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LOAN AGREEMENT
BY AND BETWEEN
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
AND
ELITE PHARMACEUTICALS, INC.
DATED AS OF AUGUST 15, 2005
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01. Definitions................................................... 2
ARTICLE II
THE LOANS
Section 2.01. The Loans.................................................... 10
Section 2.02. The Notes.................................................... 10
Section 2.03. Acceleration of Payment of Redeemed Bonds..................... 10
Section 2.04. No Defense or Set-Off......................................... 11
Section 2.05. Deficiencies in Revenues...................................... 11
Section 2.06. Manner of Payment............................................. 11
Section 2.07. Security for the Loans........................................ 11
Section 2.08. Cancellation of Bonds Upon Payment in Full.................... 11
Section 2.09. Prepayment of Loans Upon Certain Conditions................... 12
Section 2.10. Damage, Destruction or Condemnation............................12
Section 2.11. No Personal Recourse...........................................13
ARTICLE III
ESTABLISHMENT OF FUNDS
AND APPLICATION OF PROCEEDS
Section 3.01. Application of Bond Proceeds.................................. 14
Section 3.02. Disbursements from the Project Fund........................... 14
Section 3.03. No Liability of Authority or Trustee.......................... 15
Section 3.04. Establishment of Completion Date.............................. 15
Section 3.05. Company Required to Pay if Project Fund Insufficient.......... 16
Section 3.06 Restriction on Use of Project Fund......................... 16
Section 3.07 Completion of Project Facilities; Excess Bond Proceeds..... 16
Section 3.08. The Trustee................................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties.................................18
Section 4.02. Organization, Powers, etc..................................... 24
Section 4.03. Execution of Loan Documents................................... 24
Section 4.04. Title to Collateral........................................... 24
Section 4.05. Litigation.................................................... 24
Section 4.06. Payment of Taxes.............................................. 25
Section 4.07. No Defaults................................................... 25
Section 4.08. No Material Adverse Change.................................... 25
Section 4.09. Intentionally Omitted......................................... 25
Section 4.10. Obligations of the Company.................................... 25
Section 4.11. No Untrue Statements.......................................... 25
Section 4.12. No Action..................................................... 25
Section 4.13. Design of the Project......................................... 26
Section 4.14. Commencement of Project; Proper Charges....................... 26
Section 4.15. Limitation on Expenditures; Principal User.................... 26
Section 4.16. Outstanding Tax-Exempt Bonds.................................. 27
Section 4.17. Project Municipality.......................................... 27
Section 4.18. No Tenancies.................................................. 27
Section 4.19. Substantial Users............................................. 27
Section 4.20. Placement in Service.......................................... 27
Section 4.21. No Common Plan of Financing................................... 27
Section 4.22. Use of Proceeds............................................... 28
Section 4.23. Economic Life................................................. 28
Section 4.24. Aggregation of Issue for Single Project....................... 28
Section 4.25. Environmental Representation.................................. 29
Section 4.26. Company's Interest in the Collateral.......................... 29
ARTICLE V
CONDITIONS OF LENDING
Section 5.01. Opinion of Counsel for the Company............................ 30
Section 5.02. Opinion of Bond Counsel....................................... 30
Section 5.03. Loan and Other Documents...................................... 30
Section 5.04. Legal Matters................................................. 30
Section 5.05. Bond Issuance Fee............................................. 31
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01. Preservation of Property and the Collateral................... 32
Section 6.02. Insurance Required............................................ 32
Section 6.03. Payment of Taxes, etc......................................... 35
Section 6.04. Concerning the Project........................................ 35
Section 6.05. Compliance with Code and Arbitrage Regulations................ 35
Section 6.06. Compliance With Applicable Laws............................... 35
Section 6.07. Compliance With Department of Environmental Protection........ 35
Section 6.08. Financial Statements.......................................... 36
Section 6.09. Intentionally Omitted......................................... 36
Section 6.10. Indemnification............................................... 37
Section 6.11. Intentionally Omitted......................................... 39
Section 6.12. Report of Number of Employees................................. 39
ii
Section 6.13. Intentionally Omitted......................................... 39
Section 6.14. Inspection of the Project..................................... 39
Section 6.15. Continuation Statements....................................... 39
Section 6.16. Additional Covenants Concerning the Collateral................ 39
Section 6.17. Payment of Obligations........................................ 40
Section 6.18. Intentionally Omitted......................................... 40
Section 6.19. Intentionally Omitted......................................... 40
Section 6.20. Project Sign.................................................. 40
Section 6.21. Brokerage Fee................................................. 40
Section 6.22. Cost Recovery................................................. 40
Section 6.23. Rehabilitation Requirement.................................... 40
Section 6.24. Covenant by Company as to Compliance with Indenture........... 41
Section 6.25. Continuing Disclosure..........................................41
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default............................................. 42
Section 7.02. Remedies...................................................... 43
Section 7.03. No Remedy Exclusive........................................... 45
Section 7.04. Additional Remedies........................................... 45
Section 7.05. Agreement to Pay Attorneys' Fees and Expenses................. 45
Section 7.06. No Additional Waiver Implied by One Waiver.................... 45
Section 7.07. Additional Authority's Remedies............................... 46
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notice........................................................ 47
Section 8.02. Concerning Successors and Assigns............................. 47
Section 8.03. Payment of Fees and Expenses.................................. 47
Section 8.04. Payment of Trustee's and Paying Agent's
Compensation and Expenses................................. 48
Section 8.05. New Jersey Law Governs........................................ 48
Section 8.06. Modifications, Waivers or Amendments.......................... 48
Section 8.07. Failure to Exercise Rights.................................... 48
Section 8.08. Authority's Assignment........................................ 48
Section 8.09. Further Assurances and Corrective Instruments................. 48
Section 8.10. Captions...................................................... 49
Section 8.11. Severability.................................................. 49
Section 8.12. Counterparts.................................................. 49
Section 8.13. Special Limited Obligations................................... 49
Section 8.14. Effective Date and Term....................................... 49
SCHEDULE A - List of Collateral
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EXHIBIT A - Company Completion Certificate
EXHIBIT B - Addendum to Construction Contract
EXHIBIT C - Contractor's Certificate
EXHIBIT D - Contractor's Completion Certificate
EXHIBIT E - Forms of Requisition
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of the 1st day of August, 2005, by and
between the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Authority"), a
public body corporate and politic constituting an instrumentality of the State
of New Jersey and ELITE PHARMACEUTICALS, INC., a corporation organized under the
laws of the State of Delaware (the "Company").
WHEREAS, the Act (this term and certain other terms used herein are
defined in Section 1.01) declares it to be in the public interest and to be the
policy of the State to foster and promote the economy of the State, increase
opportunities for gainful employment and improve living conditions, assist in
the economic development or redevelopment of political subdivisions within the
State, and otherwise contribute to the prosperity, health and general welfare of
the State and its inhabitants by inducing manufacturing, industrial, commercial,
recreational, retail, service and other employment promoting enterprises to
locate, remain or expand within the State by making available financial
assistance; and
WHEREAS, Authority is authorized and empowered under the laws of the
State, including the Ac, to issue economic development bonds and to enter into
loan agreements, contracts and other instruments and documents necessary or
convenient to obtain loans for the purpose of facilitating the financing of
certain projects as described in the Act; and
WHEREAS, on September 2, 1999, the Authority issued its Economic
Development Bonds (Elite Pharmaceuticals, Inc. - 1999 Project) in the aggregate
principal amount of $3,000,000 (the "1999 Bonds") for the purpose of the
acquisition of land and an existing approximately 15,000 sq. ft. building and
the acquisition of equipment, to be used in the manufacturing of pharmaceutical
products to be located in the municipality of Northvale, County of Bergen, State
of New Jersey (the "Project Site"); and
WHEREAS, the Company has requested, and the Authority has determined to
issue, its Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005
Project), Series A in the aggregate principal amount of $3,660,000 (the "Series
A Bonds") for the purpose of currently refunding and redeeming the 1999 Bonds
and to finance the acquisition of additional equipment to be used in the
manufacturing of pharmaceutical products at the Project Site (the "Project") and
its Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project),
Federally Taxable Series B, in the aggregate principal amount of $495,000 (the
"Series B Bonds"; together with the Series A Bonds, the "Initial Bonds") for the
purpose of refinancing the purchase of equipment used at the Project Site and to
finance costs of issuance incurred in connection with the issuance of the
Initial Bonds; and
WHEREAS, the execution and delivery of this Loan Agreement have been
duly authorized by the Authority, and all conditions, acts and things necessary
and required by the Constitution or statutes of the State or otherwise, to
exist, to have happened, or to have been performed precedent to or in the
execution and delivery of this Loan Agreement do exist, have happened and have
been performed in regular form, time and manner.
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants and representations hereinafter contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used herein, the following terms shall
have the following meanings:
"Act" shall mean the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State, approved on
August 7, 1974, as amended and supplemented;
"Affirmative Action Program" shall mean the provisions of the Act, and
the resolutions, rules and regulations of the Authority, as adopted, amended and
supplemented from time to time, requiring that the Company and all Contractors
make every effort to hire minority workers or to cause minority workers to be
hired for employment in performance of Construction Contracts in fulfillment of
the minority employment goals fixed by the Authority, and that the Company and
all Contractors file such certificates, reports and records and do other
prescribed acts as are necessary to demonstrate or assure compliance;
"Applications" shall mean the Company's applications to the Authority,
dated May 1, 2005, as amended, seeking financial assistance for the Project, and
all attachments, exhibits, correspondence and modifications submitted in writing
to the Authority in connection therewith;
"Assignment of Leases" means the assignment dated the Closing Date from
the Company to the Authority, which is made part of the record of proceedings
and assigning to the Authority on a first priority basis the benefits of
existing and future leases on the Project;
"Authority" shall mean the New Jersey Economic Development Authority, a
public body corporate and politic constituting an instrumentality of the State,
organized and subsisting under the Act exercising public and essential
governmental functions and its successors or assigns;
"Authorized Authority Representative" shall mean any individual or
individuals duly authorized by the Authority to act on its behalf;
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"Authorized Company Representative" shall mean any individual or
individuals duly authorized by the Company to act on its behalf;
"Bond" or "Bonds" shall mean any of the bonds of the Authority
authenticated and delivered under and pursuant to the Indenture including the
Initial Bonds. Such Bonds may be Taxable Bonds or Tax-exempt Bonds;
"Bond Counsel" shall mean the law firm of McManimon & Scotland, L.L.C.,
One Riverfront Plaza, Newark, New Jersey or an attorney or firm of attorneys of
nationally recognized standing on the subject of municipal bonds;
"Bond Fund" shall mean the fund so designated and established pursuant
to Section 4.01 of the Indenture;
"Bond Proceeds" shall mean the amount, including any accrued interest,
paid to the Authority by the Placement Agent pursuant to the Bond Placement
Agreement as the purchase price of the Bonds, and interest income earned thereon
prior to the Completion Date;
"Bond Placement Agreement" shall mean the agreement by and between the
Placement Agent and the Authority executed in connection with the placement of
the Bonds;
"Bond Year" shall mean the period beginning on the date the Tax-exempt
Bonds are issued and ending one (1) year later or the close of business of such
earlier date selected by the Company. Each subsequent Bond Year is the one year
(1) period beginning on the day after the expiration of the previous Bond Year;
"Business Day" shall mean a day of the year, other than a (a) Saturday,
Sunday or legal holiday on which banks located in the municipality in which the
principal offices of the Trustee and any Paying Agent are located are not
required or authorized to remain closed and (b) a day on which the Depository
Trust Company is closed;
"Closing Date" shall mean August 31, 2005;
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations in effect thereunder;
"Collateral" shall mean the land, building, fixtures and other
facilities in which the Authority is granted a lien by the Mortgage, the lease
and revenues assigned by the Assignment of Leases, the assets subject to the
security interest created by the Security Agreement and the security interest
under Section 2.07 of this Agreement;
"Company" shall mean Elite Pharmaceuticals, Inc., a corporation
organized under the laws of the State of Delaware;
3
"Company's Completion Certificate" shall mean the certificate executed
by the Company, substantially to the effect set forth in Section 3.04;
"Completion Date" shall mean the date of completion of the Project as
stated in the Certificate described in Section 3.04 hereof and attached as
Exhibit A hereto;
"Construction Contract" shall mean, for purposes of the Prevailing Wage
Provision, any contract or subcontract in the amount of $2,000 or more for
construction, reconstruction, demolition, alteration, repair, or maintenance
work, including painting and decorating, undertaken in connection with the
Project and shall mean, for purposes of the Affirmative Action Program, any
contract or subcontract for construction, reconstruction, renovation or
rehabilitation undertaken in connection with the Project;
"Contractor" shall mean the principal or general contractor or
contractors engaged by the Company in the performance of a Construction
Contract;
"Contractor's Certificate" shall mean the instrument executed by the
Contractor in form and substance acceptable to the Authority, wherein the
Contractor agrees to undertake or perform such obligations and certifies as to
such matters as the Authority shall require, including, without limitation, that
for purposes of the Prevailing Wage Provision all workers engaged in the
performance of Construction Contracts shall be paid a wage rate not less than
the Prevailing Wage Rate and that all Construction Contracts will so provide and
that for purposes of the Affirmative Action Program the Contractor will make
every effort to hire or cause to be hired minority workers so as to meet the
minority employment goals of the Affirmative Action Program and that all
Construction Contracts will so provide;
"Contractor's Completion Certificate" shall mean the certificate or
certificates executed by the Contractor and any Subcontractors, upon substantial
completion of Project construction, in form and substance acceptable to the
Authority, wherein the Contractor certifies as to such matters as the Authority
shall require, including, without limitation, that the Contractor has made every
effort to satisfy the minority employment goals established in the Affirmative
Action Program and that the Contractor has submitted all certificates, reports,
and records required by the Authority;
"Cost" or "Costs" as used herein shall include those items set forth in
Section 3(c) of the Act as may be necessary or incident to acquiring and
renovating the Project;
"Counsel for the Company" shall mean the law firm of Gallo Geffner
Fenster, P.C., Hackensack, New Jersey;
4
"Debt Service" shall mean the scheduled amount of interest and
amortization of principal payable for any Bond Year with respect to the
Tax-exempt Bonds as defined in Section 148(d)(3)(D) of the Code;
"Determination of Taxability" means a final, non-appealable
determination by a court of competent jurisdiction in the United States of
America in (a) a proceeding for a declaratory judgment in which the Company has
participated or has been offered the opportunity to participate, or (b) a
proceeding in which an owner or former owner of any Tax-exempt Bond is a party
and has offered the Company the opportunity to assist in or assume the
preparation of such owner's defense or case, or (c) the issuance of a statutory
notice of deficiency (or its equivalent) by the Internal Revenue Service, which
has not been revoked or rescinded or overruled by a final judgment of federal
court within a period of 6 months from the date an owner or former owner of any
such Tax-exempt Bond with respect to which such statutory notice of deficiency
(or its equivalent) is issued notifies the Company of such issuance or such
shorter period as may be designated by the Company to the Trustee), in either
case to the effect that interest on any Tax- exempt Bond previously paid,
accrued or to accrue in the future is directly includable in the gross income
for federal income tax purposes of any owner or former owner thereof; provided
that if any of the foregoing is based upon certain federal income taxes not
solely based on items includable in gross income including, among other things,
(1) the inclusion of interest on any Tax- exempt Bonds in the determination,
with respect to the owner thereof, of (A) the "branch profits tax" imposed on
certain foreign corporations or (B) the alternative minimum tax imposed on
individuals or corporations or (2) the conclusion that any owner or former owner
is or was a Substantial User, or a Related Person, the same shall not be deemed
a Determination of Taxability;
"Event of Default" shall mean any Event of Default as defined in
Section 7.01 hereof;
"Financing Statements" shall mean the UCC-1 Financing Statements
executed by the Company and the Guarantor perfecting the Authority's security
interest in the Collateral;
"Fiscal Year" shall mean the twelve (12) months ending March 31 for the
Company;
"Gross Proceeds" shall have the meaning given in Section 148(f)(6)(b)
of the Code, presently including, without limitation, the original proceeds of
the Tax-exempt Bonds, investment proceeds, amounts held in a sinking fund,
amounts invested in a reasonably required reserve or replacement fund (as
defined in Section 148(d) of the Code), any amounts used to pay debt service on
the Tax-exempt Bonds and any amounts received as a result of investing in any of
the foregoing;
"Guarantor" shall mean Elite Laboratories, Inc. and any successor
guarantor of the Loans;
5
"Guaranty" shall mean the Agreement of Guaranty dated as of August 15,
2005 made by the Guarantor in favor of the Authority guarantying the payment of
the Loans;
"Indemnified Parties" shall mean the State, the Trustee, the Authority,
the Placement Agent, any person who "controls" the Authority, the State, the
Placement Agent or the Trustee within the meaning of Section 15 of the
Securities Act of 1933, as amended or Section 20 of the Securities Exchange Act
of 1934, as amended, and any member, director, officer, agent, official,
employee or attorney of the Authority, the State, the Placement Agent or the
Trustee;
"Indenture" shall mean the Indenture by and between the Authority and
The Bank of New York, as Trustee, dated as of August 15, 2005;
"Initial Bonds" shall have the meaning given in the recitals hereto;
"Investment Property" shall mean any security (within the meaning of
Section 165(g)(2)(A) or (B) of the Code), any obligation, any annuity contract,
or any investment-type property as defined in Section 1.148-1 of the Regulations
promulgated by the Internal Revenue Service under the Code;
"Loans" shall mean the Series A Loan and the Series B Loan;
"Loan Agreement" or "Agreement" shall mean this Loan Agreement and any
amendments and supplements thereto made in conformity herewith and with the
Indenture;
"Loan Documents" shall mean, the Notes, the Mortgage, the Assignment of
Leases, the Guaranty, the Security Agreement, this Loan Agreement, the Indenture
and all documents and instruments executed in connection therewith;
"Mortgage" shall mean the first lien mortgage on the Project, which is
made part of the record of proceedings, executed by the Company, as Mortgagor
and given to the Authority, as Mortgagee;
"Net Proceeds" shall mean the Bond Proceeds less any amounts placed in
a reasonably required reserve or replacement fund within the meaning of Section
148 of the Code;
"1999 Bonds" shall have the meaning given in the recitals hereto;
"Non-Purpose Obligations" shall mean any "investment property" (within
the meaning of Section 148(b)(2) of the Code) which is (i) acquired with the
Gross Proceeds of the Tax-exempt Bonds and (ii) not acquired in order to carry
out the governmental purpose of the Tax-exempt Bonds;
"Notes" shall mean the Series A Note and the Series B Note;
6
"Permitted Encumbrances" shall mean those exceptions to title and liens
which individually and in the aggregate are immaterial to the use, saleability
and value of the Collateral, including a second lien upon the Collateral,
provided that the Company continue to meet the cash flow test set forth in
Section 3.04 of the Indenture;
"Person" or "Persons" shall mean any individual, corporation,
partnership, joint venture, trust, or unincorporated organization, or a
governmental agency or any political subdivision thereof;
"Placement Agent" shall mean Ryan Beck & Co., Shrewsbury, New Jersey;
"Placement Memorandum" shall collectively mean the preliminary
placement memorandum of the Authority relating to the Bonds and the final
placement memorandum of the Authority relating to the Bonds;
"Premises" shall mean the premises and all improvements thereon located
in the Project Municipality, as described in Schedule A of the Mortgage;
"Prevailing Wage Provision" shall mean the provisions of the Act and
the resolutions, rules and regulations of the Authority, as adopted, amended and
supplemented from time to time, requiring that workers engaged in Construction
Contracts be paid a wage rate not less than the Prevailing Wage Rate, and that
the Company and all Contractors file such certificates, reports and records and
do other prescribed acts as are necessary to demonstrate or assure compliance;
"Prevailing Wage Rate" shall mean the prevailing wage rate established
by the Commissioner of the New Jersey Department of Labor and Industry from time
to time in accordance with the provisions of N.J.S.A. 34:11-56.30 for the
locality in which the Project is located;
"Principal User" shall mean any principal user within the meaning of
the proposed amendments to Treas. Reg. Sec. 1.103-10 published by the Internal
Revenue Service in the Federal Register on February 21, 1986 or any Related
Person to a Principal User within the meaning of Section 144(a) of the Code;
"Project" shall have the meaning given in the recitals hereto.
"Project Facilities" shall mean the building, machinery, equipment and
other facilities constructed or acquired with the proceeds of the Bonds;
"Project Fund" shall mean the fund so designated and established
pursuant to Section 4.01 of the Indenture;
"Project Municipality" shall mean the municipality of Northvale, County
of Bergen, New Jersey;
7
"Project Site" shall have the meaning given in the recitals hereto;
"Proper Charge" means (i) those costs which (a) are incurred after the
date which is sixty (60) days prior to June 14, 2005, the date on which an
inducement resolution was adopted by the Authority for the acquisition,
construction or improvement of either land or property subject to the allowance
for depreciation provided by Section 167 of the Code within the meaning of
Treas. Reg. 1.103-10(b)(1)(ii) (provided that the acquisition of land shall at
no time exceed 25% of the Net Proceeds of the Tax-exempt Bonds) and (b) may, by
a proper election under the Code (or may, but for a proper election under the
Code to deduct such item), be capitalized for federal income tax purposes on the
books of the Company, (ii) costs of issuance of the Tax-exempt Bonds, attorneys'
fees, printing costs, Authority's fees, agents' fees and other similar expenses
(subject to the limitations hereinafter set forth) or (iii) any expenditure
which when added to all previous expenditures from the Project Fund, will not
result in more than five percent (5%) of the aggregate amount of the moneys
theretofore disbursed from the Project Fund (after deducting from that amount
the costs referred to in (ii) above) being expended for purposes other than
those permitted by (i) above, provided that any expenditure of Tax-exempt Bond
Proceeds that, when added to all previous expenditures of Tax-exempt Bond
Proceeds for the payment of costs in (ii) above, would cause the total amount of
such costs to exceed 2% of the Tax-exempt Bond Proceeds, shall not be considered
a Proper Charge for purposes of this definition;
"Rebatable Arbitrage" shall mean the excess of the future value, as of
a date, of all receipts on nonpurpose investments over the future value, as of
that date, of all payments on nonpurpose investments, as more fully described in
Code Section 148(f) and Regulations Section 1.148-3;
"Rebate Fund" shall mean the fund so designated and established
pursuant to Section 4.07 of the Indenture;
"Record of Proceedings" shall mean the Loan Documents, certificates,
affidavits, opinions or other documentation executed in connection with the sale
of the Bonds and the making of the Loans;
"Related Person," when used with reference to any Principal User or any
Substantial User, means a "related person" within the meaning of Section
144(a)(3) of the Code;
"Requisition Form" shall mean the requisitions in the forms attached
hereto as Exhibit E;
"Resolutions" shall mean the resolutions of the Authority dated July
12, 2005 approving the Company's application and authorizing the issuance and
sale of the Initial Bonds and determining other matters in connection with the
Project;
8
"Security Agreement" shall mean the Security Agreement dated as of
August 15, 2005 by and between the Guarantor and the Authority in which the
Guarantor grants a security interest in certain assets described therein;
"Series A Bonds" shall have the meaning given in the recitals hereto;
"Series A Loan" shall mean the loan from the Authority to the Company
of the proceeds of the Series A Bonds;
"Series A Note" shall mean the promissory note dated the Closing Date,
executed and delivered by the Company to the Authority evidencing the Series A
Loan;
"Series B Bonds" shall have the meaning given in the recitals hereto;
"Series B Loan" shall mean the loan from the Authority to the Company
of the proceeds of the Series B Bonds;
"Series B Note" shall mean the promissory note dated the Closing Date,
executed and delivered by the Company to the Authority evidencing the Series B
Loan;
"State" shall mean the State of New Jersey;
"Subcontractor" shall mean any Person engaged by a Contractor or a
Subcontractor in the performance of any Construction Contract;
"Substantial User" means, with respect to any "facilities" (as the term
"facilities" is used in Section 144(a)(4)(B) of the Code), a "substantial user"
of such "facilities" within the meaning of Section 147(a) of the Code;
"Tax Certificate" shall mean the arbitrage and tax certificate executed
by the Company in form and substance acceptable to the Authority, wherein the
Company certifies as to such matters as the Authority shall require;
"Taxable Bonds" shall mean Bonds, including the Series B Bonds, the
interest on which is includable in the gross income of the holders thereof for
federal income tax purposes;
"Tax-exempt Bonds" shall mean Bonds, including the Series A Bonds, the
interest on which is not includable in the gross income of the holders thereof
for federal income tax purposes;
"Trustee" shall mean The Bank of New York, and its successors in trust
pursuant to the Indenture;
9
"Yield" shall mean a yield as shall be determined under Section 1.148-4
of the Treasury Regulations in the case of the Tax-exempt Bonds, and Section
1.148-5 of the Treasury Regulations in the case of investments.
The terms "herein", "hereunder", "hereby", "hereto", "hereof", and any
similar terms, refer to this Loan Agreement; the term "heretofore" means before
the date of execution of this Loan Agreement; and the term "hereafter" means
after the date of execution of this Loan Agreement;
Terms defined in the Indenture are incorporated herein by reference as
though set forth in full.
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ARTICLE II
THE LOANS
SECTION 2.01. THE LOANS. The Authority agrees, upon the terms and
subject to the conditions hereinafter set forth, to make the Loans to the
Company from the proceeds received from the sale of the Initial Bonds. The
Company shall repay the Loans made pursuant to this Loan Agreement by making
payments to the Trustee for deposit in the Bond Fund for the account of the
Authority, in accordance with the Notes in order to meet the payments required
in respect of the Initial Bonds (whether at maturity, upon redemption or
acceleration pursuant to any optional or mandatory prepayment requirements or
otherwise), in amounts which, when added to the balance of available funds then
on deposit in the Bond Fund and available for such purpose, shall be equal to
the amounts payable as principal of and redemption premium, if any, and interest
on the Bonds.
SECTION 2.02. THE NOTES. To evidence the Loans to the Company, the
Company shall herewith execute and deliver the Notes. The Notes provide for
monthly payments of interest in amounts, when aggregated in each semi-annual
payment period, will be equal to the payments of interest on the Bonds except
that the Company shall receive a cash credit against its interest obligations
equal to (i) accrued interest on the Bonds deposited with the Trustee at the
time of issuance of the Bonds and (ii) such other moneys held at the time of
such interest payment date by the Trustee in the Bond Fund and available for the
payment of interest on the Bonds. The Notes incorporate the redemption
provisions of the Bonds, or provisions in respect of the acceleration or
prepayment of principal and premium, if any, corresponding to the redemption
provisions of the Bonds.
The Company shall make all payments on the Notes on or prior to the due
date scheduled therein, and otherwise cause sufficient funds to be available on
the due date for the corresponding payment to be made on the Bonds.
In the event moneys on deposit with the Trustee on the Business Day
prior to any Interest Payment Date are insufficient to pay the principal of or
interest on the Bonds on such Interest Payment Date, moneys on deposit in the
Debt Service Reserve Fund shall be used to meet such deficiency. In such event,
it shall be the Company's obligation to repay such amount to the Debt Service
Reserve Fund in substantially equal monthly installments over a six-month period
as more specifically provided in the Notes and Section 4.10 of the Indenture.
SECTION 2.03. ACCELERATION OF PAYMENT OF REDEEMED BONDS. The Authority
will redeem any or all series of Bonds upon the occurrence of an event which
gives rise to any optional or mandatory redemption thereof. Whenever any series
of any Bonds is called for Optional Redemption or is subject to Extraordinary
Optional Redemption under certain circumstances in whole or in part, the
Authority will, but only upon request of the Company,
11
redeem the same in accordance with such request. In either such event, the
Company will pay an amount equal to the then applicable redemption price as a
redemption of, or prepayment on, an equal amount of principal of the Notes
relating to such series of Bonds, plus interest accrued to the redemption date.
SECTION 2.04. NO DEFENSE OR SET-OFF. The obligation of the Company to
make the payments required under the Notes and this Loan Agreement shall be
absolute and unconditional without defense or set-off by reason of any default
by the Authority under this Loan Agreement, or under any other agreement between
the Company and the Authority, or for any other reason, it being the intention
of the parties that the payments required by the Notes and this Loan Agreement
will be paid in full when due without any delay or diminution whatsoever.
SECTION 2.05. DEFICIENCIES IN REVENUES. If, for any reason, amounts
paid to the Trustee on the Notes, together with other moneys held by the Trustee
and then available, would not be sufficient to make payments of principal or
redemption price of, and interest on, the Bonds when such payments are due, the
Company will pay the amounts required from time to time to make up any such
deficiency.
SECTION 2.06. MANNER OF PAYMENT. The payments provided for herein shall
be paid in immediately available funds, on the date on which such payment is
due, directly to the Trustee for the account of the Authority and shall be
deposited in the Bond Fund, except that payments made pursuant to Sections 7.05,
8.03 and 8.04 hereof shall be made directly to the party to whom such payment is
due and owing.
SECTION 2.07. SECURITY FOR THE LOANS. As security for the Company's
obligation to make the payments required hereunder and under the Notes and to
secure its performance of all obligations and liabilities under the Notes, this
Loan Agreement and the other Loan Documents, the Company hereby grants to the
Authority a continuing first lien security interest in all of the Company's
right, title and interest in and to the fixtures or equipment acquired, or to be
acquired, with the Loan proceeds now owned by the Company as set forth in the
attached SCHEDULE A, or hereafter acquired by the Company, including without
limitation, those articles of personal property and all rights of the Company in
any warranty or service agreement pertaining to such fixtures and equipment, now
or hereinafter in effect, together with all additions and accretions thereto and
all replacements or substitutions therefor (collectively the "Collateral"). It
is the intent of the Company and the Authority that this Loan Agreement
constitute a security agreement as defined in N.J.S.A. 12A:9-105.
In the Mortgage and the Assignment of Leases, the Company has granted
the Authority a first lien on the Premises and a first priority right to collect
the rents and revenues from the Premises. In the Security Agreement, the
Guarantor has granted the Authority a first lien on the equipment and machinery
described therein.
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SECTION 2.08. CANCELLATION OF BONDS UPON PAYMENT IN FULL. Upon payment
in full of the principal of, premium, if any and interest on the Bonds, the
Holders shall surrender the Bonds to the Trustee for cancellation, and the
Trustee shall thereupon deliver a certificate of cancellation of the Bonds to
the Authority.
SECTION 2.09. PREPAYMENT OF LOANS UPON CERTAIN CONDITIONS. The Loans
may be prepaid by the Company only as permitted in the Notes and this Agreement.
The Bonds are subject to redemption as provided in the Indenture.
SECTION 2.10. DAMAGE, DESTRUCTION OR CONDEMNATION. In the event that
the Project is damaged or destroyed or title to or temporary use of a portion of
the Project shall be taken under the exercise of the power of eminent domain by
any governmental authority or person, firm or corporation acting under
governmental authority, the Company shall rebuild, restore or replace such
damaged, destroyed or condemned portion of the Project to a condition which is
of comparable usefulness to that existing prior to such event, provided,
however, (a) that prior to utilizing the proceeds of any insurance or
condemnation award, the Company shall, within twelve months of the destruction
or condemnation provide the Trustee with (i) a cost estimate of the costs of
restoration prepared by an engineering or architectural firm of recognized
standing, (ii) the proceeds of the award, and (iii) cash or a letter of credit
from a bank in an amount equal to the difference between the cost estimate and
the proceeds, and (b) provided, however, that the Company shall have the option
to prepay or in the event the Company fails to meet the conditions in (a) above,
shall prepay the Loans in full (without prepayment penalty or premium) upon the
following conditions:
1. the Project shall have been damaged or destroyed to
the extent that either (i) the Project cannot be reasonably restored
within a period of eighteen (18) months from the date of such
destruction or condemnation to the condition thereof immediately
preceding such damage or destruction or (ii) the Company is prevented
from carrying on its normal operations in connection with the Project
for a period of eighteen (18) months, and the Company abandons the
Project; or
2. upon a condemnation of all or a substantial portion
of the site of the Project and either (i) the Project cannot be
reasonably restored within a period of eighteen (18) months from the
date of such destruction or condemnation to a condition of comparable
usefulness to that existing prior to such taking or (ii) such taking
results in the Company being prevented from carrying on its normal
operations in connection therewith for a period of eighteen (18) months
and the Company abandons the Project.
In the event that the Company does not exercise its option to prepay
the Loans, the proceeds from any insurance settlement or condemnation award
shall be applied to rebuild, restore or replace the Project, and shall be paid
13
to the Trustee for deposit in the Project Fund, to be disbursed in accordance
with Section 3.02 of this Agreement.
The Company shall also have the right to prepay the Loans, without
penalty or premium, in the event that the Loans shall become void or
unenforceable or impossible of performance in accordance with the intent and
purpose of the parties as expressed in this Agreement as a result of any changes
in the Constitution of the State or the Constitution of the United States of
America or of legislative or administrative action (whether State or federal) or
by final decree, judgment or order of any court or administrative body (whether
State or federal) entered after the contest thereof by the Authority or the
Company in good faith.
Upon any such prepayment, or any prepayment permitted under the Notes,
the Company shall furnish the Trustee with written notice of such redemption at
least sixty (60) days prior to the intended redemption date.
SECTION 2.11. NO PERSONAL RECOURSE. No covenant or agreement contained
in this Loan Agreement or in any other Loan Document shall be deemed to be the
covenant or agreement of any officer, director, agent, or employee of the
Company in his individual capacity, and no person executing the Loan Documents
on behalf of the Company shall be liable personally thereunder or be subject to
any personal liability or accountability by reason of the execution thereof.
14
ARTICLE III
ESTABLISHMENT OF FUNDS
AND APPLICATION OF PROCEEDS
SECTION 3.01. APPLICATION OF BOND PROCEEDS. In order to provide funds
for the Loans, the Authority, concurrently with the execution and delivery of
this Loan Agreement, will sell, issue and deliver the Initial Bonds to the
Placement Agent and deposit all of the proceeds of the Bonds (less accrued
interest received from the Placement Agent and the Placement Agent's fee) in the
applicable account in the Project Fund in accordance with the Authority's letter
of instructions to the Trustee. Bond Proceeds representing accrued interest
shall be deposited into the Bond Fund in accordance with the Authority's letter
of instructions to the Trustee.
SECTION 3.02. DISBURSEMENTS FROM THE PROJECT FUND. The Authority
authorizes and directs the Trustee to make disbursements from the Project Fund
of Bond Proceeds or any funds deposited in the Project Fund from the proceeds of
any insurance settlement or condemnation award to Persons for work performed on
the Project or to reimburse the Company for any costs and expenses of the
Project paid by it. Each disbursement shall be made upon delivery to the Trustee
of the following:
(a) A Requisition Form signed by an Authorized Company
Representative.
(b) Either (1) a certificate of an Authorized Company
Representative stating that, for purposes of the Prevailing Wage Provision and
the Affirmative Action Program, none of the moneys disbursed at any time from
the Project Fund will be used to pay or reimburse a payment for work done in
performance of any Construction Contract unless prior thereto there shall be
submitted to the Trustee an executed Contractor's Certificate or (2) a
Contractor's Certificate executed by the Contractor. Nevertheless, prior to the
initial disbursement from the Project Fund for payment of any Construction
Contract, if not theretofore furnished, a Contractor's Certificate shall be
submitted; provided that the foregoing shall not apply to the disbursement of
the Proceeds of the Bonds.
(c) With respect to any requisition for monies to be applied
toward the purchase or reimbursement for the purchase of fixtures or any item of
machinery, equipment or other tangible personal property, Financing Statements
to be filed with the Clerk of Bergen County and the Secretary of the Treasury of
the State including a description of each item of such Collateral sufficient for
the creation and perfection of a security interest therein under the Uniform
Commercial Code of the State. The Company shall not be entitled to any moneys
for any item of property which constitutes collateral under any other security
agreement without first obtaining the consent of the Authority and obtaining and
properly filing the consent of the secured party under such security agreement
that such security interest
15
thereunder shall be subordinate to the security interest granted by the Company
herein.
(d) Such additional documents, affidavits, certificates and
opinions as the Authority may reasonably require.
There shall be retained in the Project Fund an amount equal to ten per
centum (10%) of each sum requisitioned for payment or reimbursement for payment
of a Construction Contract for purposes of the Affirmative Action Program (a
"holdback"); provided, however, if any such requisitioned sum is for payment or
reimbursement of a payment by the Company, which payment itself is or was for
only ninety per centum (90%) of the payment requested by the Contractor or
Subcontractor pursuant to such Construction Contract, then such requisitioned
sum may be paid or reimbursed without regard to the aforementioned holdback, but
the remaining ten per centum (10%), when requisitioned by the Company, shall
only be disbursed upon the satisfaction of the holdback conditions hereinafter
set forth. Said holdback shall be disbursed from the Project Fund upon
compliance with the preceding terms and conditions of this Section and (i) the
execution and filing of the Contractor's Completion Certificate, (ii) the
execution and filing of the Company's Completion Certificate, (iii) receipt by
the Company of a written notice issued by the Authority's Office of Affirmative
Action that the Contractor has complied with the requirements of the Affirmative
Action Program and (iv) certification to the Trustee by an Authorized
Representative of the Company of compliance with the conditions stated in
clauses (i) through (iii) above.
Upon receipt of each such requisition and accompanying certificate, the
Trustee shall make payment from the Project Fund in accordance with such
requisition.
SECTION 3.03. NO LIABILITY OF AUTHORITY OR TRUSTEE. Nothing contained
herein or in any documents and agreements contemplated hereby or in any other
Loan Document shall impose upon the Trustee or the Authority any obligation to
ensure the proper application of such disbursements by the Company or any other
recipient thereof. The Trustee and the Authority shall be relieved of any
liability with respect to making such disbursements in accordance with the
foregoing.
SECTION 3.04. ESTABLISHMENT OF COMPLETION DATE. The completion of the
Project shall be evidenced to the Trustee by the Company's Completion
Certificate signed by an Authorized Company Representative stating the date of
completion of the Project and that, as of such date, except for amounts retained
by the Trustee at the Company's written direction for any Project Costs not then
due and payable or if due and payable not then paid, (i) the Project has been
completed, (ii) all labor, services, materials and supplies used in the Project
have been paid for, (iii) the equipment necessary for the Project has been
installed to the Company's satisfaction, such equipment so installed is suitable
and sufficient for the efficient operation of the Project for the intended
purposes and all costs and expenses incurred in the
16
acquisition and installation of such equipment have been paid and (iv) the
Project is being operated as contemplated herein. Any moneys remaining in the
Project Fund upon submission of the Completion Certificate not required by the
written direction of the Company to be held to pay any outstanding invoice shall
be transferred by the Trustee to the Principal Account in the Bond Fund or as
otherwise permitted in Section 4.09 of the Indenture. The Company shall direct
the Trustee in writing to apply such moneys in increments of $5,000 to the
redemption of the Bonds. For any moneys not in increments of $5,000, the Company
shall direct the Trustee in writing to apply such moneys to the next principal
and/or interest payments coming due on the Bonds.
SECTION 3.05. COMPANY REQUIRED TO PAY IF PROJECT FUND INSUFFICIENT. In
the event the moneys in the Project Fund available for payment of the Costs are
not sufficient to pay all Costs of the Project in full, the Company agrees to
complete the Project and to pay that portion of the Costs in excess of the
moneys available therefor in the Project Fund. The Authority does not make any
warranty, either express or implied, that the moneys paid into the Project Fund
and available for payment of Project Costs will be sufficient to pay all of the
Costs. The Company agrees that if, after disbursement of all the moneys in the
Project Fund, the Company should pay any portion of the Costs pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Authority, the Trustee or the holders of the Bonds.
SECTION 3.06 RESTRICTION ON USE OF PROJECT FUND. The Company (i) shall
not use or direct the use of moneys from the Project Fund in any way, or take or
omit to take any other action, so as to cause the interest on any Tax-exempt
Bonds to become subject to federal income tax, (ii) shall not use more than 2%
of the proceeds of the Tax-exempt Bonds for costs of issuance thereof, (iii)
shall not use more than 25% of the Net Proceeds of the Tax-exempt Bonds for the
acquisition of land, (iv) shall use at least 95% of the Net Proceeds of the
Tax-exempt Bonds, including any interest earnings thereon not rebated to the
United States, for Project Costs constituting land (subject to the limitation in
(iii) above) or property of a character subject to an allowance for depreciation
for federal tax purposes within the meaning of Section 167 of the Code, and
shall use at least 95% of the Net Proceeds to provide a "manufacturing facility"
within the meaning of Section 144(a)(12)(C) of the Code.
SECTION 3.07 COMPLETION OF PROJECT FACILITIES; EXCESS BOND PROCEEDS.
When the Company certifies to the Trustee and the Authority, in the manner
provided in Section 3.04 hereof, that the acquisition of the Project Facilities
is complete, any amounts remaining in the Project Fund will be transferred to
the Bond Fund and applied by the Trustee in accordance with or as otherwise
permitted by Section 4.09 of the Indenture. If for any reason the amount in the
Project Fund proves insufficient to pay all Costs of the Project, the Company
will pay the remainder of such Costs.
SECTION 3.08. THE TRUSTEE. The Trustee shall act on behalf of the
Bondholders under the Indenture only insofar as its duties are expressly set
17
forth and shall not have any implied duties but may exercise such additional
powers as are reasonably incidental thereto. Neither the Trustee nor any of its
officers, directors, agents or employees shall be liable for any action taken or
omitted to be taken by it hereunder or in connection herewith except for its or
their own negligence or willful misconduct. The Trustee shall not be under a
duty to examine or pass upon the validity, effectiveness or genuineness of any
Loan Document or any direction, report, affidavit, certificate, opinion or other
instrument, document or agreement related thereto, and shall be entitled to
assume that the same are valid, effective, genuine and what they purport to be.
The Trustee may consult with legal counsel selected by it, and any action taken
or suffered by it in accordance with the opinion of such counsel shall be full
justification and protection to it. The Trustee shall have the same rights and
powers as any other bank or lender and may exercise the same as though it were
not the Trustee; and it may accept deposits from, lend money to and generally
engage in any kind of business with the Company as though it were not the
Trustee.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Authority that:
(a) The availability of financial assistance from the Authority as
provided for herein has been an important inducement to the Company to undertake
the Project and to locate the Project in the State.
(b) The Company covenants that the representations, statements and
warranties of the Company set forth in the Applications, this Agreement, or any
other Loan Document (1) are true, correct and complete, (2) do not contain any
untrue statement of a material fact, and (3) do not omit to state a material
fact necessary to make the statements contained herein or therein not misleading
or incomplete. The Company understands that all such statements, representations
and warranties have been relied upon as an inducement by the Authority to issue
the Bond.
(c) (1) Prior to leasing, subleasing or consenting to the
subleasing or assignment of any lease of all or any part of the Project, during
the period commencing on the date hereof and (2) upon the request of the
Authority the Company shall cause a Project Occupant Information Form to be
submitted to the Authority by every prospective lessee, sublessee or lease
assignee of the Project. The Company shall provide an Occupant Application to
the Authority for the approval of a new tenant. The Company shall not permit any
such leasing, subleasing or assigning of leases that would impair the
excludability of interest paid on the Tax-exempt Bonds from the gross income of
the holder thereof for purposes of federal income taxation, or that would impair
the ability of the Company to operate the Project or cause the Project not to be
operated as an authorized project under the Act or a manufacturing facility
under Section 144(a)(12)(c) of the Code.
(d) The Company shall maintain its existence as a legal entity and
shall not sell, assign, transfer or otherwise dispose of the Project or
substantially all of its assets without the consent of the Authority; provided
however that the Company may merge with or into or consolidate with another
entity, and the Project or this Agreement may be transferred pursuant to such
merger or consolidation without violating this section provided (1) the Company
causes the proposed surviving, resulting or transferee company to furnish the
Authority with a Change of Ownership Information Form; (2) the net worth of the
surviving, resulting or transferee company following the merger, consolidation
or transfer is equal to or greater than the net worth of the Company immediately
preceding the merger, consolidation or transfer; (3) any litigation or
investigations in which the surviving, resulting or transferee
19
company or its officers and directors are involved, and any court,
administrative or other orders to which the surviving, resulting or transferee
company or its officers and directors are subject, relate to matters arising in
the ordinary course of business; (4) the merger, consolidation or transfer shall
not impair the excludability of interest paid on the Tax-exempt Bonds from the
gross income of the holder thereof for purposes of federal income taxation or
cause a reissuance pursuant to an opinion of a nationally recognized Bond
counsel; (5) the surviving, resulting or transferee company assumes in writing
the obligations of the Company under this Agreement and the Notes; (6) after the
merger, consolidation or transfer, the Project shall be operated as an
authorized project under the Act; and (7) no Event of Default will have occurred
by reason of such merger, consolidation or transfer, and no event will have
occurred by reason of such merger, consolidation or transfer which with the
passage of time or giving of notice, would constitute an Event of Default.
(e) The Company shall not relocate the Project or any part thereof
(i) out of the State or (ii) within the State without the prior written consent
of the Authority.
(f) The Company shall operate or cause the Project to be operated
as an authorized project for a purpose and use as provided for under the Act
until the expiration or earlier termination of this Agreement and as a
manufacturing facility under Section 144(a)(12)(c) of the Code for so long as
the Tax-exempt Bonds are Outstanding.
(g) On each anniversary hereof, the Company shall furnish to the
Authority the following:
(i) a certification indicating whether or not the Company
is aware of any condition, event or act which constitutes an Event of
Default, or which would constitute an Event of Default with the giving
of notice or passage of time, or both, under any of the Loan Documents;
(ii) a written description of the present use of the
Project and a description of any anticipated material change in the use
of the Project or in the number of employees employed at the Project;
and
(iii) a report from every entity that leases or occupies
space at the Project indicating the number of persons the entity
employs at the Project.
(h) The Company shall comply with the Authority's Affirmative
Action and Prevailing Wage Rate Regulations and to that end:
(i) insert in all construction bid specifications for any
Construction Contract the following provisions:
Construction of this project is subject to the
Affirmative Action Regulations of the New Jersey
Economic Development Authority which establishes
20
hiring goals for minority and female workers. Any
contractor or subcontractor must agree to make every
effort to meet the established goals and to submit
certified reports and records required by the
Authority. Copies of the Affirmation Action
Regulations may be obtained by writing to: Office of
Affirmative Action, New Jersey Economic Development
Authority, One Gateway Center, Suite 2403, Newark,
New Jersey 07102;
Submission of a bid signifies that the bidder knows
the requirements of the Affirmative Action
Regulations and signifies the bidder's intention to
comply. Construction of this project is subject to
N.J.A.C. 19:30-3.1 ET SEQ. Workers employed in
construction of this project must be paid at a rate
not less than the prevailing wage rate established by
the New Jersey Commissioner of Labor;
(ii) Include in all Construction Contracts those
provisions which are set forth in the Addendum to Construction Contract
annexed hereto as EXHIBIT B;
(iii) Obtain from all contractors and submit to the
Authority a Contractor's Certificate in the form annexed hereto as
EXHIBIT C within three (3) Business Days of the execution of any
Construction Contract;
(iv) Create an office of Company Affirmative Action
Officer and maintain in that office until the completion date an
individual having responsibility to coordinate compliance by the
Company with the Authority's Affirmative Action Regulations and to act
as liaison with the Authority's Office of Affirmative Action;
(v) Submit to the Authority on the completion date, a
Completion Certificate in the form annexed hereto as EXHIBIT D; and
(vi) Furnish to the Authority all other reports and
certificates required under the Authority's Affirmative Action and
Prevailing Wage Rate Regulations.
(i) (1) The Company will at all times preserve and protect the
Project in good repair, working order and safe condition, and from time to time
will make, or will cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto including those required
after a casualty loss. The Company shall pay all operating costs, utility
charges and other costs and expenses arising out of ownership, possession, use
or operation of the Project, The Authority shall have no obligation and makes no
warranties respecting the condition or operation of the Project.
21
(2) The Company will not use as a basis for contesting any
assessment or levy of any tax the financing under the Loan Agreement or the
issuance of the Bonds by the Authority and, if any administrative body or court
of competent jurisdiction shall hold for any reason that the Project is exempt
from taxation by reason of the financing under this Loan Agreement or issuance
of the Bonds by the Authority or other Authority action in respect thereto, the
Company covenants to make payments in lieu of all such taxes in an amount equal
to such taxes and, if applicable, interest and penalties.
(j) (1) The Company covenants that it will not take any action, or
fail to take any action, if any such action or failure to take action would
adversely affect the exclusion from gross income of the interest on any
Tax-exempt Bonds under Section 103 of the Code. The Company will not directly or
indirectly use or permit the use (including the making of any investment) of any
proceeds of the Tax-exempt Bonds or any other funds of the Authority or the
Company, or take or omit to take any action, that would cause the Tax-exempt
Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code.
(2) The Company hereby covenants that in connection with
complying with the requirement for payment of the Rebatable Arbitrage to the
United States with respect to the Tax- exempt Bonds the Company will take the
following actions:
(i) Six (6) months after closing, the Company
will provide a written certification to the Authority and the
Trustee indicating whether the Company complied with the six
(6) month exception to the arbitrage rebate requirement set
forth in Section 148(f)(4)(B) of the Code,
(ii) Unless the Company has complied with the six
(6) month exception, it will retain a Rebate Expert (Rebate
Expert means any of the following chosen by the Company: (a)
Bond Counsel, (b) any nationally recognized firm of certified
public accountants, (c) any reputable firm which offers to the
tax-exempt bond industry rebate calculation services and holds
itself out as having expertise in that area, or (d) such other
person as is approved by Bond Counsel) on or within thirty
(30) days before the Initial Rebate Computation Date and on
each Rebate Computation Date thereafter, (A) to compute the
Rebatable Arbitrage with respect to the Tax-exempt Bonds for
the period ending on Initial Rebate Computation Date, (B) to
deliver an opinion to the Authority and Trustee, concerning
its conclusions with respect to the amount (if any) of such
Rebatable Arbitrage together with a written report providing a
summary of the calculations relating thereto. If the Company
has complied with the six (6) month exception, the Company
will retain a Rebate Expert to deliver an opinion to the
Authority and Trustee that all of the gross proceeds of the
Tax-exempt Bonds (within the meaning of Section 148(f) of the
Code), other than gross proceeds of the Tax-exempt Bonds on
deposit in a bona fide
22
debt service fund (within the meaning of Section 148(f)(4) of
the Code), have been expended on or prior to the expiration of
such six (6) month period.
(iii) In the event the amount in the Project Fund
is insufficient to fund the Rebate Fund, the Company shall
within ten (10) days of receipt of the report furnished by the
Rebate Expert pursuant to subparagraph (ii) above, pay or
cause to be paid to the Trustee for deposit into the Rebate
Fund the difference between the amount required to fund the
Rebatable Arbitrage. If the Company fails to make or causes to
be made any payment required pursuant to this subparagraph
(iii) when due, the Authority shall have the right, but shall
not be required, to make such payment to the Trustee on behalf
of the Company. Any amount advanced by the Authority pursuant
to this subparagraph (iii) shall be added to the moneys owing
by the Company under this Agreement and shall be payable on
demand with interest at the higher of the interest rate of the
Tax-exempt Bonds or the default rate provided in the Notes, if
any.
(iv) Each payment of Rebatable Arbitrage to be
paid to the United States shall be filed with the Internal
Revenue Service Center, Ogden, Utah, or such other address
that may be specified by the Internal Revenue Service. Each
payment shall be accompanied by Form 8038-T (or such other
form required by the Internal Revenue Service furnished by the
Company or the Authority), executed by the Authority, and a
statement identifying the Authority, the date of the issue,
the CUSIP number for the Tax-exempt Bonds with the longest
maturity (if any) and a copy of the applicable Form 8038.
(v) In the event Rebatable Arbitrage is due the
Company will direct the Trustee to withdraw from the Rebate
Fund and pay over to the United States the Rebatable Arbitrage
with respect to the Tax-exempt Bonds in installments as
follows: each payment shall be made not later than sixty (60)
days after the then current Rebate Computation Date and shall
be in an amount which ensures that the Rebatable Arbitrage
with respect to the Bond, as of the then current Rebate
Computation Date, will have been paid to the United States.
(vi) The Company acknowledges that the Authority
shall have the right at any time and in the sole and absolute
discretion of the Authority to obtain from the Company and the
Trustee the information necessary to determine the amount
required to be paid to the United States pursuant to Section
148(f) of the Code. Additionally, the Authority may, with
reasonable cause, (A) review or cause to be reviewed any
determination of the amount to be paid to the United States
made by or on behalf of the Company and (B)
23
make or retain a Rebate Expert to make the determination of
the amount to be paid to the United States. The Company hereby
agrees to be bound by any such review or determination, absent
manifest error, to pay the costs of such review, including
without limitation the reasonable fees and expenses of counsel
or a Rebate Expert retained by the Authority, and to pay to
the Trustee any additional amounts for deposit in the Rebate
Fund required as the result of any such review or
determination.
(vii) Notwithstanding any provision of this
Subection to the contrary, the Company shall be liable, and
shall indemnify and hold the Authority and the Trustee
harmless against any liability, for payments due to the United
States pursuant to Section 148(f) of the Code. Further, the
Company specifically agrees that neither the Authority nor the
Trustee shall be held liable, or in any way responsible, and
the Company shall indemnify and hold harmless the Trustee (or
Agent) and Authority against any liability, for any mistake or
error in the filing of the payment or the determination of the
amount due to the United States or for any consequences
resulting from any such mistake or error. The provisions of
this subparagraph (vii) shall survive termination of this
Agreement and the resignation or removal of the Trustee.
(viii) The Authority, the Trustee and the Company
acknowledges that the provisions of this Subsection are
intended to comply with Section 148(f) of the Code and the
regulations promulgated thereunder and if as a result of a
change in such Section of the Code or the promulgated
regulations thereunder or in the interpretation thereof, a
change in this Subsection shall be permitted or necessary to
assure continued compliance with Section 148(f) of the Code
and the promulgated regulations thereunder, then with written
notice to the Trustee, the Authority and the Company shall be
empowered to amend this Subsection and the Authority may
require, by written notice to the Company and the Trustee, the
Company to amend this Subsection to the extent necessary or
desirable to assure compliance with the provisions of Section
148 of the Code and the regulations promulgated thereunder;
provided that either the Authority or the Trustee shall
require, prior to any such amendment becoming effective, at
the sole cost and expense of the Company, an opinion of Bond
Counsel satisfactory to the Authority to the effect that
either (A) such amendment is required to maintain the
exclusion from gross income under Section 103 of the Code of
interest paid and payable on the Tax-exempt Bonds or (B) such
amendment shall not adversely affect the exclusion from gross
income under Section 103 of the Code of the interest paid or
payable on the Tax-exempt Bonds.
24
(ix) The term "Initial Rebate Computation Date"
shall mean the first Computation Date. The term "Rebate
Computation Date" shall mean the subsequent Computation Date.
The term "Computation Date" shall have the meaning assigned to
such term as set forth in Treasury Regulation Section 1.148-
3(e).
(k) All expenses in connection with the preparation, execution,
delivery, recording and filing of this Loan Agreement, the Notes, the Mortgage
and other collateral documents and in connection with the preparation, issuance
and delivery of the Bonds, the Authority's fees, the fees and expenses of
McManimon & Scotland, L.L.C., the fees and expenses of the Trustee, the fees and
expenses of Trustee's counsel and the fees and expenses of counsel to the
initial beneficial owners of the Bonds shall be paid directly by the Company.
The Company shall also pay throughout the term of the Bonds the Authority's
annual fees and expenses and the Trustee's annual and special fees and expenses
under the Indenture, the Loan Agreement, the Notes and the Mortgage, including,
but not limited to, reasonable attorney's fees and all costs of issuing,
marketing, collecting payment on and redeeming the Bonds thereunder, and any
costs and expenses of any Bond holder (or beneficial holder) in connection with
any approval, consent or waiver under, or modification of, any such document.
(l) The parties hereto shall execute, at the request of the
Company, and the Company shall file such other documents necessary to perfect
all security interests created pursuant to the terms of this Loan Agreement, the
Mortgage and the Indenture and relevant continuation statements and the
Authority shall have no responsibilities for such filings whatsoever, other than
executing the documents requested by the Company.
(m) The Tax-exempt Bonds will not be federally guaranteed within
the meaning of Section 149(b) of the Code. For purposes of this representation,
no Principal User of the Project has entered into any leases of the Project to,
or any sales or service contracts with, any federal government agency with the
result that the Tax-exempt Bonds are so federally guaranteed within the meaning
of Section 149(b) of the Code.
SECTION 4.02. ORGANIZATION, POWERS, ETC. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is authorized to do business in the State and has the
authority to own its properties and assets and to carry on its business as now
being conducted (and as now contemplated by the Company) and has the power to
perform all the undertakings of the Loan Documents, to borrow hereunder and to
execute and deliver the Loan Documents.
SECTION 4.03. EXECUTION OF LOAN DOCUMENTS. The execution, delivery and
performance by the Company of the Loan Documents and other instruments required
by this Agreement:
(a) have been duly authorized by all requisite action;
25
(b) do not and will not conflict with or violate any provision of
law, rule or regulation, any order of any court or other agency of government;
(c) do not and will not conflict with or violate any provision of
any corporate agreement of the Company;
(d) do not and will not violate or result in a default under any
provision of, or, result in any material default under any indenture, agreement
or other instrument; and
(e) do not and will not result in the creation or imposition of
any lien, charge or encumbrance of any nature, other than the liens created or
permitted by the Loan Documents.
SECTION 4.04. TITLE TO COLLATERAL. The Company has or will have good
and marketable title to the Collateral free and clear of any lien or encumbrance
except for the Permitted Encumbrances. Upon filing the Financing Statements in
the appropriate offices, the Authority will have a prior perfected security
interest in the property listed therein and on the SCHEDULE A attached hereto.
SECTION 4.05. LITIGATION. There is no action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
now pending or, to the knowledge of the Company, threatened against or affecting
it or any of its properties or rights which, if adversely determined, would (i)
materially affect the transactions contemplated hereby, (ii) affect the validity
or enforceability of the Loan Documents, (iii) affect the ability of the Company
to perform its obligations under the Loan Documents, (iv) materially impair the
value of the Collateral, (v) materially impair the Company's right to carry on
its business substantially as now conducted (and as now contemplated by the
Company) or (vi) have a material adverse effect on the Company's financial
condition.
SECTION 4.06. PAYMENT OF TAXES. The Company has filed or caused to be
filed all federal, State and local tax returns which are required to be filed,
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.
SECTION 4.07. NO DEFAULTS. The Company is not in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any material agreement or instrument to
which it is a party or by which it is bound. The Company is not now in default,
nor has it at any time been in default in the payment of principal of or
interest on any of its obligations to the Authority or the payment of principal
of or interest on any other debt obligations.
26
SECTION 4.08. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the financial condition of the Company since the date of the
financial statements submitted with the Applications.
SECTION 4.09. INTENTIONALLY OMITTED.
SECTION 4.10. OBLIGATIONS OF THE COMPANY. The Loan Documents have been
duly executed and delivered and are legal, valid and binding obligations of the
Company enforceable against it in accordance with their respective terms.
SECTION 4.11. NO UNTRUE STATEMENTS. The Loan Documents, the
Applications, or any other document, certificate or statement furnished to the
Trustee or the Authority by or on behalf of the Company do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein and therein not misleading or
incomplete. It is specifically represented that the Company is not involved in
any litigation nor is the subject of any investigation or administrative
proceeding except as disclosed in the Applications. It is specifically
understood by the Company that all such statements, representations and
warranties shall be deemed to have been relied upon by the Authority as an
inducement to make the Loans and that if any such statements, representations
and warranties were false at the time they were made, they shall constitute an
Event of Default as defined in Section 7.01 and the Authority may then exercise
the remedies provided for in this Agreement.
SECTION 4.12. NO ACTION. The Company has not taken and will not take
any action and knows of no action that any other Person has taken or intends to
take, which would cause interest income on the Tax-exempt Bonds to be includable
in the gross income of the recipients thereof for federal income tax purposes.
SECTION 4.13. DESIGN OF THE PROJECT. The operation of the Project in
the manner presently contemplated and as described in the Applications will not
conflict with any current zoning, water, air pollution or other ordinances,
orders, laws or regulations applicable thereto. The Company has caused the
Project to be designed in accordance with all federal, State and local laws or
ordinances (including rules and regulations) relating to zoning, building,
safety and environmental quality. The Company will complete the Project pursuant
to this Agreement.
SECTION 4.14. COMMENCEMENT OF PROJECT; PROPER CHARGES. Other than that
portion of the Project funded with the proceeds of the 1999 Bonds, the Project
commenced subsequent to sixty (60) days prior to June 14, 2005. The Company has
not paid any expense prior to such date for which it shall seek reimbursement
from the Project Fund, other than a Proper Charge.
SECTION 4.15. LIMITATION ON EXPENDITURES; PRINCIPAL USER. The sum of
the following does not exceed $10,000,000:
27
(a) the aggregate amount of any outstanding issues of obligations
(other than the Tax- exempt Bonds) exempt from taxation under Section 144(a)(4)
of the Code, the proceeds of which were or will be used primarily with respect
to facilities (i) located within the Project Municipality or "contiguous" or
"integrated" facilities located in any adjacent political jurisdiction and (ii)
the Principal User of which is or will be the Company or any other Principal
User of the Project or any Related Person;
(b) the aggregate amount of any capital expenditures paid or
incurred by the Company or other Principal User of the Project or any Related
Person to the Company or other Principal User of the Project (other than those
financed out of the proceeds of the Tax-exempt Bonds or a bond referred to in
subparagraph (a) above) within the meaning of Treas. Reg. Sec. 1.103-10(b)(2)
(ii) and (iii) and Treas. Reg. Sec. 1.103-10(d)(2), during the six (6) year
period beginning three (3) years prior to the date of issuance of the Tax-exempt
Bonds and ending three (3) years after such date of issuance with respect to
facilities located within the Project Municipality or "contiguous" or
"integrated" facilities located in any adjacent political jurisdiction;
(c) the aggregate amount of all capital expenditures paid or
incurred for the three (3) year period prior to the date of issuance of the
Tax-exempt Bonds by any Person other than the Company or other Principal User of
the Project or a Related Person to the Company or other Principal User of the
Project (e.g., a landlord or other lessor), with respect to and for the benefit
of facilities located within the Project Municipality or "contiguous" or
"integrated" facilities located in any adjacent political jurisdiction of which
a Principal User of the Project or any Related Person is a Principal User; and
(d) the aggregate principal amount of the Tax-exempt Bonds.
As of the date hereof, the Company is the only user and Principal User
of the Project.
SECTION 4.16. OUTSTANDING TAX-EXEMPT BONDS.
(a) Except for the Tax-exempt Bonds, there is outstanding no issue
of tax-exempt bonds (including industrial development bonds), as defined in
Section 103 of the Code, the proceeds from the sale of which have been or will
be used with respect to facilities, the Principal User of which is or will be
the Company or any Principal User of the Project and which are or will be wholly
or partially located in the Project Municipality.
(b) The aggregate face amount of the Tax-exempt Bonds when added
to the tax-exempt facility-related bonds (as defined in Section 144(a) (10)(B)
of the Code) allocated to the Company or any other Test Period Beneficiary which
are outstanding at the time of the issuance of the Tax- exempt Bonds (not
including any tax-exempt bonds to be redeemed from the Net Proceeds), does not
exceed $40,000,000.
28
SECTION 4.17. PROJECT MUNICIPALITY. The Project is located wholly
within the borders of the Project Municipality and the Premises are not
contiguous with the borders of any portion of the Project Municipality. The
operation of the Project is not integrated with any other facility in any
neighboring municipality operated by any Principal User of the Project. All of
the facilities financed by the Bond Proceeds of the Tax-exempt Bonds are located
within one state, and neither the Company nor any Related Person is a user of
any facility financed by the proceeds of the Tax- exempt Bonds other than the
Project.
SECTION 4.18. NO TENANCIES. No Principal User of the Project is a
tenant in any facility in the Project Municipality, the landlord of which is a
Person other than a Principal User of the Project.
SECTION 4.19. SUBSTANTIAL USERS. No Person (or any Related Person
within the meaning of Section 144(a)(3) of the Code) who was a substantial user
of the Project, within the meaning of Treas. Reg. Sec. 1.103-8(a)(5)(iv), at any
time during the five (5) year period immediately preceding the date hereof, and
who will receive, directly or indirectly, proceeds of the Tax- exempt Bonds in
an amount equal to five per centum (5%) or more of the face amount of the Tax-
exempt Bonds in payment for his interest in the Project, will be a Substantial
User of the Project or a Related Person at any time during the five (5) year
period beginning on the date of issuance of the Tax-exempt Bonds.
SECTION 4.20. PLACEMENT IN SERVICE. The Project was not acquired or
placed in service by the Company (determined in accordance with the provisions
of Section 103 of the Code and applicable regulations thereunder) more than one
(1) year prior to the date of issuance of the Tax- exempt Bonds.
SECTION 4.21. NO COMMON PLAN OF FINANCING. Subsequent to sixteen (16)
days prior to the date hereof, the Company or any Related Person (or group of
related persons which includes the Company) has not guarantied, arranged,
participated in, assisted with, borrowed the proceeds of, or leased facilities
financed by obligations issued under Section 103 of the Code by any state or
local governmental unit or any constituted authority empowered to issue
obligations by or on behalf of any state or local governmental unit other than
the Authority. During the period commencing on the date of issuance of the
Tax-exempt Bonds and ending sixteen (16) days thereafter, there will be no
obligations issued under Section 103 of the Code which are guarantied by the
Company or any Related Person (or group of related persons which includes the
Company) or which are issued with the assistance or participation of, or by
arrangement with the Company or any Related Person (or group of related persons
which includes the Company) without the written opinion of McManimon & Scotland,
L.L.C., or other nationally recognized Bond Counsel acceptable to McManimon &
Scotland, L.L.C. to the effect that the issuance of such obligation will not
adversely affect their opinion as to exemption from present federal income taxes
of interest on the Tax-exempt Bonds. Other than the Company or any Related
Person (or group of related persons including the Company), no person has (i)
guarantied, arranged, participated in, assisted with
29
the issuance of, or paid any portion of the cost of the issuance of the
Tax-exempt Bonds, or (ii) provided any property or any franchise, trademark or
trade name (within the meaning of Code Section 1253) which is to be used in
connection with the Project.
SECTION 4.22. USE OF PROCEEDS.
(a) Less than twenty-five per centum (25%) of the Net Proceeds of
the Tax-exempt Bonds will be used directly or indirectly to acquire land or an
interest therein.
(b) No more than twenty-five per centum (25%) of the Net Proceeds
of the Tax-exempt Bonds will be used to provide facilities the primary purpose
of which is: (i) retail food and beverage services, (ii) automobile sales or
service and (iii) the provision of recreation or entertainment.
(c) No portion of the proceeds of the Tax-exempt Bonds will be
used to provide any private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skateboard and
ice skating), racquet sports facility (including any handball or racquetball
court), hot tub facility, suntan facility, racetrack, airplane, skybox (or other
private luxury box), any health club facility, gambling facility or liquor
store.
SECTION 4.23. ECONOMIC LIFE. The information contained in the Tax
Certificate, setting forth the respective cost, economic life, ADR midpoint
life, if any, under Rev. Proc. 72-10, 1972-1 C.B. 721, as supplemented and
amended from time to time, and guideline life, if any, under Rev. Proc. 62-21,
1962-2 C.B. 118, as supplemented and amended from time to time, of each asset
constituting the Project to be financed with the proceeds of the Tax-exempt
Bonds is true, accurate and complete.
SECTION 4.24. AGGREGATION OF ISSUE FOR SINGLE PROJECT. The Project does
not share "substantial common facilities", within the meaning of Section
144(a)(9) of the Code, with any other facility financed by any outstanding
tax-exempt bonds.
SECTION 4.25. ENVIRONMENTAL REPRESENTATION.
(a) There have been no claims, litigation, administrative
proceedings, whether actual or threatened, or judgments or orders, relating to
any hazardous substances, hazardous wastes, discharges, emissions or other forms
of pollution relating in any way to any property or activities of the Company,
including without limitation, the real property and improvements located at the
Premises.
(b) To the best of the Company's knowledge, after due inquiry and
investigation, there have been no hazardous substances or hazardous wastes, as
defined by the Environmental Cleanup Responsibility Act (N.J.S.A. 13:1k-6 ET
SEQ.), as amended by the Industrial Site Recovery Act ("ISRA"), Spill
30
Compensation and Control Act (N.J.S.A. 58:10-23.11 ET SEQ.), Resource
Conservation and Recovery Act (42 U.S.C. Subsection 6901 ET SEQ.) and the
Comprehensive Environmental Responsibility Compensation and Liability Act (42
U.S.C. Subsection 9601 ET SEQ.) generated, manufactured, refined, transported,
treated, stored, handled or disposed of on the Premises by the Company or at any
other location owned by the Company in the State.
(c) To the best of the Company's knowledge, after due inquiry and
investigation, there have been no discharges, spillages or disposals of
hazardous substances or hazardous wastes (as described in the prior paragraph)
on the Premises or at any other location owned by the Company in the State other
than as disclosed in the Placement Memorandum.
(d) The Project is not subject to the requirements of Section
13:1k-9 of ISRA, or, if it is subject to such requirements, the Company or
Company's transferor has complied with such provisions.
SECTION 4.26. COMPANY'S INTEREST IN THE COLLATERAL. Subject to the
Permitted Encumbrances, (a) it is the sole owner of each item of the Collateral
and it has good and marketable title thereto, free of all other security
interests, liens, encumbrances and claims or rights of others; (b) it has the
full power and authority to subject the Collateral to the security interests
created hereby and the Authority and the Trustee are being granted a first lien
security interest therein; (c) no dispute, right of set-off, counterclaim or
defenses exist with respect to any part of the Collateral; (d) the security
interests granted to the Authority pursuant to this Loan Agreement, are a
continuing first lien security interest in the Collateral; and (e) no mortgage
lien, security agreement, equivalent security, financing statement, or lien
instrument covering all or any part of the Collateral is on file in any public
filing or recording office, and the filing of the Financing Statements covering
the security interest created hereby shall continue in effect, subject to
renewal requirements, if any, until the full and final payment of the
indebtedness secured by this Agreement.
31
ARTICLE V
CONDITIONS OF LENDING
The Authority's obligation to lend hereunder is subject to the
following conditions precedent:
SECTION 5.01. OPINION OF COUNSEL FOR THE COMPANY. On or prior to the
date of the borrowing hereunder, the Authority shall have received the opinion
of Counsel for the Company, dated the date of such borrowing, addressed to the
Authority and the Trustee, and satisfactory in form and substance to Bond
Counsel.
SECTION 5.02. OPINION OF BOND COUNSEL. The Authority shall have
received and delivered to the Trustee the opinion of Bond Counsel addressed to
the Authority and the Trustee that interest income on the Tax-exempt Bonds is
exempt from inclusion as gross income under Section 103 of the Code and is
exempt from taxation under the New Jersey Gross Income Tax Act; that the
offering of the Bonds is not required to be registered under the Securities Act
of 1933, as amended, or under the rules and regulations promulgated thereunder;
that the Indenture is not required to be qualified under the Trust Indenture Act
of 1939, as amended; and that the Bonds have been duly authorized and issued
under the provisions of the Act.
SECTION 5.03. LOAN AND OTHER DOCUMENTS. The Authority shall have
received and shall have delivered to the Trustee:
(a) This Loan Agreement duly executed by all parties thereto;
(b) The Indenture duly executed by all parties thereto;
(c) The original Notes executed by the Company;
(d) Certificates, in form and substance acceptable to the
Authority, evidencing the insurance required to be maintained by Section 6.02
hereof;
(e) The Mortgage executed by the Company;
(f) The Assignment of Leases executed by the Company; and
(g) All other documents reasonably required by the Authority and
the Trustee.
SECTION 5.04. LEGAL MATTERS. Legal matters in connection with the
making of the Loans shall be satisfactory to Bond Counsel.
32
SECTION 5.05. BOND ISSUANCE FEE. The Authority shall have received from
the Company the Bond issuance fee of $13,287.50.
33
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees, so long as this Loan Agreement shall
remain in effect or the Bonds shall be Outstanding, as follows:
SECTION 6.01. PRESERVATION OF PROPERTY AND THE COLLATERAL.
(a) The Company will at all times preserve and protect the Project
Facilities in good repair, working order and condition, and from time to time
will make, or will cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto.
(b) The Company will deliver to the Authority, at such intervals
as the Authority may require, such documents, lists, descriptions, certificates,
and other information as may be necessary or proper to keep the Authority fully
informed with respect to the description of the Collateral.
(c) From time to time the Company will promptly execute and
deliver to the Authority, at the sole expense of the Company, all such other
assignments, certificates, supplemental documents, and Financing Statements, and
do all other acts or things, as the latter may reasonably request in order to
more fully evidence and perfect the security interest herein created.
(d) The Company will give written notice to the Authority of the
removal of the Company's principal place of business, from a county or state
where it is now located, which notice shall be given not less than fifteen (15)
days before such removal and will promptly notify the Authority of any change in
any fact or circumstances (other than the removal referred to herein which
required the advance notice provided for therein) warranted or represented by
the Company in this Loan Agreement or in any other document furnished by the
Company to the Authority in connection with the Collateral or the Loans and will
promptly notify the Authority of any claim, action, or proceeding affecting the
Collateral, or any part thereof, or the security interest herein, and, at the
request of the Authority, to appear in and defend, at the Company's expense, any
such action or proceeding. The foregoing provisions are subject to Section
4.01(e) hereof.
(e) The Company covenants and agrees, except as provided in
Section 6.16 hereof and subject to Permitted Encumbrances, that without the
prior express written consent of the Authority, the Company shall not (1) sell,
assign, or transfer any of the Collateral to any person, firm or corporation
(except the Authority), (2) create in favor of anyone, except the Authority, any
other security interest in the Collateral, or in any part thereof, or otherwise
encumber or permit the same to become subject to any lien, attachment,
execution, sequestration, or other legal or equitable process; or (3) remove,
34
or permit to be removed, the Company's records concerning Collateral from the
State.
SECTION 6.02. INSURANCE REQUIRED.
(a) Until payment of the Bonds shall be made, the Company shall
maintain insurance on the Project with insurance companies licensed to do
business in the State and the claims paying ability of which is rated in at
least one of the two highest Best categories ("Eligible Insurer") of such kinds
and in such scope and amounts as is customary with entities similar to the
Company located in similar areas. Without limiting the generality of the
foregoing, the Company shall at all times during the term of the Loans maintain
with Eligible Insurers;
(i) maintain general comprehensive liability insurance
against claims for bodily injury, death or property damage occurring on, in or
about the Project or the Project Site (such coverage to include provisions
waiving subrogation against the Authority) in amounts not less than $3,000,000
with respect to bodily injury to any one Person, $3,000,000 with respect to
bodily injury to two or more Persons in any one accident and, $3,000,000 with
respect to property damage resulting from any one occurrence naming the
Authority, as an additional insured.
(ii) comprehensive casualty insurance insuring loss by
reason of casualty of any kind (except only as limited by the standard form of
extended coverage endorsement used in the State) to the Project or the
Collateral in a minimum amount equal to the greater of (x) the outstanding
principal amount of the Bonds or (y) the replacement value thereof;
(iii) during a construction period, if any, Builders' All
Risk Insurance written in "100% builders risk completed value, non-reporting
form" including coverage therein for "completion and/or premises occupancy",
such insurance to be in the amounts specified in subparagraph (ii) above;
(iv) business interruption insurance providing benefits
for a minimum of the highest annual debt service payable on the Bonds; and
(v) such other insurance in such amounts and against such
insurable hazards as the Authority or the Trustee from time to time may
reasonably request.
(b) Each insurance policy obtained in satisfaction of the
requirement of this section 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 as are
generally considered standard provisions for the type of insurance involved;
35
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer without at least
thirty (30) days prior written notice to the Authority;
(iv) without limiting the generality of the foregoing,
policies carried on the Project and the Project Site shall name the Authority as
an additional insured;
(v) prior to expiration of any such policy, the Company
shall furnish the Authority with evidence satisfactory to the Authority that the
policy or certificates has been renewed or replaced in compliance with this
Agreement.
(c) In the event the Company shall fail to maintain the insurance
coverage required by this Agreement, the Authority or the Trustee may (but shall
be under no obligation to), after ten (10) days written notice to the Company
unless cured within such ten (10) days, contract for the required policies of
insurance and pay the premiums on the same and the Company agrees to reimburse
the Authority or the Trustee to the extent of the amounts so advanced with
interest thereon at the maximum rate permitted by law.
(d) At all times during the term of this Loan Agreement, the
Company shall comply with the laws of the State relating to workers'
compensation with respect to the Project.
(e) At all times during the term of this Loan Agreement, the
Company shall keep in effect a policy of flood insurance for any part of the
Premises and any improvements upon the Premises lying or being within a
designated flood-plain in the amount and with the insurer specified in
subparagraph (a) above.
(f) Each of the policies or binders evidencing the insurance
required above to be obtained shall:
(i) designate the Trustee and the Authority as additional
insureds as their respective interests may appear;
(ii) provide that all insurance proceeds with respect to
loss or damage to the property of the Project or the Collateral be endorsed and
made payable to the Trustee and shall name the Trustee as a loss payee under the
standard loss payee clause, which insurance proceeds shall be paid over to the
Trustee;
(iii) provide that there shall be no recourse against the
Authority or the Trustee for the payment of premiums or commissions or (if such
policies or binders provide for the payment thereof) additional premiums or
assessments;
36
(iv) provide that in respect of the respective interests
of the Authority and the Trustee in such policies, the insurance shall not be
invalidated by any action or inaction of the Company or any other Person and
shall insure the Authority and the Trustee regardless of, and any losses shall
be payable notwithstanding, any such action or inaction;
(v) provide that such insurance shall be primary
insurance without any right of contribution from any other insurance carried by
the Authority or the Trustee to the extent that such other insurance provides
the Authority or the Trustee, as the case may be, with contingent and/or excess
liability insurance with respect to its respective interest as such;
(vi) provide that if the insurers cancel such insurance
for any reason whatsoever, including the insured's failure to pay any accrued
premium, or the same is allowed to lapse or expire, or there be any reduction in
amount, or any material change is made in the coverage, such cancellation,
lapse, expiration, reduction or change shall not be effective as to the
Authority, or the Trustee until at least thirty (30) days after receipt by the
Authority and the Trustee, respectively, of written notice by such insurers of
such cancellation, lapse, expiration or change;
(vii) waive any right of subrogation of the insurers
thereunder against any Person insured under such policy, and waive any right of
the insurers to any setoff or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Person insured under
such policy; and
(viii) contain such other terms and provisions as any owner
or operator of facilities similar to the Company's would, in the prudent
management of its properties, require to be contained in policies, binders or
interim insurance contracts with respect to facilities similar to the Project
owned or operated by it.
(g) Concurrently with the original issuance of the Bonds, the
Company shall deliver or cause to be delivered to the Authority and the Trustee
duplicate copies of insurance policies and/or binders evidencing compliance with
the insurance requirements of this Section. At least thirty (30) Business Days
prior to the expiration of any such policy, the Company shall furnish the
Authority and the Trustee with evidence that such policy has been renewed or
replaced or is no longer required by this Agreement.
(h) The Company shall, at its own cost and expense, make all
proofs of loss and take all other steps necessary or reasonably requested by the
Authority or the Trustee to collect from insurers for any loss covered by any
insurance required to be obtained by this Section. The Company shall not do any
act, or suffer or permit any act to be done, whereby any insurance required by
this Section would or might be suspended or impaired.
37
(i) The Trustee shall be supplied with an annual certificate,
within thirty (30) days after the close of the Company's Fiscal Year, certifying
that the Company is in compliance with this Section 6.02 and that the insurance
policies required to be maintained by the Company under this Section are still
in force and effect.
SECTION 6.03. PAYMENT OF TAXES, ETC. The Company will promptly pay and
discharge or cause to be paid and discharged promptly all taxes, assessments,
payments in lieu of taxes and governmental charges or levies imposed upon it or
in respect of any of its property and assets before the same shall become in
default, as well as all lawful claims which, if unpaid, might become a lien or
charge upon such property and assets or any part thereof, except such that are
contested in good faith by the Company for which the Company has maintained
reserves, if any, deemed adequate by its independent accountants.
SECTION 6.04. CONCERNING THE PROJECT. The Company shall operate or
cause the Project to be operated as an authorized project for a purpose and use
as provided for under the Act until the expiration or earlier termination of
this Agreement. The Project is of character included within the definition of
the "project" in the Act. The Company will complete and operate the Project
substantially in the form represented in the Applications and will neither (a)
materially alter the operation of the Project without the prior written consent
of the Authority, nor (b) cause a change in the use of the Project such that the
Tax-exempt Bonds would cease to be qualified small issue bonds (within the
meaning of Section 144(a) of the Code).
SECTION 6.05. COMPLIANCE WITH CODE AND ARBITRAGE REGULATIONS. The
Company shall at all times do and perform all acts and things necessary or
desirable in order to assure that interest paid on the Tax-exempt Bonds shall,
for the purposes of federal income taxation, be excludable from the gross income
of the holders thereof and exempt from such taxation, except in the event that
such holder is a Substantial User or Related Person to a Substantial User.
SECTION 6.06. COMPLIANCE WITH APPLICABLE LAWS. The Company shall cause
all work performed in connection with the Project to be performed in compliance
with all applicable federal, state, county and municipal laws, ordinances, rules
and regulations now in force or that may be enacted hereafter. The existing
improvements at the Project and the operation of the Project shall also comply
with all applicable federal, state, county and municipal laws, ordinances, rules
and regulations now in force or that may be enacted hereafter, including, but
not limited to such environmental protection, workers' compensation, sanitary,
safety, non-discrimination and zoning laws, ordinances, rules and regulations as
shall be binding upon the Company. The Company shall have the right to contest
any such laws, rules, regulations and the like as long as to it is contesting
the same in good faith.
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SECTION 6.07. COMPLIANCE WITH DEPARTMENT OF ENVIRONMENTAL PROTECTION.
The Company shall operate the Project or cause it to be operated in compliance
with all applicable rules and regulations promulgated by the New Jersey
Department of Environmental Protection or any successor agency thereto and
agrees to comply, and cause any tenant in the Premises to comply, with the
provisions of Section 20 in Article I of the Mortgage.
SECTION 6.08. FINANCIAL STATEMENTS. The Company shall furnish the
Trustee and the Placement Agent and to the Authority upon the Authority's
request, or cause to be furnished to the Trustee, the Placement Agent and the
Authority, annual consolidated financial statements of the Company and the
Guarantor audited by an independent certified public accountant within one
hundred twenty (120) days after the close of its Fiscal Year.
SECTION 6.09. INTENTIONALLY OMITTED.
SECTION 6.10. INDEMNIFICATION. The Company agrees to and does hereby
indemnify and hold harmless the Indemnified Parties against any and all losses,
claims, damages or liabilities (including all costs, expenses and reasonable
counsel fees incurred in investigating or defending such claim) suffered by any
of the Indemnified Parties and caused by, relating to, arising out of, resulting
from, or in any way connected with (a) the condition, use, possession, conduct,
management, planning, design, acquisition, construction, installation, financing
or sale of the Project or any part thereof including the payment of rebate to
the federal government; or (b) any untrue statement of a material fact contained
in information provided by the Company with respect to the transactions
contemplated hereby; or (c) any omission of a material fact necessary to be
stated therein in order to make such statement not misleading or incomplete; or
(d) the acceptance or administration by the Authority of its duties under the
Trust Indenture. In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect to which
indemnity may be sought against the Company, such Indemnified Party shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel satisfactory to the Indemnified
Party, the payment of all costs and expenses and the right to negotiate and
consent to settlement. Any one or more of the Indemnified Parties shall have the
right to employ separate counsel at the Company's expense in any such action and
to participate in the defense thereof if such Indemnified Party reasonably
determines that a conflict of interest would exist if separate counsel were not
employed. The Company shall not be liable for any settlement of any such action
effected without Company's consent, but if settled with the consent of the
Company, or if there is a final judgment for the claimant on any such action,
the Company agrees to indemnify and hold harmless the Indemnified Parties from
and against any loss or liability by reason of such settlement or judgment.
Notwithstanding anything in this Agreement to the contrary which may limit
recourse to the Company or may otherwise purport to limit the Company's
liability, the provisions of this Section shall control the Company's
obligations and shall survive repayment of the Bond and the resignation or
removal of the Trustee.
39
The Company agrees to and does hereby indemnify and hold harmless the
Indemnified Parties against any and all losses, claims, damages or liabilities
(including all costs, expenses, and reasonable counsel fees incurred in
investigating or defending such claim) suffered by any of the Indemnified
Parties and caused by relating to, arising out of, resulting from, or in any way
connected to an examination, investigation or audit of the Bonds by the Internal
Revenue Service (the "IRS"). In the event of such examination, investigation or
audit, the Indemnified Parties shall have the right to employ counsel at the
Company's expense. In such event, the Company shall assume the primary role in
responding to and negotiating with the IRS, but shall inform the Indemnified
Parties of the status of the investigation. In the event Company fails to
respond adequately and promptly to the IRS, the Authority shall have the right
to assume the primary role in responding to and negotiating with the IRS and
shall have the right to enter into a closing agreement, for which Company shall
be liable.
The Company covenants and agrees, at its expense, to pay and to
indemnify and save the Indemnified Parties harmless of, from and against, any
and all losses, claims, damages, expenses or liabilities caused by any untrue
statement of a material fact contained in the Applications or other information
submitted to the Authority or to the Trustee by or on behalf of the Company with
respect to the issuance and purchase of the Bonds or caused by any omission of
any material fact necessary to be stated therein in order to make such
statements to the Authority or the Trustee not misleading or incomplete.
The Company covenants and agrees, at its expense, to pay and to
indemnify and save the Indemnified Parties and their members, officers,
employees and agents harmless of, from and against, any and all claims, damages,
demands, expenses, liabilities and losses of every kind, character and nature
asserted by or on behalf of any person, firm, corporation or governmental
authority including reasonable counsel fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with the Loans and the
transactions contemplated herein, including, without limitation, (i) disputes
between any architect, general contractor, subcontractor, materialman or
supplier, or on account of any act or omission to act by the Authority or the
Trustee in connection with the Loans, or (ii) losses, damages, expenses or
liabilities sustained by the Indemnified Parties in connection with any
environmental sampling or cleanup of the Premises required or mandated by any
federal, state or local law, ordinance, rule or regulation, including, without
limitation, (a) the New Jersey Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23.11 ET SEQ.; (b) ISRA; (c) the New Jersey Leaking Underground
Storage Tank Act, as amended, N.J.S.A. 58:10A-21 ET SEQ.; (d) the Comprehensive
Environmental Response, Compensation & Liability Act, as amended, 42 U.S.C.
Section 9601 ET SEQ.; (e) the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.; or (f) any and all federal, state and
local laws, regulations, and executive orders, pertaining to environmental
matters, as the same may be amended or supplemented from time to time
(hereinafter collectively referred to as the "Applicable Environmental
40
Laws"). In case any action shall be brought against the Indemnified Parties
based upon any of the above and in respect to which indemnity may be sought
against the Company, the Indemnified Parties shall promptly notify the Company
in writing, and the Company shall assume the defense thereof, including the
employment of counsel selected by the Company and reasonably satisfactory to the
Indemnified Parties, the payment of all costs and expenses and the right to
negotiate and consent to settlement. Further, the Company agrees to indemnify
and save the Trustee harmless against any costs, expenses, losses, legal fees
and liabilities which it may incur in the exercise and performance of its powers
and duties under the Loan Documents, which are not due to its negligence or
willful misconduct. Upon reasonable determination made by the Indemnified
Parties, the Indemnified Parties shall have the right to employ separate counsel
in any such action and to participate in the defense thereof. The Company shall
not be liable for any settlement of any such action effected without the
Company's consent, but if settled with the Company's consent, or if there be a
final judgment for the claimant in any such action, the Company agrees to
indemnify and save harmless the Indemnified Parties from and against any loss or
liability by reason of such settlement or judgment. The provisions of this
Section shall survive the termination of the Loans and the repayment of the
Notes. The provisions of this Section 6.10 shall survive the redemption or
defeasance of the Bonds.
The Company also covenants and agrees, at its expense, to pay, and to
indemnify and save the Indemnified Parties harmless of, from and against all
costs, reasonable counsel fees, expenses and liabilities incurred in any action
or proceeding brought by reason of the above.
The foregoing indemnities shall not apply to losses, claims, damages or
liabilities caused by the wilful misconduct or gross negligence of the
Indemnified Party seeking such indemnification.
SECTION 6.11. INTENTIONALLY OMITTED.
SECTION 6.12. REPORT OF NUMBER OF EMPLOYEES. The Company must submit
annually to the Authority, a report showing the number and classification of
employees employed at the Project, on a form provided to the Company by the
Authority.
SECTION 6.13. INTENTIONALLY OMITTED.
SECTION 6.14. INSPECTION OF THE PROJECT. The Company agrees that the
Trustee, the Authority and their respective duly authorized agents shall have
the right at all reasonable times during normal business hours, upon reasonable
notice, to enter upon and to examine and inspect the Project. The Authority, the
Trustee and their respective officers and agents shall also be permitted at all
reasonable times during normal business hours, upon reasonable notice, to
examine the books and records of the Company with respect to the Project and to
make copies or abstracts thereof.
41
SECTION 6.15. CONTINUATION STATEMENTS. The Trustee shall prepare and
file Uniform Commercial Code continuation statements, as necessary to protect
the security of the Holders of Bonds and the right, title and interest of the
Trustee in and to the Trust Estate pursuant to the Indenture.
SECTION 6.16. ADDITIONAL COVENANTS CONCERNING THE COLLATERAL. The
Company further covenants and agrees (a) to retain possession of the Collateral
during the existence of this Loan Agreement and not to sell, exchange, assign,
loan, deliver, lease, mortgage or otherwise dispose of same without the prior
express written consent of the Authority, except for Permitted Encumbrances or
as may otherwise be permitted herein; (b) to keep the Collateral located at the
Premises, and not to remove same from said location (except as permitted below)
without the prior express written consent of the Authority, unless the
Collateral is replaced with items of equal or greater utility and value (which
shall then be included as Collateral); (c) at its own cost and expense (i) to
maintain, preserve and keep the Collateral in a manner consistent with the
standard operating practices applicable to a first class operation, in good and
substantial repair, working order and condition, ordinary wear and tear
excepted, (ii) from time to time to make or cause to be made, all necessary and
proper repairs, replacements, renewals, improvements and betterments thereto,
and (iii) from time to time, to make such substitutions, additions,
modifications and improvements as may be necessary and as shall not impair the
structural integrity, operating efficiency and economic value of the Collateral;
(d) the Company will comply, in all material respects, with all acts, rules,
regulations, orders, decrees and directions of any governmental authority,
applicable to the Collateral or any part thereof or to the operation of the
Company's business; provided, however, that the Company may contest any act,
regulation, order, decree or direction in any reasonable manner which shall not
in the sole opinion of the Authority adversely affect the Authority's rights or
the first priority of its security interest in the Collateral. All alterations,
replacements, renewals or additions made pursuant to clause (c) of this Section
6.16 shall become and constitute a part of the Collateral. The Company shall not
remove, demolish, materially alter, discontinue the use of, sell, transfer,
assign, hypothecate or otherwise dispose of to any Person, any of the
Collateral, other than in the ordinary course of the Company's business. All
Collateral which has been substituted for any removed, replaced or disposed of
Collateral shall be of a value and quality at least equal to that of the
removed, replaced or disposed of Collateral, and shall be subject to the liens
of the security interest granted to the Authority hereunder.
SECTION 6.17. PAYMENT OF OBLIGATIONS. The Company will pay and
discharge at or before maturity all material contractual obligations and all
other material debts and liabilities, including without limitation all taxes,
charges and levies imposed on it or any of its property other than obligations
contested in good faith and in accordance with applicable law and which will not
affect the priority of the liens created hereunder.
SECTION 6.18. INTENTIONALLY OMITTED.
42
SECTION 6.19. INTENTIONALLY OMITTED.
SECTION 6.20. PROJECT SIGN. During the period from the effective date
of this Agreement and until thirty (30) days after the Completion Date, the
Company shall cause to be posted and maintained at the site of the Project, a
sign to be provided to the Company by the Authority indicating that financial
assistance for the Project has been provided by the Authority. The cost of the
sign and the maintenance of the sign shall be at the expense of the Company.
SECTION 6.21. BROKERAGE FEE. The Authority shall not be liable to the
Company for any brokerage fee, finders fee, or loan servicing fee and the
Company shall hold the Authority harmless from any such fees or claims.
SECTION 6.22. COST RECOVERY. To the extent that any property is
financed by the Bond Proceeds of the Tax-exempt Bonds, the cost recovery
deduction allowed for such property shall be determined by using the alternative
depreciation system determined in accordance with Section 168(g) of the Code.
SECTION 6.23. REHABILITATION REQUIREMENT. The Company shall spend or
cause to be spent an amount equal to not less than one hundred percent (100%) of
the portion of the cost of acquiring the existing equipment and not less than
fifteen percent (15%) for facilities or other structures financed with the
Proceeds of the Tax-exempt Bonds for "rehabilitation expenditures", as defined
in Section 147(d)(3) of the Code, within two (2) years of the Issue Date or the
date of acquisition of such facility, structure or existing equipment, whichever
is later.
SECTION 6.24. COVENANT BY COMPANY AS TO COMPLIANCE WITH INDENTURE. The
Company covenants and agrees that it will not interfere with the exercise of the
power and authority granted to the Trustee in the Indenture. The Company further
agrees, at the expense of the Company, to aid in furnishing to the Authority or
the Trustee any documents, certificates or opinions that may be required under
the Indenture.
SECTION 6.25. CONTINUING DISCLOSURE. The Company hereby covenants to
deliver to the Trustee and the Authority a written undertaking (the "Continuing
Disclosure Agreement"), in a form acceptable to the Trustee and the Authority
and satisfying the requirements of Rule 15c2- 12(b)(5) (codified at 17 C.F.R.
Section 240.15c2-12), as the same may be further amended, supplemented and
officially interpreted from time to time, or any successor provision thereto
("Rule 15c2-12"), promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended and supplemented (codified as
of the date hereof at 15 U.S.C. 77 ET SEQ.) in the event that Rule 15c2-12
requires such an undertaking. The Trustee has covenanted in Section 7.09 of the
Indenture that it will execute and deliver the Continuing Disclosure Agreement
to the Company and the Authority. Neither the Authority nor the Trustee shall
have any duty to determine the sufficiency of the Continuing Disclosure
Agreement under Rule 15c2-12 and
43
neither the Authority nor the Trustee shall incur any liability arising in any
way out of their acceptance of the form of the Continuing Disclosure Agreement.
44
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. Any one or more of the following
events, shall constitute an event of default hereunder (an "Event of Default"):
(a) default in the payment of any installment of the principal or
interest on a Note within ten (10) days of the date when due;
(b) failure by the Company to make any payment required under a
Note to replenish any moneys withdrawn from the Debt Service Reserve Fund within
ten (10) days of the date when due and payable under Section 4.10 of the
Indenture;
(c) failure by the Company to pay when due any payment required to
be made under this Agreement other than payments to the Authority for the
payment of the principal, redemption premium, and interest on the Bonds, which
failure shall continue for a period of ten (10) days after written notice,
specifying such failure and requesting that it be remedied, is given to the
Company by the Authority by registered mail;
(d) if any representation or warranty of a material nature made in
this Agreement or in any other Loan Document or in any report, certificate,
financial statement or other instrument furnished in connection with this
Agreement shall prove to be false or misleading in any material respect when
made;
(e) failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed, other than as
referred to in Section 4.01(j) of this Agreement (relating to compliance with
the Code and arbitrage regulations,), or in subparagraphs (a), (b), (c) and (d)
of this Section 7.01, which failure shall continue for a period of thirty (30)
days after written notice, specifying such failure and requesting that it be
remedied, is given to the Company by the Authority by registered mail, unless
such failure is incapable of being cured within thirty (30) days after written
notice and the Company is making a diligent pursuit to cure such failure in
which case the Company shall be granted such additional time as is necessary to
effect such a cure;
(f) the dissolution or liquidation of the Company;
(g) the Company shall have applied for or consented to the
appointment of a custodian, receiver, trustee or liquidator of all or a
substantial part of its assets; or shall have made a general assignment for the
benefit of creditors; or shall have submitted a petition or an answer seeking
reorganization or an arrangement with creditors; or shall have taken advantage
of any insolvency law, or submitted an answer admitting the material allegations
of a petition in bankruptcy, reorganization or insolvency proceeding; or an
order, judgment or decree shall have been entered, without
45
the application, approval or consent of the Company by any court of competent
jurisdiction approving a petition seeking reorganization of the Company, or
appointing a custodian, receiver, trustee or liquidator of the Company or of a
substantial part of any of its respective assets and such order, judgment or
decree shall continue unstayed and in effect for any period of one hundred
twenty (120) consecutive days; or the Company shall have filed a voluntary
petition in bankruptcy; or
(h) the occurrence of an "Event of Default" under the Mortgage,
the Assignment of Leases, the Indenture or any other Loan Document, after the
expiration of any applicable notice and/or grace period.
The Company shall prepay the Notes in full, together with interest
accrued and to accrue to the Redemption Date upon the occurrence of one of the
following events: (a) the Company ceases to operate the Project or to cause the
Project to be operated as an authorized project under the Act for twelve (12)
consecutive months, without first obtaining the prior written consent of the
Authority, or (b) any representation or warranty made by the Company in this
Agreement or in any document furnished in connection with this Agreement proves
to have been false or misleading in any material respect when made. The
Authority shall give written notice to the Company and the Trustee of such
occurrence; whereupon the Trustee shall give notice to the Bondholders of the
redemption of the Bonds pursuant to Section 6.04 of the Indenture and will set a
Redemption Date according to section, but in no event later from sixty (60) days
after the Authority gives notice to the Trustee of the occurrence. The
prepayment of the Notes shall be due and payable on the Business Day preceding
the Redemption Date. Payment on the Notes by the Company pursuant to this
Section shall be in an amount sufficient, together with other funds on deposit
with the Trustee which are available for such purpose, to redeem the Bonds then
Outstanding, and to pay (i) all administrative expenses accrued and to accrue
through the Redemption Date and (ii) any other expenses and fees required to
satisfy and discharge the Indenture,
In addition to the above remedies, if the Company commits a breach, or
threatens to commit a breach of this Agreement, or of any other Loan Document,
the Authority shall have the right and remedy, without posting bond or other
security, to have the provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause immediate and irreparable injury to the
Authority and that money damages will not provide an adequate remedy therefor.
SECTION 7.02. REMEDIES. Whenever any Event of Default referred to in
Section 7.01 hereof shall have happened and be existing, any one or more of the
following remedial steps may be taken, provided, (i) that written notice of the
default has been given to the Company by the Trustee or the Authority by
overnight delivery and registered mail and the Default has not theretofore been
cured, and (ii) that no remedial steps shall be taken by the Trustee or
46
the Authority the effect of which would be to entitle the Authority to funds
necessary for the payment of principal and interest on Bonds which have not yet
matured unless such principal and interest shall have been declared due and
payable in accordance with the Indenture and such declaration shall not have
been rescinded:
(a) The Authority may at its option require acceleration of the
Notes, together with interest then due thereon, such payments to be immediately
due and payable;
(b) The Authority may take any action at law or in equity to
collect the payments then due and thereafter to become due or to enforce
performance and observance of any obligation, agreement or covenant of the
Company under this Loan Agreement;
(c) The Authority may exercise in addition to all other rights and
remedies granted to it in this Loan Agreement and the other Loan Documents, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Company expressly agrees
that in any such event the Authority, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive appropriate indemnity and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or sell or otherwise dispose
of and deliver said Collateral (or contract to do so), or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange broker's
board or at any of the Authority's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Authority shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of said Collateral so sold, free of any right
or equity of redemption in the Company, which right or equity is hereby
expressly released. The Company further agrees, at the Authority's request, to
assemble the Collateral, make it available to the Authority at places which the
Authority reasonably shall select, whether at the Company's premises or
elsewhere, at Company's cost and expense. Subject to the provisions of Section
7.07 hereof, the Authority shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any way
relating to the rights of the Authority hereunder, including reasonable
attorneys' fees and legal expenses, to the payment in whole or in part of the
Company's obligations hereunder and under the Notes, in such order as the
Authority may elect, the Company remaining liable for any deficiency remaining
unpaid after such application and only after so paying over such net proceeds
and after the payment by the Authority of any other amount required by any
provision of law,
47
need the Authority account for the surplus, if any, to the Company. To the
extent permitted by applicable law, the Company waives all claims, damages, and
demands against the Authority arising out the repossession, retention or sale of
the Collateral. The Company agrees that the Authority need not give more than
thirty (30) days' notice (which notification shall be deemed given when mailed,
postage prepaid, addressed to the Company at its address set forth in Section
8.01 hereof) of the time and place of any public sale or of the time after which
a private sale may take place and that such notice is reasonable notification of
such matters. The Company shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay all amounts
to which the Authority is entitled, the Company also being liable for the fees
of any attorneys employed by the Authority to collect such deficiency; and
(d) The Company also agrees to pay all costs of the Authority and
the Trustee, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Company's obligations and the enforcement of any of
their respective rights hereunder.
Any amounts collected pursuant to action taken under this Section 7.02 shall be
applied in accordance with the Indenture.
SECTION 7.03. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved
to the Authority by this Loan Agreement 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 any default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article VII, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required.
SECTION 7.04. ADDITIONAL REMEDIES. In addition to the above remedies,
if the Company commits a breach, or threatens to commit a breach of this Loan
Agreement, the Authority shall have the right and remedy, without posting bond
or other security, to have the provisions of this Loan Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable injury
to the Authority and that money damages will not provide an adequate remedy
therefor.
SECTION 7.05. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If the
Company shall default under any of the provisions of this Loan Agreement and the
Authority or the Trustee shall employ attorneys or incur other expenses for the
collection of the Loans or for the enforcement of performance or observance of
any obligation or agreement on the part of the
48
Company contained in this Loan Agreement, the Company will, on demand therefor,
pay the reasonable fees and expenses of the Authority, the Trustee and their
attorneys as they are incurred.
SECTION 7.06. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained in this Loan Agreement shall be breached and such breach
shall thereafter be waived, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder. In
view of the assignment of the Authority's rights in and under this Loan
Agreement to the Trustee (provided, however, the Authority retains the Reserved
Rights), the Authority shall have no power to waive any default hereunder by the
Company without the consent of the Trustee. Notwithstanding the foregoing, if,
after the maturity of the Outstanding Bonds shall have been accelerated by the
Trustee upon the occurrence of any Event of Default under the Indenture, all
arrears of interest on the Outstanding Bonds and interest on overdue
installments of interest (to the extent permitted by law) at a rate per annum
which is equal to the rate per annum borne by the Bonds and the principal and
premium (if any) on all Bonds then Outstanding which have become due and payable
otherwise than by acceleration, and all other sums payable under the Indenture,
except the principal of and the interest on such Bonds which by such
acceleration shall have become due and payable, shall have been paid, all other
things shall have been performed in respect of which there was an Event of
Default, there shall have been paid the reasonable fees and expenses of the
Trustee and of the holders of such Bonds, including reasonable attorneys' fees
paid or incurred and such Event of Default shall be waived by the Trustee with
the consequence under Section 8.01 of the Indenture that such acceleration is
rescinded, then the Company's default hereunder shall be deemed waived without
further action by the Trustee or the Authority.
SECTION 7.07. ADDITIONAL AUTHORITY'S REMEDIES. The Company shall prepay
the Notes in full, together with interest accrued and to accrue to the
Redemption Date (as determined below) upon the occurrence of one of the
following events:
(a) The Company ceases to operate the Project or cause the Project
to be operated as an authorized project under the Act for twelve (12)
consecutive months, without first obtaining the prior written consent of the
Authority, or (b) upon an Event of Default under Section 7.01(d) hereof. The
Authority shall give notice to the Company and the Trustee of such occurrence;
whereupon the Trustee shall give notice to the Bondholders of the redemption of
the Bonds pursuant to Section 6.03 of the Indenture. The prepayment shall be due
and payable on the Business Day preceding the Redemption Date, but in no event
later than sixty (60) days after the Authority gives notice to the Trustee of an
Event of Default. Payment on the Notes by the Company pursuant to this Section
shall be in an amount sufficient, together with other funds on deposit with the
Trustee which are available for such purpose, to redeem the Bonds then
Outstanding, and to pay (i) all administrative expenses accrued and to
49
accrue through the Redemption Date and (ii) any other expenses and fees required
to satisfy and discharge the Indenture.
(b) If the Company commits a breach, or threatens to commit a
breach, of any of the provisions of this Agreement, at any time prior to the
maturity or prepayment of the Bonds, the Authority shall have the right and
remedy, without posting bond or other security to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction in order
to accomplish the objectives and purposes of the Act, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable injury
to the Authority and that money damages will not provide an adequate remedy
thereto.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. NOTICE. Any notice to the Company shall be conclusively
deemed to have been received by, and to be effective on the date on which
delivered to it, at 165 Ludlow Avenue, Northvale, New Jersey 07647, Attention:
Mark Gittelman, Chief Financial Officer, or, if sent by overnight courier, on
the first Business Day after and, if sent by certified mail, on the third
Business Day after the day on which mailed, addressed to the Company at said
address with a copy to Gallo Geffner & Fenster, P.C., Country Club Plaza, West
115 Century Road, Paramus, New Jersey 07652, Attention: Michael L. Messer, Esq.
Any notice to the Authority shall be conclusively deemed to have been received
by and to be effective on the date on which delivered to the Authority at its
offices at 36 West State Street, P.O. Box 990, Trenton, New Jersey, 08625,
Attention: Director of Investment Banking or, if sent by overnight courier, on
the first Business Day after and, if sent by certified mail, on the third
Business Day after the day on which mailed, addressed to the Authority at said
address, copy to McManimon & Scotland, L.L.C., One Riverfront Plaza, Newark, New
Jersey 07102, Attention: John V. Cavaliere, Esq. Any notice to the Trustee shall
be conclusively deemed to have been received by and to be effective on the date
on which delivered to the Trustee at 385 Rifle Camp Road, West Paterson, New
Jersey 07424, Attention: Corporate Trust Department or, if sent by overnight
courier, on the first Business Day after and, if sent by certified mail, on the
third Business Day after the day on which mailed, addressed to the Trustee at
said address. A duplicate copy of each notice given hereunder by either the
Authority or the Company to the other shall also be given to the Trustee by the
same means used to give such notice. Any party hereto may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices shall be sent.
SECTION 8.02. CONCERNING SUCCESSORS AND ASSIGNS. Subject to the
provisions of Sections 4.01(j) and 6.10 hereof, all covenants, agreements,
representations and warranties made herein, in the other Loan Documents and in
the certificates delivered pursuant hereto and thereto shall survive the making
of the Loans herein contemplated and the execution and delivery of the Notes and
shall continue in full force and effect so long as the Loans are outstanding and
unpaid. Whenever in this Loan Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements made by or on behalf of the
Company which are contained in this Loan Agreement shall bind its successors and
assigns and inure to the benefit of the successors and assigns of the Authority.
SECTION 8.03. PAYMENT OF FEES AND EXPENSES. The Company will pay all
out-of-pocket expenses incurred by the Authority in connection with the
preparation of this Loan Agreement and the other Loan Documents (whether or not
the transactions hereby contemplated shall be consummated), the making of the
Loans hereunder, and the enforcement of the rights of the Authority in
51
connection with this Loan Agreement and the other Loan Documents, including the
Authority's bond issuance fee as established at the time of the issuance of the
Bonds, and the fees, disbursements and expenses of Bond Counsel.
SECTION 8.04. PAYMENT OF TRUSTEE'S AND PAYING AGENT'S COMPENSATION AND
EXPENSES. The Company will pay the compensation and expenses of the Trustee and
the Paying Agent under the Indenture and this Loan Agreement, including all
costs of enforcing the provisions of this Loan Agreement and the redemption of
the Bonds, upon receipt of an invoice setting forth the same in reasonable
detail.
SECTION 8.05. NEW JERSEY LAW GOVERNS. This Loan Agreement and the other
Loan Documents shall be construed in accordance with and governed by the laws of
the State.
SECTION 8.06. MODIFICATIONS, WAIVERS OR AMENDMENTS. Modification or the
waiver of any provisions of this Loan Agreement or any other Loan Documents, or
consent to any departure by the Company therefrom, shall in no event be
effective unless the same shall be in writing and signed by the Authority and
the Trustee. Any such modification, waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Company in any case shall entitle it to any other or further
notice or demand in the same circumstances.
This Loan Agreement may be amended only with the concurring written
consent of the Trustee given in accordance with the provisions of the Indenture.
SECTION 8.07. FAILURE TO EXERCISE RIGHTS. Neither any failure nor any
delay on the part of the Authority in exercising any right, power or privilege
hereunder or under any other Loan Document shall operate as a waiver hereof or
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege.
SECTION 8.08. AUTHORITY'S ASSIGNMENT. The Company acknowledges that
this Loan Agreement, the Notes, the Mortgage, the Assignment of Leases, and the
other Loan Documents and all rights created by all of the foregoing instruments
and the benefit of all representations, warranties and covenants made herein and
in all of the other Loan Documents have been assigned by the Authority to the
Trustee as security for the Bonds as provided in and subject to the provisions
of the Indenture; provided, however, the Authority retains the Reserved Rights.
The Company assents to such assignment and hereby agrees that, as to the
Trustee, its obligation to make payments under the Loan Documents and the Notes
shall be absolute and shall not be subject to any defense or any right of
set-off, counterclaim or recoupment arising out of any breach by the Authority
of any duty or obligation to the Company, whether hereunder or otherwise, or out
of any indebtedness or liability at any time owing to the Company by the
Authority.
52
SECTION 8.09. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. The
Company agrees that from time to time it will execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as may reasonably be required for correcting any
inadequate or incorrect description of the Project or for carrying out the
intention of or facilitating the performance of this Loan Agreement.
SECTION 8.10. CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Loan Agreement.
SECTION 8.11. SEVERABILITY. In the event any provision of this Loan
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
SECTION 8.12. COUNTERPARTS. This Loan Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 8.13. SPECIAL LIMITED OBLIGATIONS. THE STATE IS NOT OBLIGATED
TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE IS
PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR
INTEREST ON THE BONDS. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE
AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS
OF THE AUTHORITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE
AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW
AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY.
THE AUTHORITY HAS NO TAXING POWER.
SECTION 8.14. EFFECTIVE DATE AND TERM. This Loan Agreement shall become
effective upon its execution and delivery by the parties hereto, shall remain in
full force from the date hereof and, subject to the provisions hereof, shall
expire on such date as the Bonds and the interest thereon, and all other
expenses or sums to which the Authority, the Trustee and any Paying Agent are
entitled, have been fully paid in accordance with the Indenture.
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IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement and the Authority has caused its corporate seal to be affixed hereto
and to be attested, as of the day first above written.
{SEAL} NEW JERSEY ECONOMIC
ATTEST: DEVELOPMENT AUTHORITY
/s/Lawrence G. Cier By: ./s/ Gregory Ritz
- -------------------------------- ---------------------------------------
Lawrence G. Cier Gregory Ritz
Assistant Secretary Chief Financial Officer
54
(COUNTERPART SIGNATURE PAGE TO LOAN AGREEMENT)
ATTEST: ELITE PHARMACEUTICALS, INC.
/s/ Mark I. Gittelman By: /s/ Bernard J. Berk
- -------------------------------- ---------------------------------------
Mark I. Gittelman Bernard J. Berk
Secretary Chief Executive Officer and
Chairman
55
SCHEDULE A
DESCRIPTION OF COLLATERAL
EXHIBIT A
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424
COMPANY'S COMPLETION CERTIFICATE
Pursuant to Section 3.04 of the Loan Agreement by and between the Authority and
Elite Pharmaceuticals, Inc. (the "Company") dated as of August 15, 2005 (the
"Loan Agreement"), the undersigned, an Authorized Company Representative (all
undefined terms used herein shall have the same meaning ascribed to them in the
Loan Agreement), as of the date hereof, certifies that:
(i) the Project was completed as of
______________, 19__;
(ii) the cost of all labor, services, materials
and supplies used in the Project have been paid, or will be
paid from amounts retained by The Bank of New York, the
Trustee, at the Company's direction for any cost of the
Project not now due and payable or, if due and payable, not
presently paid;
(iii) the Project Facilities necessary for the
Project, if any, have been constructed or installed to the
Company's satisfaction; such Project Facilities so constructed
or installed are suitable and sufficient for the efficient
operation of the Project for the intended purposes and all
costs and expenses, if any, incurred in the acquisition and
installation of such Project Facilities have been paid, or
will be paid from amounts retained by the Trustee at the
Company's direction for any cost of the Project not now due
and payable or, if due and payable, not presently paid;
(iv) the Project is being operated as an
authorized "project" under the Act and substantially as
proposed in the Applications of the Company dated May 1, 2005,
as amended and supplemented in writing;
(v) in the event the Project included
construction (a) the Company has reviewed the Contractor's
Completion Certificate and the Company has no knowledge or
information that the representations contained therein are
false or misleading and (b) the Company required in all
Construction Contracts that wages paid to workers employed in
the performance of Construction Contracts be paid at a rate
not less than the Prevailing Wage Rate.
I acknowledge that of the amounts remaining in the Project Fund (except
amounts therein sufficient to cover costs of the Project not now due and payable
or not presently paid and except for interest or other income earned from the
investment of the moneys held in the Bond Fund, if any,) $____________ shall be
transferred to the Principal Account in the Bond Fund and applied by the Trustee
in accordance with, or as otherwise permitted by, Section 4.09 of the Indenture
and shall not be invested at a yield materially higher than the yield on the
Tax-exempt Bonds.
This certificate is given without prejudice to any rights against third
parties which exist on the date hereof or which may subsequently come into
being.
Elite Pharmaceuticals, Inc.
By:
-----------------------------------------------
Authorized Company Representative
Dated: , 20
--------------- --
EXHIBIT E
TO:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424
REQUISITION NO. ___
(SERIES A ACCOUNT)
The undersigned, an authorized officer of Elite Pharmaceuticals, Inc.
(the "Company), pursuant to the Loan Agreement by and between the Company and
the New Jersey Economic Development Authority (the "Authority") dated as of
August 15, 2005 (the "Loan Agreement") makes the following requisition for
payment from the Series A Account of the Project Fund established pursuant to
the Indenture dated as of August 15, 2005 between the Authority and The Bank of
New York (the "Indenture").
Payment to (name and address)*:
Amount:
Reason for Payment:
Such amount is based on an obligation properly incurred pursuant to the
provisions of the Loan Agreement and the Indenture, is a Proper Charge against
said Project Fund, is unpaid or unreimbursed from the Project Fund and has not
been the basis of any previous withdrawal. The amount requested, to the extent
it represents work performed or supervised by officers or employees of the
Company, does not exceed the actual cost to the Company of any cost or expense
incurred by reason of work performed or supervised by officers or employees of
the Company or any of its affiliates. The Company is not in default under any
provision of the Loan Agreement. There has not been any casualty damage to any
part of the Project to date and there has not been any condemnation or eminent
domain proceedings commenced against any part of the Project. All
representations and warranties of the Company contained in the Loan Documents,
are true and correct and no default exists under the Loan Documents and no event
has occurred which but for notice, a lapse of time, or both, would constitute a
default under the Loan Documents.
I further certify that no written notice of any lien, right to lien,
attachment upon or claim affecting the right to receive payment of any of the
moneys payable under this requisition has been received or, if any notice of any
such lien, attachment or claim has been received, such lien, attachment or claim
has been released or discharged or will be released or discharged upon payment
of this requisition.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day
of________________.
Elite Pharmaceuticals, Inc.
By:
---------------------------------------------------
Name:
Title:
*if the payment is to be made to the Company for a reimbursable advance, insert
the name and address of the Person to whom such advance was made and attach
proof of payment by the Company
TO:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424
REQUISITION NO. ___
(SERIES B ACCOUNT)
The undersigned, an authorized officer of Elite Pharmaceuticals, Inc.
(the "Company), pursuant to the Loan Agreement by and between the Company and
the New Jersey Economic Development Authority (the "Authority") dated as of
August 15, 2005 (the "Loan Agreement") makes the following requisition for
payment from the Series B Account of the Project Fund established pursuant to
the Indenture dated as of August 15, 2005 between the Authority and The Bank of
New York (the "Indenture").
Payment to (name and address)*:
Amount:
Reason for Payment**:
Such amount is based on an obligation properly incurred pursuant to the
provisions of the Loan Agreement and the Indenture, is unpaid or unreimbursed
from the Project Fund and has not been the basis of any previous withdrawal. The
amount requested, to the extent it represents work performed or supervised by
officers or employees of the Company, does not exceed the actual cost to the
Company of any cost or expense incurred by reason of work performed or
supervised by officers or employees of the Company or any of its affiliates. The
Company is not in default under any provision of the Loan Agreement. There has
not been any casualty damage to any part of the Project to date and there has
not been any condemnation or eminent domain proceedings commenced against any
part of the Project. All representations and warranties of the Company contained
in the Loan Documents, are true and correct and no default exists under the Loan
Documents and no event has occurred which but for notice, a lapse of time, or
both, would constitute a default under the Loan Documents.
I further certify that no written notice of any lien, right to lien,
attachment upon or claim affecting the right to receive payment of any of the
moneys payable under this requisition has been received or, if any notice of any
such lien, attachment or claim has been received, such lien, attachment or claim
has been released or discharged or will be released or discharged upon payment
of this requisition.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day
of________________.
Elite Pharmaceuticals, Inc.
By:
---------------------------------------------------
Name:
Title:
* if the payment is to be made to the Company for a reimbursable advance, insert
the name and address of the Person to whom such advance was made and attach
proof of payment by the Company
** if the payment is to be made for the acquisition of equipment, attached is a
list of such equipment; you are authorized to file a UCC Financing Statement
with the Delaware Department of State in order to perfect your security interest
in such equipment naming Elite Laboratories, Inc. as debtor; Elite Laboratories,
Inc. joins in this requisition for the purpose of authorizing such filing.
Elite Laboratories, Inc.
By:
---------------------------------------------------
Name:
Title: