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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) - ~ 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 ~/~' /~/{I' / 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: ....-. 1cil Notes: "- Date: June 16. 1986 Agenda Item No. /.2 . CI,Q OF SAN BERNARDI;;b - REQUEcr FOR COUNCIL AC~N STAFF REPORT '- 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. r '- Staff recommends adoption of the resolution which would authorize the amendment to guaranty in accord with the Federal Income Tax Code as noted above. l1l2L 6/86 ,,,..- --- 75-0264 ,..- "- ,..- '- -- '- c :) ,- '-' ....." 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 - 1 - c: r-, ......., -, v 'j ...... /- Realty Corporation, which resulting corporation is General Foam '- 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. - { '- - 2 - c "-' " .j ~) - 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 - ~ 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: - ~ City Attorney - 1 - ,- \- - '- - '- c '-" --' 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. :) City of attached a fulL and affixed day of City Clerk - 4 - ", c c -...I '~') "",,,,, ,- '-' 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: -------- 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") . - 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. '- 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. - '-' c c o :) - '- 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. --- 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. ......... 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 .- ......... 2 c ,-.. '- :) -) ~~., . ,- '- 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: - Fiscal Year Tangible Net Worth '- 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 r' '- 3 c ,"'" '--/ "'"" v J '-' 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: ,- "- "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 - '-' 4 c I"'" V o J - '- 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. r '- "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 ,- "- 5 c ,;"~" "-" o -.) """,,,' c 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. .-. '- .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).. c 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 6 - <; '" v :; J c 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: ,- ',- (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 ~.-.... ......, 7 ,.fO"""" '- o o :) r- '- 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. .. -- 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. c 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- ,-" '-' 8 ....- - -..) :) '- "-' ,~-, 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. '- 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. .-. '- 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: .- ...... 9 . . c c o :J - BURK ZANFT, an individual "-' 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: ,-.. '-' ,-.. '- 10 . ,.... '"'" ,'-' '-' o ~) ,.- EXHIBIT A "-' [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: ,..... ~ 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 ..- '- - c "'"" v ""'\ ~ ,j /.- 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. "-' 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. c 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 ,,"-'" ~ -2- , "...., '"" c 0' j ,..- ......... 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. c 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 ,,- ......... -3-