Fox Factory Holding Corp 8-K, filed Jun 16, 2020
Fox Factory Holding Corp (FOXF)
8-K
2020-06-16
For: 2020-06-12
View Original
Added on
April 07, 2026
About this 8-K
Fox Factory Holding Corp filed this 8-K on June 16, 2020, reporting on events of June 12, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
(Exact name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(831 ) 274-6500
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds
On June 1, 2020, Fox Factory, Inc., a California corporation (“Fox”), and wholly owned subsidiary of Fox Factory Holding Corp., a Delaware corporation (the “Company”), entered into each of the agreements as set forth below (the “Agreements”), which such Agreements became effective as of June 12, 2020 upon the issuance of the Bonds (as defined below).
FF US Holding LLC, a Georgia limited liability company of which Fox is the sole member (“Holding”) owns property in Gainesville, Georgia on which Fox has undertaken the acquisition, construction and installation of certain real and personal property, including a facility for the manufacture of shock absorbers for certain of its powered vehicles products (the “Project Facility”). The Gainesville and Hall County Development Authority (the “Issuer”) was empowered by the State of Georgia to issue its revenue bonds for the purpose of providing economic development incentives.
On June 1, 2020, Fox finalized a PILOT Agreement (the “PILOT Agreement”) between the Issuer and Fox, for certain ad valorem tax benefits provided by the Issuer to Fox on the Project Facility. The benefits are subject to partial or full reduction based on the Company’s performance against certain criteria, including capital investment of $60 million in the Project Facility by December 31, 2022, creation and retention of a specified number of jobs at the Project Facility by March 31, 2025, and the establishment of Fox’s international headquarters at the Project Facility or another certain real estate site in Gainesville, GA by December 31, 2026.
To facilitate the incentives, the Issuer will issue its Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in an aggregate principal amount not to exceed $75,000,000 (the “Bonds”). The Bonds will be issued in multiple installments through 2022, pursuant to the terms of a Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), between the Issuer and Fox, as bondholder. On June 1, 2020, Fox entered into a Bond Purchase Agreement (the “Bond Purchase Agreement”) between the Issuer and Fox, providing for the purchase by Fox of the initial Bond installment. On June 12, 2020, Fox purchased, and the Issuer delivered, one fully registered Bond, dated June 12, 2020, numbered R-1, in the amount of $34,554,100, bearing interest at the rate of 5.0% per annum, first interest payable on September 1, 2020, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier date of prepayment, and maturing on September 1, 2027. Fox and the Issuer have agreed that in return for the Bond, Holding will convey the Project Facility to the Issuer and that Fox will lease the Project Facility from the Issuer under the terms of a Lease (as defined below). Fox will not pay any cash for the Bond nor receive any cash for the conveyance of the Project Facility.
On June 1, 2020, Fox entered into a Lease Agreement (the “Lease”) between the Issuer, as lessor, and Fox, as lessee, for the lease of the Project Facility, as more fully described in the Lease. Rental payments under the Lease are set at the amount required to pay principal of and interest on the Bonds. The Lease contains customary obligations related to maintenance, taxes, utilities, inspections, and insurance requirements. Fox is required to indemnify the Issuer for construction and operations of the Project Facility, lease defaults by Fox, and negligence of Fox and certain affiliates. Fox may not assign or sublease the Project Facility without the Issuer’s consent, subject to customary exceptions. The Lease contains customary default events and remedies, however, the Issuer may not exercise many of its remedy rights under the Lease without the consent of Fox as the bondholder. The term of the Lease ends on September 1, 2027 or upon early termination by Fox. At the termination of the Lease, including early termination, the Project Facility will be reconveyed to Fox for the sum of ten dollars ($10) plus de minimus administrative fees in addition to the potential refund or forfeiture of ad valorem tax benefits.
The Bonds are secured by the Lease, by the Financing Agreement, and by a Deed to Secure Debt and Security Agreement, dated as of June 1, 2020, executed by the Issuer in favor of Fox and by an Assignment of Rents, dated as of June 1, 2020, executed by the Issuer in favor of Fox (under which substantially all the rights of the Issuer in the Lease are assigned to Fox, as bondholder). Lease and Bond payments are settled by Fox as both bondholder and lessee on a cashless basis pursuant to a Direct Payment Agreement, dated June 1, 2020, between the Issuer and Fox.
Except for the reduction in ad valorem taxes, the transactions described in this Current Report on Form 8-K will have no impact on the Company’s statements of financial position, operations or cash flow. The Company will continue to report the Project Facility within property, plant and equipment. Other than the contingent return of the incentives, the transactions taken as a whole create no third party financing obligations.
The foregoing summary of the material terms and conditions of the PILOT Agreement, Bond Purchase Agreement, Financing Agreement, Lease Agreement, Deed to Secure Debt and Security Agreement, Assignment of Lease Agreement, and Direct Payment Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the complete text of the PILOT Agreement, Bond Purchase Agreement, Financing Agreement, Lease Agreement, Deed to Secure Debt and Security Agreement, Assignment of Lease Agreement, and Direct Payment Agreement, which are attached to this Current Report on Form 8-K as Exhibits 10.1 through 10.7 and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included or incorporated by reference in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are furnished herewith:
| Exhibit Number | Description | ||||
| PILOT Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Bond Purchase Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Financing Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Lease Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Deed to Secure Debt and Security Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Assignment of Lease Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| Direct Payment Agreement, between Fox Factory, Inc. and the Gainesville and Hall County Development Authority, effective June 12, 2020. | |||||
| 104 | Cover Page Interactive Data File (embedded with Inline XBRL document) | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Fox Factory Holding Corp. | |||||||||||||||||
| Date: | June 16, 2020 | By: | /s/ Michael C. Dennison | ||||||||||||||
| Michael C. Dennison | |||||||||||||||||
| Chief Executive Officer | |||||||||||||||||
Exhibit 10.1
PILOT AGREEMENT
THIS PILOT AGREEMENT, dated as of the 1st day of June, 2020 (the “Dated Date”), but effective on the date the Bonds referred to below are issued (the “Effective Date”), by and between the Gainesville and Hall County Development Authority (the “Issuer”), a public body corporate and politic created pursuant to a local amendment to the constitution of the State of Georgia and Fox Factory, Inc., a California corporation, authorized to transact business in Georgia (the “Company”).
Section 1. The Lease Agreement. The Issuer is issuing its Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020 (the “Bonds”), in the principal amount of $75,000,000, for the purpose of financing the acquisition, construction and installation of certain real and personal property comprising a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West, Gainesville, Hall County, Georgia (the “Project”). The Project is divided into three phases, the 2020 Project, the 2021 Project and the 2022 Project as defined in the Lease Agreement. The Issuer, as lessor, and the Company, as lessee, are entering into that certain Lease Agreement, dated as of the Dated Date (the “Lease Agreement”), under which the Issuer is to lease the Project to the Company for operation. All capitalized terms used herein that are defined in the Lease Agreement, but are not defined herein, shall have the same meaning herein as in the Lease Agreement. In consideration of the execution of the Lease Agreement by the Issuer and Company, and in further consideration of the Issuer’s issuance of the Bonds, the parties have entered into this PILOT Agreement. The parties agree that the principal amount of the Bonds will not act as a limitation or a cap on the amount of property subject to valuation in accordance with Section 4 below.
Section 2. Recitals. The parties hereto recognize that the Issuer’s interest in the Project is exempt from ad valorem taxes. The parties hereto recognize that under the laws of the State of Georgia, a leasehold interest that is a mere usufruct is not treated as a separate estate in property and is not subject to ad valorem taxes.
Section 3. Findings and Agreement as to the Issuer’s and the Company’s Interests.
(a) The intention of the parties controls whether the Lease Agreement creates a usufruct or an estate for years. The Issuer and the Company have expressly stated in the Lease Agreement and hereby agree with each other, and hereby represent unto each other and to the County, other taxing authorities having powers of taxation over the location of the Project and to the Board of Tax Assessors (the “BOTA”) of the County that they intend the leasehold interest of the Company under the Lease Agreement to be a usufruct, and they have demonstrated this intention by expressly so stating in the Lease Agreement and this intention is further reflected in various provisions of the Lease Agreement which restrict and limit the Company’s rights, to wit:
(i) Limitation on Nature of Company’s Use. In order that Issuer, as lessor, may control the use of the Project to assure that such use is at all times for purposes permitted by the Act (so as to further the public purposes of the Issuer), the Issuer and the Company have provided in the Lease Agreement that the Company may use the Project only for the limited purposes stated in the Lease Agreement (which are purposes permitted by the Act). Thus, the Company does not have the right to use the Project in as absolute a manner as it would have if it were the owner of the Project.
(ii) Company’s Interest Is Not Subject to Assignment or Sublease. In order that the Issuer, as lessor, may control the use of the Project and assure that such use is at all times by persons satisfactory to the Issuer, who will use the Project for purposes permitted by the Act (so as to further the public purposes of the Issuer), the Issuer and the Company have provided in the Lease Agreement that the Company’s rights to occupy, use and enjoy the Project (a) may be subleased so long as the sublease is to the parent, subsidiary or affiliate of the Company and the Lessee remains obligated on the Lease and (b) may be assigned if the assignment is to any parent, subsidiary or affiliate of the Company and the assignee assumes all the obligations under the Lease, all as more specifically set forth in the Lease Agreement. Any other assignment or sublease will be subject to the prior consent of the Issuer, which consent shall not be unreasonably withheld or delayed. The Issuer and the Company have the right to grant liens as provided in Section 3.5 of the Lease Agreement.
(iii) Issuer’s Right to Enforce Compliance With Applicable Laws. In order that the Issuer, as lessor, may control the use of the Project in order to assure that such use is at all times lawful, the parties have provided in the Lease Agreement, that the Company’s use of the Project shall be conducted at all times in accordance with all applicable laws, ordinances, rules and regulations and that the Issuer, as lessor (in addition to any other federal, state or local government body or agency which may be entitled to enforce such laws, ordinances, rules and regulations) shall be entitled to enforce such provision of the Lease Agreement by an action at law or in equity.
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(iv) Issuer’s Rights of Inspection. In order that the Issuer may monitor compliance by the Company with the restrictions and covenants therein contained, the Issuer and the Company have provided in Section 8.2 of the Lease Agreement that the Issuer shall be entitled to inspect the Project and the Company’s books and records relating thereto, subject to the provisions of Section 8.2 of the Lease Agreement.
(v) Repair and Maintenance Covenants. Under current law, the granting of a usufruct to the Company would not impose on the Company the obligation to make major repairs to the Project; because the Issuer is without funds to pay costs of repairs and maintenance, the Issuer and the Company have agreed in Section 6.1 of the Lease Agreement that the Company, by operation of express covenant and not by operation of law, shall be responsible for the repair and maintenance of the Project, including major repairs.
(vi) Insurance Covenants. Under current law, the granting of a usufruct does not impose upon the Company any obligation to insure the property that is the subject of such grant; because the Issuer is without funds to pay costs of insurance, the Issuer and the Company have agreed in Section 6.4 of the Lease Agreement that the Company, by operation of express covenant and not by operation of law, shall be responsible for insuring the Project.
(vii) Covenants Relating to Utilities. Under current law, the granting of a usufruct does not impose upon the Company an obligation to pay for utility charges resulting from its use of the Project; because the Issuer is without funds to pay costs of utilities, the Issuer and Company have agreed in Section 6.3 of the Lease Agreement that the Company, by operation of express covenant and not by operation of law, shall be responsible for paying the costs of utilities used at the Project.
(viii) Taxes and Payments in Lieu of Taxes. Under current law, the interest of the Issuer, as lessor, is exempt from ad valorem taxes and under current law, the granting of a usufruct does not impose upon the Company any obligation to pay ad valorem taxes, either on its leasehold interest or the Issuer’s ownership interest in the Project. Because the Constitution or laws of the State may be amended in a manner that might subject the Issuer’s ownership interest in the Project or the Company’s leasehold interest in the Project under the Lease Agreement to ad valorem taxes, and because the Issuer is without funds to pay such taxes or the cost of contesting the imposition of taxes, the Issuer and the Company have agreed, in Section 6.3 of the Lease Agreement, that the Company shall bear the risk of taxation as to its leasehold interest and as to the Issuer’s ownership interest in the Project and shall be entitled to contest any ad valorem taxes sought to be imposed thereon, in its own name or in the name of the Issuer. Thus, by operation of express covenant and not by operation of law, the Lessee shall be responsible for paying any ad valorem taxes that may become payable on the Project. The Company will pay ad valorem taxes on the property that is owned by the Company and located at the site of the Project.
Section 4. Special Covenants Related to Ad Valorem Tax Assessment.
(a) The parties hereto acknowledge that the judicial decisions attempting to distinguish between leases creating an estate for years and leases creating a usufruct have relied heavily on the facts of each case and have created uncertainty. Due to the interest of the Issuer in the Project and the uncertainty under Georgia law as to whether the Company’s leasehold interest created by the Lease Agreement is a usufruct or an estate for years, the parties hereto have agreed that the leasehold interest of the Company in the Project shall be subject to ad valorem taxation as though it were an estate for years and shall be valued for such ad valorem tax purposes in accordance with the provisions of this Section 4 beginning with the tax year commencing on January 1 of the year immediately following the year in which title to the Project is first transferred to the Issuer (the “First Tax Year”), and continuing during the period the Project is owned by the Issuer.
(b) The fair market value of the Project shall be determined using the procedures ordinarily applicable to ad valorem property taxation. The Project includes property purchased with (or the cost of which was reimbursed out of) proceeds of the Bonds, including equipment transferred from another of the Company’s locations, any repairs thereto, renewals and replacements thereof, additions thereto and substitutions therefor (the cost of which need not be paid with proceeds of the Bonds so long as the property repaired, renewed, replaced, added to or with respect to which such substitutions are made was paid for with proceeds of the Bonds and so long as title to such repairs, renewals, replacements, additions and substitutions is vested in the Issuer and leased to Company pursuant to the Lease Agreement). Such repairs, renewals, replacements, additions and substitutions shall be taken into account in the determination of the taxable value of the Project and taken into account in the determination of capital investment under Section 5 hereof.
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(c) Commencing with the First Tax Year and continuing during the period the Project is owned by the Issuer, the Issuer shall take such actions as shall be necessary to cause the Project to be reflected on the tax rolls of the City of Gainesville, Georgia (the “City”), the Gainesville School District (the “School District), and Hall County (the “County”) as exempt property and to cause the Company’s leasehold interest therein to be valued for property tax purposes in the manner set forth in this Agreement and taking into account the Leasehold Valuation Factors set forth below. Prior to March 1 of each year the Company shall file with the BOTA a separate property tax return with respect to the Project, showing the Project to be exempt from tax and the Company’s leasehold to be valued as set forth in this Section. Such return shall refer to this PILOT Agreement and show the fair market value of the Project and of said leasehold, calculated in accordance with the BOTA’s procedures and as set forth in this Section.
(d) The fair market value of the 2020 Project shall be determined pursuant to the normal and customary procedures and guidelines established by the BOTA under applicable law that are utilized for the valuation of property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2020 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County, and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided below, the pro forma assessed values of the 2020 Project shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Company in the 2020 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2020 Project.
| Tax Year | Leasehold Valuation Factor | ||||
| 2021 | 0% | ||||
| 2022 | 0% | ||||
| 2023 | 50% | ||||
| 2024 | 50% | ||||
| 2025 | 50% | ||||
| 2026 and thereafter | 100% | ||||
The fair market value of that portion of the Project constituting the 2021 Project shall be determined pursuant to the normal and customary procedures and guidelines established by the BOTA under applicable law that are utilized for the valuation of real and personal property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2021 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided below, the pro forma assessed values of the 2021 Project shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Lessee in the 2021 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2021 Project.
| Tax Year | Leasehold Valuation Factor | ||||
| 2022 | 0% | ||||
| 2023 | 0% | ||||
| 2024 | 50% | ||||
| 2025 | 50% | ||||
| 2026 | 50% | ||||
| 2027 and thereafter | 100% | ||||
The fair market value of that portion of the Project constituting the 2022 Project shall be determined pursuant to the normal and customary procedures and guidelines established by the BOTA under applicable law that are utilized for the valuation of real and personal property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2022 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided below, the pro forma assessed values of the 2022 Project shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Lessee in the 2022 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2022 Project.
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| Tax Year | Leasehold Valuation Factor | ||||
| 2023 | 0% | ||||
| 2024 | 0% | ||||
| 2025 | 50% | ||||
| 2026 | 50% | ||||
| 2027 | 50% | ||||
| 2028 and thereafter | 100% | ||||
(e) The Issuer and the Company agree that the Company may, in its own name or in the name and on behalf of the Issuer, in good faith contest through any administrative, judicial or other proceedings, the (i) determination by the BOTA of the fair market value of the Project to which the Leasehold Valuation Factor is applied; and (ii) assessment, levying or imposition of any taxes, assessments and other similar charges with respect to the Project that are assessed, levied or imposed in a manner different from that described in this Section 4, and at the request and expense of the Company, the Issuer agrees to cooperate fully with and assist the Company in any such contest.
(f) The foregoing shall not preclude the Company from taking advantage of any policy or procedure of the BOTA that would allow the Company to exempt or exclude certain portions of the Project from property taxation or otherwise reduce the valuation of said Project or the property taxes payable with respect thereto.
Section 5. Payments in Lieu of Taxes.
(a) In the event that the Company fails to make an aggregate capital investment in land, building and equipment regarding the Project in the amount of $60,000,000 on or before December 31, 2022, and to retain said capital investment (without regard to depreciation) as of December 31, 2025, and fails to create 791 full-time permanent jobs or equivalents (the “headcount”), all in connection with the Project, and to include jobs located at the Tech Center adjacent to Road Atlanta in Hall County, to be measured based on the greater of the actual headcount on March 31, 2025 or the month end average headcount for each month in the 24-month period ended March 31, 2025 (collectively referred to as the “Performance Standards”), the Company agrees to make an additional payment to the taxing authorities in the amount to be determined as set forth below. Said payment shall be made as additional consideration for the issuance of the Bonds by the Issuer on behalf of the Company and as a payment in lieu of taxes payable to the taxing authorities. The amount of the payment shall be equal to the difference between the “Unpaid Tax Amount” and the “Adjusted Unpaid Tax Amount.” The “Unpaid Tax Amount” is that sum determined by subtracting the amount of ad valorem tax which the Company paid on its interest in the Project for tax years 2021 through 2026 (with any payments under Section 5(b) being treated as taxes paid) from the amount of ad valorem tax the Company would have been required to pay on the Project if the Company had owned the fee simple interest in the Project during tax years 2021 through 2026. The Company will be deemed to have complied with the Performance Standards if the results of the threshold calculation conducted in accordance with the formula on Exhibit A (“Average Actual Performance”) are equal to or greater than seventy percent (70%) (“Compliance Threshold”). The threshold calculation formula is the percentage of jobs created or retained to committed jobs and the percentage of actual capital investment to committed investment. Should the Company’s Average Actual Performance be less than seventy percent (70%) of the Performance Standards the Company’s Unpaid Tax Amount will be adjusted proportionately by multiplying the Unpaid Tax Amount by the Average Actual Performance. The resulting number will then be subtracted from the Unpaid Tax Amount to determine the Unpaid Tax Amount as adjusted (the “Adjusted Unpaid Tax Amount”). The Company shall repay to the taxing authorities the difference between the Unpaid Tax Amount and the Adjusted Unpaid Tax Amount (the “Repayment Amount”). See illustrations in Exhibit B - Repayment Calculation. The Repayment Amount shall be paid by the Company only in the event Company does not meet the Compliance Threshold. On or before March 31, 2027, the Company shall provide the Issuer an accurate report regarding the amount of capital investment and the number of jobs created and retained, and the Issuer may use such report to determine if the Company has met the Performance Standards. Within a reasonable time after receipt of the report from the Company, the Issuer will notify the Company of the Company’s compliance or noncompliance with the Performance Standards. In the event the Company has failed to meet the Compliance Threshold, the Issuer will notify the Company of the Repayment Amount and provide Company with details of the calculation thereof, including amounts due to each taxing authority. Absent manifest error in the calculation of the Additional Payment, the Company shall pay the Repayment Amount to the taxing authorities no later than forty-five (45) days after the date of the notification letter from the Issuer indicating that the Company has failed to meet the Compliance Threshold. Should the Company fail to pay the Repayment Amount to the taxing authorities in a timely manner, the taxing authorities shall have the right, in their sole discretion, to impose any and all remedies available to them at law or equity.
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(b) In the event that the Company fails to establish its international headquarters at the 2020 Project or on the 23-acre site it owns in Gainesville Industrial Park West and to establish a research and development facility at the 2020 Project or adjacent to Road Atlanta within Hall County, all on or before December 31, 2026 (hereinafter referred to as the “Headquarters Requirement”), then the Company agrees to make an additional payment (the “Additional Payment”) to the taxing authorities in the amount determined below. The amount of the Additional Payment shall be equal to the difference between the “Reduced Schedule Amount” and the “Unpaid Tax Amount” as defined above. The “Reduced Schedule Amount” is that sum determined by subtracting (1) the amount of ad valorem tax which the Company would have paid on its interest in the Project for the years 2021 through 2026 if the Leasehold Valuation Factors for the 2020 Project had been: (i) 2021 - 25%, (ii) 2022 - 25%, (iii) 2023 - 50%, (iv) 2024 - 50%, and (v) 2025 - 50%; for the 2021 Project had been: (i) 2022 - 25%, (ii) 2023 - 25%, (iii) 2024 - 50%, (iv) 2025 - 50%, and (v) 2026 - 50%; and for the 2022 Project had been: (i) 2023 - 25%, (ii) 2024 - 25%, (iii) 2025 - 50%, (iv) 2026 - 50%, and (v) 2027 - 50%, from (2) the amount of ad valorem tax the Company would have been required to pay on the Project if the Company had owned the fee simple interest in the Project during tax years 2021 through 2027. In the event the Company has failed to meet the Headquarters Requirement, the Issuer will notify the Company of the Additional Payment and provide Company with details of the calculation thereof, including amounts due to each taxing authority. Absent manifest error in the calculation of the Additional Payment, the Company shall pay the Additional Payment to the taxing authorities no later than forty-five (45) days after the date of the notification letter from the Issuer indicating that the Company has failed to meet the Headquarters Requirement. Should the Company fail to pay the Additional Payment to the taxing authorities in a timely manner, the taxing authorities shall have the right, in their sole discretion, to impose any and all remedies available to them at law or equity.
(c) If the BOTA, any tax collector or any other official empowered to assess, levy or collect ad valorem taxes should ever seek to assess, levy or collect ad valorem taxes on the Project or at a percentage valuation of the Company’s leasehold different from that set forth in Section 4 during the term of the Lease Agreement, then the Company’s obligation to make payments under Section 5(a) and (b), above shall forthwith terminate. Thus, if in any tax year such taxes are lawfully imposed or the valuation percentage of Section 4 is not respected by the BOTA, then Company shall pay such lawful taxes in accordance with its covenants in the Lease Agreement, but shall not be obligated to make any payments pursuant to Section 5(a) Section 5(b) above in any such tax year.
(d) The Issuer agrees to assist the Company in any administrative or judicial proceeding relating to ad valorem taxes on the Project or the percentage valuation of the Company’s leasehold, or the amount of any payment provided for in Section 5(a) or (b), above, so long as all costs relating thereto are paid by the Company.
Section 6. Termination. This PILOT Agreement shall terminate upon termination of the Lease Agreement, and shall remain in effect through any periods the Lease Agreement is in effect. Termination shall not affect the accrued rights and obligations of any party hereunder.
Section 7. Successors and Assigns. This PILOT Agreement shall inure to the benefit of, and the obligations of the respective parties hereunder shall be binding upon the successors and assigns of the respective parties hereto. In the event the Company’s rights under the Lease Agreement are assigned in accordance with the Lease Agreement, the rights and obligations of the Company hereunder shall become the rights and obligations of the successor Lessee, as provided in the Lease Agreement.
Section 8. Third Party Beneficiaries. The holders of the Bonds, the Escrow Agent, the County, the other taxing authorities having taxing jurisdiction over the situs of the Project and the BOTA are hereby declared to be third party beneficiaries of this PILOT Agreement.
Section 9. Severability. In the event any clause, sentence, paragraph or provision of this PILOT Agreement shall be determined to be voidable, void or unenforceable, the voidableness, voidness, or unenforceability of such clause, sentence, paragraph shall not affect the validity or enforceability of any other clause, sentence, paragraph or provision hereof.
Section 10. Governing Law, Jurisdiction and Venue. This PILOT Agreement shall be governed by the law of the State of Georgia and shall be subject to enforcement only in the Superior Court of the County. The Company, for itself, and its successors and assigns under the Lease Agreement, hereby consents to the personal jurisdiction of said court over the Company and any successor Company under the Lease Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this PILOT Agreement as of the day and year first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/ T. Treadwell Syfan
Secretary
FOX FACTORY, INC.
By: /s/ John E. Blocher
Name: John E. Blocher
Title: Chief Financial Officer
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PILOT AGREEMENT JOINDER
BY
HALL COUNTY BOARD OF TAX ASSESSORS
The undersigned hereby joins in the PILOT Agreement for the sole purpose of confirming that the Issuer’s interest in the Project is exempt from ad valorem taxation and that ad valorem taxes with respect to the leasehold interest of the Company in the Project will be assessed, levied, imposed and adjusted (if necessary) in accordance with the provisions set forth in Section 4 of the PILOT Agreement.
HALL COUNTY BOARD OF TAX ASSESSORS
By: /s/ Randy Smith
Name: Randy Smith
Title: Chairman
EXHIBIT A
The Average Actual Performance shall be determine by the following formula:
STEP 1
Actual Jobs Created or Retained = Percentage of Committed Jobs Created
Committed Number of Jobs or Retained
Actual Capital Investment = Percentage of Committed New Investment
Committed New Investment
STEP 2
Percentage of Committed Jobs Created or Retained
+ Percentage of Committed New Investment
= Percentage of Commitments Met
STEP 3
Percentage of Commitment Met = Average Actual Performance
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EXHIBIT B
Repayment Amount Calculation
(Required only if Average Actual Performance is less than 70%)
STEP 1
Unpaid Tax Amount
X Average Actual Performance
Adjusted Unpaid Tax Amount
STEP 2
Unpaid Tax Amount
- Adjusted Unpaid Tax Amount
Repayment Amount
Example A – Repayment Required
A $250,000 Unpaid Tax Amount to assist with Company A’s manufacturing facility was part of Company A’s consideration to locate in Hall County rather than an out-of-state location. As part of the deal, Company A committed to create 150 jobs and make a $10,000,000 new investment to construct and operate a new production facility in Georgia. Twenty four months following the opening of the facility, Company A has actually created 90 jobs and invested $6,500,000 into a smaller facility.
•Unpaid Tax Amount $250,000
•Commitment – 150 jobs and $10,000,000 new investment
•Actual jobs delivered – 90 (60% of Commitment)
•Actual investment delivered -- $6,500,000 (65% of Commitment)
•60%+65% = 125/2 = 62.5% [Average Actual Performance]
•$156,250 (62.5%) Adjusted Unpaid Tax Amount
•$93,750 (37.5%) Repayment Amount
Example B – No Repayment Necessary
A $100,000 Unpaid Tax Amount to assist with the purchase of production equipment was part of Company B’s consideration to locate in Hall County rather than an out-of-state location. As part of the deal, Company B committed to create 150 jobs and make a $10,000,000 capital investment to expand a manufacturing facility in Hall County. 36 months following the opening of the facility, Company B has actually created 150 jobs and invested $8,500,000 into the facility.
•Unpaid Tax Amount $100,000
•Commitment – 150 jobs & $10,000,000 investment
•Actual jobs delivered – 150 (100%)
•Actual investment delivered -- $8,500,000 (85%)
•100%+85% = 185/2 = 92.5% [Average Actual Performance]
•No Payment Required
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Exhibit 10.2
BOND PURCHASE AGREEMENT
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
Taxable Industrial Development Revenue Bonds
(Fox Factory, Inc. Project), Series 2020
BOND PURCHASE AGREEMENT dated as of June 1, 2020, between Gainesville and Hall County Development Authority (the “Issuer”) and Fox Factory, Inc. (“Fox Factory”), a California corporation, authorized to transact business in Georgia.
1. Background
(a) The Issuer proposes to issue and sell not to exceed $75,000,000 in aggregate principal amount of its Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020 (the “Bonds”), the proceeds of which shall be used to finance the acquisition, construction and installation of certain real and personal property comprising a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West, Gainesville, Hall County, Georgia (the “Project”). The Project will be leased by the Issuer to Fox Factory (hereinafter, in its capacity as lessee of the Project, referred to as the “Lessee”) under the terms of a Lease Agreement, dated as of June 1, 2020 (the “Lease”), requiring Fox Factory to pay to the Issuer rental payments in such amounts and at such times as shall be required to pay the principal of and interest on the Bonds as and when the same become due. The Bonds shall be issued under and secured by a Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”) between the Issuer and Fox Factory (hereinafter, in its capacity as purchaser of the Bonds, referred to as the “Bondholder”), under the terms of which and an Assignment of Lease, dated as of June 1, 2020 (the “Assignment”), by the Issuer in favor of the Bondholder, the Issuer’s interest in the Lease and the rents, revenues and receipts to be derived by the Issuer under the Lease will be assigned and pledged to the Bondholder as security for the payment of the Bonds. As additional security for the payment of the Bonds, the Issuer will execute and deliver to the Bondholder a deed to secure debt and security agreement, dated as of June 1, 2020 (the “Security Deed”), pursuant to which the Issuer will convey a security interest in the Project to the Bondholder.
(b) The Issuer proposes to sell the Bonds to the Bondholder and the Bondholder proposes to purchase the Bonds for its own investment purposes and not with a view towards any resale or public distribution thereof.
(c) The proceeds of the Bonds are to be applied to pay costs incurred in connection with the acquisition, construction and installation of the Project as contemplated by the Lease and the Financing Agreement.
(d) The parties hereto contemplate that the interest paid on the Bonds will be includable in gross income of the recipient or recipients thereof for Federal income tax purposes because of the application of certain provisions of the Internal Revenue Code of 1986, as amended, and that, as such, the Bonds may not be offered for sale to the public without registration under the Securities Act of 1933, as amended, unless the Bondholder has received an opinion of counsel satisfactory to it to the effect that failure to register the Bonds will not violate the Securities Act of 1933. The Issuer will cooperate fully at the request of the Bondholder in effecting such registration and in taking such other steps as may be deemed necessary or appropriate with respect to the Bonds, the Lease, the Financing Agreement or this Agreement to effect such registration in the event of any future public sale or disposition of the Bonds.
(e) In connection with the issuance of the Bonds, the Issuer is executing and delivering the Direct Payment Agreement, dated as of June 1, 2020 (the “Direct {Payment Agreement”), among the Issuer, the Lessee and the Purchaser and a PILOT Agreement, dated as of June 1, 2020 (the PILOT Agreement”), among the Issuer, the Lessee and the Hall County Board of Tax Assessors .
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2. Purchase, Sale and Closing. Subject to the terms and conditions and in reliance on the representations, warranties and covenants herein set forth, the Bondholder agrees to purchase from the Issuer all of the Bonds that are to be issued at any time and from time to time under the Financing Agreement and the Issuer hereby agrees to sell to the Bondholder all of the Bonds that are to be issued at any time and from time to time under the Financing Agreement at a price of 100% of the principal amount of the Bonds. The sale and purchase of the Bonds will be accomplished in one or more installments as described hereinafter and in Section 304 of the Financing Agreement. The parties agree that (i) the aggregate principal amount of Bonds to be sold and purchased hereunder shall not exceed the principal amount specified in Paragraph l(a) hereof, and (ii) the Bonds will be delivered to the Bondholder in one or more installments as the acquisition, construction and installation of the Project progresses. The Bond representing the initial installment shall be in a denomination mutually agreed upon by the parties hereto and shall be delivered simultaneously with the execution and delivery of this Bond Purchase Agreement. It shall be the sole prerogative of the Bondholder to designate (upon at least ten (10) business days’ advance notice to the Issuer and the Bondholder), the principal amount of each fully-registered Bond to be delivered at any subsequent installment and the date, time and place of the delivery of and payment for such Bond (hereinafter referred to as a “Closing”). The aforesaid designation to be made by the Bondholder in the case of a fully-registered Bond specified for delivery (after the first such installment shall have been delivered simultaneously with the execution and delivery of this Bond Purchase Agreement) shall be substantially in the form of that which is attached hereto as Exhibit “A” and shall be executed on behalf of the Lessee by its duly authorized officer. As is set forth in Section 304 of the Financing Agreement, any such designation which the Issuer receives from the Lessee shall be treated as an order to the Issuer to deliver the fully-registered Bond so specified therein. At any such Closing, subject to the terms and conditions of the Financing Agreement, the Issuer shall deliver to the Bondholder the designated fully-registered Bond in definitive form, duly executed, in the authorized denomination requested by the Lessee; and the Bondholder shall accept delivery and pay the purchase price of such Bond in any manner agreed to be the Lessee and the Bondholder.
Notwithstanding anything to the contrary contained herein, in connection with the initial Bond to be issued at closing of the Bond issue and the delivery of the Lease, the Lessee shall convey the Project Facility Site and the improvements to the Project Facility Site, as such improvements then exist, to the Issuer by Warranty Deed in return for the initial Bond in the amount of $34,554,100. Also, the Lessee may convey additional portions of the Project to the Issuer in return for additional Bonds.
Payment for Bonds can be made in cash or by the transfer to the Issuer by the Bondholder of property to be included in the Project at its “value,” being the Bondholder’s cost (or at its election, its federal income tax basis). Such transfer of property shall be at its “value” treated as if (i) an amount equal to the value of such property was advanced by the Bondholder to the Issuer hereunder with respect to the Bonds, (ii) the cash was deposited by the Issuer in the Project Fund under the Financing Agreement, and (iii) the cash was immediately disbursed from the Project Fund to reimburse the Lessee for such value. Any amounts advanced by the Bondholder in cash, if any, with respect to the Bonds shall be deposited in the Project Fund and used to pay or to reimburse the Issuer and the Lessee for Costs of the Project and transaction costs of issuing the Bonds.
If at any such Closing the Issuer fails to deliver the designated fully-registered Bond to the Bondholder as provided herein, the Bondholder may elect to be relieved of any further obligations under this Bond Purchase Agreement without thereby waiving any other rights the Bondholder may have against the Issuer by reason of such failure. The obligation of the Issuer to sell Bonds and to cause Bonds to be delivered to the Bondholder under the provisions of this Bond Purchase Agreement shall terminate on the earlier of (i) that date which follows the Completion Date (as defined in the Lease) of the Project by one year or (ii) December 31, 2022, and after said termination date the Issuer shall have no obligation to deliver or to cause to be delivered any new or additional Bonds hereunder or under the Financing Agreement.
All Bonds issued by the Issuer are to be sold to the Bondholder under and pursuant to this Bond Purchase Agreement and shall not be sold to any other purchaser or pursuant to any other agreement without an agreement in writing signed by the Issuer and the Lessee.
3. Private Sale. The Bondholder agrees that it is purchasing the Bonds for its own investment account and not with a view towards any resale or public distribution thereof.
4. Issuer’s Representations and Warranties. The Issuer makes the following representations and warranties to the Lessee and Bondholder:
(a) The Issuer is a body corporate and politic, an instrumentality of Hall County and the City of Gainesville, Georgia, and a public corporation created and existing under the laws of the State of Georgia.
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(b) The Issuer has full power and authority under the Constitution and laws of the State of Georgia (i) to acquire, construct and install the Project, (ii) to finance the acquisition, construction and installation of the Project by issuing and selling the Bonds, (iii) to lease the Project to the Lessee as provided in the Lease, (iv) to pledge the rents, revenues and receipts derived pursuant to the Lease to the Bondholder as provided in the Financing Agreement and the Assignment, (v) to issue, execute, deliver and perform its obligations under the Bonds and to execute, deliver and perform its obligations under this Bond Purchase Agreement, the Lease, the Financing Agreement, the Direct Payment Agreement, the Assignment, the PILOT Agreement and the Security Deed in accordance with their respective terms, and (vi) to carry out and consummate all other transactions contemplated by each of the aforesaid documents.
(c) The Issuer has duly authorized all action and complied with all provisions of law with respect to the issuance, execution, delivery and performance of its obligations under the Bonds, the execution, delivery and performance of its obligations under this Bond Purchase Agreement, the Lease, the Financing Agreement, the Direct Payment Agreement, the Assignment, the PILOT Agreement and the Security Deed, and has taken all actions necessary or appropriate to insure that such documents constitute valid and legally binding obligations of the Issuer in accordance with their respective terms.
(d) When delivered to and paid for by the Bondholder in accordance with the terms of this Bond Purchase Agreement, the Bonds will have been duly authorized, executed and issued and will constitute legal, valid and binding limited obligations of the Issuer enforceable in accordance with their terms.
(e) The Issuer has not and will not issue or sell any other bonds or obligations, the principal of and/or interest on which shall be payable from the rents, revenues and receipts derived from the Project or pledged or assigned pursuant to the Financing Agreement or which shall be secured by any lien upon any of the properties constituting the Project.
(f) The execution and delivery of this Bond Purchase Agreement, the Bonds, the Lease, the Financing Agreement, the Direct Payment Agreement, the Assignment, the PILOT Agreement and the Security Deed and the compliance with the provisions thereof, do not and will not conflict with or constitute on the part of the Issuer a violation of, breach of or default (with or without notice or lapse of time or both) under any constitutional provision, statute, indenture, mortgage, deed of trust, resolution, note agreement or other agreement or instrument to which the Issuer is a party or by which the Issuer or any of its assets is presently bound, or, to the knowledge of the Issuer, any existing order, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or any of its activities and property; and all consents, approvals, authorizations and orders of governmental or regulatory authorities, if any, which are required to be obtained by the Issuer for the issuance, execution, delivery and performance of its obligations under the Bonds and the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and this Bond Purchase Agreements and the carrying out and consummation of all of the transactions contemplated thereby have been obtained and are in full force and effect.
(g) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, known to be pending or threatened against or affecting the Issuer, nor to the best of the knowledge of the Issuer is there any basis therefor, wherein an unfavorable decision, ruling or finding (a) would materially adversely affect the transactions contemplated by this Bond Purchase Agreement or (b) which in any way would adversely affect the security for the Bonds or the validity or enforceability of the Bonds, the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement, this Bond Purchase Agreement or any agreement or instrument to which the Issuer is a party and which is used or contemplated for use in the consummation of the transactions contemplated by this Bond Purchase Agreement.
(h) Neither the Issuer nor anyone acting on its behalf (including the Bondholder) has directly or indirectly offered for sale or sold any of the Bonds or any similar security of the Issuer to, or solicited any offer to buy any of the same from, anyone other than the Bondholder. Neither the Bondholder nor anyone else acting on its behalf will after the date hereof directly or indirectly offer any of the Bonds or any other securities under circumstances which would subject this issue and sale of the Bonds to the provisions of Section 5 of the Securities Act of 1933, as amended.
5. Representations and Warranties of Lessee. The Lessee makes the following representations and warranties to the Issuer:
(a) Lessee is a corporation duly organized, existing and in current status under the laws of the State of California, authorized to transact business in the State of Georgia, and is in good standing under the laws of the State of Georgia. Lessee has full power, authority and legal right to engage in the business and activities conducted or proposed to be conducted by it with respect to the Project, to execute, deliver and perform the Lease and this Bond Purchase Agreement and to perform its obligations thereunder and hereunder, including the making of payments as provided in the Lease.
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(b) Lessee has duly authorized the execution, delivery and performance of the Lease and this Bond Purchase Agreement, and such documents, when executed and delivered by Lessee, will constitute valid and legally binding obligations of Lessee, enforceable in accordance with their respective terms, except to the extent that their enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights, and subject to the application of principles of equity, if equitable remedies are sought.
(c) The execution and delivery of this Bond Purchase Agreement and the Lease and the compliance with the provisions hereof and thereof by Lessee, do not conflict with or constitute on the part of Lessee a material violation of, breach of or default under (i) the Articles of Incorporation or By-Laws of Lessee, (ii) any material portion of any indenture, mortgage, deed of trust, lease, note agreement or other agreement or instrument to which Lessee is a party or by which Lessee is presently bound, or (iii) any constitutional provision or statute or any existing order, rule or regulation of any court or governmental or regulatory authorities, having jurisdiction over Lessee’s activities or its properties, or Lessee has obtained, where applicable, an express, written waiver thereof.
(d) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending, or, to Lessee’s knowledge, threatened against Lessee which could reasonably be expected to result in a decision which would materially adversely affect the transactions contemplated by this Bond Purchase Agreement or the Lease or the validity or enforceability of the Lease, this Bond Purchase Agreement, or any agreement or instrument to which Lessee is a party, used or contemplated for use in the consummation of the transactions contemplated by this Bond Purchase Agreement or the Lease.
6. Lessee’s Covenants. Lessee covenants and agrees that it will:
(a) Indemnify and hold harmless to the extent permitted by applicable law, the Issuer and its officers, directors, agents, servants and employees against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them may become subject under the Securities Act of 1933, the Securities Exchange Act of 1934, or the Trust Indenture Act of 1939, the rules or regulations under said Acts, or any amendments of said Acts, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon the failure to register the Bonds under the Securities Act of 1933 or to qualify the Financing Agreement under the Trust Indenture Act of 1939. Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against the Lessee under this Paragraph 6, the indemnifiable party will notify the Lessee in writing of the commencement thereof, and, subject to the provisions hereinafter stated, the Lessee shall assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to the Issuer or such indemnifiable person, as the case may be, and the payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Lessee. The Issuer or such indemnifiable person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the Lessee unless the employment of such counsel has been specifically authorized by the Lessee, or in the event that the Issuer is required to employ separate counsel as a result of the Issuer’s reasonable determination, expressed in writing to the Lessee, that a conflict of interest exists among the indemnified parties hereunder. Lessee shall not be liable to indemnify any person for any settlement of any such action effected without its consent.
(b) Refrain from taking or omitting to take any action which action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that provided for in the Lease or the Financing Agreement, as in effect from time to time.
(c) Pay or cause to be paid, all reasonable expenses and costs incident to the authorization, issuance, printing, sale and delivery, as the case may be, of the Bonds, the Lease, the Financing Agreement, the Security Deed, and this Bond Purchase Agreement, including without limitation (i) all filing, registration and recording fees and expenses; and (ii) reasonable fees and expenses of Bond Counsel and Counsel to the Issuer.
7. Conditions of Bondholder's Obligation as Purchaser. The Bondholder's obligation to purchase and pay for the Bond which is to be delivered as the initial installment hereunder is subject to the fulfillment of the following conditions at or before such delivery:
(a) The Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and this Bond Purchase Agreement shall have been duly authorized, executed and delivered by the respective parties thereto, in substantially the forms heretofore approved by the Bondholder, with only such changes therein as the Issuer and the Bondholder shall mutually agree upon;
(b) The Bond to be initially delivered shall have been duly authorized and executed in accordance with the provisions of the Financing Agreement;
(c) The Bondholder shall have received the following documents:
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(i) Executed counterparts of the Lease, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and the Financing Agreement;
(ii) Opinions dated as of the date of delivery of the Bond to be initially delivered of (A) Counsel for the Issuer in substantially the form of that which is attached hereto as Exhibit B; (B) Bond Counsel in substantially the form of that which is attached hereto as Exhibit C; and (C) Counsel for Lessee in substantially the form of that which is attached hereto as Exhibit D;
(iii) A certificate dated as of the date of delivery of the Bond to be initially delivered, signed by the Chairman or Vice Chairman and the Secretary of the Issuer and in form and substance satisfactory to the Bondholder, stating that (a) each of the representations and warranties set forth in the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and this Bond Purchase Agreement is true, accurate and complete in all material respects as of the date of delivery of the Bond to be initially delivered and that the Issuer has complied with each of its covenants and agreements required in the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and this Bond Purchase Agreement to be complied with at or prior to the date of delivery of the Bond to be initially delivered and (b) no default or event with the lapse of time or notice or both would become an event of default has occurred under the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement, the Assignment, the PILOT Agreement and this Bond Purchase Agreement;
(iv) an order validating the Bonds and the security therefor shall have been received by the Superior Court of Hall County and there shall be no pending appeals with respect to such order; and
(v) Such additional opinions, certificates, instruments and other documents as the Bondholder or its counsel may reasonably request to evidence compliance with applicable law, as of the date of delivery of the Bond to be initially delivered.
The Bondholder's obligation to purchase and pay for any of the Bonds at any time or from time to time after the delivery of the Bond to be initially delivered, as herein provided, is subject to the due execution, authentication and deliver to the Bondholder of such pertinent Bond.
8. Direct Payment Agreement. The Issuer agrees that all amounts payable to the Bondholder with respect to the Bonds held by the Bondholder or its nominee may be made directly to the Bondholder in accordance with the Direct Payment Agreement.
9. Notices and Other Actions. All notices, demands and formal actions hereunder will be in writing mailed, telegraphed, sent by next day air or delivered to:
| The Issuer | Gainesville and Hall County Development Authority | ||||
| P.O. Box 3280 | |||||
| Gainesville, GA 30503 | |||||
| Attention: Chairman | |||||
| The Bondholder | Fox Factory, Inc. | ||||
| 6634 Highway 53 | |||||
| Braselton, GA 30517 | |||||
| Attention: David Haugen | |||||
| The Lessee | Fox Factory, Inc. | ||||
| 6634 Highway 53 | |||||
| Braselton, GA 30517 | |||||
| Attention: David Haugen | |||||
The Issuer, the Lessee and the Bondholder may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certifications or other communications shall be sent. Notices shall be effective upon receipt.
10. Survival of Representations and Agreements. Except for paragraphs 4(g) and 5(d), all representations, warranties and agreements of the Issuer and Lessee contained herein shall remain operative and in full force and shall survive (a) the execution and delivery of this Bond Purchase Agreement, and (b) the purchase of any or all of the Bonds hereunder.
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11. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts with each executed counterpart constituting an original but all of which together shall constitute one and the same instrument.
12. Successors; Governing Law. This Bond Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their successors, but will not be assignable or confer any rights upon any other person, except as expressly provided herein. This Bond Purchase Agreement shall be governed by and construed in accordance with the laws of the State of Georgia.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/T. Treadwell Syfan
Secretary
FOX FACTORY, INC.,
as Lessee under the Lease Agreement
and as Bondholder of the Bonds referred
to in this Bond Purchase Agreement
By: /s/ John E. Blocher
John E. Blocher
Chief Financial Officer
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EXHIBIT A
DESIGNATION OF BOND TO BE
DELIVERED TO UNDERSIGNED
BONDHOLDER AND RELATED CERTIFICATES
Gainesville and Hall County
Development Authority
P. O. Box 3280
Gainesville, GA 30503
Attention: Chairman
Re: Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020
Gentlemen:
Pursuant to that certain Bond Purchase Agreement, dated as of June 1, 2020 (the “Bond Purchase Agreement”), between the Gainesville and Hall County Development Authority (the “Issuer”) and Fox Factory, Inc. (“Fox Factory”), a California corporation, Fox Factory, in its capacity as purchaser of the captioned Bonds (in such capacity, the “Bondholder”), hereby notifies you that it desires to take delivery of a fully registered Bond in the principal amount of $_____________ upon payment by it of the purchase price specified in Paragraph 2 of the Bond Purchase Agreement. The Bondholder designates the following particulars with respect to the Closing of such purchase and sale:
Closing Date - _______________, 2020
Closing Time - _______________
Fox Factory, as lessee under that certain Lease Agreement, dated as of June 1, 2020 (the “Lease Agreement”), with the Issuer relating to the captioned Bonds, dated as of _________, 2020 (in such capacity, the “Lessee”), hereby certifies that there exists no event of default under the aforesaid Lease Agreement as of the date hereof and that the Lessee will give immediate notice to each of the addressees shown above if to its knowledge any such event of default should occur prior to the delivery to the Bondholder of the Bond designated for delivery hereinabove.
The Bondholder hereby further certifies that the principal amount of the Bond designated for delivery hereinabove when added to the principal amount of the Bond or Bonds heretofore delivered to the Bondholder will not exceed the anticipated total cost to acquire, construct and install the Project (as more fully described in the aforesaid Lease Agreement).
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers, this _____ day of __________________, 20____.
FOX FACTORY, INC.
By:______________________________
Title:________________________
EXHIBIT B
(Letterhead of Counsel for the Issuer)
_______________, 2020
Fox Factory, Inc.
Braselton, Georgia
Gainesville and Hall County Development Authority
Gainesville, Georgia
Re: Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in an authorized aggregate principal amount not to exceed $75,000,000 to be issued under and secured by a Financing Agreement, dated as of June 1, 2020
Ladies and Gentlemen:
As counsel for the Gainesville and Hall Development Authority (the “Issuer”), we have considered the validity of the above captioned bonds (the “Bonds”), and in this connection we have examined
(i) the resolution of the Issuer adopted on May ____, 2020 (the “Resolution”);
(ii) the Lease Agreement, dated as of June 1, 2020 (the “Lease”), between the Issuer and Fox Factory, Inc. (in such capacity, the “Lessee”);
(iii) the Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), between the Issuer and Fox Factory, as purchaser of the Bonds (in such capacity, the “Bondholder”);
(iv) the Deed to Secure Debt and Security Agreement, dated as of June 1, 2020 (the “Security Deed”), from the Issuer to the Bondholder;
(v) the Bond Purchase Agreement, dated as of June 1, 2020 (the “Bond Purchase Agreement”) between the Issuer and Fox Factory, in its roles as Lessee and Bondholder;
(vi) the Direct Payment Agreement, dated as of June 1, 2020 (the “Direct Payment Agreement”), among the Issuer, the Lessee and the Bondholder;
(vii) the PILOT Agreement, dated as of June 1, 2020 (the “PILOT Agreement”), among the Issuer, the Lessee and the Board of Tax Assessors of Hall County;
(viii) a certified copy of the validation proceedings concluded in the Superior Court of Hall County with respect to the Bonds;
(ix) an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended (the “Act”);
(x) financing statements designating the Issuer as debtor, and the Bondholder as secured party, covering the granting of a security interest in certain of the Issuer’s interests in the Lease and the payments to be received pursuant thereto and the security interests in the Project (as defined in the Lease) conveyed to the Bondholder pursuant to the Security Deed (collectively, the “Financing Statements”); and
(xi) such other documents, instruments and laws as we have deemed relevant.
From such examinations, we are of the opinion that as of this date:
1. The Issuer is a body corporate and politic, an instrumentality of Hall County and the City of Gainesville, Georgia, and a public corporation created and existing under the laws of the State of Georgia, particularly the Act.
2. The Issuer has full power and authority and has taken all action legally required to authorize the issuance, sale and delivery of the Bonds and when each Bond has been delivered in the manner set forth in the Financing Agreement, such action will constitute all of the action necessary to duly authorize the issuance, sale and delivery of each Bond by the Issuer and each of said Bonds will rank on a parity regardless of the fact that such Bonds will have actually been issued and delivered at different times. The Issuer has the power to finance the Project and lease the Project to the Lessee, to pledge and assign its interest in the Pledged Estate (as defined in the Financing Agreement) and to carry out and consummate all the transactions contemplated on its part by the Lease, the Financing Agreement, the Security Deed, the Bond Purchase Agreement, the PILOT Agreement and the Direct Payment Agreement. The Issuer has duly adopted the Resolution and has duly authorized the execution, delivery and performance of the Lease, the Financing Agreement, the Security Deed, the Bond Purchase Agreement, the PILOT Agreement, the Direct Payment Agreement and the Bonds. The Bonds, the Lease, the Financing Agreement, the Security Deed, the PILOT Agreement and the Direct Payment Agreement and the Bond Purchase Agreement have been duly executed and delivered by the Issuer.
3. Each Bond after delivery in the manner set forth in the Financing Agreement will constitute a valid and binding limited obligation of the Issuer, enforceable in accordance with its terms except that (a) enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and (b) enforceability may be limited to exclude the availability of the remedy of specific performance or any other equitable remedy to the extent there is available an adequate remedy at law, and will be entitled to the security of the Lease, the Financing Agreement, and the Security Deed.
4. The Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement and the Bond Purchase Agreement are each in full force and effect and each such agreement, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitutes the valid, binding and enforceable obligation of the Issuer in accordance with its respective terms except that (a) enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and (b) enforceability may be limited to exclude the availability of the remedy of specific performance or any other equitable remedy to the extent there is available an adequate remedy at law, and the Issuer is entitled to the benefits of the same.
5. The execution and delivery of the Financing Agreement, the Lease, the Security Deed, the PILOT Agreement, the Direct Payment Agreement and the Bond Purchase Agreement and the compliance by the Issuer with the terms thereof will not be a violation of, conflict with, or result in any breach of any of the provisions of, or constitute a default under the Act or By-laws of the Issuer or any law applicable to it or under any indenture, mortgage, deed of trust, resolution, note agreement or other agreement to which the Issuer is a party or by which the Issuer or any of its activities or properties is bound, or result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon the property of the Issuer (other than as contemplated by the Financing Agreement, the Security Deed, and the Lease), pursuant to any agreement or other instrument to which the Issuer is a party or by which it may be bound, or be a violation, conflict with, or result in any breach of the provisions of any license, judgment, constitutional provision, decree, order, law, statute, ordinance or governmental rule or regulation applicable to the Issuer.
6. To the best of our knowledge, the Issuer is not in default in any material respect under any agreement or other instrument to which it is a party or by which it may be bound, which default would materially and adversely affect the transactions contemplated by the Financing Agreement, the Lease, and the Security Deed.
7. No additional or further approval, consent or authorization of any governmental or public agency or authority not already obtained is required by the Issuer in connection with (a) the issuance, sale and delivery of the Bonds, (b) the entering into and performing of its obligations under the Bonds, the Lease, the Financing Agreement, the Security Deed, or (c) the adoption of the Resolution. No opinion is expressed with respect to any “Blue Sky” laws or the securities laws of any jurisdiction.
8. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or, to the best of our knowledge, threatened against or affecting the Issuer, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Resolution, the Bonds, the Lease, the Financing Agreement, the Security Deed, PILOT Agreement, Direct Financing Agreement or the Bond Purchase Agreement, and the execution, delivery and receipt by the Issuer of the Lease, the Financing Agreement, the Security Deed, PILOT Agreement, Direct Payment Agreement and the Bond Purchase Agreement and the performance of the obligations of the Issuer thereunder do not and will not violate or constitute a default under any provision of law or any agreement, indenture, note or other instrument binding upon the Issuer.
9. The Financing Agreement creates a valid first lien on and pledge of the revenues conveyed and pledged thereunder, and all filings and/or recordings of any document required in order to perfect and preserve such first lien and pledge have been duly accomplished.
10. Pursuant to the Financing Agreement and the Security Deed, the Issuer has granted to the Bondholder, as security for the Bonds, a valid and perfected security interest in certain of its rights in the Lease, the payments made pursuant thereto and the Project Equipment as defined in the Lease (said security interest being hereinafter referred to as the “Security Interest”).
11. The Lease Agreement and the Security Deed have been properly recorded in the proper place or places where such recordation is required for the giving of notice thereof, such recordation is complete and no other filing, recording, publishing or re-recording is required.
12. All action taken by the Issuer in connection with the Resolution, the Bonds, the Lease, the Financing Agreement, the Security Deed, the Direct Payment Agreement and the Bond Purchase Agreement is legal in all respects, and none of the proceedings held or actions taken by the Issuer with respect to any of the foregoing has been repealed, rescinded or revoked. All instruments furnished to the Bondholder in connection with the order of the Issuer to deliver the Bonds conform to the requirements of the Financing Agreement and such instruments constitute sufficient authority under the Financing Agreement for the Issuer to deliver the Bonds as directed in such order.
Very truly yours,
STEWART, MELVIN & FROST, LLP
By:____________________________
A Partner
EXHIBIT C
(Letterhead of Bond Counsel)
_____________, 2020
Fox Factory, Inc.
Braselton, Georgia
Gainesville and Hall County Development Authority
Gainesville, Georgia
Re: Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in an authorized aggregate principal amount not to exceed $75,000,000 to be issued under and secured by a Financing Agreement, dated as of June 1, 2020
Ladies and Gentlemen:
We have examined (i) an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended (the “Act”); (ii) the resolution of the Gainesville and Hall County Development Authority (the “Issuer”) adopted January 28, 2020 (the “Resolution”); (iii) the Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), between the Issuer and Fox Factory, Inc. (“Fox Factory”), as purchaser of the Bonds (in such capacity, the “Bondholder”); (iv) the Lease Agreement, dated as of June 1, 2020 (the “Lease”), between the Issuer, as lessor, and Fox Factory , as lessee; (in such capacity, the “Lessee”); (v) the Deed to Secure Debt and Security Agreement, dated as of June 1, 2020 (the “Security Deed”), from the Issuer to the Bondholder; (vi) the Bond Purchase Agreement, dated as of June 1, 2020 (the “Bond Purchase Agreement”) between the Issuer and Fox Factory; and (vii) other documents and laws relating to the issuance of the bonds described in caption (the “Bonds”). The Bonds shall be in fully registered form, shall bear interest from their respective dates of issuance at the rate of 5.0% per annum (calculated on the basis of a 30-day month, 360-day year), such interest shall be payable on the 1st day of March or September next succeeding their respective dates of issuance (whichever shall come first) and semiannually thereafter on the 1st day of March and September in each year, until paid, and shall mature on September 1, 2027.
The Bonds are being issued for the purpose of financing he acquisition, construction and installation of certain real and personal property comprising a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West, Gainesville, Hall County, Georgia (the “Project”), for lease to the Lessee under the Lease in furtherance of the public purpose for which the Issuer was created. Fox Factory has agreed in the Lease to make rental payments sufficient to pay the principal, prepayment premium (if any) and interest on the Bonds as the same become due and payable. The Issuer’s interest in the Lease and all payments thereunder have been pledged under the terms of the Financing Agreement to the payment of the Bonds.
With respect to the creation and existence of Fox Factory, the power of Fox Factory to authorize, execute and deliver the Lease and the Bond Purchase Agreement and to assume the obligations represented thereby, and the execution and delivery by Fox Factory of the Lease and the Bond Purchase Agreement, we have examined and rely solely upon the opinion as to such matters rendered by __________________________________, Counsel to Fox Factory.
We have examined the Bond numbered R-1 (the “Initial Bond”) as executed by the Issuer and based upon such examination and the examinations, opinions and premises above referred to, we are of the opinion that:
(1) the Issuer is a public corporation duly organized and existing under the Constitution and laws of the State of Georgia and is in good standing under the laws of the State of Georgia;
(2) under the Constitution and laws of the State of Georgia, the Lease, the Financing Agreement, the Bond Purchase Agreement, and the Security Deed have been duly authorized, executed and delivered and constitute valid and binding obligations of the parties thereto and are legally enforceable in accordance with their terms subject to bankruptcy, insolvency and other laws of general application affecting creditors’ rights. All the right, title and interest of the Issuer in and to the Lease have been duly assigned to the Bondholder and pledged under the Financing Agreement;
(3) the lien created under the Financing Agreement on the Pledged Estate (as defined in the Financing Agreement) constitutes a first and prior pledge of and lien on the Pledged Estate superior to any pledge heretofore created or that may hereafter be created;
(4) the Bonds have been duly authorized. (a) the Initial Bond has been duly executed and delivered and is, and (b) the remaining Bonds (excluding the Initial Bond), when executed and delivered in accordance with Section 304 of the Financing Agreement will be, the legally issued and valid limited obligations of the Issuer enforceable in accordance with their terms, secured by the Financing Agreement and the Security Deed and payable solely from Pledged Estate; said Pledged Estate has been irrevocably pledged to the payment of the principal of and interest on the Bonds under the Financing Agreement; and
(5) the Bonds when delivered in the manner set forth in Section 304 of the Financing Agreement will constitute only limited obligations of the Issuer as therein and in the Financing, Agreement provided and will not constitute indebtedness by or on behalf of the State of Georgia, the City of Gainesville, or the County of Hall, or a pledge of the faith and credit of said State, City or County. The Bonds will be payable from the special fund provided therefor and will not directly, indirectly or contingently obligate said State, City or County to levy or to pledge any form of taxation whatever or to make any appropriation for the payment thereof, and no owner of any of the Bonds will ever have the right to compel the exercise of the taxing power of said State, City or County to pay the same or the interest thereon.
Very truly yours,
STEWART, MELVIN & FROST, LLP
By:_____________________________
A Partner
EXHIBIT D
(Letterhead of Counsel for Fox Factory, Inc.)
_______________, 2020
Gainesville and Hall County Development Authority
Gainesville, Georgia
Stewart, Melvin & Frost, LLP
Gainesville, Georgia
Re: Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in an authorized aggregate principal amount not to exceed $75,000,000 to be issued under and secured by a Financing Agreement, dated as of June 1, 2020
Gentlemen:
We have acted as counsel for Fox Factory, Inc., a Georgia corporation (the “Fox Factory”), in connection with the issuance and sale by the Gainesville and Hall County Development Authority (the “Issuer”) of the Bonds in caption (the “Bonds”). We have examined originals, or photostatic or certified copies, of:
(a) the Lease Agreement, dated as of June 1, 2020 (the “Lease”), between Fox Factory as lessee (in such capacity, the “Lessee”), and the Issuer, as lessor, providing for the lease by the Issuer to the Lessee of the Project (as defined in the Lease);
(b) the Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), between the Issuer and Fox Factory, as purchaser of the Bonds (in such capacity, the “Bondholder”), pursuant to which the Bonds are to be issued;
(c) the Bond Resolution adopted by the Issuer on May ___, 2020, relating to the authorization, execution and delivery of the Lease, the Financing Agreement, the Bond Purchase Agreement, and the Security Deed and certain other agreements, and the issuance and sale of the Bonds;
(e) the Bond Purchase Agreement, dated as of June 1, 2020 (the “Bond Purchase Agreement”), between the Issuer and Fox Factory, as Lessee and as Bondholder;
(f) the Deed to Secure Debt and Security Agreement, dated as of June 1, 2020 (the “Security Deed”), from the Issuer to the Bondholder; and
(g) the Certificate of Incorporation and By-laws and other charter documents of Fox Factory and such other documents, records and certificates of public officials, of Fox Factory and of officers of Fox Factory as we have deemed necessary and relevant for the opinions set forth herein.
In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents.
Based upon our examination mentioned above and relying on statements of fact contained in the documents that we have examined, it is our opinion that:
(1) Fox Factory is a corporation validly existing and in good standing under the laws of the State of California qualified to do business in the State of Georgia.
(2) Fox Factory has full power and authority to execute, deliver and perform its obligations under the Lease and the Bond Purchase Agreement (collectively, the “Fox Factory Documents”), which have been duly authorized, executed and delivered by Fox Factory and said documents constitute the valid and binding agreements of Fox Factory enforceable in accordance with their respective terms, except that (a) enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, (b) enforceability may be limited to exclude the availability of the remedy of specific performance or any other equitable remedy to the extent there is available an adequate remedy at law and (c) no opinion is given with respect to the indemnification provisions of the Fox Factory Documents.
(3) The execution and delivery of the Fox Factory Documents and the performance of its obligations thereunder by Fox Factory have not resulted and will not result in a violation of the Certificate of Incorporation or By-Laws of Fox Factory and, to the best of our knowledge, do not constitute a material default under any indenture, mortgage, deed, trust agreement or other instrument relating to borrowed money to which Fox Factory is a party or by which it is bound.
(4) Fox Factory has duly authorized the taking of any and all action necessary to carry out and give effect to the transactions contemplated to be performed on its part by the Fox Factory Documents.
(5) No consent, approval, authorization or other action by any governmental authority within the State of Georgia is required in connection with the execution, delivery or performance by Fox Factory of the Fox Factory Documents.
(6) To the best of our knowledge, there is no action, suit, proceeding or investigation at law or in equity before any court or public board or body pending or threatened against or affecting Fox Factory, nor any basis therefor, wherein an unfavorable decision, ruling or finding would have a material adverse effect on the validity or enforceability as against Fox Factory of the Fox Factory Documents.
Very truly yours,
____________________________________
By: ________________________________
Exhibit 10.3
FINANCING AGREEMENT
between
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
and
FOX FACTORY, INC.
as Bondholder
Securing the issuance of not to exceed $75,000,000, in aggregate principal amount of Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020
Dated as of June 1, 2020
TABLE OF CONTENTS
| Page | ||||||||
| Recitals | 1 | |||||||
| Granting Clause | 1 | |||||||
| Habendum | 1 | |||||||
| ARTICLE I | ||||||||
| DEFINITIONS | ||||||||
| Section 101 | Definitions | 3 | ||||||
| Section 102 | Use of Phrases | 4 | ||||||
| ARTICLE II | ||||||||
| THE BONDS | ||||||||
| Section 201 | [Reserved] | 5 | ||||||
| Section 202 | Issuance of the Bonds; Dates and Places of Payment of Bonds | 5 | ||||||
| Section 203 | Execution; Limited Obligation | 5 | ||||||
| Section 204 | [Reserved] | 5 | ||||||
| Section 205 | Form of Bonds | 5 | ||||||
| Section 206 | Mutilated, Lost, Stolen or Destroyed Bonds | 5 | ||||||
| Section 207 | Transfer of Bonds; Persons Treated as Owners | 5 | ||||||
| Section 208 | Direct Payment Agreement | 6 | ||||||
| Section 209 | Notice of Prepayment | 6 | ||||||
| Section 210 | Payment of Prepayment Price and Endorsement of Bonds | 6 | ||||||
| ARTICLE III | ||||||||
| THE SERIES 2020 BONDS | ||||||||
| Section 301 | Issuance of Series 2020 Bonds | 7 | ||||||
| Section 302 | Prepayment Dates and Prices | 7 | ||||||
| Section 303 | Form of Series 2020 Bonds | 7 | ||||||
| Section 304 | Delivery of Series 2020 Bonds | 13 | ||||||
| ARTICLE IV | ||||||||
| [RESERVED] | 14 | |||||||
| ARTICLE V | ||||||||
| GENERAL COVENANTS | ||||||||
| Section 501 | Payment of Principal and Interest | 14 | ||||||
| Section 502 | Performance of Covenants; Issuer | 14 | ||||||
| Section 503 | Ownership; Instruments of Further Assurance | 14 | ||||||
| Section 504 | Payment of Taxes, Charges, etc | 14 | ||||||
| Section 505 | Maintenance and Repair | 14 | ||||||
| Section 506 | Recordation of the Lease Agreement, Security Deed, Financing Statements and Continuation Statements | 14 | ||||||
| Section 507 | Inspection of Project Books | 15 | ||||||
| Section 508 | Priority of Pledge | 15 | ||||||
| Section 509 | Rights Under Lease Agreement | 15 | ||||||
| Section 510 | Warranty Deed and Bills of Sale to be Held by Bondholder | 15 | ||||||
| ARTICLE VI | ||||||||
| REVENUES AND FUNDS | ||||||||
| Section 601 | Source of Payment of Bonds | 15 | ||||||
| Section 602 | Creation of the Bond Fund | 15 | ||||||
| Section 603 | Payments into the Bond Fund | 15 | ||||||
| Section 604 | Use of Moneys in the Bond Fund | 16 | ||||||
| Section 605 | Custody of the Bond Fund | 16 | ||||||
| Section 606 | Non-presentment of Bonds at Maturity | 16 | ||||||
| Section 607 | [Reserved] | 16 | ||||||
| Section 608 | Moneys to be Held in Restricted Account | 16 | ||||||
| Section 609 | Repayment to the Lessee from the Bond Fund | 16 | ||||||
| ARTICLE VII | ||||||||
| CUSTODY AND APPLICATION OF PROCEEDS OF BONDS | ||||||||
| Section 701 | Project Fund; Disbursements | 16 | ||||||
| Section 702 | Completion of the Project | 16 | ||||||
| ARTICLE VIII | ||||||||
| INVESTMENTS | ||||||||
| Section 801 | Project Fund Investments | 16 | ||||||
| Section 802 | Bond Fund Investments | 17 | ||||||
| ARTICLE IX | ||||||||
| POSSESSION, USE AND PARTIAL RELEASE OF PROJECT | ||||||||
| Section 901 | Subordination to Rights of the Lessee | 18 | ||||||
| Section 902 | Release of Leased Equipment | 18 | ||||||
| ARTICLE X | ||||||||
| DISCHARGE OF LIEN | ||||||||
| Section 1001 | Discharge of Lien | 18 | ||||||
| Section 1002 | Provision for Payment of Bonds | 18 | ||||||
| Section 1003 | Discharge of the Financing Agreement | 19 | ||||||
| ARTICLE XI | ||||||||
| DEFAULT PROVISIONS AND REMEDIES OF BONDHOLDER | ||||||||
| Section 1101 | Defaults; Events of Default | 19 | ||||||
| Section 1102 | Acceleration | 19 | ||||||
| Section 1103 | Other Remedies | 19 | ||||||
| Section 1104 | Rights of Bondholders | 19 | ||||||
| Section 1105 | Right of Owners of the Bonds to Direct Proceedings | 19 | ||||||
| Section 1106 | Appointment of Receivers | 20 | ||||||
| Section 1107 | Application of Moneys | 20 | ||||||
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| Section 1108 | Rights and Remedies Vested in Bondholder | 20 | ||||||
| Section 1109 | Rights and Remedies of Bondholder | 20 | ||||||
| Section 1110 | Termination of Proceedings | 20 | ||||||
| Section 1111 | Waivers of Events of Default | 21 | ||||||
| Section 1112 | Notice of Defaults; Opportunity of the Issuer and Lessee to Cure Defaults | 21 | ||||||
| ARTICLE XII | ||||||||
| [RESERVED] | 21 | |||||||
| ARTICLE XIII | ||||||||
| SUPPLEMENTAL ADDENDUMS | ||||||||
| Section 1301 | Supplemental Addendums to Financing Agreement Requiring Consent of Bondholder | 21 | ||||||
| ARTICLE XIV | ||||||||
| AMENDMENT OF LEASE AGREEMENT | ||||||||
| Section 1401 | Amendments, etc., to Lease Agreement Requiring Consent of Bondholder | 21 | ||||||
| ARTICLE XV | ||||||||
| MISCELLANEOUS | ||||||||
| Section 1501 | [Reserved] | 22 | ||||||
| Section 1502 | Limitation of Rights | 22 | ||||||
| Section 1503 | Severability | 22 | ||||||
| Section 1504 | Notices | 22 | ||||||
| Section 1505 | Issuer as Paying Agent and Bond Registrar | 22 | ||||||
| Section 1506 | Payments Due on Saturdays, Sundays and Holidays | 22 | ||||||
| Section 1507 | Counterparts | 22 | ||||||
| Section 1508 | Law Governing Financing Agreement | 22 | ||||||
| Section 1509 | Third Party Beneficiary | 23 | ||||||
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FINANCING AGREEMENT
THIS FINANCING AGREEMENT (the “Financing Agreement”), dated as of June 1, 2020, made and entered into by and between the GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY, a public body corporate and politic, and an instrumentality of the City of Gainesville, Georgia and Hall County, Georgia, created and existing under the laws of the State of Georgia (the “Issuer”), and FOX FACTORY, INC., a California corporation authorized to transact business in Georgia, as Bondholder (the “Bondholder”).
RECITALS
WHEREAS, the Issuer has been created pursuant to an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended (collectively, the “Act”), the members of the Issuer have been appointed as provided therein and are currently acting in that capacity; and
WHEREAS, the Issuer has been created for the purpose of promoting and expanding for the public good and welfare industry and trade within the City of Gainesville and Hall County, Georgia, and reducing unemployment to the greatest extent possible in Hall County, Georgia; and
WHEREAS, the Act empowers the Issuer to issue its revenue obligations, in accordance with the applicable provisions of the Revenue Bond Law of the State of Georgia (O.C.G.A. Sections 36-82-60 - 36-82-85), as heretofore and hereafter amended, for the purpose of acquiring, constructing and installing any “project” (as defined in the Act) for lease or sale to prospective tenants or purchasers in furtherance of the public purpose for which it was created; and
WHEREAS, after careful study and investigation the Issuer, in furtherance of the purpose for which it was created and pursuant to resolution duly adopted, has entered into a lease agreement (the “Lease Agreement”), dated as of even date herewith, with Fox Factory, Inc. (the “Lessee”), a California corporation qualified to do business in Georgia, pursuant to which the Issuer has agreed to acquire, construct and install the Project (as defined in the Lease Agreement), for the exclusive use and possession of the Lessee under the Lease Agreement and the Lessee has agreed to pay the Issuer specified rental payments and other payments; and
WHEREAS, after careful investigation, the Issuer has found and does hereby declare that it is in the best interest of the citizens of the City of Gainesville and Hall County, Georgia, that the Project be acquired, constructed and installed and leased to the Lessee for the purposes stated in the Lease Agreement, all in keeping with the public purpose for which the Issuer was created; and
WHEREAS, a Project Summary for the Project has been prepared and it is estimated that the cost of the Project will be approximately $75,000,000 (said Project Summary, which may be amended from time to time by the Lessee, has been approved by the Issuer and is on file with the Secretary of the Issuer); and
WHEREAS, the most feasible method of financing the cost of the Project is through the issuance hereunder of Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in the aggregate principal amount of not to exceed $75,000,000 (the “Series 2020 Bonds” or the “Bonds”); and
WHEREAS, the execution and delivery of this Financing Agreement and the sale, issuance and delivery of the Series 2020 Bonds have been in all respects duly and validly authorized by resolution duly adopted by the Issuer; and
WHEREAS, the Series 2020 Bonds will be delivered to and paid for by the purchaser in multiple installments as and when moneys are required to complete the acquisition, construction and installation of the Project; and
WHEREAS, the Issuer will receive rental payments and other payments from the Lessee, which revenues, together with all other rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project, shall be pledged, together with the Lease Agreement (except for certain indemnification rights provided therein), as security for the payment of the principal of and interest on the Series 2020 Bonds; and
WHEREAS, the Issuer has delivered to the Bondholder a duly authorized and executed Deed to Secure Debt, dated as of even date herewith, pursuant to which the Issuer will convey a security interest in the Project to the Bondholder as additional security for the payment of the principal of and interest on the Series 2020 Bonds; and
1
WHEREAS, all things necessary to make the Series 2020 Bonds when issued and delivered as in this Financing Agreement provided the valid, binding and legal obligations of the Issuer according to the import thereof, and to create a valid assignment and pledge of the rental payments and other payments derived from the Lease Agreement to the payment of the principal of and interest on the Bonds and a valid assignment of all the right, title and interest of the Issuer in the Lease Agreement have been done and performed, and the execution and delivery of this Financing Agreement and the execution, issuance and delivery of the Series 2020 Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS FINANCING AGREEMENT WITNESSETH:
That the Issuer, in consideration of the premises and of the purchase and acceptance of the Series 2020 Bonds by the owner thereof, and of the sum of One Dollar ($1.00), lawful money of the United States of America, to it duly paid by the Bondholder, at or before the execution and delivery of these presents, and for other good and valuable consideration, the receipt of which is hereby acknowledged, in order to secure the payment of the principal of and interest on the Bonds according to their tenor and effect and to ensure the performance and observance by the Issuer of all the covenants expressed or implied herein and in the Bonds, has given, granted a security interest in, pledged, assigned, conveyed and transferred and does by these presents give, grant, pledge, assign, convey and transfer to the Bondholder, its successors and assigns, forever all of the Issuer’s estate, right, title and interest in, to and under any and all of the following described property, rights and interest (hereinafter sometimes referred to collectively as the “Pledged Estate”), to-wit:
I.
All right, title and interest of the Issuer in and to the Lease Agreement and all amendments, modifications and renewals thereof.
II.
All rental payments and other payments to be received pursuant to the Lease Agreement, together with all other rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project (except for certain indemnification rights provided therein), and all amendments, modifications and renewals thereof.
III.
All amounts on deposit from time to time in the Project Fund and the Bond Fund, subject to the provisions of this Financing Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein.
IV.
Any and all other property of every name and nature (including, without limitation, any additional lease or leases covering the Project) from time to time hereafter by delivery or by writing of any kind, given, granted, pledged, assigned, conveyed, mortgaged or transferred, as and for additional security hereunder, by the Issuer or by anyone in its behalf or with its written consent, to the Bondholder.
TO HAVE AND HOLD all the same with all privileges and appurtenances hereby given, granted, pledged, assigned, conveyed, mortgaged and transferred, or agreed or intended to be to the Bondholder, its successors and assigns, forever, upon the terms and conditions herein set forth, without preference, priority or distinction as to lien or otherwise of any of the Bonds over any of the others except as herein expressly provided;
PROVIDED, HOWEVER, that upon Payment in Full of the Bonds in accordance with the terms and provisions of this Financing Agreement, this Financing Agreement and the rights hereby granted shall cease, terminate and be void; otherwise, this Financing Agreement shall be of full force and effect.
THIS FINANCING AGREEMENT FURTHER WITNESSETH and it is expressly declared that all Bonds issued and secured hereunder are to be issued and delivered and all property hereby given, granted, pledged, assigned, conveyed or transferred is to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, uses and purposes as hereinafter expressed, and the Issuer has agreed and covenanted and does hereby agree and covenant with the Bondholder as follows, that is to say:
2
ARTICLE I
DEFINITIONS
Section 101. Definitions. The following words and phrases and others evidently intended as the equivalent thereof shall, in the absence of clear implication herein otherwise, be given the following respective interpretations herein (terms which are not defined in this Section shall have the meaning specified in Article I of the Lease Agreement except as herein otherwise expressly provided or unless the context requires otherwise):
“Act” means an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended.
“Bond” or “Bonds” shall mean any or all of the not to exceed $75,000,000 in aggregate principal amount of Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, to be issued by the Issuer hereunder.
“Bond Fund” means the Bond principal and interest payment fund created by Section 602 hereof and within which there shall be established a general account and a special account. The special account may be established by the Issuer for bookkeeping purposes only and moneys designated as being held in the special account may be held in any segregated account designated by the Issuer for such purpose. Any reference herein to the words “Bond Fund” without further qualification shall constitute a reference to said general account.
“Bond Purchase Agreement” means the contract of even date herewith by and between the Issuer and Fox Factory, Inc., in its capacities as Lessee under the Lease and as Bondholder, pursuant to which the Issuer has agreed to sell, and the Bondholder has agreed to purchase, the Series 2020 Bonds in accordance with the provisions thereof.
“Bondholder” means Fox Factory, Inc., a California corporation authorized to transact business in Georgia, and its successors and assigns.
“Counsel” means an attorney or firm thereof duly admitted to practice law before the highest court of any state in the United States of America or of the District of Columbia.
“Escrow Agent” means the escrow agent designated in Section 510 hereof, and its successors and assigns.
The term “event of default” means the events specified in Section 1101 hereof, subject to the terms of Section 1112 hereof.
“Financing Agreement” means this Financing Agreement and any supplemental agreements with the Bondholder pursuant hereto.
“Financing Statements” means any and all financing statements (including continuation statements) filed for record from time to time.
“Government Obligations” means (a) direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged, or (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the payment of the principal of and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation by the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of Treasury of the United States of America), which obligations, in either case, are held in the name of the Issuer and not subject to redemption prior to maturity by anyone other than the holder thereof.
“Independent Counsel” means an attorney, or firm thereof, duly admitted to practice law before the highest court of any state in the United States of America or of the District of Columbia and not an employee of or regularly retained by either the Issuer or the Lessee.
“Interest Payment Date” means, with respect to the Series 2020 Bonds, September 1, 2020, and each March 1 and September 1 thereafter, and each date on which interest or principal is due and payable on all or part of the Series 2020 Bonds by reason of acceleration or redemption.
“Interest Period” means the period from and including any Interest Payment Date to and including the day immediately preceding the next following Interest Payment Date.
“Issuer” means the Gainesville and Hall County Development Authority, a body corporate and politic, an instrumentality of Hall County and the City of Gainesville, Georgia, and a public corporation created and existing under the laws of the State of Georgia, and its lawful successors and assigns.
“Lease Agreement” or “Lease” means the Lease Agreement, of even date herewith, between the Issuer and the Lessee, and any amendments or supplements thereto.
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“Lessee” means Fox Factory, Inc., a California corporation authorized to transact business in Georgia, and its successors and assigns, including any surviving, resulting or transferee Person as provided in Section 8.3 of the Lease Agreement.
The term “outstanding,” when used with reference to the Bonds at any date as of which the amount of outstanding Bonds is to be determined, means all Bonds which have been delivered to Lessee by the Bondholder under this Financing Agreement, except:
(a) Bonds cancelled at or prior to such date;
(b) Bonds for the payment or prepayment of which sufficient moneys and/or Government Obligations meeting the terms and conditions specified in Section 1002 hereof shall have been theretofore transferred or deposited into the Bond Fund (whether upon or prior to the maturity or prepayment date of any such Bonds); provided that if such Bonds are to be prepaid prior to the maturity thereof, notice of such prepayment shall have been given or arrangements satisfactory to the Bondholder shall have been made therefor, or waiver of such notice satisfactory in form to the Bondholder shall have been filed with the Bondholder; and
(c) Bonds in lieu of which others have been delivered under Section 206 hereof.
The term “Payment in Full of the Bonds” specifically encompasses the situations described in Sections 1001 and 1002 hereof.
“Person” means natural persons, firms, associations, corporations and public bodies and other legal entities.
“Pledged Estate” means the property described in Sections I, II, III and IV of the Granting Clauses of this Financing Agreement.
The term “Principal Office of the Bondholder” means the principal office of the Bondholder in Braselton, Georgia, or the principal office of any successor bondholder designated pursuant to the provisions of a supplemental addendum.
“Project” means the acquisition of the Project Facility Site, the acquisition, construction and installation of the Project Facility on the Project Facility Site and the installation in the Project Facility or on the Project Facility Site of the Project Equipment. The terms Project Facility Site, Project Facility and Project Equipment shall have the meanings ascribed to them in the Lease Agreement, as it may at any time exist.
“Record Date” means the close of business on the fifteenth (15th) day (whether or not a business day) of the month immediately preceding the applicable Interest Payment Date.
“Security Deed” means the deed to secure debt and security agreement of even date herewith from Issuer to the Bondholder pursuant to which the Issuer will convey a security interest in the Project to the Bondholder as additional security for the payment of the principal of and interest on the Bonds, which deed shall be recorded in the Clerk’s Office, Hall County Superior Court.
“Security interest” or “security interests” shall refer to the security interests created herein and shall have the meaning set forth in the Uniform Commercial Code of Georgia, as now or hereafter amended.
“Series 2020 Bond” or “Series 2020 Bonds” mean any and all of the not to exceed $75,000,000 in aggregate principal amount of the Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, issued by the Issuer hereunder.
Section 102. Use of Phrases. “Herein”, “hereby”, “hereunder”, “hereof”, “hereinbefore”, “hereinafter” and other equivalent words refer to this Financing Agreement and not solely to the particular portion hereof in which any such word is used. The definitions set forth in Section 101 hereof include both singular and plural. Whenever used herein, any pronoun shall be deemed to include both singular and plural and to cover all genders.
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ARTICLE II
THE BONDS
Section 201. [Reserved].
Section 202. Issuance of the Bonds; Dates and Places of Payment of Bonds. The Bonds shall be issued in a single series of fully registered Bonds in multiple installments as hereinafter provided. The Bonds shall be dated the date of delivery thereof by the Issuer, and shall bear interest from the date of initial delivery, and thereafter from the Interest Payment Date next preceding the date of issuance of such Bond to which interest has been paid or duly provided for, unless the date of issuance of such Bond is an Interest Payment Date to which interest has been paid or duly provided for, in which case from the date of issuance of such Bond, or unless no interest has been paid or duly provided for on the Bonds, then from the date of initial issuance and delivery of the Bonds, at the rate per annum and on the dates set forth in this Financing Agreement. Notwithstanding the foregoing, if any Bond is dated after any Record Date and before the following Interest Payment Date, such Bond shall bear interest from such following Interest Payment Date; provided, however, that if the Issuer shall default in the payment of interest due on such Interest Payment Date, then such Bond shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for on the Bonds, from the date of initial issuance and delivery of the Bonds.
The principal of and interest on each of the Bonds shall be payable in lawful money of the United States of America by check of the Issuer to the owner thereof delivered at the address of such owner as shown on the Bond Register maintained by the Issuer as Bond Registrar, unless there shall be in effect a direct payment agreement, as provided in Section 208 hereof. Such payments shall be made to the person in whose name a Bond shall be registered on the Bond Register, with respect to payment of principal, on the date such principal is due, and, with respect to the payment of interest, as of the applicable Record Date as shown on the Bond Register maintained by the Issuer, as Bond Registrar on the Record Date. Upon the payment of the final installment of principal of each Bond the owner thereof shall surrender the Bond to the Issuer. The Bond Registrar shall maintain a record of the amount and date of all payments or prepayments of the principal of and interest on the Bonds.
Section 203. Execution; Limited Obligation. The Bonds shall be executed on behalf of the Issuer by the official manual signature of its Chairman or Vice Chairman and the Issuer’s corporate seal shall be affixed thereto and attested by the official manual signature of its Secretary or Assistant Secretary. The obligation of the Issuer to pay the Bonds and the interest thereon shall not be a general obligation of the Issuer but shall be a limited obligation which shall be payable from, and wholly secured by, a pledge of the rental payments and other payments received from the Lessee derived by the Issuer under the Lease Agreement together with all other rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project. If any officer of the Issuer who shall have signed or sealed any Bond shall cease to be such officer before such Bond so signed and/or sealed has been delivered by the Bondholder, such Bond nevertheless may be delivered as though the person who signed and/or sealed such Bond had not ceased to be such officer, and also any Bond may be signed and sealed on behalf of the Issuer by such persons as at the actual time of execution of such Bond shall be the proper officers of the Issuer, although at the date of such Bond such persons may not have been officers of the Issuer.
Section 204. [Reserved].
Section 205. Form of Bonds. The fully registered Series 2020 Bonds and the form for transfer and the validation certificate to be printed thereon shall be in substantially the form hereinafter set forth in Section 303 hereof with such appropriate variations, omissions, substitutions and insertions as are permitted or required by this Financing Agreement and may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon, as may be required to comply with any applicable laws or rules or regulations, or as may, consistently herewith, be determined by the officers executing such Series 2020 Bonds, as evidenced by their execution of the Series 2020 Bonds.
Section 206. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and deliver a new Bond in the same principal amount in lieu of and in substitution for the Bond mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Issuer, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Issuer evidence satisfactory to it and to the Lessee of the ownership of such Bond and of such loss, theft or destruction, together with indemnity satisfactory to them. If any such Bond shall have fully matured, instead of issuing a new Bond the Issuer may pay the same. The Issuer may charge the owner of such Bond with its reasonable fees and expenses in this connection.
Section 207. Transfer of Bonds; Persons Treated as Owners. The Issuer shall act as Bond Registrar for the Bonds and shall keep books for the transfer of the Bonds as provided in this Financing Agreement. Upon surrender for transfer of any Bond at the Principal Office of the Issuer, the Issuer shall execute and deliver in the name of the transferee or transferees a new fully registered Bond or fully registered Bonds in the same aggregate principal amount of any authorized denomination or denominations. Fully registered Bonds may be exchanged at the Principal Office of the Issuer for an equal aggregate principal amount of fully registered Bonds of any authorized denomination or denominations.
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Any Bond shall be fully transferable by the registered owner on the Bond Register to be provided for that purpose, upon presentation of such Bond for notation of transfer thereof at the Principal Office of the Issuer, as Bond Registrar, accompanied by a written instrument of transfer in form reasonably satisfactory to the Bond Registrar duly executed by the registered owner or its attorney duly authorized in writing. No service charge shall be made for any such transfer, but the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The person in whose name any Bond is registered from time to time shall be deemed and regarded as the absolute owner thereof for all purposes and payment of or on account of the principal of and interest on such Bond shall be made only to or upon the order of the registered owner thereof, or its attorney duly authorized in writing, and neither the Issuer, the Bondholder, nor any paying agent acting for the Issuer shall be affected by any notice to the contrary. All such payments shall be valid and effectual to satisfy and discharge the liability upon the Bonds to the extent of the sum or sums so paid.
Anything in this Financing Agreement to the contrary notwithstanding, there shall not be effected, and the Issuer, acting as Bond Registrar, shall not permit the effecting of, any transfer of any Bond pursuant to the provisions of this Section, unless there is delivered to the Issuer an opinion of Counsel reasonably satisfactory to the Issuer and the Lessee to the effect that such transfer will not violate applicable securities laws.
Section 208. Direct Payment Agreement. Notwithstanding any provision of this Financing Agreement or of any Bond to the contrary, the Issuer may enter into a direct payment agreement with the owner of any Bond in an original principal amount of at least $100,000, providing for the making to such owner of all payments of principal and interest on such Bond or any part thereof (other than any payment of the entire unpaid principal amount thereof) at a place and in a manner other than as provided in this Financing Agreement and in the Bonds without presentation or surrender of such Bond (including the payment by Lessee of rental payments under the Lease directly to the owners of the Bonds in satisfaction of principal and interest on the Bonds). The Issuer agrees to permit to be made payments of principal and interest on the Bonds in accordance with the provisions of such direct payment agreement. In the absence of written notice from the owner of any such Bond to the contrary, the Issuer may conclusively presume that no default exists in making any payments of principal and interest. Upon registration of the transfer of any registered Bond being paid in accordance with the provisions of a direct payment agreement permitted by this Section, the owner of such registered bond prior to the delivery of such Bond to the transferee, shall make a notation on such Bond of the date to which interest has been paid thereon and the amount of any prepayments made on account of the principal thereof, and the Issuer shall not be deemed to have notice of any such payment.
Section 209. Notice of Prepayment. Notice of the call for any such total or partial prepayment shall be given by mailing a copy of the prepayment notice by first class mail at least thirty (30) days prior to the prepayment date to the registered owner of the Bonds at the addresses shown on the Bond Register. Not later than the prepayment date, sufficient moneys shall be deposited in the Bond Fund to pay the Bonds or portions thereof called for prepayment and accrued interest thereon to the prepayment date. Any portion of any Bond thus called and provided for as hereinabove specified shall not bear interest after the prepayment date.
Section 210. Payment of Prepayment Price and Endorsement of Bonds. Upon the date set for prepayment in said written notice, the Issuer shall pay the prepayment price in lawful moneys of the United States of America by check to the owner of the Bonds at the addresses of such person shown in the Bond Register. By acceptance of a Bond, the owner thereof agrees that upon a partial prepayment thereof it will endorse in the space provided on the schedule attached to such Bond, the amount and date of such partial prepayment.
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ARTICLE III
THE SERIES 2020 BONDS
Section 301. Issuance of Series 2020 Bonds. The Series 2020 Bonds (i) shall be designated “Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020”, (ii) shall be issuable in an aggregate principal amount of not to exceed $75,000,000 as one or more fully registered Bonds in any denomination in excess of $100,000 and in more than one installment; (iii) shall be dated in the manner set forth in Section 202 hereof; (iv) shall bear interest from date at the rate of 5.0% per annum (computed on the basis of a 360-day year, 30-day month), from their dated date or from the last Interest Payment Date to which interest has been paid (interest due on any Series 2020 Bond on any Interest Payment Date shall be paid to the Bondholder of such Series 2020 Bond as shown on the registration books kept by the Bond Registrar on the Record Date), first interest payable on the next succeeding March 1 or September 1 (whichever shall come first), and semiannually thereafter on each Interest Payment Date of each year until maturity or earlier date of prepayment, and shall mature on September 1, 2027, and (v) shall be numbered from R-1 consecutively upwards according to the records of the Issuer.
Section 302. Prepayment Dates and Prices. The Series 2020 Bonds are subject to prepayment prior to maturity by the Issuer at any time, in whole or in part, at 100% of the principal amount to be so prepaid plus accrued interest thereon to the prepayment date.
Section 303. Form of Series 2020 Bonds. The Series 2020 fully registered Bonds shall be in substantially the form set forth, to the extent provided in Section 205 hereof, as follows:
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(FORM OF SERIES 2020 BOND)
STATE OF GEORGIA
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND
(FOX FACTORY, INC. PROJECT),
SERIES 2020
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND IT MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED NOR MAY THE EXTENT OF ITS REGISTRATION BE REDUCED, WITHOUT OPINION OF COUNSEL SATISFACTORY TO THE BONDHOLDER, THE ISSUER AND THE INITIAL LESSEE OF THE PROJECT REFERRED TO IN THIS BOND TO THE EFFECT THAT SUCH TRANSFER OR CHANGE IN THE EXTENT OF REGISTRATION WILL NOT VIOLATE APPLICABLE SECURITIES LAWS.
No. R- Issue Date:______________ $___________
FOR VALUE RECEIVED, the Gainesville and Hall County Development Authority (the “Issuer”), a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, created pursuant to an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq.; continued at Ga. Laws 1986, page 4328, et seq.), duly ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended, hereby promises to pay to FOX FACTORY, INC., or registered assigns (the “Bondholder”), solely from the special fund hereinafter described and from no other source, on September 1, 2027, the principal sum of
_______________________________________________ AND ____/100 DOLLARS
and to pay to the registered owner hereof solely from said special fund, interest hereon at the rate of five percent (5.0%) per annum (calculated on the basis of a 30-day month, 360-day year), from the date of initial delivery, and thereafter from the Interest Payment Date next preceding the date of delivery thereof to which interest has been paid or duly provided for, unless the date of delivery thereof is an Interest Payment Date to which interest has been paid or duly provided for, in which case from the date of delivery thereof, or unless no interest has been paid or duly provided for on the bonds, then from the date of initial issuance and delivery of the bonds, at the rates per annum and on the Interest Payment Dates set forth in the Financing Agreement. “Interest Payment Date” shall have the meaning given such term in the Financing Agreement. Notwithstanding the foregoing, if any bond is dated after any Record Date and before the following Interest Payment Date, such bond shall bear interest from such following Interest Payment Date; provided, however, that if the Issuer shall default in the payment of interest due on such Interest Payment Date, then such Bond shall bear interest from the next preceding Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for on the bonds, from the date of initial issuance and delivery of the bonds. The principal of and the interest on this bond shall be payable in lawful money of the United States of America by check, delivered to the registered owner hereof at the orders shown on the Bond Register or to the order of any subsequent registered owner hereof shown on the Bond Register. The interest on this bond (except for final payment of such interest which shall be made only upon presentation and surrender of this bond at the principal office of the Issuer) shall be mailed to the registered owner thereof, as shown on the Bond Register as of the close of business on the Record Date (as hereinafter defined).
“Record Date” shall mean the close of business on the 15th day (whether or not a Business Day) of the calendar month immediately preceding the applicable Interest Payment Date.
This bond is a fully registered bond comprising one of a duly authorized series in the aggregate principal amount of not to exceed $75,000,000 (the “bonds”), of like tenor except as to numbers, issued under and secured by an Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), by and between the Issuer and the Bondholder, and an authorizing resolution of the Issuer adopted on May _____, 2020, for the purpose of financing the acquisition, construction and installation of certain real and personal property comprising a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West, Gainesville, Hall County, Georgia (the “Project”). The Project will be leased by the Issuer to Fox Factory, Inc., as lessee (the “Lessee”), pursuant to a Lease Agreement, dated as of June 1, 2020 (the “Lease Agreement”) between the Issuer and the Lessee.
The Financing Agreement recites that the bonds of this series may be delivered to, and paid for by, the purchaser, in multiple installments as and when moneys are required to complete the acquisition, construction and installation of the Project.
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This bond and the interest hereon shall not be deemed to constitute a debt or a general obligation or a pledge of the faith and credit of the State of Georgia, the City of Gainesville or of Hall County, and does not directly, indirectly or contingently obligate said State, City or County to levy or to pledge any form of taxation whatever for the payment of such principal and interest. This bond is payable solely from the rental payments and other payments received under the Lease Agreement together with all other rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project (except for certain indemnification rights provided therein) and the Issuer is obligated to pay the principal of and the interest on this bond only from the fund entitled Gainesville and Hall County Development Authority, Fox Factory, Inc. Project, Series 2020 (the “Bond Fund”), created in the Financing Agreement. No recourse shall be had for the payment of the principal of and the interest on this bond against any officer or member of the Issuer.
This bond is issued and the Financing Agreement was authorized, executed and delivered by the Issuer under and pursuant to the laws of the State of Georgia, including particularly the Act, and the aforesaid resolution of the Issuer. Pursuant to the terms of the Lease Agreement, the Lessee must pay to the Issuer rental payments which are pledged to, and will be fully sufficient to provide for, the payment of the principal of and the interest on the bonds of this series as the same become due. As additional security for the payment of the bonds of this series, the Issuer will execute and deliver to the Bondholder a deed to secure debt and security agreement, dated as of June 1, 2020 (the “Security Deed”), pursuant to which the Issuer will convey a security interest in the Project to the Bondholder.
The Issuer has agreed that it will use its best efforts to keep the Project continuously leased and will prescribe and collect rental payments therefor sufficient to pay when due the principal of and the interest on the bonds. Reference to the Financing Agreement is hereby made for a description of the aforesaid Bond Fund which is charged with, and pledged to, the payment of the principal of and the interest on the bonds, the nature and extent of the security, the rights, duties and obligations of the Issuer, the rights of the Bondholder, the terms and conditions under and upon the occurrence of which the Financing Agreement and the Lease Agreement may be modified, and the terms and conditions under and upon the occurrence of which the lien of the Financing Agreement may be defeased as to this bond prior to the maturity or prepayment date hereof, to all of the provisions of which the Bondholder, by the acceptance of this bond, assents.
The bonds of this series are subject to prepayment prior to maturity by the Issuer at any time, in whole or in part, as provided in the Financing Agreement, at 100% of the principal amount to be so prepaid plus accrued interest thereon to the prepayment date.
When this bond (or any portion hereof) is called for prepayment as aforesaid, notice thereof shall be given by mailing a copy of the prepayment notice by first class mail at least thirty days prior to the prepayment date to the registered owner of this bond at the addresses shown on the registration books.
Less than the entire principal amount of this bond may be prepaid and in such case, upon the surrender of such bond (a) appropriate endorsement shall be made thereon by the Issuer to reflect such partial prepayment, or (b) there shall be issued to the registered owner hereof, without charge therefor, for the unredeemed balance of the principal amount of this bond, fully registered bonds in any of the authorized denominations, as more fully set forth in the Financing Agreement.
The owner of this Bond agrees that upon a partial prepayment of this bond it will endorse in the space provided on the schedule attached hereto, the amount and date of such partial prepayment.
This bond is transferable by the registered owner hereof in person or by his attorney duly authorized in writing at the principal office of the Issuer, but only in the manner, subject to the conditions and limitations and upon payment of the charges provided in the Financing Agreement, and upon surrender and cancellation of this bond. Upon such transfer, a new fully registered bond or fully registered bonds in the same aggregate principal amount and of any authorized denomination or denominations shall be issued to the transferee or transferees in exchange therefor.
The owner of this bond shall have the right to enforce the payment of the principal hereof and the interest hereon at or after the maturity hereof, and the owner of this bond shall have the right to enforce the provisions of the Financing Agreement and to institute action to enforce the covenants therein, and to take any action with respect to any Event of Default under the Financing Agreement, and to institute, appear in or defend any suit or other proceedings with respect thereto, as provided in the Financing Agreement. In certain events, on the conditions, in the manner and with the effect set forth in the Financing Agreement, the principal of all the bonds issued under the Financing Agreement and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with the interest accrued thereon. Modifications or alterations of the Financing Agreement, or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Financing Agreement.
This bond is issued with the intent that the laws of the State of Georgia shall govern its construction.
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It is hereby certified and recited that all acts, conditions and things required by the Constitution and laws of the State of Georgia to happen, exist and be performed precedent to and in the issuance of this bond, the execution of the Financing Agreement and the adoption of the aforesaid resolution by the Issuer, have happened, exist and have been performed. The issuance of this bond and the series of which it forms a part, together with all other obligations of the Issuer, does not exceed or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Issuer has caused this bond to be executed in its name by the signature of its Chairman, and its corporate seal to be hereunto affixed and attested by the signature of its Secretary, all as of ____________, 20___.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: __________________
Chairman
Attest: __________________
Secretary
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VALIDATION CERTIFICATE
STATE OF GEORGIA
COUNTY OF HALL
The undersigned Clerk of the Superior Court of Hall County, Georgia, HEREBY CERTIFIES that the within bond was confirmed and validated by judgment of the Superior Court of Hall County, Georgia, rendered on the _____ day of ____________, 2020, Civil Action No. ____________ that no intervention or objection was filed thereto and that no appeal has been taken therefrom.
WITNESS my manual signature and the reproduced facsimile seal of said court.
_______________________________
Clerk of the Superior Court of
Hall County, Georgia
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PAYMENTS ON ACCOUNT OF PRINCIPAL
Partial prepayments of the principal of this bond have been made, as follows:
| DATE | AMOUNT PREPAID | BALANCE OF PRINCIPAL AMOUNT UNPAID | AUTHORIZED SIGNATURE OF OWNER OF THIS BOND | ||||||||
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(Form for Transfer)
COMPLETE AND SIGN THIS FORM FOR
REGISTRATION OF TRANSFER
For value received ________________________ hereby sells, assigns and transfers unto
______________________________________________________________________________
this Bond and hereby irrevocably constitutes and appoints _______________________ Attorney to register such transfer on the books of registration in the office of the Registrar with full power of substitution in the premises.
Dated: ______________________ | ___________________________________ NOTE: The signature on this assignment must correspond with the name as written on the face of this Bond in every particular, without alteration, enlargement or any change whatsoever. | ||||
Section 304. Delivery of Series 2020 Bonds. Immediately following the execution and delivery of this Financing Agreement, the Issuer will deliver a Series 2020 Bond executed by the Issuer to the Bondholder. The proceeds from the sale of any such Bond shall be deposited in the Project Fund as hereinafter provided in Article VII, subject to the provisions of Section 701 hereof.
Prior to the delivery by the Issuer of the aforesaid Series 2020 Bond which it will be initially ordered to deliver hereunder, there shall be filed with the Bondholder:
1. A copy, duly certified by the Secretary of the Issuer, of the resolution by the Issuer authorizing the issuance of the Series 2020 Bonds and the execution, delivery and performance of this Financing Agreement, the Lease Agreement, the Security Deed, the Direct Payment Agreement and the Bond Purchase Agreement.
2. An original executed counterpart of this Financing Agreement, the Lease Agreement, the Bond Purchase Agreement, the Direct Payment Agreement and the Security Deed.
3. Copies of Financing Statements filed to perfect the security interests created herein and the security interests created in the Security Deed.
4. The written opinion of Counsel for the Issuer or other counsel satisfactory to the Issuer stating (a) that this Financing Agreement creates a valid first lien on and pledge of the revenues hereby conveyed and pledged, and all filings and/or recordings of any document required in order to perfect and preserve such first lien and pledge have been duly accomplished, and (b) that the Lease Agreement and the Security Deed have been properly recorded in the proper place or places where such recordation is required for the giving of notice thereof, such recordation is complete and no other filing, recording, publishing or re-recording is required.
5. An opinion of nationally recognized bond attorneys satisfactory to the Issuer to the effect (i) that the issuance of the Series 2020 Bonds has been duly authorized and (2) the Series 2020 Bonds constitute valid and binding obligations of the Issuer entitled to the benefits of and secured by this Financing Agreement.
Prior to the delivery by the Issuer of any Series 2020 Bond subsequent to the delivery of the Series 2020 Bond initially delivered to the Bondholder as hereinabove provided, there shall be filed with the Issuer a designation signed by the Lessee in substantially the form of that which is attached to the Bond Purchase Agreement as Exhibit “A” thereto. The Issuer shall deliver to the Bondholder a fully registered Series 2020 Bond of the designated denomination in accordance with the terms of such designation upon the payment to the Issuer of the purchase price of said Series 2020 Bond as specified in the Bond Purchase Agreement. The proceeds from the sale of any such Series 2020 Bond shall likewise be deposited in the Project Fund as hereinafter provided in Article VII, subject to the provisions of Section 701 hereof.
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ARTICLE IV
[RESERVED]
ARTICLE V
GENERAL COVENANTS
Section 501. Payment of Principal and Interest. Issuer covenants that it will promptly pay the principal of and interest on the Bonds at the place, on the dates and in the manner provided herein and in the Bonds according to the true meaning hereof and thereof. The principal and interest are payable solely from rental payments and other payments received from the Lessee under the Lease Agreement together with all other rents, revenues and receipts (except for certain indemnification rights provided therein) arising out of or connection with the Issuer’s ownership of the Project, which payments, rents, revenues and receipts are hereby specifically pledged to the payment of the principal of and interest on the Bonds in the manner and to the extent herein specified. The Bonds and the interest thereon shall not be deemed to constitute a debt or a general obligation of the State of Georgia, City of Gainesville or Hall County, and the Bonds do not directly, indirectly or contingently obligate said State, City or County to levy or to pledge any form of taxation whatsoever for the payment of the principal of or interest on the Bonds. Subject to Section 208, the principal of and interest on the Bonds are payable solely from the Bond Fund and specifically from the special account established therein pursuant to Section 602 hereof.
Section 502. Performance of Covenants; Issuer. The Issuer covenants that it will faithfully perform at all times any and all covenants, agreements, undertakings, stipulations and provisions contained in this Financing Agreement, in any and every Bond, and in all proceedings of the Issuer pertaining thereto. The Issuer covenants that it is duly authorized under the laws of the State of Georgia to issue the Bonds and to execute, deliver and perform the Financing Agreement, and the Security Deed, and to pledge the Lease Agreement and the rental payments and other payments received from the Lessee under the Lease Agreement together with all other rents, revenues and receipts (except for certain indemnification rights provided therein) arising out of or in connection with its ownership of the Project in the manner and to the extent herein set forth; that all action on its part for the issuance of the Bonds and the execution, delivery and performance of this Financing Agreement, and the Security Deed has been duly and effectively taken, and that the Bonds are and will be valid and enforceable limited obligations of the Issuer according to the import thereof.
Section 503. Ownership; Instruments of Further Assurance. The Issuer covenants that it lawfully owns and is lawfully possessed of the Project and that it will defend its title in and to the Project and every part thereof to the Bondholder, and its respective successors and assigns, against the claims and demands of all persons whomsoever. The Issuer covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the Bondholder may reasonably require for the better giving, granting, pledging, assigning, conveying, transferring, assuring and confirming unto the Bondholder all and singular the rents, revenues and receipts pledged hereby to the payment of the principal of and interest on the Bonds. The Issuer covenants that, except for the Bill of Sale (Project Equipment), and the Warranty Deed, and except as herein and in the Lease Agreement and the Security Deed provided, it will not sell, convey, encumber or otherwise dispose of any part of the Project.
Section 504. Payment of Taxes, Charges, etc. Pursuant to the provisions of Section 6.3 of the Lease Agreement, the Lessee has agreed to pay all lawful taxes, assessments and charges at any time levied or assessed upon or against the Project, or any part thereof, which might impair or prejudice the lien of this Financing Agreement; provided, however, that nothing contained in this Section 504 shall require the payment of any such taxes, assessments or charges if the same are not required to be paid under the provisions of Section 6.3 of the Lease Agreement.
Section 505. Maintenance and Repair. Pursuant to the provisions of Section 6.1 of the Lease Agreement, the Lessee has agreed at its own expense to keep the leased real property and equipment and all other improvements and property forming a part of the Project in as reasonably safe condition as the operation thereof will permit, subject to its discretion, under the circumstances set forth in the Lease Agreement.
Section 506. Recordation of the Lease Agreement, Security Deed, Financing Statements and Continuation Statements. The Issuer covenants that it will cause the Lease Agreement (or the Short Form Lease Agreement), the Security Deed, and all Financing Statements and all supplements thereto and hereto to be recorded and filed in such manner and in such places as may be required by law in order to fully protect and preserve the rights, privileges and options of the Bondholder hereunder and the Lessee has covenanted in Section 8.7 of the Lease Agreement to cause continuation statements with respect to said Financing Statements to be kept recorded and filed in such manner and in such places as may be required by law in order to fully protect and preserve the interest of the Bondholder as aforesaid.
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Section 507. Inspection of Project Books. The Issuer covenants that all books and documents in its possession relating to the rents, revenues and receipts derived from the Project shall at all times during normal business hours be open to inspection by such accountants or other agents as the Bondholder may, from time to time, designate. The Issuer shall be given at least 48 hours prior written notice of any such inspection and the opportunity to have a representative present during such inspection.
Section 508. Priority of Pledge. The pledge hereby made of the Pledged Estate constitutes a first and prior pledge thereof and shall not be impaired directly or indirectly by the Issuer and the payments, rents, revenues and receipts from the Project and the Issuer’s interest in the Lease Agreement shall not otherwise be pledged and no persons shall have any rights with respect thereto except as provided herein and in the Lease Agreement.
Section 509. Rights Under Lease Agreement. The Lease Agreement sets forth the respective obligations of the Issuer and the Lessee relating to the leasing of the Project, including a provision that subsequent to the initial issuance of the Bonds and prior to Payment in Full thereof, the Lease Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the Bondholder (other than as provided therein). Reference is hereby made to the Lease Agreement for a detailed statement of the obligations of the Lessee thereunder, and the Bondholder may enforce all rights of the Issuer and all obligations of the Lessee under and pursuant to the Lease Agreement, whether or not the Issuer is in default hereunder.
Section 510. Warranty Deed and Bills of Sale to be Held by Escrow Agent. The Escrow Agent agrees that it will hold the Bill of Sale (Project Equipment) and the Warranty Deed in escrow, and will deliver the Warranty Deed and the Bill of Sale (Project Equipment) to the Lessee at the written direction of the Lessee upon Payment in Full of the Bonds. In the event the Escrow Agent does not deliver the Warranty Deed and the Bill of Sale (Project Equipment) to the Lessee in accordance with the terms of this Section 510, Lessee shall have all remedies available to it at law or in equity, including specific performance. Stewart, Melvin & Frost, LLP is hereby designated as the Escrow Agent.
ARTICLE VI
REVENUES AND FUNDS
Section 601. Source of Payment of Bonds. The obligation of the Issuer to pay the principal of and interest on the Bonds is not a general obligation of the Issuer but is a limited obligation payable solely from the Pledged Estate and as authorized and provided herein.
The Project has been leased under the Lease Agreement and the rental payments provided for in Section 5.3 of the Lease Agreement (except as may otherwise be provided in a direct payment agreement authorized by the provisions of Section 208 hereof) are to be remitted directly to the Issuer and are to be deposited in the Bond Fund by the Issuer. Said rental payments are sufficient in amount and become due in a timely manner so as to ensure the prompt payment of the principal of and interest on the Bonds.
The Issuer has also executed the Security Deed wherein the Issuer will convey a security interest in the Project to the Bondholder as additional security for the payment of the principal of and interest on the Bonds.
Section 602. Creation of the Bond Fund. There is hereby created by the Issuer a special fund to be designated “Gainesville and Hall County Development Authority Revenue Bond Fund, Fox Factory, Inc. Project, Series 2020,” which shall be held by a depository designated from time to time by the Issuer separate and apart from all other deposits or funds of the Issuer, and shall be used to pay the principal of and interest on the Bonds. There shall be established as separate accounts within the Bond Fund a general account and a special account. The special account may be established by the Issuer for bookkeeping purposes only and moneys designated as being held in the special account may be held in any segregated account designated by the Issuer for such purpose. Any reference in this Financing Agreement to “Bond Fund” without further qualification or explanation shall constitute a reference to said general account. Notwithstanding anything herein to the contrary, the Issuer shall be not required to maintain a Bond Fund as long as a direct payment agreement is in effect with respect to the Series 2020 Bonds and the Lessee is timely making payments under the Lease.
Section 603. Payments into the Bond Fund. There shall be paid into the Bond Fund all accrued interest, if any, derived from the sale of the Bonds. In addition, there shall be paid into the Bond Fund, as and when received, (a) all rental payments specified in Section 5.3 of the Lease Agreement (except for any moneys paid directly to the Bondholder pursuant to the provisions of a direct payment agreement permitted pursuant to Section 208 hereof and described in Section 601 above), (b) all moneys required to be so deposited from the Project Fund, as provided in the Lease Agreement, and (c) all other moneys received by the Issuer under and pursuant to any of the provisions of the Lease Agreement or this Financing Agreement which are required to be paid into the Bond Fund.
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The Issuer covenants that so long as any of the Bonds are outstanding it will pay, or cause to be paid, into the Bond Fund from the sources of payment described in Section 601 hereof sufficient moneys to promptly pay the principal of and interest on the Bonds as the same become due and payable. To this end, the Issuer covenants that it will use its best efforts to cause the Project to be continuously and effectively leased as a revenue producing undertaking. If there occurs an Event of Default under the Lease Agreement resulting in the right of possession to the Project being returned to the Issuer, the Issuer will fully cooperate with the Bondholder to the end of fully protecting the rights and security of the Bondholder and shall diligently proceed in good faith and use its best efforts to secure another tenant for the Project to the end that at all times sufficient rents, revenues and receipts will be derived from the Project to promptly pay the principal of and interest on the Bonds as the same become due and payable and to pay the costs of maintaining and insuring the Project. Nothing herein shall be construed as requiring the Issuer to operate the Project or to use any funds from any source to pay the principal of and interest on the Bonds or to pay the costs of maintaining and insuring the Project other than rents, revenues and receipts arising out of or in connection with its ownership of the Project.
Section 604. Use of Moneys in the Bond Fund.
(a) Except as provided in Section 609 hereof, moneys in the Bond Fund shall be used solely for the payment of the principal of and interest on the Bonds. No part of the rental payments under the Lease Agreement required to be paid into the Bond Fund (excluding prepayments under Section 9.5 of the Lease Agreement) shall be used to prepay, prior to maturity, a portion of any Bond; provided, that whenever the moneys held in the Bond Fund (in the general account and in the special account) from any source whatsoever are sufficient to prepay all of the Bonds and to pay interest to accrue thereon prior to such prepayment, the Issuer agrees to take and cause to be taken the necessary steps to prepay all of the Bonds on the next succeeding prepayment date for which the required prepayment notice can be given; and, provided further, that any moneys in the Bond Fund other than rental payments may be used to prepay a portion of the Bonds so long as the Lessee is not in default with respect to any rental payments under the Lease Agreement.
(b) At the maturity date or prepayment date prior to maturity of each Bond the Issuer shall transfer from the general account in the Bond Fund to the special account in the Bond Fund sufficient moneys to pay all principal of and interest (if any) then due and payable with respect to each such Bond. Moneys so transferred into said special account shall not thereafter be invested in any manner but shall be held by the Issuer without liability on the part of the Issuer for interest thereon until actually paid out for the purposes intended. The Issuer shall withdraw, from time to time, sufficient moneys from the special account in the Bond Fund to pay the principal of and interest on the Bonds as the same become due and payable.
Section 605. Custody of the Bond Fund. The Bond Fund shall be held by the Issuer as a restricted fund solely for the benefit of the Bondholder. The general account and the special account established in the Bond Fund shall also constitute restricted accounts.
Section 606. Non-presentment of Bonds at Maturity. If any Bond shall not be presented for payment when the principal thereof becomes due, either at maturity or at the prepayment date, provided moneys sufficient to pay such Bond shall have been made available to the Bondholder and are held in the special account in the Bond Fund for the benefit of the owner thereof, all liability of the Issuer to the owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Issuer to hold such moneys in said special account, without liability for interest thereon, for the benefit of the owner of such Bond who shall thereafter be restricted exclusively to moneys held in said special account, for any claim of whatever nature on its part under this Financing Agreement or on, or with respect to, such Bond.
Section 607. [Reserved].
Section 608. Moneys to be Held in Restricted Account. All moneys deposited by the Issuer in the Bond Fund under any provision of this Financing Agreement shall be held in a restricted account by the depository solely for the benefit of the Bondholder.
Section 609. Repayment to the Lessee from the Bond Fund.
(a) Any moneys remaining in the general account in the Bond Fund after Payment in Full of the Bonds (taking into consideration that sufficient moneys or obligations such as are described in Section 1002 hereof have been transferred to and/or deposited in the special account in the Bond Fund to pay all principal of and interest then due and payable with respect to each Bond not yet presented for payment and to pay all principal and interest relating to each Bond which is not yet due and payable but with respect to which the lien of this Financing Agreement has been defeased upon compliance with Article X hereof), the fees, charges and expenses of the Bondholder, any paying agents and the Bond Registrar which have accrued and which will accrue and all other items required to be paid hereunder (other than items payable from the special account in the Bond Fund) shall be paid to the Lessee upon the expiration or sooner termination of the term of the Lease Agreement.
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(b) Any moneys held by the Issuer in the special account in the Bond Fund restricted for the payment of the principal of or interest on any Bond remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Lessee, and the holder of such Bond shall thereafter, as an unsecured general creditor, look only to the Lessee for the payment thereof and all liability of the Issuer with respect to such restricted monies shall thereupon cease.
ARTICLE VII
CUSTODY AND APPLICATION OF PROCEEDS OF BONDS
Section 701. Project Fund; Disbursements. There is hereby created and held by the Issuer, to be deposited with Regions Bank, Gainesville, Georgia (the “Project Fund Depository”), a restricted fund to be designated “Gainesville and Hall County Development Authority Revenue Bonds Project Fund, Fox Factory, Inc. Project, Series 2020.” The proceeds derived from the sale of the Bonds shall be paid into the Project Fund unless the Lessee or its Affiliate also owns the Series 2020 Bonds in which case no actual cash transfer need be made. Moneys received from the Lessee pursuant to Section 6.2 of the Lease Agreement shall be paid into the Project Fund. Moneys in the Project Fund shall be disbursed in accordance with the provisions of the Lease Agreement, and particularly Section 4.3 thereof. In addition, the Issuer may issue the Bonds to purchase portions of the Project as provided in Section 4.2 of the Lease Agreement.
The Issuer agrees to promptly take all necessary and appropriate action in approving and ordering all such disbursements. The Issuer shall issue its checks for each disbursement required by the aforesaid provisions of the Lease Agreement.
The Issuer shall maintain adequate records pertaining to the Project Fund and all disbursements therefrom, and after the Project has been completed and a certificate of payment of all costs filed as provided in Section 702 hereof, the Issuer shall file an accounting thereof with the Lessee. The requirements for such accounting may be satisfied by provision of any interim statements of the Project Fund as agreed upon by the Issuer and the Lessee.
Costs incurred by the Lessee for land, costs incurred in constructing any improvements that are a part of the Project and costs incurred in the purchase, acquisition and installation of equipment for the Project shall be treated as if cash in an amount equal to the Lessee’s cost of such land, construction or equipment were advanced by the Bondholder to the Issuer hereunder with respect to the Bonds and immediately disbursed by the Issuer to reimburse the Lessee for such costs.
Section 702. Completion of the Project. The completion of the acquisition, construction and installation of the Project and the payment of all costs and expenses incident thereto shall be evidenced by the filing with the Issuer of the certificate of the Lessee executed on behalf of the Lessee by an Authorized Lessee Representative required by Section 4.5 of the Lease Agreement. As soon as practicable, and in any event not later than sixty (60) days from the date of the certificate referred to above, any moneys remaining in the Project Fund (other than moneys retained to pay costs and expenses not then due and payable) be applied in accordance with Section 4.3 of the Lease without any further direction.
ARTICLE VIII
INVESTMENTS
Section 801. Project Fund Investments. Moneys held in the Project Fund or in any other fund or account held by any depository under the provisions of this Financing Agreement (except the Bond Fund or an account in the Bond Fund) shall be invested and reinvested by the Issuer or the depository at the written direction of the Lessee in Permitted Investments in accordance with the treatment prescribed for Project Fund moneys in Section 4.8 of the Lease Agreement. Such Permitted Investments shall be held by or under the control of the Issuer and shall be deemed at all times a part of the Project Fund or other pertinent fund and the interest accruing thereon and any profit resulting therefrom shall be credited to the Project Fund or other pertinent fund and any loss resulting therefrom shall be charged to the Project Fund or other pertinent fund. The Issuer shall 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 when presented otherwise make a timely disbursement required to be made therefrom. The Issuer shall not be responsible for any depreciation of the value of any investment made pursuant to this Section or for losses incurred in the redemption, sale or other disposal of any investments made in accordance with this Section, and in the absence of any written direction of the Lessee given in accordance with the provisions hereof, the Issuer may hold any and all funds uninvested.
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Section 802. Bond Fund Investments. Moneys held in the Bond Fund (other than moneys held in the special account in the Bond Fund referred to in Section 604(b) hereof) shall be invested and reinvested by the Issuer at the written direction of the Lessee in accordance with the treatment prescribed for Project Fund moneys in Section 4.8 of the Lease Agreement. Such investments shall be held by or under the control of the Issuer and shall be deemed at all times a part of the Bond Fund and the interest accruing thereon and any profit resulting therefrom shall be credited to the Bond Fund and any loss resulting therefrom shall be charged to the Bond Fund. The Issuer shall sell and convert to cash a sufficient amount of such investments in the Bond Fund whenever the cash held in the Bond Fund is insufficient to provide for the payment of the principal of (whether at the maturity date or prepayment date prior to maturity) and interest on the Bonds as the same become due and payable. The Issuer shall not be responsible for any depreciation of the value of any investment made pursuant to this Section or for losses incurred in the redemption, sale or other disposal of any investments made in accordance with this Section, and in the absence of any written direction of the Lessee given in accordance with the provisions hereof, the Issuer may hold any and all funds uninvested. The money in the special account shall be held uninvested.
ARTICLE IX
POSSESSION, USE AND PARTIAL RELEASE OF PROJECT
Section 901. Subordination to Rights of the Lessee. So long as the Lessee is not in default under the Lease Agreement, this Financing Agreement and the rights, options and privileges hereunder of the Bondholder are specifically made subject and subordinate to the rights, options, obligations and privileges of the Lessee set forth in the Lease Agreement. So long as not otherwise provided in this Financing Agreement, the Lessee shall be suffered and permitted to possess, use and enjoy the Project and its appurtenances so as to carry out its obligations under the Lease Agreement.
Section 902. Release of Leased Project Facility Site, Project Building and Project Equipment. Reference is made to the provisions of the Lease Agreement, including, without limitation, Section 6.2 and Section 11.4 thereof, wherein the Lessee has reserved the right to release the Project Facility Site the Project Building and the Project Equipment from the Lease Agreement upon compliance with the terms and conditions of the Lease Agreement. The Bondholder shall at the request of the Issuer or the Lessee release all its rights to and liens on the rents, revenues and receipts derived from such withdrawn items under this Financing Agreement upon compliance with the provisions of the Lease Agreement. The Bondholder is hereby authorized and directed to execute and record or cause to be executed and properly recorded any and all instruments reasonably requested by the Lessee to effectuate a conveyance of the property so released and to terminate any security interest or other lien with respect thereto.
ARTICLE X
DISCHARGE OF LIEN
Section 1001. Discharge of Lien. If the Issuer shall pay or cause to be paid the principal of and interest on the Bonds at the times and in the manner stipulated therein and herein, and if the Issuer shall keep, perform and observe all and singular the covenants and agreements in the Bonds and in this Financing Agreement expressed as to be kept, performed and observed by it or on its part, then the lien of this Financing Agreement, these presents and the Pledged Estate shall cease, determine and be void, and thereupon the Bondholder shall cancel and discharge this Financing Agreement, and execute and deliver to the Issuer such instruments in writing as shall be required to cancel and discharge this Financing Agreement and reconvey to the Issuer the Pledged Estate, and assign and deliver to the Issuer so much of the Pledged Estate as may be in its possession or subject to its control, except for moneys and Government Obligations held in the Bond Fund for the purpose of paying Bonds which have not yet been presented for payment and moneys and obligations in the Bond Fund required to be paid to the Lessee pursuant to Section 609 hereof. Upon payment in full of the Bonds, at the written direction of the Lessee and the Issuer, the Escrow Agent shall deliver the Warranty Deed and the Bills of Sale to the Lessee.
Section 1002. Provision for Payment of Bonds. Bonds shall be deemed to have been paid within the meaning of Section 1001 hereof if:
(a) there shall have been irrevocably deposited in the Bond Fund either:
(i) sufficient moneys, or
(ii) Government Obligations of such maturities and interest payment dates and bearing such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings thereon (said earnings to be held in the restricted account also), be sufficient, together with any moneys referred to in subsection (i) above, for the payment at their respective maturities or prepayment dates prior to maturity, of the principal thereof, together with the interest accrued and to accrue to such maturity or prepayment dates, as the case may be; and
(b) if any Bonds are to be prepaid on any date prior to their maturity, the Issuer shall have given to the Bondholder all prepayment notices required by this Financing Agreement.
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Section 1003. Discharge of the Financing Agreement. Notwithstanding the fact that the lien of this Financing Agreement upon the Pledged Estate may have been discharged and cancelled in accordance with Section 1001 hereof, this Financing Agreement and the rights granted and duties imposed hereby, to the extent not inconsistent with the fact that the lien upon the Pledged Estate may have been discharged and cancelled, shall nevertheless continue and subsist until the principal of and interest on all of the Bonds shall have been fully paid or the Issuer shall have returned to the Lessee pursuant to this Financing Agreement all funds theretofore held by the Issuer for payment of any Bonds not theretofore presented for payment.
ARTICLE XI
DEFAULT PROVISIONS AND
REMEDIES OF BONDHOLDER
Section 1101. Defaults; Events of Default. If any of the following events occurs, subject to the terms of Section 1112 hereof, it is hereby defined as and declared to be and to constitute an “event of default” under this Financing Agreement:
(a) default in the due and punctual payment of any interest on any Bond; or
(b) default in the due and punctual payment of the principal of any Bond, whether at the maturity thereof or any prepayment date prior to maturity, or upon maturity thereof by declaration; or
(c) default in the performance or observance of any other of the covenants, agreements or conditions on the part of the Issuer in this Financing Agreement or in the Bonds contained; or
(d) the occurrence of an “Event of Default” under the Lease Agreement as provided in Section 10.1 thereof; or
(e) the occurrence of a default by the Issuer under the Security Deed.
Section 1102. Acceleration. Upon the occurrence of an event of default, and subject to the waiver provisions of Section 1111 hereof, the Bondholder may declare the principal of all Bonds and the interest accrued thereon to the date of such acceleration immediately due and payable, by notice in writing delivered to the Issuer, and the same shall thereupon become and be immediately due and payable. Upon any declaration of acceleration hereunder, the Bondholder shall immediately declare all rental payments due under the Lease Agreement to be immediately due and payable in accordance with Section 10.2 of the Lease Agreement.
Section 1103. Other Remedies. Upon the occurrence of an event of default, and subject to the waiver provisions of Section 1111 hereof, the Bondholder shall have the power to proceed with any right or remedy granted by the Constitution and laws of the State of Georgia, as it may deem best, including any suit, action or special proceeding in equity or at law for the specific performance of any covenant or agreement contained herein or for the enforcement of any proper, legal or equitable remedy as the Bondholder shall deem most effectual to protect the rights aforesaid, insofar as such may be authorized by law, and the right to the appointment, as a matter of right and without regard to the sufficiency of the security afforded by the Pledged Estate, of a receiver for all or any part of the Pledged Estate and the rents, revenues and receipts thereof; the rights herein specified are to be cumulative to all other available rights, remedies or powers and shall not exclude any such rights, remedies or powers. Without intending to limit the foregoing rights, remedies and powers by virtue of such specification, the Bondholder is authorized to further assign the Issuer’s right, title and interest in the Lease Agreement to a third party, provided that the Bondholder shall provide written notice of such assignment to the Issuer and the Lessee at least one business day prior to the effective date of any such assignment.
Section 1104. Rights of Bondholder.
No right or remedy by the terms of this Financing Agreement conferred upon or reserved to the Bondholder is intended to be exclusive of any other right or remedy, but each and every such right and remedy shall be cumulative and shall be in addition to any other right or remedy given to the Bondholder or now or hereafter existing at law, in equity or by statute.
No delay or omission to exercise any right or remedy accruing upon any event of default shall impair any such right or remedy or shall be construed to be a waiver of any such event of default or acquiescence therein; and every such right and remedy may be exercised from time to time and as often as may be deemed expedient.
No waiver of any event of default hereunder by the Bondholder shall extend to or shall affect any subsequent event of default or shall impair any rights or remedies consequent thereon.
Section 1105. Right of Bondholder to Direct Proceedings. Anything in this Financing Agreement to the contrary notwithstanding, the Bondholder shall have the right, at any time, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Financing Agreement, or for the appointment
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of a receiver or any other proceedings hereunder; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of this Financing Agreement.
Section 1106. Appointment of Receivers. Upon the occurrence of an event of default and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights and remedies of the Bondholder under this Financing Agreement, the Bondholder shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Project and of the rents, revenues and receipts thereof and therefrom, pending such proceedings, with such powers as the court making such appointment shall confer.
Section 1107. Application of Moneys. All moneys received by the Bondholder pursuant to any right given or action taken under the provisions of this Article shall, after payment of the reasonable costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Bondholder, be deposited in the Bond Fund and all moneys in the Bond Fund shall be applied as follows:
(a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:
first - to the payment to the Bondholder of all installments of interest then due on the Bonds (other than installments of interest on Bonds with respect to the payment of which moneys and/or Government Obligations are set aside in the special account in the Bond Fund), in the order of the maturity of the installments of such interest; and
second - to the payment to the Bondholder of the unpaid principal of any of the Bonds which shall have become due (other than principal of Bonds with respect to the payment of which moneys and/or Government Obligations are set aside in the special account in the Bond Fund), in the order of their due dates, with interest on such Bonds from the respective dates upon which they become due.
(b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment to the Bondholder of the principal and interest then due and unpaid upon the Bonds (other than principal of and interest on Bonds with respect to the payment of which moneys and/or Government Obligations are set aside in the special account in the Bond Fund).
(c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Bondholder shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bondholder shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Issuer shall give such notice as it may deem appropriate of the deposit to the Bond Fund of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Bondholder until such Bond shall be presented to the Issuer for appropriate endorsement or for cancellation if paid in full.
Whenever all Bonds and interest thereon have been paid under the provisions of this Section 1107 and all expenses and charges of the Bondholder have been paid, any balance remaining in the Bond Fund shall be paid to the Lessee as provided in Section 609 hereof.
Section 1108. Rights and Remedies Vested in Bondholder. Subject to the provisions of Section 1104, all rights and remedies of action (including the right to file proof of claims) under this Financing Agreement or under any of the Bonds may be enforced by the Bondholder, and any recovery of judgment shall be for the benefit of the Bondholder.
Section 1109. Rights and Remedies of Bondholder. Nothing in this Financing Agreement contained shall affect or impair the right of the Bondholder to enforce the payment of the principal of and interest on any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of and interest on each of the Bonds issued hereunder to the Bondholder at the time, place, from the source and in the manner expressed in the Bonds.
Section 1110. Termination of Proceedings. In case the Bondholder shall have proceeded to enforce any right or remedy under this Financing Agreement by the appointment of a receiver, by entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Issuer and the Bondholder shall be restored to their former positions and rights hereunder with respect to the Pledged Estate, and all rights, remedies and powers of the Bondholder shall continue as if no such proceedings had been taken.
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Section 1111. Waivers of Events of Default. The Bondholder may in its discretion waive any event of default hereunder and its consequences and rescind any declaration of maturity of principal and its consequences, if such event of default has been cured and there is no longer continuing any default hereunder; provided, however, that there shall not be waived (i) any event of default pertaining to the payment of the principal of any Bond at its maturity date or any prepayment date prior to maturity, or (ii) any event of default pertaining to the payment when due of the interest on any Bond, unless prior to such waiver or rescission, all arrears of principal (due otherwise than by declaration) and interest, with interest (to the extent permitted by law) at the rate borne by the Bonds on overdue installments of principal and interest and all arrears of payments of principal when due, as the case may be, and all expenses of the Bondholder in connection with such event of default, shall have been paid or provided for, and in case of any such waiver or rescission, or in case any proceeding taken by the Bondholder on account of any such event of default shall have been discontinued or abandoned or determined adversely, then and in every such case the Issuer and the Bondholder shall be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other event of default, or impair any right consequent thereon.
Section 1112. Notice of Defaults; Opportunity of the Issuer and Lessee to Cure Defaults. No default specified in Section 1101(c) hereof shall constitute an event of default hereunder until notice of such default by registered or certified mail shall be given by the Bondholder to the Issuer and the Lessee, and the Issuer shall have had thirty (30) days after receipt of such notice to correct said default or cause said default to be corrected, and shall not have corrected said default or caused said default to be corrected within the applicable period; provided, further, that if a default specified in said Section 1101(c) be such that it can be corrected but not within the period specified herein, it shall not constitute the basis of an event of default hereunder (i) if corrective action capable of remedying such default is instituted by the Issuer within the applicable period and diligently pursued until the default is corrected, and (ii) if the Issuer shall within the applicable period furnish to the Bondholder a certificate certifying that said default is such that it can be corrected but not within the applicable period and that corrective action capable of remedying such default has been instituted and is being diligently pursued and will be diligently pursued until the default is corrected. The Issuer shall notify the Bondholder by certificate executed as above when such default has been corrected.
With regard to any default concerning which notice is given to the Lessee or the Issuer under the provisions of this Section 1112, the Issuer hereby grants to the Lessee full authority to perform any obligation the performance of which by the Issuer is alleged in said notice to be in default, such performance by the Lessee to be in the name and stead of the Issuer with full power to do any and all things and acts to the same extent that the Issuer could do and perform any such things and acts and with power of substitution. The Issuer acknowledges that so long as a Permitted Mortgage is in effect with respect to the Project, the Permitted Beneficiary, in addition to the Lessee, shall be entitled to perform the Issuer’s obligations.
ARTICLE XII
[Reserved]
ARTICLE XIII
SUPPLEMENTAL ADDENDUMS
Section 1301. Supplemental Addendums to Financing Agreement Requiring Consent of Bondholder. Any addendum or addendums supplemental hereto shall require the written consent of the Issuer and the Bondholder. Upon the execution of any such supplemental addendum as in this Section permitted and provided, this Financing Agreement shall be modified and amended in accordance therewith.
Anything herein to the contrary notwithstanding, a supplemental addendum under this Article XIII which affects any right or obligation of the Lessee under the Lease Agreement shall not become effective unless and until the Lessee shall have consented to the execution and delivery of such supplemental addendum. In this regard, the Bondholder and the Issuer shall cause notice of the proposed execution and delivery of any such supplemental addendum together with a copy of the proposed supplemental addendum to be mailed by certified or registered mail or UPS Next-Day-Air to the Lessee at least thirty (30) days prior to the proposed date of execution and delivery of any such supplemental addendum. The Lessee shall be deemed to have consented to the execution and delivery of any such supplemental addendum if the Bondholder does not receive a letter of protest or objection thereto signed by or on behalf of the Lessee on or before 4:30 o’clock P.M., eastern standard time, of the thirtieth (30th) day after the mailing of said notice and a copy of the proposed supplemental addendum.
ARTICLE XIV
AMENDMENT OF LEASE AGREEMENT
Section 1401. Amendments, etc., to Lease Agreement Requiring Consent of Bondholder. Neither the Issuer nor the Lessee shall consent to any amendment, change or modification of the Lease Agreement without the delivery of notice and the written approval or consent of the Bondholder.
21
ARTICLE XV
MISCELLANEOUS
Section 1501. [Reserved].
Section 1502. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Financing Agreement or the Bonds is intended or shall be construed to give to any Person other than the Issuer, the Lessee and the Bondholder any legal or equitable right, remedy or claim under or in respect to this Financing Agreement or any covenants, agreements, conditions and provisions herein contained; this Financing Agreement and all of the covenants, agreements, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of parties hereto and the Lessee as herein provided.
Section 1503. Severability. If any provision of this Financing Agreement shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
Section 1504. Notices. It shall be sufficient service of any notice, request, complaint, demand or other paper if the same shall be duly mailed by first class or registered or certified mail, or overnight mail or hand-delivered, addressed as follows:
| If to the Issuer: | Gainesville and Hall County Development Authority P. O. Box 3280 Gainesville, GA 30503 Attention: Chairman | ||||
| If to the Lessee: | Fox Factory, Inc. 6634 Highway 53 Braselton, Georgia 30517 Attention: David Haugen | ||||
| If to the Bondholder: | Fox Factory, Inc. 6634 Highway 53 Braselton, Georgia 30517 Attention: David Haugen | ||||
A duplicate copy of each notice, certificate or other communication given hereunder by either the Issuer, the Lessee or the Bondholder shall also be given to each of the others. The Issuer, the Lessee and the Bondholder may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 1505. Issuer as Paying Agent and Bond Registrar. The Issuer shall act as paying agent and Bond Registrar for and in respect of the Bonds.
Section 1506. Payments Due on Saturdays, Sundays and Holidays. In any case where the date of maturity of principal of or interest on the Bonds or the date fixed for prepayment of any Bonds shall be, in the city of payment, a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then payment of principal or interest need not be made on such date in such city but may be made on the next succeeding business day not a Saturday, Sunday, legal holiday or day upon which banking institutions are authorized by law to close with the same force and effect as if made on the date of maturity or the date fixed for prepayment, and no interest shall accrue for the period after such date.
Section 1507. Counterparts. This Financing Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 1508. Law Governing Financing Agreement. The effect and meaning of this Financing Agreement and the rights of all parties hereunder shall be governed by, and construed according to, the laws of the State of Georgia.
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Section 1509. Third Party Beneficiary. Lessee is a third party beneficiary of this Financing Agreement, including but not limited to Section 510.
IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in its name and behalf by its Chairman and its corporate seal to be hereunto affixed and attested by its Secretary, and the Bondholder has caused these presents to be signed in its name and behalf and its official seal to be hereunto affixed and attested by its duly authorized officers, all as of the date first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/ T. Treadwell Syfan
Secretary
FOX FACTORY, INC., as Bondholder
By: /s/ John E. Blocher
John E. Blocher
Chief Financial Officer
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CONSENT OF ESCROW AGENT
The undersigned hereby consents and agrees to serve as the Escrow Agent to carry out the duties of the Escrow Agent set forth in Section 510 of the Financing Agreement.
Stewart, Melvin & Frost, LLP
By: /s/ T. Treadwell Syfan
Date: June 12, 2020
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Exhibit 10.4
LEASE AGREEMENT
between
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
and
FOX FACTORY, INC.
Dated as of June 1, 2020
This Lease Agreement and all right, title and interest of the Gainesville and Hall County Development Authority (the “Issuer”), in any rents, revenues and receipts derived under this Lease Agreement have been assigned to Fox Factory, Inc., as Bondholder, under the Financing Agreement, dated as of June 1, 2020, between the Issuer and the Bondholder, which secures not to exceed $75,000,000 in aggregate principal amount of Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020.
LEASE AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Lease Agreement is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provisions of this Lease Agreement.)
| Page | |||||||||||
| PARTIES | 1 | ||||||||||
| ARTICLE I | |||||||||||
| DEFINITIONS | |||||||||||
| Section 1.1 | Definitions | 1 | |||||||||
| Section 1.2 | Rules of Construction | 5 | |||||||||
| ARTICLE II | |||||||||||
| REPRESENTATION AND WARRANTIES | |||||||||||
| Section 2.1 | Representations and Warranties by the Issuer | 5 | |||||||||
| Section 2.2 | Representations and Warranties by the Lessee | 6 | |||||||||
| ARTICLE III | |||||||||||
| LEASING CLAUSES AND WARRANTY OF TITLE | |||||||||||
| Section 3.1 | Lease of the Project | 7 | |||||||||
| Section 3.2 | Title to Project | 7 | |||||||||
| Section 3.3 | Quiet Enjoyment | 8 | |||||||||
| Section 3.4 | Agreement of the Issuer to Execute Amendment to Lease Agreement | 8 | |||||||||
| Section 3.5 | Additional Encumbrances | 8 | |||||||||
| ARTICLE IV | |||||||||||
| LEASING CLAUSES AND WARRANTY OF TITLE | |||||||||||
COMMENCEMENT AND COMPLETION OF THE PROJECT; | |||||||||||
ISSUANCE OF THE SERIES 2020 BONDS | |||||||||||
| Section 4.1 | Agreement to Acquire and Install the Project | 9 | |||||||||
| Section 4.2 | Agreement to Issue Series 2020 Bonds; Application of Series 2020 Bond Proceeds | 9 | |||||||||
| Section 4.3 | Disbursements from the Project Fund | 10 | |||||||||
| Section 4.4 | Obligation of the Parties to Cooperate in Furnishing Documents to Each Other | 11 | |||||||||
| Section 4.5 | Establishment of Completion Date | 11 | |||||||||
| Section 4.6 | Lessee Required to Pay Project Costs in Event Project Fund Insufficient | 11 | |||||||||
| Section 4.7 | Issuer to Pursue Remedies Against Suppliers, Contractors and Subcontractors and Their Sureties | 11 | |||||||||
| Section 4.8 | Investment of Project Fund Moneys Permitted | 11 | |||||||||
| ARTICLE V | |||||||||||
EFFECTIVE DATE OF THIS LEASE; DURATION OF | |||||||||||
LEASE TERM; RENTAL PROVISIONS | |||||||||||
| Section 5.1 | Effective Date of this Lease; Duration of Lease Term | 12 | |||||||||
| Section 5.2 | Delivery and Acceptance of Possession | 12 | |||||||||
| Section 5.3 | Rents and Other Amounts Payable | 12 | |||||||||
| Section 5.4 | Place of Rental Payments | 12 | |||||||||
| Section 5.5 | Obligations of Lessee Hereunder Absolute and Unconditional | 13 | |||||||||
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| Section 5.6 | Lessee’s Performance under Financing Agreement | 13 | ||||||
| ARTICLE VI | ||||||||
MAINTENANCE AND MODIFICATIONS, | ||||||||
TAXES AND INSURANCE | ||||||||
| Section 6.1 | Maintenance and Modifications of Project by Lessee | 13 | ||||||
| Section 6.2 | Removal of Leased Equipment | 14 | ||||||
| Section 6.3 | Taxes, Other Governmental Charges and Utility Charges | 14 | ||||||
| Section 6.4 | Insurance Required | 14 | ||||||
| Section 6.5 | Application of Net Proceeds of Insurance | 15 | ||||||
| Section 6.6 | Additional Provisions Respecting Insurance | 15 | ||||||
| Section 6.7 | Other Issuer Expenses | 15 | ||||||
| Section 6.8 | Advances by Issuer or Bondholder | 15 | ||||||
| Section 6.9 | Indemnification of Issuer and Bondholder | 16 | ||||||
| ARTICLE VII | ||||||||
DAMAGE, DESTRUCTION AND CONDEMNATION | ||||||||
| Section 7.1 | Damage and Destruction | 17 | ||||||
| Section 7.2 | Condemnation | 17 | ||||||
| Section 7.3 | Proceeds of Insurance and Condemnation Awards | 17 | ||||||
| ARTICLE VIII | ||||||||
SPECIAL COVENANTS | ||||||||
| Section 8.1 | No Warranty of Condition or Suitability by the Issuer | 17 | ||||||
| Section 8.2 | Inspection of Project; Right of Access to the Project by the Issuer | 17 | ||||||
| Section 8.3 | Lessee to Maintain Its Existence; Exceptions Permitted | 17 | ||||||
| Section 8.4 | Qualification in Georgia | 18 | ||||||
| Section 8.5 | Granting and Release of Easements | 18 | ||||||
| Section 8.6 | Report by Lessee | 18 | ||||||
| Section 8.7 | Filing of Certain Continuation Statements | 18 | ||||||
| Section 8.8 | Special Covenants Related to Ad Valorem Taxation | 18 | ||||||
| Section 8.9 | Payments in Lieu of Taxes to the Issuer | 19 | ||||||
| ARTICLE IX | ||||||||
ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING; | ||||||||
REDEMPTION; RENT PREPAYMENT AND ABATEMENT | ||||||||
| Section 9.1 | Assignment and Subleasing | 20 | ||||||
| Section 9.2 | Assignment of Lease to Bondholder | 20 | ||||||
| Section 9.3 | Restrictions on Sale of Project by Issuer | 20 | ||||||
| Section 9.4 | Redemption or Prepayment of Bonds | 20 | ||||||
| Section 9.5 | Prepayment of Rents | 20 | ||||||
| Section 9.6 | Rent Abatements if Bonds Paid Prior to Maturity | 21 | ||||||
| Section 9.7 | Reference to Bonds Ineffective After Bonds Paid | 21 | ||||||
| ARTICLE X | ||||||||
EVENTS OF DEFAULT AND REMEDIES | ||||||||
| Section 10.1 | Events of Default Defined | 21 | ||||||
2
| Section 10.2 | Remedies on Default | 22 | |||||||||
| Section 10.3 | No Remedy Exclusive | 22 | |||||||||
| Section 10.4 | Agreement to Pay Attorneys’ Fees and Expenses | 22 | |||||||||
| Section 10.5 | No Additional Waiver Implied by One Waiver | 23 | |||||||||
| Section 10.6 | Waiver of Appraisement, Valuation, Etc | 23 | |||||||||
| Section 10.7 | Reinstatement of Lease | 23 | |||||||||
| ARTICLE XI | |||||||||||
OPTIONS IN FAVOR OF LESSEE | |||||||||||
| Section 11.1 | Options to Terminate the Lease Term | 23 | |||||||||
| Section 11.2 | Option to Purchase Project | 23 | |||||||||
| Section 11.3 | Conveyance on Purchase | 24 | |||||||||
| Section 11.4 | Option to Purchase Unimproved Land | 24 | |||||||||
| Section 11.5 | Relative Position of Options and Financing Agreement | 24 | |||||||||
| Section 11.6 | Partial Prepayments of the Bonds; Purchase of 2020 Project and 2021 Project | 24 | |||||||||
| ARTICLE XII | |||||||||||
OBLIGATIONS OF LESSEE | |||||||||||
| Section 12.1 | Option to Purchase Project | 25 | |||||||||
| ARTICLE XIII | |||||||||||
MISCELLANEOUS | |||||||||||
| Section 13.1 | Notices | 25 | |||||||||
| Section 13.2 | No Estate in Land | 25 | |||||||||
| Section 13.3 | Binding Effect | 25 | |||||||||
| Section 13.4 | Severability | 25 | |||||||||
| Section 13.5 | Amounts Remaining in Bond Fund | 25 | |||||||||
| Section 13.6 | Amendments, Changes and Modifications | 25 | |||||||||
| Section 13.7 | Execution Counterparts | 26 | |||||||||
| Section 13.8 | Captions | 26 | |||||||||
| Section 13.9 | Recording of Lease | 26 | |||||||||
| Section 13.10 | Law Governing Construction of Lease | 26 | |||||||||
| Section 13.11 | Net Lease | 26 | |||||||||
SIGNATURES | |||||||||||
ACKNOWLEDGMENTS | |||||||||||
EXHIBIT A - DESCRIPTION OF THE PROJECT FACILITY SITE | |||||||||||
EXHIBIT B - DESCRIPTION OF THE PROJECT FACILITY | |||||||||||
EXHIBIT C - DESCRIPTION OF THE PROJECT EQUIPMENT | |||||||||||
EXHIBIT D – PROJECT SUMMARY | |||||||||||
EXHIBIT E – BILL OF SALE (PROJECT EQUIPMENT) | |||||||||||
EXHIBIT F - WARRANTY DEED | |||||||||||
EXHIBIT G - FORM OF AMENDMENT TO LEASE AGREEMENT | |||||||||||
| EXHIBIT H - REQUISITION AND CERTIFICATE | |||||||||||
EXHIBIT I - PERMITTED ENCUMBRANCES | |||||||||||
3
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of June 1, 2020, by and between the GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY (the “Issuer”), a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, duly organized and existing under the Constitution and laws of the State of Georgia, as lessor, and FOX FACTORY, INC. (the “Lessee”), a California corporation, as lessee.
W I T N E S S E T H:
That in consideration of the respective representations and agreements hereinafter contained, the Issuer and the Lessee agree as follows (provided, that in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur for the payment of money shall not be a general debt on its part but shall be payable solely out of the rents, revenues and receipts derived from this Lease Agreement, the sale of the bonds referred to in Section 2.1 hereof, the insurance and condemnation awards as herein described and any other rents, revenues and receipts arising out of or in connection with its ownership of the Project as hereinafter defined):
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In addition to the words and terms elsewhere defined in this Lease Agreement, the following words and terms as used in this Lease Agreement shall have the following meanings unless the context or use indicates another or different meaning or intent. Terms which are not defined in this Lease Agreement shall have the meaning specified in Article I of the Financing Agreement except as herein otherwise expressly provided or unless the context requires otherwise.
“2020 Project” means the Project Facility Site, the Project Facility and the Project Equipment acquired with part of the proceeds of the Series 2020 Bonds during 2020 and designated as 2020 Project Equipment on Exhibit “C” hereto or by amendment thereof.
“2021 Project” means the Project Equipment acquired with part of the proceeds of the Series 2020 Bonds during 2021 and designated as 2021 Project Equipment on Exhibit “C” by amendment thereof.
“2022 Project” means the Project Equipment acquired with part of the proceeds of the Series 2020 Bonds during 2022 and designated as 2022 Project Equipment on Exhibit “C” by amendment thereof.
“Act” means an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended.
“Acquisition Period” means the period beginning on the date on which the Series 2020 Bonds are delivered to the first purchaser or purchasers thereof or the date upon which the acquisition, construction and installation of the Project began, whichever is earlier, and ending on the Completion Date.
“Affiliate” means a corporation or other entity that controls the Lessee, that the Lessee controls or that is under common control with the Lessee through a common “parent” corporation or other entity. For such purposes the ownership of more than 50% of the voting stock or ownership interest of a corporation or other entity shall constitute “control.”
“Authorized Issuer Representative” means the person or persons at the time designated to act on behalf of the Issuer by certificate furnished to the Lessee and the Bondholder containing the specimen signature of each such person and signed by the Chairman or Vice Chairman of the Issuer. Such certificate may designate an alternate or alternates, each of whom shall be entitled to perform all duties of the Authorized Issuer Representative. Should any Authorized Issuer Representative not be satisfactory to the Lessee, then upon the request of the Lessee and the Bondholder, the Issuer will designate another Authorized Issuer Representative.
“Authorized Lessee Representative” means the person or persons at the time designated to act on behalf of the Lessee by written certificate furnished to the Issuer and the Bondholder containing the specimen signature of each such persons and signed on behalf of the Lessee by an officer of the Lessee. Such certificate may designate an alternate or alternates.
“Bill of Sale” means the Bill of Sale (Project Equipment) to be dated the date of actual execution and delivery thereof, held in trust by the Escrow Agent in accordance with the provisions hereof. The Bill of Sale, in substantially the form it is to be executed and delivered, is attached as Exhibit “E” hereto.
“Bond” or “Bonds” means any or all of the Series 2020 Bonds issued by the Issuer pursuant to the Financing Agreement.
1
“Bond Fund” means the Bond principal and interest payment fund created by Section 602 of the Financing Agreement and within which has been established a general account and a special account. Any reference herein to the “Bond Fund” without further limitation or explanation shall be deemed to be a reference to the general account in the Bond Fund.
The term “Bondholder” means Fox Factory, Inc., and its successors and assigns.
“Completion Date” means the date of completion of the acquisition, construction and installation of the Project as provided in Section 4.5 hereof.
“Counsel” means an attorney or firm thereof admitted to practice law before the highest court of any State of the United States of America or the District of Columbia. An attorney for the Issuer or the Lessee may be eligible for appointment as Counsel.
“Direct Payment Agreement” means the Direct Payment Agreement, dated as of June 1, 2020, among the Issuer, the Lessee and the Bondholder, as authorized by Section 208 of the Financing Agreement.
“Event of Default” means any of the events described in Section 10.1 hereof.
“Financing Agreement” means the Financing Agreement between the Issuer and the Bondholder of even date herewith, pursuant to which the Bonds are authorized to be issued and the Issuer’s interest in the Lease and the rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project are to be pledged and assigned to the Bondholder as security for the payment of the principal of, prepayment premium (if any) and interest on the Bonds, including any agreement supplemental thereto.
“Financing Statements” means any and all financing statements (including continuation statements) filed for record from time to time to perfect the security interests created by Financing Agreement and the security interests created by the Security Deed.
“Government Obligations” means (a) direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged, or (b) obligations issued by any agency controlled or supervised by and acting as an instrumentality of the United States of America, the payment of the principal of and interest on which is fully and unconditionally guaranteed as a full faith and credit obligation of the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of Treasury of the United States of America), which obligations, in either case, are held in the name of the Issuer and are not subject to redemption prior to maturity by anyone other than the holder thereof.
“Independent Counsel” means an attorney or firm thereof duly admitted to practice law before the highest court of any state or the District of Columbia and not an employee of the Issuer or the Lessee.
“Issuer” means the Gainesville and Hall County Development Authority, a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, created and existing pursuant to Act, and its successors and assigns.
“Issuer Documents” means this Lease, the Financing Agreement, the Bond Purchase Agreement, the Bill of Sale, the Warranty Deed, the Security Deed, the Direct Payment Agreement and the PILOT Agreement.
“Lease” means this Lease Agreement as it now exists and as it may hereafter be amended pursuant to Article XIV of the Financing Agreement.
“Lease Term” means the duration of the lessee interest created by this Lease as specified in Section 5.1 hereof.
“Lessee” means Fox Factory, Inc., a California corporation, and its successors and assigns, including any surviving, resulting or transferee Person as provided in Section 8.3 hereof.
“Lessee Documents” means this Lease and the Direct Payment Agreement.
“Net Proceeds” when used with respect to any insurance or condemnation award, means the gross proceeds from the insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys and fees) incurred in the collection of such gross proceeds.
The term “Payment in Full of the Bonds” specifically encompasses the situations referred to in Section 1002 of the Financing Agreement.
“Permitted Beneficiary” has the meaning set forth in Section 3.5 hereof.
2
“Permitted Encumbrances” means, as of any particular time, (i) liens for ad valorem taxes and special assessments not then delinquent or permitted to exist as provided in Section 6.3 hereof, (ii) this Lease, the Financing Agreement, and the Security Deed, and the security interests created herein, in the Security Deed, and in the Financing Agreement, (iii) unfiled and inchoate mechanics, and materialmen’s liens for construction work in progress, (iv) architects’, contractors’, subcontractors’, mechanics’, materialmen’s, suppliers’, laborers, and vendors’ liens or other similar liens not then payable or permitted to exist as provided in Section 6.1(c) hereof, (v) those matters set forth on Exhibit “I” attached hereto and by reference made a part hereof, (vi) utility, access or other easements and rights of way, restrictions, reservations, reversions and exceptions in the nature of easements that Lessee will certify will not materially interfere with or impair the operations being conducted at the Project, (vii) the liens permitted by Section 3.5 and defined as Permitted Mortgages therein and (viii) such minor defects, irregularities and encumbrances as the Lessee, by an Authorized Lessee Representative, certifies do not, in the aggregate, materially impair the property affected thereby for purpose for which it was acquired or is held by the Issuer.
“Permitted Investments” means the following securities, and no other:
(1) Bonds or obligations of such county, municipal corporation, school district, political subdivision, authority, or body or bonds or obligations of the State of Georgia or of other counties, municipal corporations, and political subdivisions of the State of Georgia which are rated in the highest rating category by a nationally recognized rating agency (e.g., at least “A” by Moody’s or S&P);
(2) Bonds or other obligations of the United States government or of subsidiary corporations of the United States government which are fully guaranteed by such government;
(3) Obligations of agencies of the United States government issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, and the Central Bank for Cooperatives and any other such agency or instrumentality now or hereafter in existence; provided however, that all such obligations shall have e a current credit rating from a nationally recognized rating service of at least one of the three highest rating categories available and have a nationally recognized market;
(4) Bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government;
(5) Certificates of deposit of national or state banks located within the State of Georgia which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or saving and loan associations located within the State of Georgia which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, saving and loan association, or building and loan association acting as depository, custodian, or trustee for any such bonds proceeds. The portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, shall be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within the State of Georgia, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of the State of Georgia or of any county or municipal corporation in the State of Georgia, obligations of the United States or subsidiary corporations included in paragraph (2) of the Official Code of Georgia Annotated Title 36, Chapter 82-7, obligations of the agencies of the United States government included in paragraph (3) of said Code section, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities included in paragraph (4) of said Code section;
(6) Securities of or other interests in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as:
(A) The portfolio of such investment company or investment trust or common trust fund is limited to the obligations referenced in paragraphs (2) and (3) of the Official Code of Georgia annotated Title 36, Chapter 82-7 and repurchase agreements fully collateralized by any such obligations;
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(B) Such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodian;
(C) Such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value; and
(D) Securities of or other interests in such investment company or investment trust or common trust fund are purchased and redeemed only through the use of national or state banks having corporate trust powers and located within the State of Georgia;
(7) Interest bearing time deposits, repurchase agreements, reverse repurchase agreements, rate guarantee agreements, or other similar banking arrangements with a bank or trust company having capital and surplus aggregating at least $50 million or with any government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York having capital aggregating at least $50 million or with any corporation which is subject to registration with the Board of Governors of the Federal Reserve System pursuant to the requirements of the Bank Holding Company Act of 1956, provided that each such interest-bearing time deposit, repurchase agreement, reverse repurchase agreement, rate guarantee agreement, or other similar banking arrangement shall permit the moneys so placed to be available at the time provided with respect to the investment or reinvestment o such moneys; and
(8) Any other investments to the extent now or hereafter permitted for the investment of public funds under the Constitution and laws of the State of Georgia.
“Permitted Mortgage” has the meaning set forth in Section 3.5 hereof.
“Person” means natural persons, firms, associations, corporations and public bodies and any other legal entities.
“PILOT Agreement” means that certain PILOT Agreement, dated as of June 1, 2020, between the Issuer and the Lessee.
“Project” means the acquisition of the Project Facility Site, the acquisition, construction and installation of the Project Facility on the Project Facility Site and the Project Equipment installed in the Project Facility or on the Project Facility Site, and consists of the 2020 Project, the 2021 Project and the 2022 Project.
“Project Equipment” means those items of machinery, equipment and related property required or authorized herein to be acquired and installed in the Project Facility or on the Project Facility Site with proceeds from the sale of the Bonds or the proceeds of any payment by the Lessee pursuant to Section 4.6 hereof or otherwise as agreed to between the Lessee and the Issuer and any item of machinery, equipment and related property acquired and installed in the Project Facility or on the Project Facility Site in substitution therefor and renewals and replacements thereof pursuant to Sections 6.2, 7.1 and 7.2 hereof, less such machinery, equipment and related property as may be released from this Lease pursuant to Section 6.2 hereof or taken by the exercise of power of eminent domain as provided in Section 7.2 hereof, but not including the Lessee’s own machinery, equipment and related property installed under the provisions of Section 6.1(b) hereof. The Project Equipment is more fully described in Exhibit “C” attached hereto, as amended from time to time, and by this reference made a part of this Lease. The items of leased equipment comprising part of the Project at any time and from time to time may be tagged or otherwise identified by serial number or other recognizable identification system as being the property of the Issuer and leased to the Lessee hereunder. The Project Equipment shall be divided into “2020 Project Equipment,” “2021 Project Equipment” and “2022 Project Equipment” as designated on Exhibit “C” hereto.
“Project Facility” means the facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles located on the Project Facility Site in Gainesville Industrial Park West, Gainesville, Hall County, Georgia, said Project Facility being more particularly described in Exhibit ”B” attached hereto and by this reference made a part hereof.
“Project Facility Site” means the real estate and interests in real estate described in Exhibit “A” attached hereto and by this reference made a part hereof.
“Project Fund” means the project fund created by Section 701 of the Financing Agreement and referred to in Sections 4.2 and 4.3 hereof.
“Project Summary” means the Project Summary, dated as of June 1, 2020, filed with the Secretary of the Issuer, as the same may be amended from time to time in accordance with the provisions of this Lease. The Project Summary is contained in Exhibit “D” attached hereto and by this reference made a part of this Lease.
“Security Deed” means the deed to secure debt and security agreement of even date herewith from Issuer to the Bondholder, and any amendments or supplements thereto, pursuant to which the Issuer will convey a security interest in the Project to the Bondholder as additional security for the payment of the principal of and interest on the Bonds, which deed shall be recorded in the Clerk’s Office, Hall County Superior Court.
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“Security interest” or “security interests” shall have the meaning set forth in the Uniform Commercial Code of Georgia, as now or hereafter amended.
“Series 2020 Bonds” means the Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in the aggregate principal amount not to exceed $75,000,000, delivered in installments in accordance with Section 304 of the Financing Agreement.
“Warranty Deed” means the Warranty Deed to be dated the date of actual execution and delivery thereof, held in trust by the Escrow Agent in accordance with the provisions hereof. The Warranty Deed, in substantially the form it is to be executed and delivered, is attached as Exhibit “F” hereto.
Section 1.2. Rules of Construction. Unless the context clearly indicates to the contrary:
(a) “Herein”, “hereby”, “hereunder”, “hereof”, “hereinbefore”, “hereinafter” and other equivalent words refer to this Lease and not solely to the particular portion thereof in which any such word is used.
(b) Words importing the singular number shall include the plural number and vice versa, and any pronoun used herein shall be deemed to cover all genders.
(c) All references herein to particular Articles or Sections are references to Articles or Sections of this Lease.
(d) Any certificate or statement required to be delivered under the provisions of this Lease or the Financing Agreement shall, in the absence of manifest error, be deemed to be conclusive evidence of the truth, correctness and accuracy of the matters covered in such certificate or statement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by Issuer. The Issuer makes the following representations and warranties:
(a) Organization and Authority. The Issuer is a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, duly organized and existing under the Constitution and laws of the State of Georgia, including particularly the provisions of the Act. Under the provisions of the Act, the Issuer has the power to execute and deliver the Issuer Documents, to enter into the transactions contemplated thereby and to perform and observe its obligations contained therein in accordance with the terms thereof. By proper corporate action, the Issuer has duly authorized the execution and delivery of the Issuer Documents.
(b) Qualification of Project Under Act. The Project constitutes a “project” within the meaning of the Act for which bonds may be issued under the Act, and is located in Gainesville, Hall County, Georgia.
(c) Public Purpose. The Issuer has found and hereby declares that the issuance of the Bonds and the use of the proceeds of the Bonds to acquire, construct and install the Project and the leasing of the Project to the Lessee and the sale of the Project to the Lessee at the expiration or sooner termination of the Lease Term is in furtherance of the public purposes for which the Issuer was created.
(d) Agreements are Legal and Authorized. The Issuer 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 Issuer from entering into the Issuer Documents or performing any of its obligations thereunder, except to the extent that such performance may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditor’s rights.
(e) Limited Obligations. Notwithstanding anything herein contained to the contrary, any obligation the Issuer may hereby incur for the payment of money shall not be a general debt on its part but shall be payable solely from rents, revenues and receipts derived from this Lease, the sale of the Bonds and any other rents, revenues and receipts derived by the Issuer arising out of or in connection with its ownership of the Project.
(f) Issuance of Bonds. To accomplish the foregoing, the Issuer proposes to issue not to exceed $75,000,000 in aggregate principal amount of its Series 2020 Bonds immediately following the execution and delivery of this Lease. The date, denominations, interest rate, maturity date, prepayment provisions and other pertinent provisions with respect to the Bonds are set forth in the Financing Agreement (particularly Articles II and III thereof) and by this reference thereto they are incorporated herein.
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(g) Security for Bonds. The Bonds are to be issued under and secured by the Financing Agreement, pursuant to which the Issuer’s right, title and interest in this Lease (except for certain rights of indemnification and payment of expenses), and the rents, revenues and receipts arising out of or in connection with the Issuer’s ownership of the Project will be assigned to the Bondholder and pledged as security for the payment of the principal of and interest on the Bonds. In addition, the Issuer will execute and deliver the Security Deed conveying to the Bondholder a security interest in the Project, as additional security for the payment of the principal of and interest on the Bonds.
(h) No Prior Pledge. Neither this Lease nor the receipts and revenues hereunder have been pledged or hypothecated in any manner or for any purpose (other than as provided in the Financing Agreement).
(i) Governmental Consents. Neither the nature of the Issuer nor any of its activities or properties, nor any relationship between the Issuer and any other Person, nor any circumstance in connection with the offer, issue, sale or delivery of any of the Bonds is such as to require the consent, approval or authorization of, or the filing, registration or qualification with, any governmental authority on the part of the Issuer in connection with the execution, delivery and performance of any of the Issuer Documents or the offer, issue, sale or delivery of the Bonds, other than those already obtained or filed; provided, however, no representation is made herein as to compliance with the securities or “blue sky” laws of any jurisdiction.
(j) No Defaults. No event has occurred and no condition exists with respect to the Issuer which would constitute an event of default, as defined therein, under any of the Issuer Documents or which, with the lapse of time or with the giving of notice or both, would become an event of default under any of the Issuer Documents.
(k) Enforceability. Each of the Issuer Documents is a legal, valid and binding obligation of the Issuer enforceable in accordance with its terms, except to the extent the Enforceability hereof may be subject to (i) the exercise of judicial discretion in accordance with general principles of equity, and (ii) bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors, rights heretofore or hereinafter enacted to the extent constitutionally applicable.
(1) No Warranty by Issuer of Condition or Suitability of the Project. The Issuer makes no warranty, either express or implied, as to the suitability or utility of the Project or as to the condition of the Project or that the Project is or will be suitable for the Lessee’s purposes or needs.
(m) Pending Litigation. There are no actions, suits, proceedings, inquiries or investigations pending, or to the knowledge of the Issuer threatened, against or affecting the Issuer in any court or before any governmental authority or arbitration board or tribunal which is reasonably anticipated to materially and adversely affect the transactions contemplated by any of the Issuer Documents or which is reasonably anticipated to adversely affect the validity or enforceability of the Bonds or any of the Issuer Documents or the ability of the Issuer to perform its obligations under any of the foregoing.
Section 2.2. Representations and Warranties by the Lessee. The Lessee makes the following representations and warranties:
(a) Organization and Power. The Lessee is a corporation duly organized and validly existing under the laws of the State of California, has the power to enter into the Lessee Documents and to perform and observe its obligations contained therein in accordance with the terms thereof, and has, by proper action, been duly authorized to execute, deliver and perform the Lessee Documents in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings, inquiries or investigations pending, or to the knowledge of the Lessee threatened, against or affecting the Lessee in any court or before any governmental authority or arbitration board or tribunal which are reasonably anticipated to materially and adversely affect the transactions contemplated on its part by any of the Lessee Documents or which are reasonably anticipated to adversely affect the validity or Enforceability of the Bonds or any of the Lessee Documents or the ability of the Lessee to perform its obligations under any of the foregoing.
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(c) Agreements Are Valid and Authorized. The execution and delivery by the Lessee of the Lessee Documents and the compliance by the Lessee with all of the provisions hereof and thereof and the consummation of the transactions contemplated hereby and thereby (i) are within the power of the Lessee (ii) will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, its Articles of Incorporation, its bylaws, or in any material respect any commitment, agreement or instrument of whatever nature to which the Lessee is a party or by which it may be bound, or to which any of its properties may be subject, or any license, judgment, decree, law, statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Lessee or any of its activities or properties (or the Lessee will have obtained an express, written waiver of such condition or provision for the purposes hereof), or (iii) result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Lessee under the terms of any instrument or agreement.
(d) Governmental Consents. Neither the Lessee nor any of its business or properties, nor any relationship between the Lessee and any other Person, nor any circumstance in connection with the execution, delivery and performance by the Lessee of the Lessee Documents, or the offer, issue, sale or delivery by the Issuer of the Bonds, is such as to require the consent, approval or authorization of, or the filing, registration or qualification with, any governmental authority on the part of the Lessee, other than those already obtained as of the Closing Date; provided, however, no representation is made herein as to compliance with the securities or “blue sky” laws of any jurisdiction nor is any representation made as to any permits or similar approvals not required as of the date hereof with respect to the Project.
(e) No Defaults. No event has occurred and no condition exists with respect to the Lessee that would constitute an event of default, as defined therein, under any of the Lessee Documents or which, with the lapse of time or with the giving of notice or both, would become an event of default under any of the Lessee Documents.
(f) Governmental Approvals. The Project will be acquired, constructed and installed in such manner as to conform in all material respects with all applicable zoning, planning, building and other regulations of governmental authorities having jurisdiction over the Project and all necessary utilities will be available in all material respects to the Project.
(g) Enforceability. This Lease is a legal, valid and binding obligation of the Lessee enforceable in accordance with its terms, except to the extent the enforceability hereof may be subject to (i) the exercise of judicial discretion in accordance with general principles of equity, and (ii) bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors, rights heretofore or hereinafter enacted to the extent constitutionally applicable.
(h) Purpose of Project. The Lessee presently intends to operate the Project, located wholly within Gainesville, Hall County, Georgia, in a manner consistent with the Act, principally as a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles from the Completion Date until the expiration or sooner termination of the Lease Term as provided herein.
ARTICLE III
LEASING CLAUSES AND WARRANTY OF TITLE
Section 3.1. Lease of the Project. The Issuer hereby leases to the Lessee, and the Lessee hereby leases from the Issuer, subject to Permitted Encumbrances, the Project at the rental set forth in Section 5.3 hereof and in accordance with the provisions of this Lease.
Section 3.2. Title to Project. The Issuer for itself, its successors and assigns, warrants to the Lessee, its successors and assigns, that the Issuer has good and valid title in and to the Project, free from all encumbrances except Permitted Encumbrances.
The Issuer agrees that it shall upon request of the Lessee join where necessary in any proceeding to protect and defend the Issuer’s title in and to the Project, provided that the Lessee shall pay the entire cost of any such proceeding, reimburse and indemnify and hold harmless the Issuer from any cost or liability whatsoever.
The Lessee and the Issuer agree that the Issuer will hold title to such of the Project as is conveyed by the Lessee to the Issuer from time to time.
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Section 3.3. Quiet Enjoyment. The Issuer warrants and covenants that it will defend the Lessee in the quiet enjoyment and peaceful possession, use and operation of the Project, and all appurtenances thereunto belonging, free from all claims of all persons whomsoever acting by, through or under the Issuer, throughout the Lease Term.
In addition to the foregoing warranty, the Issuer agrees that it will not take or cause another party to take any action to interfere with the Lessee’s peaceful, use, operation and quiet enjoyment of the Project. The Issuer agrees that in the event the peaceful and quiet enjoyment of the Project shall otherwise be denied to the Lessee or contested by anyone, the Issuer shall upon request of the Lessee join where necessary in any proceeding to protect and defend the quiet enjoyment of the Lessee, provided that, unless such denial or contest shall result from the gross negligence or willful misconduct of the Issuer or violation by the Issuer of its warranties and covenants contained herein, the Lessee shall pay the entire cost of any such proceeding, and reimburse and indemnify and hold harmless the Issuer from any cost or liability whatsoever.
Section 3.4. Agreement of the Issuer to Execute Amendment to Lease Agreement. The Issuer and the Lessee understand and agree that additional items of machinery, equipment and related personal property for the Project Facility and additional real property may be acquired, constructed or installed by the Lessee and conveyed to the Issuer or may be acquired directly by the Issuer from time to time hereafter and in each event thereby comprise a portion of the Project hereunder. The Issuer agrees, at the request of the Lessee, to execute an Amendment to Lease Agreement in the form contained as Exhibit “G” hereto without further action on its part contained and the additional property added thereby shall become a part of the Project and leased by the Issuer to the Lessee pursuant to the provisions of this Lease Agreement.
Section 3.5. Additional Encumbrances; Consents; Subordination; Estoppel Certificates. The Issuer agrees with the Lessee that the Issuer shall not grant any security interest, liens, mortgages, deeds of trust or other pledges or encumbrances on the Project Facility, the Project Facility Site, the Project Equipment, or any other equipment or other property which is or may from time to time become subject to this Lease (collectively, the “Leased Property”), except that, at the written request of the Lessee, the Issuer shall grant to any of the Lessee’s lenders, creditors or other parties as requested by the Lessee from time to time (each, a “Permitted Beneficiary”), a security interest in, lien on, pledge of, mortgage in, deed to secure debt and deed of trust on, all or any portion of the Leased Property and, at the written request of the Lessee, the Issuer will enter into any security agreements, mortgages, deeds of trust, deeds to secure debt or other instruments as may be requested by the Lessee (each a “Permitted Mortgage”) in connection with any such grant. The Lessee will reimburse the Issuer for all of its reasonable fees and expenses relating to any such grant or documentation and the Issuer shall not have any pecuniary liability resulting from any such grant or documentation. All Permitted Mortgages shall be considered Permitted Encumbrances.
From time to time during the term of this Lease, Lessee expects to secure financing of its interest in the Project by collaterally assigning Lessee’s interest in this Lease together with the Bonds. In the event of any such assignment to a Permitted Beneficiary, Issuer will, upon not less than ten (10) days prior request by Lessee, execute, acknowledge and deliver to Lessee (i) a consent to such assignment addressed to such Permitted Beneficiary or (ii) a subordination agreement, whichever shall be requested by Lessee, in a form satisfactory to such Permitted Beneficiary; and Issuer will produce, at Lessee’s expense, such certificates, subordination agreements, opinions of counsel and other documents as may be reasonably requested by such Permitted Beneficiary
Nothing contained in this Lease or any of the other Issuer Documents or Lessee Documents or related documents shall prohibit the Lessee from granting to any Permitted Beneficiary a security interest in, a lien upon, a pledge of, a mortgage on, and a deed of trust on, any of the Leased Property, including a leasehold deed to secure debt, from time to time.
Issuer and Lessee will, at any time from time to time, upon not less than ten (10) days prior request by the other party or by a Permitted Beneficiary, execute, acknowledge and deliver a certificate (a) to the effect that (i) this Lease is unmodified and in full effect (or setting forth any modifications and that this Lease is in full effect as modified); (ii) to the knowledge of the signer, the rent and other amounts payable and the dates to which the rent and other amounts payable hereunder have been paid; (iii) to the knowledge of the signer, there are no Events of Default or events which with the passage of time or notice or both would become an Event of Default (or describing the Event of Default); (iv) the commencement and expiration dates of this Lease; (v) the amount of any security or other deposits; and (vi) the Lessee is in possession of the Project (or who is in possession) and (b) concerning such other matters as may reasonably be required by the requesting party. Any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Project or Lessee’s interest therein.
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ARTICLE IV
COMMENCEMENT AND COMPLETION OF THE PROJECT;
ISSUANCE OF THE SERIES 2020 BONDS
Section 4.1. Agreement to Acquire, Construct and Install the Project. Not later than the delivery of this Lease the Issuer will have acquired the title in and to the Project Facility Site and, subject to the provisions of Section 4.6 hereof, the Issuer agrees that it will cause the acquisition, construction, installation and completion of the Project to be made in accordance with the Project Summary, as may be amended from time to time by the Lessee, the Project to consist of the Project Facility, the Project Facility Site, and the machinery, equipment and related property comprising the Project Equipment, said Project Equipment being more particularly described in the list attached hereto as Exhibit “C,” as from time to time amended, and such other items of machinery, equipment and related property as in the Lessee’s judgment may be necessary or desirable for the operation of the Project and as shall from time to time prior to the Completion Date be specified in written orders from the Lessee to the Issuer, all of which acquisitions, construction and installations shall be made substantially in accordance with directions given by the Lessee. Any changes to the Project Summary shall be made at the sole discretion of the Lessee and shall also be filed with the Secretary of the Issuer and the Authorized Lessee Representative. Upon the request of the Lessee, the Issuer shall deliver to the Lessee an Amendment to Lease Agreement in substantially the form of Exhibit “G” hereto and other appropriate documents necessary to convey to the Issuer title to any real property and any items of machinery, equipment and related personal property acquired and installed with the proceeds of the Bonds or acquired and installed by the Lessee with its own funds.
The Issuer, to the maximum extent permitted by law, hereby makes, constitutes and appoints the Lessee as its true, lawful and exclusive agent for the acquisition, construction and installation of the Project, and the Lessee hereby accepts such agency to act and do all things on behalf of the Issuer, to perform all acts of the Issuer hereinbefore provided in this Section 4.1, and to bring any actions or proceedings against any person which the Issuer might bring with respect thereto as the Lessee shall deem proper. The Issuer hereby ratifies and confirms all actions of the Lessee with respect to the Project prior to the date hereof. This appointment of the Lessee to act as agent and all authority hereby conferred or granted is conferred and granted irrevocably, until all activities in connection with the acquisition, construction and installation of the Project shall have been completed, and shall not be terminated prior thereto by act of the Issuer or of the Lessee.
The Issuer agrees that only such changes will be made in the Project Summary as may be specified by an Authorized Lessee Representative. The Issuer agrees that it will enter into, or accept the assignment of, such contracts as the Lessee may request in order to effectuate the purposes of this Section, but that it will not execute any other contract or give any order for the acquisition, construction and installation of the Project unless and until the Authorized Lessee Representative shall have approved the same in writing.
The Lessee, as agent of the Issuer, shall acquire, construct and install the Project in accordance with the Project Summary as it exists from time to time. The Lessee agrees to complete the acquisition, construction and installation of the Project as promptly as practicable after the date of the execution and delivery of this Lease, to continue such acquisition, construction and installation with all reasonable dispatch and to use its best efforts to cause the same to be completed as soon as practicable, delays incident to strikes, riots, acts of God or the public enemy beyond the reasonable control of the Issuer and the Lessee only excepted, but if said acquisition, construction and installation is not completed within the time herein contemplated there shall be no resulting liability on the part of the Issuer and no diminution in or postponement of the rents required in Section 5.3 hereof to be paid by the Lessee. The Issuer agrees to effect the acquisition, construction and installation of the Project as promptly as practicable after specification by the Lessee of the items to be acquired, constructed and installed, and receipt of the acquisition, construction and installation schedule desired by the Lessee.
Section 4.2. Agreement to Issue Series 2020 Bonds; Application of Series 2020 Bond Proceeds. In order to provide funds for payment of the costs of the acquisition, construction and installation of the Project provided for in Section 4.1 hereof, the Issuer agrees that as soon as possible it will authorize, sell and cause to be delivered to the initial purchaser or purchasers thereof, the Series 2020 Bonds, bearing interest and maturing as set forth in Article III of the Financing Agreement, at a price to be approved by the Lessee. Upon receipt of the proceeds derived from the sale of the Series 2020 Bonds, the Issuer will deposit said proceeds received upon said sale in the Project Fund. The Project shall be divided into three parts, the 2020 Project, the 2021 Project and the 2022 Project. The Bonds will be delivered in one or more installments and at different times as provided in Article II of the Financing Agreement. Notwithstanding anything to the contrary contained herein or in the Financing Agreement, on the date of execution of this Lease, the Issuer will purchase the Project Facility Site and any improvements thereon in exchange for an initial Bond in the principal amount of $34,554,100 in accordance with the provisions of Paragraph 2 of the Bond Purchase Agreement dated as of June 1, 2020, by and between the Issuer and the Lessee, and on each date thereafter that an additional Bond is issued, the Issuer will purchase any additional improvements to the Project Facility Site and/or Project Equipment in exchange for an additional Bond in accordance with such Bond Purchase Agreement.
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Section 4.3. Disbursements from the Project Fund. The Issuer will use the moneys in the Project Fund for the following purposes:
(a) Payment of the fees and expenses for recording or filing the deed whereby fee simple title to the Project Facility Site is to be conveyed to the Issuer; payment of the fees and expenses for recording or filing this Lease, the Security Deed, the Financing Agreement and any other documents by which this Lease is assigned as security for the Bonds; the fees and expenses for recording or filing any documents that the Lessee may deem desirable to file for record in order to protect the title of the Issuer to the Project, or any part thereof; and the fees and expenses in connection with any actions or proceedings that the Lessee may deem desirable to bring in order to perfect or protect the title of the Issuer to the Project or any part thereof;
(b) Payment to the Lessee and the Issuer, as the case may be, of such amounts, if any, as shall be necessary to reimburse the Lessee and the Issuer in full for all advances and payments made by them or either of them prior to or after the delivery of the Bonds for expenditures in connection with the acquisition by the Issuer or the Lessee of title to the Project or any part thereof, preparation of the plans and specifications for the Project (including any preliminary study or planning of the Project or any aspect thereof), the acquisition, construction and installation of the Project, the acquisition and installation necessary to provide utility services or other facilities, and the acquisition, construction and installation of all properties, including machinery and equipment, deemed necessary in connection with the Project or any part thereof, and any architectural, engineering and supervisory services with respect to any of the foregoing;
(c) Payment of, or reimbursement of the Issuer or the Lessee for, the customary and reasonable legal and accounting fees and expenses, financial consultants’ fees, rating agencies, fees, financing charges (including underwriting or placement fees) and printing and engraving costs incurred in connection with the authorization, sale and issuance of the Bonds, the preparation of this Lease, the Financing Agreement, the Security Deed, the Financing Statements and all other documents in connection therewith and in connection with the acquisition of title to the Project;
(d) Payment for labor, services, materials and supplies used or furnished in site improvement and in the acquisition, construction and installation of the Project or any part thereof, all as provided in the plans and specifications therefor; payment for the cost of the acquisition, construction and installation of utility services or other facilities and payment for the cost of all property deemed necessary in connection with the Project or any part thereof; and payment for the miscellaneous expenses incidental to any of the foregoing;
(e) Payment of the fees, if any, for architectural, engineering and supervisory services with respect to the Project or any part thereof;
(f) To such extent as they shall not be paid by a contractor for acquisition, construction or installation with respect to any part of the Project, payment of the premiums on all insurance required to be taken out and maintained during the Acquisition Period under this Lease, or reimbursement thereof if paid by the Lessee under Section 6.4 hereof;
(g) Payment of the taxes, assessments and other charges, if any, referred to in Section 6.3 hereof that may become payable during the Acquisition Period; and
(h) Payment of expenses incurred with approval of the Lessee in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the Project or any part thereof.
All moneys remaining in the Project Fund (including moneys earned on investments made pursuant to the provisions of Section 4.8 hereof) after the Completion Date and payment in full of the costs of the acquisition, construction and installation of the Project, and after payment of all other items provided for in the preceding subsections of this Section then due and payable shall, at the written direction of the Authorized Lessee Representative, be (i) used for the purchase of Bonds for the purpose of cancellation or prepayment of the Bonds, or (ii) paid into the Bond Fund, or (iii) a combination of (i) and (ii) as is provided in such direction, provided that amounts approved by the Lessee shall be retained by the Issuer in the Project Fund for payment of Project costs not then due and payable. Any balance remaining of such retained funds after full payment of all such Project costs shall be used by the Issuer as directed by the Lessee in the manner specified in clauses (i), (ii) and (iii) of this subsection.
The payments specified in subsections (a) through (h) of this Section shall be made by the Issuer only upon receipt of a written Requisition for such payment signed by the Lessee by an Authorized Lessee Representative, in the form contained as Exhibit “H” hereto.
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In making any such payment from the Project Fund the Issuer may rely on any such requisitions and certificates delivered to it pursuant to this Section and the Issuer shall be relieved of all liability with respect to making such payments in accordance with such requisitions and certificates without inspection of the Project or any other investigation. The Issuer acknowledges and agrees that it shall not be entitled to any reimbursement for moneys advanced or expended by it as an economic incentive to the Lessee.
Section 4.4. Obligation of the Parties to Cooperate in Furnishing Documents to Each Other. The Issuer and the Lessee agree to cooperate with each other in furnishing the documents referred to in Section 4.3 hereof that are required to effect payments out of the Project Fund, and to cause such requisitions and certificates to be directed by the Authorized Issuer Representative and the Authorized Lessee Representative to the appropriate party as may be necessary to effect payment out of the Project Fund in accordance with Section 4.3 hereof. Such obligation of the Issuer and the Lessee is subject to any provisions of this Lease or the Financing Agreement requiring additional documentation with respect to payments and shall not extend beyond the moneys in the Project Fund available for payment under the terms of the Financing Agreement.
Section 4.5. Establishment of Completion Date. The Completion Date shall be evidenced to the Issuer by a certificate signed on behalf of the Lessee by an Authorized Lessee Representative stating that, except for amounts retained by the Issuer for Project costs not then due and payable as provided in Section 4.3 hereof, (i) the acquisition, construction and installation of the Project has been substantially completed and all labor, services, materials and supplies used in such acquisition, construction and installation have been paid for, and (ii) the Project has been acquired, constructed and installed to the Lessee’s satisfaction and all costs and expenses incurred in connection therewith have been paid, and (iii) all permissions required of governmental authorities for the occupancy of the Project Facility have been obtained, including a certificate of occupancy. Notwithstanding the foregoing, the Completion Date shall not be later than December 31, 2022, and such certificate of the Lessee shall state that it is given without prejudice to any rights against third parties which exist on the date of such certificate or which may subsequently come into being. The Issuer and the Lessee agree to cooperate one with the other in causing such certificates to be furnished as herein provided.
Section 4.6. Lessee Required to Pay Project Costs in Event Project Fund Insufficient. 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, the Lessee 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 Lease, will be available for payment of costs of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Lessee agrees that if after exhaustion of the moneys in the Project Fund, the Lessee 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 rental payments required in Section 5.3 hereof to be paid by the Lessee.
Section 4.7. Issuer to Pursue Remedies Against Suppliers, Contractors and Subcontractors and Their Sureties. In the event of any default of any supplier, contractor or subcontractor under any contract made by it in connection with the Project or in the event of breach of warranty with respect to any material, workmanship or performance guaranty, the Lessee will promptly proceed, either separately or in conjunction with others, to exhaust the remedies that the Issuer or the Lessee may have against any defaulting supplier, contractor or subcontractor and against any surety therefor, for the performance of any contract made in connection with the Project. The Lessee may, in its own name or, if it notifies the Issuer, in the name of the Issuer, prosecute or defend any action or proceeding or take any other action involving any such supplier, contractor, subcontractor or surety which the Lessee deems reasonably necessary, and in such event the Issuer hereby agrees to cooperate fully with the Lessee and to take all action necessary to effect the substitution of the Lessee for the Issuer in any such action or proceeding. Any amounts recovered by way of damages, refunds, adjustments or otherwise in connection with the foregoing shall be paid to the Lessee.
Section 4.8. Investment of Project Fund Moneys Permitted. Any moneys held as part of the Project Fund shall be invested or reinvested by the Issuer upon the written request and direction of the Authorized Lessee Representative in Permitted Investments. Such investments shall mature or shall be subject to sale prior to maturity in such amounts and at such times as may be necessary to provide funds when needed to make payments from the Project Fund. Any interest or gain received from such investments of the moneys in the Project Fund shall be credited to and held in the Project Fund and any loss from such investments shall be charged against the Project Fund.
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ARTICLE V
EFFECTIVE DATE OF THIS LEASE; DURATION
OF LEASE TERM; RENTAL PROVISIONS
Section 5.1. Effective Date of this Lease; Duration of Lease Term. This Lease shall become effective upon its delivery and upon the issuance of the initial Series 2020 Bond, and the usufruct or bailment for hire created by this Lease shall then begin. Subject to the other provisions of this Lease (including particularly Articles X, XI, and XII hereof), this Lease shall expire at midnight, September 1, 2027, or if at said time and on said date Payment in Full of the Bonds shall not have been made, then on such date as such payment shall have been made.
Section 5.2. Delivery and Acceptance of Possession. The Issuer agrees to deliver to the Lessee sole and exclusive possession of the Project (subject to the right of the Bondholder to enter the Project Facility for inspection and other purposes as set forth in Section 8.2 hereof) on the effective date of this Lease and the Lessee agrees to accept possession of the Project upon such delivery.
Section 5.3. Rents and Other Amounts Payable. Subject to Section 208 of the Financing Agreement, on or before September 1, 2020, and on or before each March 1 and September 1 thereafter until Payment in Full of the Bonds, the Lessee shall pay or cause to be paid to the Issuer as rents for the Project a sum equal to the amount payable on such date as principal of and interest on the Bonds, as provided in the Financing Agreement. Each rental payment under this Section shall be sufficient to pay the total amount of principal and interest payable on such semiannual interest payment date, and if at any semiannual interest payment date the balance in the Bond Fund is insufficient to make required payments of principal and interest on such date, the Lessee shall forthwith pay any such deficiency.
Anything herein to the contrary notwithstanding, any amount at any time held by the Issuer in the Bond Fund shall be credited against the next succeeding rental payment and such credit shall reduce the payment to be then made by the Lessee; and further, if the amount held by the Issuer in the Bond Fund should be sufficient to pay at the times required the principal of and interest on all Bonds then remaining unpaid, the Lessee shall not be obligated to make any further rental payments under the provisions of this Section.
Notwithstanding the foregoing or anything to the contrary contained herein or in the Financing Agreement, while the Lessee is the sole Bondholder, payment shall be made as set forth in the Direct Payment Agreement so long as it is in effect.
If the Lessee should fail to make any of the payments required in this Section, the item or installment so in default shall continue as an obligation of the Lessee until the same shall have been fully paid, and the Lessee agrees to pay the same with interest thereon, to the extent legally enforceable, at the rate borne by the Bonds per annum until paid. The provisions of this Section shall be subject to the provisions of Section 9.6 hereof.
Section 5.4. Place of Rental Payments. The rents provided for in the first paragraph of Section 5.3 hereof and the interest on delinquent rents shall be paid directly to the Issuer and will be deposited in the Bond Fund subject to the provisions of the Direct Payment Agreement and Section 208 of the Financing Agreement.
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Section 5.5. Obligations of Lessee Hereunder Absolute and Unconditional. Subject to the provisions of Section 9.6 hereof, the obligations of the Lessee to make the payments required in Section 5.3 hereof and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional. Until such time as Payment in Full of the Bonds shall have been made, the Lessee (i) will not suspend or discontinue any payments provided for in Section 5.3 hereof except to the extent the same have been prepaid, (ii) will perform and observe all of its other agreements contained in this Lease Agreement, and (iii) except as provided in Sections 11.1 and 11.2 hereof, will not terminate the Lease Term for any cause, including, without limiting the generality of the foregoing, failure of the Issuer to complete the Project, failure of the Issuer’s title in and to the Project or any part thereof, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of Georgia or any political subdivision of either thereof 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 connected with this Lease Agreement or the Financing Agreement. Nothing contained in this Section shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained; and if the Issuer should fail to perform any such agreement, the Lessee may institute such action against the Issuer as the Lessee may deem necessary to compel performance or recover its damages for nonperformance so long as such action shall not conflict with the agreements on the part of the Lessee contained in the preceding sentence. The Lessee may, however, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceeding or take any other action involving third persons which the Lessee deems reasonably necessary or in order to insure the acquisition, construction, installation and completion of the Project or to secure or protect its right of possession and use of the Project hereunder, and in such event the Issuer hereby agrees to cooperate fully with the Lessee and to take all lawful action which is required to effect the substitution of the Lessee for the Issuer in any such action or proceeding if the Lessee shall so request.
Section 5.6. Lessee’s Performance under Financing Agreement. The Lessee agrees, for the benefit of the Bondholder to do and perform all acts and things contemplated in the Financing Agreement to be done or performed by it.
ARTICLE VI
MAINTENANCE AND MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. Maintenance and Modifications of Project by Lessee.
(a) The Lessee will cause the Project to be maintained, preserved and kept in good repair, working order and condition, ordinary wear and tear excepted, and will from time to time cause to be made all necessary and proper repairs, replacements and renewals; provided, however, that the Lessee will have no obligation to cause to be maintained, preserved, repaired, replaced or renewed any element or unit of the Project, the maintenance, repair, replacement or renewal of which, in the opinion of the Lessee, becomes uneconomical to the Lessee because of damage or destruction or obsolescence, or change in economic or business conditions, or change in government standards and regulations, or the termination by the Lessee of the operation of the production facilities to which such element or unit of the Project is an adjunct. The Lessee agrees that the Issuer shall have no obligation to maintain the Project or any portion thereof. The Lessee covenants that as long as the Lessee or one of its Affiliates operates the Project, it or one of its Affiliates will cause the Project to be maintained and operated as a “project” within the meaning of the Act as in effect on the date hereof.
(b) The Lessee may from time to time, in its sole discretion, at its own expense and not from the proceeds of the Bonds, make any additions, modifications or improvements to the Project, including installation of additional machinery, equipment and related property in the Project Facility, or on the Project Facility Site, which it may deem desirable for its business purposes; provided that all such additions, modifications or improvements do not adversely affect the structural integrity of the Project Facility and are located wholly within the boundary lines of the Project Facility Site, as applicable. All machinery, equipment and related property so installed by the Lessee shall remain the sole property of the Lessee in which the Issuer shall have no interest, and accordingly, Lessee may dispose of it in any manner desired by Lessee. All such machinery, equipment and other related property may be modified or removed at any time; provided that any damage to the Project occasioned by such modification or removal shall be repaired by the Lessee at its own expense.
(c) The Lessee shall not permit any mechanic’s liens, materialmen’s liens or other liens to be established and remain against the Project for labor or materials furnished or services rendered in connection with any additions, modifications, improvements, repairs, renewals or replacements so made by it; provided, the Lessee may in good faith contest any mechanic’s liens, materialmen’s liens or other liens filed or established against the Project, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom. The Issuer will cooperate fully with the Lessee in any such contest.
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Section 6.2. Removal of Leased Equipment. The Issuer shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn out, unsuitable, undesirable, inappropriate or unnecessary items of leased equipment comprising the Project. In any instance where the Lessee in its sole discretion determines that any such items have become inadequate, obsolete, worn out, unsuitable, undesirable, inappropriate or unnecessary for their purposes at such time, the Lessee may remove such items of leased equipment and (on behalf of the Issuer) sell, trade in, exchange or otherwise dispose of them (as a whole or in part) without any responsibility or accountability to the Issuer therefor, provided that the Lessee shall certify that such removal or substitution shall not materially impair the operation of the Project. Any substitution of Leased Equipment shall be accounted for as a capital investment in equipment as described under the PILOT Agreement.
At the option of the Lessee, at any time prior to the Completion Date, the Lessee may pay the proceeds of any such sale, trade-in or other disposition of such items of leased equipment to the Issuer with written instructions to deposit such moneys into the Project Fund whereupon such moneys shall become a part of the Project Fund and used in the manner set forth in Article IV hereof. After the Completion Date, the Lessee shall retain such proceeds.
The removal from the Project of any portion of the Project pursuant to the provisions of this Section shall not entitle the Lessee to any abatement or diminution in amount of the rents payable under Section 5.3 hereof.
The Lessee will not remove or permit the removal of any item of leased equipment except in accordance with the provisions of this Section.
The Lessee shall deliver to the Issuer a bill of sale or other appropriate documents conveying to the Issuer title to any machinery, equipment or related property installed or placed in the Project Facility or upon the Project Facility Site pursuant to this Section 6.2 prior to the Payment in Full of the Bonds, and upon the request of the Lessee, the Issuer shall deliver to the Lessee an Amendment to Lease Agreement in substantially the form of Exhibit “G” hereto or other appropriate documents, including, without limitation, a bill of sale, conveying to the Lessee title to any property removed from the Project thereof pursuant to this Section 6.2 and releasing the same from the provisions of this Lease.
Section 6.3. Taxes, Other Governmental Charges and Utility Charges. The Lessee and the Issuer have entered into certain special covenants related to ad valorem taxation, as specifically set forth in Section 8.8 hereof and as set forth in the PILOT Agreement. The Issuer and the Lessee further acknowledge that under present law no part of the Project owned by the Issuer will be subject to ad valorem taxation by the State of Georgia or by any political or taxing subdivision thereof, and that under present law the income and profits (if any) of the Issuer from the Project are not subject to either federal or Georgia taxation, and that under present law the interest held by the Lessee under this Lease is not subject to ad valorem taxation by the State of Georgia or by any political or taxing subdivision thereof, and these factors have induced the Lessee to enter into this Lease. The Issuer and the Lessee acknowledge that the Lessee’s willingness to acquire, construct and equip the Project are based in part upon such covenants and the PILOT Agreement. However, the Lessee shall pay, as the same become lawfully due and payable, (i) all taxes and governmental charges of any kind whatsoever upon or with respect to the interest held by the Lessee under this Lease, (ii) all taxes and governmental charges of any kind whatsoever upon or with respect to the Project or any machinery, equipment or related property installed or brought by the Lessee in the Project Facility (including, without limiting the generality of the foregoing, any taxes levied upon or with respect to the income or profits of the Issuer from the Project which, if not paid, will become a charge on the rents, revenues and receipts from the Project prior to or on a parity with the pledge or assignment thereof created and made in the Financing Agreement), (iii) all utility and other charges incurred in the operation, maintenance, use, and upkeep of the Project and (iv) all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Project; provided, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Lessee shall be obligated to pay only such installments as are required to be paid during the Lease Term.
The Lessee may, at its own expense and in its own name and behalf or in the name and behalf of the Issuer, in good faith contest any such taxes, assessments and other charges and, in the event of any such contest, may permit the taxes, assessments and other charges so contested to remain unpaid (if allowed by law) during the period of such contest and any appeal therefrom.
Section 6.4. Insurance Required. During the acquisition, construction and installation of the Project, and throughout the Lease Term, the Lessee shall cause the Project to be continually insured against such property and personal injury risks as are customary with industry standards for comparable facilities and shall pay or cause to be paid all premiums due in respect of such insurance. Without limiting the foregoing, the Issuer acknowledges and agrees that the Lessee may, in certain circumstances, elect to self-insure; provided, however, the Lessee shall maintain a commercial general liability policy covering claims for bodily injury, death or property damage in or about the Project to the extent of at least $2,000,000. In lieu of separate insurance policies, such insurance may be in the form of a blanket insurance policy or policies of the Lessee. Insurance policies may be written with deductible amounts and exceptions and exclusions as the Lessee deems necessary in the normal course of its business and as customary with industry standards. The Issuer shall be listed as an additional named insured on the general liability policy.
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Section 6.5. Application of Net Proceeds of Insurance. The Net Proceeds of the insurance carried pursuant to the provisions of Section 6.4 hereof shall be applied as follows: Net Proceeds of the insurance required in Section 6.4 hereof or pursuant to any blanket policy carried as an alternative to the insurance required to be carried pursuant to Section 6.4 hereof shall be applied, at the sole discretion of the Lessee, as provided in Section 7.1 hereof or toward extinguishment or satisfaction of the liability with respect to which such insurance proceeds may be paid.
Section 6.6. Additional Provisions Respecting Insurance. All claims made under any insurance policies carried pursuant to the requirements of Section 6.4 hereof, regardless of amount, may be adjusted by the Lessee with the insurers.
The Lessee shall furnish to the Issuer and the Bondholder annually a certificate of the Authorized Lessee Representative executed by one of its officials or other evidence satisfactory to the Issuer and the Bondholder that it is in compliance with the requirements of Section 6.4 hereof and that such general liability insurance provides coverage of at least $2,000,000 for third party liability.
Section 6.7. Other Issuer Expenses. The Lessee shall pay any expenses of the Issuer not specifically mentioned herein which do not result from the willful misconduct of the Issuer and which are reasonably incurred by the Issuer in connection with the Project, this Lease, the Financing Agreement, the Security Deed, or the Bonds, and which are not paid from the Project Fund pursuant to Section 4.3 hereof.
Section 6.8. Advances by Issuer or Bondholder. If the Lessee fails to maintain the full insurance coverage required by this Lease or fails to keep the Project in as reasonably safe condition as its operating conditions will permit, or fails to keep the Project in good repair and good operating condition, the Issuer or the Bondholder may (but unless satisfactorily indemnified shall be under no obligation to), after notice to the Lessee, take out the required policies of insurance and pay the premiums on the same or make the required repairs, renewals and replacements if Lessee shall fail to do so within thirty (30) days after written notice of failure to do so has been delivered to Lessee by the Bondholder or the Issuer; and all amounts so advanced therefor by the Issuer or the Bondholder will become an additional obligation of the Lessee to the one making the advancement, which amounts, together with interest thereon at the rate of five percent (5%) per annum from the date thereof, the Lessee agrees to pay. Notwithstanding the foregoing, if the failure stated in the notice cannot be corrected in the applicable time period, the Lessee shall be afforded such additional time as shall be reasonably necessary to correct such failure provided that corrective action is initiated by the Lessee within the applicable time period and diligently pursued until the failure is corrected.
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Section 6.9. Indemnification of Issuer and Bondholder. The Lessee shall, to the extent permitted by applicable law, indemnify and save the Issuer and the Bondholder and the officers, agents, employees and attorneys of each harmless against and from all claims by or on behalf of any person, firm or corporation arising from the conduct or management of, or from any work or thing done on, the Project during the Lease Term, and against and from all claims arising during the Lease Term from (a) any condition of the Project or its operation, (b) any breach or default on the part of the Lessee in the performance of any of its obligations under this Lease, (c) any contract entered into in compliance with the provisions of Section 4.1 hereof in connection with the acquisition, construction and installation of the Project, (d) any act of negligence of the Lessee or of any of its agents, contractors, servants, employees or licensees, and (e) any act of negligence of any assignee or sublessee of the Lessee, or of any agents, contractors, servants, employees or licensees of any assignee or sublessee of the Lessee. The Lessee shall indemnify and save the Issuer and the Bondholder and the officers, agents, employees and attorneys of each harmless from and against all costs and expenses incurred in or in connection with any action or proceeding brought on such claims, and upon notice from the Issuer or the Bondholder, the Lessee shall defend them or either of them in any such action or proceeding. Nothing contained herein shall require the Lessee to indemnify the Issuer and the Bondholder and the officers, agents, employees and attorneys of each for any claim or liability resulting from the Issuer’s or the Bondholder’s own willful acts, gross negligence, or for any claim or liability which the Lessee was not given the opportunity to contest. The Issuer or the Bondholder shall reimburse the Lessee for payments made by the Lessee pursuant to this Section 6.9 to the extent of any proceeds, net of all expenses of collection, actually received by either such party from any insurance covering such claims with respect to the losses sustained. The Issuer or the Bondholder, as applicable, shall promptly claim any such insurance proceeds and shall assign its rights to such proceeds, to the extent of such required reimbursement, to the Lessee. In case any action shall be brought against the Issuer or the Bondholder in respect of which indemnity may be sought against the Lessee, the Issuer or the Bondholder, as applicable, shall promptly notify the Lessee in writing and the Lessee shall have the right to assume the investigation and defense thereof including the employment of counsel and the payment of all expenses. Failure to give any such notice shall not affect the right of the Issuer or Bondholder, as applicable, to receive the indemnification provided herein; unless such failure resulted from the gross negligence or willful misconduct of the Issuer or the Bondholder, such failure could not be remedied and the result of such failure is that the interests of the Lessee were materially and adversely affected as a direct result of such failure. The Issuer or the Bondholder, as applicable, shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof, but the fees and expenses of such counsel shall be paid by the Issuer or the Bondholder, as applicable, unless (i) the employment of such counsel has been authorized by the Lessee or, (ii) the Lessee shall have failed promptly after receiving notice of such action from the Issuer or the Bondholder, as applicable, to assume the defense of such action and employ counsel reasonably satisfactory to the Issuer or the Bondholder, as applicable, or (iii) the named parties to any such action (including any impleaded parties) include both the Issuer or the Bondholder, as applicable, and the Lessee or an Affiliate of the Lessee, and the Issuer or the Bondholder, as applicable, shall have been advised by counsel that there may be one or more legal defense available to such party which are different from or in addition to those available to the Lessee or Affiliate of the Lessee or (iv) the Issuer or the Bondholder, as applicable, shall have been advised by counsel that there is a conflict on any issue between the Issuer or the Bondholder, as applicable, and the Lessee (in which case, if the Issuer or the Bondholder, as applicable, notifies the Lessee in writing that it elects to employ separate counsel at the expense of the Lessee, the Lessee shall not have the right to assume the defense of such action or proceeding on behalf of the Issuer or the Bondholder, as applicable). The Lessee shall not be liable for any settlement of any such action without its consent but, if any such action is settled with the consent of the Lessee or if there be a final unappealable judgment for the plaintiff in any such action, the Lessee agrees to, subject to the limitations herein, indemnify and hold harmless the Issuer and the Bondholder and the officers, agents, employees and attorneys of each from and against any loss by reason of such settlement or judgment. Nothing herein shall be construed as requiring the Issuer or the Bondholder to acquire or maintain insurance of any form or nature with respect to the Project or any portion thereof or with respect to any phrase, term, provision, condition or obligation of this Lease or any other matter in connection herewith. The obligations of the Lessee under this Section 6.9 shall survive the termination of this Lease Agreement and the satisfaction and discharge of the Financing Agreement and shall continue in full force and effect, binding the Lessee to the provisions of this Section 6.9 without regard to the manner of termination of this Lease Agreement, but not longer than the statute of limitations applicable to the particular claim.
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ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage and Destruction. Unless the Lessee shall have exercised its options to prepay the Bonds in whole, terminate the Lease Term and purchase the Project, if prior to Payment in Full of the Bonds the Project is damaged or destroyed by fire or other casualty, the Lessee, shall promptly replace, repair, rebuild or restore the property damaged to substantially the same condition as existed prior to the event causing such damage, with such changes, alterations and modifications (including the substitution and addition of property) as may be desired by the Lessee in its sole discretion and as will not hinder or restrict the operating unity of the Project or change its character to the extent that its ownership by the Issuer would not be permitted under the Act.
Section 7.2. Condemnation. Unless the Lessee shall have exercised its options to prepay the Bonds in whole, terminate the Lease Term and purchase the Project, if the title in and to, or the temporary use of, the Project or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the Lessee shall be obligated to continue to make the rental payments specified in Section 5.3 hereof, and to the extent the Lessee deems necessary, shall cause the restoration of the Project to substantially the same condition as it existed prior to the exercise of the said power of eminent domain, or shall acquire and install other machinery, equipment or related property suitable for the Lessee’s operations at the Project, title to which machinery, equipment or related property will be conveyed to the Issuer by bill of sale and which will be deemed a part of the Project and available for use, possession and occupancy by the Lessee without the payment of any rent other than the payments specified in Section 5.3 hereof.
Section 7.3. Proceeds of Insurance and Condemnation Awards. All Net Proceeds of insurance resulting from claims for such losses described in this Article and all Net Proceeds of any condemnation award shall be paid to the Lessee.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Warranty of Condition or Suitability by the Issuer. THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE PROJECT OR THAT IT WILL BE SUITABLE FOR THE LESSEE’S PURPOSES OR NEEDS. The Lessee releases the Issuer from, agrees that the Issuer shall not be liable for and agrees, to the extent permitted by applicable law, to hold the Issuer harmless against, any loss that may be occasioned by the condition of the Project or its suitability for the Lessee’s purposes or needs.
Section 8.2. Inspection of Project; Right of Access to the Project by the Issuer. The Lessee agrees that the Authorized Issuer Representative, the Bondholder or either of their duly authorized agents who are acceptable to the Lessee shall have the right at all reasonable times during business hours and upon five business days’ notice to the Lessee, to enter upon, examine and inspect the Project, provided that this does not result in any interference or prejudice to the Lessee’s operations, and provided further that the Authorized Issuer Representative, the Bondholder or the agent of either of them shall have executed a confidentiality agreement, in a form acceptable to the Lessee, whereby such parties agree to keep confidential all information relating to the operations of the Lessee, its financial information, business records, and information received from the Lessee relating to the Lessee or its business, other than such information that is available to the Issuer or the Bondholder on a non-confidential basis prior to disclosure. Provided that the Lessee is not in default hereunder, such inspection shall only be made in the presence of an official of the Lessee. The Lessee further agrees that the Issuer and its duly authorized agents shall have such rights of access to the Project as may be reasonably necessary to cause to be completed the acquisition, construction and installation of the Project provided for in Section 4.1 hereof.
Section 8.3. Lessee to Maintain Its Existence; Exceptions Permitted. The Lessee agrees that so long as the Bonds or any portion thereof shall remain outstanding it shall maintain its corporate existence and shall not merge or consolidate with or into any other person and shall not transfer or convey all or substantially all of its property, assets and licenses; provided, however, the Lessee may, without violating any provisions of this Lease, consolidate with or merge into another Person and permit one or more Persons to consolidate with or merge into it, and transfer all or substantially all of its assets to such other Person, but only on the condition that the Person resulting from or surviving such merger (if other than the Lessee) or consolidation is then solvent and shall expressly assume in writing and agree to pay and to perform all of the Lessee’s obligations under this Lease. If the Lessee is the surviving Person in such a merger the express assumption shall not be required.
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Section 8.4. Qualification in Georgia. The Lessee warrants (except as may be otherwise permitted pursuant to the provisions of Section 8.3 above) that it is and throughout the Lease Term it will continue to be a corporation either organized under the laws of the State of Georgia or duly qualified to do business in the State of Georgia as a foreign corporation, as the case may be.
Section 8.5. Granting and Release of Easements. The Lessee may, on behalf of the Issuer and itself, at any time or times (a) cause to be granted easements, licenses, rights-of-way (temporary or perpetual and including the dedication of public highways) and other rights or privileges in the nature of easements with respect to any property included in the Project and such grant will be free from the lien or security interests created by the Financing Agreement, the Security Deed, or this Lease or (b) cause to be amended, modified or released existing easements, licenses, rights-of-way and other rights or privileges in the nature of easements, with respect to any property included in the Project with or without consideration. The Issuer agrees that it shall execute and deliver and will cause the Bondholder to execute and deliver any instrument necessary or appropriate to confirm and grant, amend, modify or release any such easement, license, right-of-way or other right or privilege upon receipt of a certificate of an Authorized Lessee Representative stating that the granting or release of the easement, license, right-of-way or other right or privilege so proposed to be made will not materially impair the operation of the Project and will not destroy the means of ingress thereto and egress therefrom.
Section 8.6. Reports by Lessee. The Lessee agrees so long as any of the Bonds are outstanding to furnish to the Bondholder or an authorized representative of the Bondholder publicly available information with respect to Lessee’s corporate parent (FOXF) filed with the Securities Exchange Commission.
Section 8.7. Filing of Certain Continuation Statements. From time to time, the Lessee shall duly file or cause to be filed continuation statements for the purpose of continuing without lapse the effectiveness of (i) those Financing Statements which shall have been filed at or prior to the issuance of the Bonds in connection with the security for the Bonds pursuant to the authority of the Uniform Commercial Code of Georgia, and (ii) any previously filed continuation statements which shall have been filed as herein required.
Section 8.8. Special Covenants Related to Ad Valorem Taxation. The Issuer has consulted with the Board of Tax Assessors of Hall County (“BOTA”) with reference to the ad valorem tax treatment of the Project during the Lease Term. The exemption set forth below is acceptable to the BOTA. The Issuer is granting to the Lessee hereunder only a usufruct, which is a limited right to use the Project during the Lease Term upon the terms set forth herein. The Issuer and the Lessee hereby agree to ad valorem taxation of the Project in the manner set forth below.
The fair market value of the 2020 Project shall be determined pursuant to the normal and customary procedures and guidelines established by BOTA under applicable law that are utilized for the valuation of property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2020 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County, and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided in the PILOT Agreement, the pro forma assessed values shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Company in the 2020 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2020 Project.
| Tax Year | Leasehold Valuation Factor | ||||
| 2020 | 100% | ||||
| 2021 | 0% | ||||
| 2022 | 0% | ||||
| 2023 | 50% | ||||
| 2024 | 50% | ||||
| 2025 | 50% | ||||
| 2026 and thereafter | 100% | ||||
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The fair market value of that portion of the Project constituting the 2021 Project shall be determined pursuant to the normal and customary procedures and guidelines established by the BOTA under applicable law that are utilized for the valuation of real and personal property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2021 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided in the PILOT Agreement, the pro forma assessed values shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Lessee in the 2021 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2021 Project.
| Tax Year | Leasehold Valuation Factor | ||||
| 2022 | 0% | ||||
| 2023 | 0% | ||||
| 2024 | 50% | ||||
| 2025 | 50% | ||||
| 2026 | 50% | ||||
| 2027 and thereafter | 100% | ||||
The fair market value of that portion of the Project constituting the 2022 Project shall be determined pursuant to the normal and customary procedures and guidelines established by the BOTA under applicable law that are utilized for the valuation of real and personal property used for business purposes (including, without limitation, utilization of generally applicable depreciation factors). The fair market value of the 2022 Project so determined shall be multiplied by the statutory assessment rate of forty percent (40%) for Hall County and one hundred percent (100%) for City of Gainesville and Gainesville School District to determine the pro forma assessed values. Subject to adjustment as provided in the PILOT Agreement, the pro forma assessed values shall be multiplied by the following percentages (the “Leasehold Valuation Factors”) for the applicable years set forth below to determine the “base value” for the leasehold interest of the Lessee in the 2022 Project. The base value shall be multiplied by the millage rates for ad valorem taxes applicable to the 2022 Project.
| Tax Year | Leasehold Valuation Factor | ||||
| 2023 | 0% | ||||
| 2024 | 0% | ||||
| 2025 | 50% | ||||
| 2026 | 50% | ||||
| 2027 | 50% | ||||
| 2028 and thereafter | 100% | ||||
Section 8.9. Payments in Lieu of Taxes to the Issuer. As additional consideration for leasing and agreeing to sell the Project to the Lessee hereunder, the Lessee agrees to make the payments in lieu of taxes to the Issuer as set forth in Section 5(a) and 5(b) of the PILOT Agreement. The right to receive said payments is personal to the Issuer and not assignable to anyone including the Bondholder.
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ARTICLE IX
ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
REDEMPTION: RENT PREPAYMENT AND ABATEMENT
Section 9.1. Assignment and Subleasing. Except as otherwise provided in Section 8.3 hereof or except to an Affiliate, this Lease may not be assigned, in whole or in part, and the Project may not be subleased, as a whole or in part, by the Lessee without the consent of the Issuer and the Bondholder, which consents shall not be unreasonably withheld; any such assignment or sublease is further subject to the following conditions:
(a) no assignment (other than pursuant to Section 8.3 hereof) or sublease shall relieve the Lessee from primary liability for any of its obligations hereunder, and if any such assignment occurs the Lessee shall continue to remain primarily liable for payment of the rents specified in Section 5.3 hereof and for performance and observance of the other agreements on its part herein provided to be performed and observed by it unless the Lessee shall have obtained the consent of the Issuer and the Bondholder, which consents shall not be unreasonably withheld; and
(b) the Lessee shall within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Issuer and to the Bondholder a true and complete copy of each such assignment or sublease, as the case may be, together with any instrument of assumption.
Section 9.2. Assignment of Lease to Bondholder. The Issuer shall assign its interest in and pledge all rents, revenues and receipts derived under this Lease or otherwise arising out of or in connection with its ownership of the Project pursuant to the Financing Agreement, to the Bondholder as security for the payment of the principal of and interest on the Bonds, but such assignment shall be subject and subordinate to this Lease. The Issuer shall not assign its interest in the Lease or otherwise create a security interest in this Lease, except as provided in the Financing Agreement, and any attempted assignment or transfer prohibited hereby shall be null and void.
Section 9.3. Restrictions on Sale of Project by Issuer. The Issuer agrees that, except as otherwise permitted under the terms of this Lease, including, without limitation, Section 3.5 hereof, or the Financing Agreement, it will not mortgage, sell, assign, transfer, convey or otherwise encumber the Project or any portion thereof during the Lease Term and that it will not take any other action which may reasonably be construed as tending to cause or induce the levy or assessment of ad valorem taxes on the Project or any portion thereof. If the laws of the State of Georgia at the time require such action to be taken, nothing contained in this Section shall prevent the consolidation of the Issuer with, or the merger of the Issuer into, or the transfer of the Project as an entirety to, any public corporation whose property and income are not subject to taxation and which has corporate authority to carry on the business of owning and leasing the Project; provided, (a) that no such action shall be taken without the prior written consent of the Lessee, unless such action shall be required by law, and (b) that upon any such consolidation, merger or transfer, the due and punctual payment of the principal of and interest on the Bonds according to their tenor, and the due and punctual performance and observance of all the agreements and conditions of this Lease to be kept and performed by the Issuer, shall be expressly assumed in writing by the corporation resulting from such consolidation or surviving such merger or to which the Project shall be transferred as an entirety.
Section 9.4. Prepayment of Bonds. The Issuer, at the request at any time of the Lessee and if the same are then prepayable, shall forthwith take all steps that may be necessary under the applicable prepayment provisions of the Financing Agreement to effect prepayment of all or any portion of the Bonds, as may be specified by the Lessee, on the earliest redemption or prepayment date on which such redemption or prepayment may be made under such applicable provisions. So long as the Lessee is not in default hereunder and the Issuer is not obligated to prepay the Bonds pursuant to the terms of the Financing Agreement, the Issuer shall not prepay any Bonds prior to their maturity unless requested in writing by the Lessee. The Lessee agrees to give notice to the Issuer and the Bondholder of any prepayment at least twenty (20) days prior to the prepayment date or such shorter period of time as may be acceptable to the Issuer unless the Bondholder waives, in writing, notice of such prepayment.
Section 9.5. Prepayment of Rents. There is expressly reserved to the Lessee the right, and the Lessee is authorized and permitted, at any time it may choose, so long as it is not in default hereunder, to prepay all or any part of the rents payable under Section 5.3 hereof, and the Issuer agrees that the Bondholder may accept such prepayment when the same is tendered by the Lessee. All prepaid rents shall be credited on the rents specified in Section 5.3, in the chronological order of their due dates.
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Section 9.6. Rent Abatements if Bonds Paid Prior to Maturity. If at any time the aggregate moneys in the Bond Fund are sufficient to retire, in accordance with the terms of the Financing Agreement, all of the outstanding Bonds under circumstances not resulting in termination of the Lease Term, and if the Lessee is not at the time otherwise in default hereunder, the Lessee shall be entitled to use, possess and occupy the Project from the date on which such aggregate moneys are in the Bond Fund to and including maturity of the Bonds, without the payment of rent under Section 5.3 during that interval (but otherwise on the terms and conditions hereof).
Section 9.7. Reference to Bonds Ineffective After Bonds Paid. Upon Payment in Full of the Bonds, all references in this Lease to the Bonds shall be ineffective and the Bondholder shall not thereafter have any rights hereunder, saving and excepting those that shall have theretofore vested. Reference is hereby made to Section 1002 of the Financing Agreement which sets forth the conditions upon the existence or occurrence of which Payment in Full of the Bonds shall be deemed to have been made.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined. The following shall be Events of Default under this Lease:
(a) failure by the Lessee to make any rental payments required under Section 5.3 hereof on or before the date that the payment is due;
(b) failure by the Lessee to observe and perform any other material covenant, condition or agreement on its part under this Lease (other than as referred to in subsection (a) of this Section), for a period of 60 days after written notice, specifying such failure and requesting that it be remedied, shall be given to the Lessee by the Bondholder, unless the Issuer and the Bondholder shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer and the Bondholder will consent to an extension of such time if it is possible to correct such failure and corrective action is instituted by the Lessee within the applicable period and diligently pursued until the default is corrected;
(c) the entry of a decree or order by a court having jurisdiction in the premises for relief in respect of the Lessee or adjudging the Lessee a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Lessee under Title 11 of the United States Code, as now constituted or as amended or any other applicable Federal or state bankruptcy or other similar law, and such decree or order shall have continued undischarged or unstayed for a period of 90 days; or the entry of a decree or order of a court having jurisdiction of the premises for the appointment of a receiver or liquidator or trustee or custodian or assignee in bankruptcy or insolvency of the Lessee or of all or a major part of its property, or for the winding up or liquidation of its affairs and such decree or order shall have remained in force undischarged or unstayed for a period of 90 days; or
(d) the Lessee shall institute proceedings to be adjudicated as bankrupt or insolvent, or shall consent to the filing of a bankruptcy or insolvency proceeding against it, or shall file a petition or answer or consent seeking relief under Title 11 of the United States Code, as now constituted or as amended, or any other applicable Federal or state bankruptcy or other similar law, or shall consent to the institution of proceedings thereunder or to the filing of any such petition, or shall consent to the appointment or taking possession of a receiver or liquidator or trustee or custodian or assignee in bankruptcy or insolvency of it or of all or a major part of its property, or shall make an assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts generally as they become due, or the failure of the Lessee generally to pay its debts as such debts become due, or the taking of action by the Lessee in furtherance of any such action.
The foregoing provisions of this Section are subject to the following limitations: if by reason of force majeure the Lessee is unable in whole or in part to carry out the agreements on its part herein contained, other than the obligations on the part of the Lessee contained in Sections 5.3, 6.3, 6.4 and 8.3 hereof, the Lessee shall not be deemed in default during the continuance of such inability. The term “force majeure” as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States of America or of the State of Georgia or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of ,the Lessee. The Lessee agrees, however, to use its best efforts to remedy with all reasonable dispatch the cause or causes preventing the Lessee from carrying out its agreements; provided, that the settlement of strikes, lockouts and other
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industrial disturbances shall be entirely within the discretion of the Lessee, and the Lessee shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of the Lessee, unfavorable to the Lessee.
Section 10.2. Remedies on Default. Whenever any Event of Default shall have happened and be subsisting, the Issuer, with the written consent of the Bondholder, or the Bondholder as provided in the Financing Agreement, may take any one or more of the following remedial steps:
(a) declare all installments of rent payable under Section 5.3 hereof for the remainder of the Lease Term to be immediately due and payable, whereupon the same shall become immediately due and payable. If the Issuer or the Bondholder elects to exercise the remedy afforded in this Section 10.2(a) and accelerates all rents payable under Section 5.3 hereof for the remainder of the Lease Term, the amount then due and payable as accelerated rents shall be the sum of (1) the aggregate principal amount of the outstanding Bonds, and (2) all interest on the Bonds accruing to the date of maturity by declaration;
(b) re-enter and take possession of the Project without terminating this Lease and without any liability to the Lessee for such entry and repossession, and sublease the Project for the account of the Lessee, holding the Lessee liable for the difference in the rents and other amounts payable by such sublessee in such subleasing and the rents and other amounts payable by the Lessee under Section 5.3;
(c) terminate this Lease (provided, however, that upon such termination, the options of the Lessee to purchase the Project pursuant to the provisions of Article XI hereof and the obligations of the Lessee to make the rental payments pursuant to Section 5.3 hereof and to purchase the Project pursuant to Section 12.1 hereof contained therein shall survive such termination), exclude the Lessee from possession of the Project and use its best efforts to lease the Project to another for the account of the Lessee, holding the Lessee liable for all rent and other payments due up to the effective date of such leasing;
(d) require accounting books and records of the Lessee pertaining exclusively to the Project only for an Event of Default under Section 10.1(a);
(e) take whatever action at law or in equity may appear necessary or desirable to collect the rents then due, or to enforce performance and observance of any obligation, agreement or covenant of the Lessee under this Lease; and
(f) exercise any remedies provided for in the Financing Agreement, or in the Uniform Commercial Code of the State of Georgia.
Any amounts collected pursuant to action taken under this Section shall be paid into the Bond Fund and applied in accordance with the provisions of the Financing Agreement and after Payment in Full of the Bonds and the payment of any costs occasioned by an Event of Default hereunder, any excess moneys in the Bond Fund shall be returned to the Lessee as an overpayment of rent.
Notwithstanding the foregoing, unless the Issuer has obtained the written consent of the Bondholder, upon the occurrence of an Event of Default by the Lessee the Issuer may as its sole remedy take whatever action at law or in equity to collect any amounts then due from the Lessee to the Issuer or to enforce performance of any obligation, agreement or covenant of the Lessee under this Lease.
Section 10.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Bondholder is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity or by statute. The Issuer will not exercise any remedies without the express written consent of the Bondholder. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Bondholder to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice or notices as may be herein expressly required. Such remedies as are given to the Issuer hereunder shall also extend to the Bondholder, and the Bondholder shall be deemed a third party beneficiary of all covenants and agreements herein contained.
Section 10.4. Agreement to Pay Attorneys’ Fees and Expenses. Should an Event of Default occur and the Issuer and/or the Bondholder should employ attorneys or incur other expenses for collection of rents or the enforcement of performance or observance of any obligation or agreement on the part of the Lessee herein contained, the Lessee agrees that it shall on demand therefor pay to the Issuer and/or the Bondholder the reasonable fees of such attorneys actually incurred at standard billable rates and such other reasonable expenses so incurred by the Issuer and/or the Bondholder.
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Section 10.5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
Section 10.6. Waiver of Appraisement, Valuation, Etc. If the Lessee should default under any of the provisions of this Lease, the Lessee agrees to waive, to the extent it may lawfully do so, the benefit of all appraisement, valuation, stay, extension or redemption laws now or hereafter in force, and all right of appraisement and redemption to which it may be entitled.
Section 10.7. Reinstatement of Lease. Notwithstanding any termination of this Lease in accordance with the provisions of Section 10.2, unless and until the Issuer shall have entered into a valid and binding agreement providing for the reletting of the Project and shall have provided Lessee with thirty (30) days prior written notice of such reletting, the Lessee may at any time after such termination pay all accrued unpaid rent, except rent accelerated pursuant to Section 10.2(a) of this Lease, plus any costs to the Issuer and the Bondholder occasioned by the default, including all interest required to be paid in accordance with the Financing Agreement on overdue principal and, to the extent lawful, on any overdue interest, or on the principal of Bonds not redeemed in accordance with the Financing Agreement by reason of any default by the Lessee in the payment of rent, and fully cure all other defaults then capable of being cured. Upon such payment and cure and the rescission and annulment of acceleration as provided in Section 1111 of the Financing Agreement, this Lease shall be fully reinstated, as if it had never been terminated, and the Lessee shall be restored to the use, possession and occupancy of the Project and any acceleration pursuant to Section 10.2(a) of this Lease shall thereupon be rescinded and annulled.
ARTICLE XI
OPTIONS IN FAVOR OF LESSEE
Section 11.1. Options to Terminate the Lease Term. The Lessee shall have the following unconditional and irrevocable options to terminate the Lease Term:
(a) At any time prior to Payment in Full of the Bonds, the Lessee may terminate the Lease Term by giving the Issuer and the Bondholder notice in writing of such termination and by paying to the Issuer an amount which, when added to the funds in the Bond Fund, will be sufficient to pay, retire and prepay without premium or penalty all of the outstanding Bonds in accordance with the provisions of the Financing Agreement (including, without limiting the generality of the foregoing, principal, interest to maturity or earliest applicable prepayment date, as the case may be, expenses of prepayment and the Bondholder’s fees and expenses), and, in case of prepayment, making arrangements satisfactory to the Issuer and the Bondholder for the giving of the required notice of prepayment; or
(b) At any time after Payment in Full of the Bonds, the Lessee may terminate the Lease Term by giving the Issuer notice in writing of such termination and such termination shall forthwith become effective.
Section 11.2. Option to Purchase Project. The Lessee shall have, and is hereby granted, the option to purchase the Project prior to the expiration of the Lease Term and prior to the Payment in Full of the Bonds. To exercise such option, the Lessee shall give written notice to the Issuer specifying the date of closing such purchase, which date shall be not less than fifteen (15) nor more than one hundred twenty (120) days from the date such notice is given, and shall make arrangements for the giving of the required notice of prepayment of the Bonds in accordance with the provisions of the Financing Agreement. The amount which shall be paid to the Issuer by the Lessee in the event of its exercise of the option granted in this Section shall be the sum of the following:
(1) an amount of money which, when added to the funds in the Bond Fund, will be sufficient to retire and prepay all of the then outstanding Bonds at par on the date specified by the Lessee for such prepayment including, without limitation, principal plus accrued interest thereon to said prepayment date, or the Bondholder has stated that it has been paid in full, plus
(2) an amount of money equal to the Bondholder’s and the paying agent’s, fees and expenses under the Financing Agreement accrued and to accrue until such final payment and prepayment of the Bonds or satisfactory arrangements are made for the payment of such fees; plus
(3) the sum of ten dollars ($10) which shall be paid by the Lessee to the Issuer, which sum the parties hereto acknowledge and agree constitutes good and adequate consideration for the purchase of the Project.
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Section 11.3. Conveyance on Purchase. At the closing of any purchase pursuant to Article XI or Article XII hereof or pursuant to the exercise of any option to purchase granted herein, the Issuer will, upon receipt of the purchase price, deliver to the Lessee the Warranty Deed and the Bill of Sale or documents satisfactory to the Lessee conveying to the Lessee good and marketable title in and to the property with respect to which such obligation or option was exercised, by limited warranty deed and/or bill of sale without other warranty of title, subject to the following: (i) those liens and encumbrances (if any) to which such title in and to said property was subject when conveyed to the Issuer, (ii) those liens and encumbrances created by the Lessee or to the creation or suffering of which the Lessee consented in writing, including liens permitted under Section 3.5 hereof, (iii) those liens, security interests and encumbrances resulting from the failure of the Lessee to perform or observe any of the agreements on its part contained in this Lease, and (iv) Permitted Encumbrances other than the Financing Agreement, the Security Deed, and this Lease. In addition, the Lessee and the Issuer shall execute such documents as are customary in the State of Georgia for the purchase and sale of improved real property and such other documents as may be reasonably required by the Lessee’s title company to ensure good and marketable title has been transferred to Lessee.
Section 11.4 Option to Release Unimproved Land. The Lessee may from time to time request that the Issuer release, and the Issuer shall release, any unimproved part of the Project Facility Site (on which no building or equipment essential to the continued operation of the Project is situated) without consideration. In connection with such release, there shall be deposited with the Issuer (a) a certificate of the Authorized Lessee Representative dated not more than sixty (60) days prior to the date of the release and stating that, in the opinion of the Authorized Lessee Representative, (i) the portion of the Project Facility Site so proposed to be released is not needed for the continued operation of the Project for the purpose hereinabove stated and (ii) the release so proposed to be made will not destroy the means of ingress and egress therefrom, and (b) a copy of the instrument conveying the portion of the Project Facility Site to be released. No release effected under the provisions of this Section 11.4 shall entitle Lessee to any abatement or diminution of the rents payable under Section 5.3 hereof. The costs associated with obtaining releases contemplated by this Section, and elsewhere in this Lease, shall be borne by the Lessee.
The Issuer shall release all or any portion of the Project Facility Site and Project Facility which are taken by eminent domain.
The Issuer shall release the Project on or about September 1, 2027 in accordance with the PILOT Agreement.
The Issuer shall execute a limited warranty deed in favor of the Lessee conveying the Project Facility Site or Project Facility released pursuant to this Section. The Issuer and Lessee shall execute and amendment or amendments to this Lease in substantially the form of Exhibit G in connection with all releases of the Project Facility Site and Project Facility.
Section 11.5. Relative Position of Options and Financing Agreement. The options respectively granted to the Lessee in this Article shall be and remain prior and superior to the Financing Agreement and may be exercised whether or not the Lessee is in default hereunder, provided that such default will not result in non-fulfillment of any condition to the exercise of any such option.
Section 11.6. Partial Prepayments of the Bonds; Purchase of 2020 Project and 2021 Project. The Lessee agrees to take all actions necessary to cause the Issuer to prepay on September 1, 2025 an outstanding principal amount of the Bonds equal to the cost of the 2020 Project and agrees to prepay a sufficient amount of the rents payable under Section 5.3 hereof necessary for the Issuer to make said prepayment of the Bonds on September 1, 2025.
The Lessee agrees to take all actions necessary to cause the Issuer to prepay on September 1, 2026 an outstanding principal amount of the Bonds equal to the cost of the 2021 Project and agrees to prepay a sufficient amount of the rents payable under Section 5.3 hereof necessary for the Issuer to make said prepayment of the Bonds on September 1, 2026.
After the September 1, 2025 principal prepayment on the Series 2020 Bonds is made, the Lessee shall purchase and the Issuer shall sell the 2020 Project for a purchase price of $10.00. Closing of the purchase and sale shall be held on or before December 30, 2025. The Bill of Sale and Limited Warranty Deed, along with such other documents necessary for closing of the purchase and sale, shall be executed and delivered to the Lessee. This Lease shall be amended to reflect the release of the 2020 Project from the terms of this Lease.
After the September 1, 2026 principal prepayment on the Series 2020 Bonds is made, the Lessee shall purchase and the Issuer shall sell the 2021 Project for a purchase price of $10.00. Closing of the purchase and sale shall be held on or before December 30, 2026. The Bill of Sale, along with such other documents necessary for closing of the purchase and sale, shall be executed and delivered to the Lessee. This Lease shall be amended to reflect the release of the 2021 Project from the terms of this Lease.
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ARTICLE XII
OBLIGATIONS OF LESSEE
Section 12.1 Obligation to Purchase Project. The Lessee hereby agrees to purchase, and the Issuer hereby agrees to sell, the Project for Ten Dollars ($10.00) plus Payment in Full of the Bonds at the expiration or sooner termination of the Lease Term following Payment in Full of the Bonds. At any time subsequent to the expiration or sooner termination of this Lease as aforesaid upon notice to the Issuer by the Lessee, the Issuer shall upon receipt of the purchase price deliver to the Lessee those documents set forth in Section 11.3 hereof. The obligation specified in this Section shall be and remain prior and superior to the Financing Agreement and may be exercised whether or not the Lessee is in default hereunder provided that such default will not result in nonfulfillment of any condition to this right.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Notices. All notices, certificates or other communications hereunder shall be mailed by first class or registered or certified mail or by delivery to physical address, return receipt requested, postage prepaid, addressed as follows or by facsimile with receipt confirmed:
| If to the Issuer: | Gainesville and Hall County Development Authority P. O. Box 3280 Gainesville, GA 30503 Attention: Chairman | ||||
| If to the Lessee: | Fox Factory, Inc. 6634 Highway 53 Braselton, Georgia 30517 Attention: David Haugen | ||||
| If to the Bondholder: | Fox Factory, Inc. 6634 Highway 53 Braselton, Georgia 30517 Attention: David Haugen | ||||
A duplicate copy of each notice, certificate or other communication given hereunder by either the Issuer, the Lessee or the Bondholder shall be given to each of the others. The Issuer, the Lessee and the Bondholder may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Notices shall be effective upon receipt.
Section 13.2 No Estate in Land. This agreement shall create the relationship of landlord and tenant between the parties hereto; no estate shall pass out of the Issuer. The Lessee shall have only a usufruct in the Project.
Section 13.3. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Issuer, the Lessee and their respective successors and assigns.
Section 13.4. Severability. If any provision of this Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 13.5. Amounts Remaining in Bond Fund. It is agreed by the parties hereto that, subject to and in accordance with the terms and conditions of Section 609 of the Financing Agreement certain surplus moneys remaining in the Bond Fund shall belong and be paid to the Lessee by the Issuer as an overpayment of rents.
Section 13.6. Amendments, Changes and Modifications. Except as otherwise provided in this Lease or in the Financing Agreement, subsequent to the initial issuance of the Bonds and prior to Payment in Full of the Bonds, this Lease may only be amended, changed, modified, altered or terminated by the written agreement of the Issuer and the Lessee and may not be effectively amended, changed, modified, altered or terminated without the concurring written consent of the Bondholder in accordance with the Financing Agreement.
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The Lessee and the Issuer, if requested by the Lessee in connection with an authorized assignment by the Lessee of this Lease, shall bifurcate this Lease into two substantially identical leases in order to accommodate the separate assignment of the Lease relating to the Project Equipment and the remainder of the Project subject hereto. In addition, the Lessee and the Issuer agree to amend the Financing Agreement, the Security Deed, the PILOT Agreement and such documents executed in connection with the issuance of the Bonds as necessary to implement such bifurcation by the Issuer and the Lessee.
Section 13.7. Execution Counterparts. This Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 13.8. Captions. The captions and headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions of this Lease.
Section 13.9. Recording of Lease. This Lease (or a Memorandum of Lease acceptable to Issuer and Lessee) and every assignment and modification hereof shall be recorded in the office of the Clerk of the Superior Court of Hall County, Georgia, or in such other office as may be at the time provided by law as the proper place for such recordation.
Section 13.10. Law Governing Construction of Lease. This Lease shall be governed by, and construed in accordance with, the laws of the State of Georgia.
Section 13.11. Net Lease. This Lease shall be deemed a “net lease”, and the Lessee shall pay absolutely net during the Lease Term the rents, revenues and receipts pledged hereunder, without abatement, deduction or set-off other than those herein expressly provided.
IN WITNESS WHEREOF, the Issuer and the Lessee have caused this Lease to be executed under seal in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/ T. Treadwell Syfan
Secretary
As to the Issuer, signed and sealed and delivered in the presence of:
By: /s/ J. Randall Trot
Witness
By: /s/ D. Thomas Lefevre
Notary Public
My commission expires: February 13, 2024
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FOX FACTORY, INC.
By: /s/ John E. Blocher
Name: John E. Blocher
Title: Chief Financial Officer
As to the Lessee, signed and sealed an delivered in the presence of:
By: /s/ Teresa P. Finister
Witness
By: /s/ Sandra Dover
Notary Public
My commission expires: August 2, 2021
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EXHIBIT A
DESCRIPTION OF PROJECT FACILITY SITE
(41.224 Acre Tract in Gainesville Industrial Park West)
All that tract or parcel of land lying and being in Land Lot 11 of the 8th District, City of Gainesville, Hall County, Georgia, and being that certain 41.224 acre tract shown on that certain ALTA/NSPS Land Title Survey for FF US Holding, LLC and Chicago Title Insurance Company dated March 29, 2019, last revised April 25, 2019, prepared by Rochester & Associates, Inc., and recorded in Plat Book 877, page 58, Hall County Plat Records, and being more particularly described according to said plat as follows:
Commencing at the intersection of the southerly right of way of Industrial Park West Drive, said right of way being 60 feet in width, with the westerly right of way of State Route 13, a.k.a. Atlanta Highway, said right of way having a variable width; thence proceed along said westerly right of way of State Route 13 in a southwesterly direction 1,249.53 feet to a 1/2 inch rebar found being the TRUE POINT OF BEGINNING;
From the TRUE POINT OF BEGINNING thus establish and continuing along said westerly right of way of State Route 13 South 24 degrees 25 minutes 56 seconds West a distance of 60.00 feet to a 1/2 inch rebar found; thence leaving said westerly right of way and proceeding along the property now or formerly of Industrial Park West Business Center North 65 degrees 45 minutes 01 seconds West a distance of 370.60 feet to a 1/2 inch rebar found; thence South 29 degrees 23 minutes 55 seconds West a distance of 439.51 feet to a 1/2 inch rebar found; thence South 51 degrees 09 minutes 50 seconds West a distance of 771.53 feet to a 1/2 inch rebar found; thence South 30 degrees 35 minutes 12 seconds East a distance of 123.61 feet to a 1/2 inch rebar found; thence proceeding along the property now or formerly of Athens Holdings, L.P. South 52 degrees 34 minutes 46 seconds West a distance of 209.44 feet to a 1/2 inch rebar found; thence proceeding along the property now or formerly of Presco Properties, Inc. North 30 degrees 32 minutes 54 seconds West a distance of 1384.38 feet to a concrete monument found; thence proceeding along the property now or formerly of the City of Gainesville North 73 degrees 28 minutes 06 seconds East a distance of 504.66 feet to a 1/2 inch rebar found; thence North 58 degrees 55 minutes 28 seconds East a distance of 138.38 feet to a 1/2 inch rebar found; thence North 14 degrees 38 minutes 52 seconds West a distance of 197.79 feet to a 1/2 inch rebar found on the aforementioned southerly right of way of Industrial Park West Drive; thence proceeding along said southerly right of way the following courses and distances: along a curve to the left having a radius of 630.00 feet, and an arc length of 278.70 feet, being subtended by a bearing of North 62 degrees 40 minutes 45 seconds East, having a distance of 276.43 feet to a point; North 50 degrees 00 minutes 22 seconds East a distance of 404.23 feet to a point; and along a curve to the right having a radius of 1270.00 feet, and an arc length of 322.20 feet, being subtended by a bearing of North 57 degrees 16 minutes 27 seconds East, having a distance of 321.33 feet to a 1/2 inch rebar found; thence leaving said southerly right of way and proceeding along the property now or formerly of Industrial Park West Business Center, LLC South 16 degrees 22 minutes 12 seconds East a distance of 1059.49 feet to a 1/2 inch rebar found; thence South 65 degrees 45 minutes 01 seconds East a distance of 340.00 feet to the TRUE POINT OF BEGINNING.
Said tract contains 41.224 acres.
EXHIBIT B
DESCRIPTION OF PROJECT FACILITY
The Project Facility consists of a 347,000 square foot building for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West on West Park Drive, Gainesville, Hall County, Georgia.
28
EXHIBIT C
PROJECT EQUIPMENT
I. Description of the 2020 Project Equipment:
All items of personal property located on the Project Facility Site, owned by the Issuer and acquired by the Issuer with part of the proceeds of the Series 2020 Bonds and designated as 2020 Project Equipment, including, without limitation, the following:
[To be provided by an amendment or amendments to the Lease Agreement]
II. Description of the 2021 Project Equipment:
All items of personal property located on the Project Facility Site, owned by the Issuer and acquired by the Issuer with part of the proceeds of the Series 2020 Bonds and designated as 2021 Project Equipment, including, without limitation, the following:
[To be provided by an amendment or amendments to the Lease Agreement]
III. Description of the 2022 Project Equipment:
All items of personal property located on the Project Facility Site, owned by the Issuer and acquired by the Issuer with part of the proceeds of the Series 2020 Bonds and designated as 2022 Project Equipment, including, without limitation, the following:
[To be provided by an amendment or amendments to the Lease Agreement]
29
EXHIBIT D
PROJECT SUMMARY
Fox Factory, Inc. (“Corporation”), pursuant to the foregoing Lease Agreement between Corporation and the Gainesville and Hall County Development Authority (the “Authority”), has undertaken, for the use and benefit of the Corporation, the acquisition of the Project Facility Site (hereinafter defined) and the acquisition, construction and installation of a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles (the “Project Facility”) in Gainesville Industrial Park West on West Park Drive, Gainesville, Hall County, Georgia, on the property described in Exhibit A to the Lease Agreement to which this Project Summary is attached (the “Project Facility Site”), and the acquisition and installation in the Project Facility or on the Project Facility Site of certain items of machinery, equipment and related property (the “Project Equipment”), for the use and benefit of the Corporation (the Project Facility, the Project Facility Site and the Project Equipment are hereinafter referred to collectively as the “Project”). The Project Facility is more particularly described on Exhibit B to the Lease Agreement to which this Project Summary is attached. The Project Equipment is more fully described in Exhibit C to the Lease Agreement to which this Project Summary is attached. The Project shall be divided into three phases for funding and investment purposes. The first phase of the Project shall be implemented in 2019 and 2020 and is referred herein as the 2020 Project. The second phase of the Project shall begin in 2021 and is referred to herein as the 2021 Project. The third phase of the Project shall begin in 2022 and is referred to herein as the 2022 Project. Pursuant to the Lease Agreement, Corporation has leased the Project from the Authority. The Authority or Corporation, as the exclusive agent of the Authority, will acquire, construct and install the Project.
The Project will require expenditures presently estimated not to exceed $75,000,000 and is expected to increase employment in the area served by the Authority by approximately 791 jobs within five years from the date hereof.
30
EXHIBIT E
BILL OF SALE
(PROJECT EQUIPMENT)
This BILL OF SALE, (the “Bill of Sale”) dated the date hereof by the hereinafter described Grantee, by and between the GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY (the “Grantor”) and FOX FACTORY, INC., a California corporation, as grantee (the “Grantee”):
W I T N E S E T H:
WHEREAS, the Grantor and the Grantee have entered into a Lease Agreement, dated as of June 1, 2020 (the “Lease Agreement”); and
WHEREAS, the Grantor and the Grantee, pursuant to the terms of the Lease Agreement have agreed to enter into this Bill of Sale; and
WHEREAS, all capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Lease Agreement; and
WHEREAS, the Grantor desires to assign its right, title and interest in and to the Project Equipment to the Grantee and to execute a Bill of Sale with respect to all property rights it has in and to the Project Equipment;
NOW THEREFORE, in consideration of the premises and the respective undertakings and agreements hereinafter set forth, THE GRANTOR HEREBY AGREES AS FOLLOWS:
1. The Grantor hereby, with effect as and from the date hereof, grants, assigns, transfers and conveys to the Grantee, all of its right, title and interest in, to and under the Project Equipment.
2. The Grantor warrants to the Grantee that the Grantor holds title in and to the Project Equipment, free of all claims of all persons whomsoever claiming by, through or under the Grantor.
3. The Grantee hereby accepts the Assignment of all of the foregoing rights, title and interest of the Grantor in, to and under the Project Equipment.
4. The Grantor does hereby bargain, sell and convey to the Grantee its interest, if any, in the Project Equipment and being more particularly described in Exhibit “A” attached hereto, such property being free from all claims of all persons whomsoever claiming by, through or under the Grantor.
THE GRANTOR AND THE GRANTEE FURTHER AGREE AS FOLLOWS:
The Grantor, in consideration of the sum of Ten Dollars ($10.00) by it in hand paid at and before the sealing of these presents (the receipt whereof is hereby acknowledged), has granted, bargained, sold and released, and by these presents does grant, bargain, sell and release, unto the said Grantee, its successors and assigns, whatever right, title, and interest the Grantor does possess, and does by these presents demise, release, and forever quitclaim unto the Grantee all of the interest of the Grantor, if any, in and to the Project Equipment;
TOGETHER, with all and singular the rights, tenements, hereditaments and appurtenances to the said Project Equipment belonging or in anywise incident or appertaining.
TO HAVE AND TO HOLD, all and singular the said property before mentioned unto the said Grantee, its successors and assigns forever.
The Grantor agrees that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such consents, assignments or other agreements supplemental thereto and such further acts, instruments and transfers as the Grantee may reasonably require for the better giving, granting, assigning, pledging, conveying, mortgaging, transferring, assuring and confirming unto the Grantee all and singular the rights of the Grantor in and to the Project Equipment.
IN WITNESS WHEREOF, the Gainesville and Hall County Development Authority, has caused these presents to be executed in its name and its corporate seal to be hereto affixed this _____ day of _________________, 20___.
31
GAINESVILLE AND HALL COUNTY
DEVELOPMENT AUTHORITY
By: ______________________________
Chairman
Attest: _____________________________
Secretary
(SEAL)
Signed, sealed and delivered in
the presence of:
______________________________
Witness
______________________________
Notary Public
MY Commission Expires:________
(NOTARIAL SEAL)
32
EXHIBIT F
WARRANTY DEED
LIMITED WARRANTY DEED
GEORGIA, COUNTY OF HALL
THIS INDENTURE, made this ____ day of __________, 20____, between GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY, a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia (hereinafter called “GRANTOR”), and FOX FACTORY, INC., a California corporation (hereinafter called “GRANTEE”).
WITNESSETH: That the said GRANTOR, for and in consideration of the sum of TEN DOLLARS AND OTHER VALUABLE CONSIDERATION ($10.00) Dollars, in hand paid at and before the sealing and delivery of these presents, the receipt of which is hereby acknowledged, has granted, bargained, sold and conveyed, and by these presents does grant, bargain, sell and convey unto the said GRANTEE the property described on Exhibit “A” attached hereto and incorporated herein by reference.
TO HAVE AND TO HOLD the said tract or parcel of land with all and singular the rights, members and appurtenances thereof, to the same being, belonging, or in anywise appertaining, to the only proper use, benefit and behoof of the said GRANTEE, forever, in FEE SIMPLE.
AND THE SAID GRANTOR will warrant and forever defend the right and title to the above described property unto the said GRANTEE against the claims of all persons claiming under GRANTOR.
WHEREVER there is a reference herein to the GRANTOR or the GRANTEE, the singular includes the plural and the masculine includes the feminine and the neuter, and said terms include and bind the heirs, executors, administrators, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the said GRANTOR has executed this deed under seal, the day and year above written.
Signed, sealed and delivered GAINESVILLE AND HALL COUNTY
in presence of: DEVELOPMENT AUTHORITY
____________________________ By: ________________________________
Unofficial Witness Chairman
____________________________ Attest: _____________________________
Notary Public Secretary
My Commission Expires: _______
(SEAL)
(SEAL)
33
EXHIBIT G
FORM OF AMENDMENT TO LEASE AGREEMENT
Number _______
THIS AMENDMENT TO LEASE AGREEMENT, dated as of _________, _____, between the GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY (the “Authority”), a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, duly organized and existing under the Constitution and laws of the State of Georgia, as Lessor, and FOX FACTORY, INC. (the “Lessee”), a California corporation.
W I T N E S E T H:
WHEREAS, the Authority and the Lessee have heretofore entered into a Lease Agreement, dated as of June 1, 2020 (said Lease Agreement, as from time to time modified or amended, is herein called the “Lease”), relating to the Project (as defined in the Lease); and
WHEREAS, the Authority and the Lessee have now determined that it is necessary to amend the Lease in certain respects to reflect the [removal from] [addition to] the description of Project , the items described in Exhibit “1” hereto; and
NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter contained, the Authority and the Lessee agree to and do hereby amend the Lease to modify the description of the Project, contained as Exhibit “_______” attached thereto in order to [remove therefrom] [add thereto], effective as of the date hereof, the items described in Exhibit “1” to this Amendment to Lease Agreement.
Section 1. Amendment of Lease. The Lease shall be deemed to be modified and amended in accordance with the provisions of this Amendment to Lease Agreement and the respective rights, duties and obligations of the Authority and the Lessee under the Lease shall hereafter be determined, exercised and enforced under the Lease subject in all respects to this Amendment to Lease Agreement, and all the terms and conditions of this Amendment to the Lease Agreement shall be part of the terms and conditions of the Lease for any and all purposes.
All references in the Lease to the Project, described in Exhibit “______” thereof shall refer to said Exhibit as hereby amended and modified.
Section 2. Execution in Counterparts. This Amendment to Lease Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 3. Recordation. This Amendment to Lease Agreement may be recorded in the office of the Superior Court of Hall County, or in such other office as may be at the time provided by law as the proper place for such recordation.
Section 4. Lease to Continue in Full Force and Effect. All other terms of the Lease shall continue in full force and effect subject to this Amendment to Lease Agreement as set forth herein.
IN WITNESS WHEREOF, the Authority and the Lessee have caused this Amendment to the Lease Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers as of _____________, 20___.
34
GAINESVILLE AND HALL COUNTY
DEVELOPMENT AUTHORITY
By: ______________________________
(SEAL) Chairman
Attest:
_____________________________
Secretary
Signed, sealed and delivered
in the presence of
______________________________
Witness
______________________________
Notary Public
My commission expires:________
(NOTARIAL SEAL)
FOX FACTORY, INC.
By:________________________________
Title:___________________________
(CORPORATE SEAL)
Signed, sealed and delivered
in the presence of:
______________________________
Witness
______________________________
Notary Public
My commission expires:________
(NOTARIAL SEAL)
EXHIBIT H
REQUISITION AND CERTIFICATE
Requisition and Certificate No._____
Reference to Bill of Sale No.
Date: ____________, 20____
Amount of Requisition: $______________
Gainesville and Hall County Development Authority (the “Issuer”)
35
RE: Financing Agreement, dated as of June 1, 2020, relating to Gainesville and Hall County Development Authority Taxable Industrial Revenue Bonds (Fox Factory, Inc. Project), Series 2020, in an aggregate principal amount not to exceed $75,000,000
Gentlemen:
All capitalized terms used but not defined herein shall have the meanings assigned to them in that certain Lease Agreement, dated as of June 1, 2020, by and between the Gainesville and Hall County Development Authority and Fox Factory, Inc.
This is a requisition for payment from the Gainesville and Hall County Development Authority Project Fund — Fox Factory, Inc. Project, of an obligation in the stated amount incurred by or on behalf of the Issuer in connection with the issuance of the Series 2020 Bonds in caption or the acquisition, construction and installation of the Project.
1. This obligation is a proper charge against the Project Fund, the payment thereof is being made in connection with the Project and has not been the basis of any previous withdrawal from the Project Fund.
2. No other certificate in respect of the foregoing obligation is being or has been previously delivered to the Issuer.
3. The Lessee has no notice of any vendor’s, mechanic’s, or other liens or right to liens, chattel mortgages or conditional sales contracts, or other contracts or obligations (other than those being contested in good faith as permitted in Section 6.1(c) of the Lease Agreement) which should be satisfied or discharged before such payment is made; and
4. Such requisition contains no item representing payment on account of any retained percentages which the Issuer or the Lessee is, as of the date of such requisition, entitled to retain under retained percentage agreements.
5. Purpose and circumstances of such obligation: reimbursement of costs of the Project owing to Fox Factory, Inc.
6. A bill or statement of account for such obligation is available upon request made to the Lessee.
7. If not covered by the Lease Agreement as originally executed, a Lease Amendment relating to the portion of the Project for which such obligation has been incurred is attached hereto, and has been executed by the Lessee. If not personal property previously acquired by or conveyed to Issuer, the Lease Amendment and this Requisition and Certificate relate to those portions of the Project conveyed to the Issuer by Bill of Sale attached hereto and numbered as described above.
8. We have no notice of any vendors’, mechanics, or other liens or right to liens, chattel mortgages or conditional sales contracts, or other contracts or obligations (other than those being contested in good faith as permitted by Section 6.1 of the Lease Agreement) which should be satisfied or discharged before payment of such obligation is made.
9. This requisition contains no item representing payment on account of any retained percentages which the Issuer or the Lessee is, as of the date of such requisition, entitled to retain under retained percentage agreements.
All of the foregoing is hereby certified.
By:___________________________
Authorized Lessee Representative
36
Insofar as the disbursement requested hereby is to pay obligations incurred for labor, services, material, supplies or equipment in connection with the acquisition, construction and installation of the Project, such labor and services were to the Lessee’s knowledge performed and such material, supplies or equipment were or are to be used in connection with the acquisition, construction and installation of the Project or delivered at the site of the Project for such purpose. This requisition includes by attachment hereto the bill of sale necessary to convey title in and to the items of leased equipment comprising the Project for which reimbursement is sought to the Issuer.
This requisition is given without prejudice against any rights of the Issuer or the Lessee against third parties which exist on the date hereof.
_________________________________
Authorized Lessee Representative
(Attachment to Requisition and Certificate)
Number ______
BILL OF SALE
STATE OF __________ )
)
COUNTY OF ___________ )
KNOW ALL MEN BY THESE PRESENTS
that Fox Factory, Inc., a Georgia corporation (the “Grantor”), for and in consideration of the sum of TEN DOLLARS($10.00) and other good and valuable consideration in hand paid to the Grantor by the Gainesville and Hall County Development Authority, a public body corporate and politic and an instrumentality of the City of Gainesville and Hall County, Georgia, duly organized and existing under the Constitution and laws of the State of Georgia, (the “Grantee”), the receipt and sufficiency of which is hereby acknowledged, has transferred, bargained, sold and conveyed and by these presents does hereby transfer, bargain, sell and convey unto the Grantee and its successors and assigns, the machinery, equipment and related personal property located in the Project Facility or on the Project Facility Site in Gainesville, Hall County, Georgia, which machinery, equipment and related personal property is more particularly described in Exhibit “A” attached hereto.
TO HAVE AND TO HOLD the said machinery, equipment and related personal property unto the Grantee, its successors and assigns, to its only proper use, benefit and behalf forever.
The Grantor warrants that said machinery, equipment and related personal property is the property of the Grantor and is free from all liens, security interests and encumbrances other than Permitted Encumbrances” (defined in the Lease Agreement between the Grantor and the Grantee, dated as of June 1, 2020), and that the Grantor is authorized to give this Bill of Sale with respect thereto.
This Bill of Sale is made without general covenants of warranty except as set forth in the preceding paragraph, and all of said personal property is conveyed by the Grantor to the Grantee and accepted by the Grantee in the condition in which it exists and without any representation by the Grantor as to condition thereof or the suitability thereof for any particular use or purpose.
IN WITNESS WHEREOF, the Grantor has caused this Bill of Sale to be executed in its name by an authorized officer and its corporate seal to be affixed hereto and attested by an authorized officer, all as of the ______ day of ______________,_____.
37
FOX FACTORY, INC.
By:__________________________________
Title: ___________________________
(CORPORATE SEAL)
WITNESSES:
______________________________
______________________________
38
EXHIBIT I
PERMITTED ENCUMBRANCES
Project:
1. Deed to Secure Debt and Security Agreement, dated as of June 1, 2020, between Gainesville and Hall County Development Authority and Fox Factory, Inc. recorded in the Hall County, Georgia Deed Records.
2. State and County taxes for 2020 and all subsequent years, which taxes are not yet due or payable, and any additional taxes, interest and/or penalties which may be assessed for prior tax years by virtue of adjustment, re appraisal, re assessment, appeal or other amendment to the tax records of the city or county in which subject property is located.
3. Unfiled and inchoate mechanics, and materialmen’s liens for construction work in progress.
4. Architects’, contractors’, subcontractors’, mechanics’, materialmen’s, suppliers’, laborers, and vendors’ liens or other similar liens not then payable or permitted to exist as provided in Section 6.1(c) of the Lease Agreement.
5. Declaration of Covenants, Restrictions and Easements for Gainesville Industrial Park West, dated October 23, 2018, recorded in Deed Book 8168, pages 209-222, Hall County, Georgia Deed Records, as amended by Amendment to Declaration of Covenants, dated December 4, 2018, recorded in Deed Book 8190, page 663, aforesaid records.
7. Expanded Stream Buffer Conservation Easement, dated April 1, 2008, from Koch Foods of Gainesville LLC, recorded in Deed Book 6312, pages 595-612, Hall County Deed Records.
8. Sanitary Sewer Easement, dated March 25, 2019, from Gainesville and Hall County Development Authority to City of Gainesville, recorded in Deed Book 8239, page 310, Hall County Deed Records.
9. Those matters shown on a plat of survey entitled “ALTA/NSPS Land Title Survey for FF US Holding LLC and Chicago Title Insurance Company,” dated March 29, 2019, last revised April 25, 2019, prepared by Rochester & Associates, Inc., Georgia Registered Land Surveyors, recorded in Plat Book 877, page 58, Hall County Plat Records.
10. Deed restrictions set forth in that certain limited warranty deed, dated April 30, 2019, from Gainesville and Hall County Development Authority to FF US Holding LLC, recorded in Deed Book 8257, page 533, Hall County Deed Records.
11. Construction (Slope) Easement, dated December 10, 2019, from Presco Properties, Inc. to FF US Holding LLC, recorded in Deed Book 8388, page 597, Hall County Deed Records.
12. Release/Modification and Grant of Stream Buffer Conservation Easement, dated October 21, 2019, between FF US Holding LLC and the City of Gainesville, recorded in Deed Book 8356, page 781, Hall County Deed Records.
13. Construction (Slope) Easement, dated December 10, 2019, from Industrial Park West Business Center, LLC to FF US Holding LLC, recorded in Deed Book 8388, page 600, Hall County Deed Records.
14. Driveway Easement, dated December 10, 2019, from FF US Holding LLC to Presco Properties, Inc., recorded in Deed Book 8388, page 603, Hall County Deed Records.
15. Driveway Easement, dated December 10, 2019, from FF US Holding LLC to Industrial Park West Business Center, LLC, recorded in Deed Book 8388, page 609, Hall County Deed Records.
39
Exhibit 10.5
After recording, please return to:
T. TREADWELL SYFAN
Stewart. Melvin & Frost, LLP
P. O. Box 3280
Gainesville, GA 30503
This instrument prepared by the above named attorney
______________________________________________________________________________
STATE OF GEORGIA
HALL COUNTY
DEED TO SECURE DEBT AND SECURITY AGREEMENT
FROM
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
TO
FOX FACTORY, INC.
DATED AS OF JUNE 1, 2020
______________________________________________________________________________
THIS INSTRUMENT IS GIVEN IN ORDER TO PROVIDE SECURITY IN CONNECTION WITH THE ISSUANCE OF NOT TO EXCEED $75,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (FOX FACTORY, INC. PROJECT), SERIES 2019.
THIS INSTRUMENT IS A “CONSTRUCTION MORTGAGE,” AS THAT TERM IS DEFINED IN ARTICLE 9, SECTION 313(1)(c) OF THE UNIFORM COMMERCIAL CODE, TITLE 11 OF THE OFFICIAL CODE OF GEORGIA, AND A PORTION OF THE PROCEEDS OF THE INDEBTEDNESS SECURED HEREBY HAVE BEEN GIVEN TO FINANCE THE CONSTRUCTION OF IMPROVEMENTS UPON LAND.
DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (the “Deed”), made and entered into as of this 1st day of June, 2020, by GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Georgia (the “Grantor” or the “Issuer”), unto FOX FACTORY, INC. (“Fox Factory”), a California corporation authorized to transact business in Georgia, having an office at 6634 Highway 53, Braselton, Georgia 30517, its successors and assigns (Fox Factory and such successors and assigns being herein called the “Grantee”);
W I T N E S S E T H:
WHEREAS, the Grantor, in furtherance of the public purpose for which it was created, proposes to issue Gainesville and Hall County Development Authority Taxable Industrial Revenue Bonds (Fox Factory, Inc.), Series 2019 (the “Bonds”), in an aggregate principal amount not to exceed $75,000,000, maturing September 1, 2027, for the purpose of financing of financing the acquisition, construction and installation of certain real and personal property comprising a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West, Gainesville, Hall County, Georgia (the “Project”), for lease to Fox Factory (in such capacity, the “Lessee”); and
WHEREAS, the Bonds are authorized pursuant to the Constitution of the State of Georgia and the various statutes of the State of Georgia, including specifically an amendment to the Constitution of the State of Georgia (Ga. Laws 1964, page 866, et seq., as continued by Ga. Laws 1986, page 4328, et seq.), ratified and proclaimed, and an act of the General Assembly of the State of Georgia (Ga. Laws 1964, page 2282, et seq.), as amended (the “Act”), and under and by virtue of the authority of a resolution of the Issuer adopted on October 29, 2019 (the “Bond Resolution”); and
WHEREAS, the Issuer and the Lessee will enter into a Lease Agreement, dated as of June 1, 2020 (the “Lease Agreement”), pursuant to the terms of which the Issuer has agreed to use the proceeds of the sale of the Bonds to finance the costs of the Project and to lease the Project to the Lessee; and
WHEREAS, under the terms of the Lease Agreement Fox Factory is obligated to pay the costs of maintaining the Project in good repair, to keep it properly insured and to pay all taxes, levies or other charges assessed against or with respect to the Project and Fox Factory has agreed to pay to the Issuer certain specified rents and other payments which will be fully sufficient to pay the principal of, the redemption premium, if any, and the interest on the Bonds as the same become due; and
WHEREAS, the Bonds will be issued under and secured by a Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), to be entered into between the Issuer and the Grantee, as bondholder (in such capacity, the “Bondholder”), pursuant to the terms of which the Pledged Estate (as defined in the Financing Agreement, will be assigned to the Bondholder and pledged to the payment of the principal of, the redemption premium, if any, and the interest on the Bonds; and
WHEREAS, in order to secure the Indebtedness (defined below) the Grantor is granting to the Grantee title in the Collateral (as defined below), as provided herein.
NOW THEREFORE, FOR AND IN CONSIDERATION of the sum of TEN AND NO/100 DOLLARS ($10.00) and other valuable consideration, the receipt and sufficiency whereof are hereby acknowledged by the Grantor, and in order to secure the Indebtedness hereinafter described, Grantor hereby grants, bargains, sells, warrants, conveys, aliens, remises, releases, assigns, sets over and confirms to the Grantee and its successors and assigns all of the following (collectively called the “Collateral”):
(i) THE LAND: all right, title, and interest now held or hereafter acquired by the Grantor in and to all those certain lot(s), piece(s) or parcel(s) of land described in Exhibit A attached hereto and by this reference incorporated herein and made a part hereof; together with all right, title and interest, if any, of the Grantor in and to the streets and roads abutting said land to the center lines thereof, the strips and gores within or adjoining said land, the air space and right to use said air space above said land, all rights of ingress and egress by pedestrians and motor vehicles to parking facilities on or within said land, and all easements now or hereafter affecting said land, royalties and all rights appertaining to the use and enjoyment of said land, including, without limitation, alley, drainage, sewer, mineral, water, oil and gas rights, rights-of-way, vaults, ways, passages, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way belonging, relating or appertaining to the land or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Grantor and the reversion and reversions, remainder and remainders (said land described in Exhibit A hereto, together with the property and other rights, privileges and interests encumbered and conveyed by this paragraph, are hereinafter collectively referred to as the “Project Facility Site”);
(ii) IMPROVEMENTS: all right, title and interest now held or hereafter acquired by the Grantor in and to all buildings (including, but not limited to those described in Exhibit B hereto), structures, improvements on the Project Facility Site and those fixtures that are located at the Project Facility Site and that are intended to be non-removable and intended to be accessions to the freehold interest in the Project Facility Site or that otherwise become a part of such freehold, which are now or hereafter are attached to any of such buildings, structures, improvements on the Project Facility Site, including, but not limited to, (a) those buildings, structures, improvements and fixtures comprising the Project Facility and forming a part of the Project (the “Project Improvements”), the Project Facility, said Project and said improvements being more particularly described in the Lease Agreement, and (b) those buildings, structures, improvements and fixtures not forming a part of the Project (the “Other Improvements”) (the Project Improvements and the Other Improvements being herein collectively called the “Improvements”), including, but not limited to, the following: floor covering, screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, furniture and furnishings, heating, lighting, plumbing, ventilating, air conditioning, refrigerating, incinerating and elevator plants, stoves, ovens (microwave, convection and others), refrigerators, freezers, ranges, shelving, racks, vacuum cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, appliances, equipment, gasoline pumps, petroleum storage facilities, fittings, fixtures and other articles of personal property all of which are hereby declared and shall be deemed to be fixtures and accessions to the freehold and a part of the premises as between the parties hereto and all persons claiming by, through or under them (said Improvements and the Project Facility Site are hereinafter collectively referred to as the “Premises”);
(iii) THE EQUIPMENT: all right, title and interest now owned or hereafter acquired by the Grantor in and to all furniture, furnishings, fixtures, machinery, appliances, and equipment owned by Grantor and used in the operation of a facility for the manufacture of utility vehicle by the Lessee on the property described on Exhibit A attached hereto, including, but not limited to the equipment which forms a part of the Project, i.e. the Project Equipment (as described in the Lease Agreement), which was financed with the proceeds of the Bonds, together with (i) all additions, parts, fittings, accessories, special tools, attachments, and accessions now and hereafter affixed thereto and/or used in connection therewith, (ii) all replacements thereof and substitutions therefor, and (iii) all cash and non-cash proceeds and products thereof; the equipment comprising the Collateral is more particularly described on Exhibit C attached hereto and is hereinafter referred to as the “Equipment”;
(iv) INSURANCE AND EMINENT DOMAIN: the Grantor’s rights in and under casualty insurance policies relating to the Premises now or hereafter obtained by the Grantor or the Lessee, including the rights of Grantor or Lessee to unearned premiums, accrued, accruing or to accrue under such casualty insurance policies and the right, title and interest of Grantor or Lessee in proceeds of any such policies on account of the conversion, voluntary or involuntary, of the Premises or any part thereof into cash or liquidated claims, and the rights of Grantor or Lessee in all awards and compensation heretofore and hereafter made by any governmental or other lawful authorities for the taking by eminent domain, condemnation or otherwise or amounts received from a sale in lieu of a taking by eminent domain, of all or any part of the Collateral or of any easement therein, including awards for any change of grade of streets, provided, however, that so long as the Bonds have not been paid in full, the net proceeds received with respect to the Project shall be paid to the Grantee and applied as provided in the Lease Agreement;
(v) WARRANTIES, ETC.: all product warranties, product guarantees, business and building licenses and permits, architects’ and engineers’ plans, blueprints and drawings, and books and records owned by the Grantor relating to the Premises; and
(vi) BUILDING MATERIALS: all of the Grantor’s interests in all building materials delivered to the Project Facility Site in connection with the construction, reconstruction, alteration, improvement, replacement, expansion or repairs of any of the Improvements.
TO HAVE AND TO HOLD unto the Grantee, its successors and assigns:
(a) TITLE IN THE PREMISES IN FEE SIMPLE forever; and the Grantor covenants and warrants that the Grantor is indefeasibly seized with the fee simple title to and possessed of the real property described in Exhibit A hereto and to the Improvements presently located thereon and upon the construction of additional Improvements thereon security title to such additional Improvements, in fee simple, shall vest in the Grantee, all subject to Permitted Encumbrances listed on Exhibit D hereto.
(b) A SECURITY INTEREST IN THE EQUIPMENT which is presently owned or hereafter acquired by Grantor, and Grantor covenants and warrants that upon the acquisition and delivery of additional Equipment to the Project Facility Site, the Grantor shall acquire good title thereto, subject to the security interest herein granted to the Grantee and free of all liens, encumbrances and claims of any kind, and that the Grantor does warrant and will forever defend the Grantor’s title thereto and the Grantee’s security interest therein against the claims and demands of all persons whomsoever.
PROVIDED, HOWEVER, should the Grantor well and truly pay unto the Grantee the Indebtedness according to the tenor and effect thereof when the same shall become due and payable, and should the Lessee perform, comply with and abide by each and every one of the stipulations, agreements, conditions and covenants contained in the Lease Agreement, then: (a) this Deed shall be canceled and surrendered, it being intended by the parties that this Deed shall operate as a deed passing title to the Premises (and any of the other Collateral that is determined to constitute real property under the laws of the State of Georgia) to the Grantee and is made under those provisions of the existing laws of the State of Georgia relating to deeds to secure debt, and not as a mortgage, and is given to secure payment of the Indebtedness; and (b) the liens and security interests hereby created on the Collateral (to the extent the same is not real property) shall cease, terminate, be satisfied and discharged and be null and void, otherwise this Deed and the security title, security interests and lien hereby created shall remain in full force and effect.
THIS DEED TO SECURE DEBT is given to secure the following described indebtedness, liabilities and obligations (collectively called the “Indebtedness”):
(a) the payment of the Bonds;
(b) the payment of all amounts payable under the terms of the Lease Agreement by Fox Factory to the Bondholder (as assignee of the Grantor’s right, title and interest in the Lease Agreement pursuant to the Financing Agreement);
(c) any and all advances made, and expenses incurred by the Grantee to protect or preserve the Collateral or the security hereof on the Collateral, including, but not limited to amounts advanced to pay taxes on the Collateral, to pay insurance premiums relating to the Collateral, to repair or maintain the Collateral, and to provide for the remediation of environmental concerns; and
(d) any and all expenses incident to the collection of the Indebtedness secured hereby, the foreclosure hereof by action in any court, or by exercise of the power of sale herein contained.
AND the Grantor covenants and agrees with the Grantee as follows:
ARTICLE I
Covenants of the Grantor
Section 1.01. Payment of the Indebtedness. The Grantor shall, or cause the applicable obligor to, punctually pay the Indebtedness as provided herein in the coin and currency of the United States of America which is legal tender for the payment of public and private debts.
Section 1.02. Warranties. The Grantor warrants that: (i) it has full power and lawful authority to convey and encumber its interest in the Collateral in the manner and form herein set forth; (ii) this Deed has been duly authorized, executed and delivered by the Grantor, is the legal and valid instrument of the Grantor and is enforceable against the Grantor in accordance with its terms, subject to bankruptcy and laws affecting creditors rights and the exercise of judicial discretion; and (iii) it will preserve the Grantee’s security title and security interests created hereunder, and will forever warrant and defend the validity hereof and the priority of the Grantee hereunder against the claims of all persons and parties whomsoever claiming through the Grantor, except only for the Permitted Encumbrances and the interests of the Bondholder under the Financing Agreement. Nothing in this Section 1.02 shall require the payment or discharge of any obligation imposed upon the Grantor by this Section 1.02 so long as the Grantor shall in good faith and at its own expense contest the same or the validity thereof by appropriate legal proceedings, which proceedings must operate to prevent the collection thereof or other realization thereon and the sale or forfeiture of the Collateral or any part thereof to satisfy the same; and provided that if at any time payment of any obligation imposed upon the Grantor by this Section 1.02 shall become necessary to prevent a lien foreclosure sale of the Collateral or any portion thereof because of nonpayment, then the Grantor shall pay the same in sufficient time to prevent the foreclosure sale.
The Grantor hereby warrants and represents that (a) it is validly existing under the Constitution and laws of the State of Georgia, and (b) it has all necessary licenses, authorizations, registrations and approvals and full power and authority to own its properties and carry on its activities as presently conducted; and the execution and delivery by and performance of its obligations under this Deed and the Lease Agreement will not result in the Grantor being in default under any provision of law or of any other agreement, mortgage, deed to secure debt or other agreement to which the Grantor is a party.
Section 1.03. [Reserved]
Section 1.04. [Reserved]
Section 1.05. [Reserved]
Section 1.06 [Reserved]
Section 1.07 [Reserved]
Section 1.08. Maintenance of Existence. The Grantor shall do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges under the laws of the State of Georgia and comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental authority or court applicable to the Grantor or to the Collateral or any part thereof.
Section 1.09. [Reserved]
Section 1.10. [Reserved]
Section 1.11. Costs of Defending and Enforcing the Lien. If any action or proceeding is commenced to which action or proceeding the Grantee is made a party or in which it becomes necessary to defend or uphold its rights under this Deed (other than actions or proceedings caused solely by the Grantee’s gross negligence or willful misconduct), the Grantor shall, on demand, reimburse the Grantee for all reasonable expenses (including, without limitation, reasonable attorneys’ fees and appellate attorneys’ fees) actually incurred by the Grantee in any such action or proceeding and all such expenses shall be secured by this Deed. The Grantor agrees to bear and pay all reasonable expenses (including reasonable attorneys’ fees and appellate attorneys’ fees actually incurred) of or incidental to the perfection and enforcement of any provision hereof, or the enforcement, compromise or settlement of this Deed or the Indebtedness, and for the curing thereof, or for defending or asserting the rights and claims of the Grantee in respect thereof, by litigation or otherwise. All rights and remedies of the Grantee shall be cumulative and may be exercised singly or concurrently. Notwithstanding anything herein contained to the contrary, the Grantor: (a) will not (i) at any time insist upon, or plead, or in any manner whatsoever claim or take any benefit or advantage of any stay or extension or moratorium law, any exemption from execution or sale of the Collateral or any part thereof, wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Deed, nor (ii) claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisal of the Collateral, or any part thereof prior to any sale or sales thereof which may be made pursuant to any provision herein, or pursuant to the decree, judgment or order of any court of competent jurisdiction, nor (iii) after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted to redeem the property so sold or any part thereof; (b) hereby expressly waives all benefit or advantage of any such law or laws; and (c) covenants not to hinder, delay or impede the execution of any power herein granted or delegated to the Grantee, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted. The Grantor, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have the Collateral marshaled upon any foreclosure hereof.
Section 1.12. Additional Advances and Disbursements. The Grantor shall pay when due all payments and charges on all mortgages, deeds of trust, deeds to secure debt, security agreements, liens, encumbrances, ground and other leases, and security interests which may be or become superior or inferior to this Deed, and in default thereof, the Grantee shall have the right, but shall not be obligated, to pay, without notice to the Grantor, such payments and charges and the Grantor shall, on demand, reimburse the Grantee for amounts so paid. In addition, upon default by the Grantor in the performance of any other terms, covenants, conditions or obligations by it to be performed under any such prior or subordinate lien, encumbrance, lease or security interest, the Grantee shall have the right, but shall not be obligated, to cure such default in the name and on behalf of the Grantor. If the Grantor shall fail to perform any of its covenants in this Deed, the Bondholder may, at any time and from time to time, after written notice to the Grantor make advances to effect performance of any such covenant on behalf of the Grantor. Any money so advanced by the Bondholder, together with interest at 5.0% per annum, shall be repaid on demand to the Bondholder by the Grantor and shall be added to the Indebtedness secured hereby.
Section 1.13. Deed Taxes. The Grantor shall pay any and all taxes, charges, filing, registration and recording fees, excises and levies imposed by the State of Georgia or under Georgia law upon the Grantee by reason of its ownership of this Deed, or by reason of the recording or filing hereof, or any security instrument supplemental hereto, any security instrument or Uniform Commercial Code financing statement with respect to any of the Collateral and any instrument of further assurance (other than income, franchise and doing business taxes), and shall pay all stamp or intangible taxes and other taxes required to be paid hereon. In the event the Grantor fail to make any such payment within five (5) days after written notice thereof from the Grantee, then the Grantee shall have the right, but shall not be obligated, to pay the amount due, and the Grantor shall, on demand, reimburse the Grantee for said amount, and until so paid said amount shall become part of the Indebtedness secured hereby. The provisions of this Section shall survive the repayment of the Indebtedness.
Section 1.14. Interest Upon Default. In the event any payment to the Lessee provided for in the Lease Agreement or provided for herein is not paid when due, said delinquent amount shall bear interest from the date that such sum was due to and including the date payment, computed at 5.0% per annum. Such interest shall be added to the Indebtedness secured hereby.
Section 1.15. Compliance with Laws. The Grantor shall promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Collateral or any part thereof. If the Grantor receives notice from any federal, state, or other governmental entity that any of the Collateral fails to comply with any applicable law, ordinance, rule, order or regulation, the Grantor shall promptly furnish a copy of such notice to the Grantee.
Section 1.16. Books, Records, Accounts and Annual Reports. The Grantor shall keep and maintain or shall cause to be kept and maintained, at the Grantor’s cost and expense, proper and accurate books, records and accounts reflecting all items of income and expense of the Grantor. The Grantee, by the Grantee’s agents, accountants and attorneys, shall have the right from time to time to examine such books, records and accounts at the office of the Grantor or such other person or entity maintaining such books, records and accounts and to make copies or extracts thereof as the Grantee shall desire and to discuss the Grantor’s affairs, finances and accounts with the Grantor and with the officers and principals of the Grantor, at such reasonable times as may be requested by the Grantee.
Section 1.17. Limit of Validity. If from any circumstances whatsoever fulfillment of any provision of this Deed or of the Lease Agreement, at the time performance of such provision shall be due, shall involve transcending the limits of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then ipso facto the obligation to be fulfilled shall be reduced to the limit of such validity, so that in no event shall any exaction be possible under this Deed or under the Lease Agreement that is in excess of the current limit of such validity, but such obligation shall be fulfilled to the limit of such validity.
Section 1.18 [Reserved]
Section 1.19 Maintenance and Modification of Project.
(a) Throughout the term of this Deed to Secure Debt, the Grantor shall cause the Lessee at its own expense (i) to keep the Project in as reasonably safe condition as the operation thereof will permit, and (ii) keep, or cause to be kept, the Equipment and the Project Improvements in good repair and in good operating condition, making from time to time all necessary repairs thereto and renewals and replacements thereof.
(b) So long as no default exists hereunder and subject to the provisions of Section 1.20, the Lessee and/or the Grantor may from time to time, at either’s expense, make any additions, modifications or improvements to the Project, including installation of additional machinery, equipment and related property in the Project Improvements or on the Project Facility Site, which either may deem desirable for either’s business purposes; provided that all such additions, modifications and improvements do not adversely affect or impair the structural integrity of the Project Improvements or change the Project’s character, and all such additions, modifications and improvements are located wholly within the boundary lines of the Project Facility Site. The Lessee and the Grantor shall have no right, however, without the consent of the Grantee, to demolish any portion of the Project Improvements. All such machinery, equipment and related property installed by the Lessee or the Grantor pursuant to this subsection shall be subject to the provisions of this Deed to Secure Debt. All additions, modifications and improvements to the Equipment shall inure to and become a part of the Equipment.
Section 1.20. Removal and Substitution of Equipment. If the Lessee, in its reasonable discretion, determines that any item of the Equipment has become inadequate, obsolete, worn out, unsuitable, undesirable, inappropriate or unnecessary for its purposes at any time, the Lessee may remove such item from the Project Improvements and the Project Facility Site and sell, trade in, or otherwise dispose of its (as a whole or in part) without any responsibility or accountability to the Grantee therefor provided that the current market values of all such items of Equipment sold, traded in, or otherwise disposed of in any such fiscal year of the Lessee was less than $50,000. If the purchase price of the items of Equipment sold, traded in, or disposed of was $50,000 or more the Lessee shall either:
(a) substitute and install within the Project Improvements or on the Project Facility Site other machinery, equipment and related property having equal or greater value (but not necessarily having the same function or utility) in the operation of the Project as a modern manufacturing facility (provided such removal and substitution shall not impair operating utility), all of which substituted machinery, equipment and related property shall be free of any other liens and encumbrances and shall become a part of the Equipment and shall be subject to this Deed to Secure Debt; or
(b) not make any such substitution and installation, provided (i) that in the case of the sale of any such machinery, equipment and related property or in the case of the scrapping thereof, the Lessee shall sell such machinery, equipment and related property for the best price reasonably obtainable and shall pay to the Bondholder, as a partial prepayment of the Bonds, the proceeds from the sale of the scrap value of such machinery, equipment and related property, (ii) that in the case of the trade-in of such machinery, equipment and related property for other machinery, equipment or related property not to be installed in the Project Improvements or on the Project Facility Site, the Lessee shall pay to the Bondholder, as a partial prepayment of the Bonds, the amount of credit received by it in such trade-in, and (iii) that in the case of any other disposition thereof, the Lessee shall pay to the Bondholder, as a partial prepayment of the Bonds, an amount equal to the original cost thereof, less depreciation at rates calculated in accordance with generally accepted accounting principles.
The removal from the Project of any portion of the Equipment pursuant to the provisions of this Section shall not entitle the Lessee to any diminution in or postponement or abatement of the payments required to be made by the Lessee hereunder or under the Lease Agreement.
Upon request of the Lessee, the Grantee shall deliver to the Lessee appropriate documents releasing the removed items of the Equipment from the lien of this Deed to Secure Debt and cancelling any security interest with respect thereto. The Lessee and the Grantor shall take or cause to be taken such action, if any, as may be necessary to perfect the security interest of the Grantee with respect to any substituted property placed in the Project Improvements or upon the Project Facility Site pursuant to this Section.
Section 1.21 Acquisition of Collateral. The Grantor shall not acquire any portion of the personal property covered by this Deed subject to any security interest, conditional sales contract, title retention arrangement or other charge or lien taking precedence over the security title and lien hereof unless the Grantee consents thereto in writing.
Section 1.22 Rules, Regulations. The Grantor hereby represents and warrants: (i) that the Grantor shall comply with all laws, ordinances, rules, regulations, covenants, conditions, and restrictions affecting the Collateral and shall not commit or permit any act upon or concerning the Collateral in violation of any such laws, ordinances, rules, regulations, covenants, conditions, and restrictions; and (ii) that, to the best of the Grantor’s actual knowledge, the location, construction, occupancy, operation and actual or intended use of the Collateral do not violate any applicable law, ordinance, rule, regulation, covenant, condition or restriction affecting the Collateral.
Section 1.23 Further Assurances; After Acquired Property. At any time, and from time to time, upon request by the Grantee, the Grantor shall make, execute and deliver or cause to be made, executed and delivered, to the Grantee and, where appropriate, cause to be recorded and/or filed and from time to time thereafter to be re-recorded and/or refiled at such time and in such offices and places as shall be deemed necessary by the Grantee, any and all such other and further deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as to the Collateral as may, in the opinion of the Grantee, be reasonably necessary in order to effectuate, complete or perfect, or to continue and preserve (i) the obligations of the Grantor hereunder and (ii) the security interest created hereby as a first and prior security interest upon and security title in and to the Collateral (subject to Permitted Encumbrances), whether now owned or hereafter acquired by the Grantor. The security title conveyed hereby and the security interest created hereby will automatically attach, without further act, to all after acquired property as described herein attached to and/or used in the operation of the Collateral or any part thereof.
Section 1.24 Estoppel Affidavits. The Grantor, upon ten (10) days prior written notice, shall furnish the Grantee a written statement, duly acknowledged, setting forth the unpaid principal of, and interest on, the Indebtedness secured hereby and whether or not any offsets or defenses exist against the Indebtedness, or any portion thereof, and, if such offsets or defenses exist, stating in reasonable detail the specific facts relating to each such offset or defense.
Section 1.25 Subrogation. To the full extent of the Indebtedness, the Grantee is hereby subrogated to the liens, claims and demands, and to the rights of the owners and holders of each and every claim, demand and other encumbrance on the Collateral which is paid or satisfied, in whole or in part, out of the proceeds of the Indebtedness, and the respective liens, claims, demands and other encumbrances shall be, and each of them is hereby, preserved and shall pass to and be held by the Grantee as additional Collateral and further security for the Indebtedness, to the same extent they would have been preserved and would have been passed to and held by the Grantee, had they been duly and legally assigned, transferred, set over and delivered unto the Grantee by assignment, notwithstanding the fact that any instrument providing public notice of the same may be satisfied and canceled of record.
Section 1.26. Additional Covenants.
(a) Without the prior written consent of the Grantee, the Grantor shall not: (i) execute or permit to exist any lease or sublease of all or any portion of the Collateral except on a lease form approved by the Grantee and upon rental terms and conditions approved by the Grantee; (ii) modify or vary, surrender, cancel or terminate, either orally or in writing, any lease affecting the Collateral except in the case of the tenant’s default thereunder and then only in accordance with sound business judgment; (iii) discount any rents or collect the same for a period of more than one month in advance, except for security or damage deposits which are handled by the Grantor in accordance with Section 1.27 hereof; (iv) execute any conditional bill of sale, chattel mortgage, security agreement or other security instruments covering any furniture, furnishings, fixtures and equipment, intended to be incorporated in the Collateral or the appurtenances thereto, or covering articles of personal property owned by the Grantor and placed on the Premises, or purchase any of such furniture, furnishings, fixtures and equipment so that ownership of the same will not vest unconditionally in the Grantor, free from encumbrances on delivery to the Premises, except for Permitted Encumbrances); (v) further assign the leases and rents affecting the Collateral; (vi) further encumber, alienate, hypothecate, grant a security interest in or grant any other interest whatsoever in the Collateral, or any part thereof; or (vii) enter into any agreement whereby the holder of any prior or subordinate mortgage, deed of trust or deed to secure debt, waives, extends or modifies any of the terms of such prior or subordinate security instrument.
(b) Without the prior written consent of the Grantee and except for any leases of space within the Premises for occupancy by a tenant and permitted by Section 1.26(a)(i), the Grantor shall not (i) (except if approved by the Grantee) sell, lease, exchange, assign, convey, transfer or otherwise dispose of (or enter into any agreement to do so), the Collateral or any part thereof or any interest therein, including, without limitation, the leases, rents or income thereof, or (ii) grant or permit to exist any other mortgage, deed to secure debt, deed of trust, security agreement or other lien, security interest, charge or encumbrance against the Collateral or any part thereof or any interest therein, including, without limitation, the leases, rents or income thereof, whether superior or inferior to this Deed.
Section 1.27. Security Deposits. Within ten (10) days after request by the Grantee, the Grantor shall further assign to the Grantee the interest of Grantor in all leases permitted by Section 1.26(a)(i) above, and shall furnish a statement of all security deposits deposited by the tenants and copies of all leases not theretofore delivered to the Grantee, certified by the Grantor.
Section 1.28. Assignment of Rents. The Grantor hereby assigns to the Grantee, as further security for the payment of the Indebtedness, the rents, issues and profits of the Collateral, together with all leases, subleases and other documents evidencing such rents, issues and profits now or hereafter in effect and any and all deposits held as security under said leases or subleases. Nothing contained in the foregoing sentence shall be construed to bind the Grantee to the performance of any of the covenants, conditions or provisions contained in any such lease, subleases or other document or otherwise to impose any obligation on the Grantee (including, without limitation, any liability under the covenant of quiet enjoyment contained in any lease or in any law of any applicable state in the event that any tenant shall have been joined as a party defendant in any action to foreclose this Deed and shall have been barred and foreclosed thereby of all right, title and interest and equity of redemption in the Collateral), except that the Grantee shall be accountable for any money actually received pursuant to such assignment. Following the occurrence and during the continuation of an Event of Default, the Grantor hereby further grants to the Grantee the right (i) to enter upon and the Premises and take possession of the Collateral for the purpose of collecting the said rents, issues and profits, (ii) to dispossess by the usual summary proceedings any tenant defaulting in the payment thereof to the Grantee, (iii) to let the Collateral, or any part thereof, and (iv) to apply said rents, issues and profits, after payment of all necessary charges and expenses, on account of said Indebtedness. Such assignment and grant shall continue in effect until the Indebtedness is paid, the execution of this Deed constituting and evidencing the irrevocable consent of the Grantor to the entry upon and taking possession of the Collateral by the Grantee pursuant to such grant, whether foreclosure has been instituted or not and without applying for a receiver. Until the occurrence of an Event of Default, the Grantor shall be entitled to collect and receive said rents, issues and profits. Such right of the Grantor to collect and receive such rents, issues and profits may be revoked by the Grantee upon the occurrence of an Event of Default by giving written notice of such revocation, served personally upon or sent by registered or certified mail to the Grantor.
Section 1.29. Leases and Other Agreements Affecting Collateral. The Grantor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under any lease, sublease or any other agreement of any nature whatsoever which involves or affects the Collateral or any part thereof. The Grantor shall, at the request of the Grantee, furnish the Grantee with executed copies of all leases and subleases to which the Grantor is a party now or hereafter created upon the Collateral or any part thereof. All present and future lease forms used by the Grantor with respect to the tenants and subtenants of the Collateral, or any part thereof shall be approved by the Grantee in accordance with Section 1.26(a)(i) hereof, and no substantive modifications shall be made thereto without the Grantee’s consent. The term and rental of all future leases and subleases are to be approved by the Grantee in accordance with Section 1.26(a)(i) hereof.
Section 1.30 [Reserved]
Section 1.31. [Reserved]
Section 1.32. Maintenance and Other Operating Expenses. Under the terms of the Lease Agreement, Fox Factory is obligated, at its own expense, to (a) maintain the Collateral in good condition, repair and working order, (b) make all necessary repairs, renewals, replacements and improvements to the Collateral, and (c) pay all gas, electric, water, sewer and other charges for the operation, use and upkeep of the Collateral.
ARTICLE II
Default and Remedies
Section 2.01. Events of Default. Any one or more of the following events or conditions shall constitute Events of Default under this Deed:
(a) Failure of the applicable obligor to pay as and when due and payable any portion of the Indebtedness; or
(b) Failure by the Grantor to observe or perform any of the other terms, covenants or conditions contained in this Deed for ten (10) days after receipt from the Grantee of written notice of such failure, provided, such ten (10) day grace period set forth in this subsection (b) shall not apply to any other Event of Default expressly set forth in this Section 2.01 or to any other covenant or condition with respect to which a limitation as to time or grace period or right to cure is expressly provided in this Deed; or
(c) Failure by the Lessee to observe or perform any of the other terms, covenants or conditions contained in the Lease Agreement for sixty (60) days after receipt from the Grantee of written notice of such failure, provided, such sixty (60) day grace period set forth in this subsection (c) shall not apply to any other Event of Default expressly set forth in this Section 2.01 or to any other covenant or condition with respect to which a limitation as to time or grace period or right to cure is expressly provided in this Deed or the Lease Agreement; or
(d) [Reserved]
(e) [Reserved]
(f) [Reserved]
(g) If there is an attachment, levy or sequestration of or relating to a material part of the Collateral and the same is not promptly discharged; or
(h) If Fox Factory shall fail to provide or to maintain insurance in accordance with the requirements of the Lease Agreement, or shall fail to pay the premiums therefor in a timely manner as required by the Lease Agreement or if there shall occur any material uninsured damage to or loss, theft or destruction to the Collateral; or
(i) If an event of default shall occur under the Lease Agreement, or any deed to secure debt, deed of trust or mortgage on any material part of the Collateral which is superior or inferior to this Deed; provided, however, that this provision shall not be deemed to be a consent by the Grantee for the creation or imposition of any such other deed to secure debt, deed of trust or mortgage; or
(j) Except for the breach of any warranty of title, which breach shall be governed by Section 2.01(p) below, any warranty or representation of the Grantor contained herein or of the Lessee in the Lease Agreement proves to be untrue or misleading in any material respect; provided, however, if a cure period is specified herein or therein for any specific warranty or representation, then the failure to cure such untrue or misleading warranty or representation within the specified cure period; or
(k) The filing by the Grantor or the Lessee of a voluntary petition in bankruptcy or the filing by the Grantor or the Lessee of any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, or the Grantor’s or the Lessee's seeking or consenting to or acquiescing in the appointment of any trustee, receiver or liquidator of the Grantor or the Lessee, as the case may be, to take possession of all or any substantial part of the Collateral or of any other property or assets of the Grantor or the Lessee, or of any or all of the income, rents, issues, earnings, profits or revenues thereof, or the making by any the Grantor or the Lessee of any general assignment for the benefit of creditors, or the admission in writing by the Grantor or the Lessee of its inability to pay its debts generally as they become due or the commission by the Grantor or the Lessee of an act of bankruptcy; or
(l) The filing of a petition against the Grantor or the Lessee seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal, state or other law or regulation relating to bankruptcy, insolvency or other relief for debtors, or the appointment of any trustee, receiver or liquidator of the Grantor or the Lessee or of all or any substantial part of the Collateral or of any or all of the income, rents, issues, profits or revenues thereof unless such petition shall be dismissed within thirty (30) days after such filing, but in any event prior to the entry of an order, judgment or decree approving such petition; or
(m) The Collateral or any part thereof are subjected to actual or threatened waste, or any material part thereof is removed, demolished or altered (except for replaceable personal property which is promptly replaced and except for any casualty or condemnation) without the prior written consent of the Grantee; or
(n) The Grantor or the Lessee is dissolved, partitioned or terminated; or
(o) The filing of any federal tax lien against the Grantor or the Lessee unless such lien is satisfied or bonded within forty-five (45) days after its filing; or
(p) The filing of any lien or other encumbrance against Premises or against the Grantor or the Lessee which according to law is superior to the lien or encumbrance created hereby (except for a lien for any tax or special assessment which is not yet due and payable), or the assertion of any claim of priority to this Deed by title, lien or otherwise in any legal or equitable proceeding, and the Grantor or the Lessee as the case may be, does not provide the Grantee, within five (5) days of the Grantor’s or the Lessee's actual notice of such lien or claim, with reasonably satisfactory assurance from the insurance company providing title insurance to the Grantee for the Premises that the Grantee has title insurance coverage over such superior lien or claim, or the Grantor does not remove, satisfy or bond such lien or claim within thirty (30) days of the Grantor’s or the Lessee's actual notice thereof; or
(q) Any suit shall be filed against the Grantor, which, in the Grantee’s reasonable opinion, if adversely determined, could reasonably be expected to impair the ability of the Grantor to perform each and every one of its obligations hereunder and such suit is not dismissed within thirty (30) days from the filing thereof; or,
(r) Any suit shall be filed against the Lessee which, in the Grantee’s reasonable opinion, if adversely determined, could reasonably be expected to impair the ability of the Lessee to perform each and every one of its obligations under the Lease Agreement and such suit is not dismissed within thirty (30) days from the filing thereof; or,
(s) [Reserved]
(t) Any substantial or material change of an adverse nature shall occur in the financial status of the Lessee from that reported and delivered to the Grantee heretofore which, in the Grantee’s reasonable opinion, would materially impair the ability of the Lessee to comply with all of its obligations under the Lease Agreement; or
(u) the Grantee shall reasonably suspect the occurrence of one or more of the above said Events of Default and the Grantor or the Lessee, as the case may be, upon the request of the Grantee, shall fail to provide evidence reasonably satisfactory to the Grantee that no Events of Default have occurred.
The Grantor agrees that nothing contained in this Section 2.01 shall be construed to require the Grantee to delay in exercising any remedy other than beyond any applicable grace or curative period, if any. Any periods of grace, cure or notice provided for the benefit of the Grantor and/or the Lessee herein and in the Lease Agreement shall run concurrently and not consecutively. Except as specifically set forth in this Article II, the Grantor shall not be entitled to receive any notice of or time to cure an Event of Default under the provisions hereof.
Section 2.02. Remedies.
(a) [Reserved]
(b) If an Event of Default occurs, the Grantee may (1) declare the entire unpaid Indebtedness to be immediately due and payable; or (2) notify all tenants of the Collateral and all others obligated on leases or subleases of any part of the Collateral that all rents and other sums owing on such leases and subleases have been assigned to the Grantee and are to be paid directly to the Grantee, and to enforce payment of all obligations owing on leases and subleases, by suit, ejectment, cancellation, releasing, reletting or otherwise, whether or not the Grantee has taken possession of the Collateral, and to exercise whatever rights and remedies the Grantee may have under any assignment of rents and leases; provided, however this remedy shall not apply to the Lease Agreement and the Lessee's obligation to pay rentals thereunder; or (3) enter into or upon the Premises, either personally or by its agents, nominees or attorneys and dispossess the Grantor and their agents and servants therefrom, and thereupon the Grantee may (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Collateral and conduct the activities thereat; (B) complete any construction on the Premises in such manner and form as the Grantee deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Collateral; (D) exercise all rights and power of the Grantor with respect to the Collateral, whether in the name of the Grantor, or otherwise, including, without limitation, the right to make, cancel, enforce or modify leases, obtain and evict tenants, and demand, sue for, collect and receive all earnings, revenues, rents, issues, profits and other income of the Collateral and every part thereof, which rights shall not be in limitation of the Grantee’s rights under any assignment of rents and leases securing the Indebtedness; and (E) apply the receipts from the Collateral to the payment of the Indebtedness, after deducting therefrom all reasonable expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the taxes, assessments, insurance and other charges in connection with the
Collateral, as well as just and reasonable compensation for the services of the Grantee, its counsel, agents and employees; or (4) institute proceedings for the complete foreclosure of this Deed either at law, in equity or pursuant to Section 2.02(b) herein, in which case the portion of the Collateral constituting real property may be sold for cash or upon credit in one or more parcels; or (5) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Deed for the portion of the Indebtedness then due and payable (if the Grantee shall have elected not to declare the entire Indebtedness to be immediately due and owing), subject to the continuing lien of this Deed for the balance of the Indebtedness not then due; or (6) sell for cash or upon credit the Collateral or any part thereof and all estate, claim, demand, right, title and interest of the Grantor therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law, and in the event of a sale, by foreclosure or otherwise, of less than all of the Collateral, this Deed shall continue as a lien on the remaining portion of the Collateral; or (7) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein; or (8) recover judgment hereunder either before, during or after any proceedings for the enforcement of this Deed; or (9) apply for the appointment of a trustee, receiver, liquidator or conservator of the Collateral, without regard for the adequacy of the security for the Indebtedness and without regard for the solvency of the Grantor, any guarantor, or any other person, firm or other entity liable for the payment of the Indebtedness; or (10) pay or perform any default in the payment, performance or observance of any term, covenant or condition of this Deed, and all payments made or costs or expenses incurred by the Grantee in connection therewith, shall be secured hereby and shall be, without demand, immediately repaid by the Grantor to the Grantee with interest thereon as provided in Section 1.14 hereof, the necessity for any such actions and of the amounts to be paid to be in the sole judgment of the Grantee, and the Grantee may enter and authorize others to enter upon the Collateral or any part thereof for the purpose of performing or observing any such defaulted term, covenant or condition without thereby becoming liable to the Grantor or any person in possession holding under the Grantor; or (11) pursue such other remedies as the Grantee may have under applicable law, in equity or under the Lease Agreement or this Deed. In the exercise of such remedies, the Grantee, at its option, may sell the Collateral or any part of the Collateral at public sale or sales on the sale date(s) required by law at the usual place for conducting sales in the county in which the Collateral or any part of the Collateral is situated, to the highest bidder for cash, in order to pay the Indebtedness secured hereby and accrued interest thereon and insurance premiums, liens, assessments, taxes and charges, including utility charges, if any, with accrued interest thereon, and all expenses of the sale and of all proceedings in connection therewith, including reasonable attorneys’ fees, actually incurred, after advertising the time, place and terms of sale once a week for four (4) weeks immediately preceding such sale (but without regard to the number of days) in a newspaper in which Sheriff’s sales are advertised in said county, all other notice being hereby waived by the Grantor. At any such public sale, the Grantee may execute and deliver to the purchaser a conveyance of the Collateral or any part of the Collateral in fee simple, with full warranties of title (or without warranties if the Grantee shall so elect) and to this end, the Grantor hereby constitutes and appoints the Grantee the agent and attorney-in-fact of the Grantor to make such sale and conveyance, and thereby to divest the Grantor of all right, title, interest, equity and equity of redemption that the Grantor may have in and to the Collateral and to vest the same in the purchaser or purchasers at such sale or sales, and all the acts and doings of said agent and attorney in fact are hereby ratified and confirmed and any recitals in said conveyance or conveyances as to facts essential to a valid sale shall be binding upon the Grantor. The aforesaid power of sale and agency hereby granted are, to the extent permitted by law, coupled with an interest and are irrevocable, are granted as cumulative of the other remedies provided hereby or by law for collection of the Indebtedness secured hereby and shall not be exhausted by one exercise thereof but may be exercised until full payment of all Indebtedness secured hereby. In the event of any such foreclosure sale by the Grantee, the Grantor or other lessee of the Collateral shall be deemed a tenant holding over and shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily dispossessed according to provisions of law applicable to tenants holding over.
(c) The purchase money proceeds or avails of any sale made under or by virtue of subsection (b) of this Section, together with any other sums which then may be held by the Grantee under this Deed, whether under the provisions of this Article II or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of exercising Grantee’s remedies hereunder, including any such sale, including reasonable compensation to the Grantee, its agents and counsel, and of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by the Grantee under this Deed, together with interest as provided herein on all advances made by the Grantee and all taxes or assessments, except any taxes, assessments or other charges subject to which the Collateral shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid upon the Indebtedness.
Third: To the payment of the surplus, if any, after the payment of all of the foregoing, to the Grantor or to whomsoever may then be lawfully entitled to receive the same. The Grantee and any receiver of the Collateral, or any part thereof, shall be liable to account for only those rents, issues, profits and proceeds actually received by it.
(d) The Grantee may adjourn from time to time any sale by it to be made under or by virtue of subsection (b), above, by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable provision of law, the Grantee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.
(e) Upon the completion of any sale or sales made by the Grantee under or by virtue of this Article II, the Grantee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. The Grantee is hereby irrevocably appointed the true and lawful attorney of the Grantor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Collateral and rights so sold and for that purpose the Grantee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with like power, the Grantor hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any such sale or sales made under or by virtue of this Article II, whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of the Grantor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against the Grantor and against any and all persons claiming or who may claim the same, or any part thereof from, through or under the Grantor.
(f) In the event of any sale made under or by virtue of this Article II (whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale) the entire Indebtedness, if not previously due and payable, immediately thereupon shall, anything in this Deed to the contrary notwithstanding, become due and payable.
(g) Upon any sale made under or by virtue of this Article II (whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale), the Grantee may bid for and acquire the Collateral or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Indebtedness the net sales price after deducting therefrom the expenses of the sale and the costs of the action and any other sums which the Grantee is authorized to deduct under this Deed.
(h) No recovery of any judgment by the Grantee and no levy of an execution under any judgment upon the Collateral or upon any other property of the Grantor shall affect in any manner or to any extent, the lien and title of this Deed upon the Collateral or any part thereof, or any liens, titles, rights, powers or remedies of the Grantee hereunder, but such liens, titles, rights, powers and remedies of the Grantee shall continue unimpaired as before.
(i) The Grantor agrees, to the fullest extent permitted by law, that upon the occurrence of an Event of Default, neither the Grantor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension, homestead, exemption or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Deed, or the absolute sale of the Collateral, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereat, and the Grantor, for itself and all who may at any time claim through or under it, hereby waives to the full extent that it may lawfully so do, the benefit of all such laws, and any and all right to have the assets comprised in the security intended to be created hereby marshaled upon any foreclosure of the lien or title hereof.
(j) The Grantee, at its option, is authorized to foreclose this Deed subject to the rights of any tenants of the Premises, and the failure to make any such tenants parties to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by the Grantor, a defense to any proceedings instituted by the Grantee to collect the sums secured hereby.
Section 2.03. Payment of Indebtedness After Default. Upon the occurrence of any Event of Default hereunder and the acceleration of the maturity of the Indebtedness, if, at any time prior to the foreclosure sale, the Grantor or any other person tender payment of the amount necessary to satisfy the Indebtedness, the same shall constitute an evasion of the payment terms of the Bonds and shall be deemed to be a voluntary prepayment thereunder, in which case such payment must include the premium required under the prepayment provision, if any, contained in the Bonds.
Section 2.04. Possession of the Premises. Possession of the Premises during the existence of the Indebtedness by the Grantor, or any person claiming under the Grantor, shall be that of a tenant under the Grantee and its successors and assigns. Upon the occurrence and during the continuation of any Event of Default hereunder, it is agreed that the occupant of the Premises or any part thereof, shall, at the Grantee’s option, immediately surrender possession of the Premises so occupied to the Grantee, and if such occupant is permitted, by the Grantee, to remain in possession, the possession shall be as tenant of the Grantee and, on demand, such occupant (a) shall pay to the Grantee monthly, in advance, a reasonable rental for the space so occupied, and (b) in default thereof may be dispossessed by the usual summary proceedings. The covenants herein contained may be enforced by a receiver of the Premises or any part thereof. Nothing in this Section 2.04 shall be deemed to be a waiver of the provisions of this Deed prohibiting the sale or other disposition of the Collateral without the Grantee’s consent.
Section 2.05. [Reserved]
Section 2.06. The Grantor’s Actions After Default. After the happening of any Event of Default and immediately upon the commencement of any action, suit or other legal proceedings by the Grantee to obtain judgment for the Indebtedness, or of any other nature in aid of the enforcement of the Lease Agreement or of this Deed, the Grantor shall, if required by the Grantee, consent to the appointment of a receiver or receivers of the Collateral and of all the earnings, revenues, rents, issues, profits and income thereof. Nothing herein shall be deemed to require the commencement of a suit or the consent of the Grantor as a condition precedent for the Grantee’s right to the appointment of a receiver or the exercise of any other rights or remedies available to the Grantee.
Section 2.07. Control by the Grantee After Default. Notwithstanding the appointment of any receiver, liquidator or trustee of the Grantor, or of any of its property, or of the Collateral or any part thereof, the Grantee shall be entitled to retain possession and control of all property now and hereafter covered by this Deed.
Section 2.08. WAIVER OF GRANTORS’ RIGHTS. BY EXECUTION OF THIS INSTRUMENT, GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE LEASE AGREEMENT AND THE POWER OF ATTORNEY GIVEN HEREIN TO GRANTEE TO SELL THE SECURED PROPERTY BY NONJUDICIAL FORECLOSURE UPON THE OCCURRENCE OF AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO GRANTEE; (C) ACKNOWLEDGES THAT GRANTOR HAS READ THIS INSTRUMENT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR AND GRANTOR HAS CONSULTED WITH COUNSEL OF GRANTOR’S CHOICE PRIOR TO EXECUTING THIS INSTRUMENT; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART OF A BARGAINED FOR LOAN TRANSACTION.
ARTICLE III
Miscellaneous
Section 3.01. [Reserved]
Section 3.02. [Reserved]
Section 3.03. Notices. All notices to any parties hereunder shall be in writing (including bank wire, telex, telecopy or similar teletransmission or writing) and shall be given by United States mail, telex, teletransmission or overnight courier to such party at its address or applicable teletransmission number set forth below or such other address or applicable telecopy number as such party may hereafter specified by notice to the other party hereto. Each such notice, request or other communication shall be effective (i) if given by telex, once such telex is transmitted to the telex number specified herein and the appropriate answer back is received (ii) if given by mail, 72 hours after such communication is deposited in the mail with first class postage pre-paid, addressed as aforesaid, (iii) if given by telecopy, when such telecopy is transmitted to the telecopy number specified below and the appropriate confirmation is received or (iv) if given by any other means (including, without limitation, by air courier), when delivered or received at the address specified in this sections (provided that notices to the Grantee shall not be effective until received):
| If to the Grantor: | Gainesville and Hall County Development Authority P. O. Box 3280 Gainesville, GA 30503 Attention: Chairman | ||||
| If to the Grantee: | Fox Factory, Inc. 6634 Highway 53 Braselton, GA 30517 Attention: David Haugen | ||||
provided, however, if the Grantee, named herein shall have assigned this Deed, notices to the Grantee shall be sent to the successor or assign of the Grantee at such address as such successor the Grantee shall have provided to the Grantor in writing.
Section 3.04. Binding Obligations. The provisions and covenants of this Deed shall run with the land, shall be binding upon the Grantor and shall inure to the benefit of the Grantee, subsequent holders of this Deed and their respective successors and assigns. For the purpose of this Deed, the term “Grantor” shall mean the Grantor named herein, any subsequent owner of the Collateral, and their respective heirs, executors, legal representatives, successors and assigns.
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE MONETARY OBLIGATIONS OF THE GRANTOR HEREUNDER ARE LIMITED OBLIGATIONS AND ARE PAYABLE SOLELY FROM MONEYS PAID BY THE LESSEE UNDER THE LEASE AGREEMENT. BY ACCEPTANCE OF THIS DEED, THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT IT MAY NOT LOOK TO THE GRANTOR FOR THE PAYMENT OF THE GRANTOR’S MONETARY OBLIGATIONS HEREUNDER EXCEPT TO THE EXTENT NECESSARY TO ENFORCE ITS REMEDIES AGAINST AMOUNTS PAYABLE UNDER THE LEASE AGREEMENT.
Section 3.05. Captions. The captions of the sections of this Deed are for the purpose of convenience only and are not intended to be a part of this Deed and shall not be deemed to modify, explain, enlarge or restrict any of the provisions hereof.
Section 3.06. Further Assurances. The Grantor shall do, execute, acknowledge and deliver, at the sole cost and expense of the Grantor, all and every such further acts, deeds, conveyances, assignments, estoppel certificates, notices of assignment, transfers and assurances as the Grantee may reasonably require from time to time in order to better assure, convey, assign, transfer and confirm unto the Grantee, the rights now or hereafter intended to be granted to the Grantee under this Deed, any other instrument executed in connection with this Deed or any other instrument under which the Grantor may be or may hereafter become bound to convey, transfer or assign to the Grantee for carrying out the intention of facilitating the performance of the terms of this Deed.
Section 3.07. Severability. Any provision of this Deed which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
Section 3.08. General Conditions.
(a) All covenants hereof shall be construed as affording to the Grantee rights additional to and not exclusive of the rights conferred under the provisions of applicable laws of the State of Georgia.
(b) This Deed cannot be altered, amended, modified or discharged orally and no agreement shall be effective to modify or discharge it in whole or in part, unless it is in writing and signed by the party against whom enforcement of the modification, alteration, amendment or discharge is sought.
(c) No remedy herein conferred upon or reserved to the Grantee is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission of the Grantee in exercising any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Event of Default, or any acquiescence therein. Acceptance of any payment after the occurrence of an Event of Default shall not be deemed to waive or cure such Event of Default; and every power and remedy given by this Deed to the Grantee may be exercised from time to time as often as may be deemed expedient by the Grantee. Nothing in this Deed or in the Lease Agreement shall affect the obligation of the Lessee to pay the Indebtedness in the manner and at the time and place therein respectively expressed.
(d) No waiver by the Grantee will be effective unless it is in writing and then only to the extent specifically stated. Without limiting the generality of the foregoing, any payment made by the Grantee for insurance premiums, taxes, assessments, water rates, sewer rentals or any other charges affecting the Collateral, shall not constitute a waiver of the Lessee's default in making such payments and shall not obligate the Grantee to make any further payments.
(e) The Grantee shall have the right to appear in and defend any action or proceeding which the Grantee, in its discretion, feels may adversely affect the Collateral or this Deed and, following the occurrence of and Event of Default, may appear in the name and on behalf of the Grantor. The Grantee shall also have the right to institute any action or proceeding which the Grantee, in its discretion, feels should be brought to protect its interest in the Collateral or its rights hereunder. All reasonable costs and expenses incurred by the Grantee in connection with such actions or proceedings, including, without limitation, reasonable attorneys’ fees and appellate attorneys’ fees actually incurred, shall be paid by the Grantor, on demand.
(f) [Reserved]
(g) The Grantor acknowledges that it has received a true copy of this Deed.
(h) For the purposes of this Deed, all defined terms and personal pronouns contained herein shall be construed, whenever the context of this Deed so requires, so that the singular shall be construed as the plural and vice versa and so that the masculine, feminine or neuter gender shall be construed to include all other genders.
(i) No provision of this Deed shall be construed against or interpreted to the disadvantage of the Grantor or the Grantee by any court or other governmental or judicial authority by reason of such party having or being deemed to have drafted, prepared, structured or dictated such provision.
(j) Whenever any payment to be made hereunder or under the Lease Agreement shall be stated to be due on a Saturday, Sunday or a public holiday under the laws of the State of Georgia, such payment may be made on the next succeeding business day, and such extension of time shall in such case be included in the computation of payment of interest hereunder or under the Lease Agreement.
(k) Time is of the essence with respect to each and every covenant, agreement and obligation of the Grantor under this Deed.
(l) Whenever this Deed or the Lease Agreement requires the consent, approval, waiver, acceptance, satisfaction or the taking of any discretionary act by, the Grantee all of the foregoing being referred to as “Consent” in this Section 3.08(l), the right, power, privilege and option of the Grantee to withhold or grant its Consent shall not be exhausted by the exercise thereof on one or more occasions, but shall be a continuing right, power, privilege and option of the Grantee with respect to any such matters.
Section 3.09. [Reserved]
Section 3.10. Waiver of Jury Trial. The Grantor and the Grantee, on behalf of themselves and their respective successors and assigns, waive all right to trial by jury in any action or proceeding to enforce or defend any rights or remedies under the Lease Agreement or this Deed.
Section 3.11. No Partnership or Joint Venture. Nothing contained herein or in the Lease Agreement, nor the acts of the parties hereto, shall be construed to create a partnership or joint venture between the Grantor and the Grantee. The relationship between the Grantor and the Grantee is the relationship of “debtor” and “creditor.”
Section 3.12. Nature of Instrument.
(a) As to that portion of the Collateral that constitutes real property under Georgia law, this Deed is intended to be a deed to secure debt that conveys title to such real property to the Grantee.
(b) As to that portion of the Collateral as to which the provisions of the Uniform Commercial Code as enacted in the State of Georgia is applicable, including the Equipment, this Deed is intended to be a security agreement, encumbering each and every item of such of the Collateral, in compliance with the provisions of the Uniform Commercial Code as enacted in the State of Georgia. A financing statement or statements reciting this Deed to be a security agreement, affecting all of said portion of the Collateral, shall be executed by the Grantor and appropriately filed. The remedies for any violation of the covenants, terms and conditions of the security agreement herein contained shall be (i) as prescribed herein, or (ii) as prescribed by general law, or (iii) as prescribed by the specific statutory consequences now or hereafter enacted and specified in said Uniform Commercial Code, all at the Grantee’s sole election.
(c) As to any portion of the Collateral that is neither real property under Georgia law nor subject to the Uniform Commercial Code, as enacted in the State of Georgia, this Deed shall constitute a common law pledge thereof, which is intended to be enforceable in the manner and to the extent permitted by law.
(d) The Grantor shall execute and deliver to the Grantee, in form and substance satisfactory to the Grantee, such “financing statements,” real estate and related notice filing and such further assurances as the Grantee may from time to time reasonably consider necessary to create, perfect and preserve the Grantee’s interest in the Collateral herein granted, and the Grantee may cause such statements and assurances to be recorded and filed at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest.
(e) This instrument shall not be deemed or construed to constitute the Grantee as a “trustee in possession” of the Collateral, to obligate the Grantee to lease the Collateral or attempt to do same, or to take any action, incur any expense or perform or discharge any obligation, duty or liability whatsoever under any of the leases or otherwise.
Section 3.13. Security Agreement.
(a) Insofar as the Equipment is concerned, this Deed to Secure Debt is hereby made and declared to be a security agreement, encumbering each and every item of the Equipment, in compliance with the provisions of the U.C.C. A financing statement or statements reciting this Deed to Secure Debt to be a security agreement, affecting all of said Equipment, shall be prepared showing Lessee and the Grantor, as debtors, and the Grantee, as secured party, and appropriately filed. The remedies for any violation of the agreements, terms and conditions of the security agreement herein contained shall be (i) as prescribed herein, or (ii) as prescribed by general law, or (iii) as prescribed by the specific statutory consequences now or hereafter enacted and specified in the U.C.C., all at the Grantee’s sole election. Lessee and the Grantor agree that the filing of such financing statements in the records normally having to do with personal property shall never be constructed as in anywise derogating from or impairing the declaration and hereby stated intention of the Lessee and the Grantor that the Equipment is, and at all times and for all purposes and in all proceedings both legal or equitable shall be, regarded as part of the real estate irrespective of whether (1) any such item is physically attached to the improvements thereon, (2) serial numbers are used for the better identification of certain items capable of being thus identified in a recital contained herein, or (3) any such item is referred to or reflected in any such financing statements so filed at any time. The mention in any such financing statements of the rights in and to (A) the proceeds of any fire and/or hazard insurance policy, or (B) any award in eminent domain proceedings for a taking or for loss of value, or (C) the Lessee's interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the Project, whether pursuant to a lease or otherwise, shall never be construed as in anywise altering any of the rights of the Grantee as determined by this instrument or impugning the priority of the Grantee’s lien granted hereby or by any other recorded document, but such mention in such financing statements is declared to be for the protection of the Grantee in the event any court shall at any time hold with respect to the foregoing (A), (B) or (C), that notice of the Grantee’s priority of interest to be effective against a particular class of persons, must be filed in the U.C.C. records of Georgia.
(b) The Lessee and the Grantor each warrant that the location of the Collateral is upon the Project Facility Site. The Lessee and the Grantor each agree that they will furnish the Grantee with notice of any change in the matters addressed by clauses (i) or (iii) of this subsection 3.13(b) within thirty days of the effective date of any such change and the Lessee and the Grantor will promptly prepare any financing statements or other instruments deemed necessary by the Grantee to prevent any filed financing statement from becoming misleading or losing its perfected status.
(c) [Reserved].
Section 3.14. Perpetual Security Interest. It is the affirmative intention of the Grantor and Grantee to create, establish and convey a perpetual or indefinite security interest in favor of Grantee in the property conveyed hereby, pursuant to O.C.G.A. Section 44-14-80(a), and specifically to agree that title to the property conveyed hereby shall not revert to Grantor until the expiration of the later of: (i) 20 years from the date of this conveyance or seven years from the maturity of the indebtedness secured hereby, or (ii) the date determined in accordance with O.C.G.A. Section 44-14-80(b), or section 44-14-80(c), as applicable, if any portion or all of the Indebtedness secured hereby is extended or renewed beyond the original maturity date thereof. In addition to all other covenants and conveyances set forth herein, Grantor and Grantee hereby agree that the perpetual or indefinite security interest hereby established and conveyed also secures any and all Indebtedness which may now exist or hereafter arise between Grantor or the obligor (or any of them) on the Indebtedness hereby secured if not the Grantor and Grantee incident to the open end indebtedness provisions of this deed to secure debt.
Section 3.15. Counterparts. This Deed may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which, taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Deed has been duly executed and delivered under seal as of the day and year first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
Signed, sealed and delivered in the presence of:
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/T. Treadwell Syfan
Secretary
By: /s/ Whitney Brown
Unofficial Witness
By: /s/ Amy C. Stewart
Notary Public
My commission expires: April 26, 2022
EXHIBIT A
Description of Project Facility Site
(41.224 Acre Tract in Gainesville Industrial Park West)
All that tract or parcel of land lying and being in Land Lot 11 of the 8th District, City of Gainesville, Hall County, Georgia, and being that certain 41.224 acre tract shown on that certain ALTA/NSPS Land Title Survey for FF US Holding, LLC and Chicago Title Insurance Company dated March 29, 2019, last revised April 25, 2019, prepared by Rochester & Associates, Inc., and recorded in Plat Book 877, page 58, Hall County Plat Records, and being more particularly described according to said plat as follows:
Commencing at the intersection of the southerly right of way of Industrial Park West Drive, said right of way being 60 feet in width, with the westerly right of way of State Route 13, a.k.a. Atlanta Highway, said right of way having a variable width; thence proceed along said westerly right of way of State Route 13 in a southwesterly direction 1,249.53 feet to a 1/2 inch rebar found being the TRUE POINT OF BEGINNING;
From the TRUE POINT OF BEGINNING thus establish and continuing along said westerly right of way of State Route 13 South 24 degrees 25 minutes 56 seconds West a distance of 60.00 feet to a 1/2 inch rebar found; thence leaving said westerly right of way and proceeding along the property now or formerly of Industrial Park West Business Center North 65 degrees 45 minutes 01 seconds West a distance of 370.60 feet to a 1/2 inch rebar found; thence South 29 degrees 23 minutes 55 seconds West a distance of 439.51 feet to a 1/2 inch rebar found; thence South 51 degrees 09 minutes 50 seconds West a distance of 771.53 feet to a 1/2 inch rebar found; thence South 30 degrees 35 minutes 12 seconds East a distance of 123.61 feet to a 1/2 inch rebar found; thence proceeding along the property now or formerly of Athens Holdings, L.P. South 52 degrees 34 minutes 46 seconds West a distance of 209.44 feet to a 1/2 inch rebar found; thence proceeding along the property now or formerly of Presco Properties, Inc. North 30 degrees 32 minutes 54 seconds West a distance of 1384.38 feet to a concrete monument found; thence proceeding along the property now or formerly of the City of Gainesville North 73 degrees 28 minutes 06 seconds East a distance of 504.66 feet to a 1/2 inch rebar found; thence North 58 degrees 55 minutes 28 seconds East a distance of 138.38 feet to a 1/2 inch rebar found; thence North 14 degrees 38 minutes 52 seconds West a distance of 197.79 feet to a 1/2 inch rebar found on the aforementioned southerly right of way of Industrial Park West Drive; thence proceeding along said southerly right of way the following courses and distances: along a curve to the left having a radius of 630.00 feet, and an arc length of 278.70 feet, being subtended by a bearing of North 62 degrees 40 minutes 45 seconds East, having a distance of 276.43 feet to a point; North 50 degrees 00 minutes 22 seconds East a distance of 404.23 feet to a point; and along a curve to the right having a radius of 1270.00 feet, and an arc length of 322.20 feet, being subtended by a bearing of North 57 degrees 16 minutes 27 seconds East, having a distance of 321.33 feet to a 1/2 inch rebar found; thence leaving said southerly right of way and proceeding along the property now or formerly of Industrial Park West Business Center, LLC South 16 degrees 22 minutes 12 seconds East a distance of 1059.49 feet to a 1/2 inch rebar found; thence South 65 degrees 45 minutes 01 seconds East a distance of 340.00 feet to the TRUE POINT OF BEGINNING.
Said tract contains 41.224 acres.
EXHIBIT B
Description of Improvements
The Project Facility consists of a _____________ square foot building for the manufacture of of shock absorbers for automobiles, trucks and motorcycles in Gainesville Industrial Park West on West Park Drive, Gainesville, Hall County, Georgia.
EXHIBIT C
Description of Equipment
All furniture, furnishings, fixtures, machinery, appliances and equipment owned by Gainesville and Hall County Development Authority (the “Authority”) and used in the operation of a facility for the manufacture of shock absorbers for automobiles, trucks and motorcycles by Fox Factory, Inc. on the property described on Exhibit A attached to this Security Deed, including, but not limited to, the equipment which forms a part of the Project, i.e. the Project Equipment (as described in the Lease Agreement), which was financed with the proceeds of the Bonds, together with (i) all additions, parts, fittings, accessories, special tools, attachments, and accessions now and hereafter affixed thereto and/or used in connection therewith, (ii) all replacements thereof and substitutions therefor, and (iii) all cash and non-cash proceeds and products thereof.
EXHIBIT D
Permitted Encumbrances
(1) Liens for ad valorem taxes and special assessments not then delinquent or permitted to exist as provided in Section 6.3 of that certain Lease Agreement, dated as of December 1, 2019 (the “Lease”), between Gainesville and Hall County Development Authority (the “Authority”) and Fox Factory, Inc. (“Fox Factory” or the “Lessee”).
(2) The Lease, the Financing Agreement, dated as of December 1, 2019 (the “Financing Agreement”), between the Authority and the Fox Factory, this Security Deed, and the security interests created in this Security Deed, in the Lease, and in the Financing Agreement.
(3) Unfiled and inchoate mechanics, and materialmen’s liens for construction work in progress.
(4) Architects’, contractors’, subcontractors’, mechanics’, materialmen’s, suppliers’, laborers, and vendors’ liens or other similar liens not then payable or permitted to exist as provided in Section 6.1(c) of the Lease Agreement.
(5) State and County taxes for 2020 and all subsequent years, which taxes are not yet due or payable, and any additional taxes, interest and/or penalties which may be assessed for prior tax years by virtue of adjustment, re appraisal, re assessment, appeal or other amendment to the tax records of the city or county in which subject property is located.
(6) Declaration of Covenants, Restrictions and Easements for Gainesville Industrial Park West, dated October 23, 2018, recorded in Deed Book 8168, pages 209-222, Hall County, Georgia Deed Records, as amended by Amendment to Declaration of Covenants, dated December 4, 2018, recorded in Deed Book 8190, page 663, aforesaid records.
(7) Expanded Stream Buffer Conservation Easement, dated April 1, 2008, from Koch Foods of Gainesville LLC, recorded in Deed Book 6312, pages 595-612, Hall County Deed Records.
(8) Sanitary Sewer Easement, dated March 25, 2019, from Gainesville and Hall County Development Authority to City of Gainesville, recorded in Deed Book 8239, page 310, Hall County Deed Records.
(9) Those matters shown on a plat of survey entitled “ALTA/NSPS Land Title Survey for FF US Holding LLC and Chicago Title Insurance Company,” dated March 29, 2019, last revised April 25, 2019, prepared by Rochester & Associates, Inc., Georgia Registered Land Surveyors, recorded in Plat Book 877, page 58, Hall County Plat Records.
(10) Deed restrictions set forth in that certain limited warranty deed, dated April 30, 2019, from Gainesville and Hall County Development Authority to FF US Holding LLC, recorded in Deed Book 8257, page 533, Hall County Deed Records.
(11) Construction (Slope) Easement, dated December 10, 2019, from Presco Properties, Inc. to FF US Holding LLC, recorded in Deed Book 8388, page 597, Hall County Deed Records.
(12) Release/Modification and Grant of Stream Buffer Conservation Easement, dated October 21, 2019, between FF US Holding LLC and the City of Gainesville, recorded in Deed Book 8356, page 781, Hall County Deed Records.
(13) Construction (Slope) Easement, dated December 10, 2019, from Industrial Park West Business Center, LLC to FF US Holding LLC, recorded in Deed Book 8388, page 600, Hall County Deed Records.
(14) Driveway Easement, dated December 10, 2019, from FF US Holding LLC to Presco Properties, Inc., recorded in Deed Book 8388, page 603, Hall County Deed Records.
(15) Driveway Easement, dated December 10, 2019, from FF US Holding LLC to Industrial Park West Business Center, LLC, recorded in Deed Book 8388, page 609, Hall County Deed Records.
Exhibit 10.6
After Recording Return To:
Treadwell Syfan
P. O. Box 3280
Gainesville, GA 30503
ASSIGNMENT OF LEASE AGREEMENTTHIS ASSIGNMENT OF LEASE AGREEMENT, dated as of June 1, 2020 (the “Assignment”), is from GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY (the “Authority”) to FOX FACTORY, INC., as bondholder (in such capacity, the “Bondholder”).
WITNESSETH
WHEREAS, the Authority has authorized the issuance of its not to exceed $75,000,000 aggregate principal amount Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020 (the “Series 2020 Bonds” or the “Bonds”); and
WHEREAS, the Bonds were issued under and secured by a Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”) between the Authority and the Bondholder; and
WHEREAS, pursuant to a Lease Agreement, dated as of June 1, 2020 (the “Lease Agreement”), between the Authority and Fox Factory, Inc., as lessee (in such capacity, the “Lessee”), the Authority has agreed to lease the Project (as defined in said Lease Agreement) to the Lessee and the Lessee agreed, among other things, to make rental payments to the Authority sufficient to pay, among other things, all debt service on the Bonds and certain other expenses; and
WHEREAS, a Short Form Lease Agreement incorporating the Lease Agreement by reference is recorded in Deed Book ______, pages ______, Hall County, Georgia Deed Records (the “Short Form Lease”); and
WHEREAS, pursuant to the Financing Agreement, the Lease Agreement is being assigned on a first priority basis to the Bondholder to secure payment of the Bonds; and
WHEREAS, the Authority has agreed to execute this Assignment to evidence the assignment of its right, title and interest in and to the Lease Agreement to the Bondholder pursuant to the Financing Agreement;
NOW, THEREFORE, the Authority, intending to be legally bound, by these presents does hereby grant, bargain, sell, convey, alienate, assign, transfer and set over unto the Bondholder and to it and its assigns forever for the benefit of the Bondholder, all and singular, the Lease Agreement and the Short Form Lease and the rights of the Authority under and pursuant to the terms thereof, and all rental payments and other payments receivable by the Authority thereunder (except for certain indemnification rights provided therein). The Project which is the subject of the Lease Agreement and the Short Form Lease is more particularly described in the Short Form Lease, which Short Form Lease is incorporated herein and by reference made a part hereof.
IN WITNESS WHEREOF, the Authority has executed this Assignment of Lease Agreement under seal, the day and year first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/T. Treadwell Syfan
Secretary
As to the Issuer, signed and sealed and delivered in the presence of:
By: /s/ Lisa F. Smith
Witness
By: /s/ Sandra K. Jones
Notary Public
My commission expires: July 10, 2023
Exhibit 10.7
DIRECT PAYMENT AGREEMENT
THIS DIRECT PAYMENT AGREEMENT is made as of the 1st day of June, 2020, by and among Gainesville and Hall County Development Authority (the “Issuer”) and Fox Factory, Inc., as Lessee under the Agreement, as defined below (in such capacity, the “Lessee”), a California corporation authorized to transact business in Georgia, and Fox Factory, Inc., as the Bondholder (in such capacity, the “Bondholder”).
WITNESSETH:
WHEREAS, the Bondholder is the holder of the $75,000,000 Gainesville and Hall County Development Authority Taxable Industrial Development Revenue Bonds (Fox Factory, Inc. Project), Series 2020 (the “Bonds”), which Bonds have been issued by the Issuer under and secured by that certain Financing Agreement, dated as of June 1, 2020 (the “Financing Agreement”), between the Issuer and the Bondholder; and
WHEREAS, the Bonds are secured by a pledge and an assignment to the Bondholder under the Financing Agreement of the Issuer’s interest in a Lease Agreement, dated as of June 1, 2020 (the “Agreement”), between the Lessee and the Issuer, pursuant to which Lessee is obligated to make rental payments to the Issuer in an amount sufficient to pay the principal, premium, if any, and interest required to be paid with respect to the Bonds; and
WHEREAS, the parties wish to enter into this Direct Payment Agreement as permitted by Section 208 of the Financing Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby agree as follows:
1. Notwithstanding any provision of the Financing Agreement or of the Bonds to the contrary, the Lessee on behalf of the Issuer shall make all payments of principal and interest on the Bonds, whether at maturity or by reason of prepayment, directly to the Bondholder at its address shown on the bond registration book of the Issuer. The payment by Lessee of the rental payments required under Section 5.3 of the Agreement directly to the Bondholder shall be deemed to be the payment by the Issuer of the principal and interest on the Bonds, and Lessee hereby agrees to make said rental payments directly to the Bondholder at its address set forth on the Bonds registration book of the Issuer. Notwithstanding the foregoing, the Lessee and the Bondholder acknowledge and agree that no cash shall be paid so long as the Lessee is also the Bondholder of the Bonds.
2. The Issuer shall not be liable to the Bondholder or the Lessee for any act or omission to act on the part of the Lessee or the Bondholder in connection with this Direct Payment Agreement, and the Issuer shall not be deemed to have notice of any default in the making of any such payment by Lessee.
3. So long as this Direct Payment Agreement is in effect, upon the transfer of the Bonds, the Bondholder, prior to the delivery of the Bonds to the transferee, shall make a notation on the Bonds of the date to which interest has been paid thereon and the amount of any partial redemption made on account of the principal thereof, and the Issuer shall not be deemed to have notice of any such payment by the Lessee. The transferee shall be required to submit the Bonds to the Bondholder for re-registration, and new Bonds shall be issued for the unpaid principal amount thereof pursuant to the terms of the Financing Agreement. Upon any such transfer, the Issuer shall give written notice by first class mail to the Lessee of the transfer of the Bonds.
4. This Direct Payment Agreement shall remain in effect until terminated by written notice from the Bondholder to the Issuer and the Lessee. Any such notice must be received at least fifteen (15) days prior to any interest payment date under the Bonds. In addition, this Direct Payment Agreement shall terminate upon transfer of the Bonds by the Bondholder.
1
IN WITNESS WHEREOF, the parties hereto have executed this Direct Payment Agreement on the date first above written.
GAINESVILLE AND HALL COUNTY DEVELOPMENT AUTHORITY
By: /s/ Philip A. Wilheit
Chairman
Attest: /s/T. Treadwell Syfan
Secretary
LESSEE:
FOX FACTORY, INC.
By: /s/ John E. Blocher
John E. Blocher
Chief Financial Officer
BONDHOLDER:
FOX FACTORY, INC.
By: /s/ John E. Blocher
John E. Blocher
Chief Financial Officer