Exhibit 10.1
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LOAN AGREEMENT
between
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
NEOSE TECHNOLOGIES, INC.
Dated
as of
March 1, 1997
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$8,400,000 Montgomery County Industrial Development Authority
Federally Taxable Variable Rate Demand Revenue Bonds
(Neose Technologies, Inc. Project)
Series B of 1997
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TABLE OF CONTENTS
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Preambles.......................................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1. Use of Terms Defined in Indenture.................................................... 2
Section 1.2. Definitions.......................................................................... 2
Section 1.3. Interpretation....................................................................... 4
Section 1.4. Captions, Headings and Table of Contents............................................. 4
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations and Findings of Issuer............................................... 5
Section 2.2. Representations of Borrower.......................................................... 5
ARTICLE III
ACQUISITION OF PROJECT;
ISSUANCE OF BONDS; PROJECT FUND
Section 3.1. Acquisition of Project............................................................... 7
Section 3.2. Additions and Changes to Project..................................................... 7
Section 3.3. Issuance of Bonds; Application of Proceeds........................................... 7
Section 3.4. Disbursements from Project Fund...................................................... 8
Section 3.5. Borrower Required to Pay Costs in Event Project Fund Insufficient.................... 8
Section 3.6. Completion........................................................................... 8
Section 3.7. Investment and Use of Fund Moneys.................................................... 9
ARTICLE IV
LOAN BY ISSUER; LOAN PAYMENTS;
OTHER PAYMENTS
Section 4.1. Loan by Issuer....................................................................... 10
Section 4.2. Loan Payments........................................................................ 10
Section 4.3. Purchase Payments.................................................................... 11
Section 4.4. Additional Payments.................................................................. 11
Section 4.5. Obligations Unconditional............................................................ 11
Section 4.6. Assignment of Issuer's Rights........................................................ 11
Section 4.7. Letter of Credit..................................................................... 11
(i)
ARTICLE V
ADDITIONAL COVENANTS OF BORROWER
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Section 5.1. Maintenance of Existence............................................................. 13
Section 5.2. Compliance with Laws; Commencement and Continuation of Operations at
Project; No Sale, Removal or Demolition of Project................................... 13
Section 5.3. Right of Inspection.................................................................. 13
Section 5.4. Lease by Borrower.................................................................... 13
Section 5.5. Financial Statements; Books and Records.............................................. 14
Section 5.6. Taxes, Other Governmental Charges and Utility Charges................................ 14
Section 5.7. Insurance............................................................................ 14
Section 5.8. Damage to or Condemnation of Project................................................. 14
Section 5.9. Litigation Notice.................................................................... 15
Section 5.10. Indemnification...................................................................... 15
Section 5.11. Nondiscrimination.................................................................... 16
ARTICLE VI
REDEMPTION OF BONDS
Section 6.1. Optional Redemption................................................................... 17
Section 6.2. Extraordinary Optional Redemption..................................................... 17
Section 6.3. Actions by Issuer..................................................................... 18
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default..................................................................... 19
Section 7.2. Remedies on Default................................................................... 20
Section 7.3. Remedies Not Exclusive................................................................ 21
Section 7.4. Payment of Legal Fees and Expenses.................................................... 21
Section 7.5. No Waiver............................................................................. 21
Section 7.6. Notice of Default..................................................................... 22
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Term of Agreement..................................................................... 23
Section 8.2. Notices............................................................................... 23
Section 8.3. Limitation of Liability; No Personal Liability........................................ 24
Section 8.4. Binding Effect........................................................................ 24
Section 8.5. Amendments............................................................................ 25
Section 8.6. Counterparts.......................................................................... 25
(ii)
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Section 8.7. Severability......................................................................... 25
Section 8.8. Governing Law........................................................................ 25
Section 8.9. Assignment........................................................................... 25
Section 8.10. Receipt of Indenture................................................................. 25
Execution.......................................................................................... 26
Exhibit A - PROJECT SITE.........................................................................A-1
Exhibit B - PROJECT DESCRIPTION..................................................................B-1
Exhibit C - FORM OF DISBURSEMENT REQUEST.........................................................C-1
Exhibit D - NONDISCRIMINATION CLAUSE.............................................................D-1
All exhibits omitted. The Registrant hereby agrees to furnish supplementally a
copy of any omitted exhibit to the Securities and Exchange Commission upon
request.
(iii)
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of March 1, 1997 between
MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Issuer"), a public
instrumentality and body corporate and politic of the Commonwealth of
Pennsylvania organized and existing under the Pennsylvania Economic Development
Financing Law, as amended, and NEOSE TECHNOLOGIES, INC. (the "Borrower"), a
corporation duly organized and validly existing under the laws of the State of
Delaware (the capitalized terms not defined in the recitals being used therein
as defined or otherwise described in Article I of this Agreement),
WITNESSETH THAT:
A. The Issuer is a public instrumentality of the Commonwealth
of Pennsylvania and a body corporate and politic organized and existing under
the Act. Under the Act, the Issuer is authorized to enter into agreements
providing for the financing of industrial facilities, commercial facilities,
pollution control facilities, public facilities and other facilities and
activities which promote any of the public purposes set forth in the Act.
B. The Issuer has undertaken the financing of certain costs
involving the acquisition, improvement and equipment of a facility located on
certain real property more fully described in Exhibit A attached hereto (the
"Project Site"). The Project Site and such facilities are herein collectively
called the "Project". The Project is owned and operated by the Borrower. A more
complete description of the Project and the estimated costs thereof is set forth
in Exhibit B attached hereto.
C. In order to finance the Project, the Issuer has duly
authorized the issuance and sale of its Federally Taxable Variable Rate Demand
Revenue Bonds (Neose Technologies, Inc. Project) Series B of 1997 (the "Bonds")
to be issued under the terms of a Trust Indenture dated as of the date hereof
(as the same may hereafter be amended or supplemented from time to time, the
"Indenture") by and between the Issuer and Dauphin Deposit Bank and Trust
Company, Harrisburg, Pennsylvania, as Trustee.
D. The Issuer has entered into this Agreement with the
Borrower for the purposes of providing for (i) the loan of the proceeds of the
Bonds to the Borrower in order to finance the Project and (ii) the repayment of
such loan by the Borrower in amounts sufficient to pay, when due, the principal
of, premium, if any, on and interest on the Bonds.
NOW, THEREFORE, intending to be legally bound, the Issuer and
the Borrower hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Use of Terms Defined in Indenture. Terms used in
this Agreement which are defined in the Indenture and are not otherwise defined
in this Agreement shall have the meanings set forth in the Indenture unless the
context or use clearly indicates another meaning or intent.
Section 1.2. Definitions. In addition to the terms defined in
the recital clauses of this Agreement, as used herein:
"Additional Payments" means the amounts required to be paid by
the Borrower pursuant to Section 4.4.
"Agreement" means this Loan Agreement, as amended or
supplemented from time to time.
"Authorized Representative" means, with respect to the Issuer,
the Chairperson, Vice Chairperson or any other person at the time designated to
act on behalf of the Issuer by written certificate furnished to the Trustee
containing the specimen signature of such person and signed on behalf of the
Issuer by its Chairperson or Vice Chairperson, and, with respect to the
Borrower, the Chief Executive Officer, the President or any other person at the
time designated to act on behalf of the Borrower by written certificate
furnished to the Trustee containing the specimen signature of such person and
signed on behalf of the Borrower by its Chief Executive Officer or President.
"Bond Service" means, for any period or payable at any time,
the principal of, premium, if any, on and interest on the Bonds for that period
or payable at the time whether due on an Interest Payment Date, at maturity or
upon acceleration or redemption.
"Borrower's Agreements" means this Agreement, the Placement
Agreement, the Remarketing Agreement, the Reimbursement Agreement and the Bond
Pledge Agreement.
"Completion Date" means the date of completion of the Project
evidenced in accordance with the requirements of Section 3.6.
"Event of Default" means any of the events described as an
Event of Default in Section 7.1.
"Issuer's Fee" means the amount of $21,000.
"Loan" means the loan by the Issuer to the Borrower of the
proceeds of the Bonds pursuant to Section 4.1 in the original principal amount
of $8,400,000.
"Loan Payments" means the amounts required to be paid by the
Borrower in repayment of the Loan pursuant to Section 4.2.
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"Participating Bank" means the commercial bank, trust company
or other financial institution which has entered into the Participating Bank
Agreement with the Bank and the Reimbursement Agreement with the Borrower, and
its successors and assigns. The initial Participating Bank is Jefferson Bank.
"Participating Bank Agreement" means the Participation and
Reimbursement Agreement between the Participating Bank and the Bank relating to
the Bonds, as amended, supplemented or replaced from time to time.
"Placement Agreement" means the Placement Agreement among the
Issuer, the Borrower and CoreStates Capital Markets, a Division of CoreStates
Bank, N.A., as the Placement Agent, relating to the Bonds.
"Project Costs" means costs of the Project permitted under the
Act, including, but not limited to, the following:
(a) Costs incurred in acquisition, construction,
installation, equipment or improvement of the Project, including costs
incurred in respect of the Project for preliminary planning and
studies; architectural, engineering, accounting, consulting, legal and
other professional fees and expenses; labor, services and materials;
(b) Fees, charges and expenses incurred in connection
with the authorization, sale, issuance and delivery of the Bonds,
including without limitation bond discount, printing expense, title
insurance, recording fees and the initial fees and expenses of the
Trustee, Issuer, Remarketing Agent, Bank and Participating Bank;
(c) Payment of interest on the Bonds and fees of the
Bank, Participating Bank, Trustee and Remarketing Agent accruing during
the period of acquisition, construction and/or equipping of the
Project; and
(d) Any other costs, expenses, fees and charges
properly chargeable to the cost of acquisition, construction,
installation, equipment or improvement of the Project.
"Purchase Payments" means the amounts required to be paid by
the Borrower pursuant to Section 4.3.
"Reimbursement Agreement" means the Reimbursement Agreement
between the Participating Bank and the Borrower relating to the Letter of Credit
and the Bonds, as amended, supplemented or replaced from time to time.
"Remarketing Agreement" means the Remarketing Agreement
between the Borrower and the Remarketing Agent relating to the Bonds, as
amended, supplemented or replaced from time to time.
"Resolutions" means the resolution or resolutions of the
Issuer approving and authorizing the Bonds, the Indenture and this Agreement.
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"Unassigned Issuer's Rights" means all of the rights of the
Issuer to receive Additional Payments under Section 4.4, to be held harmless and
indemnified under Section 5.10, to be reimbursed for attorney's fees and
expenses under Section 7.4, and to give or withhold consent to or approval of
amendments, modifications, termination or assignment of this Agreement, or sale,
transfer, assignment, lease (or assignment of lease) or other disposal of the
Project, under Sections 5.1, 5.2, 5.4, 8.5 and 8.9.
Section 1.3. Interpretation. In this Agreement, unless the
context indicates otherwise, words importing the singular number include the
plural number, and vice versa, the terms "hereof", "hereby", "herein", "hereto",
"hereunder" and similar terms refer to this Agreement, and the term "hereafter"
means after and the term "heretofore" means before the Series Issue Date, and
words of any gender include the correlative words of the other genders. In this
Agreement, unless otherwise indicated, all references to particular Articles,
Sections, Subsections or paragraphs are references to the Articles, Sections,
Subsections or paragraphs of this Agreement.
Section 1.4. Captions, Headings and Table of Contents. The
captions, headings and table of contents in this Agreement are solely for
convenience of reference and in no way define, limit or describe the scope or
intent of any Articles, Sections, Subsections or paragraphs hereof.
(End of Article I)
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations and Findings of Issuer. The
Issuer hereby confirms its findings and represents that:
(a) The Issuer is a public body corporate and politic
established in the Commonwealth of Pennsylvania pursuant to the laws of
the Commonwealth of Pennsylvania (including the Act). Under the Act,
the Issuer has the power to enter into the Indenture, the Placement
Agreement and this Agreement and to carry out its obligations
thereunder and to issue the Bonds to finance the Project.
(b) By adoption of the Resolutions at one or more
duly convened meetings of the Issuer at which a quorum was present and
acting throughout, the Issuer has duly authorized the execution and
delivery of the Indenture, the Placement Agreement and this Agreement
and performance of its obligations thereunder and the issuance of the
Bonds. Simultaneously with the execution and delivery of this
Agreement, the Issuer has duly executed and delivered the Indenture and
issued and sold the Bonds.
(c) Based on representations and information
furnished to the Issuer by or on behalf of the Borrower, the Issuer has
found that the Borrower is qualified to be a beneficiary of financing
provided by the Issuer pursuant to the Act.
(d) Based on representations and information
furnished to the Issuer by or on behalf of the Borrower, the Issuer has
found that the Project (i) will promote the public purposes of the Act,
(ii) is located within the boundaries of the Commonwealth of
Pennsylvania and within the boundaries of the county, city, town,
borough or township which organized the Issuer, and (iii) will
constitute a project within the meaning of the Act.
(e) The Project has been approved (1) by the
Pennsylvania Secretary of Commerce, as required by the Act, and (2) by
the Issuer by adoption of the Resolutions, as required by the Act.
(f) The Issuer has not and will not pledge the income
and revenues derived from this Agreement other than pursuant to and as
set forth in the Indenture.
Section 2.2. Representations of Borrower. The Borrower hereby
represents that:
(a) The Borrower is a corporation duly organized and
validly existing under the laws of the State of Delaware, qualified to
do business in the Commonwealth of Pennsylvania, and has full power and
authority to execute, deliver and perform its obligations under the
Borrower's Agreements and to enter into and carry out the transactions
contemplated thereby.
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(b) The Borrower's Agreements have been duly
authorized, executed and delivered by the Borrower and constitute valid
and binding obligations of the Borrower. The execution, delivery and
performance of the Borrower's Agreements by the Borrower do not violate
the Borrower's articles of incorporation or bylaws or, to the knowledge
of the Borrower, any provision of law applicable to the Borrower or any
agreement or instrument to which the Borrower is a party or by which it
or any of its properties is bound.
(c) The Project will promote the public purposes of
the Act and will not cause, directly or indirectly, the removal, either
in whole or in part, of a plant, facility or establishment from one
area of the Commonwealth of Pennsylvania to another. The Project is
located within the boundaries of the county, city, town, borough or
township which organized the Issuer.
(d) The Borrower has acquired or will acquire before
they are needed all permits and licenses, and has satisfied or will
satisfy other requirements necessary, for the acquisition,
construction, installation and/or operation of the Project. The Project
is a project within the meaning of the Act and will be operated as
such.
(e) The Borrower presently intends to use or operate
the Project in a manner consistent with the Act until the date on which
the Bonds have been fully paid and knows of no reason why the Project
will not be so used or operated.
(f) The proceeds of the Bonds will not exceed the
Project Costs.
(End of Article II)
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ARTICLE III
ACQUISITION OF PROJECT;
ISSUANCE OF BONDS; PROJECT FUND
Section 3.1. Acquisition of Project. The Borrower (a) has
acquired or shall acquire the Project Site and shall construct, install, equip
and/or improve the Project on the Project Site with all reasonable dispatch and
in accordance with the description thereof in Exhibit B attached hereto and
applicable law, (b) shall procure or cause to be procured all permits and
licenses necessary for the prosecution of any and all work on the Project, and
(c) shall pay when due all costs and expenses incurred in connection with such
acquisition, construction, installation, equipment and improvement from funds
made available therefor in accordance with this Agreement or otherwise. It is
understood that the Project is the property of the Borrower and that any
contracts made by the Borrower with respect thereto and any work to be done by
the Borrower on the Project are made or done by the Borrower in its own behalf
and not as agent or contractor for the Issuer. The Borrower may cause legal
title to the Project Site and buildings thereon to be conveyed to an industrial
development corporation for the purpose of obtaining financing for the benefit
of the Borrower through the Pennsylvania Industrial Development Authority of
costs of the Project Site and buildings thereon not financed with proceeds of
the Bonds.
Section 3.2. Additions and Changes to Project. The Borrower
may, at its option and at its own cost and expense, at any time and from time to
time, revise the description of the Project in Exhibit B attached hereto and/or
make such additions and changes to the Project as it may deem to be desirable
for its uses and purposes, provided that (i) such additions and changes shall
constitute part of the Project, (ii) the Borrower shall supplement the
information contained in Exhibit B attached hereto by filing with the Issuer and
the Trustee such supplemental information as is necessary to reflect such
additions and changes so that the Issuer and the Trustee will be able to
ascertain the nature and cost of the facilities included in the Project and
covered by this Agreement and (iii) if an addition or change is substantial in
relation to the Bonds, the Borrower shall have first obtained and filed with the
Issuer and the Trustee an opinion of Bond Counsel to the effect that such
addition or change is authorized or permitted under the Act. In any case, the
Borrower shall obtain the Issuer's approval of the addition to the Project of
any proposed facilities or any other changes not generally described in Exhibit
B attached hereto on the date of delivery of this Agreement.
Section 3.3. Issuance of Bonds; Application of Proceeds. To
provide funds to make the Loan for purposes of paying Project Costs in
accordance with Exhibit B attached hereto, the Issuer will issue the Bonds in
the aggregate principal amount of $8,400,000. The Bonds will be issued pursuant
to the Indenture and will bear interest, mature and be subject to redemption all
as set forth therein. The Borrower hereby approves the terms and conditions of
the Indenture and the Bonds, and the terms and conditions under which the Bonds
will be issued, sold and delivered.
The proceeds from the sale of the Bonds (including any bond
discount) shall be loaned to the Borrower pursuant to Section 4.1 and such
proceeds (net of any bond discount) shall be paid over to the Trustee for
deposit in the Project Fund. Pending disbursement pursuant to Section 3.4, the
proceeds of the Bonds so deposited in the Project Fund, together with any
investment earnings thereon, shall constitute a part of the Trust Estate and
shall be subject to the lien of the Indenture pursuant to the granting clauses
therein as security for the obligations described in such granting clauses, and
to such
7
end the Borrower hereby grants to the Trustee as security for such obligations a
security interest in all of the Borrower's right, title and interest in and to
the Project Fund.
Section 3.4. Disbursements from Project Fund. Subject to the
provisions below, disbursements from the Project Fund shall be made to reimburse
or pay the Borrower, or any person designated by the Borrower, for Project
Costs. The Borrower agrees that the sums so disbursed from the Project Fund will
be used only for the payment of Project Costs, and will not be used for any
other purpose.
Any disbursements from the Project Fund for the payment of the
Project Costs shall be made by the Trustee only upon the written order of an
Authorized Representative of the Borrower, with the written approval of the
Participating Bank, delivered to the Trustee; provided that disbursements made
for costs described in clause (b) of the definition of Project Costs may be made
by the Trustee upon delivery to the Trustee of a closing statement signed by the
respective Authorized Representatives of the Issuer and the Borrower and
approved by the Participating Bank. Each such written order shall be
substantially in the form of the disbursement request attached hereto as Exhibit
C and shall be consecutively numbered and accompanied by invoices or other
appropriate documentation supporting the payments or reimbursements requested.
In case any contract provides for the retention by the Borrower of a portion of
the contract price, there shall be paid from the Project Fund only the net
amount remaining after deduction of any such portion, and only when that
retained amount is due and payable, may it be paid from the Project Fund.
Any moneys in the Project Fund (including the earnings from
investments therein) remaining after the Completion Date and payment, or
provision for payment, in full of the Project Costs shall, at the direction of
an Authorized Representative of the Borrower, be transferred to the General
Account of the Bond Fund and applied as provided in Subsection 5.04(c) of the
Indenture.
Section 3.5. Borrower Required to Pay Costs in Event Project
Fund Insufficient. If moneys in the Project Fund are not sufficient to pay all
Project Costs, the Borrower nonetheless shall complete the Project in accordance
with Exhibit B attached hereto and shall pay all such additional Project Costs.
The Borrower shall not be entitled to any reimbursement for any such payments
from the Issuer, the Trustee, the Bank, the Participating Bank or any Holder;
nor shall it be entitled to any abatement, diminution or postponement of the
Loan Payments.
Section 3.6. Completion. Except to the extent otherwise
approved by the Issuer, within three years of the date of original delivery and
payment for the Bonds, the Borrower shall have completed the Project and caused
all of the proceeds of the Bonds to be expended for Project Costs in accordance
with Exhibit B attached hereto or otherwise applied as described in Section 3.4.
The Borrower shall notify the Issuer and the Trustee of the Completion Date by a
certificate signed by an Authorized Representative of the Borrower stating
(a) the date on which the Project was substantially
completed,
(b) that all other facilities necessary in connection
with the Project have been acquired, constructed, installed, equipped
and/or improved,
(c) that the acquisition, construction, installation,
equipment and/or improvement of the Project and such other facilities
have been accomplished in such a manner
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as to conform with all applicable zoning, planning, building,
environmental and other similar governmental regulations,
(d) that except as provided in clause (e) below,
all costs of the Project then or theretofore due and payable have been
paid, and
(e) the amounts which the Trustee shall retain in the
Project Fund for the payment of Project Costs not yet due or for
liabilities which the Borrower is contesting or which otherwise should
be so retained and the reasons therefor.
Such certificate may state that it is given without prejudice to any rights
against third parties which then exist or subsequently may come into being. The
Authorized Representative of the Borrower shall include with such certificate a
statement specifically describing all items of personal property comprising a
part of the Project. The certificate shall be delivered as promptly as
practicable after the Borrower is in a position to certify as to the matters
referred to in clauses (a) through (e) above.
Section 3.7. Investment and Use of Fund Moneys. At the oral or
written request of an Authorized Representative of the Borrower, any moneys held
as part of the Bond Fund (except moneys in the Letter of Credit Debt Service
Account created under Section 5.04 of the Indenture and except any moneys
representing principal of, or premium, if any, or interest on, any Bonds which
are deemed paid under Section 10.02 of the Indenture) or the Project Fund shall
be invested or reinvested by the Trustee in Eligible Investments.
(End of Article III)
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ARTICLE IV
LOAN BY ISSUER; LOAN PAYMENTS;
OTHER PAYMENTS
Section 4.1. Loan by Issuer. Upon the terms and conditions of
this Agreement, the Issuer will make the Loan to the Borrower on the Series
Issue Date in a principal amount equal to the aggregate principal amount of the
Bonds. The Loan shall be deemed fully advanced upon deposit of the proceeds of
the Bonds (net of any bond discount) in the Project Fund pursuant to Section
3.3.
Section 4.2. Loan Payments. In consideration of and in
repayment of the Loan, the Borrower shall make, as Loan Payments, payments which
correspond, as to amounts and due dates, to the Bond Service on the Bonds;
provided that, except to the extent that the Participating Bank shall otherwise
stipulate by written notice delivered to the Issuer, the Trustee and the Bank,
such payments shall be made in advance as set forth below in this Section.
Amounts received upon a drawing by the Trustee under the Letter of Credit for
the payment of Bond Service shall be credited against the Loan Payments
otherwise payable by the Borrower corresponding to such Bond Service; provided
that the Bank and, if applicable, the Participating Bank have been fully
reimbursed for such drawing by the Borrower.
To provide funds to pay the Bond Service as and when due as
specified above, the Borrower shall make the Loan Payments on or before the
Business Day next preceding the first Business Day of each month in an amount
equal to the interest due on the Bonds on the Interest Payment Date for such
month, while the Bonds bear interest at a Weekly Rate, or in an amount equal to
1/6 of the interest due on the Bonds on the next Interest Payment Date while the
Bonds bear interest at a Term Rate, taking into account funds held in the
General Account of the Bond Fund under the Indenture which would be available
for such purposes. In addition, to provide funds to pay the principal of and
premium, if any, and interest on the Bonds as and when due at any other time,
the Borrower hereby agrees to make and shall make Loan Payments at least one
Business Day (or earlier if required by the Indenture) prior to the date when
such principal, premium, if any, and interest is due and payable. The foregoing
requirement to make Loan Payments in advance of the corresponding dates for
payment of the principal of and interest on the Bonds may be waived if and to
the extent stipulated by the Participating Bank by written notice delivered to
the Issuer, the Trustee and the Bank; provided that in no event shall Loan
Payments be made later than such corresponding dates.
It is the intention of the Issuer and the Borrower that,
notwithstanding any other provision of this Agreement, the Trustee, as assignee
of the Issuer, shall receive funds from or on behalf of the Borrower (taking
into account such credits for amounts drawn on the Letter of Credit) in such
amounts and at such times as will enable the Issuer to pay when due all of its
Bond Service on the Bonds and any obligations arising under Section 4.3 and any
such obligations surviving the payment of the Bonds.
All Loan Payments shall be payable in lawful money of the
United States of America and shall be made by, or on behalf of the Borrower, to
the Trustee at its Principal Office for the account of the Issuer and deposited
in the General Account of the Bond Fund created by the Indenture.
Such Loan Payments shall be applied as provided in the Indenture.
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The Borrower shall be entitled to credits against the Loan
Payments as and to the extent provided in Subsection 5.04(f) of the Indenture.
Section 4.3. Purchase Payments. To the extent that moneys on
deposit in the Remarketing Proceeds Purchase Account or the Letter of Credit
Purchase Account established under the Indenture are insufficient to pay the
full purchase price of Bonds payable pursuant to Sections 4.01 and 4.02 of the
Indenture on the applicable Purchase Date, the Borrower shall also pay to the
Trustee as Purchase Payments for deposit in the Borrower Purchase Account
established under the Indenture amounts sufficient to cover the shortfalls.
Section 4.4. Additional Payments. The Borrower shall pay as
Additional Payments hereunder: (a) to the Issuer, the Issuer's Fee on the Series
Issue Date and any and all costs and expenses (including reasonable legal fees
and expenses) incurred or to be paid by the Issuer in connection with the
issuance and delivery of the Bonds or otherwise related to actions taken by the
Issuer under this Agreement or the Indenture or any amendment thereof,
supplement thereto or consent or waiver thereunder, including without limitation
the Borrower's pro rata share of any annual charge made by a Rating Service to
maintain a rating on the Bonds; (b) to the Remarketing Agent, the fees and
expenses of the Remarketing Agent under the Indenture and the Remarketing
Agreement for services rendered in connection with the Bonds; and (c) to the
Trustee, the reasonable fees, charges and expenses of the Trustee and its agents
for acting as such under the Indenture.
Section 4.5. Obligations Unconditional. The obligations of the
Borrower to make Loan Payments, Purchase Payments and Additional Payments shall
be absolute and unconditional, and the Borrower shall make such payments without
abatement, diminution or deduction regardless of any cause or circumstances
whatsoever including without limitation any defense, set-off, recoupment or
counterclaim which the Borrower may have or assert against the Issuer, the
Trustee, the Remarketing Agent, the Bank, the Participating Bank or any other
person, whether express or implied, or any duty, liability or obligation arising
out of or connected with this Agreement, it being the intention of the parties
that the payments required of the Borrower hereunder will be paid in full when
due without any delay or diminution whatsoever. Loan Payments and Purchase
Payments required to be paid by or on behalf of the Borrower hereunder shall be
received by the Issuer or the Trustee as net sums and the Borrower agrees to pay
or cause to be paid all charges against or which might diminish such net sums.
Section 4.6. Assignment of Issuer's Rights. To secure the
payment of, first, the Bond Service, second, the Participating Bank's
obligations under the Participating Bank Agreement, and third, the Borrower's
obligations under the Reimbursement Agreement, the Issuer shall pledge and
assign to the Trustee all the Issuer's rights in, to and under this Agreement
(except for the Unassigned Issuer's Rights), the Revenues and the other property
comprising the Trust Estate. The Borrower consents to such pledge and assignment
and agrees to make or cause to be made Loan Payments and Purchase Payments
directly to the Trustee without defense or set-off by reason of any dispute
between the Borrower and the Trustee. Whenever the Borrower is required to
obtain the consent of the Issuer hereunder, the Borrower shall also obtain the
consent of the Trustee; provided that, except as otherwise expressly stipulated
herein or in the Indenture, the Borrower shall not be required to obtain the
Trustee's consent with respect to the Unassigned Issuer's Rights.
Section 4.7. Letter of Credit. Concurrently with the initial
delivery of the Bonds pursuant to Section 2.01 of the Indenture, the Borrower
shall cause the initial Letter of Credit to be issued by the Bank pursuant to
the Participating Bank Agreement, which Letter of Credit (1) shall be
substantially in the same form as the exhibit attached to the Participating Bank
Agreement; (2) shall be
11
dated the date of delivery of the Bonds; (3) shall authorize the Trustee to draw
on the Bank, subject to the terms and conditions thereof, up to (a) an amount
equal to the principal amount of the Bonds (i) to enable the Trustee to pay the
principal amount of the Bonds when due at maturity or upon redemption or
acceleration and (ii) to enable the Trustee to pay the portion of the purchase
price of Bonds tendered to it for purchase and not remarketed corresponding to
the principal amount of such Bonds, plus (b) an amount equal to the 46 days
interest on the Bonds at the Maximum Rate with respect to the Weekly Rate (i) to
enable the Trustee to pay interest on the Bonds when due and (ii) to enable the
Trustee to pay the portion of the purchase price of Bonds tendered to it for
purchase and not remarketed corresponding to the accrued interest on such Bonds.
The Letter of Credit may be extended, amended or replaced by an Alternate Letter
of Credit complying with the provisions of Sections 2.05 and 5.08 of the
Indenture. The Participating Bank, the Participating Bank Agreement and the
Reimbursement Agreement may be replaced by complying with the provisions of
Section 5.08(g) of the Indenture.
Subject to the provisions of Section 5.09(h) of the Indenture,
it is anticipated that all payments of principal of and interest on the Bonds,
and all payments of purchase price of the Bonds payable upon optional or
mandatory tender for purchase for the payment of which remarketing proceeds are
not available pursuant to Article IV of the Indenture, will be funded from draws
on the Letter of Credit.
The Borrower shall take whatever action may be necessary to
maintain the Letter of Credit in full force and effect during the period
required by the Indenture, including the payment of any transfer fees required
by the Bank upon any transfer of the Letter of Credit to any successor Trustee.
(End of Article IV)
12
ARTICLE V
ADDITIONAL COVENANTS OF BORROWER
Section 5.1. Maintenance of Existence. The Borrower shall do
all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and qualification to do business in Pennsylvania
and shall not (a) dissolve or otherwise sell, transfer or dispose of all, or
substantially all, of its assets or (b) consolidate with or merge into any other
entity; provided that the preceding restrictions shall not apply if the
transferee or the surviving or resulting entity, if other than the Borrower, by
written instrument satisfactory to the Trustee, assumes and agrees to perform
and observe the agreements and obligations of the Borrower under this Agreement
and the provisions of Section 8.9 are satisfied.
Section 5.2. Compliance with Laws; Commencement and
Continuation of Operations at Project; No Sale, Removal or Demolition of
Project. The Borrower will acquire, construct, install, operate and maintain the
Project in such manner as to comply with the Act and all applicable requirements
of federal, state and local laws and the regulations, rules and orders of any
federal, state or local agency, board, commission or court having jurisdiction
over the Project or the operation thereof, including without limitation
applicable zoning, planning, building and environmental laws, regulations, rules
and orders; provided that the Borrower shall be deemed in compliance with this
Section so long as it is contesting in good faith any such requirement by
appropriate legal proceedings. The Borrower (or its lessee) shall commence
operations at the Project within three years from the Series Issue Date and
shall continue such operations throughout the term of this Agreement. The
Borrower shall not sell, assign or otherwise dispose of (whether in one
transaction or in a series of transactions) its interest in the Project or any
material portion thereof (other than as permitted by Section 5.1 and other than
leases permitted under Section 5.4) or undertake or permit the demolition or
removal of the Project or any material portion thereof without the prior written
consent of the Issuer; provided that the Borrower shall be permitted (i) to
sell, transfer, assign or otherwise dispose of or remove any portion of the
Project which is retired or replaced in the ordinary course of business and (ii)
to convey legal title to the Project Site and buildings thereon to an industrial
development corporation for the purpose of obtaining financing for the benefit
of the Borrower through the Pennsylvania Industrial Development Authority of
costs of the Project Site and buildings thereon not financed with proceeds of
the Bonds.
Section 5.3. Right of Inspection. Subject to reasonable
security and safety regulations and upon reasonable notice, the Issuer and the
Trustee, and their respective agents, shall have the right during normal
business hours to inspect the Project.
Section 5.4. Lease by Borrower. The Borrower may lease the
Project, in whole or in part, to one or more other Persons, provided that:
(a) No such lease shall relieve the Borrower from its
obligations under this Agreement, the Reimbursement Agreement,
the Bond Pledge Agreement or the Remarketing Agreement;
(b) In connection with any such lease the Borrower
shall retain such rights and interests as will permit it to
comply with its obligations under this Agreement, the
13
Reimbursement Agreement, the Bond Pledge Agreement and the
Remarketing Agreement;
(c) No such lease shall impair materially the
accomplishment of the purposes of the Act to be accomplished
by operation of the Project as herein provided;
(d) Any such lease shall require the lessee to
operate the Project as a "project" under the Act as long as
the Bonds are outstanding; and
(e) In the case of a lease to a new lessee or an
assignment of an existing lease to a new lessee of
substantially all of the Project, such new lessee shall have
been approved by the Issuer (such approval not to be
unreasonably withheld).
Section 5.5. Financial Statements; Books and Records. The
Borrower shall prepare or have prepared such financial statements and reports in
such form as are required by the Participating Bank, and shall keep true and
proper books of records and accounts in which full and correct entries are made
of all its business transactions. Copies of such financial statements and
reports shall be provided to the Issuer and the Trustee promptly upon request,
and such books of records and accounts shall be made available for inspection
during normal business hours upon request by the Issuer or the Trustee or their
respective agents.
Section 5.6. Taxes, Other Governmental Charges and Utility
Charges. The Borrower shall pay, or cause to be paid before the same become
delinquent, all taxes, assessments, whether general or special, and governmental
charges of any kind whatsoever that may at any time be lawfully assessed or
levied against or with respect to the Project, including any equipment or
related property installed or brought by the Borrower therein or thereon, and
all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project. With respect to special assessments or
other governmental charges that lawfully may be paid in installments over a
period of years, the Borrower shall be obligated to pay only such installments
as are required to be paid during the term hereof. The Borrower may, at its
expense, in good faith contest any such taxes, assessments and other charges
and, in the event of any such contest, may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom, unless the Issuer or the Trustee shall notify the
Borrower that, in the opinion of counsel selected by the Issuer or the Trustee,
by nonpayment of any such items the Project or any part thereof will be subject
to loss or forfeiture, in which event such taxes, assessments or charges shall
be paid promptly. The Borrower shall also comply at its own cost and expense
with all notices received from public authorities with respect to the Project.
Section 5.7. Insurance. The Borrower shall at its own cost and
expense obtain or cause to be obtained insurance policies against such risks,
and in such amounts, as are customarily insured against by entities owning
facilities of like size and type to the Project, paying, as the same become due
and payable, all premiums in respect thereof.
Section 5.8. Damage to or Condemnation of Project. In the
event of damage, destruction or condemnation of part or all of the Project, the
Borrower shall, subject to the provisions of the Reimbursement Agreement,
either: (i) restore the Project or (ii) if permitted by the terms of the Bonds,
direct the Issuer to call the Bonds for redemption as set forth in Section 6.2.
Damage to, destruction of or condemnation of all or a portion of the Project
shall not terminate this Agreement or
14
cause any abatement of or reduction in the payments to be made by the Borrower
under this Agreement.
Section 5.9. Litigation Notice. The Borrower shall give the
Trustee, the Participating Bank, the Remarketing Agent and the Bank prompt
notice of any action, suit or proceeding pending or threatened against it at law
or in equity, or before any governmental instrumentality or agency, which, if
adversely determined, would materially impair the right of the Borrower to carry
on the business which is contemplated in connection with the Project or would
materially and adversely affect its business, operations, properties, assets or
condition.
Section 5.10. Indemnification. The Borrower will indemnify and
hold harmless the Issuer and each member, director, officer, employee, attorney
and agent of the Issuer for and against any and all claims, losses, damages or
liabilities (including the costs and expenses of defending against any such
claims) to which the Issuer or any member, director, officer, employee or agent
of the Issuer may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise directly or indirectly out of
(a) any loss or damage to property or injury to or death of or loss by any
person that may be occasioned by any cause whatsoever pertaining to the
construction, maintenance, operation and use of the Project; (b) any breach or
default on the part of the Borrower in the performance of any covenant or
agreement of the Borrower under any of the Borrower's Agreements or any related
document, or arising from any act or failure to act by the Borrower or any of
its agents, contractors, servants, employees or licensees; (c) the
authorization, issuance and sale of the Bonds; (d) any failure by the Borrower
to comply with the provisions of the Act; and (e) any claim, action or
proceeding brought with respect to any matter set forth in clause (a), (b), (c)
or (d) above.
The Borrower will indemnify and hold harmless the Trustee and
the Remarketing Agent for and against all liabilities, claims, costs and
expenses incurred without negligence or bad faith on the part of the Trustee or
the Remarketing Agent on account of any action taken or omitted to be taken by
the Trustee or the Remarketing Agent in accordance with the terms of this
Agreement, the Bonds, the Bond Pledge Agreement, the Letter of Credit, the
Remarketing Agreement or the Indenture or any action taken at the request of or
with the consent of the Borrower, including the costs and expenses incurred by
the Trustee and the Remarketing Agent in defending themselves against any such
claims.
In case any action or proceeding is brought against the
Issuer, the Remarketing Agent or the Trustee in respect of which indemnity may
be sought hereunder, the party seeking indemnity promptly shall give notice of
that action or proceeding to the Borrower, and the Borrower upon receipt of that
notice shall have the obligation and the right to assume the defense of the
action or proceeding; provided that failure of a party to give that notice shall
not relieve the Borrower from any of its obligations under this Section unless
(and then only to the extent) that failure prejudices the defense of the action
or proceeding by the Borrower. At its own expense, an indemnified party may
employ separate counsel and participate in the defense. The Borrower shall not
be liable for any settlement made without its consent, which shall not be
unreasonably withheld.
The indemnification set forth above is intended to and shall
(i) include the indemnification of all affected directors, officers, agents and
employees of the Issuer, the Remarketing Agent and the Trustee, respectively,
and (ii) be enforceable by the Issuer, the Remarketing Agent and the Trustee,
respectively, to the full extent permitted by law.
15
Section 5.11. Nondiscrimination. The Borrower hereby accepts
and agrees to be bound by the nondiscrimination clause set forth in Exhibit D
attached hereto.
(End of Article V)
16
ARTICLE VI
REDEMPTION OF BONDS
Section 6.1. Optional Redemption. Provided no Event of Default
shall have occurred and be subsisting, at any time and from time to time, the
Borrower may deliver or cause to be delivered Loan Payments to the Trustee in
addition to the scheduled Loan Payments required to be made under Section 4.2
and direct the Trustee to use the Loan Payments so delivered for the purpose of
calling Bonds for optional redemption in accordance with the applicable
provisions of the Indenture and redeeming such Bonds at the redemption price
stated in the Indenture. Such Loan Payments shall be held and applied as
provided in Section 5.04 of the Indenture and delivery thereof shall not operate
to abate or postpone Loan Payments otherwise becoming due or to alter or suspend
any other obligations of the Borrower under this Agreement. Whenever the Bonds
are subject to optional redemption pursuant to the Indenture, the Issuer will,
but only upon direction of the Borrower, direct the Trustee to call the same for
redemption as provided in the Indenture.
Section 6.2. Extraordinary Optional Redemption. The Borrower
shall have, subject to the conditions hereinafter imposed, the option to direct
the redemption of the Bonds in accordance with the applicable provisions of the
Indenture upon the occurrence of any of the following events:
(a) The Project shall have been damaged or destroyed
to such an extent that (1) it cannot reasonably be expected by
the Borrower to be restored, within a period of six months, to
the condition thereof immediately preceding such damage or
destruction or (2) its normal use and operation is reasonably
expected by the Borrower to be prevented for a period of six
consecutive months.
(b) Title to, or the temporary use of, all or a
significant part of the Project shall have been taken under
the exercise of the power of eminent domain (1) to such extent
that the Project cannot reasonably be expected by the Borrower
to be restored within a period of six months to a condition of
usefulness comparable to that existing prior to the taking or
(2) as a result of the taking, normal use and operation of the
Project is reasonably expected by the Borrower to be prevented
for a period of six consecutive months.
(c) As a result of any changes in state or federal
laws or as a result 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 Issuer or
the Borrower in good faith, this Agreement shall have become
void or unenforceable or impossible of performance in
accordance with the intent and purpose of the parties as
expressed in this Agreement, or if unreasonable burden or
excessive liability shall have been imposed with respect to
the Project or the operation thereof, including without
limitation federal, state or other ad valorem, property,
income or other taxes not being imposed on the date of this
Agreement other than ad valorem taxes presently generally
levied upon privately owned property used for the same general
purpose as the Project.
(d) Changes in the economic availability of raw
materials, operating supplies, energy sources or supplies, or
facilities (including, but not limited to, facilities
17
in connection with the disposal of industrial wastes)
necessary for the operation of the Project shall have occurred
or technological or other changes shall have occurred which
the Borrower cannot reasonably overcome or control and which
in the Borrower's reasonable judgment render the Project
uneconomic.
To exercise such option, the Borrower shall, within 90 days
following the event giving rise to the exercise of that option, or at any time
during the continuation of the condition referred to in clause (d) above, give
notice to the Issuer and the Trustee specifying the date on which the Borrower
will deliver the funds required for such redemption, which date shall be not
more than 90 days from the date such notice is mailed and shall make
arrangements satisfactory to the Trustee for the giving of the required notice
of redemption.
The amount payable by the Borrower in the event of its
exercise of the option granted in this Section shall be the sum of (i) an amount
of money which, when added to the moneys and investments held to the credit of
the Bond Fund, will be sufficient pursuant to Section 5.04 and Article X of the
Indenture to pay, or provide for the payment of, the redemption price of Bonds
on the redemption date and to fully reimburse the Bank and the Participating
Bank with respect to all drawings on the Letter of Credit, such amount to be
paid to the Trustee, plus (ii) an amount of money equal to the Additional
Payments accrued and to accrue until actual final payment and redemption of the
Bonds, such amount or applicable portions thereof to be paid to the Trustee or
to the Persons to whom those Additional Payments are or will be due. The
requirement of clause (ii) above with respect to Additional Payments to accrue
may be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.
Section 6.3. Actions by Issuer. At the request of the Borrower
or the Trustee, the Issuer shall take all steps required of it under the
applicable provisions of the Indenture or the Bonds to effect the redemption of
all or a portion of the Bonds pursuant to this Article.
(End of Article VI)
18
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Each of the following shall
(unless waived by the Trustee) be an Event of Default:
(a) Failure by the Borrower to make or cause to be
made any Loan Payment or Purchase Payment on or prior to the
date on which such payment is due and payable;
(b) Failure by the Borrower to observe and perform
any other agreement, term or condition contained in this
Agreement and continuation of such failure for a period of 30
days after notice thereof shall have been given to the
Borrower by the Issuer or the Trustee, or for such longer
period as the Issuer and the Trustee may agree to in writing;
provided that if the failure is other than the payment of
money and is of such nature that it can be corrected but not
within the applicable period, such failure shall not
constitute an Event of Default so long as the Borrower
institutes curative action within the applicable period and
diligently pursues such action to completion;
(c) The Borrower shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or
custodian or the like of itself or of its property, or (ii)
admit in writing its inability to pay its debts generally as
they become due, or (iii) make a general assignment for the
benefit of creditors, or (iv) be adjudicated a bankrupt or
insolvent, or (v) commence a voluntary case under the United
States Bankruptcy Code, or file a voluntary petition or answer
seeking reorganization, an arrangement with creditors or an
order for relief, or seeking to take advantage of any
insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization, or insolvency proceeding, or action shall be
taken by it for the purpose of effecting any of the foregoing,
or (vi) have instituted against it, without the application,
approval or consent of the Borrower, a proceeding in any court
of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of the Borrower an order for relief or an
adjudication in bankruptcy, reorganization, dissolution,
winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the
Borrower or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by
the Borrower in good faith, the same shall (A) result in the
entry of an order for relief or any such adjudication or
appointment or (B) remain unvacated, undismissed and
undischarged for a period of 60 days;
(d) Any representation or warranty made by the
Borrower herein or any statement in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or with the purchase of the
Bonds shall at any time prove to have been false or misleading
in any material respect when made or given;
(e) For any reason the Bonds are declared due and
payable by acceleration in accordance with Section 7.03 of
the Indenture;
19
(f) The Trustee receives notice from the
Participating Bank (i) stating that an Event of Default as
defined in the Reimbursement Agreement has occurred and is
continuing and (ii) directing the Trustee to call the Bonds
for mandatory purchase or to declare the principal of the
outstanding Bonds immediately due and payable;
(g) The Trustee receives notice from the Bank (i)
stating that an Event of Default as defined in the
Participating Bank Agreement has occurred and is continuing
and (ii) directing the Trustee to call the Bonds for mandatory
purchase or to declare the principal of the outstanding Bonds
immediately due and payable; or
(h) The Trustee receives notice from the Bank prior
to the third Business Day following payment of a drawing under
the Letter of Credit for interest on Bonds which remain
outstanding after the application of the proceeds of such
drawing, stating that the Letter of Credit will not be
reinstated with respect to such interest.
The declaration of an Event of Default under paragraph (c)
above, and the exercise of remedies upon any such declaration, shall be subject
to any applicable limitations of federal bankruptcy law affecting or precluding
that declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.
Section 7.2. Remedies on Default.
(a) Whenever an Event of Default shall have happened and be
subsisting, any one or more of the following remedial steps may be
taken:
(1) If acceleration of the principal amount of the
Bonds has been declared pursuant to Section 7.03 of the
Indenture, the Trustee shall declare all Loan Payments to be
immediately due and payable, whereupon the same shall become
immediately due and payable; and
(2) The Issuer or the Trustee may pursue any and all
remedies now or hereafter existing at law or in equity to
collect all amounts then due and thereafter to become due
under this Agreement or the Letter of Credit or to enforce the
performance and observance of any other obligation or
agreement of the Borrower under this Agreement.
(b) The Borrower covenants that, in case it shall fail to pay
or cause to be paid any Loan Payments or Purchase Payments as and when
the same shall become due and payable whether at maturity or by
acceleration or otherwise, then, upon demand of the Trustee, the
Borrower will pay to the Trustee the whole amount that then shall have
become due and payable hereunder; and, in addition thereto, such
further amounts as shall be sufficient to cover the costs and expenses
of collection, including a reasonable compensation to the Trustee, its
agents and counsel, and any expenses or liabilities incurred by the
Issuer or the Trustee. In case the Borrower shall fail forthwith to pay
such amounts upon such demand, the Trustee shall be entitled and
empowered to institute any actions or proceedings at law or in equity
for the collection of the sums so due and unpaid.
(c) In case there shall be pending proceedings for the
bankruptcy or reorganization of the Borrower under the federal
bankruptcy laws or any other applicable law, or in case a
20
receiver or trustee shall have been appointed for the benefit of the
creditors or the property of the Borrower, the Trustee shall be
entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount due
hereunder, including interest owing and unpaid in respect thereof, and,
in case of any judicial proceedings, to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee allowed in such judicial proceedings
relative to the Borrower, its creditors or its property, and to collect
and receive any moneys or other property payable or deliverable on any
such claims, and to distribute the same after the deduction of its
charges and expenses. Any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized to make such payments to the
Issuer or the Trustee, and to pay to the Issuer or the Trustee any
amount due it for compensation and expenses, including counsel fees
incurred by it up to the date of such distribution.
Notwithstanding the foregoing, the Trustee shall not be
obligated to take any step which in its opinion will or might cause it to expend
money or otherwise incur liability unless and until a satisfactory indemnity
bond has been furnished to the Trustee at no cost or expense to the Trustee. Any
amounts collected as Loan Payments or applicable to Loan Payments and any other
amounts which would be applicable to payment of Bond Service collected pursuant
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in Article X of the Indenture for transfers
of remaining amounts in the Bond Fund.
The provisions of this Section are subject to the further
limitation that the annulment by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to Subsection 7.2(a)(1); provided that
no such waiver or rescission shall extend to or affect any subsequent or other
default or impair any right consequent thereon.
Section 7.3. Remedies Not Exclusive. No remedy conferred upon
or reserved to the Issuer or the Trustee by this 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 Agreement or the Letter of Credit, or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any default shall impair that right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Issuer or the
Trustee to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than any notice required by law or for which
express provision is made herein.
Section 7.4. Payment of Legal Fees and Expenses. If an Event
of Default should occur and the Issuer or the Trustee should incur expenses,
including attorneys' fees, in connection with the enforcement of this Agreement
or the Letter of Credit or the collection of sums due thereunder, the Borrower
shall reimburse the Issuer and the Trustee, as applicable, for the expenses so
incurred, upon demand.
Section 7.5. No Waiver. No failure by the Issuer or the
Trustee to insist upon the strict performance by the Borrower of any provision
hereof shall constitute a waiver of their right to strict performance and no
express waiver shall be deemed to apply to any other existing or subsequent
right to remedy the failure by the Borrower to observe or comply with any
provision hereof.
21
The Issuer and the Trustee may waive any Event of Default
hereunder only with the prior written consent of the Bank and the Participating
Bank.
Section 7.6. Notice of Default. The Borrower shall notify the
Trustee, the Issuer, the Participating Bank and the Bank immediately if it
becomes aware of the occurrence of any Event of Default hereunder or of any
fact, condition or event which, with the giving of notice or passage of time or
both, would become an Event of Default.
(End of Article VII)
22
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Term of Agreement. This Agreement shall be and
remain in full force and effect from the Series Issue Date until such time as
all of the Bonds shall have been fully paid (or provision made for such payment)
pursuant to the Indenture, the Indenture shall have been released pursuant to
Section 10.01 thereof, and all other sums payable by the Borrower under this
Agreement and the Reimbursement Agreement shall have been paid, except for
obligations of the Borrower under Section 5.10, which shall survive any
termination of this Agreement.
Section 8.2. Notices. All notices, certificates, requests or
other communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage prepaid,
and addressed as follows:
If to the Borrower: Neose Technologies, Inc.
102 Witmer Road
Horsham, PA 19044
Attention: P. Sherrill Neff, President
with a copy to: Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, PA 19103
Attention: Lynn Axelroth, Esquire
If to the Issuer: Montgomery County Industrial
Development Authority
3 Stoney Creek Office Center
151 West Marshall Street
Norristown, PA 19401
Attention: Gerald Birkelbach,
Executive Director
If to the Trustee: Dauphin Deposit Bank and Trust Company, Trustee
213 Market Street
Harrisburg, PA 17101
Attention: Corporate Trust Services Department,
M/C #001-01-02
If to the Remarketing Agent: CoreStates Capital Markets,
a Division of CoreStates Bank, N.A.
600 Penn Street, 2nd Floor
Reading, PA 19602
Attention: Ms. Angel Helm
Senior Vice President
23
If to the Bank: CoreStates Bank, N.A.
FC1-1-5-22
Broad & Chestnut Streets
Philadelphia, PA 19107
Attention: Global Financial Institutions
If to the Participating Bank: Jefferson Bank
1607 Walnut Street
Philadelphia, PA 19103
Attention: _____________________
The Borrower, the Issuer, the Trustee, the Bank, the Participating Bank and the
Remarketing Agent, by notice given hereunder to the Persons listed above, may
designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent.
Section 8.3. Limitation of Liability; No Personal Liability.
In the exercise of the powers of the Issuer, the Trustee or the Remarketing
Agent hereunder or under the Indenture, including without limitation the
application of moneys and the investment of funds, neither the Issuer, the
Trustee, the Remarketing Agent nor their members, directors, officers, employees
or agents shall be accountable for any action taken or omitted by any of them in
good faith and with the belief that it is authorized or within the discretion or
rights or powers conferred. The Issuer, the Trustee, the Remarketing Agent and
their members, directors, officers, employees and agents shall be protected in
acting upon any paper or document believed to be genuine, and any of them may
conclusively rely upon the advice of counsel and may (but need not) require
further evidence of any fact or matter before taking any action. In the event of
any default by the Issuer hereunder, the liability of the Issuer shall be
enforceable only out of the Issuer's interest under this Agreement and there
shall be no other recourse for damages against the Issuer, its members,
directors, officers, attorneys, agents and employees, or any of the property now
or hereafter owned by it or them. All covenants, obligations and agreements of
the Issuer contained in this Agreement or the Indenture shall be effective to
the extent authorized and permitted by applicable law. No such covenant,
obligation or agreement shall be deemed to be a covenant, obligation or
agreement of any present or future member, director, officer, agent or employee
of the Issuer, and no official executing the Bonds shall be liable personally on
the Bonds or be subject to any personal liability or accountability by reason of
the issuance thereof or by reason of the covenants, obligations or agreements of
the Issuer contained in this Agreement or the Indenture.
Section 8.4. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding in accordance with its terms upon the Issuer,
the Borrower and their respective successors and assigns; provided that this
Agreement may not be assigned by the Borrower (except in connection with a sale
or transfer of assets pursuant to Section 5.1 or in compliance with Section 8.9)
and may not be assigned by the Issuer except to the Trustee pursuant to the
Indenture or as otherwise may be necessary to enforce or secure payment of Bond
Service. This Agreement may be enforced only by the parties, their assignees and
others who may, by law, stand in their respective places. In addition, the
Remarketing Agent, the Bank and Participating Bank are hereby explicitly
recognized as third party beneficiaries of this Agreement.
Section 8.5. Amendments. Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Bonds and unless and until all conditions provided
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for in the Indenture for release of the Indenture having been met, this
Agreement may not be effectively amended, modified or terminated except by an
instrument in writing signed by the Borrower and the Issuer, consented to by the
Trustee, and in accordance with the provisions of Article IX of the Indenture,
as applicable.
Section 8.6. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute one and the same instrument.
Section 8.7. Severability. If any provision of this Agreement
is determined by a court to be invalid or unenforceable, such determination
shall not affect any other provision hereof, each of which shall be construed
and enforced as if the invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision shall be deemed to be
effective, operative and entered into in the manner and to the full extent
permitted by applicable law.
Section 8.8. Governing Law. This Agreement shall be deemed to
be a contract made under the laws of the Commonwealth of Pennsylvania and for
all purposes shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania.
Section 8.9. Assignment. The Borrower shall not assign this
Agreement or any interest of the Borrower herein, either in whole or in part,
without the prior written consent of the Trustee, which consent shall be given
if the following conditions are fulfilled: (i) the assignee assumes in writing
all of the obligations of the Borrower hereunder; (ii) neither the validity nor
the enforceability of this Agreement shall be adversely affected by such
assignment; (iii) the Project shall continue in the opinion of Bond Counsel to
be a "project" as such term is defined in the Act after such assignment; and
(iv) consent by the Issuer, which consent shall not be unreasonably withheld.
For purposes of this Section, no foreclosure by the Participating Bank, or
conveyance in lieu thereof, or other transfer to the Participating Bank or an
affiliate of Participating Bank, shall, of itself, be deemed an assignment for
purposes of this Section or a sale, transfer, assignment or other disposition
for purposes of Section 5.2. Subject to the foregoing, the terms "Issuer",
"Borrower", "Trustee" and "Remarketing Agent" shall, where the context requires,
include the respective successors and assigns of such persons. No assignment
pursuant to this Section shall release the Borrower from its obligations under
this Agreement, unless the Participating Bank has consented to such release.
Section 8.10. Receipt of Indenture. The Borrower hereby
acknowledges that it has received an executed copy of the Indenture and is
familiar with its provisions, and agrees that it is subject to and bound by the
terms thereof and it will take all such actions as are required or contemplated
of it under the Indenture to preserve and protect the rights of the Trustee and
of the Holders and the Bank and the Participating Bank thereunder and that it
will not take any action which would cause a default thereunder. Any redemption
of Bonds prior to maturity shall be effected as provided in the Indenture.
(End of Article VIII)
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IN WITNESS WHEREOF, the Issuer and the Borrower, intending to
be legally bound, have caused this Agreement to be duly executed in their
respective names, all as of the date first above written.
[SEAL] MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest /s/ Gerald J. Birkelbach By /s/ Sherry Horowitz
--------------------------------- ----------------------------------
Secretary Chairperson
[SEAL] NEOSE TECHNOLOGIES, INC.
Attest /s/ A. Brian Davis By /s/ P. Sherrill Neff
--------------------------------- ----------------------------------
Secretary President
This execution page is part of the Loan Agreement dated as of
March 1, 1997 between Montgomery County Industrial Development Authority and
Neose Technologies, Inc.
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