HomeMy WebLinkAboutR12-Redevelopment Agency
R~ENT AGENCY.~EST FOR b'6_ISSION/COUNCIL A~ION
~m: GLENDA SAUL
~t: Redevelopment Agency
Subject: PROPOSED AMENDMENTS TO GUARANTY IN
CONNECTION WITH SAN BERNARDINO, INDUSTRIEE
INC., INDUSTRIAL DEVELOPMENT BOND
FINANCING
Date: JUNE 11, 1986
Synopsis of Previous Commission/Council action:
On November 24, 1982, the Mayor and Common Council issued City of San Bernardino
Industrial Development Bonds to finance the acquisition and construction of an
industrial complex for manufacturing and warehouse purposes.
On March 19, 1984, the Mayor and Common Council adopted a resolution approving
certain amendments to the bond documents as a resullt of the merger between San
Bernardino Industries, a subsidiary of General Foam Plastics Corporation, and
General Foam Plastics Corporation.
Recommended motion:
(MAYOR AND COMMON COUNCIL)
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA,
APPROVING A CERTAIN AMENDMENT TO THE GUARANTY IN CONNECTION WITH ITS $3,500,000
CITY OF SAN BERNARDINO INDUSTRIAL DEVELOPMENT REVENUE NOTE OF 1982 (SAN BERNARDINO
INDUSTRIES, INC., PROJECT).
Exhibit "A" -- Amendment to Guaranty
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/ Signature
Contact person: GLENDA SAUL/KEN HENDERSON
Phone: 383-5081
Supporting data attached: YES / STAFF REPORT
Ward: 5
FUNDING REQUIREMENTS:
Amount: $
N/A
Project:
State College
No adverse Impact on City:
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Date:
June 16. 1986
Agenda Item No. /.2
. CI,Q OF SAN BERNARDI;;b - REQUEcr FOR COUNCIL AC~N
STAFF REPORT
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Industrial Revenue Bonds in the amount of $3,500,000 were issued in December,
1982, by the City of San Bernardino to San Bernardino Industries, Inc. The
bonds were issued to finance the acquisition and construction of an industrial
complex for manufacturing and warehouse purposes.
The Mayor and Common Council adopted a resolution in March, 1984, approving
certain amendments which were completed at the request of San Bernardino
Industries, Inc. These amendments were completed due to a merger of San
Bernardino, Inc., a California Corporation, a subsidiary of General Foam
Plastics Corporation, with General Foam Plastics Corporation, General Foam
Extrusion Corporation and 3321 Realty Corporation, which resulting corporation
is General Foam Plastics Corporation. The reason for the amendments were to
comply with merger r~quirements under California State Law.
Today, staff is requesting the approval by the Mayor and Common Council of an
amendment to the Guaranty in connection with it's $3,500,000 City of San
Bernardino Industrial Revenue Note of 1982. The reason for this amendment is
that General Foam Extrusion Corporation and San Bernardino Industries, Inc.,
were merged into General Foam Plastics Corporation (as noted above) and
General Foam Plastics Corporation has elected to be treated as an "S"
corporation by Internal Revenue Service, in accord with the merger
requirements under the Federal Income Tax Code.
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Staff recommends adoption of the resolution which would authorize the
amendment to guaranty in accord with the Federal Income Tax Code as noted
above.
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75-0264
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SBEOOl-126/1720S/k1
OS/29/86
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING A
CERTAIN AMENDMENT TO THE GUARANTY IN CONNECTION
WITH ITS $3,500,000 CITY OF SAN BERNARDINO,
INDUSTRIAL DEVELOPMENT REVENUE NOTE OF 1982
(SAN BERNARDINO INDUSTRIES, INC. PROJECT)
WHEREAS, on November 1, 1982, the Mayor and Common Council
of the City of San Bernardino, California (the "Mayor and Common
Council"), acting for and on behalf of the City of San Bernardino,
California (the "City"), approved the execution of the Project
Agreement by and among San Bernardino Industries, Inc., a California
corporation (the "Company"), the City, Bankers Trust Company (the
"Purchaser") and Security Pacific National Bank (the "Trustee")
dated as of November 1, 1982 (the "Project Agreement"), and such
other necessary or des i rable security documents in connect ion wi th
the issuance of its $3,500,000 City of San Bernardino, Industrial
Development Revenue Note of 1982 (San Bernardino Industries, Inc.
Project) (the "City Note"), including a Guaranty by and among the
Company, General Foam Plastics Corporation, 3321 Realty Corporation
and Burk Zanff to the Trustee, on behalf of the Purchaser, dated as
of November 1, 1982 (the "Guaranty"); and
WHEREAS, there has been a merger of the Company, a
subsidiary of General Foam Plastics Corporation, with General Foam
Plastics Corporation, General Foam Extrusion Corporation and 3321
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/- Realty Corporation, which resulting corporation is General Foam
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Plastics Corporation; and
WHEREAS, the Mayor and Common Council, by adoption of an
appropriate Resolution on March 19, 1984, has previously approved
and authorized the execution of amendments to the Project Agreement
and various documents, including Amendment No.1 to the Guaranty by
and among the parties to the Guaranty, dated November 24, 1982
("Amendment No. I") for the purposes of naming General Foam Plastics
Corporation as a party to the Project Agreement and such other
documents executed and delivered in connection therewith;
WHEREAS, General Foam Plastics Corporation has requested
C the Mayor and Common Counci 1 to approve a certain amendment to the
Guaranty in the form as attached hereto as Exhibit "A" ("Amendment
No.2 to the Guaranty") to enable General Foam Plastics Corporation
to comply with certain "S" corporation requirements as imposed by
the Internal Revenue Service.
NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS
FOLLOWS:
Section 1.
The recitals set forth hereinabove are true
and correct in all respects.
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Section 2.
The Mayor and Common Council hereby approves
~ Amendment No.2 to the Guaranty.
Section 3.
The
Mayor
and
City
Clerk
are
hereby
authorized to execute Amendment No. 2 to the Guaranty and the City
Clerk is hereby authorized to transmit the final executed copies of
Amendment No.2 to the Guaranty to the Trustee as a party to said
Amendments.
I HEREBY
adopted by the
San Bernardino at
held on the
the following vote,
CERTIFY
Mayor
a
that
and
the foregoing
Common Counci 1
resolution
of the
meeting
was duly
Ci ty of
thereof,
1986 , by
day of
to wit:
AYES:
Council Members
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NAYS:
ABSENT:
City Clerk
day of
The foregoing resolution is hereby approved this
, 1986.
Mayor of the City of
San Bernardino
Approved as to form:
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~ City Attorney
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STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO )
CITY OF SAN BERNARDINO )
ss
I, SHAUNA CLARK, City Clerk in and for the
San Bernardino, DO HEREBY CERTIFY that the foregoing and
copy of San Bernardino City Resolution No. is
true and correct copy of that now on file in this office.
IN WITNESS WHEREOF, I have hereunto set my hand
the official seal of the City of San Bernardino this
, 1986.
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City of
attached
a fulL
and affixed
day of
City Clerk
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AMENDMENT
AMENDMENT, dated as of November 1, 1985, by and
among GENERAL FOAM PLASTICS CORP., a Virginia corporation
(hPlasticsR), 3321 REALTY CORP., a Virginia corporation
(R332l RealtyR), and BURK ZANFT, an individual (all of the
foregoing, collectively, the RGuarantorsR), SECURITY PACIFIC
NATIONAL BANK, a national banking association, as trustee
(the RTrusteeR), and the CITY OF SAN BERNARDINO, CALIFORNIA,
a political subdivision of the State of California (the
RAuthorityR) .
R E C I TAL S:
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A. Bankers Trust Company, a New York banking
corporation (the RBankR), purchased from the Authority the
Authority's $3,500,000 Industrial Development Revenue Note of
1982 (San Bernardino Industries, Inc., Project) (the "City
Notes") .
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B. The City Notes were issued under and pursuant
to a Project Agreement (as amended from time to time, the
"Project Agreement"), dated as of November 1, 1982, among the
Authority, the Trustee, San Bernardino Industries, Inc., a
California corporation (RDebtor"), and the Bank.
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C. The proceeds derived from the issuance of the
City Notes were used to acquire and construct an industrial
complex for manufacturing and warehouse purposes as specified
in the Project Agreement.
D. In connection therewith, the Guarantors,
Debtor and General Foam Extrusion Corp., a Virginia
corporation (RExtrusion"), entered into a Guaranty (together
with Exhibit A thereto, as amended from time to time, the
RGuaranty"), dated as of November 1, 1982, pursuant to which
the Guarantors and Extrusion jointly and severally, among
other things, unconditionally and irrevocably guaranteed the
payment of the City Notes to the Trustee and the
RBondholders" therein referred to, including, without limita-
tion, the Bank, and their respective successors and assigns.
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E. subsequent to entering into the Guaranty,
Extrusion and Debtor merged with and into Plastics and
Plastics became entitled (and is now entitled) to the
benefits of Subchapter S of Chapter 1 (Section 1371 et seq.)
of the Internal Revenue Code of 1954, as amended.
F. The Guarantors have requested that the Guar-
anty be amended to modify certain of the terms and provisions
contained therein.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. (a) All of the terms used herein which are
defined in the Guaranty and in the Project Agreement shall
have the same meaning when used herein unless otherwise
defined herein. '
(b) For all purposes of the Guaranty, unless
the context otherwise requires, the term wApril 30, 1985
NatWest Term Loan AgreementW means the Term Loan Agreement
dated as of April 30, 1985 by and between Plastics and
National Westminster Bank USA, a national banking
association.
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2. All references to Extrusion and its Subsid-
iaries are hereby deleted from the Guaranty and, accordingly,
(i) each reference to wPlastics, Extrusion and their Subsidi-
aries. in the Guaranty is hereby deleted and there is substi-
tuted therefor a reference to wPlastics and its Subsi-
diaries., (ii) the term wCompanies. defined in the Guaranty
is hereby amended to mean Plastics and 3321 Realty Corp.,
(iii) the term .Guarantors. defined in the Guaranty is here-
by amended to mean Plastics, 3321 Realty Corp. .and Burk Zanft
and (iv) the term wDebtor. defined in the Guaranty is hereby
amended to mean Plastics.
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3. A new Section 2.0l(f) is hereby added to the
Guaranty reading as follows:
W(f) The occurrence of an Event of Default under
and as defined in the April 30, 1985 NatWest Term
Loan Agreement..
4. Paragraph C.1 of Exhibit A to the Guaranty is
hereby amended by deleting such Paragraph in its entirety and
by substituting therefor the following:
.1. working Capital. Plastics and its Sub-
sidiaries, if any, shall not permit or suffer
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their c~nsolidated working Capital as of April
30 of each of the below mentioned fiscal
years, to be less than the amount set forth
opposite each such respective date:
Fiscal Year
Working Capital
April 30, 1985
April 30, 1986
Apr il 30, 1 987
and April 30 of
each fiscal year
thereafter
$
$
6,500,000
7,500,000
$
8,500,000"
5. Paragraph C.2 of Exhibit A to the Guaranty is
hereby amended by deleting subparagraphs (a) and (b) of Para-
graphC.2 in their entirety and substituting therefor the
following:
"(a) Permit or suffer the sum of their consol-
idated Tangible Net Worth as of April 30 of
each of the below mentioned fiscal years to be
less than the amount set forth opposite each
such respective date:
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Fiscal Year
Tangible Net Worth
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April 30, 1985
Apr il 30, 1 986
April 30, 1987
and April 30 of
each fiscal
year thereafter
$
$
11,000,000
12,000,000
$
13,000,000
"(b) ~ermit or suffer the ratio of their
consolidated Indebtedness to their
consolidated Tangible Net Worth to be more
than 1.50 to 1 as of April 30 of each fiscal
year, commencing with the. fiscal year ended
Apr il 30, 1 985. "
6. paragraph C.5 of Exhibit A to the Guaranty is
hereby amended by adding after the words "dividends payable
solely in shares of its common stock", beginning in the fifth
line of the first sentence of such Paragraph, the following:
"and except for distributions to its shareholders to the
extent the aggregate distributions made during any fiscal
year do not exceed the balance (determined after taking into
account income and loss for the fiscal year in which such
distributions are made but before taking into account
distributions made during such fiscal year) in its
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accumulated adjustments account (as defined in section 1368
of the Internal Revenue Code of 1954, as amended), if any,
as at the last day of the fiscal year in which such distri-
butions are made"
7. Paragraph C.6 of Exhibit A to the Guaranty is
hereby amended by deleting the word "and" appearing before
"(d)" on the eleventh line of such Paragraph and substituting
a comma therefor, and deleting the period at the end of such
Paragraph and substituting therefor the following: "; and
(e) the guaranties of 3321 Realty Corp. and Burk Zanft made
pursuant to the April 30, 1985 NatWest Term Loan Agreement."
8. paragraph C.8 of Exhibit A to the Guaranty is
hereby amended by adding on the twentieth line of such Para-
graph following the words "may be required by", the
following: "the April 30, 1985 NatWest Term Loan Agreement
orne
9. paragraph C.9 of Exhibit A to the Guaranty is
hereby amended by deleting the reference therein to "January
31" and substituting therefor "April 30".
10. New Paragraphs B.8 through B.15 are hereby
added to Exhibit A to the Guaranty reading as follows:
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"8. Compliance with ERISA. Comply with the
applicable provisions of ERISA with respect to their respec-
tive Plans (if any).
"9. Maintenance of Plastics' working Capital.
Plastics shall have as at the last day of each of its fiscal
years an excess of (a) current assets over (b) current
liabilities less the current portion of "subordinated
indebtedness" (as defined in the April 30, 1985 NatWest Term
Loan Agreement) of at least $6,500,000 as at April 30, 1985,
$7,500,000 as at April 30, 1986 and $8,500,000 as at April
30, 1987 and as at the end of each fiscal year thereafter.
"10. Maintenance of Plastics' Tangible Net Worth.
Plastics shall maintain at all times "tangible net worth"
plus "subordinated indebtedness" in an amount not less than
$9,519,000 and a ratio of Indebtedness less "subordinated
indebtedness" to "tangible net worth" plus "subordinated
indebtedness" of not more than 1.75 to 1.0 (all such terms
as defined in the April 30, 1985 NatWest Term Loan
Agreement) .
"11. Debt Service Coveraqe Ratio. Plastics shall
have as at the last day of each of its fiscal years, a ratio
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of (i) net income before federal, state and local taxes plus
the expense for the depreciation and amortization of assets
for such year to (ii) the required payments of principal to
be paid on the current portion of "long term indebtedness"
exclusive of "subordinated indebtedness" during the follow-
ing fiscal year of Plastics of not l~ss than 2.5 to 1.0 (all
such terms as defined in the April 30, 1985 NatWest Term
Loan Agreement).
"12. No Short Term Indebtedness. Plastics shall
have, during each fiscal year, a period of at least 30 con-
secutive days in which no "short term indebtedness" (as
defined in the April 30, 1985 NatWest Term Loan Agreement)
is outstanding.
"13. S Corporation Status. Plastics shall main-
tain its status at all times as a corporation entitled to
the benefit of Chapter 1, Subchapter S of the Internal
Revenue Code of 1954, as amended.
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"14. Notice of Event of Default. Immediately give
written notice to the Trustee and the Bondholders that an
Event of Default has occurred or that an event which, with
the giving of notice or lapse of time, or both, would
constitute an Event of Default, has occurred and specifying
the action which the Guarantors have taken and propose to
take with respect thereto.
"15. Additional Deliveries.
"(a) Annually, as soon as available, but in
any event within 90 days after the last day of each fiscal
year of 3321 Realty, balance sheets of 3321 Realty as at such
last day of the fiscal year, and related statements of income
and retained earnings and changes in financial position, for
such fiscal year, each prepared in accordance with generally
accepted accounting principles consistently applied, in rea-
sonable detail, such statements to be certified without
qualification by Ellenbogen, Freeman & Co., P.C. or by a -firm
of independent certified public accountants reasonably satis-
factory to the holders of the City Notes;
"(b) Monthly, but no later than the 15th day
after the last day of each month, an aging of Plastics'
accounts receivable in a form reasonably satisfactory to the
holders of the City Notes; and
"(c) Quarterly, but no later than 45 days
after the last day of each fiscal quarter of Plastics, a
compilation statement of Plastics prepared on a break-even
basis by Ellenbogen, Freeman & Co., P.C. or by a firm of
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independent certified. public accountants reasonably satisfac-
tory to the holders of the City Notes, said statement to be
in a form reasonably satisfactory to the holders of the City
Notes..
11. New Paragraphs C.l0 and C.ll are hereby added
to Exhibit A to the Guaranty reading as follows:
.10. Limitations on Loans and Investments. The
Companies shall not, and shall not permit any Subsidiary to,
lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any
Person except investments in United States Government obli-
gations and certificates of deposit of any banking institu-
tion with combined capital and surplus of at least
$200,000,000.
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.11. Limitation on Indebtedness. Plastics shall
not have any period longer than 120 consecutive days during
which total indebtedness of Plastics or any of its Subsi-
diaries (excluding .subordinated indebtedness.) to any fin-
ancial institution which is secured by accounts receivable
and/or inventory exceeds 80% of Plastic's trade accounts
receivable arising in the ordinary course of Plastics'
business which are not owing more than 90 days past the date
of the invoice; total indebtedness to include both .short
term indebtedness. and .long term indebtedness. minus
(i) indebtedness incurred for the purchase of real property,
if, but only if, the lender is secured by such real property
and such indebtedness does not exceed 75% of the appraised
value of such property (which appraisal must be reasonably
satisfactory to the Bank); (ii) indebtedness incurred for
the purchase of machinery and equipment if, but only if, the
lender is secured by such machinery and equipment and such
indebtedness does not exceed 60% of the purchase price of
said machinery or equipment; and (iii) .long term
indebtedness. incurred prior to April.30, 1985 (as such
terms are defined in the April 30, 1985 NatWest Term Loan
Agreement)..
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12. In order to induce the Authority and the
Trustee to enter into this Amendment, and to induce the Bank
to agree and consent to this Amendment, the Guarantors hereby
jointly and severally represent and warrant as follows:
(a) All of the representations and warranties
made or deemed to have been made by the Guarantors pursuant
to the Guaranty are true and correct as of the date hereof,
except to the extent that the facts upon which such repre-
sentations and warranties were based may have been changed by
transactions not in violation of the Guaranty as herein
amended; provided, however, that each reference in the
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Guaranty to the Guaranty shall be deemed to refer to the
Guaranty as herein ame'nded.
(b) The Companies have the corporate power
and authority to execute, deliver and carry out the terms and
provisions of the Guaranty as herein' amended. The execution,
delivery and performance by the Companies of this Amendment
has been duly authorized by all requisite corporate action
and this Amendment constitutes the valid, legal and binding
obligation of the Guarantors enforceable in accordance with
its terms.
(c) As of the date hereof, unless waived by
the Bank in writing, the Guarantors have observed and per-
formed all of the terms, conditions and agreements set forth
in the Guaranty as herein amended on their part to be
observed and performed and there has not occurred and is
continuing any Event of Default under the Guaranty as herein
amended. . - -.-
13. The provisions of this Amendment shall become
effective only if and when all of the following conditions
precedent shall have been satisfied:
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(a) The Guarantors, the Authority, the
Trustee and the Bank shall have executed this Amendment, and
the Bank shall have received a fully executed manually signed
copy or copies thereof.
(b) The Bank shall have received from each of
the Guarantors (other than Burk zanft) a certificate of its
Secretary (or Assistant Secretary), dated the date hereof,
certifying as to (i) the resolutions of its Board of
Directors authorizing the the execution, delivery and
performance of this Amendment and the Guaranty as herein
amended, (ii) the full force and effect of such resolutions
on the date of said certificate and (iii) the incumbency and
signature of the officer or officers signing this Amendment
and any other document relating thereto on its behalf.
(c) The Bank shall have received from Roberts
& Holland, counsel for the Guarantors, an opinion addressed
to the Bank, dated the date hereof, substantially in the form
of Exhibit A annexed hereto.
(d) All corporate and legal proceedings and
all instruments and agreements in connection with the trans-
actions contemplated by this Amendment shall be satisfactory
in form, scope and substance to the Bank and its counsel, and
the Bank and such counsel shall have received all information
and copies of all documents, including records of corporate
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proceedings, which the Bank or its counsel may reasonably
have requested in connection therewith, such documents where
appropriate to be certified by proper corporate and govern-
mental authorities.
14. No modification or waiver of any provisions of
this Amendment or-the Guaranty, nor consent to any departure
by the Guarantors therefrom, shall in any event be effective,
irrespective of any course of dealing between the parties,
unless the same shall be in a writing executed by the Bank,
and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.
The Guaranty as herein amended, and any other instruments
referred to therein or herein, set forth the entire agreement
of the parties hereto with respect to the subject matter
hereof.
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15. All of the terms of this Amendment shall be
binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and
assigns, but the Guarantors shall have no right to assign (by
operation of law or otherwise) any of their rights hereunder
or under the Guaranty without the prior written consent of
the Bank.
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16. The Guarantors agree to pay, and the Bank may
charge any deposit or loan account(s) of any and all of the
Guarantors for, all out-of-pocket expenses incurred by the
Bank in connection with the negotiation, preparation, execu-
tion, delivery and administration of this Amendment, includ-
ing, without limitation, the reasonable fees and disburse-
ments of Messrs. Moses & Singer, the Bank's special counsel.
17. The parties hereto agree that (i) the execu-
tion and delivery of this Amendment as provided for herein
shall be sufficient to comply with the provisions of the
Guaranty and the Project Agreement, providing, inter alia,
the procedure for amending the Guaranty, (ii) the signatUre
of the Bank hereto shall constitute the agreement of the -
holders of 100% in aggregate principal amount of the Bonds
presently outstanding to the terms and provisions of this
Amendment and (iii) notice of this Amendment need not be
mailed to the Bank.
18. The waivers and modifications set forth herein
are limited precisely as written and shall not be deemed to
(i) be a consent to or a waiver of any other term or condi-
tion of the Guaranty or the Project Agreement or any of the
instruments and documents referred to therein or (ii) preju-
dice any right or rights which the Trustee may now have or
may have in the future under or in connection with the Guar-
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anty or the Project Agreement, as modified, or any of the
instruments and documents referred to therein. Except as
expressly modified hereby or pursuant hereto, the terms and
provisions of the Guaranty and the Project Agreement and the
instruments and documents referred to therein shall remain in
full force and effect, and, as so modified, are hereby
ratified and confirmed.
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19. The execution by the parties hereto of this
Amendment shall also constitute their approval of the waivers
and modifications effected hereby.
20. Each of the parties hereto represents as to
itself that this Amendment constitutes its duly authorized,
executed and delivered agreement which is binding upon such
party in accordance with its terms.
21. This Amendment and the rights and obligations
of the parties hereunder shall be governed by and construed
and enforced in accordance with the internal laws of the
State of New York applicable to contracts made and to be
performed wholly within such State, without reference to
choice or conflict of laws principles.
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22. This Amendment may be executed in several
counterparts each of which shall be an original and all of
which taken together shall constitute one and the same in-
strument.
IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be duly executed and delivered, in the
case of corporate parties, by their respective duly author-
ized officers, on the date first above written, and in the
case of the Bank, in New York City, New York.
GENERAL FOAM PLASTICS CORP.
By:
Title:
3321 REALTY CORP.
By:
Title:
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BURK ZANFT, an individual
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SECURITY PACIFIC NATIONAL BANK,
as Trustee
By:
Title:
[SEAL]
ATTEST:
CITY OF SAN BERNARDINO,
CALIFORNIA
By:
Mayor
City Clerk.
AGREED AND CONSENTED TO THIS
OF NOVEMBER, 1985:
DAY
BANKERS TRUST COMPANY, as Bondholder
By:
Title:
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EXHIBIT A
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[To be transcribed on the
letterhead of Roberts & Bolland]
November 1, 1985
Bankers Trust Company
280 Park Avenue
New York, New York 10017
National Westminster Bank OSA
592 Fifth Avenue
New York, New York 10036
Gentlemen:
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We are counsel to General Foam Plastics Corp., a
Virginia corporation; 3321 Realty Corp., a Virginia
corporation; and Burk Zanft, an individual (all of the
foregoing, collectively, the "Guarantors"), and have acted as
such in connection with the four Amendments of even date
herewith described in Schedule A hereto (the "Amendments").
We have reviewed the Amendments, the corporate
records of each of the corporate Guarantors and the
proceedings of their respective shareholders and Boards of
Directors and such other matters, including questions of law
and fact, as we have deemed necessary to render the opinions
set forth herein. Any reference herein to our knowledge
means such knowledge based upon duly diligent inquiry and
investigation.
that:
Based upon the foregoing, we are of the opinion
1. Each Guarantor has the power and authority to
execute, deliver and carry out the terms and provisions of
the Amendments and the Guaranties therein referred to (as
amended by said Amendments) to which it is a party.
2. The execution, delivery and performance by
each Guarantor of each Amendment to which it is a party has
been duly authorized by all requisite corporate action.
3. Neither the execution and delivery of the
Amendments nor the consummation of the transactions therein
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contemplated, nor compliance with the terms and provlslons
thereof, will contrav~ne any provision of law, statute, rule
or regulation to which any Guarantor is subject or any
judgment, decree, franchise, order, arbitration award or
permit applicable to any Guarantor, or will conflict or be
inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute
a default under, or result in the creation or imposition of
any lien, security interest, charge or other encumbrance upon
any of the properties or other assets of any Guarantor
pursuant to the terms of, any indenture, mortgage, deed of
trust, agreement or other instrument known to us to which any
Guarantor is a party or by which any Guarantor's property may
be subject or affected, or violate any provision of the
Certificate of Incorporation or By-laws of any Guarantor.
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4. The Amendments constitute the duly authorized,
valid and legally binding obligations of each Guarantor, as
the case may be, enforceable in accordance with their respec-
tive terms, except as limited by bankruptcy, insolvency,
reorganization and other similar laws which generally affect
the enforcement of creditors' rights.
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5. No consent or approval of, or exemption or
other action by, or filing or registration with, any govern-
mental or public body or authority is required to authorize,
or is required in connection with the execution, delivery and
performance of, the Amendments, or the taking of any action
contemplated thereby.
6. The execution, delivery and performance of the
Amendments shall not have any adverse effect on the exemption
from all present Federal income taxation of the interest on
the RBonds" referred to in each of the Amendments, except as
provided in Section 103(b)(13) of the Internal Revenue Code
of 1954, as amended (the RCodeR), with respect to interest on
any Bond for any period during which it is held by a person
who is a Rsubstantial user" of any Project financed by any of
the Bonds or a Rrelated personR as those terms are used .in
Section 103(b) of the Code and related Regulations of the
U.S. Department of Treasury.
Very truly yours,
ROBERTS , HOLLAND
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SCHEDULE A
to Opinion of
Roberts & Holland
Amendments
1. Amendment among General Foam Plastics Corp.
(WPlasticsW), 3321 Realty Corp. (W3321 RealtyW), Burk Zanft,
United Virginia Bank, as trustee, and Norfolk Port and
Industrial Authority, consented to by Bankers Trust Company
(WBTW), as bondholder.
2. Amendme~t among Plastics, 3321 Realty, Burk
Zanft, Security Pacific National Bank, as trustee, and the
City of San Bernardino, consented to by BT, as bondholder.
.3. Amendment among Plastics, Burk Zanft, Citizens
Bank and Trust Company, Lebanon, Indiana, as trustee, and the
City of Lebanon, consented to by National Westminster Bank
USA, as bondholder.
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4.
Boone County
consented to
bondholders.
Amendment
State Bank,
by National
among Plastics, Burk Zanft, and The
as trustee, and the City of Lebanon,
Westminster Bank USA and BT, as
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