Authority[, the Guarantor] or the Borrower to enter into or perform their respective obligations under any of the foregoing.
4. To the best of my knowledge, after due inquiry,
5. Neither the Borrower nor the Guarantor is in default in the payment of the principal or interest on any of its indebtedness for borrowed money or in default under any instrument or instruments or agreements under and subject to which any indebtedness for borrowed money has been issued and no event has occurred and is continuing under the provisions of any such instrument or agreement which with the lapse of time, the giving of notice, or both, would constitute an event of default thereunder or any event of default under the Borrower's Documents.
Very truly yours,
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U01/79335
EXHIBIT C
CONSTRUCTION SCHEDULE
4 ..
LAO1 /79335
EXHIBIT D
DESCRIPTION OF PROJECT AND PROPERTY
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LA01/79335
EXHIBIT E
DEFINITIONS
@%orrow8r's Funds shall mean a non-interest bearing account maintained with the Purchaser for the purpose of receiving Borrower's Funds and making disbursements of the Loan.
Wertificatm of Bubrtantial om plot ion^^ shall mean, at the Purchaser's election, (i) a certificate in the form of AIA Form G-704 or in another format approved by the Purchaser, exe- cuted by the design architect and the General Contractor, or (ii) a certificate of occupancy issued by the applicable Governmental Authority and a certificate in the form of AIA Form G-704 or in another format approved by the Purchaser and executed by the General Contractor, in each case certifying as to matters requested by the Purchaser, including without limitation, compliance with applicable building codes and the American with Disabilities Act (Public Law 101-336).
"Collater81" shall mean all of Borrower's interest in all construction materials and equipment and all furniture, furnishings, fixtures, machinery, equipment, inventory and all other items of personal property in which Borrower now or hereafter owns or acquires any interest or right, and which are used or useful in the construction, operation, use and occupancy of the Project (including, without limitation, the Stored Materials); all of Borrower's accounts receivable from operation of the Project; all of Borrower's documents, instruments, contract rights and general intangibles relating to the construction, use, operation or occupancy of the Project; condemnation proceeds relating to any portion of the Project; and all insurance proceeds from any policies of insurance covering any of the aforesaid.
DgCompletion Date" shall mean the date upon which the Improvements are Substantially Complete, which in no event shall occur later than .
schedule showing a trade-by-trade breakdown of the estimated periods of commencement and completion of construction in the form of mi bit E attached hereto.
Wonstruction Soh8dul8" shall mean a construction
"Default R8te" shall mean the Maximum Rate.
"DirOCt Costso' shall mean all costs incurred for labor performed in the construction of the Improvements and the materials incorporated into the Improvements.
6
U01/79335
"Dr8W Requost Dou~ments@@ shall mean the documents in the form to be approved by the Purchaser with which Borrower may request a disbursement of the Loan.
indemnity from Borrower in favor of the Purchaser covering environmental matters in form and substance satisfactory to the Purchaser.
nEnviroamental Inb.Jnnity@@ shall mean an unsecured
@@Environment81 Laws@@ shall mean any and all present and future federal, state and local laws, ordinances, regulations, policies and any other requirements of Governmental Authorities relating to the health, safety, the environment or to any Hazardous Substances, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation Recovery Act (RCRA), the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Endangered Species Act, the Clean Water Act, the Occupational Safety and Health Act, the California Environmental Quality Act and the applicable provisions of the California Health and Safety Code, California Labor Code and the California Water Code, and the rules, regulations and guidance documents promulgated thereunder.
@@Event of Def8ultW@ shall mean the occurrence of any of the events listed in Section 1Q.
@@Pund8 Aeaounts@@ shall mean the budget for the Project approved by the Purchaser and as modified from time to time pursuant to the terms of this Agreement. ..
general construction contract by and between Borrower and the
General Contractor.
"GO~hOr81 Contr8ct@@ shall mean a guaranteed maximum cost
@@Gonoral Contraator@@ shall mean Hamann Construction, Inc.
@@Go~ernmontal Authority@@ shall mean each federal, state or local body or agency which has jurisdiction over the Project or the use, occupancy or operation thereof, or the power to regulate, govern, approve or control the Project or any aspect thereof.
@@Irnprovements@~ shall mean the improvements to be constructed on the Property, a portion of the costs of which shall be paid for with Loan proceeds, including, without limitation, all msite improvementsw as defined in California Civil Code Section 3102, "works of improvementn as defined in California Civil Code Section 3106, related on-site and off-site
.. 7
LAO1 179335
improvements, curbs, landscaping and underground utilities, all in accordance with the Plans and Specifications.
@@Indirmct Costs@@ shall mean all costs incurred for ancillary services performed in connection with the construction of the Improvements, such as appraisal, marketing, engineering, environmental consulting, architectural, survey, legal, permit, franchise and license fees, title insurance premiums and the like and interest and loan fees.
@@L08n DOCIUP3mnt8@@ shall mean the Agreement, this Contract, the Deed of Trust, the Indenture and the Guaranty Agreement, and any other documents, instruments, agreements, certificates or assignments relating to the Loan.
"~lans 8nd ~pmcifications@m shall mean the final plans and specifications for the Project, with evidence of appropriate approvals of each Governmental Authority shown thereon, as approved by the Purchaser in its sole discretion and as changed from time to time with the prior written approval of the Purchaser.
@@Potanti81 8818ncing Dmf8Ult" shall mean the failure to deliver to the Purchaser, within five (5) days after notice that the Loan is not "in balance", (i) evidence that the Borrower has
expended its own funds in the Project or (ii) the amount of cash, cash equivalents or other security satisfactory to the Purchaser, in its sole discretion, necessary to put the Loan "in balance" pursuant to Section 9(e).
"Potmnti81 D~f8Ultm@ shall mean the existence of any event which, with the giving of notice, the passage of time, or both, would constitute an Event of Default under any of the Loan Documents.
@@Projmct Costs@@ shall mean the total, as shown on the Funds Accounts, of all costs, expenses and fees required to construct the Improvements and'operate the Project until the Maturity Date, including payment of interest on the Loan.
*@8tored Y8tmri8lsm@ shall mean materials purchased or to be purchased by Borrower or the General Contractor at the date of a request for disbursement,,,but not yet installed or incorporated into the Project.
@@8ubstantially Complmtm@@ or @'lubstant i.1 Complmt ion@@ shall mean such time as the Purchaser shall have approved the completed work under the General Contract and shall have received a Certificate of Substantial Completion.
8
\.
''Tit18 Company" shall mean the title insurance company selected by Borrower and approved by the Purchaser in the Purchaser's sole discretion to provide the Title Insurance Policy.
m@Titlo Insuraaam Poliaygm shall mean a title insurance policy in the form of an American Land Title Association Loan Policy of Title Insurance, insuring the Purchaser that on the
Closing Date Borrower owns fee simple title to the Property (or, as the case may be, a valid leasehold estate therein) and that the Deed of Trust is a valid first lien on the Property (or8 as the case may be, the leasehold estate therein) in the amount of
$2#070,000~00~ endorsements and shall be subject to such reinsurance agreements as the Purchaser reasonably requires and shall be subject only to such exceptions to coverage as approved by the Purchaser in writing prior to the Closing Date.
The Title Insurance Policy shall contain such
..
.. .
9