HomeMy WebLinkAboutResolution - 82-79 - Amending 82-55 - ITT Schadow MIDB's - 05/04/1982 RESOLUTION
A RESOLUTION AMENDING A CERTAIN RESOLUTION OF THE
CITY OF EDEN PRAIRIE, MINNESOTA, ADOPTED MARCH 16, 1982,
RELATING TO THE ISSUANCE OF A CITY OF EDEN PRAIRIE,
MINNESOTA INDUSTRIAL DEVELOPMENT REVENUE BOND
(INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION
PROJECT), SERIES 1982, IN THE PRINCIPAL AMOUNT OF
$2,000,000.
WHEREAS, the City of Eden Prairie, Minnesota, a duly incorporated
municipality of the State of Minnesota (the "Issuer") is authorized, pursuant to the
Minnesota Municipal Industrial Development Act (Minnesota Statutes 1967,
Chapter 474) (the "Act"), to enter into a revenue agreement (as defined in -the Act)
with any person, firm or public or private col poration and to issue revenue bonds in
anticipation of the collection of revenues of any authorized project under the Act;
and
WHEREAS, in accordance with the provisions of the Act, the Issuer has
heretofore adopted a resolution, dated March 16, 1982 (the "Bond Resolution"),
entitled:
A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF A
REVENUE BOND PURSUANT TO THE MINNESOTA MUNICIPAL
INDUSTRIAL DEVELOPMENT ACT TO PROVIDE FUNDS TO BE
LOANED TO INTERNATIONAL TELEPHONE AND TELEGRAPH
CORPORATION, A DELAWARE CORPORATION, FOR AN
INDUSTRIAL PROJECT AND APPROVING THE LOAN AGREEMENT,
THE ESCROW AGREEMENT AND THE PLEDGE AND ASSIGNMENT,
authorizing among other things the issuance of a City of Eden Prairie Industrial
Development Revenue Bond (International Telephone and Telegraph Corporation
Project), Series 1982, in the principal amount of $2,000,000 (the "Bond") .for the
purpose of financing the cost of acquiring, constructing and installing an expansion
to the existing industrial facility operated by ITT Schadow, Inc. a Minnesota
corporation and the wholly-owned subsidiary of the Company in the City of Eden
Prairie, Minnesota (the "Project"); and
WHEREAS, Section 5 of the Bond Resolution provides for the
authorization of a Loan Agreement by and arnong the Issuer, International Telephone
and Telegraph Corporation, a Delaware corporation (the "Company") and First
Interstate Bank of California, a California banking corporation (the "Bank") in
substantially the form attached thereto; and
WHEREAS, the Bond Resolution and the Loan Agreement provided that
the Bond shall bear interest at the 'Regular Rate' (defined therein); and
(
WHEREAS, the Issuer has been informed by the Company that due to
econornic factors and an unanticipated delay in the issuance of the Bond, the rate of
interest borne by the Bond must be changed; and
WHEREAS, the prepayment penalty rate specified in the Bond, the Bond
Resolution and the Loan Agreement must also be changed;
NOW, THEREFORE, 6E IT RESOLVED, as follows:
Section 1. The interest rate to be borne by the Bond is hereby adjusted
as hereinafter set forth and all necessary changes in the Loan Agreement, the
Promissory Note authorized thereunder and the Bond are herein authorized to
accommodate such change. The Bond shall bear interest at the "Regular Rate"
(hereinafter defined), payable semiannually on May 1 and November 1 in each year,
until paid, commencing November 1, 1982. " 'Regular Rate' means the product of W
either G) for the period from the date hereof to, but not including May 1, 1987 that
rate of 9.24% per annum or GO from May 1, 1987 the rate equal to 65% of the
'Prime Rate' (hereafter defined), multiplied by (y) the 'Margin Rate Factor'
(hereafter defined). 'Prime Rate' means at any time, the rate of interest most
recently announced by the Bank as such, with the understanding that the Bank's
Prime Rate is one of its base rates and serves as the basis upon which effective
rates of interest are calculated for its loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as the Bank may designate. All changes in the Prime
Rate shall be effective as of 12:01 a.m. prevailing time in Los Angeles, California,
on the day on which such announcement shall be -made. 'Margin Rate Factor' shall
mean the product of G) 1.0 minus the 'Maximum Federal Corporate Tax Rate'
(hereafter defined), times (ii) 1.85185. 'Maximum Federal Corporate Tax Rate' shall
mean the maximum rate of income taxation imposed on the taxable income of
corporations pursuant to Section II(b) or any successor provision of the Internal
Revenue Code of 1954, as amended, as in effect from time to time. The Margin
Rate Factor shall be 1.0 so long as the Maximum Federal Corporate Tax Rate shall
be 46%, and thereafter shall change from tirne to time effective as of the effective
date of any change in the Maximum Federal Corporate Tax Rate"; and
Section 2. The decrease of the prepayment penalty specified in the Loan
Agreement, the above-referred to Promissory Note and the Bond from 17.50% to
16.125% is hereby authorized.
Section 3. The execution, delivery and performance of the Loan
Agreement by and among the Issuer, the Company and the Bank, as authorized by
the Bond Resolution is hereby confirmed as amended hereby. The Loan Agreement
shall be in substantially the form attached hereto as Exhibit "A", subject to such
minor changes, insertions or omissions as may be approved by the Mayor and the
City Manager of the Issuer and the execution of the Loan Agreement by the Mayor,
the City Manager and the City Clerk of the Issuer as hereby authorized shall be
conclusive evidence of any such approval.
Section 4. All other terms and provisions of the Bond Resolution, as
herein supplemented, are in all respects hereby ratified and reaffirmed, and the
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Bond Resolution and this Resolution shall be taken, read and construed as the same
resolution.
Mj-4y
Adopted this ` /�' day of -Ap4l, 1982.
CITY OF EDEN PRAIRIE,
MIN NESOTA
By: v
i
(CORPORATE SEAS,) or
Attel#:
City Clerk
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LOAD: AGREEMENT
by and among
CITY OF EDEN PRAIRIE, MINNESOTA
and
INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION
and
FIRST INTERSTATE BANK OF CALIFORNIA
i
Dated as of May 1, 1982
This document prepared by:
King do Spalding
2500 Trust Company Tower
Atlanta, Georgia 30303
Exhibit "A„
f
TABLE OF CONTENTS
Page
PARTIES 1
ARTICLE I. REPRESENTATIONS AND WARRANTIES
Section 1.1. Representations and Warranties of Issuer 2
Section 1.2. Representations and Warranties of Company 3
Section 1.3. Representations and Warranties of Bank 5
ARTICLE II. THE TRANSACTION; ACQUISITION, CONSTRUCTION,
INSTALLATION AND SALE OF THE PROJECT
Section 2.1. Sale and Purchase of tt-ie Bond and Additional Bonds 6
Section 2.2. Acquisition, Construction and Installation
of the Project; Completion Date 6
Section 2.3. Deposit of Proceeds 8
Section 2.4. Project Costs Authorized 8
Section 2.5. Project Fund Investments 9
Section 2.6. Form of Bond 10
Section 2.7. Execution of Bond; Limited Obligation;
Mutilated, Lost, Stolen or Destroyed Bond 10
Section 2.8. Registration and Transfer of Bond 10
Section 2.9. Payments 11
Section 2.10. Additional Payments to Issuer 11
Section 2.11. Prepayment of Bond 12
Section 2.11. Payment or Prepayments Hereunder 13
ARTICLE III. GENERAL COVENANTS
Section 3.1. Certain Covenants with Respect to the
Bond 13
Section 3.2. Payment of Bond 14
Section 3.3. Payment Obligations of the Company 14
Section 3.4. Unconditional Obligation of Company 14
Section 3.5. Issuer's Expenses; Indemnification 15
Section 3.6. Financial Information 16
Section 3.7. Merger; Sale of Assets 16
Section 3.8. Maintenance of Existence, Permits and Licenses 17
Section 3.9. No Impairment 17
Section 3.10. Maintenance of Project; Insurance 17
Table of Contents - Page 1
1
Page
Section 3.11. Taxes, Other Governmental Charges and Utility
Charges 17
Section 3.12. Immunity of Members, Officers, Agents, and
Employees of Issuer 17
Section 3.13. Proceeds of Insurance, Condemnation Awards 18
Section 3.14. Reports to Governmental Agencies 18
ARTICLE IV. COVENANTS WITH RESPECT TO CAPITAL EXPENDITURES;
DETERMINATION OF TAXABILITY
Section 4.1. Covenants of Company with Respect
to Capital Expenditures 18
Section 4.2. Determination of Taxability 20
ARTICLE V. DEFAULTS AND REMEDIES
Section 5.1. Events of Default 21
Section 5.2. Notice of Default 22
Section 5.3. Remedies on Default 22
Section 5.4. No Remedy Exclusive 23
Section 5.5. Company to Pay Attorney's Fees and Expenses 23
Section 5.6. Waiver of Certain Rights 23
ARTICLE VI. ADDITIONAL BONDS
Section 6.1. Additional Bonds for Plant Costs 23
Section 6.2. Refunding Bonds 24
ARTICLE VI1. MISCELLANEOUS
Section 7.1. Term of this Agreement 25
Section 7.2. No Waiver 25
Section 7.3. Payments Due on Saturdays, Sundays and Holidays 25
Section 7.4. Notices 25
Section 7.5. Costs and Expenses 25
Section 7.6. Survival of Representations and Warranties 26
Section 7.7. Amendments 26
Section 7.8. Execution Counterparts 26
Section 7.4. Severability 26
Section 7.10. Successors and Assigns 26
Section 7.11. Applicable Law 26
Section 7.12. Limitation of Issuer's Liability 26
SIGNATURES AND SEALS 27
Table of Contents - Page 2
Page
EXHIBIT A - FORM OF BOND A-1
EXHIBIT C - PLEDGE AND ASSIGNMENT C-1
EXHIBIT D - REQUISITION AND CERTIFICATION D-1
EXHIBIT E - CERTIFICATE OF COMPLETION E-1
EXHIBIT F - PROJECT SUMMARY F-1
Table of Contents - Page 3
THIS LOAN AGREEMENT, dated as of May 1, 1982 (the "Agreement"), by
and arnong the City of Eden Prairie, Minnesota, a municipality of the State of
Minnesota (the "Issuer"), International Telephone and Telegraph Corporation, a
corporation organized and existing under the laws of the State of Delaware and duly
qualified to do business in the State of Minnesota (the "Company") and First
Interstate Bank of California, Los Angeles, California, a state banking corporation
organized and existing under the laws of the State of California (the "Bank") (the
Bank and any subsequent registered holder of the Bond hereinafter defined being
sometimes hereinafter referred to as the "Bondholder");
WITNES SET H:
WHEREAS, the Issuer is authorized, pursuant to the Minnesota Municipal
Industrial Development Act (Minnesota Statutes 1967, Chapter 474) (hereinafter
referred to as the "Act"), to enter into a revenue agreement (as defined in the Act)
with any person, firm or public or private corporation and to issue revenue bonds in
anticipation of the collection of revenues of any authorized project under the Act;
and
WHEREAS, the Company proposes the acquisition, construction and
installation of an expansion to the existing industrial facility of ITT Schadow, Inc.,
a Minnesota corporation and the wholly-owned subsidiary of the Company
("Schadow") in the City of Eden Prairie, Minnesota (the "Project"); and
WHEREAS, the Project has been approved by the Commissioner of
Securities of the State of Minnesota, in accordance with the provisions of the Act;
and
WHEREAS, after careful study, the Issuer, in furtherance of the purposes
expressed in the Act, and pursuant to an ordinance duly adopted, has agreed to enter
into this Agreement with the Company and the Bank, pursuant to which the Issuer
agrees to finance the acquisition, construction and installation of the Project on
land owned by Schadow, for the exclusive use and occupancy of Schadow hereunder;
and
WHEREAS, plans and specifications dated as of May 1, 1982 relating to
the Project have been prepared by Schadow, and it is estimated that the cost of
acquiring, constructing and installing the Project will be at least $2,000,000 (said
plans and specifications have been approved by the Issuer and are on file and of
record in the office of the City Clerk and are attached hereto as Exhibit F); and
WHEREAS, the Company on behalf of Schadow has proceeded with plans
for the acquisition, construction and installation of the Project; and
WHEREAS, the Issuer, by resolution duly adopted on March 16, 1982 (the
"Bond Resolution"), has agreed to provide financing of the cost of the acquisition,
construction and installation of the Project described in -the Plans and Specifications
by the issuance and sale of its City of Eden Prairie, Minnesota Industrial
Development Revenue Bond (International Telephone and Telegraph Corporation
l
Project), Series 1982 (the "Bond") in the principal amount of $2,000,000, which Bond
shall be in the form attached hereto as Exhibit B; and
WHEREAS, the proceeds of the Bond will be deposited in a special
"Project Fund" account created in an Escrow Agreement, dated as of May 1, 1982
(the "Escrow Agreement") by and among the Issuer, the Company and First
Interstate Bank of California, Los Angeles, California, as project fund custodian (the
"Project Fund Custodian"), and used by the Company on behalf of Schadow to
acquire, construct and install the Project; and
WHEREAS, the payments required to be made by the Company under this
Agreement will be sufficient to pay the principal of and interest on the Bond; and
WHEREAS, the Bank has agreed to participate in the financing of the
cost of the Project by purchasing the Bond from the Issuer under the terms and
conditions hereinafter set forth and is therefor made a party to this Agreement; and
WHEREAS, the Bond will be fully registered in the name of the Bank and
certain of the rights of the Issuer under this Agreement and the payments, revenues
and receipts derived hereunder (including moneys held from time to time in the
Project Fund) will be pledged and assigned to the Bank, or any subsequent registered
owner of the Bond, under the terms of a pledge and assignment (the "Pledge") from
the Issuer to the Bank, which Pledge shall be in the form attached hereto as Exhibit
C;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto covenant and agree as
follows:
ARTICLE I.
Representations and Warranties
Section 1.1. Representations and Warranties of Issuer. As the basis
for its covenants and agreements herein contained the Issuer represents and
warrants to the Company and the Bank that:
(a) The Project has been approved by the Commissioner of Securities
and Real Estate of the State of Minnesota.
(b) The Issuer, by a resolution duly adopted on September 1, 1981, took
official action providing for the financing of the acquisition, construction and
installation of the Project, and the issuance of the Bond.
(c) The execution and delivery of, and the performance of the
obligations and agreements of the Issuer set forth or referred to in, this
Agreement, the Bond, the Pledge and the Escrow Agreement have been duly
authorized by all necessary proceedings.
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Section 1.2. Representations and Warranties of Company. As a basis
for its covenants and agreements herein contained, the Company represents and
warrants to the Issuer and the Bank that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified to
do business in and is in good standing under the laws of the State of Minnesota,
and has the power to enter into this Agreement and the Escrow Agreement and
to take all action contemplated by this Agreement and the Escrow Agreement,
and has been duly authorized to execute, deliver and perform this Agreement
and the Escrow Agreement and no further action on the part of the Company
is required in connection with the authorization, execution, delivery and
performance of this Agreement and the Escrow Agreement.
(b) The Company is not subject to any charter, by-law or contractual
limitation or provision of any nature whatsoever which in any way limits,
restricts or prevents the Company from entering into this Agreement or the
Escrow Agreement or performing any of its obligations hereunder or
thereunder and the execution and delivery of this Agreement and the Escrow
Agreement, the consummation of the transactions contemplated hereby and
thereby, and the fulfillment of or compliance with the terms and conditions of
this Agreement ;-.nd the Escrow Agreement will not conflict with or result in a
breach of the terms, conditions or provisions of any corporate restriction or
any agreement or instrument to which the Company is a party or by which it is
bound, or constitute a default under any of the foregoing.
(c) There is no event of default existing under any indenture or
instrument evidencing indebtedness, under which the Company has outstanding
$1,000,000 or more in original aggregate principal amount of indebtedness for
money borrowed.
(d) The Company has delivered to the Bank a copy of the audited
financial statements of the Company and its consolidated subsidiaries as of
and for the period ending December 31, .1980 (including a balance sheet and
profit and loss statement) and unaudited financial statements (including a
balance sheet and profit and loss statement) of the Company and its
consolidated subsidiaries as of, and for the periods ending March 31, 1981,
June 30, 1991 and September 30, 1981. Such financial statements have been
prepared in accordance with generally accepted accounting principles on a
basis consistent, except as otherwise noted therein, with that of the previous
fiscal year, and fairly reflect on a consolidated basis the financial condition of
the Company and its subsidiaries as of the dates thereof, and the results of
operations for the periods covered thereby, except that the unaudited financial
statements are subject to year-end adjustment.
(e) The Company his no contingent liabilities other than those
disclosed in the financial statements hereinabove referred to or in comments
or footnotes thereto, except s ich claims or liabilities which do not materially
adversely affect the business or financial condition of the Company and its
consolidated subsidiaries. Since September 30, 1981, there has not been any
change in the financial condition or assets and liabilities of the Company and
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its subsidiaries which would materially adversely affect the business and
properties of the Company and its consolidated subsidiaries, and there is no
action,, suit or proceeding pending or, to the knowledge of the Company
threatened, against the Company which would materially adversely affect the
business and properties of the Company and its consolidated subsidiaries.
(f) None of the proceeds from the sale of the Bond will be used to
"purchase or carry" any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System nor to extend credit to
others for the purpose of "purchasing or carrying" any "margin stock" nor is
the Company engaged in the business of extending credit for the purpose of
"purchasing or carrying" any "margin stock" within the meaning of said
Regulation U.
(g) There is no action, suit or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company before any
court or administrative agency which would materially adversely affect the
ability of the Company to perform its obligations under this Agreement or the
Escrow Agreement.
(h) This Agreement and the Escrow Agreement constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except as enforcement may be limited by bankruptcy or other
laws of general application affecting creditors' rights.
W All authorizations, consents, approvals and findings of
governmental bodies or agencies required in connection with the following
matters have been obtained: (i) the execution and delivery of this Agreement
and the Escrow Agreement by the Company, and the consummation of the
transactions contemplated hereby and thereby, and (ii) the acquisition,
construction and installation of the Project by the Company on behalf of
Schadow. All of the authorizations, consents, approvals, findings and
certifications referred to above have not been modified or rescinded and are in
full force and effect.
(j) Substantially all of the proceeds of the sale of the Bonds will be
used to finance the acquisition, construction and installation of the Project,
and the Project consists of land or property of a character subject to the
allowance for depreciation provided by Section 167 of the Internal Revenue
Code of 1954, as amended (the "Code"). No part of the proceeds of the Bonds
is to be used by the Company, directly or indirectly, as working capital or to
finance inventory.
(k) The information furnished by the Company and used by the Issuer
in preparing the election which it will file with the Internal Revenue Service
pursuant to Section 103(b)(6)(D) of the Code will be true and complete as of
the date of the filing of said election.
(1) The issuance of the Bond by the Issuer and the use of the proceeds
from the sale of the Bonds to finance the cost of the acquisition, construction
and installation of the Project has induced the Company on behalf of Schadow
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to acquire, construct and install the Project in the City of Eden Prairie,
Minnesota, which will directly result in an increase in employment within the
boundaries of the City of Eden Prairie, Minnesota of a substantial number of
persons.
(m) The Company, through Schadow, intends to operate the Project
from the Completion Date (as defined in Section 2.2(f)) to the expiration or
sooner termination of this Agreement as a manufacturing facility.
(n) The acquisition, construction and installation of the Project was
not commenced or contracted for prior to the resolution of the Issuer adopted
September 1, 1981.
(o) The acquisition, construction and installation of the Project has
begun and is anticipated to be completed on �, The net
proceeds from the Issuance of the Bond do not exceed the cost of the Project
and are needed for the purpose of paying all or a part of the cost of the
acquisition, construction and installation of the Project; except as
contemplated herein, the Project will not be sold or otherwise disposed of, in
whole or in part, prior to the payment in full of the Bond.
(p) To the best of our knowledge neither any of the "employee pension
benefit plans" of the Company, as such term is defined in Section 3 of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA")
nor any trusts created thereunder, nor any trustee or administrator thereof,
P has engaged in a "prohibited transaction," as such term is defined in Section
4975 of the Code which could subject such pension plans or any of them or any
such trust, or any trustee or administrator thereof, or any party dealing with
such pension plans or any such trust to -the tax or penalty on prohibited
transactions .irnposed by said Section 4975, nor have any of such pension plans
or any such trusts been terminated nor have there been any "reportable
events," as that term is defined in Section 4043 of ERISA, since the effective
date of ERISA; neither any of such pension plans nor any such trusts has
incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA (whether or not waived), since the effective date of
ERISA.
Section 1.3. Representations and Warranties of Bank. As the basis
for its covenants and agreements herein contained, the Bank represents and
warrants to the Issuer and the Company that:
(a) The Bank is a state banking corporation duly organized and existing
under the laws of the State of California and is authorized by its charter to
take all action contemplated by this Agreement and by proper corporate
action has been duly authorized to execute this Agreement.
(b) The Bank is not a "substantial user" of the Project, nor is it a
"related person" of any "substantial user" thereof or of the Company (as those
terms are defined in Section 103(b) of the Code and in the regulations with
respect thereto).
i
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ARTICLE II
The Transaction; Acquisition, Construction,
Installation and Sale of the Project
Section 2.1. Sale and Purchase of the Bond and Additional Bonds.
(a) In order to provide financing of the cost of acquiring, constructing
and installing the Project, the Issuer hereby agrees to issue its fully. registered
Bond and to sell the Bond to the Bank and -the Bank hereby agrees to purchase
the Bond from the Issuer at a purchase price of 100% of the principal amount
thereof and in accordance with the terms and provisions hereof.
(b) If no Event of Default hereunder shall have occurred and be
continuing, the Company, to the extent permitted by law may request the
Issuer to authorize the issuance of Additional Bonds in aggregate principal
amounts as requested by the Company and upon the terms and conditions
provided herein, and the provisions and terms of such Additional Bonds shall
conform to the applicable provisions and limitations of the Act. Additional
Bonds may be issued for the purpose of (a) providing moneys to pay any of the
Project Costs (as defined in Section 2.7 hereof) not previously provided for by
the issuance of the Bond, or (b) refunding the Bond or any Additional Bonds
then outstanding; provided, in either case, that either prior to or
contemporaneously with the issuance of Additional Bonds (i) the terms,
x conditions, manner of issuance, purchase price, delivery and contemplated
disposition of the proceeds of the sale of such Additional Bonds shall have been
approved in writing by the President, any Vice President or the Treasurer of
the Company, and (ii) the conditions specified in .Article VI hereof with respect
to the issuance of such Additional Bonds shall have been ;z-?risfied. All of the
portion of the proceeds of such Additional Bonds issued for the purpose of
financing the refunding of the Bond must be used for the payment in full of the
Bond within 180 days of the date of the issuance of such Additional Bonds. As
security for the payment of such Additional Bonds, the Company will execute
and deliver to the Issuer a new agreement or an amendment to this Agreement
representing its unconditional obligation to pay to the Issuer amounts
sufficient to provide for payment when due of the principal of, redemption
premium (if any) and the interest on such Additional. Bonds, including any
arrears in interest or penalties in the form of interest or otherwise, payable
under such Additional Bonds.
Section 2.2. Acquisition, Construction and Installation of the
Project; Completion Date.
(a) The Company, on behalf of Schadow, agrees to acquire, construct
and install the Project or to cause the Project to be acquired, constructed and
installed by Schadow, in accordance with the plans and specifications as
amended from time to time by the Company and approved by the Issuer, which
approval shall not be unreasonably witheld or delayed; provided, however, that
no material amendment shall be made in the plans and specifications unless
there shall be filed with the Issuer and the Bank the unqualified opinion of a
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firm of nationally recognized bond attorneys stating that such amendment and
the expenditure of moneys frorn the Project Fund created pursuant to the
provisions of the Escrow Agreement to pay the cost of acquiring, constructing
and installing the Project in accordance with the plans and specifications, as
so amended, will not change the nature of the Project as an authorized
"project" within the meaning of the .Act and will not impair the exemption of
the interest on the Bond from Federal income taxation pursuant to Section
1O3(b)(6)(A) of the Code.
(b) The Company agrees to cause the acquisition, construction and
installation of the Project -to be completed as promptly as practicable after
receipt of the proceeds from the sale of the Bonds, delays incident to strikes,
riots, acts of God or the public enemy beyond the reasonable control of the
Company only excepted, but if said acquisition, construction and installation
are not completed there shall be no resulting liability on the part of the Issuer
and no diminution in or postponement of the payments required to be made
hereunder.
(c) The Company recognizes that since the Project is being acquired,
constructed and installed by contractors and suppliers selected by it or
Schadow in accordance with plans and specifications prepared by architects or
engineers selected by it or Schadow, the Issuer makes no representation or
warranty with respect to the condition or workmanship of any part of the
Project or its suitability for the purposes of Schadow or the extent to which
proceeds derived from the sale of the Bond will pay the costs incurred in
connection with the Project.
(d) The Company agrees that the completion of the Project shall be
evidenced by the execution of a Certificate of Completion, the form of which
is attached hereto as Exhibit E (and is attached to the Escrow Agreement as
Exhibit B). Should any moneys remain in the Project Fund after the
Completion Date (that being the date of completion of the Project as certified
by the Company) such excess (except for amounts retained in the Project Fund
for Project costs noi t;erg due and payable) shall be applied as a prepayment of
principal on the Bond as required by Section 2.1.0(2) hereof; provided, however,
that should moneys remain in the Project Fund which exceed $100,000, such
moneys shall not be used to prepay the Bond or for any other purpose unless an
opinion of nationally recognized bond counsel satisfactory to the Bank is
obtained stating that such use will not impair the exemption of interest on the
Bond from Federal income taxation under Section 1O3(b)(6) of the Code.
(e) In the event that moneys in the Project Fund available for payment
of the costs of the Project should not be sufficient to pay the costs thereof in
full, and if Additional Bonds are not issued to finance the completion of the
Project, the Company agrees to complete the Project and to pay all that
portion of the costs of the Project as may be in excess of the moneys available
therefor in the Project Fund. The Issuer does not make any warranty, either
express or implied, that the moneys which will be paid into the Project Fund
and which, under the provisions of this Agreement, will be available for
payment of the costs of the Project, will be sufficient to pay all the costs
which will be incurred in that connection. The Company agrees that if after
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exhaustion of the moneys in the Project Fund, the Company should pay any
portion of the costs of the Project pursuant to the provisions of this Section, it
shall not be entitled to any reimbursement therefor from the Issuer or from
the Bondholder nor shall it be entitled to any diminution in or postponement of
the payments required hereunder to be paid by the Company.
Section 2.3. Deposit of Proceeds. Upon the execution and issuance
of the Bond and the delivery of the Bond to the Bank, the Bank shall transfer funds
in the amount of $2,000,000 to the hereinafter described account of the Issuer
maintained with the Bank, designated in the Escrow Agreement as Project Fund
Custodian (hereinafter referred to, when acting in such capacity, as the "Project
Fund Custodian"). Said amount shall be immediately deposited in a special trust
account designated "City of Eden Prairie, Minnesota - ITT Corporation - Project
Fund," (hereinafter referred to as the "Project Fund") which the Project Fund
Custodian will create pursuant to the provisions of the Escrow Agreement and hold
as a special trust account, for the purposes set forth herein and in the Escrow
Agreement.
Section 2.4. Project Costs Authorized. The moneys in the Project
Fund are authorized to be used for the following purposes, but for no other purposes;
such costs being sometimes referred to as the "Project Costs":
(a) payment to the Company of such amounts, if any, as shall be
necessary to reimburse the Company in full for all advances and payments
made by it, either prior to or after the delivery of the Bond, for expenditures
in connection with acquisition by the Company of appropriate title in and to
the real property comprising the Project (including the cost of such acquisition
and of any rights-of-way for the purpose of providing access to and from such
real property and all recording costs), clearing the same, site improvement,
the preparation of plans and specifications for the Project (including any
preliminary study or planning of the Project or any aspect thereof), the
construction of necessary structures, the acquisition and installation of
machinery and equipment and the acquisition, construction and installation
necessary to provide utility services or other facilities including trackage to
connect the Project with public transportation facilities, and all real or
personal properties deemed necessary in connection with the Project, or any
one or more of said expenditures (including architectural, engineering and
supervisory services) with respect to any of the foregoing;
(b) payment of, or reimbursement to the Company for, the legal and
accounting fees and expenses, financial consultants' fees, financing charges
and reproduction costs incurred in connection with the authorization, sale and
issuance of the Bond, all expenses incurred in connection with the preparation
of this Agreement and the Escrow Agreement and all other documents in
connection therewith;
(c) payment for labor, services, materials and supplies used or
furnished in site improvement and in the construction of any structures, all as
provided in the plans and specifications therefor, payment for the cost of the
acquisition and installation of items of machinery and equipment described in
Exhibit F hereto, payment for the cost of acquisition, construction, and
r'
installation of utility services or other facilities including trackage to connect
the Project with public transportation facilities, and all real and personal
properties deemed necessary in connection with the Project and payment for
the miscellaneous expenses incidental to any of the foregoing;
(d) payment of the fees, if any, for architectural, engineering and
supervisory services with respect to the Project;
(e) payment of the taxes, assessments and other charges, if any, that
may become payable with respect to the Project prior to the Completion Date;
(f) payment of expenses incurred with approval of the Company in
seeking to enforce any remedy against any supplier, contractor or
subcontractor in respect of any alleged default under a contract relating to
the Project;
(g) payment of the expenses of the Issuer incurred with respect to the
Project, including fees and expenses of counsel to the Issuer; and
(h) payment of any other lawful costs and expenses relating to the
Project; provided, however, that the proceeds from the sale of the Bond shall
not be used for the payment of interest on the Bond.
Each such payment from the Project Fund shall be made by the Project Fund
Custodian upon its receipt of the Requisition and Certification attached 'hereto as
Exhibit D (and attached as Exhibit A to the Escrow Agreement), properly executed
by an officer or agent of the Company to be designated by the Company in writing
to the Issuer, the Bank and the Project Fund Custodian (the "Authorized Company
Representative").
In making any such payment .from the Project Fund, the Project Fund
Custodian may rely upon any such Requisition and Certification delivered to it
pursuant to this Section, and the Project Fund Custodian shall be relieved of all
liability with respect to making such payments in accordance therewith without
inspection of the Project or any other investigation, and the Company hereby
covenants and agrees in the Escrow Agreement to hold harmless and indemnify the
Project Fund Custodian and its officers and employees, from any liability incurred in
connection with any such payment.
The Bank agrees that it will notify the Issuer, the Company and the
Project Fund Custodian immediately upon the existence of any default hereunder
being made known to it. After the Project Fund Custodian has received written
notice from the Bank, it will make no payments frorn the Project Fund until it has
received written notice from the Bank that such payments may continue.
Section 2.5. Project Fund Investments. In accordance with the
provisions of the Escrow Agreement, at the written request of and as directed by
the Authorized Company Representative (or, if the Company is in default under this
Agreement, the Authorized Issuer Representative), the Project Fund Custodian will
invest and reinvest separately any moneys held in the Project Fund in any
investments permitted by the laws of the State of Minnesota for the proceeds of
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obligations of a nature similar to the Bond. Such investments shall be held by or
under the control of the Project Fund Custodian and shall be deemed at all times a
part of the Project Fund and the interest accruing thereon and any profit realized
therefrom shall be credited to the Project Fund and any loss resulting therefrom
shall be charged against the Project Fund. The Project Fund Custodian is directed
in the Escrow Agreement to sell and convert to cash a sufficient amount of such
investments whenever the cash held in the Project Fund is insufficient to pay a
requisition for payment from the Project Funci when presented. Neither the Project
Fund Custodian nor the Issuer shall be liable or responsible for any loss resulting
from any such investment or resulting from the redemption or sale of any such
investment as herein authorized.
Section 2.6. Form of Bond. The Bond shall be dated the actual date
of issuance and delivery thereof and shall be designated the "City of Eden Prairie,
Minnesota Industrial Development Revenue Bond (International Telephone and
Telegraph Corporation Project), Series 1982". The Bond shall bear interest, be
payable in such amounts and at such times, shall be subject to prepayrnent, all as set
forth in the form attached hereto as Exhibit A, and said form of Bond shall be
deemed to be incorporated herein in its entirety.
Section 2.7. Execution of Bond; Limited Obligation; Mutilated, Lost,
Stolen or Destroyed Bond. The Bond shall be executed on behalf of the Issuer by the
signature of its Mayor and City Manager and attested with the signature of its City
Clerk, and shall have impressed thereon the corporate seal of the Issuer. In case any
officer of the Issuer whose signature shall appear on the Bond shall cease to be such
officer before the Bond is issued and delivered to the Bank, such signature shall
nevertheless be valid and sufficient for all purposes and the Bond may be issued and
delivered as though said officer had remained in office until such issuance and
delivery. The Bond shall be a limited obligation of the Issuer as provided therein.
If the Bond is mutilated, lost, stolen or destroyed, the Issuer shall at the
request of the Bondholder and in accordance with the provisions of this Section,
execute and deliver a new Bond in the principal amount at the time outstanding in
lieu of and in substitution for the Bond; provided that, in the case of a mutilated
Bond, the mutilated Bond shall first be surrendered to the Issuer, and in the case of
a lost, stolen or destroyed Bond, there shall be first furnished to the Issuer and the
Company evidence satisfactory to it of the ownership of the Bond and of such loss,
theft or destruction, together with indemnity satisfactory to them. The Issuer and
the Company may charge the Bondholder with their reasonable fees and expenses in
this connection.
Section 2.8. Registration and Transfer of Bond. The Bond shall be
issued in registered form, payable to the Bank, or registered assigns, as the
registered owner thereof. The Issuer shall keep books for the registration and for
the transfer of the Bond, as the Bond Registrar. The Bond may be transferred only
upon an assignment duly executed by the registered owner or his attorney in such
form as shall be satisfactory to the Company and the Issuer, such transfer to be
made on said registration books and endorsed on the Bond by the Issuer. Provided,
however, that no such transfer of the Bond shall be made without the express
written notice of intent to transfer given by the Bondholder to the Issuer and the
Company at least ten (10) days prior to the proposed date of transfer. Upon receipt
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of said notice the Company shall have the option to purchase the Bond at a price of
the principal arnount thereof at the time outstanding, plus accrued interest at the
rate then in effect in accordance with the provisions of the Bond, plus arrears in
interest and penalties in the form of interest or otherwise, if any, due and payable
with respect thereto as a result of the occurrence of a "Determination of
Taxability" (as defined in Section 4.2 hereof). The Company may exercise this right
by delivery, within five business days from the receipt of the notice, to the
registered owner of the Bond of a written notice of its intent to purchase the Bond,
and such purchase shall be consummated within a reasonable tirne thereafter. If no
such notice is received by the Bondholder from the Company, transfer of the Bond
may be made according to the foregoing provisions of this Section. The person in
whose name the Bond shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes and payment of the principal and interest on
the Bond shall be made only to or upon the order of the registered owner thereof or
his legal representative. All such payments shall be valid and effectual to satisfy
and discharge the liability of the Issuer upon the Bond to the extent of the sum or
sums so paid.
Section 2.9. Payments. On or before November 1, 1982 and on or
before the lst day of each November and May thereafter, to and including May 1,
1992, or such date upon which principal and interest on the Bond shall have been
paid in full, the Company shall pay to the Issuer hereunder a sum, equal to the
amount payable on such date as principal of and interest on the Bond, as provided in
the Bond (including any interest or penalties resulting from the occurrence of a
"Determination of Taxability" as set forth in the Bond, and including any penalty
interest as set forth in Section 3.3 hereof).
Simultaneously with the issuance of the Bond, the Issuer will execute and
deliver the Pledge to the Bank, as pledgee under the Pledge. It is understood and
agreed that certain of the payments required to be made to the Issuer hereunder are
assigned and pledged to the Bondholder under the Pledge. The Company hereby
agrees to such assignment and pledge, and further agrees that all payments under
this Section shall be made directly to the Bank for the account of the Issuer at the
address set forth in the Bond, without any presentment thereof, except upon
payment of the final installment of principal. The Bank agrees to notify the Issuer
of any failure by the Company to make any payment hereunder for application to
the payment of the Bond. Upon any assignment or transfer of the Bond a new
agreement shall be entered into with the Company, the Issuer and the Bondholder,
respecting the place of payment of the Bond.
Anything herein to the contrary, all payments made to the Bondholder as
payment of the principal of or interest on the Bond, shall be credited against the
payment due on such date or the next succeeding payment hereunder and shall
reduce the payment to be made by the Company hereunder; upon payment in full of
the principal of and interest on the Bond, including any penalties (in the form of
interest or otherwise) owing hereunder and under the Bond, the Company shall not
be obligated to make any further payments hereunder.
Section 2.10. Additional Payments to Issuer. The Company agrees to
pay, as additional payments under this Agreement, to the Issuer all expenses
incurred by the Issuer in relation to the Project and the issuance and sale of the
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Bond which are not otherwise required to be paid by the Company under the terms
of this .Agreement, including attorneys' fees and all permit and license fees required
under regulation or Codes of the Issuer.
Section 2. 11. Prepayment of Bond. The Bond is subject to
prepayment prior to maturity, as follows:
1. The Bond may be prepaid in whole or in part in multiples of
$100,000 at any time, upon 30 business days written notice from the Company
and the City to the Bondholder, and payment to the Bondholder of:
(i) the principal amount of the Bond to be prepaid, plus
(ii) accrued interest to the date of prepayment at the applicable
rate; plus
(iii) if paid prior to February 1, 1987 (except as hereinafter
provided), a prepayment premium, which shall be the amount
calculated by multiplying the Penalty Rate (hereinafter
described) by the principal amount of the Bond to be prepaid,
by the r:urnber of days from the date of the prepayment to
February 1, 1987, divided by 365. The Penalty Rate shall be
sixteen and one-eighth percentum (16-1/8%) minus the
Reinvestment Rate (hereinafter defined). The Reinvestment
Rate shall be the annual interest rate on the date of
prepayment of the Bond equivalent to the highest yield-to-
maturity obligation of the United States Government which
matures within thirty (30) days prior to February 1, 1987, and
which is available on the date of prepayment.
The foregoing prepayment premium shall not be payable if the Company
determines and, within thirty (30) days thereafter, notifies the Bondholder in
writing that:
(1) The Project has been damaged or destroyed to the extent
that it cannot, in the judgment of the Company, be restored to its
original condition within a period of four (4) consecutive months;
(2) All or substantially all of the Project has been condemned so
that the Company, in its judgment, cannot carry on normal operations
therein; or
(3) There shall have occurred changes in market conditions or in
the economic availability of labor, raw materials, operating supplies or
facilities required for the continued operation of the Project and such
changes, in the opinion of the Company, render the continued operation
of the Project uneconomical.
2. The Bond may also be prepaid in whole upon the occurrence of a
"Determination of Taxability" (as defined in Section 4.2 hereof), without the
giving of prior notice of prepayment and payment to the Bondholder• of:
(i) the principal amount of the Bond to be prepaid, plus
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(ii) accrued interest to the date of prepayment, at the applicable
rate in accordance with the provisions of the Bond; plus
(iii) any penalties (in the form of interest or otherwise) payable
by the Bondholder by reason of its having excluded any such
interest from its taxable income for the period beginning on
the date interest on the Bond is deemed to have become
taxable and ending with the date of the Determination of
Taxability.
3. The Bond shall also be prepaid in any amount to the extent excess
moneys in the Project Fund are so applied as set forth in Section 2.2(d) hereof,
upon written instructions from the Company to the Project Fund Custodian
that such excess moneys are to be directly applied to such prepayment.
Section 2.12. Payment or Prepayments Hereunder. In the event of
the exercise of any of the options to prepay the Bond in whole or in part set forth in
Section 2.11 hereof, the Company shall have the obligation to prepay the payments
due hereunder in par-c or in full in an amount necessary to prepay the Bond in
accordance with the provisions of Section 2. 11 hereof; all such payments shall be
made directly to the Bondholder, as pledgee of the Issuer.
ARTICLE HI
General Covenants
Section 3.1. Certain Covenants with Respect to the Bond.
(a) The Company covenants with the Issuer and the Bank that
substantially all of the proceeds of the Bond will be used to pay the costs of issuing
the Bond and the costs of acquiring, constructing and installing the Project as
defined herein and that Bond proceeds (including interest, if any, earned thereon)
will never be used so as to cause the loss of the exemption of interest on the Bond
from Federal income taxation under Section 103(b)(6)(D) of the Code and the
regulations thereunder.
(b) The Company reasonably expects, and hereby certifies and
represents to the Issuer and the Bondholder that it reasonably expects that the
proceeds of the Bond will not be used in a manner that would cause the Bond to be
classified as an "arbitrage bond" under Section 103(c) of the Code and regulations
thereunder. To the best knowledge and belief of the Company, there are no facts or
circumstances that would materially change the foregoing conclusion.
The Issuer hereby certifies to the Company that it has not been notified
of any listing or proposed listing of it by the Internal Revenue Service as a bond
issuer whose arbitrage certification may not be relied upon.
The Company certifies to and covenants with the Bondholder that so long
as any portion of the Bond remains outstanding, moneys on deposit in any fund or
account in connection with the Bond, whether or not such moneys were derived from
l
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the proceeds of the sale of the Bond or from any other sources, will not be used in a
manner which will cause the Bond to be an "arbitrage bond" within the meaning of
the Code and the regulations thereunder.
(c) The Company shall file or cause to be filed with the Internal
Revenue Service of the United States Treasury Department or any other authorized
governmental agency any and all statements or other instruments required under the
Code (including Section 103 thereof) and regulations thereunder, if any, in order that
the interest on the Bond shall continue to be excludable from the gross income of
the Bondholder for Federal income tax purposes.
Section 3.2. Payment of Bond. The Issuer covenants that it will
promptly pay the principal of, interest on and other amounts payable under the Bond
at the place, on the dates and in the manner provided therein according to the true
intent and meaning thereof. The principal of, interest on and other amounts payable
under the Bond are payable solely from payments derived hereunder, and otherwise
as provided in this Agreement which payments are specifically pledged to the
payment of the Bond in the manner and to the extent herein and in the Pledge
specified, and nothing in the Bond or in the Pledge shall be considered as pledging
any funds or assets other than the Issuer's interest in this Agreement. The Bond and
the interest thereon shall never be deemed to constitute an indebtedness of the
State of Minnesota, or of the City of Eden Prairie, Minnesota or any other political
subdivision, within the meaning of any state constitutional provision or statutory
limitation and shall never constitute nor give rise to a pecuniary liability of the
governing body of the State of Minnesota or the Issuer or a charge against its
general credit or taxing power, and neither the State of Minnesota or the City of
Eden Prairie, Minnesota nor any political subdivision thereof, shall be obligated to
pay the Bond or the interest thereon or other amounts payable thereunder, except
from the payments pledged therefor.
Section 3.3. Payment Obligations of the Company. The Company
agrees to make prompt payment of the payments required to be made hereunder
pursuant to the terms hereof. In the event the Company should fail to make any of
the payments required hereunder, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have been
fully paid, and the Company agrees to pay the same with interest on overdue
payments attributable to principal and, to the extent legally enforceable, interest,
and other payments due under the Bond at the rate per annum equal to the "Prime
Rate" of the Bank (hereinafter defined) plus 2% (hereinafter referred to as the
"Overdue Rate"), until paid. "Prime Rate" means at any time, the rate of interest
most recently announced by the Bank as such, with the understanding that the Bank's
Prime Rate is one of its base rates and serves as the basis upon which effective
rates of interest are calculated for its loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as the Bank may designate. All changes in the Prime
Rate shall be effective as of 12:01 a.m. prevailing time in Los Angeles, California,
on the day on which such announcement shall be made.
Section 3.4. Unconditional Obligation of Company. The obligations
of the Company to make the payments required to be made hereunder and to
perform and observe the other agreements on its part contained herein shall be
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absolute and unconditional without regard to the validity, regularity or
enforceability of the Bond or the Pledge and without regard to any advance, set off
or counterclaim which may at any time be available to or be asserted by the
Company against the Issuer or by the Issuer against the Bank and which constitutes,
or might be construed to constitute an equitable or legal discharge of the Company
or the Issuer for payments by the Issuer under the Bond or by the Company under
this Agreement, in bankruptcy or in any other instance. Until such time as the
principal of and interest on the Bond shall have been fully paid, the Company (i) will
not suspend or discontinue any payments required to be made hereunder, GO will
perform and observe all its other agreements contained in this Agreement and (iii)
will not terminate its obligations hereunder for any cause including, without limiting
the generality of the foregoing, any acts or circumstances that may constitute
failure of consideration, destruction of or damage to the Project, any change in the
tax or other laws of the United States of America or of the State of Minnesota or
any political subdivision of- either, or any failure of the Issuer to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection with this Agreement. Nothing contained in
this Section shall be construed to release the Issuer from the performance of any of
the agreements on its part contained herein.
Section 3.5. Issuer's Expenses; Indemnification. The Company agrees
to indemnify and hold harmless the Issuer, its officers, employees and agents,
against any and all losses, claims, damages or liability to which the Issuer, its
officers, employees and agents may become subject under any law in connection
with the issuance and sale of the Bond, the carrying out of the transactions
contemplated by this Agreement and the conduct of any activity in the Project, and
to reimburse the Issuer, its officers, employees and agents for any out-of-pocket
legal and other expenses (including reasonable counsel fees) incurred by the Issuer,
its officers, employees and agents in connection with investigating any such losses,
claims, damage or liability or in connection with defending any actions relating
thereto, including, but without limitation and by way of example only, the following:
(1) any injury to or death of any person or damage to property in or
upon the Project or growing out of or connected with the use, nonuse,
condition or occupancy of the Project or any part thereof;
(2) violation of any agreement or condition of this Agreement;
(3) violation of any contract, agreement or restriction by the Company
relating to the Project;
(4) violation of any law, ordinance or regulation affecting the Project
or a part thereof or the ownership, occupancy or use thereof; and
(5) any statement or information relating to the expenditure of the
proceeds of the Bond contained in the "Arbitrage Certificate" or similar
document furnished by the Company to the Issuer which, at the time made, is
misleading, untrue or incorrect in any material respect.
The Issuer agrees, at the request and expense of the Company, to
cooperate in the making of any investigation in defense of any such claim, and upon
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k request of the Company promptly to assert any or all of the rights and privileges and
defenses identified in writing by the Company which may be available to the Issuer.
The provisions of this Section 3.5 shall survive the payment of the Bond.
Section 3.6. Financial Information. During the term of this
Agreement, the Company will deliver to the Bondholder and the Issuer the following:
W a copy of the Company's Annual Report on Form 10-K pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, for each fiscal
year of the Company, in the form and within 60 days after such Report is filed
with the Securities and Exchange Commission; and
GO a copy of the Company's Quarterly Report on Form 10-Q pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, for each of the
first three fiscal quarters of such fiscal year of the Company, within 60 days
after such Report is filed with the Securities and Exchange Commission.
If the Company shall no longer be required to file such Reports or other reports
containing substantially similar financial information with the Securities and
Exchange Commission, the Company shall provide the following financial statements
to the Bondholder in lieu of those described above:
W as soon as available and in any event within 120 days after the
close of the fiscal year of the Company, a consolidated balance sheet of the
Company and its subsidiaries as of the end of such year and consolidated
statements of income and surplus of the Company and its subsidiaries for such
year, accompanied by the opinion of independent public accountants for the
Company to the effect that the same fairly present the consolidated financial
condition of the Company and its subsidiaries as of such date and the results of
their operations for such year; and
(ii) within 90 days after the end of each of the first three quarters of
each fiscal year of the Company, a consolidated balance sheet of the Company
and its subsidiaries as of the close of each such quarter, and consolidated
statements of income and surplus of the Company and its subsidiaries for each
such quarter and for that part of the fiscal year ending with each such fiscal
quarter, all in reasonable detail and certified (subject to audit and normal
year-end adjustments) by a proper accounting officer of the Company.
Section 3.7. Merger; Sale of Assets. The Company agrees that so
long as the Bond or any portion thereof shall remain outstanding it shall maintain its
corporate existence and shall not merge or consolidate with any other corporation
and shall not transfer or convey all or substantially all of its property, assets and
licenses; provided, however, the Company may, without violating any provisions of
this Agreement, consolidate with or merge into another domestic corporation (i.e., a
corporation incorporated and existing under the laws of one of the states of the
United States of America or the District of Columbia) or permit one or more
domestic corporations to consolidate with or merge into it, or transfer all or
substantially all of its assets to another domestic corporation, but only on the
condition that (i) the assignee corporation or the corporation resulting frorn or
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surviving such merger (if other than the Company) or consolidation or the
corporation to which such transfer is made shall expressly assume in writing and
agree to pay and to perform all of the Company's obligations under this Agreement,
and 01) in connection with any such consolidation, merger or transfer, there shall be
filed with the Bondholder a letter of the Comptroller of the Company certifying
that immediately following the consummation of such consolidation, merger or
transfer, the corporation resulting from or surviving such consolidation or merger or
the corporation to which Stich transfer is to be made will have a net worth at least
as great as the Company would have had if such consolidation, merger or transfer
had not occurred. If the Company is the surviving corporation in any such
consolidation, merger or transfer, the express assumption referred to in W above
shall not be required, but the letter of the Comptroller of the Company described in
(ii) above shall be filed as indicated.
Section 3.8. Maintenance of Existence, Permits and Licenses.
Except as otherwise permitted by Section 3.7 hereof, the Company will do all things
necessary to preserve and keep in full force and effect its corporate existence and
its good standing in the State of Minnesota. The Company will execute any
applications to any governmental or other agency or authority for, and will use its
best efforts to obtain, any permit, license or similar approval or ccnsent which is
necessary for the proper performance of this Agreement or the consummation of the
transactions contemplated hereby.
Section 3.9. No Impairment. The Company agrees that it will not
enter into any agreement or instrument or take any other action which would tend
to prevent it from performing, or materially impair its ability to perform, its
obligations and agreements under this Agreement.
Section 3.10. Maintenance of Project; Insurance. The Company will
maintain and operate the Project and will insure its properties against loss or
damage in a prudent manner and in accordance with generally accepted industry
practice.
Section 3.11. Taxes, Other Governmental Charges and Utility
Charges. The Company will pay or cause to be paid all taxes, assessments, levies,
charges and withholdings imposed on or against it or in respect of its properties
including the Project when due, provided that this covenant shall not apply to any
tax, assessment, levy, charge or withholding the amount of which is being contested
in good faith by appropriate proceedings timely initiated and diligently prosecuted.
Section 3.12. Immunity of Meru- ers, Officers, Agents and Employees
of Issuer. No recourse shall be had for the enforcement of any obligation, covenant,
promise or agreement of the Issuer contained in this Agreement or for any claim
based hereon or otherwise in respect hereof, against the Issuer or any member,
officer, agent or employee, as such, in his individual capacity, past, present or
future, of the Issuer or of any successor corporation, either directly or through the
Issuer or any successor corporation, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise; and no personal liability whatsoever shall attach to, or be incurred by,
the Issuer or any member, officer, agent or employee as such, past, present or
future, of the Issuer or of any successor corporation, either directly or through the
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Issuer or any successor corporation, under or by reason of any of the obligations,
covenants, promises or agreements entered into between the Issuer, the Company
and the Bank whether contained in this Agreement or to be implied herefrom as
being supplemental hereto, and all personal liability of that character against the
Issuer or every such member, officer, agent and employee is, by the execution of
this Agreement and as a condition of, and as part of the consideration for, the
execution of this Agreement, expressly waived and released. The immunity of
members, officers, agents and employees of the Issuer under the provisions
contained in this Section shall survive the termination of this Agreement.
Section 3.13. Proceeds of Insurance, Condemnation Awards. All
proceeds of any insurance or condemnation award with respect to the Project shall
be paid to the Company.
Section 3.14. Reports to Governmental Agencies. The Company will
furnish to agencies of the State of Minnesota, including but not limited to the
Commissioner of Securities and Real Estate and the Department of Economic
Development, such periodic reports or statements as they may require throughout
the term of this Agreement.
ARTICLE IV
Covenants With Respect To Capital Expenditures;
Determination of Taxability
Section 4. 1 . Covenants of Company with Respect to Capital
Expenditures. The Issuer is issuing the Bond pursuant to an election made by it
under Section 1O3(b)(6)(D) of the Code. It is the intention of the parties hereto that
the interest on the Bond be and remain free from Federal income taxation and to
that end the Company does hereby covenant with the Bondholder as follows:
(1) The Company covenants and represents that there have never been
issued any obligations with respect to "facilities" described in Section
1O3(b)(6)(E) of the Code which are located in the City of Eden Prairie,
Minnesota, or which facilities would be considered to be "contiguous or
integrated" with the Project within the meaning of said Code section, which
obligations would be taken into account in determining the aggregate face
amount of the Bond as provided in Section 103(b)(6)(D)(ii) of the Code.
(2) The Company further covenants and represents that the aggregate
principal amount of the Bond and capital expenditures heretofore made (other
than those mentioned in Section 1O3(b)(6)(F) of the Code) with respect to
"facilities" described in Section 1O3(b)(6)(E) of the Code which are located in
the City of Eden Prairie, Minnesota, or which facilities would be considered to
be "contiguous or integrated" with the Project within the meaning of said Code
section, have not and will not exceed $10,000,000 (or any such larger amount
as may be hereafter permitted by law) during the six-year period beginning
three years before the date of issuance and delivery of the Bond.
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(3) The Company further covenants and agrees that during the three-
year period following the date of the issuance and delivery of the Bond, it shall
not make or cause or permit to be made any capital expenditures (other than
those mentioned in said Section 103(b)(6)(F) of the Code) with respect to
"facilities" described in said Section 103(b)(6)(E) of the Code which are located
in the City of Eden Prairie, Minnesota, or which facilities would be considered
to be "contiguous or integrated" with the Project within the meaning of said
Code section, which would cause the interest on the Bonds to be subject to
Federal incorne taxation.
(4) The Company further covenants and agrees that on or before
May 1, 1983, and on or before the first day of each May thereafter to and
including May 1, 1986, it will furnish to the Bondholder a certificate of its
Comptroller stating that during the period beginning three years prior to the
date of the issuance and delivery of the Bond and extending through the date
such certificate is due (except that the certificate dated May 1, 1986, shall
extend only through the date three years subsequent to the date of issuance
and delivery of the Bond), capital expenditures (including as capital
expenditures for this purpose the aggregate principal amount of the Bond, but
deducting therefrom capital expenditures paid or reimbursed out of the
proceeds of the Bond) in excess of $10,000,000 (or any such larger amounts as
may be hereafter permitted by law) have not been paid or incurred with
respect to "facilities" described in said Section 1O3(bX6)(E) of the Code which
are located in the City of Eden Prairie, Minnesota, or which facilities would be
considered to be "contiguous or integrated" with the Project within the
meaning of said Code section.
(5) The Company further covenants and agrees that there are no
bonds, notes or other obligations which have been issued, or which are
conternplated to be issued, for the benefit of the Company or any "related
person", which (i) have been, or will be, sold at substantially the same time as
the Bond, (ii) have been, or will be, sold pursuant to a common plan of
marketing with the Bond, (iii) have been, or will be, sold at substantially the
same interest rate as the interest rate on the Bond, and (iv) use or have
available, or will use or will have available, a common or pooled security to
pay debt service with the security to be used or made available to pay debt
service on the Bond.
(6) The Company further covenants and agrees to fully comply, during
the term of this Agreement, with all effective rules, rulings or regulations
promulgated by the Department of Treasury or the Internal Revenue Service,
with respect to obligations issued under said Section 103(b)(6)(D) of the Code,
including specifically, but without limitation, the post-issuance filing
requirements of Treasury Regulations Section 1.103-10(b)(2)(vi), so as to
maintain the tax-exempt status of the interest on the Bond. A copy of each
supplemental statement, tax schedule, return or other filing made with the
Internal Revenue Service pursuant to the provisions hereof shall be sent to the
Bondholder within 30 days from the date of filing of the same.
The covenants and agreements of the Company contained herein shall
survive the termination of this Agreeme:t.
(
-19-
4 Section 4.2. Determination of Taxability. In 'the event that there
should occur a "Determination of Taxability (the "Determination of Taxability") as
hereinafter defined, the interest rate on the Bond from the date interest on the
Bond is deemed to have become taxable to and through the date of payment in full
of the Bond shall be a rate per annum (calculated on the basis of actual days in a
year of 365 or 366 days, as the case may be) equal to 1% above the Prime Rate of
the Bank (as defined in Section 3.3 hereof) from time to time in effect (the
"Adjusted Rate"). Notwithstanding anything to the contrary herein, in the event
that the Adjusted Rate would be at any time or from time to time in excess of the
highest amount permitted by law, the Adjusted Rate shall be the highest rate
permitted by law.
A Determination of Taxability shall be deemed to have occurred: W on
that date when the Company files (in compliance with its obligations under this
Agreement) a statement which discloses that capital expenditures have been paid or
incurred in excess of those permitted in Section 103(b)(6)(D) of the Code, or (ii) upon
the date of an administrative determination or judicial decision or the receipt by the
Bondholder of the written opinion of nationally recognized bond counsel to the
effect that interest on the Bond is includable for federal income tax purposes in the
gross income of the Bondholder; provided, however, that if such determination,
decision or opinion is based upon a conclusion that the Bondholder is a "substantial
user" of the Project as provided in Section 103(b)(10) of the Internal Revenue Code
of 1954, as amended, or a "related person" as defined in Section 103(b)(6)(C) thereof,
no Determination of Taxability shall be deemed to have occurred. The Bondholder
shall have no obligation to contest or appeal any assertion or decision that any
interest on the Bond is taxable; provided, however, that the Company or the Issuer
shall have the right to require the Bondholder to prosecute any administrative
remedies or judicial proceedings available to it, provided that all such remedies shall
be pursued at the Company's sole cost and expense.
The Company and the Bondholder each agree to immediately notify the
other parties hereto in writing upon receipt of notice or other evidence of the
occurrence of a Determination of Taxability.
There shall also be paid to the Bondholder under the Bond, any penalties
(in the form of interest or otherwise) owing by the Bondholder due to the failure of
the Bondholder to include interest on the Bond in its gross income for Federal
income tax purposes for that period beginning on the date interest on the Bond is
deemed to have become taxable and ending with the date of the Determination of
Taxability; such amount (including an amount equal to the difference between the
interest paid on the Bond at the Regular Rate during such period and the interest
that would have accrued on the Bond during such period had the interest rate on the
Bond during such period been equal to the Adjusted Rate) any penalties (in the form
of interest or otherwise) shall be paid on the interest payment date next succeeding
the Determination of Taxability, or in the event the Bond has been theretofore paid,
on a date no later than 30 days next succeeding the date of the Determination of
Taxability.
These provisions of this Section 4.2 shall survive the payment of the
Bond.
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j
ARTICLE V
Defaults and Remedies
Section 5.1. Events of Default. Each of the following events is
hereby declared an Event of Default:
(a) The Issuer's failure to make or cause to be made any principal or
interest payment required to be made on the Band when the same becomes due
and payable, and the continuance of such failure for a period of thirty (30)
days.
(b) The Issuer's failure to observe and perform any of its other
covenants, conditions or agreements contained herein or in the Bond and the
continuance of the same unremedied for a period of 60 days after notice
(unless the Company, the Issuer and the Bondholder shall agree in writing to an
extension of such time prior to its expiration) specifying such failure and
requesting that it be remedied is given by the Company or the Bondholder to
the Issuer, or in the case of any such default which can be cured with due
diligence but not within such 60-day period, the Issuer's failure to proceed
promptly to cure the same and thereafter prosecute the curing of such default
with due diligence.
�c) The Company's failure to make any payment required to be made
hereunder when the same becomes due and payable, and the continuance of
such failure for a period of thirty (30) days.
(d) The Company's failure to observe and perform any of its other
covenants, conditions or agreements contained herein and the continuance of
the same unremedied for a period of 30 days after notice (unless the Issuer,
the Company and the Bondholder shall agree in writing to an extension of such
time prior to its expiration) specifying such failure and requesting that it be
remedied is given by the Issuer or the Bondholder to the Company, or in the
case of any such default which can be cured with due diligence but not within
such 30-day period, the Company's failure to proceed promptly to cure the
same and thereafter prosecute the curing of such default with due diligence.
(e) If any representation or warranty W made by the Issuer in this
Agreement or the Pledge or in any certificate or other statement delivered
pursuant hereto or 00 made by the Company in this Agreement or in any
certificate or financial or ether statement delivered pursuant hereto, shall
prove to have been untrue in any material respect on the date on which made.
(f) If the Company shall W apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
the Company or of all or a substantial part of its property, 01) admit in writing
its inability, or be generally unable, to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (v) file a petition seeking to take advantage of any other law relating
-21-
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (vi) fail to contravert in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against the Company in an
involuntary case under said Federal Bankruptcy Code, or (vii) take any
corporate action for the purpose of effecting any of the foregoing.
(g) If a proceeding or case shall be commenced, without the
application or consent of the Company, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding-up or,
composition or readjustment of debts of the Company, (ii) the appointment of
a Trustee, receiver, custodian, liquidator or the like of the Company or of all
or a substantial part of its assets, or (iii) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) days from commencement of such proceeding
or case, or an order for relief against the Company shall be entered in an
involuntary case under said Federal Bankruptcy Code.
Section 5.2. Notice of Default. The Company covenants and agrees
to give notice to the Bondholder and the Issuer of the occurrence of any Event of
Default hereunder or any default hereunder or event which with the passage of time
or otherwise could become an Event of Default, as promptly as practicable following
such occurrence.
Section 5.3. Remedies on Default. Whenever an Event of Default
shall have happened and be continuing, the Bondholder or the Issuer at the written
direction of the Bondholder (provided however that the Issuer shall not be obligated
to take any such action, and provided, further, that no consent of the Bondholder
shall be necessary to enable the Issuer to take remedial steps set forth in
paragraph (c) of this Section with respect to enforcement of rights of the Issuer
under Sections 2.10, 3.5, 7.5, 7.6 and 7.12 hereof) shall have the following rights and
remedies:
(a) The Bondholder or the Issuer may declare all payments hereunder
to be immediately due and payable, whereupon the same shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything
contained in this Agreement to the contrary notwithstanding. In such event,
the amount then due and payable by the Company hereunder shall be the sum
of (1) the principal amount of the Bond at the time outstanding, (2) all interest
at the applicable rate then due and to become due on the Bond to the date of
payment thereof, (3) all penalties (in the form of interest or otherwise) and
any other payments due hereunder or under the Bond as a result of the
occurrence of a Determination of Taxability, and (4) any other sums then due
under the terms of this Agreement.
(b) The Bondholder may declare the Bond to be immediately due and
payable, whereupon the same shall become immediately due and payable
r without presentment, demand, protest or other notice of any kind, all of which
t
-22-
are hereby expressly waived, anything contained in this Agreement or the Bond
to the contrary notwithstanding.
(c) The Bondholder or the Issuer may take whatever action at law or in
equity may appear necessary or desirable to collect any sums then due and
thereafter to become due or to enforce observance or performance of any
covenant, condition or agreement of the Company or the Issuer Linder this
Agreement or the Bond.
Section 5.4. No Remedy Exclusive. No remedy herein conferred
upon or reserved to the Issuer or Bondholder is intended to be exclusive of any other
remedy, and every remedy shall be cumulative and in addition to every other remedy
herein or now or hereafter existing at law, in equity or by statute. No delay or
omission to exercise any right or power accruing upon an Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof (unless
waived in writing by the Bondholder and the Issuer as provided in Section 7.2
hereof), but any such right or power may be exercised from time to time and as
of ten as may be deemed expedient.
Section 5.5. Company to Pay Attorney's Fees and Expenses. Should
an Event of Default occur and the Bondholder and/or the Issuer ernploy attorneys or
incur other expenses for the collection of sums due hereunder or the enforcement of
performance of any other obligation of the Issuer or the Company under this
Agreement or the Bond, the Company shall on demand pay to the Bondholder and/or
the Issuer the reasonable fees of such attorneys and such other reasonable expenses
so incurred.
Section 5.6 Waiver of Certain Rights. If the Company should default
under any of the provisions of this Agreement, to the extent that such rights may
then lawfully be waived, the Company agrees to waive the benefit of all
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force, provided, however, any deficiency remaining subsequent to disclosure shall
not in any event constitute an indebtedness or an obligation of the Issuer, but shall
be paid solely from the payments, revenues and receipts pledged hereunder.
ARTICLE VI
Additional Bonds
Section 6.1. Additional Bonds for Plant Costs. In accordance with
the provisions of this Agreement, the Issuer may from time to time provide for the
issuance hereunder of Additional Bonds for the purpose of providing moneys to pay
any of the costs of the Project not previously provided for by the issuance of the
Bond.
The Issuer may execute and deliver to the purchaser or purchasers
thereof any Additional Bonds issued for the purposes specified in the first paragraph
of this Section upon receipt of the following:
v
4
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(a) A written certificate signed by the President or any Vice President
or the Comptroller of the Company G) approving the terms, conditions, manner
of issuance, purchase price, delivery and contemplated disposition of the
proceeds of the sale of such Additional Bonds, and GO certifying that there
exists no default under the provisions of this Agreement;
(b) A copy, duly certified by the City Clerk of the Issuer, of the
Resolution adopted and approved by the Issuer authorizing the issuance of such
Additional Bonds and the execution and delivery of a supplemental agreement
or an amendment to this Agreement providing for the terms and conditions
under which such Additional Bonds shall be issued, together with an executed
counterpart of such Agreement;
(c) An opinion of Counsel for the Company, to the effect that the
agreement being issued as security for the Additional Bonds has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding obligation of the Company in accordance with its terms;
(d) An opinion of nationally recognized bond counsel addressed to the
Issuer, the Purchaser of the Additional Bonds and the Bondholder to the effect
that (i) the issuance of such Additional Bonds has been duly authorized and the
terms thereof comply with the requirements of this Agreement and the
Constitution and laws of the State of Minnesota; (ii) all conditions precedent
provided for in this Agreement relating to the delivery of such Additional
Bonds have been satisfied; (iii) the issuance of such Additional Bonds will not
adversely affect the exemption from Federal income taxation of interest on
any Bonds at the time outstanding; (iv) the Additional Bonds are valid and
binding obligations of the Issuer, and the interest on the Additional Bonds is
exempt from present Federal income taxation, except for any such Additional
Bonds held by a "substantial user" or a "related person" within the meaning of
Section 103(b)(10) of the Code.
The proceeds from the sale of such Additional Bonds shall be deposited in
the escrow account established in the Escrow Agreement.
Section 6.2. Refunding Bonds. In accordance with the provisions of
this .Agreement, the Issuer may from time to time provide for the issuance of
Additional Bonds for the purpose of refunding all but not less than all of the Bond or
any Additional Bonds then outstanding.
The Issuer may execute and deliver Additional Bonds for the purpose
specified in this Section upon receipt of the iterns specified in subsections (a)
through (d), inclusive, of Section 6.1 hereof.
The proceeds derived from the sale of such Additional Bonds shall be
used to retire the Bond or any Additional Bonds within 180 days from the date of
issuance thereof.
-24-
ARTICLE VII.
Misoellaneom
Section 7.1. Term of this Agreement. This Agreement shall become
effective upon its delivery and the term of this Agreement shall expire at midnight,
May 1, 1992, or if at said time and on said date the Bond shall not have been paid in
full, then on such date as such payment and payment of all other amounts owing
hereunder shall have been made.
Section 7.2. No Waiver. No failure or delay on the part of the
Bondholder or the Issuer in exercising any power or right hereurider shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other right or
power hereunder. No modification or waiver of any provision of this Agreement or
the Bond nor consent to any departure by the Issuer or the Company therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Issuer, the Company and the Bondholder, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Issuer or the Company in any case shall entitle the Issuer
or the Company to any other or further notice of demand in similar or other
circumstances.
Section 7.3. Payments Due on Saturdays, Sundays and Holidays.
Whenever any payment to be made hereunder or under the Bond shall be stated to be
due on a Saturday, a Sunday or a public holiday under the laws of the State of
Minnesota or the State of California, such payment may be made on the next
succeeding business day and such extension of time shall in such case be included in
computing interest, if any, in connection with such payment.
Section 7.4. Notices. All communications and notices provided for
hereunder shall be in writing or by telecopier and, if to the Bank, mailed, delivered
or telecopied to it addressed to it at 707 Wilshire Boulevard, Los Angeles,
California 90017, Attention: Multinational Division; if to the Issuer, mailed,
delivered or telecopied to it, addressed to it at its office at the 8950 Eden Prairie
Road, Eden Prairie, Minnesota 55344, Attention: Finance Director; if to the
Company, mailed, delivered or telecopied to it, addressed to it at its office at 320
Park Avenue, New York, New York 10022, Attention: Secretary; if to the Project
Fund Custodian, mailed, delivered or telecopied to it at 707 Wilshire Boulevard, Los
Angeles, California 90017, Attention: Corporate Trust Department; or, as to each
party, at such other address as shall be designated by such party in a written or
telecopied notice to each other party.
All mailed notices shall be sent by United States certified mail, return
receipt requested, and shall be effective from the date of execution of such receipt.
Section 7.5. Costs and Expenses. The Company agrees to pay all
reasonable costs and expenses in connection with the preparation, execution,
delivery and performance of this Agreement, the Bond Resolution, the Pledge and
the Bond (including the reasonable fees and out-of-pocket expenses of bond counsel
and counsel for the Issuer and the Bank) and all reasonable costs and expenses in
-25--
connection with the enforcement of this Agreement, the Pledge and the Bond which
costs are not paid out of the proceeds of the Bond.
Section 7.6. Survival of Representations and Warranties. All
representations, warranties and agreements of the Company, the Issuer and the Bank
contained herein shall remain operative and in full force and effect and shall survive
(a) the execution and delivery of this Agreement, and (b) the issuance of the Bond
hereunder.
Section 7.7. Amendments. This Agreement shall not be amended
except by a document in writing signed by the Issuer, the Company and the
Bondholder.
Section 7.8. Execution Counterparts. This Agreement may be
simultaneously executed in any number of counterparts, each of which shall be an
original with the sarne effect as if the signatures thereto and hereto were upon the
same instrument.
Section 7.9. Severability. If any provision of this Agreement shall
be held invalid by any court of competent jurisdiction, such holding shall not
invalidate any other provision hereof.
Section 7.10, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Issuer, the Company and the Bank, and
their respective successors and assigns.
Section 7.11. Applicable Law. This Agreement and the Bond shall
each be deemed to be contracts under the laws of Minnesota and for all purposes
shall be construed in accordance with said laws.
Section 7.12. Limitation of Issuer's Liability. It is understood and
agreed by the Company and the Bondholder that no covenant, provision or
agreement of the Issuer herein or in the Bond or in any other document executed by
the Issuer in connection with the issuance, sale and delivery of the Bond, or any
obligation herein or therein imposed upon the Issuer or breach thereof, shall give
rise to a pecuniary liability of the Issuer or a charge against its general credit or
taxing powers or shall obligate the Issuer financially in any way except with respect
to this Agreement and the application of revenues herefrom and the proceeds of the
Bond. No failure of the Issuer to comply with any term, condition, covenant or
agreement therein shall subject the Issuer to liability for any claim for damages,
costs or other financial or pecuniary charges except to the extent that the same can
be paid or recovered from this Agreement or revenues herefrom or proceeds of the
Bond. No execution on any claim, demand, cause of action or judgment shall be
levied upon or collected from the general credit, general funds or taxing powers of
the Issuer. In making the agreements, provisions and covenants set forth herein, the
Issuer has not obligated itself except with respect to this Agreement and the
application of revenues hereunder as hereinabove provided. The Bond constitutes a
special obligation of the Issuer, payable solely from the revenues pledged to the
payment thereof pursuant to this Agreement and the Assignment, and does not now
and shall never constitute an indebtedness or a loan of the credit of the Issuer, the
State of Minnesota or any political subdivision thereof or a charge against general
-26-
taxing powers within the meaning of any constitutional or statutory provision
whatsoever. It is further understood and agreed by the Company and the Bondholder
that the Issuer shall incur no pecuniary liability hereunder and shall not be liable for
any expenses related hereto, all of which the Company agrees to pay. if,
notwithstanding the provisions of this Section, the Issuer incurs expense, or suffers
any losses, claims or damages or incurs any liabilities, the Company will indenmify
and hold harmless the Issuer from the same and will reimburse the Issuer for any
legal or other expenses incurred by the Issuer in relation thereto, and this covenant
to indemnify, hold harmless and reimburse the Issuer shall survive delivery of and
payment for the Bond. The liability of the Issuer is further restricted as provided in
Section 474.10 of the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the date
first above written.
CITY OF EDEN PRAIRIE,
MINNESOTA
(SEAL)
yf
Attest: By: r �
yor
City Clerk &J
By:
City Mani er
INTERNATIONAL TELEPHONE AND
TELEGRAPH CORPORATION
(SEAL)
Attest:
By:
Vice President
Assistant Secretary
FIRST INTERSTATE BANK OF
CALIFORNIA, as purchaser
of the Bond described herein
(SEAL)
Attest: By:_ _
Ti tie:
Title:
-27-
EXHIBrr A
UNITED STATES OF AMERICA
STATE OF MIN NESOTA
CITY OF EDEN PRAIRIE, MINNESOTA
INDUSTRIAL DEVELOPMENT REVENUE BOND
(INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION PROJECT),
SERIES 1982
$2,000,000 No. R-1
FOR VALUE RECEIVED, the City of Eden Prairie, Minnesota (the
"Issuer"), a municipality of the State of Minnesota existing under the Constitution
and laws of the State of Minnesota, promises to pay in immediately available funds,
in lawful moneys of the United States of America, to First Interstate Bank of
California (hereinafter referred to as the "Bank" or, together with any subsequent
registered owner hereof, as the "Bondholder"), at its office at 707 Wilshire
Boulevard, Los Angeles, California 90017, or registered assigns, solely from the
revenues and receipts hereinafter specified and from no other source, the principal
suin of $2,000,000, in installments as follows:
Date Principal Due
May 1, 1988 $ 400,000
May 1, 1989 400,000
May 1, 1990 400,000
May 1, 1991 400,000
May 1, 1992 400,000
Interest hereon, shall be paid in the same manner as principal from the date hereof
until maturity (whether by stated maturity, prepayment prior to maturity,
acceleration or otherwise) at the rate per annum (calculated on the basis of actual
days in a year of 365 or 366 days, as the case may be) equal to (except as
hereinafter set forth): this Bond shall bear interest at the "Regular Rate" (hereafter
defined); payable semiannually on May 1 and November 1 in each year, until paid,
commencing November 1, 1982. "Regular Rate" means the product of (x) either (i)
for the period from the date hereof to, but not including May 1, 1987 that rate of
9.24% per annum or (ii) from May 1, 1987 the rate equal to 65% of the "Prime Rate"
(hereafter defined), multiplied by (y) the "Margin Rate Factor" (hereafter defined).
"Prime Rate" means at any time, the rate of interest most recently announced by
the Bank as such, with the understanding that the Bank's Prime Rate is one of its
base rates and serves as the basis upon which effective rates of interest are
calculated for its loans making reference thereto, and is evidenced by the recording
thereof after its announcement in such internal publication or publications as the
Banat may designate. All changes in the Prime Rate shall be effective as of 12:01
a.m, prevailing time in Los Angeles, California, on the day on which such
A-1
announcement shall be made. "Margin Rate Factor" shall mean the product of W 1.0
minus the "Maximum Federal Corporate Tax Rate" (hereafter defined), times (ii)
1.85185. "Maximum Federal Corporate Tax Rate" shall mean the maximum rate of
income taxation imposed on the taxable income of corporations pursuant to Section
1I(b) or any successor provision of the Internal Revenue Code of 1954, as amended,
as in effect from tirne to time. The Margin Rate Factor shall be 1.0 so long as the
Maximum Federal Corporate Tax Rate shall be 46%, and thereafter shall change
from time to time effective as of the effective date of any change in the Maximum
Federal Corporate Tax Rate. Interest on overdue principal and to extent permitted
by law, interest and other amounts payable hereunder, are payable at a rate per
annum equal to the Prime Rate plus 2%. In the event that there shall occur a
"Determination of Taxability" (the "Determination of Taxability") as defined in
Section 4.2 of the .Agreement hereinafter referred to, the interest rate on this Bond
from the date interest on this Bond is deemed to have become taxable to and
through the date of payment in full of this Bond shall be a rate per annum equal to
1% above the Prime Rate from time to time in effect (the "Adjusted Rate"). From
the date of the Determination of Taxability, all installments of interest shall be
increased so as to include interest at the Adjusted Rate. There shall also be paid
hereunder any penalties (in the form of interest or otherwise) owing by the
Bondholder due to the failure of the Bondholder to include interest hereon in its
gross income for Federal income tax purposes for that period beginning, on the date
interest hereon is deemed to have become taxable and ending on the date of the
Determination of Taxability; such amounts including an amount equal to the
difference between the interest paid on the Bond at the Regular Rate during such
period and the interest that would have accrued on the Bond during such period had
the interest rate on the Bond during such period been equal to the Adjusted Rate
shall be paid on the interest payment date next succeeding the Determination of
Taxability, or in the event this Bond has been theretofore paid, on a date no later
than 30 days next succeeding the date of the Determination of Taxability. The
provisions contained in this paragraph shall survive the payment of this Bond.
Notwithstanding anything to the contrary herein, in the event that the
Adjusted Rate would be at any time or would at any time cause this Bond to be in
violation of the usury laws of the State of Minnesota, the Adjusted Rate shall be the
highest rate permitted by law, which would not cause this Bond to violate such usury
laws.
This Bond is a fully registered bond in the principal amount of $2,000,000
(the "Bond"). This Bond is separately issued under and secured and entitled to the
protection given by a Loan Agreement (the "Agreement"), dated as of May 1, 1982,
by and among the Issuer, International Telephone and Telegraph Corporation, a
Delaware corporation (the "Company") and the Bank. Reference is hereby made to
the Agreement for a description of the obligations of the Issuer and the Company
thereunder. This Bond is being issued to provide funds to be used to pay the costs of
acquiring, constructing and installing the Project defined in the Agreement, which
Project consists of an expansion and modification of an existing industrial facility of
the Company in the City of Eden Prairie, Minnesota. Pursuant to the Agreement,
the Project is to be acquired, constructed and installed by the Company on behalf of
ITT Schadow, Inc., a wholly-owned subsidiary of the Company ("Schadow") and will
be owned and operated by the Company Schadow and the Company is obligated
under the Agreement to make payments to the order of the Issuer at times and in
A-2
`7
amounts sufficient to provide for full payment of the principal of and interest or)
this Bond, including arrears in interest and penalties in the form of interest or
otherwise owed hereunder as a result of the occurrence of a Determination of
Taxability, and interest on overdue principal and, to the extent permitted by law,
interest on and other payments under this Bond in the amounts, at the rate or rates,
and otherwise as provided herein. As security for the payment of this Bond, the
Agreement and certain rights of the Issuer thereunder have been pledged and
assigned to the Bondholder.
This Bond is a limited obligation of the Issuer payable solely from the
payments, revenues and receipts derived from the Agreement. Neither the State of
Minnesota nor the City of Eden Prairie, Minnesota nor any other political
subdivision, shall be obligated to pay the principal of. this Bond or the interest
hereon or other arnounts owing thereunder or other costs incident thereto except
from the payments, revenues and receipts referred to above. This Bond is issued
pursuant to and in full compliance with the Constitution and laws of the State of
Minnesota, including Minnesota Statutes, Chapter 474, and pursuant to a resolution
duly adopted by the City Council on March 16, 1982 (the "Resolution"), and, together
with interest hereon and any premiums, taxes, penalties, late charges or other
amounts payable hereunder, however designated, are special obligations of the Issuer
payable solely from payments to be received by the Issuer pursuant to the
Agreement. This Bond, the interest hereon and any premiums, taxes, penalties, late
charges or other amounts payable hereunder, however designated, shall never
constitute a debt of the Issuer within the meaning of any constitutional provision or
statutory limitation and shall never constitute or give rise to a charge against its
general credit or taming powers, and are not payable from nor a charge upon any
w f ands of the Issuer other than the revenues pledged to the payment thereof. This
Bond, the interest hereon and any premiums, taxes, penalties, late charges or other
amounts payable hereunder, however designated, do not constitute a charge, lien or
encumbrance, legal or equitable, upon any property of the Issuer, except the
revenues to be received by the Issuer under the Agreement, and the agreement of
the Issuer to perform or cause the performance of the covenants and other
provisions herein referred to shall be limited at all times to the availability of
ee venues from the Agreement derived pursuant to the Assignment, sufficient to pay
all costs of such performance or the enforcement thereof. The provisions of this
paragraph shall, for all purposes of this Bond, be controlling and be given full force
and effect, anything else to the contrary in this Bond notwithstanding.
This Bond is subject to prepayment prior to maturity as follows:
I. This Bond may be prepaid in whole or in part in multiples of
$100,000 at any time, upon 30 business days written notice from the Company
and the County to the Bondholder, and payment to the Bondholder of:
W the principal amount of this Bond to be prepaid, plus
00 accrued interest to the date of prepayment at the applicable
rate; plus
(iii) if paid prior to May 1, 1987 (except as hereinafter provided),
a prepayment premium, which shall be the amount calculated
by multiplying the Penalty Rate (hereinafter described) by
the principal amount of this Bond to be prepaid,
A-3
., by the number of days from the date of the prepayment to
May 1, 1987, divided by 365. The Penalty Rate shall be
seventeen and one-half prcentum (16.125%) minus the
Reinvestment Rate (hereinafter defined). The Reinvestment
Rate shall be the annual interest rate on the date of
prepayment of this Bond equivalent to the highest yield-to-
maturity obligation of the United States Government which
matures within thirty (30) days prior to May 1 , 1987, and
which is available on the date of prepayment.
The foregoing prepayment premium shall not be payable if the Company
determines and, within thirty (30) days thereafter, notifies the Bondholder in
writing that:
(1) The Project has been damaged or destroyed to the extent
that it cannot, in the judgment of the Company, be restored to its
original condition within a period of four (4) consecutive months;
(2) All or substantially all of the Project has been condemned so
that the Company, in its judgment, cannot carry on normal operations
therein; or
(3) There shall have occurred changes in market conditions or in
the econornic availability of labor, raw materials, operat;ng supplies or
facilities required for the continued operation of the Project and such
changes, in the opinion of the Company, render the continued operation
of the Project uneconmical.
2. This Bond may also be prepaid in whole upon the occurrence of a
"Determination of Taxability" (as defined in Section 4.2 hereof), without the
giving of prior notice of prepayment and payment to the Bondholder of:
(i) the principal amount of this Bond to be prepaid, plus
(ii) accrued interest to the date of prepayment, at the app:icable
rate in accordance with the provisions of this Bond; plus
(iii) any penalties (in the form of interest or otherwise) payable
by the Bondholder by reason of its having excluded any such
interest from its taxable income for the period bF.ginning on
the date interest on this Bond is deemed to have become
taxable and ending with the date of the Determination of
Taxability.
3. This Bond shall also be prepaid by the Issuer in part in any amount
from excess moneys in the Project Fund created in the Agreement, as required
by Section 2.13(2) and 2.3(e) of the Agreement.
Upon any prepayment of principal of this Bond, the Bondholder shall
endorse on the Schedule of Payments attached hereto the amount and date of such
payment, and all such payments shall be credited against principal in inverse order
of the installment due dates.
A-4
This Bond is registered in the name of the Bondholder on the registration
books kept by the Issuer as Bond Registrar, which registration has been made in said
registration books and endorsed hereon by said Bond Registrar, and no transfer
hereof shall be valid unless made on said registration books at the written request of
the Bondholder or his duly authorized attorney and similarly noted hereon; provided,
however that no assignment or transfer of registration shall occur unless the
Company and the Issuer have been given notice in writing at least ten days prior to
the date of such assignment or transfer, in accordance with the restrictions
contained in Section 2.8 of the Agreement.
This Bond is issued with the intent that the laws of the State of
Minnesota shall govern its construction, and is issued pursuant to, and in compliance
with the laws of the State of Minnesota.
Upon the occurrence of an Event of Default, as defined in the
Agreement, the principal of and accrued interest on and other amounts owing under
this Bond may be declared immediately due and payable forthwith as provided in the
Agreement.
It is hereby certified and recited that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to happen, exist and
be performed precedent to and in the issuance of this Bond, the execution of the
Agreement and the adoption of an appropriate resolution by the Issuer, Dave
happened, exist and have been performed as required by law.
IN WITNESS WHEREOF, the Council of the City of Eden Prairie,
' Minneosta has caused this Bond to be duly executed in its name and on its behalf by
the signature of its Mayor and the City Manager, its corporate seal to be impressed
hereon and attested to by the signature of its City Clerk and this Bond to be dated
the day of May, 1982.
CITY OF EDEN PRAIRIE,
MIN NESOTA
(SEAL)
M or
Attest:
By: _
City Man74 -
City Clerk
A-5
CERTIFICATE OF REGISTRATION
DATE OF NAME OF SIGNATURE OF
REGISTRATION REGISTERED OWNER BOND REGISTRAR
A-6
F;
ASSIGNMENT
FOR VALUE RECEIVED
the undersigned hereby sells, assigns and
transfers unto
INSERT SOCIAL SECURITY OR OTf-lER
IDENTIFYING NUMBER OF ASSIGNEE
the within Bond of
CITY OF EDEN PRAIRIE, MINNESOTA and does hereby irrevocably
constitute and appoint _ __` , attorney to transfer
the said Bond on the books of the within named Bond Registrar, with full power of
substitution in the premises.
Dated:
Registered Owner
A-7
=L
SCHEDULE OF PAYMENTS
SIGNATURE
OF
DATE AMOUNT BONDHOLDER
A-8
EXHIBIT B
CERTIFICATE OF COMPLETION
The undersigned officer or agent of INTERNATIONAL TELEPHONE AND
TELEGRAPH CORPORATION DOES HEREBY CERTIFY as follows:
1. The acquisition, construction and installation of the Project as
described in the Loan Agreement (the "Agreement") dated as of May 1, 1982
by and among City of Eden Prairie, Minnesota (the "Issuer"), International
Telephone and Telegraph Corporation (the "Company") and First Interstate
Bank of California (the "Bank") has been completed in accordance with the
Plans and Specifications contained as Exhibit F to the Agreement and all
labor, services, materials, supplies and equipment used in such acquisition,
construction and installation have been paid for, except for amounts retained
in the Project Fund created in the Agreement for costs of the Project not yet
due or payable.
2. All other facilities necessary in connection with the Project have
been acquired, constructed and installed in accordance with the Plans and
Specifications and all costs and expenses incurred in connection therewith
have been paid, except for amounts retained in the Project Fund created in the
Agreement for costs of the Project not yet due or payable.
3. The Project and all other facilities in connection therewith, have
been acquired, constructed and installed to our satisfaction and the Project as
so acquired, constructed and installed is suitable and sufficient for operation
as a manufacturing facility.
4. Substantially all of the proceeds of the $2,000,000 in principal
amount of the City of Eden Prairie, Minnesota (International Telephone and
Telegraph Corporation Project), Series 1982, dated May _, 1982 (the "Bond")
have been used to acquire property of a character subject -to the allowance for
depreciation contained in Section 167 of the Internal Revenue Code of 1954, as
amended (the "Code"), and such costs representing proceeds so used are
properly chargeable to the capital account of the Company for Federal income
tax purposes and were used to acquire, construct and install the Project.
B-1
This certificate is given without prejudice to any rights against third
parties which exist on the date hereof or which may subsequently corne into being.
This the day of
INTERNATIONAL TELEPIIONE AND
TELEGRAPH CORPORATION
Authorized Company Representative
B-2
EXHIBIT C
PLEDGE AND ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS that:
WHEREAS, the City of Eden Prairie, a municipal corporation and
political subdivision of the State of Minnesota (the "Issuer"), has executed an
Industrial Development Revenue Bond (International Telephone and Telegraph
Corporation Project), Series 1982, dated the date of issuance and delivery thereof
(the "Bond"), payable to the order of First Interstate Bank of California, Los
Angeles, California, a state banking corporation (which, together with its successors
and assigns, is herein referred to as the "Bondholder"), which Bond is in the principal
amount of $2,200,000; and
WHEREAS, the Issuer has entered into a Loan Agreement, of even date
herewith (the "Agreement"), with International Telephone and Telegraph
Corporation, a Delaware corporation (the "Company"), whereby the Issuer will loan
the proceeds of said Bond to the Company and the Company will repay the loan upon
the terms set forth therein; and
WHEREAS, the Bondholder is desirous and the Issuer is agreeable of
further securing the Bond issued to the Bondholder;
NOW, THEREFORE, in consideration of ONE DOLLAR ($1.00) and other
good and valuable consideration, the receipt and sufficiency of which are here;oy
acknowledged, the Issuer does hereby pledge the Issuer's entire interest in the
Agreement (except for rights and remedies of the Issuer under Sections 2.10, 3.5,
5.3(c), 7.5, 7.6 and 7.12 thereof), and grant a security interest therein, to the
Bondholder, together with all rights to payments thereunder (except for amounts
payable to the Issuer as hereinabove described) which are now or may hereafter
become due at any time, and all rights and remedies which may be available to the
Issuer thereunder.
By accepting this Pledge and Assignment, the Bondholder acknowledges
and agrees to the limitations on the Issuer's liability as set forth in Section 7.12 of
the Agreement.
C-1
IN WITNESS WHEREOF, the Issuer has executed this instrument this
day of , 1982.
CITY OF EDEN PRAIRIE,
MINNESOTA
Attest: By:
ayor
I
City Clerk And;
City Mang
(SEAL)
Accepted this day of , 1982.
FIRST INTERSTATE BANK
OF CALIFORNIA
Attest: By:
Its:
Title:
(SEAL)
C-2
EXHIBIT D
REQUISITION AND CERTIFICATION
With respect to the use of the City of Eden Prairie, Minnesota Industrial
Development Revenue Bond (ITT Corporation Project), Series 1981 (the "Bond"), WE
HEREBY CERTIFY as follows:
1. An obligation in the amount of $ _ has been incurred in
connection with the issuance of the Bond or the acquisition, construction and
installation of the Project described in the Loan Agreement dated as of May 1,
1982 by and arnong the City of Eden Prairie, Minnesota (the "Issuer"), First
Interstate Bank of California (the "Bank") and the undersigned, International
Telephone and Telegraph Corporation (the "Company").
2. Such obligation is a proper charge against the Project Fund and has
not been the basis of any previous withdrawal from the Project Fund.
3. The purpose and circumstances of such obligation in reasonable
detail are as follows:
The name and address of the person, firm or corporation to whom
payment has been made or to whore payment is owed, is as follows:
Name:
Address:
A bill or statement of account for such obligation is attached hereto. If
the Company is to be reimbursed, proof of payment of such obligation is attached
hereto.
4. The obligation is for an itern which is properly chargeable to the
capital account of the Company for Federal income tax purposes. Payment of
this obligation will not result in less than substantially all of the proceeds of
D-I
the Bond expended on the date hereof tieing used to provide land or property of
a character subject to the allowance for depreciation under Section 167 of the
Internal Revenue Code of 1954, as amended.
5. Either the Company (i) has no notice of any vendor's, mechanic's,
or other liens or rights -to liens, chattel mortgages or conditional sales
contracts, or other obligations or contracts which should be satisfied or
discharged before payment of such obligation is made, or (ii) this requisition is
for the purpose of obtaining funds to be used to satisfy or discharge a lien or
contract of the type described in (i) above.
6. This requisition contains no request for payment on account of any
portion of such obligation which the Issuer is, as of the date hereof, entitled
to retain under retained percentage agreements.
7. This requisition contains no request for payment of any item for
which any payment obligation was incurred by the Company, and no item the
acquisition or fabrication of which was begun, prior to September 1, 1981.
8. With respect to any such item representing payment for labor,
services, material, supplies or equipment, insofar as such obligation was
incurred for labor, services, material, supplies or equipment in connection with
the acquisition, construction and installation of -the aforesaid Project, (1) such
labor and services were actually performed in a satisfactory manner, and (ii)
such labor and services were performed and such materials, supplies and
equipment were actually used solely in connection with she acquisition,
construction and installation of the Project.
a
This day of 1982.
INTERNATIONAL TELEPHONE AND
TELEGRAPH CORPORATION
By: _
AuthorE-- c Company Representative
D-2
EXHIBIT E
CERTIFICATE OF COMPLETION
The undersigned officer or agent of INTERNATIONAL TELEPHONE AND
TELEGRAPH CORPORATION DOES HEREBY CERTIFY as follows:
1. The acquisition, construction and installation of the Project as
described in the Loan Agreement (the "Agreement") dated as of May 1, 1982
by and among City of Eden Prairie, Minnesota (the "Issuer"), International
Telephone and Telegraph Corporation (the "Company") and First Interstate
Bark of California (the "Bank") has been completed in accordance with the
Plans and Specifications contained as Exhibit F to the Agreement and all
labor, services, materials, supplies and equipment used in such acquisition,
construction and installation have been paid for, except for amounts retained
in the Project Fund created in the Agreement for costs of the Project not yet
due or payable.
2. All other facilities necessary in connection with the Project have
been acquired, constructed and installed in accordance with the Plans and
Specifications and all costs and expenses incurred in connection therewith
have been paid, except for amounts retained in the Project Fund created in the
Agreement for costs of the Project riot yet due or payable.
3. The Project and all other facilities in connection therewith, have
been acquired, constructed and installed to our satisfaction and the Project as
so acquired, constructed and installed is suitable and sufficient for operation
as a manufacturing facility.
4. Substantially all of the proceeds of the $2,000,000 in principal
amount of the City of Eden Prairie, Minnesota Industrial Development
Revenue Bond (International Telephone and Telegraph Corporation Project),
Series 1982, have been used to acquire property of a character subject to the
allowance for depreciation contained in Section 167 of the Internal Revenue
Code of 1954, as amended (the "Code"), and such costs representing proceeds
so used are properly chargeable to the capital account of the Company for
Federal income tax purposes and were used to acquire, construct and install
the Project.
This certificate is given without prejudice to any rights against third
parties which exist on the date hereof or which may subsequently come into being.
This the _ day of
INTERNATIONAL TELEPHONE AND
TELEGRAPH CORPORATION
By:
Authorized Company Representative
E-1
r
r
EXHIBIT "F"
PROJECT SUMMARY
The Project consists of the acquisition, construction and installation of an expansion
to the existing industrial manufacturing facility operated by ITT Schadow, Inc. in
the City of Eden Prairie, Minnesota. The Project will be utilized for the
manufacture of switches. It is to consist of the construction of a 12,000 square foot
addition at a cost of approximately $400,000 and the installation in the addition of
machinery, equipment and related property including manufacturing and material
handling equipment, with a total cost of approximately $1,500,000.
Exhibit "F" - Page 1