- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of November 1, 1996
BETWEEN
MARYLAND INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY
("Issuer") and
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
("Borrower") $7,000,000
Maryland Industrial Development Financing Authority
Economic Development Revenue Bonds
(Chesapeake Biological Laboratories, Inc. Facility)
1996 Issue
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CERTAIN RIGHTS OF THE ISSUER UNDER THIS AGREEMENT HAVE BEEN ASSIGNED TO, AND
ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS TRUSTEE AND BRANCH BANKING AND TRUST COMPANY, AS CREDIT
FACILITY TRUSTEE UNDER A TRUST INDENTURE OF EVEN DATE HEREWITH BETWEEN THE
ISSUER, THE TRUSTEE AND THE CREDIT FACILITY TRUSTEE, AS AMENDED OR SUPPLEMENTED
FROM TIME TO TIME.
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of November 1, 1996, between the Maryland
Industrial Development Financing Authority, a body corporate and politic and a
public instrumentality of the State of Maryland, (the "Issuer"), and Chesapeake
Biological Laboratories, Inc., a Maryland corporation (the "Borrower"),
W I T N E S S E T H:
In consideration of the respective representations and agreements contained
herein, the parties hereto, recognizing that under the Act (as hereinafter
defined) this Loan Agreement shall not in any way obligate the State (as
hereinafter defined) or any political subdivision thereof, the Department (as
hereinafter defined), the Issuer or any other public body, to raise any money by
taxation or use other public moneys for any purpose in relation to the Facility
(as hereinafter defined) and that neither the State nor any political
subdivision thereof, nor the Department, nor the Issuer, nor any other public
body, shall pay or promise to pay any debt or meet any financial obligation to
any person at any time in relation to the Facility, except from moneys received
or to be received under the provisions of this Loan Agreement, the Note, the
Insurance Agreement and from the Credit Facility Issuer under a Credit Facility
(each as hereinafter defined) or derived from the exercise of the rights of the
Issuer thereunder, agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions. In addition to words and terms elsewhere defined
in this Loan Agreement or in the Indenture, the following words and terms shall
have the following meanings:
"Acquisition" or "acquisition" means, when used in regard to the Facility,
and shall include, where applicable, and without limitation, the acquisition,
construction, rehabilitation, remodeling, extension, equipping and permanent
improvement of the Facility, and paying the necessary costs of preparing,
printing and selling the Bonds, and such other costs as may be permitted by the
Act and the Code.
"Act" shall mean the MIDFA Act and the Revenue Bond Act.
"Administrative Expenses" shall mean the amounts payable pursuant to Section
7.2 hereof by the Borrower to or for the account of the Issuer to provide for
payment of the costs and expenses incurred by the Issuer.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to a Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Alternate Credit Facility" shall mean an irrevocable direct pay letter of
credit, insurance policy, surety bond or similar credit enhancement or support
facility for the benefit of the Trustee, the terms of which Alternate Credit
Facility shall in all respects material to the Bondholders be the same (except
for the term set forth in such Alternate Credit Facility) as the Letter of
Credit.
"Bank" shall mean First Union National Bank of North Carolina, as the issuer
of the Letter of Credit.
"Bond" or "Bonds" shall mean any bond or bonds authenticated and delivered
under the Indenture.
"Bond Documents" shall mean collectively the Indenture, the Bonds, this Loan
Agreement, the Note, the Placement Agreement, the Tender Agency Agreement and
the Remarketing Agreement.
"Bondholder" or "Bondholders" or "owner of Bonds" or "owners of Bonds" shall
mean (a) in the event that the book-entry system of evidence of transfer of
ownership in the Bonds is employed pursuant to Section 206 of the Indenture,
Cede & Co., as nominee of DTC, or its nominee, and (b) in all other cases the
person or persons in whose name any of the Bond or Bonds are registered on the
books and records of the Bond Registrar pursuant to Section 204 of the
Indenture.
"Bond Fund" shall mean the trust fund created under Section 502 of the
Indenture.
"Borrower" shall mean Chesapeake Biological Laboratories, Inc., a Maryland
corporation, and its successors and assigns and any surviving, resulting or
transferee corporation or other entity.
"Borrower Representative" shall mean any one of the persons at the time
designated to act on behalf of the Borrower by the written certificate furnished
to the Issuer and the Trustee containing the specimen signatures of such persons
and signed on behalf of the Borrower by the President or any duly authorized
Vice President of the Borrower.
"Borrower's Tax Certificate" shall mean the Borrower's Tax Certificate and
Compliance Agreement dated the date of the initial issuance and delivered of the
Bonds, together with any amendments or supplements thereto.
"Business Day" shall mean a day upon which banks in the State and in the
Commonwealth of Virginia and the State of North Carolina are open for the
transaction of business of the nature required pursuant to this Loan Agreement
and the Indenture.
2
"Co-Bond Counsel" or "Bond Counsel" shall mean Chewanney A. Brown, Attorney
At Law, and Miles & Stockbridge, a Professional Corporation, or a firm of
attorneys of nationally recognized standing in matters pertaining to the
tax-exempt nature of interest on bonds issued by states and their political
subdivisions, duly admitted to the practice of law before the highest court of
any state of the United States of America and approved by the Issuer.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
related regulations, rulings and procedures issued by the United States
Department of the Treasury or its successors.
"Completion Date" shall mean that date certified by the Borrower under
Section 4.3 hereof.
"Consistent Basis" shall mean, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
period referred to are comparable in all material respects to those applied in
the preceding period, except as to any changes consented to by the Trustee and
the Credit Facility Issuer.
"Cost of Acquisition of the Facility" shall mean the costs and allowances
for the Acquisition of the Facility which are permitted under the Act and which
include, but are not limited to, all capital costs of the Facility, including
the following: (i) the Acquisition, construction, renovation and installation of
the Facility at the Facility Site; (ii) preparation of the plans and
specifications, if any, for the Facility (including any preliminary study or
plan of the Facility or any aspect thereof), any labor, services, materials and
supplies used or furnished in the Acquisition of the Facility, the acquisition
and installation necessary to provide utility services or other services and all
real and tangible personal property deemed necessary by the Borrower in
connection with the Facility; (iii) the fees for architectural, engineering,
supervisory and consulting, services in connection with the Acquisition of the
Facility; (iv) to the extent they shall not be paid by a contractor, the
premiums of all insurance and surety and performance bonds required to be
maintained in connection with the Acquisition of the Facility; (v) any fees and
expenses in connection with the acquisition, perfection and protection of title
to the Facility Site and any fees and expenses incurred in connection with the
preparation, recording or filing of such documents, instruments or financing
statements as either the Borrower, the Issuer or the Trustee may deem desirable
to perfect or protect the rights of the Issuer or the Trustee under the Bond
Documents, the Bonds and the Letter of Credit Documents; (vi) the legal,
accounting and financial advisory fees and expenses, filing fees, and printing
and engraving costs incurred in connection with the authorization, issuance,
sale and purchase of the Bonds, and the preparation of the Bond Documents, the
Bonds, the Letter of Credit Documents, and all other documents in connection
with the authorization, issuance and sale of the Bonds; (vii) interest prior to,
during and for a period not exceeding one year after completion of construction
of the Facility; and (viii) any administrative or other fees charged by the
Issuer or reimbursement thereto of expenses, in connection with the Facility to
the Completion Date.
3
"Counsel" shall mean an attorney or a firm of attorneys acceptable to the
Trustee, and may, but need not, be Co-Bond Counsel to the Issuer, the Credit
Facility Issuer or the Borrower.
"Collateral Pledge Agreement" means the Collateral Pledge Agreement dated as
of November 1, 1996 by and between the Borrower and the Bank.
"Credit Facility" shall mean the Letter of Credit or any Alternate Credit
Facility delivered to the Credit Facility Trustee, pursuant to Article VI of the
Indenture.
"Credit Facility Issuer" shall mean the Bank with respect to the Letter of
Credit and the institution issuing any Alternate Credit Facility.
"Credit Facility Trustee" shall mean the banking institution at the time
serving as Credit Facility Trustee under the Indenture, if any.
"Deed of Trust" shall mean the Deed of Trust dated as of November 1, 1996
from the Borrower to certain individual trustees named therein.
"Department" means the Department of Business and Economic Development of
the State.
"Determination of Taxability" shall be defined as and shall be deemed to
have occurred on the first to occur of the following: (i) on that date when
the Borrower files any statement, supplemental statement or other tax
schedule, return or document (whether pursuant to Treasury Regulations
Section 1.103-10(b)(2)(vi), as the same may be amended or supplemented, or
otherwise) which discloses that an Event of Taxability shall have in fact
occurred; (ii) on that date when any Bondholder or former Bondholder notifies
the Borrower or the Trustee that it has received a written opinion of bond
counsel to the effect that an Event of Taxability shall have occurred unless,
within 180 days after receipt by the Borrower of such notification from the
Trustee, any Bondholder or any former Bondholder, the Borrower shall obtain
and deliver to the Trustee and each Bondholder and former Bondholder a
favorable ruling or determination letter issued to or on behalf of the
Borrower by the Commissioner or any District Director of Internal Revenue (or
any other government official exercising the same or a substantially similar
function from time to time) to the effect that, after taking into
consideration such facts as form the basis for the opinion that an Event of
Taxability has occurred, an Event of Taxability shall not have occurred;
(iii) on that date when the Borrower shall be advised in writing by the
Commissioner or any District Director of Internal Revenue (or any other
government official or agent exercising the same or a substantially similar
function from time to time) that, based upon filings of the Borrower, or upon
any review or audit of the Borrower, or upon any other grounds whatsoever, an
Event of Taxability shall have occurred; (iv) on that date when the Borrower
shall receive notice in writing from any Bondholder or former Bondholder, or
from the Trustee, that the Internal Revenue Service (or any other government
agency exercising the same or a substantially similar function from time to
time) has assessed as includable in the gross income of any Bondholder or
former Bondholder the interest on such Bondholder's or former Bondholder's
Bond due to the occurrence of an Event of Taxability;
4
provided, however, no Determination of Taxability shall occur under
subparagraph (iii) or (iv) hereof unless the Borrower has been afforded the
opportunity, at its expense, to contest any such assessment or unfavorable
ruling and, further, no Determination of Taxability shall occur until such
contest, if made, has been finally determined.
"Eminent Domain" shall mean the taking of title to, or the temporary use of,
the Facility or any part thereof pursuant to eminent domain or condemnation
proceedings, or any voluntary conveyance of any part of the Facility during the
pendency of, or as a result of a threat of, such proceedings.
"Equipment" shall mean all of the fixtures (including all leasehold
improvements), machinery, equipment and other items of tangible personal
property now owned or hereafter acquired by the Borrower and located or to be
located on or affixed to the Facility Site, together with all substitutions
therefor and all repairs, renewals and replacements thereof.
"Event of Default" or "Default" shall have the meaning set forth in Section
9.1 hereof.
"Event of Taxability" shall mean a change in law or fact or the
interpretation thereof, or the occurrence or existence of any fact, event or
circumstance (including, without limitation, the issuance of obligations or the
incurring of capital expenditures in excess of those permitted by Sections
144(a)(4)(A) of the Code, or the taking of any action by the Borrower, or the
failure to take any action,by the Borrower, or the making by the Borrower of any
misrepresentation herein or in any certificate required to be given in
connection with the issuance, sale or delivery of the Bonds) which has the
effect of causing the interest paid or payable on any Bond to become includable
in the gross income of any Bondholder or former Bondholder other than a
Bondholder or former Bondholder who is or was a "substantial user" or "related
person" as such terms are used in Section 147(a) of the Code.
"Facility" shall mean (a) the acquisition of the Facility Site, (b) the
renovation and rehabilitation of the existing improvements thereon, (c) the
acquisition and installation of certain necessary or useful equipment and
machinery, and (d) the acquisition of such other interests in land or
improvements as may be necessary and suitable for the foregoing, including roads
and rights of access, utilities and other necessary site preparation facilities.
"Facility Site" shall mean those parcels of land containing in the aggregate
approximately 3.5 acres located at 1111 South Paca Street in Baltimore City,
Maryland (as more particularly described in Exhibit A attached to the Deed of
Trust) and any and all improvements thereon including, without limitation, a
building containing approximately 70,000 square feet.
"Generally Accepted Accounting Principles" shall mean those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have
other substantial authoritative support and are applicable in the
circumstances as of the date of application, as such principles are from time
to time supplemented and amended.
5
"Government Obligations" shall mean (i) direct obligations of the United
States of America, (ii) obligations unconditionally guaranteed by the United
States of America, and (iii) securities or receipts evidencing ownership
interests in obligations or specified portions (such as principal or interest)
of obligations described in clause (i) or (ii) above the full and timely payment
of which securities, receipts or obligations is unconditionally guaranteed by
the United States of America.
"Indenture" shall mean the Trust Indenture of even date herewith by and
between the Issuer, the Trustee and the Credit Facility Trustee, together with
any amendments or supplements thereto permitted thereby.
"Insurance Agreement" shall mean the Insurance Agreement dated as of
November 1, 1996 by and among the Issuer, the Bank and the Borrower, pursuant to
which the Issuer is insuring a portion of the obligations of the Borrower under
the Reimbursement Agreement.
"Issuer" shall mean the Maryland Industrial Development Financing Authority,
a body corporate and politic and a public instrumentality of the State.
"Issuer Representative" shall mean the Chairman, Vice Chairman or Executive
Director or such other persons at the time designated to act on behalf of the
Issuer by written certificate furnished to the Borrower and the Trustee
containing the specimen signatures of such persons and signed on behalf of the
Issuer by its Chairman or Vice Chairman.
"Letter of Credit" shall mean the irrevocable direct pay letter of credit
dated as of November 1, 1996 in the amount of $7,280,000 issued by the Bank,
including any extensions thereof.
"Letter of Credit Documents" shall mean the Letter of Credit, the Deed of
Trust, the Security Agreement, the Reimbursement Agreement, the Insurance
Agreement, the Pledge Agreement and the Collateral Pledge Agreement.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements hereto.
"Net Proceeds" when used with respect to any insurance proceeds or award
resulting from, or other amount received in connection with, Eminent Domain
shall mean the gross proceeds from such proceeds, award or other amount, less
all expenses (including attorneys' fees) incurred in the realization thereof.
"Note" shall mean the promissory note given by the Borrower pursuant to
Section 5.1 of this Loan Agreement, substantially in the form of Exhibit A
attached hereto.
"Official Intent" shall mean the action taken by the Issuer on May 23, 1996
in adopting a resolution authorizing the issuance of the Bonds.
"Overdue Rate" shall mean the Prime Rate plus two percent.
6
"Payment of the Bonds" shall mean payment of (i) the principal of, premium
(if any) and interest on and purchase price of the Bonds in accordance with
their terms whether through payment at maturity, upon acceleration, prepayment
or purchase, (ii) all amounts due as Administrative Expenses or otherwise, and
(iii) any and all other liabilities and obligations arising under the Indenture
and this Loan Agreement; in any case, in such a manner that all such amounts due
and owing with respect to the Bonds shall have been paid.
"Permitted Encumbrances" shall mean, as of any particular time, "Permitted
Liens," as defined in the Reimbursement Agreement.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture, joint-stock company, or
a government or agency or political subdivision thereof.
"Placement Agreement" shall mean the letter agreement of even date herewith
between the Borrower and First Union National Bank of North Carolina, as
Placement Agent, providing for the introducing of the Bonds by the Placement
Agent to prospective purchasers.
"Plans and Specifications" shall mean the plans and specifications used in
the Acquisition of the Facility, as the same may be revised from time to time by
the Borrower in accordance with Section 3.3 hereof.
"Plant" shall mean all buildings, structures, improvements, fixtures,
furniture, machinery, equipment or other property (excluding inventory) of the
Borrower, now or hereafter located at or affixed to the Facility Site, including
without limitation the Facility.
"Pledge Agreement" shall mean the Pledge Agreement of even date herewith
between the Borrower and the Bank, and any amendments or supplements thereto.
"Prime Rate" shall mean the rate of interest per annum announced by First
Union National Bank of North Carolina at its principal office in Charlotte,
North Carolina from time to time to be its prime rate.
"Private Placement Memorandum" shall mean the Private Placement Memorandum
dated November 1, 1996, relating to the Bonds.
"Reimbursement Agreement" shall mean the Letter of Credit and Reimbursement
Agreement of as of November 1, 1996 between the Borrower and the Bank, as the
same may be amended from time to time and filed with the Trustee, and any
agreement of the Borrower with a Credit Facility Issuer setting forth the
obligations of the Borrower to such Credit Facility Issuer arising out of any
payments under a Credit Facility and which provides that it shall be deemed to
be a Reimbursement Agreement for the purposes of the Indenture.
"Remarketing Agent" shall mean First Union National Bank of North Carolina
(acting through its Capital Markets Group) and its successor as provide in
Section 1201 of the Indenture.
7
"Remarketing Agreement" shall mean the Remarketing Agreement of dated as of
November 1, 1996 between the Borrower and the Remarketing Agent, as amended,
restated, modified or supplemented from time to time.
"State" shall mean the State of Maryland.
"Tender Agency Agreement" shall mean the Tender Agency Agreement dated as of
November 1, 1996 among the Borrower, the Trustee and the Tender Agent.
"Tender Agent" means First Union National Bank of North Carolina and its
successors as provided in Section 1202 of the Indenture.
"Trustee" shall mean the banking institution at the time serving as Trustee
under the Indenture.
Section 1.2. Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders, and words of the neuter
gender shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(b) The table of contents, captions and headings in this Loan Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Loan Agreement.
(c) All references herein to particular articles or sections are references
to articles or sections of this Loan Agreement unless some other reference is
established.
(d) All accounting terms not specifically defined herein shall be construed
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
(e) All references herein to the Borrower shall be deemed to refer to each
of the Persons if more than one, as described by such term and any agreement,
obligation, duty or liability of the Borrower shall be a joint and several
agreement, obligation, duty or liability of each of the Persons so described by
such term.
(f) Any terms not defined herein but defined in any of the other Bond
Documents shall have the same meaning herein.
(g) All references herein to the Code or any particular provision or section
thereof shall be deemed to refer to any successor, or successor provision or
section, thereof, as the case may be.
ARTICLE II
8
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer represents and
warrants as follows:
(a) The Issuer is a body politic and corporate and a public instrumentality
of the State. Under the provisions of the Act, the Issuer has the power to enter
into this Loan Agreement and the other Bond Documents entered into by it and the
transactions contemplated hereunder and thereunder and to carry out its
obligations hereunder and thereunder. By proper action, the Issuer has duly
authorized the execution and delivery of this Loan Agreement and each of the
other Bond Documents executed and delivered by it. The Issuer is not in default
under any of the provisions of the laws of the State which would affect its
existence or its powers referred to in this subsection (a).
(b) To finance the cost of the acquisition of the Facility, the Issuer has
agreed at the request of the Borrower to issue and sell the Bonds and to lend
the proceeds thereof to the Borrower under and pursuant to this Loan Agreement.
(c) As provided in the Indenture, the Revenues are pledged to secure the
payment of the principal of and interest and premium (if any) on the Bonds and
for any other payment referred to in this Loan Agreement.
(d) This Loan Agreement and the Indenture have been duly and properly
authorized, executed, sealed and delivered by the Issuer, constitute valid and
legally binding obligations of the Issuer, and are fully enforceable against the
Issuer in accordance with their respective terms. Provided, however, that the
enforceability and binding nature of this Loan Agreement and the Indenture are
subject to bankruptcy, insolvency, reorganization and other state and federal
laws affecting the enforcement of creditors' rights generally, and, to the
extent that certain remedies under such instruments require, or may require
enforcement by a court of equity, such principles of equity as the court having
jurisdiction may impose.
(e) There are no proceedings pending or, to the knowledge of the Issuer,
threatened before any court or administrative agency which may affect the
authority of the Issuer to enter into this Loan Agreement or the Indenture.
(f) The execution, delivery and performance by the Issuer of this Loan
Agreement and the Indenture, or any other document required or contemplated
hereby to be delivered by the Issuer, do not and shall not constitute a
violation or breach of or a default under any existing mortgage, indenture,
contract, instrument or agreement binding on the Issuer or affecting its
property, or any provision of law or order of any court binding upon the Issuer.
Section 2.2. Representations, Warranties and Covenants by the Borrower.
The Borrower represents, warrants and covenants as follows:
9
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, and is qualified to do
business in the State, has legal authority to enter into and to perform the
agreements and covenants on its part contained in the Bond Documents and the
Letter of Credit Documents to which it is a party and the approval of the
section of the Private Placement Memorandum entitled "The Borrower," and has
duly authorized the execution, delivery and performance of the Bond Documents
and the Letter of Credit Documents to which it is a party.
(b) The borrowing under the Note, the execution and delivery of this Loan
Agreement and the other Bond Documents and the Letter of Credit Documents to
which it is a party and the approval of the section of the Private Placement
Memorandum entitled "The Borrower," the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of or compliance with the
terms and conditions hereof and thereof do not and will not violate, conflict
with or constitute a breach of or default under or require any consent (except
for such consents and approvals as have heretofore been obtained) pursuant to
the Articles of Incorporation or Bylaws of the Borrower, any law or regulation
of the United States or the State or, to the best knowledge of the Borrower, of
any other jurisdiction presently applicable to the Borrower, any order of any
court, regulatory body or arbitral tribunal or any agreement or instrument to
which the Borrower is a party or by which it or any of its property is bound.
(c) The Borrower will cause the proceeds of the Bonds to be applied to the
Facility.
(d) The Borrower intends that the proceeds of the Loan be used solely to pay
Facility Costs. The Borrower intends that the interest payable on the Bonds
shall be excludable from the gross income of the holders thereof for purposes of
federal income taxation and shall be exempt from state, county and municipal
taxation in the State.
(e) The Borrower presently expects to operate the Facility as a
pharmaceutical-manufacturing facility until Payment of the Bonds.
(f) The Facility is a "facility" within the meaning of the Act.
(g) The Facility is located wholly within Baltimore City, Maryland.
(h) Assuming due authorization, execution and delivery by the other parties
thereto, when executed and delivered, the Bond Documents to which the Borrower
is a party and the Placement Agreement will be the valid and binding obligations
or agreements of the Borrower enforceable in accordance with their respective
terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws effecting the rights of creditors
generally and by general principles of equity, whether applied in a proceeding
at law or in equity.
(i) There is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or agency or arbitral body now pending,
or to the knowledge of the Borrower, threatened against or affecting the
Borrower or any properties or rights of the
10
Borrower which, if adversely determined, would materially impair the right of
the Borrower to carry on its business substantially as now conducted or would
materially adversely affect the Facility Site or the financial condition,
business or operations of the Borrower or the transactions contemplated by,
or the validity of, any of the Bond Documents, the Letter of Credit Documents
or the Placement Agreement.
(j) The Borrower has filed all federal, state and local tax returns which
are required to be filed by it and has paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the extent that
such taxes have become due, and no controversy in respect of additional
income taxes, state or federal, of the Borrower is pending or, to the
knowledge of the Borrower, threatened which has not heretofore been disclosed
in writing to the Trustee and which, if adversely determined, would
materially and adversely affect the financial condition or operations of the
Borrower.
(k) Neither the Bond Documents nor the Letter of Credit Document to which
the Borrower is a party nor the Borrower's Tax Certificate contains any
misrepresentation or untrue statement of fact or omits to state a material fact
necessary in order to make any such representation or statement contained
therein in light of the circumstances under which made, not misleading.
(l) The Borrower possesses all necessary patents, licenses, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct its
business as now conducted, without known conflict with any patent, license,
trademark, trade name or copyrights of any other Person.
(m) The Facility Site is properly zoned, and its intended use and the
operation of the Facility comply with the uses permitted by applicable zoning
regulations.
(n) No approval, consent or authorization of, or registration, declaration
or filing with, any governmental or public body or authority is required in
connection with the valid execution, delivery and performance by the Borrower of
the Bond Documents or the Letter of Credit Documents to which it is a party
which has not heretofore been obtained, other than approvals and permits
relating to the construction and improvements at the Facility to be financed
with proceeds of the Bonds, which will be obtained in a timely manner.
(o) The Borrower will not take or omit to take any action which would impair
the exemption of interest on the Bonds from federal income taxation.
(p) All of the representations, warranties and covenants of the Borrower
contained in the Borrower's Tax Certificate are hereby reaffirmed and
incorporated herein by reference.
(q) The Borrower has a place of business in only two counties in the State,
such counties being Baltimore City and Baltimore County. In addition to the
places of business described in the next preceding sentence, since January 1,
1976, the Borrower has had a place of business in the following counties in the
State: Baltimore County at a different location. Since January 1, 1976, the
Borrower has had no other places of business in the State.
11
(r) In addition to Chesapeake Biological Laboratories, Inc., since January
1, 1976, the Borrower has used or operated under the following corporate and/or
trade names: GAC Equine Diagnostics, Inc. Since January 1, 1976, the Borrower
has not changed its name from Chesapeake Biological Laboratories, Inc., or
changed its identity or corporate structure so as to make the use of the name
Chesapeake Biological Laboratories, Inc. in a filed financing statement
materially misleading.
(s) Except for simultaneous liens being granted in favor of the Trustee and
the Bank, there exist no liens or security interests on or with respect to the
Facility (other than Permitted Encumbrances).
(t) The Borrower will comply with all applicable federal, State and local
laws, rules and regulations, subject to the Borrower's right to contest any of
the foregoing in good faith and by appropriate proceedings diligently
prosecuted.
(u) The Borrower will permit access by the Issuer and Trustee to the books
and records of the Borrower at the offices of the Borrower during normal
business hours.
All of the above representations, warranties and covenants shall survive the
execution of this Loan Agreement and the issuance of the Note.
ARTICLE III
ACQUISITION OF THE FACILITY
Section 3.1. Acquisition of the Facility. The Borrower shall complete the
Acquisition of the Facility with all reasonable dispatch, delays incident to
strikes, riots, acts of God or the public enemy or any delay beyond its
reasonable control only excepted, in accordance with the Plans and
Specifications; provided, however, that if completion of such Acquisition is
delayed for any reason, there shall be no diminution in or postponement of the
payments to be made by the Borrower pursuant to the Note or Section 5.1 hereof.
Section 3.2. Borrower to Obtain Approvals Required for the Facility and the
Plant. The Borrower shall obtain or cause to be obtained all necessary permits
and approvals for the Acquisition of the Facility and the operation and
maintenance of the Plant and the Equipment and shall comply with all lawful
requirements of any governmental body regarding the use or condition of the
Equipment, the Facility Site and the Plant. The Borrower may, however, contest
any such requirement by an appropriate proceeding diligently prosecuted in good
faith.
Section 3.3. Plans and Specifications. The Borrower shall maintain a set
of Plans and Specifications at the Facility Site which shall be available to
the Issuer and the Trustee for inspection and examination during the
Borrower's regular business hours. The Borrower may supplement, amend and add
to the Plans and Specifications, and the Borrower shall be authorized to omit
or make substitutions for components of the Facility, provided that no such
change shall be made which shall be contrary to subsections (c), (d), (e),
(f), (g), (h) and (i)
12
of Section 2.2 hereof or the provisions of Article IX hereof, and provided
further that if any such change would render materially incorrect or
incomplete the description of the initial components of the Facility or the
description of the Facility Site as set forth in Exhibit B to this Loan
Agreement, the Borrower and the Issuer shall amend such Exhibit B to reflect
such change, upon receipt by the Issuer and the Trustee of an opinion of
Co-Bond Counsel that such change will not result in an Event of Taxability.
ARTICLE IV
ISSUANCE OF THE BONDS; FACILITY FUND
Section 4.1. Agreement to Issue the Bonds, Insurance of Other Obligations.
To provide funds for Facility, the Issuer agrees that it will sell, issue and
deliver the Bonds in the aggregate principal amount of $7,000,000 in the manner
set forth in the Indenture and cause the proceeds of the Bonds to be applied as
provided in the Indenture.
THE BONDS AND THE PREMIUM (IF ANY) AND INTEREST THEREON, AND THE PURCHASE
PRICE THEREOF, ARE LIMITED OBLIGATIONS OF THE ISSUER, THE PRINCIPAL OF,
PREMIUM, IF ANY, AND INTEREST ON, AND THE PURCHASE PRICE OF WHICH ARE PAYABLE
SOLELY FROM THE REVENUES TO BE RECEIVED IN CONNECTION WITH THE FINANCING OF
THE FACILITY AND FROM ANY OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH
PURPOSE. NEITHER THE BONDS NOR ANY PREMIUM OR INTEREST THEREON, NOR THE
PURCHASE PRICE THEREOF, SHALL EVER CONSTITUTE AN INDEBTEDNESS OR A CHARGE
AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE STATE OF MARYLAND, THE
DEPARTMENT OF BUSINESS AND ECONOMIC DEVELOPMENT OF THE STATE OF MARYLAND (THE
"DEPARTMENT"), THE ISSUER, BALTIMORE CITY, MARYLAND (THE "CITY") OR ANY OTHER
PUBLIC BODY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR CHARTER PROVISION OR
STATUTORY LIMITATION AND NONE OF THE ABOVE SHALL EVER CONSTITUTE OR GIVE RISE
TO ANY PECUNIARY LIABILITY OF THE STATE OF MARYLAND, THE DEPARTMENT, THE
ISSUER, THE CITY OR ANY OTHER PUBLIC BODY. THE BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS TO WHICH THE FAITH OR CREDIT OF THE STATE OF MARYLAND, THE
DEPARTMENT, THE ISSUER, THE CITY OR ANY OTHER PUBLIC BODY IS PLEDGED.
The Issuer expressly reserves the right (but shall be under no obligation to
do so) to enter into, to the extent permitted by law, an agreement other than
this Loan Agreement with respect to the issuance by the Issuer under an
indenture or indentures other than the Indenture to provide additional funds to
complete the Facility, or to refund all or any principal amount of the Bonds, or
any combination of the foregoing.
Section 4.2. Disbursement from the Facility Fund. All payments from the
Facility Fund to pay the Cost of Acquisition of the Facility or to reimburse the
Borrower for any Cost of Acquisition of the Facility paid or incurred by the
Borrower before or after the execution
13
and delivery of this Loan Agreement and the issuance and delivery of the
Bonds shall be made by the Trustee pursuant to the Indenture upon receipt by
the Trustee of a requisition and certificate substantially in the form of
Exhibit A attached to the Indenture.
Section 4.3. Closeout of the Facility Fund. The Completion Date for the
Facility shall be promptly established and evidenced to the Trustee and shall be
the date on which the Borrower Representative delivers to the Trustee, the
Credit Facility Issuer and the Issuer a certificate stating that, except for the
amounts retained by the Trustee at the Borrower's direction for any Cost of
Acquisition of the Facility not then due and payable, the Acquisition of the
Facility has been completed substantially in accordance with the Plans and
Specifications, and all costs and expenses incurred in connection therewith have
been paid. Notwithstanding the foregoing, such certificate may state that it is
given without prejudice to any rights against third parties that exist at the
date of such certificate or that may subsequently come into being. Such
certificate shall be accompanied by a permanent use and occupancy certificates
authorizing occupancy of the Facility and final lien waivers of the general
contractor and all subcontractors.
Section 4.4. Disposition of the Balance in the Facility Fund. Pursuant to
the Indenture, as soon as practicable after, and in any event within sixty (60)
days from, the Trustee's receipt of the certificate mentioned in Section 4.3
hereof, all amounts remaining in the Facility Fund, including any unliquidated
investments made with money theretofore deposited in the Facility Fund except
for amounts to be retained in the Facility Fund for any Cost of Acquisition of
the Facility not then due and payable as provided in Section 4.3 hereof, shall
be transferred by the Trustee to the Loan Repayment Account of the Bond Fund and
shall be applied to the prepayment of the principal installments of the Bonds in
accordance with the terms of the Indenture.
Section 4.5. Borrower Required to Pay in Event Facility Fund Insufficient.
In the event the moneys in the Facility Fund should not be sufficient to pay the
total cost of the Facility, the Borrower agrees to complete the Facility and to
pay that portion of such cost in excess of the moneys available therefor in the
Facility Fund. THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE
MONEYS PAID INTO THE FACILITY FUND AND AVAILABLE FOR PAYMENT OF THE COST OF THE
FACILITY WILL BE SUFFICIENT TO PAY THE TOTAL COST OF THE FACILITY. The Borrower
agrees that if, after exhaustion of the moneys in the Facility Fund, the
Borrower should pay any portion of the total cost of Facility pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Issuer, the Trustee, the Credit Facility Trustee or any
Bondholder and it shall not be entitled to any abatement or diminution of the
payments required to be made by the Borrower pursuant to the Note or Section 5.1
hereof.
Section 4.6. No Third Party Beneficiary. It is specifically agreed
between the parties executing this Loan Agreement that it is not intended by
any of the provisions of any part of this Loan Agreement to establish in
favor of the public or any member thereof, other than as may be expressly
provided herein or as contemplated in the Indenture, the rights of a third
party beneficiary hereunder, or to authorize anyone not a party to this Loan
Agreement to maintain a suit for personal injuries or property damage
pursuant to the terms or provisions of
14
this Loan Agreement. The duties, obligations, and responsibilities of the
parties to this Loan Agreement with respect to third parties shall remain as
imposed by law.
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT; PAYMENT OF REBATE AMOUNT AND
PURCHASE PRICE
Section 5.1. Loan by the Issuer; Repayment. Upon the terms and conditions of
this Loan Agreement, the Issuer shall lend to the Borrower the proceeds of the
sale of the Bonds. The loan shall be evidenced by and repayable as set forth in
the Note. The loan shall be made by depositing said proceeds in the Facility
Fund in accordance with the terms of the Indenture.
As consideration for the issuance of the Bonds and the making of the loan to
the Borrower by the Issuer, the Borrower will execute and deliver this Loan
Agreement and the Note, in the form attached as Exhibit A hereto, and the Issuer
will endorse the Note without recourse to the order of, and pledge the Note and
assign this Loan Agreement (except for the Reserved Rights of the Issuer) and
the Note to, the Trustee, as the assignee of the Issuer under the Indenture,
contemporaneously with the issuance of the Bonds. The Borrower shall repay the
loan in accordance with the provisions of the Note and of this Loan Agreement.
Section 5.2. No Set-Off. The obligation of the Borrower to make the payments
required by the Note shall be absolute and unconditional. The Borrower will pay
without abatement, diminution or deduction (whether for taxes or otherwise) all
such amounts regardless of any cause or circumstance whatsoever including,
without limitation, any defense, set-off, recoupment or counterclaim that the
Borrower may have or assert against the Issuer, the Trustee, the Credit Facility
Trustee, any Bondholder or any other Person.
Section 5.3. Prepayments. The Borrower may prepay all or any part of the
amounts the Note obligates it to pay as provided in Section 701 and 702 of the
Indenture with respect to redemption of the Bonds. Except as provided in this
Section 5.3 and in Sections 4.4, 10.1, 10.2 and 10.3, the Borrower shall not be
entitled to prepay the Note or cause the Bonds to be prepaid. The Borrower shall
prepay all of the amounts it is required to prepay as provided in Sections 10.2
and 10.3 hereof.
Section 5.4. Credits Against the Note. To the extent that principal of or
interest on the Bonds shall be paid, including those payments made pursuant
to a draw under a Credit Facility, there shall be credited against the unpaid
principal of or interest on the Note, as the case may be, an amount equal to
the principal of or interest on the Bonds so paid. If the principal of and
interest on and other amounts payable under the Bonds shall have been paid
sufficiently that Payment of the Bonds shall have occurred, then the Note,
ipso facto, shall be deemed to have been paid in full, the Borrower's
obligations thereon shall be discharged (with the exception of the obligation
of the Borrower to make certain payments which may subsequently arise as a
result of a Determination of Taxability which shall survive
15
(notwithstanding Payment of the Bonds), and the Note shall be canceled and
surrendered to the Borrower.
Section 5.5. Letter of Credit and Reimbursement Agreement. As a further
condition to the Issuer's making the loan hereunder, the Borrower shall:
(a) cause the Letter of Credit to be issued and delivered to the Credit
Facility Trustee as security for the Bonds. Until the earlier to occur of the
Conversion Date or payment of the Note and the Bonds in full, the Borrower shall
cause a Credit Facility meeting the requirements of Section 603 of the Indenture
to be maintained with the Credit Facility Trustee; and
(b) enter into the Reimbursement Agreement in form and substance
satisfactory to the Bank and execute and deliver the other Letter of Credit
Documents required by the Bank.
Section 5.6. Rebate Amount. The Borrower shall pay at any time and from
time to time the Rebate Amount, if any, to the United States of America as
provided in the Indenture and the Borrower's Tax Certificate. The Borrower
shall pay to the Trustee at any time and from time to time for deposit into
the Rebate Fund moneys equal to the Rebate Amount. If the moneys on deposit
in the Rebate Fund are not sufficient to pay the Rebate Amount, the Borrower,
immediately upon notice from the Trustee, shall pay to the Trustee, for
deposit in the Rebate Fund, an amount of money sufficient to cause the amount
of moneys on deposit in the Rebate Fund to equal the Rebate Amount.
Section 5.7. Payments to Trustee for Purchase of Bonds. The Borrower shall
pay to the Trustee amounts equal to the amounts to be paid to Owners of Bonds
pursuant to Section 203 and Section 701(e) of the Indenture, on the dates the
purchase price of Bonds tendered or deemed tendered for purchase to the Trustee
is to be paid pursuant to the Indenture and the Bonds. The obligation of the
Borrower to make the payments required to be made under this Section 5.7 shall
be reduced by the amount of any moneys available for such payment from proceeds
of the remarketing and sale of Bonds or money received from a drawing under the
Credit Facility to pay the purchase price of such Bonds.
ARTICLE VI
GENERAL COVENANTS
Throughout the Loan Term and until all of the Issuer's obligations and the
Borrower's obligations under the Bond Documents and the Letter of Credit
Documents shall have been paid and performed in full, the Borrower will
undertake the following:
Section 6.1. Maintenance and Modification of the Plant by Borrower. The
Borrower agrees that, until Payment of the Bonds shall be made, it will at
its own expense, (i) keep the Plant and the Facility Site or cause the Plant
and the Facility Site to be kept in as reasonably safe a condition as its
operations shall permit, (ii) make or cause to be made from time to time
16
all necessary repairs thereto and renewals and replacements thereof and
otherwise keep the Plant in good repair and in good operating condition and
(iii) not permit or suffer others to commit a nuisance on or about the Plant
or the Facility Site. The Borrower shall pay or cause to be paid all costs
and expenses of operation and maintenance of the Plant.
The Borrower may, at its own expense, make from time to time any additions,
modifications or improvements to the Plant that it may deem desirable for its
business purposes and that do not materially impair the effective use, or
decrease the value, of the Facility.
Section 6.2. Taxes and Utility Charges.
(a) The Borrower shall pay as the same respectively become due, all taxes,
assessments, levies, claims and charges of any kind whatsoever that may at any
time be lawfully assessed or levied against or with respect to the Facility
(including, without limiting the generality of the foregoing, any tax upon or
with respect to the income or profits of the Borrower from the Plant and that,
if not paid, would become a charge on the payments to be made under this Loan
Agreement or the Note prior to or on a parity with the charge thereof created by
the Indenture and including ad valorem, sales and excise taxes, assessments and
charges upon the Borrower's interest in the Plant), all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Facility and all assessments and charges lawfully made by any governmental body
for public improvements that may be secured by lien on any portion of the
Facility.
(b) The Borrower may, at its expense, contest in good faith any such
levy, tax, assessment, claim or other charge, but the Borrower may permit the
items so contested to remain undischarged and unsatisfied during the period
of such contest and any appeal therefrom only if the Borrower shall notify
the Issuer, the Trustee and the Credit Facility Trustee that in the opinion
of Counsel, by non-payment of any such items, the rights of the Trustee and
the Credit Facility Trustee with respect to this Loan Agreement and the Note
created by the assignment under the Indenture, as to the rights assigned
under this Loan Agreement, or any part of the payments to be made under this
Loan Agreement or the Note, will not be materially endangered nor will the
Facility or any part thereof be subject to loss or forfeiture. If the
Borrower is unable to deliver such an opinion of Counsel, the Borrower shall
promptly pay or bond and cause to be satisfied or discharged all such unpaid
items or furnish, at the expense of the Borrower, indemnity satisfactory to
the Trustee and the Credit Facility Trustee; but provided further, that any
tax assessment, charge, levy or claim shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same. The
Issuer, the Trustee and the Credit Facility Trustee, at the expense of the
Borrower, will cooperate fully in any such permitted contest. If the Borrower
shall fail to pay any of the foregoing items, the Issuer or the Trustee may
(but shall be under no obligation to) pay the same and any amounts so
advanced therefor by the Issuer or the Trustee shall become an additional
obligation of the Borrower to the one making the advancement, which amounts,
together with interest thereon at the Overdue Rate, or the maximum contract
rate permitted by law, whichever is lower, from the date of payment, the
Borrower agrees to pay on demand therefor.
17
(c) The Borrower shall furnish the Issuer, the Credit Facility Issuer, the
Trustee and the Credit Facility Trustee, upon request, with proof of payment of
any taxes, governmental charges, utility charges, insurance premiums or other
charges required to be paid by the Borrower under this Loan Agreement.
Section 6.3. Insurance. Until Payment of the Bonds shall be made, the
Borrower will keep the Plant and the Facility Site continuously insured against
such risks as are customarily insured against by businesses of like size and
type engaged in the same or similar manufacturing operations (other than
business interruption insurance) including, without limiting the generality of
the foregoing:
(a) casualty insurance on the Plant in an amount not less than the full
insurable value of all property located at, and all improvements to, the
Facility Site, against loss or damage by fire and lightning and other hazards
ordinarily included under uniform broad form extended coverage policies, limited
only as may be provided in the uniform broad form of extended coverage
endorsement at the time in use in the State;
(b) general comprehensive liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the Plant or the
Facility Site (such coverage to include provisions waiving subrogation against
the Issuer and the Trustee) in amounts not less than $1,000,000 with respect to
bodily injury to any one person, $1,000,000 with respect to bodily injury to two
or more persons in any one accident and $1,000,000, with respect to property
damage resulting from any one occurrence;
(c) liability insurance with respect to the Plant and the Facility Site
under the workers' compensation laws of the State; provided, however, that the
insurance so required may be provided by blanket policies now or hereafter
maintained by the Borrower; and
(d) if at any time any portion of the Facility Site is in an area that has
been identified by the Secretary of Housing and Urban Development as having
special flood and mud slide hazards, a policy of flood insurance covering
improvements located on such portion of the Facility Site with amounts and
coverage satisfactory to the Trustee.
Section 6.4. General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the requirements of
Section 6.3 hereof:
(i) shall be by such insurer (or insurers) as shall be financially
responsible, qualified to do business in the State and of recognized standing;
(ii) shall be in such form and have such provisions (including, without
limitation, the lenders long-form loss payable clause, the waiver of subrogation
clause, the deductible amount, if any, and the standard mortgagee endorsement
clause), as are generally considered standard provisions for the type of
insurance involved and are acceptable in all respects to the Trustee;
18
(iii) shall prohibit cancellation or substantial modification, termination
or lapse in coverage by the insurer without at least 30 days' prior written
notice to the Issuer and the Trustee;
(iv) shall provide that losses thereunder shall be adjusted with the insurer
by the Borrower at its expense on behalf of the insured parties and the decision
of the Borrower as to any adjustment shall be final and conclusive; and
(v) without limiting the generality of the foregoing, all insurance policies
carried on the Plant shall name the Borrower, the Issuer and the Trustee as
parties insured thereunder as the respective interests of each may appear, and
any loss thereunder shall be made payable and shall be applied as provided in
Section 6.8 hereof.
(b) Prior to expiration of any such policy, the Borrower shall furnish the
Trustee with evidence satisfactory to the Trustee that the policy or certificate
has been renewed or replaced in compliance with this Loan Agreement or is no
longer required by this Loan Agreement.
Section 6.5. Advances by the Issuer or the Trustee. In the event the
Borrower shall fail to maintain, or cause to be maintained, the full insurance
coverage required by this Loan Agreement or shall fail to keep or cause to be
kept the Plant in good repair and good operating condition, the Issuer or the
Trustee may (but shall be under no obligation to), after 10 days' written notice
to the Borrower, contract for the required policies of insurance and pay the
premiums on the same and make any required repairs, renewals and replacements,
and the Borrower agrees to reimburse the Issuer and the Trustee to the extent of
the amounts so advanced by them or any of them with interest thereon at the
Overdue Rate or the maximum rate permitted by law, whichever is lower, from the
date of advance to the date of reimbursement. Any amounts so advanced by the
Issuer or the Trustee shall become an additional obligation of the Borrower,
shall be payable on demand, and shall be deemed a part of the obligation of the
Borrower evidenced by the Note.
Section 6.6. Borrower to Make up Deficiency in Insurance Coverage. The
Borrower agrees that to the extent that it shall not carry insurance required by
Section 6.3 hereof, it shall pay promptly to the Trustee for application in
accordance with the provisions of Section 6.8 hereof, such amount as would have
been received as Net Proceeds by the Trustee under the provisions of Section 6.8
hereof had such insurance been carried to the extent required.
Section 6.7. Eminent Domain. Unless the Borrower shall have prepaid the Note
pursuant to the provisions of Article X hereof, in the event that title to, or
temporary use of, the Facility Site, the Plant or any part thereof shall be
taken by Eminent Domain, the Borrower shall be obligated to continue to make the
payments required to be made pursuant to the Note and the Net Proceeds received
as a result of such Eminent Domain shall be applied as provided in Section
6.8(b) hereof.
19
Section 6.8. Application of Net Proceeds of Insurance and Eminent Domain.
(a) The Net Proceeds of the insurance carried pursuant to the provisions of
Sections 6.3(b) and 6.3(c) hereof shall be applied by the Borrower toward
extinguishment of the defect or claim or satisfaction of the liability with
respect to which such insurance proceeds may be paid.
(b) The Net Proceeds of the insurance carried with respect to the Plant
pursuant to the provisions of Sections 6.3(a) and 6.3(d) hereof (excluding the
Net Proceeds of any business interruption insurance, which shall be paid to the
Borrower, but including any Net Proceeds from title insurance), and the Net
Proceeds resulting from Eminent Domain shall be paid to the Trustee and applied
as follows:
(i) If the amount of the Net Proceeds does not exceed $50,000, the Net
Proceeds shall be paid to the Borrower and shall be applied to the repair,
replacement, renewal or improvement of the Plant as necessary. Any residual
amount of Net Proceeds not applied to the repair, replacement, renewal or
improvement of the Plant shall be promptly paid to the Trustee for deposit in
the Loan Repayments Account of the Bond Fund.
(ii) If the amount of the Net Proceeds exceeds $50,000, the Net Proceeds
shall be paid to and held by the Trustee as a special trust fund and invested
in accordance with Section 602 of the Indenture pending receipt of written
instructions from the Borrower. At the option of the Borrower, to be
exercised within the period of 90 days from the receipt by the Trustee of
such Net Proceeds, the Borrower shall advise the Trustee that (A) the
Borrower will use the Net Proceeds for the repair, replacement, renewal or
improvement of the Plant (such funds to be disbursed by the Trustee to the
Borrower following substantially the same procedure for the disbursement of
the proceeds of the Bonds from the Facility Fund), or (B) the Net Proceeds
shall be applied to the prepayment of the Bonds as provided in Article X
hereof. If the Borrower does not advise the Trustee within said period of 90
days that it elects to proceed under clause (A) to use such Net Proceeds for
the repair, replacement, renewal or improvement of the Plant, such Net
Proceeds shall be applied to the prepayment of the Bonds pursuant to Article
X hereof. Any prepayment pursuant to the preceding sentence shall be effected
on the next interest payment date not less than 30 days after the earlier of
notice of the Borrower's election to prepay the Bonds or expiration of said
period of 90 days without an election by the Borrower. The Borrower shall
deposit with the Trustee an amount that together with moneys representing Net
Proceeds, shall be sufficient so that upon redemption no Bonds are in
denomination other than Authorized Denominations.
The Borrower agrees that if it shall elect to use the moneys paid to the
Trustee pursuant to subsection (b)(ii) of this Section 6.8 for the repair,
replacement, renewal or improvement of the Plant, it will restore the Plant,
or cause the same to be done, to a condition substantially equivalent to its
condition prior to the occurrence of the event to which the Net Proceeds were
20
attributable. To the extent that the Net Proceeds are not sufficient to
restore or replace the Plant, the Borrower shall use its own funds to restore
or replace the Plant. Prior to the commencement of such work, the Trustee,
the Issuer or the Credit Facility Issuer may require the Borrower to furnish
a completion bond, escrow deposit, or other satisfactory evidence of the
Borrower's ability to pay or provide for the payment of any estimated costs
in excess of the amount of the Net Proceeds. Any balance remaining after any
such application of such Net Proceeds, shall be promptly paid to the Trustee
for deposit in the Loan Repayment Account of the Bond Fund.. The Borrower
shall be entitled to the Net Proceeds of any insurance or resulting from
Eminent Domain relating to property of the Borrower not included in the Plant
or the Facility Site and not providing security for the Note or this Loan
Agreement.
Section 6.9. Parties to Give Notice. In case of any material damage to or
destruction of all or any part of the Plant, the Borrower shall give prompt
notice thereof to the Issuer and the Trustee. In case of a taking or proposed
taking of all or any part of the Plant, the Facility Site or any right therein
by Eminent Domain, the Borrower shall give prompt notice thereof to the Issuer
and the Trustee. Each such notice shall describe generally the nature and extent
of such damage, destruction, taking, loss, proceeding or negotiations.
Section 6.10. Hazardous Material. (1) The Borrower shall not place,
manufacture or store, or permit to be placed, manufactured or stored, on the
Property any Hazardous Materials, except in accordance with all applicable laws.
(2) The Borrower agrees to (a) give notice to the Issuer immediately upon
the Borrower's acquiring knowledge of the presence of any Hazardous Materials
on the Property that are not being used or stored in accordance with all
applicable laws or of any Hazardous Materials Contamination, with a full
description thereof; (b) promptly comply with any laws requiring the removal,
treatment or disposal of such Hazardous Materials or Hazardous Materials
Contamination and provide the Issuer with satisfactory evidence of such
compliance; (c) provide the Issuer, within thirty (30) days after a demand by
the Issuer, with a bond, letter of credit or similar financial assurance
evidencing to the Issuer's satisfaction that the necessary funds are
available to pay the cost of removing, treating and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
Encumbrance which may be established on the Property as a result thereof; and
(d) indemnify and hold harmless the Issuer and the Trustee from any and all
claims which may now or in the future (whether before or after the release of
this Financing Agreement) be asserted as a result of the presence of any
Hazardous Materials on the Property or any Hazardous Materials Contamination
except for those resulting from the gross negligence of the Issuer and the
Trustee or their Agents.
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. Payment of Administrative Expenses of the Trustee, the
Paying Agent, the Remarketing Agent and the Credit Facility Trustee. The
Borrower agrees to pay to the Trustee, the Credit Facility Issuer, the
Remarketing Agent and the Credit Facility Trustee
21
amounts equal to the respective fees and charges of the Trustee, the Credit
Facility Issuer, the Remarketing Agent and the Credit Facility Trustee for
the services rendered and expenses reasonably incurred (including attorneys
fees) under the Bond Documents as and when the same become due; provided,
however, that the fees and expenses of the Remarketing Agent shall be paid by
the Borrower as provided in the Remarketing Agreement. In addition, the
Borrower shall pay all reasonable costs and expenses of the Trustee, the
Credit Facility Trustee and the Credit Facility Issuer in connection with the
registration, exchange or registration of transfer of the Bonds pursuant to
Section 204 of the Indenture. The obligation of the Borrower under this
Section shall survive the termination of this Loan Agreement and the payment
and performance of all other of the Borrower's obligations.
Section 7.2. Payment of Issuer's Administrative Expenses. The Borrower
agrees to pay the Issuer (or, if the Issuer so elects, to pay directly to the
person entitled to payment) for the Administrative Expenses, if any, incurred by
the Issuer in the administration of this Loan Agreement, of the Loan, and of the
Bonds, including attorneys' fees. The obligation of the Borrower under this
Section shall survive the termination of this Loan Agreement and the payment and
performance of all other of the Borrower's obligations.
Section 7.3. No Pecuniary Liability. The Acts prescribe and the parties
intend that by reason of making this Loan Agreement, by reason of the issuance
of the Bonds, by reason of the performance of any act required of it by this
Loan Agreement, or by reason of the performance of any act requested of it by
the Borrower, no indebtedness or charge against the general credit or taxing
powers of the State, the Department or the Issuer within the meaning of any
constitutional or charter provision or statutory limitation shall occur, nor
shall any of the foregoing ever constitute or give rise to any pecuniary
liability of the State, the Department or the Issuer. Nevertheless, if the
Issuer incurs any such pecuniary liability, then in such event the Borrower
shall indemnify and hold the Issuer harmless by reason thereof.
Section 7.4. Indemnification of the Issuer, the Trustee, the Credit
Facility Issuer, the Remarketing Agent and the Credit Facility Trustee. The
Borrower shall protect, indemnify, and save harmless the Issuer, the Trustee,
the Credit Facility Issuer, the Remarketing Agent and the Credit Facility
Trustee and their respective officers, employees and agents against and from
any and all liabilities, suits, actions, claims, demands, losses, expenses
and costs of every kind and nature incurred by, or asserted or imposed
against, the Issuer, the Trustee, the Credit Facility Issuer, the Remarketing
Agent and the Credit Facility Trustee and their respective officers, agents
or employees, or any of them, by reason of any accident, injury (including
death) or damage to any person or property, however caused (other than the
gross negligence or willful misconduct of the Trustee, the Credit Facility
Issuer, the Remarketing Agent or the Credit Facility Trustee, which gross
negligence or willful misconduct shall affect the indemnification rights of
only that person which committed such gross negligence or willful
misconduct), resulting from, connected with or growing out of any act of
commission or omission of the Borrower, or any officers, employees, agents,
assignees, contractors or subcontractors of the Borrower or any use, non-use,
possession, occupation, condition, operation, service, design, construction,
acquisition, maintenance or management of, or on, or in connection with, the
Facility, or any part thereof, during the term of the loan and regardless of
whether such liabilities, suits, actions, claims, demands, damages, losses,
expenses and costs
22
be against or be suffered or sustained by the Issuer, the Trustee, the Credit
Facility Issuer, the Remarketing Agent or the Credit Facility Trustee, or any
of their respective officers, agents or employees, or be against or be
suffered or sustained by legal entities, officers, agents, or other persons
to whom the Issuer, the Trustee, the Credit Facility Issuer, the Remarketing
Agent and the Credit Facility Trustee, or any of their respective officers,
agents or employees may become liable therefor. The Issuer shall not be
liable for any damage or injury occurring during the Loan Term to the persons
or property of the Borrower or any of its officers, agents, including
operating personnel, contractors and employees, or any other person or entity
who or which may be upon the Facility. The Borrower may, and if so requested
by the Issuer, the Trustee, the Credit Facility Issuer, the Remarketing Agent
and the Credit Facility Trustee, shall, undertake to defend, at its sole cost
and expense, any and all suits, actions and proceedings brought against the
Issuer, the Trustee, the Credit Facility Issuer, the Remarketing Agent and
the Credit Facility Trustee, or any of their respective officers, agents or
employees in connection with any of the matters indemnified against in this
Section. The Issuer, the Trustee, the Credit Facility Issuer, the Remarketing
Agent and the Credit Facility Trustee shall give the Borrower timely notice
of and shall forward to the Borrower every demand, notice, summons or other
process received with respect to any claim or legal proceedings within the
purview hereof, but the failure of the Issuer, the Trustee, the Credit
Facility Issuer, the Remarketing Agent or the Credit Facility Trustee to give
such notice shall not affect its right to indemnification hereunder, unless
the failure to give notice shall have deprived the Borrower of a reasonable
opportunity to contest any such matter.
The Borrower agrees to indemnify the Trustee, the Credit Facility Issuer,
the Credit Facility Trustee and their respective officers, employees and agents
for, and to hold them harmless against, any loss, liability or expense incurred
without gross negligence, willful misconduct or bad faith on their part, arising
out of or in connection with the acceptance or administration of the trust or
trusts and duties hereunder and under the Bond Documents, including the costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
hereunder.
If the indemnification provided for herein is held by a court to be
unavailable or is insufficient to hold any indemnified party harmless in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
then the Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Borrower on the one hand and the indemnified party on the
other hand, as well as any other relevant equitable considerations.
The obligations of the Borrower under this Section shall survive the
termination of this Loan Agreement and the payment and performance of all other
of the Borrower's obligations.
All acts, including any failure to act, relating to the Facility by any
agent, representative or designee of the Trustee are performed solely for the
benefit of the Trustee and the Owners to assure repayment of the loan and are
not for the benefit of the Borrower or the benefit of any other person.
23
Section 7.5. Right to Perform; Advances by Issuer or Trustee. If the
Borrower fails to make, or cause to be made, any payment or to perform any other
of the Borrower's obligations, the Issuer or the Trustee, without notice or
demand upon the Borrower, without waiving any default or releasing the Borrower
from any of the Borrower's obligations, and without being under any obligation
to do so, may make such payment or perform any of the Borrower's obligations.
All amounts so paid by the Issuer or the Trustee and all costs, fees and
expenses incurred by the Issuer or the Trustee in connection with such payment
or performance shall be immediately due and payable by the Borrower as
additional payments, together with interest thereon from the date the same are
paid or incurred, until the same are paid in full by the Borrower.
Section 7.6. Agreement to Pay Attorneys' Fees and Expenses. In the event the
Borrower defaults under any of the provisions of the Bond Documents and the
Issuer or the Trustee employs attorneys or incur other expenses for the
collection of amounts due hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Borrower contained
in the Bond Documents, the Borrower will, on demand therefor, pay to the Issuer
or the Trustee the reasonable fees of such attorneys and such other reasonable
expenses so incurred by the Issuer or the Trustee.
Section 7.7. Inspection of Facility. The Borrower will permit the Issuer or
the Trustee or any person or persons authorized by the Issuer or the Trustee to
enter and make inspections of the Facility or any part thereof at all reasonable
times and as often as may be reasonably requested by the Trustee or the Issuer,
and at any time whatsoever, to enforce any remedies upon the occurrence of an
Event of Default, provided, however, that, except in an apparent emergency
situation, neither Bank nor MIDFA, nor their agents or representatives, may
enter any areas of the Property which are proprietary areas or areas designed
for laboratory or related manufacturing activity which would be disturbed or
destroyed as a result of entrance by unauthorized persons (collectively, the
"Clean Areas") without at least three (3) days prior written notice to Borrower,
and then only upon reasonable conditions established by Borrower to maintain the
integrity of the Clean Areas.
Section 7.8. No Warranty of Suitability or Merchantability by Issuer. The
Borrower recognizes that since the Plans and Specifications for constructing the
Facility are furnished by it, and since any items of equipment are selected by
it and are to be installed in accordance with its directions, the Issuer makes
no warranty, either express or implied, and offers no assurances that the
Facility will be suitable for the Borrower's purposes or needs or that the
proceeds derived from the Loan will be sufficient to pay in full all costs of
the acquisition of the Facility. Without limiting the generality of the
foregoing provisions of this Section, the Borrower hereby acknowledges that THE
ISSUER DOES NOT IN ANY WAY WARRANT THE MERCHANTABILITY OF ANY EQUIPMENT, AND
THAT THERE ARE NO IMPLIED WARRANTIES OR WARRANTIES OF FITNESS MADE BY THE
ISSUER. By acceptance of each item of equipment, the Borrower is deemed to have
acknowledged to the Issuer that such item of equipment is in acceptable
condition, occurrence, and operating order.
Section 7.9. Issuer's Rights to Approve Certain Actions and Receive
Notices and Information. Notwithstanding the Granting Clauses of the
Indenture, the Issuer reserves to
24
itself and shall retain the right to grant any and all approvals which the
Issuer is specifically entitled to grant under the terms of the Bond
Documents, and the right to receive from time to time reports, notices and
other information from the Borrower or any other person pursuant to the Bond
Documents.
Section 7.10. Officials of Issuer Not Liable. No covenant or agreement
contained in the Bonds or in the other Bond Documents shall be deemed to be the
covenant or agreement of any official, officer, agent, or employee of the Issuer
in his or her individual capacity, and neither any member of the staff of the
Issuer nor any official executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of the
issuance thereof.
Section 7.11. Access to the Facility and Inspection. The Credit Facility
Issuer, the Trustee, the Credit Facility Trustee, and the Issuer shall have
the right in addition to the rights set forth ins Section 7.7 hereof, at all
reasonable times upon the furnishing of reasonable notice to the Borrower
under the circumstances, to enter upon the Facility Site and to examine and
inspect the Plant and the Equipment, provided, however, that, except in an
apparent emergency situation, neither Bank nor MIDFA, nor their agents or
representatives, may enter any areas of the Property which are Clean Areas
without at least three (3) days prior written notice to Borrower, and then
only upon reasonable conditions established by Borrower to maintain the
integrity of the Clean Areas. The Trustee, the Credit Facility Trustee, the
Credit Facility Issuer, the Issuer and their duly authorized agents shall
also have such right of access to the Facility as may be reasonably necessary
to cause to be completed the construction, acquisition and installation of
the Facility, and thereafter for its proper maintenance, in the event of
failure by the Borrower to perform its obligations relating to maintenance
under this Loan Agreement. The Borrower hereby covenants to execute,
acknowledge and deliver all such further documents, and do all such other
acts and things as may be necessary to grant to the Issuer Representative,
the Credit Facility Trustee, and the Trustee such right of entry. The Issuer,
the Credit Facility Trustee, the Trustee and the Credit Facility Issuer shall
also be permitted, at all reasonable times, to examine the books and records
of the Borrower with respect to the Facility and the obligations of the
Borrower hereunder, but none of them shall be entitled to access to trade
secrets or other proprietary information (other than financial information)
of the Borrower or its clients or customers. No prior notice shall be
required upon the occurrence and continuance of an Event of Default.
Section 7.12. Further Assurances and Corrective Instruments. Subject to
the provisions of the Indenture, the Issuer and the Borrower agree that they
will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements and amendments hereto
and such further instruments as may reasonably be required for carrying out
the intention or facilitating the performance of this Loan Agreement. All
such supplements, amendments and further instruments shall require the
approval of the Credit Facility Issuer.
25
Section 7.13. Recording and Filing; Other Instruments.
(a) The Borrower covenants that it will, at its expense, cause Counsel in
the State to take all steps are as reasonably necessary to render an opinion,
and to render an opinion to the Issuer and the Trustee not earlier than 60 nor
later than 30 days prior to each anniversary date occurring at five-year
intervals after the issuance of the Bonds, to the effect that all financing
statements, continuation statements, notices and other instruments required by
applicable law have been recorded or filed or re-recorded or re-filed in such
manner and in such places required by law in order fully to preserve and protect
the rights of the Trustee and the Credit Facility Trustee in the granting by the
Issuer of certain rights of the Issuer, pursuant to the Indenture, under this
Loan Agreement and the Note.
(b) The Borrower and the Issuer shall execute and deliver all instruments
and shall furnish all information and evidence deemed necessary or advisable by
such Counsel to enable him to render the opinion referred to in subsection (a)
of this Section. The Borrower shall file and re-file and record and re-record or
cause to be filed and re-filed and recorded and re-recorded all instruments
required to be filed and re-filed and recorded or re-recorded pursuant to the
opinion of such Counsel and shall continue or cause to be continued the liens of
such instruments for so long as the Bonds shall be outstanding, except as
otherwise required by this Loan Agreement.
Section 7.14. Non-Arbitrage Covenants: Notice of Event of Taxability.
(a) Neither the Borrower nor the Issuer shall take any action, and the
Borrower covenants that it will not approve the Trustee's taking any action or
making any investment or use of the proceeds of the Bonds, which would cause any
of the Bonds to be an "arbitrage bond" within the meaning of Section 148 of the
Code.
(b) The Borrower's obligation to make any payments of rebate amounts
required by this Loan Agreement and the Indenture and to prepare and furnish to
the Issuer and the Trustee the statements and forms described herein and therein
shall survive Payment of the Bonds notwithstanding any provision of this Loan
Agreement to the contrary.
(c) The Borrower shall give immediate telephonic notice, promptly confirmed
in writing, to the Issuer and the Trustee of any Event of Taxability whether the
Borrower is on Notice of such Event of Taxability by its own filing of any
statement, tax schedule, return or document with the Internal Revenue Service
which discloses that an Event of Taxability shall have occurred, by its receipt
of any oral or written advice from the Internal Revenue Service that an Event of
Taxability shall have occurred, or otherwise.
Section 7.15. Release and Indemnification. The Borrower shall at all
times protect and hold the Issuer, and the Trustee, their respective members,
officers, employees and agents harmless against any claims or liability
resulting from any loss or damage to property or any injury to or death of
any person that may be occasioned by any cause whatsoever pertaining to the
Facility, the Facility Site, the Plant and the Equipment or the use thereof,
including without limitation any lease thereof or assignment of its interest
in this Agreement, such
26
indemnification to include reasonable expenses and attorneys' fees incurred
by the Issuer, and the Trustee, their respective members, officers, employees
and agents in connection therewith, provided that such indemnity shall be
effective only to the extent of any loss that may be sustained by the Issuer
or the Trustee, their respective members, officers, employees and agents in
excess of the Net Proceeds received by it or them from any insurance carrier
with respect to such loss and provided further that the benefits of this
Section 7.7 shall not inure to any person other than the Issuer or the
Trustee, their respective members, officers, employees and agents.
Section 7.16. Additional Information. Until Payment of the Bonds shall have
occurred, the Borrower shall promptly, from time to time, deliver to the Issuer
and the Trustee such information regarding the operations, business affairs and
financial condition of the Borrower as the Issuer and the Trustee may reasonably
request, but in any event exclusive of proprietary or confidential information
of the Borrower and any client or customer of the Borrower. The Trustee is
hereby authorized to deliver a copy of any such financial information delivered
hereunder, or otherwise obtained by the Trustee, to the Credit Facility Trustee,
to any Bondholder or prospective Bondholder, to any regulatory authority having
jurisdiction over the Trustee and to any other Person as may be required by law.
The Issuer and the Trustee are authorized to provide information concerning the
outstanding principal amount and payment history of, and other information
pertaining to, the Bonds or the Note to any agency or regulatory authority of
the State requesting such information.
Section 7.17. Corporate Existence, Sale of Assets, Consolidation or Merger.
Unless the Issuer, the Trustee and the Credit Facility Trustee consent in
writing, the Borrower will maintain its corporate existence, will not dissolve
or otherwise dispose of all or substantially all of its assets and will not
enter into any transaction of merger or consolidation; provided that, if a
Reimbursement Agreement is in effect, the Borrower may take such action if it is
permitted by the terms of the Reimbursement Agreement. If the Reimbursement
Agreement permits such action, the Borrower shall promptly notify the Issuer,
the Trustee and the Credit Facility Trustee thereof.
Section 7.18. Default Certificates. The Borrower shall deliver to the
Trustee and the Credit Facility Trustee, annually, within 60 days after the
close of each fiscal year, a certificate that no Event of Default hereunder or
under the Note, the Indenture, or the Reimbursement Agreement, or an event which
would constitute such an Event of Default but for the requirement that notice be
given or time elapse or both has occurred and is continuing, or if such an event
has occurred or is continuing, a certificate of the Borrower specifying the
nature and period of existence thereof and what action the Borrower proposes to
take with respect thereto.
Section 7.19. Notification to Trustee and Credit Facility Trustee. The
Borrower shall notify the Issuer, the Trustee and the Credit Facility Trustee in
writing promptly, but in any event within five Business Days, of the occurrence
of any of the following, with respect to the Borrower:
27
(i) any levy of an attachment, execution or other process against its
assets, which may materially adversely affect the financial condition or
operation of the Borrower;
(ii) any change in any existing agreement or contract which may materially
adversely affect its business or affairs, financial or otherwise; and
(iii) any change in the senior executive management of the Borrower or upon
taking the Borrower in private rather than public ownership.
Section 7.20. Additional Reporting Requirements. The Borrower shall deliver
on or prior to December 1 of each year to the Issuer and the Trustee a
certificate stating the principal amount of the Bonds outstanding and the
Registered Owners of such Bonds as of June 30 of such year.
Section 7.21. Observe Laws. The Borrower shall observe all applicable laws,
regulations and other valid requirements of any regulatory authority with
respect to its operations at the Plant and the Facility Site.
Section 7.22. Covenants of the Issuer. The Issuer hereby covenants and
agrees as follows:
(a) Maintenance of Existence; Compliance with Laws. The Issuer will not
voluntarily take any action towards dissolution unless it has assured the
assumption of its obligations under this Agreement and the other Documents by
any other person succeeding to its powers; and it will comply with all laws
applicable to this Agreement or any of the other Documents.
(b) Further Instruments and Actions. The Issuer will from time to time
execute and deliver such further instruments and take such further actions as
may be reasonable and as may be required to carry out the purpose of this
Agreement; provided, however, that no such instruments or actions shall pledge
the credit or taxing power of the State, the Department, the Issuer or any other
public body or require the State, the Department, the Issuer or any other public
body to incur any pecuniary obligations.
(c) Priority of Pledge. Except for the assignment to the Bank under this
Agreement and the Assignment of Note and except for its use of the Bond
Insurance Fund to provide financial assistance in connection with other
facilities and transactions, to the extent permitted by law, the Issuer will not
sell, lease or otherwise dispose of or encumber its interest in any part of the
security for the Bond, and will cooperate in causing to be discharged any
Encumbrances created by it with respect to any of the security for the Bond.
(d) Books and Documents Open to Inspection. The Issuer shall, to the
extent required and permitted by law, within a reasonable time after request,
open any and all of its books and documents in its possession relating to the
financing of the Facility, if any, during
28
the normal business hours of the Issuer, to such Accountants or other persons
as the Bank or the Borrower or both may from time to time designate.
(e) Covenant with Respect to Insurance. Until the earlier to occur of (i)
payment in full to the Bank of the Insured Portion of the Bonds (as defined in
the Insurance Agreement) or (ii) the Issuer becoming the holder of the Note, the
Issuer shall provide to the Bank as soon as available, but in any event within
thirty (30) days after available for distribution, its audited financial
statements prepared by an independent certified public accountant in accordance
with generally accepted accounting principles, consistently applied.
Section 7.23. Affirmative Covenants of the Borrower. Until the Bonds have
been fully paid, the Borrower will, unless the prior written consent to do
otherwise has been obtained from the Bank and the Issuer:
(a) Financial Statements. Furnish to the Bank and the Issuer:
(i) as soon as available but no later than 45 days after the close of each
of the Borrower's first three fiscal quarters, a balance sheet of the Borrower
and its subsidiaries, if any, as of the close of such period and an income
statement for such period, certified by the principal financial officer of the
Borrower and accompanied by a certificate of that officer stating whether any
event has occurred which constitutes an event of default under any of the
documents or which would constitute such an event of default with the giving of
notice or the lapse of time or both, and, if so, stating the facts with respect
to such default; and
(ii) as soon as available but no later than 120 days after the close of each
of the Borrower's fiscal years, a copy of the annual financial statement in
detail reasonably satisfactory to the Credit Facility Issuer and the Issuer
relating to the Borrower and its subsidiaries, if any, prepared in accordance
with generally accepted accounting principles and audited by an independent
accountant, which financial statement shall include a balance sheet of the
Borrower and its subsidiaries, if any, as of the end of such fiscal year, and an
income statement, a statement of retained earnings and a statement of cash flows
of the Borrower and its subsidiaries, if any, for such fiscal year; and
(iii) such additional information, reports or statements as the Credit
Facility Issuer or the Issuer may from time to time reasonably request.
(b) Taxes and Claims. Pay and discharge all Taxes prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become an encumbrance upon any of its properties, subject to the right of the
Borrower to contest the same in accordance with the provisions of this
Article VII hereof. If the Borrower fails to pay any of such Taxes at the
time or in the manner provided in this Section, the Bank may, at its option,
pay such Taxes and the Borrower shall pay to the Bank the amount of any sum
so paid, with interest thereon.
The fact that the Issuer is assisting in the financing of the acquisition
of the Facility shall not imply that the Borrower is or shall be eligible for
any decrease in or
29
immunity from any applicable Taxes ordinarily imposed by the State, the
County or any other public body.
(c) Insurance. In addition to the insurance required by Article VI hereof,
maintain insurance with responsible insurance companies on such of its
properties, in such amounts and against such risks as is customarily maintained
by similar businesses operating in the same vicinity. The Borrower shall file
with the Bank and the Issuer, upon request, a detailed list of the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of insurance, dates of the expiration thereof and the properties and risks
covered thereby; and, within 30 days after Notice from the Bank, obtain such
additional insurance as the Bank may reasonably request.
(d) Existence. Maintain in good standing its existence as a Maryland
corporation.
(e) Compliance With Laws. Comply with all applicable federal, state and
local laws, rules and regulations, including, without limitation, the Employment
Retirement Income Security Act of 1974, as amended.
(f) Equal Employment. Prohibit and not engage in discrimination on the basis
of (i) political or religious opinion or affiliation, marital status, race,
color, creed or national origin, (ii) sex or age, except when sex or age
constitutes a bona fide occupational qualification, or (iii) the physical or
mental disability of a qualified individual with a disability. Upon the request
of the Issuer or the Department, the Borrower will submit to the Issuer or the
Department, as appropriate, information relating to its employment practices and
operations, with regard to this subsection (f) on a form to be prescribed by the
Department.
(g) Drug and Alcohol Free Workplace. Make a good faith effort to eliminate
illegal drug use and alcohol and drug abuse from any workplace of the Borrower
in the State, including, without limitation, the Facility, during the term of
this Agreement by:
(1) prohibiting the unlawful manufacture, distribution, dispensation,
possession, or use of drugs in any workplace of the Borrower in the State,
including without limitation, the Facility;
(2) prohibiting its employees from working while under the influence
of alcohol or illegal drugs or abusing alcohol or drugs;
(3) not hiring or assigning to work on an activity funded in whole or
part with State funds, anyone whom it knows, or in the exercise of due
diligence should know, currently abuses alcohol or drugs and is not actively
engaged in a bona fide rehabilitation program;
(4) promptly informing the appropriate law enforcement agency of
every drug-related crime that occurs in any workplace of the Borrower in the
State, including, without limitation, the Facility if it or its employee has
observed the violations or otherwise has reliable information that a
violation has occurred; and
30
(5) notifying employees that illegal drug use and alcohol and drug
abuse are banned in any workplace of the Borrower in the State, including,
without limitation, the Facility, imposing sanctions on employees who abuse
drugs and alcohol in any workplace of the Borrower in the State, including,
without limitation, the Facility, and instituting steps to maintain any
workplace of the Borrower in the State, including, without limitation, the
Facility free from illegal drug use and drug and alcohol abuse.
(h) Employment Count. Upon request, but not more frequently than twice
annually, supply the employment count at the Facility to the Issuer, including
the number of employees of tenants.
(i) Licenses and Permits. Obtain and maintain all licenses and permits
required for the Borrower's operations.
(j) Coverage Ratio and Net Worth. Maintain a ratio of debt to tangible
net worth (including subordinate debt) not greater than 2.25 to 1.00,
measured quarterly. The Borrower shall also maintain a current assets to
current liabilities ratio of 2.5 to 1.0, measured quarterly, and a ratio of
EBITDA plus operating lease and rental expenses to principal and interest due
plus operating and lease expense of not less than 1.20 to 1.0, measured
quarterly. In addition, the Borrower shall maintain a tangible net worth
(including subordinated debt) of not less than (1) $4,250,000 from December
31, 1996 to and including March 31, 1997, and (2) $4,500,000 as of each
quarter end thereafter. Anything to the contrary notwithstanding, the value
of the collateral (as described in the Collateral Pledge Agreement) shall be
included as a current asset of the Borrower when determining compliance by
the Borrower with the covenants required of the Borrower under this
subsection (j).
(k) Bank Accounts. Maintain its operating accounts and depository accounts
with the Bank.
(l) Books and Records; Inspection. Keep adequate records and books of
account with respect to the Facility and its business in accordance with
generally accepted accounting principles and permit the Issuer and the Bank to
inspect the Facility and examine such records and books of account.
(m) Issuer's Fee. Starting not later than one year from the date of issuance
of the bonds, and annually thereafter, the Issuer shall be paid an Issuer's Fee
equal to 0.125% of the outstanding principal balance of the Bonds before taking
into account that year's annual principal reduction. This Issuer's Fee shall
have a priority over principal of and interest on the Bonds in the Indenture,
shall be collected in monthly installments by the Trustee, and shall be remitted
by the Trustee without the necessity of any notice from the Issuer. Failure to
pay the Issuer's Fee shall be an Event of Default under Article IX hereof, and
shall be treated in a manner similar to non-payment of principal of or interest
on the Bonds.
Section 7.24. Negative Covenants of the Borrower. Until full payment of the
Bonds, the Borrower will not, without the prior written consent of the Bank,
directly or indirectly:
31
(a) ERISA Compliance.
(i) amend any employee benefit pension plan (as that term is defined in
Section 3(2) of ERISA) which is maintained by the Borrower or any corporation,
trade or business that is under common control with the Borrower as defined in
Section 414(b), (c), (m) or (o) of the Code (hereafter "commonly controlled
entity") and intended to be a qualified plan under Section 401(a) of the Code in
any manner designed to cause such plan to not be qualified under Section 401(a)
of the Code;
(ii) permit any officers of the Borrower or any commonly controlled entity
to take any action that would cause such plan not to be qualified under Section
401(a) of the Code;
(iii) engage in or permit any commonly controlled entity to engage in any
transaction prohibited by Section 4975 of the Code in connection with such plan;
(iv) permit any such plan that is subject to Section 412 of the Code to have
an accumulated funding deficiency (within the meaning of Section 412 of the
Code);
(v) take, or permit any commonly controlled entity to take, any action in
connection with such plan which results in the imposition of a lien on any
property of the Borrower or any commonly controlled entity pursuant to Section
4068 of ERISA;
(vi) fail to notify the Bank and the Issuer that notice has been received of
the termination of an employee pension benefit plan which is a multiemployer
pension plan (as those terms are defined in Section 3(2) and Section 3(37) of
ERISA) to which the Borrower or any commonly controlled entity is required to
contribute under circumstances where such termination would result in a material
liability to the Borrower or any commonly controlled entity;
(vii) fail to notify the Bank and the Issuer that notice has been
received of the reorganization of an employee pension benefit plan which is a
multiemployer pension plan (as those terms are defined in Section 3(2),
Section 3(37) and Section 4241 of ERISA) to which the Borrower or any
commonly controlled entity is required to contribute under circumstances
where such reorganization would result in a material liability to the
Borrower or any commonly controlled entity; and
(viii) incur or permit a commonly controlled entity to incur a material
liability as a result of a complete withdrawal or partial withdrawal (as those
terms are defined in Section 4203 and Section 4205 of ERISA).
(b) Additional Borrowings. The Borrower shall not make any further or
additional borrowings, whether or not such borrowings are secured by property
constituting security for the Loan, except for borrowings which are Permitted
Encumbrances.
32
(c) Mergers; Acquisitions. The Borrower shall not enter into any merger or
consolidation or acquire any equity interest in, or all or any material part of
the assets of, any other entity.
(d) Sale of Assets. The Borrower shall not sell, lease or otherwise dispose
of any of its assets, except for sales of inventory in the ordinary course of
business and the sale of equipment and other assets in the ordinary course of
business if replaced with equipment and/or other assets of equivalent value and
except that the Borrower may enter into agreements and/or arrangements with its
clients, customers or other third parties from time-to-time with respect to
license, sublease or dedication of portions of the Facility to or for the
benefit of customers or clients of the Borrower, or other third parties, in the
ordinary course of the Borrower's business.
(e) Mortgages and Liens. The Borrower shall not create, incur, assume or
permit to exist any mortgage, pledge, lien or other encumbrance of any kind upon
any of its property or assets, whether now owned or hereafter acquired, except
any encumbrances consented to in writing by the Bank and the Issuer, and except
for any Permitted Encumbrances.
(f) Sell Leaseback. The Borrower shall not enter into any sale and leaseback
arrangement.
(g) Loans. The Borrower shall not make loans or advances to any person,
except for advances for reasonable business expenses.
Section 7.25. Consent Relating to Construction of the Facility. Until all
obligations of the Borrower hereunder to be performed and paid shall have been
performed and paid in full, and so long as the Credit Facility shall be
outstanding, the Borrower covenants and agrees that all required consents
hereunder shall include the written consent of the Credit Facility Issuer and
MIDFA.
Section 7.26. Notice To Trustee. The Borrower agrees to notify the Trustee
in writing promptly upon the occurrence of an Event of Bankruptcy.
ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
Section 8.1. Assignment of Loan Agreement or Lease or Sale of Facility by
the Borrower. Except with the prior written consent of the Issuer, the Credit
Facility Issuer, the Credit Facility Trustee and the Trustee, the rights of the
Borrower under this Loan Agreement may not be assigned, and, except to the
extent permitted by Section 7.24(e) hereof, the Facility may not be leased or
sold as a whole or in part.
Section 8.2. Restrictions on Transfer of Issuer's Rights. Except for the
assignment made pursuant to the Indenture of certain of its rights under this
Loan Agreement and its
33
pledge of the Note, endorsed without recourse to the order of the Trustee, to
the Trustee as security pursuant to the Indenture, the Issuer will not,
during the term of this Loan Agreement, sell, assign, transfer or convey any
of its interests in this Loan Agreement or the Note. The Borrower hereby
assents to such assignment and pledge of the Issuer's rights under the Loan
Agreement and the pledge of the Note to the Trustee.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined. The term "Event of Default" shall
mean any one or more of the following events:
(a) The failure by the Borrower to pay when due any payment of principal or
interest on or other amount payable under the Note.
(b) The failure of the Issuer to pay when due any payment of principal of or
interest on or other amount payable under the Bonds.
(c) The failure of the Borrower to perform any of its obligations under
Sections 7.4, 7.23(a) and 7.24 hereof.
(d) The occurrence of an "Event of Default" or "event of default" under any
of the other Bond Documents or the Letter of Credit Documents.
(e) Any representation or warranty of the Borrower contained in Section 2.2
hereof, or in any document, instrument or certificate delivered pursuant hereto
or to the Indenture or in connection with the issuance and sale of the Bonds,
including but not limited to the Borrower's Tax Certificate, shall be false,
misleading or incomplete in any material respect on the date as of which made.
(f) Failure by the Borrower to observe and perform any covenant, condition
or agreement on the part of the Borrower under the Note or this Loan Agreement,
other than as referred to in the preceding paragraphs of this Section 9.1, for a
period of 30 days after written notice, specifying such failure and requesting
that it be remedied, is given to the Borrower by the Issuer or the Trustee.
(g) The commencement against the Borrower of an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or of
any action or proceeding for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the Borrower
or for any substantial part of its property, or for the winding-up or
liquidation of its affairs and the continuance of any such case, action, or
proceeding unstayed and in effect for a period of 60 consecutive days.
34
(h) The commencement by the Borrower of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to, or its acquiescence in the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Borrower or of any substantial part of its property, or
the making by it of or the consent by it to any assignment for the benefit of
creditors, or the taking of any action by the Borrower in furtherance of any of
the foregoing.
(i) Failure by the Borrower to pay, when due or within any applicable grace
period, any amount owing on account of indebtedness for money borrowed or for
deferred purchases of property, or the failure by the Borrower to observe or
perform any covenant or undertaking on its part to be observed or performed in
any agreement evidencing, securing or relating to such indebtedness, if the
effect of such default is to cause, or permit the holder or holders of such
obligation (or a trustee for such holder or holders) to cause such obligation to
become due prior to its stated maturity and the acceleration of such obligation
would have a material and adverse effect on the business or financial condition
of the Borrower and its subsidiaries as a whole.
(j) The entry of a judgment or decree against the Borrower in an amount in
excess of $100,000 which remains undischarged and unstayed for a period of 30
consecutive days.
Section 9.2. Remedies on Default. If Payment of the Bonds shall not have
been made, whenever any Event of Default referred to in Section 9.1 hereof shall
have happened and shall not have been waived:
(a) The Issuer, or the Trustee on behalf of the Issuer, may by written
notice declare all installments of principal repayable pursuant to the Note for
the remainder of the term thereof to be immediately due and payable, whereupon
the same, together with accrued interest thereon as provided for in the Note,
shall become immediately due and payable without presentment, demand, protest or
any other notice whatsoever, all of which are hereby expressly waived by the
Borrower; provided, however, all such amounts shall automatically be and become
immediately due and payable without notice upon the occurrence of any event
described in Section 9.1(g) or 9.1(h) hereof, which notice the Borrower hereby
expressly waives.
(b) The Issuer may take whatever other action at law or in equity may appear
necessary or desirable to collect the amounts payable pursuant to the Note then
due and thereafter to become due, or to enforce the performance and observance
of any obligation, agreement or covenant of the Borrower under this Loan
Agreement or under any of the other Bond Documents.
In the enforcement of the remedies provided in this Section 9.2, the Issuer
may treat all reasonable expenses of enforcement, including, without limitation,
legal, accounting and advertising fees and expenses, as additional amounts
payable by the Borrower then due and owing and the Borrower agrees to pay such
additional amounts upon demand, the amount of such legal fees to be without
regard to any statutory presumption.
35
Section 9.3. Application of Amounts Realized in Enforcement of Remedies. Any
amounts collected pursuant to action taken under Section 9.2 hereof shall be
paid to the Trustee and applied to the payment of, first, any costs, expenses
and fees incurred by the Issuer, the Trustee and the Credit Facility Trustee as
a result of taking such action; second, any interest which shall have accrued on
any overdue interest and any accrued interest on any overdue principal of the
Bonds at the rate set forth in the Bonds; third, any overdue interest on the
Bonds; fourth, any overdue principal of the Bonds; fifth, the outstanding
principal balance of the Bonds; and sixth, if Payment of the Bonds shall have
been made in full, all remaining moneys shall be applied as set forth in Article
IX of the Indenture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer 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 Loan Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon 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.
Section 9.5. Agreement to Pay Attorneys' Fees and Expenses. In any Event of
Default, if the Issuer, the Trustee, the Credit Facility Trustee, the Credit
Facility Issuer or any Bondholder employs attorneys or incurs other expenses for
the collection of amounts payable hereunder or for the enforcement of the
performance or observance of any covenants or agreements on the part of the
Borrower contained herein or in the Indenture (in the case of the Issuer, the
Trustee, the Credit Facility Trustee, or the Credit Facility Issuer) or
contained in the Indenture (on the part of any Bondholder), the Borrower agrees
that it will on demand therefor pay to the Issuer, the Trustee, the Credit
Facility Trustee, the Credit Facility Issuer or such Bondholder the reasonable
fees of such attorneys and such other reasonable expenses so incurred by the
Issuer, the Trustee, the Credit Facility Trustee, the Credit Facility Issuer or
such Bondholder, the amount of such fees of attorneys to be without regard to
any statutory presumption.
Section 9.6. Correlative Waivers. If an event of default under Section 901
of the Indenture shall be cured or waived and any remedial action by the Trustee
or the Credit Facility Trustee rescinded, any correlative default under this
Loan Agreement shall be deemed to have been cured or waived.
Section 9.7. MIDFA Insurance. Pursuant to the terms and conditions of the
Insurance Agreement, the Issuer has insured a portion of the Borrower's
obligations under the Reimbursement Agreement. Certain of the rights, duties,
obligations and remedies of the Trustee, the Borrower and the Bank under this
Loan Agreement and the other Bond Documents are subject to the terms,
conditions and limitations set forth in the Insurance Agreement.
Section 9.8. Conflicting Provisions. Upon the occurrence of a conflict
between provisions of this Loan Agreement and the Reimbursement Agreement, so
long as the Credit Facility is outstanding and there are no defaults under the
Reimbursement Agreement by the Credit Facility Provider, provisions of the
Reimbursement Agreement shall control.
36
ARTICLE X
PREPAYMENTS
Section 10.1. Optional Prepayments.
(a) The Borrower is hereby granted, and shall have, the option to prepay the
unpaid principal of the Note in whole or in part in accordance with and as set
forth in Section 701 and 702 of the Indenture with respect to the prepayment of
the Bonds; provided, all prepayments shall be made in immediately available
funds and with accrued interest to the date of prepayment and that any
prepayment of the Note in part shall be applied to unpaid installments of
principal in inverse order of maturity. Any prepayment pursuant to this
subsection (a) shall be made by the Borrower taking, or causing the Issuer to
take, the actions required (i) for Payment of the Bonds, in the case of
prepayment of the Note in whole, or (ii) to effect prepayment of less than all
of the Bonds according to their terms in the case of a partial prepayment of the
Note.
(b) In the event of damage, destruction, or condemnation of the Plant or any
part thereof, the Borrower may, at its option, pursuant to Section 6.8 hereof
and without penalty or premium, prepay the Note in whole or in part; provided
that any such prepayment shall be made in immediately available funds with
accrued interest to the date of whole or partial prepayment. Any prepayment
pursuant to this subsection (b) shall be made by the Borrower taking, or causing
the Issuer to take, the actions required for the full or partial prepayment of
the Bond as provided for in subsection (a) hereof.
(c) To exercise the option granted in subsection (a) or (b) of this Section
10.1, the Borrower shall give written notice to the Issuer and the Trustee which
shall specify therein (i) the date of the intended prepayment of the Note, which
shall not be less than 30 nor more than 60 days from the date the notice is
mailed and (ii) the principal amount of the Note to be prepaid. When given such
notice shall be irrevocable by the Borrower.
Section 10.2. Mandatory Prepayments.
(a) In the event of a Determination of Taxability, the Borrower shall, on a
date selected by the Borrower not more than 180 days following the date of
written notice to the Trustee of a Determination of Taxability, prepay the
entire unpaid principal balance of the Note in full, plus accrued interest to
such date. Immediately upon the occurrence of a Determination of Taxability, the
Borrower shall notify the Issuer, the Trustee and the Credit Facility Trustee of
the date selected for payment pursuant to this Section 10.2.
(b) Prior to the Conversion Date, in the event any Credit Facility is not
renewed and an Alternate Credit Facility has not been provided in accordance
with Section 603 of the Indenture, the Borrower shall on or before the
Interest Payment Date occurring closest but not less than 15 days prior to
the expiration date of the then current Credit Facility, prepay the
37
entire unpaid principal balance of the Note in full. The Borrower shall
promptly notify the Issuer, the Trustee and the Credit Facility Trustee of
the date selected for such payment.
Section 10.3. Other Mandatory Prepayments. The amounts required to be
applied to the prepayment of the Note by Sections 4.4, 5.3 and 6.8 hereof
shall be applied by the Borrower to prepay, together with accrued interest,
all or a portion of the unpaid principal of the Note. Such prepayment shall
be made by the Borrower taking, or causing the Issuer to take, the actions
required (i) for payment of the Bonds, whether by redemption prior to the
maturity or by payment at maturity, or (ii) to effect the purchase,
redemption or payment at maturity of less than all of the installments of
principal on the Bonds in inverse order of their maturities.
ARTICLE XI
MISCELLANEOUS
Section 11.1. References to the Bonds Ineffective After Bonds Paid. Upon
payment of the Bonds, all references in this Loan Agreement to the Bonds shall
be ineffective and the Issuer and any holder of the Bonds shall not thereafter
have any rights hereunder, excepting reporting and payment of rebate amounts and
other payments under the Borrower's Tax Certificate.
Section 11.2. No Implied Waiver. In the event any agreement contained in the
Note or this Loan Agreement 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 thereunder or
hereunder. Neither any failure nor any delay on the part of the Trustee to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege.
Section 11.3. Issuer Representative. Whenever under the provisions of this
Loan Agreement the approval of the Issuer is required or the Issuer is required
to take some action at the request of the Borrower, such approval shall be made
or such action shall be taken by the Issuer Representative; and the Borrower,
the Trustee and the Bondholders shall be authorized to rely on any such approval
or action.
Section 11.4. Borrower Representative. Whenever under the provisions of this
Loan Agreement the approval of the Borrower is required or the Borrower is
required to take some action at the request of the Issuer, such approval shall
be made or such action shall be taken by the Borrower Representative; and the
Issuer, the Trustee, the Credit Facility Trustee and the Bondholders shall be
authorized to act on any such approval or action.
38
Section 11.5. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
by hand delivery or mailed by first class, postage prepaid, registered or
certified mail, addressed as follows:
If to the Issuer: Maryland Industrial Development Financing Authority 217
East Redwood Street, 22nd Floor Baltimore, Maryland 21202 Attention: Executive
Director
If to the Borrower: Chesapeake Biological Laboratories, Inc. 6000 Metro
Drive Baltimore, Maryland 21215 Attention: John C. Weiss III, President
If to the Trustee: First Union National Bank of Virginia Bond Administration
901 E. Cary Street, 2nd Floor Richmond, Virginia 23219 Attention: Corporate
Trust Department
If to the Credit Facility Issuer: First Union National Bank of North
Carolina Two First Union Center Charlotte, North Carolina 28288 Attention:
International Operations
If to Credit Facility Trustee: Branch Banking and Trust Company 223 West
Nash Street Wilson, North Carolina 27984 Attention: Corporate Trust Department
The Issuer, the Borrower or the Trustee may, by notice given hereunder,
designate from time to time any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Section 11.6. If Payment or Performance Date Is Other Than a Business Day.
If the specified or last date for the making of any payment, the performance of
any act or the exercising of any right, as provided in this Loan Agreement,
shall be a day other than a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day with the same
effect as if made, performed or exercised on the specified date; provided that
interest shall accrue during any such period during which payment shall not
occur.
39
Section 11.7. Binding Effect. This Loan Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Borrower and their respective
successors and assigns.
Section 11.8. Severability. In the event any provision of this Loan
Agreement or the Note shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or thereof.
Section 11.9. Amendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to Payment of the Bonds, this Loan Agreement and
the other Bond Documents may not be effectively amended, changed, modified,
altered or terminated except in accordance with the Indenture.
Section 11.10. Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument, and no one counterpart
of which need be executed by all parties, except that, to the extent that this
Loan Agreement shall constitute personal property under the Uniform Commercial
Code of Maryland, no security interest in this Loan Agreement may be created or
perfected through the transfer or possession of any counterpart of this Loan
Agreement other than the original counterpart, which shall be the counterpart
containing the receipt therefor executed by the Trustee following the signatures
to this Loan Agreement.
Section 11.11. Applicable Law. This Loan Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 11.12. No Charge Against Issuer Credit. No provision hereof shall be
construed to impose a charge against the general credit of the Issuer or any
personal or pecuniary liability upon any commissioner, official, employee or
agent of the Issuer.
Section 11.13. Issuer Not Liable. Notwithstanding any other provision of
this Loan Agreement (a) the Issuer shall not be liable to the Borrower, the
Trustee, any Bondholder or any other Person for any failure of the Issuer to
take action under this Loan Agreement unless the Issuer (i) is requested in
writing by an appropriate Person to take such action, (ii) is assured of payment
of or reimbursement for any expense in such action, and (iii) is afforded, under
the existing circumstances, a reasonable period to take such action, and (b)
except with respect to any action for specific performance or any action in the
nature of a prohibitory or mandatory injunction, neither the Issuer nor any
commissioner of the Issuer nor any other official, employee or agent of the
Issuer shall be liable to the Borrower, the Trustee, any Bondholder or any other
Person for any action taken by the Issuer or by its officers, servants, agents
or employees, or for any failure to take action under this Loan Agreement or the
other Bond Documents to which the Issuer is a party. In acting under this Loan
Agreement, or in refraining from acting under this Loan Agreement, the Issuer
may conclusively rely on the advice of its counsel.
Section 11.14. Expenses. The Borrower agrees to pay all reasonable fees
and expenses incurred in connection with the preparation, execution,
delivery, modification, waiver, and amendment of this Loan Agreement, the
other Bond Documents and related documents,
40
and the fees and expenses of Co-Bond Counsel, Counsel for the Issuer and, in
connection with any amendments, any Counsel, if any, for any Bondholder who
owns more than 25% of the aggregate principal amount of the Bonds
Outstanding. The Borrower also agrees to pay all expenses incurred by the
Trustee or the Issuer in collection of any indebtedness incurred hereunder in
the Event of Default by the Borrower, provided that the amount of any legal
fees so incurred shall be without regard to any statutory presumption.
Section 11.15. Amounts Remaining with the Trustee. Any amounts remaining in
the Bond Fund or otherwise in trust with the Trustee under the Indenture or this
Loan Agreement shall, after Payment of the Bonds and all Administrative Expenses
in accordance with this Loan Agreement, be disbursed by the Trustee in
accordance with the provisions of the Indenture or otherwise as may be required
by law.
Section 11.16. Execution in Counterparts. This Loan Agreement may be
executed in multiple counterparts, each of which shall be regarded for all
purposes as an original, and such counterparts shall constitute but one and the
same instrument, and no one counterpart of which need be executed by all
parties.
Section 11.17. Effective Date. This Loan Agreement has been dated as of the
date first written solely for the purpose of convenience of reference and shall
become effective upon its execution and delivery, on the date of initial
issuance of the Bonds, by the parties hereto. All representations and warranties
set forth herein shall be deemed to have been made on such date.
[SIGNATURES ON FOLLOWING PAGE]
41
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be executed in their respective legal names by their duly
authorized representatives and their respective seals to be hereunto affixed,
and the signatures of duly authorized persons to be attested, all as of the date
first above written.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
ATTEST:
/s/ Stephen J. Lynch /s/ Thomas H. Mullaney
- ------------------------- --------------------------------------
Stephen J. Lynch, By: Thomas H. Mullaney,
Acting Executive Director Chairman
(SEAL)
CHESAPEAKE BIOLOGICAL LABORATORIES,
INC.
ATTEST:/WITNESS
/s/ J.T. Janssen By: /s/John C. Weiss, III
- ------------------------- --------------------------------------
CFO/Treasurer John C. Weiss III, President
- -------------------------
(CORPORATE SEAL)
42
EXHIBIT A
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREIN PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OF
THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN AGREEMENT REFERRED
TO HEREIN.
PROMISSORY NOTE
$_________________ November __, 1996
FOR VALUE RECEIVED,__________, a _______ corporation (the "Borrower"), by
this promissory note promises to pay to the order of _________________________
(the "Issuer") the principal sum of________________________ and No/100
Dollars ($__________) which principal amount shall be due and payable in
_____________ consecutive quarterly installments on the first Business Day of
each February, May, August and November, commencing the first Business Day of
November, 1998, as more specifically set forth below:
[INSERT SCHEDULE FROM INDENTURE]
The Borrower further agrees to pay interest on the unpaid principal amount
from the date of authentication and delivery of the Bonds (as defined in the
Loan Agreement referred to below) until the principal amount and all interest
thereon is paid in full which shall be paid on the first Business Day of each
February, May, August and November (the "Interest Payment Dates"), at the rate
of interest equal to the Variable Rate (as defined in the Indenture hereinafter
mentioned) or the Fixed Rate (as defined in the Indenture).
This Promissory Note is the "Note" referred to in the Loan Agreement dated
as of November 1, 1996 (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof and subject to the conditions
thereof. Terms not otherwise defined herein shall have the definitions set forth
in the Loan Agreement.
Under the Loan Agreement, the Issuer has loaned to the Borrower the proceeds
received from the sale of the Issuer's $7,000,000 Maryland Industrial
Development Financing Authority Economic Development Revenue Bonds (Chesapeake,
Biological Laboratories, Inc. Facility), 1996 Issue, dated as of the date hereof
(the "Bonds"). The Bonds have been issued, concurrently with the execution and
delivery of this Note, pursuant to, and are secured by, the Trust Indenture
among the Issuer, First Union National Bank of Virginia, as Trustee (the
"Trustee") and Branch Banking and Trust Company, as Credit Facility Trustee (the
"Credit Facility Trustee") dated as of November 1, 1996 (the "Indenture"). The
Bonds bear interest at the Variable Rate prior to the Conversion Date (as
defined in the Indenture) and at the Fixed
Rate on or subsequent to the Conversion Date. Such interest is payable on the
Interest Payment Dates. This Note shall bear interest at the Variable Rate
and the Fixed Rate during the same periods as such rates are borne by the
Bonds.
Each payment of principal of and interest on this Note will be sufficient to
enable the Issuer to pay when due the total amount of principal of (whether at
maturity, upon acceleration or otherwise), premium, if any, and interest on the
Bonds. To the extent that principal of, premium, if any, or interest on the
Bonds shall be paid, there shall be credited against unpaid principal of or
interest on this Note, as the case may be, an amount equal to the principal of
or interest on the Bonds so paid. The principal of, premium, if any, and
interest on this Note are payable in immediately available funds of any coin or
currency of the United States of America which on the respective dates of
payment thereof shall be legal tender for the payment of public and private
debts.
In addition, the Borrower agrees to pay when due in immediately available
funds all other amounts at the time the Issuer may be required to pay the same
pursuant to the Bonds or the Indenture.
The obligation of the Borrower to make the payments required hereunder shall
be absolute and unconditional without any defense, recoupment or right of
set-off by reason of any default by the Issuer under the Loan Agreement or for
any other reason.
Upon the occurrence of an Event of Default specified in the Loan Agreement,
the unpaid principal hereof and accrued interest and additional interest hereon
may become forthwith due and payable as provided in the Loan Agreement, and in
the event the Borrower shall fail to pay any amount required to be paid under
this Note when due, the Borrower shall pay interest on such amount at a rate per
annum equal to the Overdue Rate (as defined in the Loan Agreement) or the
maximum rate permitted by law, whichever is lower.
The Borrower may at its option, and may under certain circumstances be
required to, prepay all or any part of the unpaid principal of this Note upon
the terms provided in the Loan Agreement.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE BORROWER AUTHORIZES THE
CLERK OR ANY ATTORNEY DESIGNATED BY THE BANK, MIDFA OR ANY CLERK OF ANY COURT
OF RECORD TO APPEAR FOR IT IN ANY COURT OF RECORD AND CONFESS JUDGMENT
AGAINST IT WITHOUT PRIOR HEARING, IN FAVOR OF THE BANK OR MIDFA FOR AND IN
THE AMOUNT EQUAL TO SUCH OF THE OBLIGATIONS OF THE BORROWER WHICH HAVE BEEN
DUE AND PAYABLE UNDER THE PROVISIONS OF THIS NOTE, PLUS INTEREST ACCRUED AND
UNPAID THEREON, ALL OTHER AMOUNTS THEN DUE AND PAYABLE HEREUNDER, COSTS OF
SUIT AND AN ATTORNEY'S FEE IN AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF
SUCH OBLIGATIONS PLUS ALL ACCRUED AND UNPAID INTEREST THEREON, PROVIDED,
HOWEVER, (A) IF THE ACTUAL ATTORNEY'S FEES INCURRED BY THE BANK OR MIDFA ARE
LESS THAN 15% OF SUCH OBLIGATION (PLUS ALL ACCRUED AND UNPAID INTEREST
2
THEREON), THE BANK OR MIDFA WILL REFUND (TO THE EXTENT ACTUALLY COLLECTED) TO
THE BORROWER AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN 15% OF SUCH OBLIGATION
(PLUS ALL ACCRUED AND UNPAID INTEREST THEREON) AND THE AMOUNT OF SUCH ACTUAL
ATTORNEY'S FEES (AFTER ALL OF SUCH OBLIGATIONS HAVE BEEN PAID IN FULL), OR
(B) IF THE ACTUAL ATTORNEY'S FEES INCURRED BY THE BANK OR MIDFA OR OTHER
HOLDER HEREOF EXCEED 15% OF SUCH OBLIGATIONS (PLUS ALL ACCRUED AND UNPAID
INTEREST THEREON, WHETHER BY REASON OF JUDGMENT BEING CONTESTED OR OTHERWISE,
THE BORROWER WILL PAY TO THE BANK OR MIDFA ON DEMAND THE AMOUNT OF ANY SUCH
EXCESS. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE
BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISE THEREOF, OR BY ANY
IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO. SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS. AS
OFTEN AS THE BANK OR MIDFA SHALL DEEM NECESSARY OR DESIRABLE, FOR ALL OF
WHICH THIS NOTE SHALL BE A SUFFICIENT WARRANT.
The Borrower hereby promises to pay all costs of collection, including
reasonable attorneys' fees and disbursements, without regard to any statutory
presumption, in the case of a default under this Note or the Loan Agreement. The
Borrower hereby waives presentment, protest and notice of protest or dishonor.
This Note shall be construed in accordance with the laws of the State of
Maryland.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be executed
in its corporate name by its duly authorized officers and its corporate seal to
be affixed hereto all as of the date first above written.
CHESAPEAKE BIOLOGICAL LABORATORIES,
INC.
ATTEST:
___________________________ By:_______________________________
____________Secretary John C. Weiss, III, President
(CORPORATE SEAL)
3
ENDORSEMENT
Pay to the order of First Union National Bank of Virginia, as Trustee for
the benefit of the Bondholders under the Trust Indenture dated as of November 1,
1996, between the Issuer, the Trustee and Branch Banking and Trust Company, as
Credit Facility Trustee, without recourse. This endorsement is given and made
without any warranty as to the authority and genuineness of the signature of the
maker of the foregoing Promissory Note.
This the day of November, 1996.
MARYLAND INDUSTRIAL DEVELOPMENT
FINANCING AUTHORITY
By:_____________________________
Title:__________________________
RECEIPT
Receipt of the foregoing original counterpart of the Loan Agreement, dated
as of November 1, 1996, between the Maryland Industrial Development Financing
Authority and Chesapeake Biological Laboratories, Inc., is hereby acknowledged.
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Trustee
By:_____________________________
Title:__________________________
EXHIBIT B
(Facility Site)