COLLATERAL PLEDGE AGREEMENT
THIS COLLATERAL PLEDGE AGREEMENT (this "Agreement") is made as of this 1st
day of November, 1996, by and between CHESAPEAKE BIOLOGICAL LABORATORIES, INC.,
a Maryland corporation (the "Borrower") and FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking association (the "Bank"); Witnesseth:
RECITALS
Pursuant to a Trust Indenture of even date herewith (as amended, modified,
supplemented or restated from time to time, the "Indenture") among the Maryland
Industrial Development Financing Authority (the "Issuer") and First Union
National Bank of Virginia, as Trustee and Branch Banking and Trust Company, as
Credit Facility Trustee (collectively, in such capacities, the "Bond Trustee"),
the Issuer has issued and sold its Maryland Industrial Development Financing
Authority Economic Development Revenue Bonds (Chesapeake Biological
Laboratories, Inc. Facility) 1996 Issue in the original aggregate principal
amount of $7,000,000 (the "Bonds"). The proceeds of the sale of the Bonds will
be loaned (such loan of the proceeds of the Bonds being hereinafter referred to
as the "Loan") by the Issuer to the Borrower pursuant to a Loan Agreement of
even date herewith (as amended, modified, supplemented or restated from time to
time, the "Loan Agreement") between the Issuer and the Borrower, and used by the
Borrower to finance (a) the acquisition by the Borrower of approximately 3.5
acres of land located at 1111 South Paca Street, Baltimore, Maryland together
with all improvements thereon (the "Real Property"), (b) the renovation of such
improvements and the construction of other improvements on the Real Property,
and (c) the acquisition of certain equipment to be used at the Real Property
(such Real Property, improvements and equipment being herewith collectively
referred to as the "Facility"). As used herein, the term "Property" means the
Real Property and the improvements to be made thereto as part of the Facility.
As used herein, the term "Bond Documents" means the Indenture, the Loan
Agreement, the Bonds and any other documents now or hereafter executed by the
Issuer, the Bond Trustee, the Borrower or any other party to evidence, secure or
in connection with the Bonds, as the same may be amended, modified or
supplemented from time to time in accordance with their respective terms. As
used herein, the term "Bond Obligations" means the obligations of the Borrower
to (a) pay the principal of, and interest on the Loan, when and as the same
becomes due and payable, (b) pay all other payments required by the Bond
Documents to be paid by the Borrower to the Issuer, to the Bank, to the Bond
Trustee or to others, when
and as the same shall become due and payable, and (c) timely perform, observe
and comply with all of the terms, covenants, conditions, stipulations, and
agreements express or implied, which the Borrower is required by any of the
Bond Documents to perform or observe.
In order to enhance the marketability of the Bonds, the Borrower and the
Issuer have requested that the Bank issue to the Bond Trustee an irrevocable
letter of credit (such letter of credit and all amendments and supplements
thereto, or any successor or substitute letter of credit issued by the Bank with
respect thereto being hereinafter called the "Letter of Credit") in an amount
not to exceed $7,280,000. Pursuant to a Letter of Credit and Reimbursement
Agreement of even date herewith (the "Letter of Credit Agreement") by and
between the Borrower and the Bank, the Bank has agreed to issue the Letter of
Credit.
As a condition precedent to the issuance of the Letter of Credit, the Bank
has required that the obligations of the Borrower under the Letter of Credit
Agreement be partially insured by the Maryland Industrial Development Financing
Authority (in such capacity, "MIDFA") pursuant to an Insurance Agreement dated
as of even date herewith by and among MIDFA, the Bank and the Borrower (the
"MIDFA Insurance Agreement")
As used herein, the term "Letter of Credit Documents" means the Letter of
Credit, the Letter of Credit Agreement and any other documents now or
hereafter executed by the Borrower or any other party to evidence, secure or
in connection with the Letter of Credit, as the same may be amended, modified
or supplemented from time to time in accordance with their respective terms.
As used herein, the term "Letter of Credit Obligations" means the obligations
of the Borrower under the Letter of Credit Documents to (a) pay all payments
required by the Letter of Credit Documents, when and as the same become due
and payable, including without limitation, all drafts drawn under the Letter
of Credit, and (b) timely perform, observe and comply with all of the terms,
covenants, conditions, stipulations and agreements, express or implied, which
the Borrower is required by the Letter of Credit Documents to observe or
perform. As a condition precedent to issuing the Letter of Credit, the Bank
has required, among other things, that the Borrower secure the payment and
performance of the Letter of Credit Obligations by the execution and delivery
of this Collateral Pledge Agreement.
The Bank and the Borrower have entered into an ISDA Master Agreement of even
date herewith (the "Swap Agreement") providing for an interest rate swap
arrangement for the Loan (the Swap Agreement and any other documents now or
hereafter executed in connection therewith including without limitation any
other "swap agreement," as defined in 11 U.S.C. 101, executed in substitution
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for the Swap Agreement are hereinafter collectively referred to as the "Swap
Documents"). As used herein, the term "Swap Obligations" means any and all
obligations, whether absolute or contingent, now or hereafter due or becoming
due or owing by the Borrower to the Bank under the Swap Documents. As a
condition precedent to making the interest rate swap arrangement available to
the Borrower under the Swap Agreement, the Bank has required that the
Borrower secure the payment and performance of the Swap Obligations by the
execution and delivery of this Collateral Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower agrees as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1. Definitions. The terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"Collateral" has the meaning set forth in Section 2.1.
"Default" has the meaning set forth in Article V.
"Enforcement Costs" means any and all funds, costs, expenses and charges of
any nature whatsoever (including, without limitation, attorney's fees and
expenses) reasonably advanced, paid or incurred by or on behalf of the Bank
under or in connection with the administration or enforcement of this Agreement,
including, without limitation, (a) the compliance of the Borrower with any
covenant, warranty, representation or agreement of the Borrower made in or
pursuant to this Agreement or any of the other Financing Documents, (b) the
collection or enforcement of any of the Obligations, this Agreement and any of
the other Financing Documents, and (c) the exercise, preservation, maintenance,
protection, operation, management, collection, sale or other disposition of, or
realization upon, all or any part of the Collateral, the Security Interest and
the rights and remedies of the Bank hereunder, under the other Financing
Documents, under applicable law and otherwise.
"Event of Default" means an event which, with the giving of notice or the
lapse of time, or both, could or would constitute a Default under the provisions
of this Agreement.
"Financing Documents" means Letter of Credit Documents and the Swap
Documents.
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"Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance, judgment, lien, claim or charge of any kind in, on,
of or in respect of, any asset or property or any rights to any asset or
property, including, without limitation, (a) any interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to any such asset or property, and (b) the
filing of, or any agreement to give, any financing statement relating to any
such asset or property under the Uniform Commercial Code of any jurisdiction.
"Obligations" means the Letter of Credit Obligations and the Swap
Obligations.
"Person" means and includes an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated association, a government or political
subdivision or agency thereof, or any other entity.
"Prime Rate" means the floating and fluctuating per annum rate of interest
of the Bank at any time or from time to time established and declared by the
Bank in its sole and absolute discretion as its prime rate. The Prime Rate does
not necessarily represent the lowest rate of interest charged by the Bank to
borrowers.
"Security Interests" means the security interests and other Liens in the
Collateral granted hereunder.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Maryland.
"VIC" means the Variable Investment Contract dated as of November 1, 1996 by
and between the First Union National Bank of North Carolina (in such capacity,
hereinafter referred to as "FUNBNC") and the Borrower, pursuant to which the
Borrower has delivered to FUNBNC the principal amount of $700,000 (the "Invested
Monies") to be invested by FUNBNC pursuant to the terms of the VIC.
SECTION 1.2. Rules of Construction. Unless otherwise defined herein and
unless the context otherwise requires, all terms used herein which are
defined by the UCC shall have the same meanings assigned to them by the UCC
unless and to the extent varied by this Agreement. The words "hereof",
"herein", and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, subsection, schedule, and exhibit
references are references to sections or subsections of, or schedules or
exhibits to, as the case may be, this Agreement unless otherwise specified.
As used herein, the singular number shall include the plural, the plural the
singular, and the use of the
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masculine, feminine or neuter gender shall include all genders, as the
context may require.
ARTICLE II
THE COLLATERAL
SECTION 2.1. The Pledge. In order to secure the full and punctual payment of
the Obligations in accordance with the terms thereof, and to secure the
performance of this Agreement and the other Financing Documents, the Borrower
hereby transfers, pledges, assigns, sets over, delivers and grants to the Bank a
continuing lien and security interest in and to all of the following property of
the Borrower, both now owned and existing and hereafter created, acquired and
arising (all being collectively referred to as the "Collateral") and all right,
title and interest of the Borrower in and to the Collateral:
(a) Invested Monies, etc. (i) the Invested Monies, (ii) all other monies
and funds now or hereafter delivered to or on deposit with the Bank pursuant
to the VIC and all rights for or to payment thereof, and (iii) all interest,
dividends, cash, income or other property now or hereafter payable or
distributable under, or, to or by reason of, the VIC or the money and funds
on deposit with the Bank pursuant to the VIC or represented thereby; and
(b) Proceeds. All cash and non-cash proceeds and products of the portion of
the Collateral described in clause (a) above.
SECTION 2.2. Security Interests Security Only. The Security Interests are
granted as security only and shall not subject the Bank to, or transfer or in
any way affect or modify, any obligation or liability of the Borrower with
respect to any of the Collateral or any transaction in connection therewith.
SECTION 2.3. Delivery, Etc. The Borrower shall deliver or promptly cause to
be delivered to the Bank (a) the VIC which shall be accompanied by an
acknowledgment duly executed and delivered by FUNBNC and in form and content
satisfactory to the Bank under which, among other things, FUNBC will accept and
confirm notice of the Bank's Security Interest in the Collateral free and clear
of any other Liens and agree not to permit any withdrawals from, liens against,
or releases or further transfers, pledges or assignments of, the Collateral
without the prior written consent of the Bank, and (b) all other instruments,
agreements and papers comprising, representing, evidencing or in connection with
the Collateral or any part thereof accompanied by proper instruments of
transfer, assignment or endorsement duly executed by the Borrower.
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SECTION 2.4. Record Owner of Collateral. The Bank shall have the right in
its sole and absolute discretion to hold the VIC or other instrument or document
representing or evidencing the Invested Monies and any other certificates,
notes, instruments or securities now or hereafter included in the Collateral in
its own name, the name of its nominee or the name of the Borrower. The Borrower
will promptly give to the Bank copies of any notices or other communications
received by it with respect to Collateral registered in the name of the
Borrower.
SECTION 2.5. Interest etc, until Event of Default.
(a) Unless and until an Event of Default shall have occurred and is
continuing, the Borrower shall be entitled to receive and retain any and all
interest, income or dividends paid in cash on the Invested Monies.
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Borrower to receive interest, income or dividends which the
Borrower is authorized to receive pursuant to paragraph (a) of this Section 2.5
shall cease, and all such rights shall thereupon become vested in the Bank,
which shall have the sole and exclusive right and authority to receive and
retain such interest, income or dividends. All interest, income or dividends
which are received by the Borrower contrary to the provisions of this Section
2.5 shall be received in trust for the benefit of the Bank, shall be segregated
from other property or funds of the Borrower and shall be forthwith delivered to
the Bank in the same form as so received with any necessary endorsement which
the Borrower agrees to make.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank and MIDFA that the
following statements are true, correct and complete:
SECTION 3.1. Title and Authority. The Borrower is the owner of the
Collateral and has good and marketable title to the Collateral free and clear of
any Liens. The Borrower has full power and authority to grant the Security
Interests to the Bank in the Collateral pursuant hereto and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement
without the consent or approval of any Person other than any consent or approval
which has been obtained.
SECTION 3.2. Validity, Perfection and Priority of Security Interests. By
virtue of the execution and delivery of this Agreement and upon delivery to
the Bank of the Collateral (or
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certificates, instruments or other papers representing or evidencing the
Collateral) in accordance with the provisions of this Agreement, the Bank
will have a valid and perfected Lien on the Collateral subject to no prior or
other Liens. No registration, recordation or filing with any governmental
body, agency or official is required in connection with the execution and
delivery of this Agreement or necessary for the validity or enforceability of
this Agreement or for the perfection of the Security Interests.
SECTION 3.3. Survival. All representations and warranties contained in or
made under or in connection with this Agreement (a) shall survive the execution,
delivery and performance of this Agreement, and (b) shall be true, correct and
complete at all times during which any of the Obligations (or commitments
therefor) are outstanding with the same effect as if such representations and
warranties had been made at such times.
ARTICLE IV
COVENANTS OF BORROWER
The Borrower covenants and agrees with the Bank and MIDFA as follows:
SECTION 4.1. Title, Liens and Taxes. The Borrower shall, at its cost and
expense, take any and all actions necessary to defend its title to Collateral
against all Persons and to defend the Security Interest of the Bank in the
Collateral and the priority (or intended priority) thereof, against any adverse
Lien of any nature whatsoever. Except to the extent contested in good faith, the
Borrower will pay all taxes and assessments levied or placed on the Collateral
prior to the date when any interest or penalty would accrue for the nonpayment
thereof.
SECTION 4.2. Further Assurances. The Borrower shall, from time to time, at
its expense, execute, deliver, acknowledge and cause to be duly filed, recorded
or registered any statement, assignment, endorsement, instrument, paper,
agreement or other document and take any other action that from time to time may
be necessary or desirable, or that the Bank may reasonably request, in order to
create, preserve, continue, perfect, confirm or validate the Security Interests
or to enable the Bank to obtain the full benefits of this Agreement or to
exercise and enforce any of its rights, powers and remedies hereunder. The
Borrower shall pay all costs of, and incidental to, the filing, recording or
registration of any such document as well as any recordation, transfer or other
tax required to be paid in connection with any such filing, recordation or
registration.
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SECTION 4.3. Care and Protection of Collateral. The Borrower shall promptly
notify the Bank of any event causing deterioration, loss or depreciation in
value of any substantial portion of the Collateral and the amount of such loss
or depreciation. The Borrower shall perform, observe, and comply with all of the
terms and provisions to be performed, observed or complied with by it under each
contract, agreement or obligation relating to the Collateral. The Bank shall
have no duty to, and the Borrower hereby releases the Bank from all claims for
loss or damage caused by the failure of the Bank to, collect, protect, preserve
or enforce any of the Collateral or preserve rights against account debtors and
prior parties to the Collateral.
SECTION 4.4. Sale of Collateral. Without the prior written consent of the
Bank and MIDFA, the Borrower will not (a) sell, lease, assign, transfer, dispose
of, pledge or grant or permit a Lien to exist on, the Collateral or (b) withdraw
any monies or funds on deposit pursuant to the VIC, except interest, income or
dividends receivable by the Borrower under Section 2.5 hereof.
ARTICLE V
DEFAULT
The occurrence of any one or more of the following events shall constitute a
default under the provisions of this Agreement, and the term "Default" shall
mean, whenever it is used in this Agreement, any one or more of the following
events:
SECTION 5.1. Payment of Obligations. If any of the Obligations are not paid
as and when due and payable in accordance with the provisions of this Agreement,
and/or any of the other Financing Documents after giving effect to any
applicable cure or grace periods, if any;
SECTION 5.2. Perform, etc. Certain Provisions of this Agreement. The failure
of the Borrower to perform, observe or comply with any of the provisions of
Sections 4.1 and 4.4 of this Agreement;
SECTION 5.3. Perform, etc. Other Provisions of This Agreement. The failure
of the Borrower to perform, observe or comply with any of the provisions of this
Agreement other than those covered by Sections 5.1 and 5.2 above, and, such
failure is not cured to the satisfaction of the Bank within a period of thirty
(30) days after the date of written notice thereof by the Bank to the Borrower;
SECTION 5.4. Representations and Warranties. If any representation and
warranty contained herein or any statement or representation made in any
officer's certificate or any other
8
information at any time given by or on behalf of the Borrower or furnished in
connection with this Agreement or any of the other Financing Documents shall
prove to be false or incorrect in any material respect on the date as of
which made; or
SECTION 5.5. Default under Other Financing Documents. The failure of the
Borrower to perform, observe or comply with any of the provisions of any of the
Financing Documents (other than this Agreement) to which the Borrower is a party
and such failure is not cured within applicable cure or grace periods, if any,
or if a "Default" (as defined and described therein) occurs under the provisions
of any of the Financing Documents (other than this Agreement) which is not cured
within applicable cure or grace periods, if any.
ARTICLE VI
RIGHTS AND REMEDIES
SECTION 6.1. Rights and Remedies of the Bank. Upon and after the occurrence
of an Event of Default, the Bank may, without notice or demand other than
expressly provided for under the provisions of this Agreement, exercise in any
jurisdiction in which enforcement hereof is sought, the following rights and
remedies, in addition to the rights and remedies available to the Bank under the
other provisions of this Agreement and the other Financing Documents, the rights
and remedies of a secured party under the UCC and all other rights and remedies
available to the Bank under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:
(a) The Bank may, and is hereby irrevocably authorized by the Borrower to,
either in the Bank's name or in the name of the Borrower, irrespective of any
penalties for early termination and free of any right or equity of the Borrower
in any of the Collateral, ask for, demand, collect, withdraw, sue for, receive,
receipt and/or give acquittance for, any and all money and funds on deposit or
otherwise held by FUNBNC under or pursuant to the VIC and any interest, income
or dividends thereon and any other money and funds due or to become due under or
by reason thereof, (ii) endorse checks, drafts, orders and other instruments for
the payment of money payable to the Borrower representing any principal,
interest, income, dividend or distribution payable in respect of the Collateral
or any part thereof or on account thereof and to give full discharge for the
same, (iii) settle, compromise, prosecute or defend any action, claim or
proceeding with respect to the Collateral, (iv) terminate, surrender, convert to
cash, sell, assign, endorse, pledge or transfer the Collateral at face value,
plus the amount of any accrued interest thereon but subject to any forfeiture or
penalty provisions that may apply, or (v) make any
9
agreement respecting the Collateral or otherwise deal with the Collateral as
though the Bank were the absolute owner of the Collateral; provided, however,
that nothing herein contained shall be construed as requiring or obligating
the Bank to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Bank, or to present or file any
claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken by the Bank or omitted to be
taken with respect to the Collateral or any part thereof shall give rise to
any defense, counterclaim or offset in favor of the Borrower or to any claim
or action against the Bank.
(b) As an alternative to exercising the remedies herein conferred upon it
under subparagraph (a) above, the Bank may proceed by a suit or suits at law or
in equity to foreclose this Agreement and to sell or collect the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.
SECTION 6.2. Application. The proceeds of collection, sale or other
disposition of all or any part of the Collateral coming into the Bank's
possession may be applied by the Bank to any of the Obligations, whether matured
or unmatured, in such order and manner as the Bank may determine in its sole
discretion.
SECTION 6.3. No Waiver, Etc. No failure or delay by the Bank to insist upon
the strict performance of any term, condition, covenant or agreement of this
Agreement or of the other Financing Documents, or to exercise any right, power
or remedy consequent upon a breach thereof, shall constitute a waiver of any
such term, condition, covenant or agreement or of any such breach, or preclude
the Bank from exercising any such right, power or remedy at any later time or
times. By accepting payment after the due date of any amount payable under this
Agreement or under any of the other Financing Documents, the Bank shall not be
deemed to waive the right either to require prompt payment when due of all other
amounts payable under this Agreement or under any of the other Financing
Documents, or to declare a Default for failure to effect such prompt payment of
any such other amount. The payment by the Borrower or any other Person and the
acceptance by the Bank or any other amount due and payable under the provisions
of this Agreement or the other Financing Documents at any time during which a
Default exists shall not in any way or manner be construed as a waiver of such
Default by the Bank or preclude the Bank from exercising any right of power or
remedy consequent upon such Default.
ARTICLE VII
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MISCELLANEOUS
SECTION 7.1. Course of Dealing; Amendment. No course of dealing between the
Bank and the Borrower shall be effective to amend, modify or change any
provision of this Agreement or the other Financing Documents. The Bank shall
have the right at all times to enforce the provisions of this Agreement and the
other Financing Documents in strict accordance with the provisions hereof and
thereof, notwithstanding any conduct or custom on the part of the Bank in
refraining from so doing at any time or times. The failure of the Bank at any
time or times to enforce its rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or the other
Financing Documents or as having in any way or manner modified or waived the
same. This Agreement may not be amended, modified, or changed in any respect
except by an agreement, in writing, signed by the Bank and the Borrower.
SECTION 7.2. Waiver of Default. The Bank may, at any time and from time to
time, execute and deliver to the Borrower a written instrument waiving, on such
terms and conditions as the Bank may specify in such written instrument, any of
the requirements of this Agreement or any Event of Default or Default and its
consequences, provided, that any such waiver shall be for such period and
subject to such conditions as shall be specified in any such instrument. In the
case of any such waiver, the Borrower and the Bank shall be restored to their
former positions prior to such Event of Default or Default and shall have the
same rights as they had hereunder. No such waiver shall extend to any subsequent
or other Event of Default or Default, or impair any right consequent thereto and
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 7.3. Notices. All notices, requests and demands to or upon the
parties to this Agreement shall be deemed to have been given or made when
delivered by hand, or when deposited in the mail, postage prepaid by registered
or certified mail, return receipt requested, addressed as follows or to such
other address as may be hereafter designated in writing by one party to the
other:
Borrower: Chesapeake Biological Laboratories, Inc.
6000 Metro Drive
Baltimore, Maryland 21215
Attention: John C. Weiss, III, President
With a
copy to: Douglas M. Fox, Esquire
Ballard, Spahr, Andrews & Ingersoll
Suite 1900
11
300 East Lombard Street
Baltimore, Maryland 21202
Bank: First Union National Bank of North
Carolina
Two First Union Center, T-7
Charlotte, North Carolina 28288
Attention: International Operations
except in cases where it is expressly herein provided that such notice,
request or demand is not effective until received by the party to whom it is
addressed.
SECTION 7.3. Performance for Borrower. The Borrower hereby appoints the Bank
the attorney-in-fact of the Borrower for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Bank may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Bank shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Bank's name or in the name of the Borrower,
(a) to ask for, demand, sue for, collect, receive, receipt and give acquittance
for any and all moneys due or to become due and under and by virtue of any
Collateral, (b) to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Borrower representing any interest, dividend or
other distribution payable in respect of the Collateral or any part thereof or
on account thereof, (c) to give full discharge for all or any part of the
Collateral, (d) to settle, compromise, prosecute or defend any action, claim or
proceeding with respect to all or any part of the Collateral, (e) to sell,
assign, endorse, pledge, transfer and make any agreement respecting all or any
part of the Collateral, or (f) otherwise deal with all or any part of the
Collateral as though the Bank were the absolute owner thereof; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Bank to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by the Bank, or to present or file
any claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or become due in respect thereof or any property
covered thereby, and no action taken by the Bank or omitted to be taken with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Borrower or to any claim or action
against the Bank.
SECTION 7.4. Enforcement Costs. The Borrower shall pay to the Bank upon
demand all Enforcement Costs together with interest thereon from the date
incurred or advanced until paid in full at a
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per annum rate of interest equal at all times to the Prime Rate in effect
from time to time, plus four percent (4%) per annum. Enforcement Costs
together with interest thereon shall be included in the Obligations secured
hereby.
SECTION 7.5. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may be possible, (b)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction, and (c) the parties hereto shall endeavor in good faith
negotiations to replace the invalid or unenforceable provisions with valid and
enforceable provisions, the economic effect of which comes as close as possible
to that of the invalid or unenforceable provisions.
SECTION 7.6. Assignment. The Bank may, without notice to, or consent of,
the Borrower, sell, assign or transfer to any Person or Persons (except for a
competitor of the Borrower as reasonably determined by the Bank) all or any
part of the Obligations, and in the event of any such assignment, the
Security Interests and rights and remedies of the Bank hereunder shall extend
to, and vest in, any such assignee or assignees who shall have the right to
enforce the provisions of this Agreement as fully as the Bank, provided that
the Bank shall continue to have the unimpaired right to enforce the
provisions of this Agreement as to so much of the Obligations that it has not
sold, assigned or transferred. The Borrower will fully cooperate with the
Bank in connection with any such assignment and will execute and deliver such
consents and acceptances to any such assignment and amendments to this
Agreement in order to effect any such assignment (including, without
limitation, the appointment of the Bank as agent for itself and all
assignees).
SECTION 7.7. Survival. All representations, warranties and covenants
contained among the provisions of this Agreement shall survive the execution and
delivery of this Agreement and all other Financing Documents.
SECTION 7.8. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective personal
representatives, successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Bank.
SECTION 7.9. Continuing Agreement. This Agreement and the Security Interests
shall be continuing and binding on the Borrower
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regardless of how long before or after the date hereof any of the Obligations
were or are incurred. Subject to the provisions of Section 7.14 hereof, this
Agreement and the Security Interests shall terminate when all of the
Obligations have been indefeasibly paid in full and no commitments therefor
are outstanding, at which time the Bank will reassign and deliver to the
Borrower, against receipt, such of the Collateral as still held by the Bank
(if any) and not sold or otherwise applied by the Bank pursuant to the terms
hereof. Any such reassignment shall be without recourse to or warranty by the
Bank at the expense of the Borrower.
SECTION 7.10. Applicable Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed and interpreted in accordance with
the laws of the State of Maryland, both in interpretation and performance.
SECTION 7.11. Duplicate Originals and Counterparts. This Agreement may be
executed in any number of duplicate originals or counterparts, each of such
duplicate originals or counterparts shall be deemed to be an original and all
taken together shall constitute but one and the same instrument.
SECTION 7.12. Exhibits and Schedules. Any exhibits and schedules attached to
this Agreement are an integral part hereof and are hereby incorporated herein
and included in the term "this Agreement".
SECTION 7.13. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only, shall not constitute a part
of this Agreement for any other purpose and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.
SECTION 7.14. Partial Releases of Collateral. The appraisal of the Property
prepared by Colliers Pinkard on September 30, 1996 (the "Original Property
Appraisal") contains the "as completed" value of the Property other than the
"as-completed" value related to the pharmaceutical build-out and validation in
that plans and specifications with respect to the pharmaceutical build-out were
not then sufficiently developed.. As used herein, the term "Margined Property
Value" means 75% of the gross market value of the Property as determined by the
Bank and MIDFA based upon a current appraisal of the Property approved by MIDFA
and the Bank. Based upon the Original Appraisal, the Bank and MIDFA determined a
then current Margined Property Value of the Property equal to $1,856,000. The
Borrower shall have the right to have subsequent reappraisals of the Property at
its sole expense by an appraiser approved by the Bank and MIDFA at the following
times:
(a) After all of the plans and specifications for the Facility, including
the pharmaceutical build-out, have been
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substantially completed, a reappraisal of the Property may be performed.
(b) After the "Start-up/Commissioning" of the cGMP (current good
manufacturing practice) manufacturing area, another reappraisal may be
performed. "Start-up/Commissioning" is defined as the point in time when
"Installation Qualification" has been achieved on substantially all process
and utility equipment and systems. "Installation Qualification" provides
verification and documentation that the equipment is properly installed at
the Property, that the materials of construction meet cGMP requirements and
that the equipment is properly connected to utilities and controls according
to the vender and engineer specifications.
(c) The Borrower will also have the option to reasonably request that
additional reappraisals of the Property be performed at any time and from time
to time after the event described in subparagraphs (a) above has occurred (each
of the reappraisal in these subparagraphs (a), (b) and (c) being hereinafter
collectively referred to the "Reappraisals" and individually as a
"Reappraisal").
Notwithstanding anything herein to the contrary, the Bank agrees to release
all or parts of the Collateral from this Agreement from time to time prior to
payment in full of the Obligations subject to the final approval of MIDFA and
the Bank and satisfaction of the following terms and conditions:
(a) No Default or Event of Default shall have occurred and be continuing at
the time that a full or partial release is to be given by the Bank.
(b) The Borrower shall have submitted to the Bank and MIDFA each time that a
full or partial release is requested, a current Reappraisal of the Property by
an appraiser approved by the Bank and MIDFA. Based upon such Reappraisal (which
must be satisfactory in all respects to the Bank and MIDFA), the Bank and MIDFA
shall determine the current Margined Property Value. If the Margined Property
Value has increased from the Margined Property Value determined based upon the
Original Appraisal, the Bank will release from the lien of this Agreement an
amount of Collateral approximately equal to such increase. All costs and
expenses for obtaining any such reappraisals and releases of Collateral shall be
borne by the Borrower.
SECTION 7.15. Lien Subordination. Notwithstanding anything herein to the
contrary, the lien of the Swap Documents (including this Agreement) in and to
the Collateral is subordinate to the lien of the Letter of Credit Documents in
and to the Collateral, and the lien of the Letter of Credit Documents in and to
the Collateral
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shall be deemed to be prior and senior to the lien of the Swap Documents in
and to the Collateral.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Agreement
under its seal as of the day and year first written above.
WITNESS: CHESAPEAKE BIOLOGICAL LABORATORIES
/s/ Jacqueline M. Wood By:/s/ John C. Weiss, III (SEAL)
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John C. Weiss, III, President
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