Exhibit 10.5
REIMBURSEMENT AGREEMENT
Dated as of March 1, 1997
Between
NEOSE TECHNOLOGIES, INC.
and
JEFFERSON BANK
Entered into with regard to ▇▇▇▇▇▇▇▇▇▇ County
Industrial Development Authority's
$8,400,000 Federally Taxable Variable Rate Demand Revenue Bonds (Neose
Technologies, Inc. Project), Series B of 1997
TABLE OF CONTENTS
Page
Recitals.................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................. 2
Section 1.02. Accounting and Commercial Terms.............................. 7
Section 1.03. Rules of Construction; Time of Day.......................... 7
Section 1.04 Security Agreement........................................... 7
ARTICLE II
CREDIT AND REIMBURSEMENT
Section 2.01. Credit....................................................... 8
Section 2.02. Reimbursement and Other Payments to Bank..................... 8
Section 2.03. Payments Under Loan Agreement............................... 12
Section 2.04. Obligations Absolute........................................ 13
Section 2.05. Indemnification............................................. 13
Section 2.06. Liability of Bank........................................... 14
ARTICLE III
SECURITY
Section 3.01. Security and Subrogation under Indenture.................... 15
Section 3.02. Pledge of Rights to Certain Funds and Investments........... 15
Section 3.03. Pledged Bonds............................................... 15
Section 3.04. Mortgage; Security Agreement................................ 16
Section 3.05. Financing Statements........................................ 16
Section 3.06. Custodial Bank Agreement.................................... 16
Section 3.07. Benefit, Security and Subrogation Rights
of Letter of Credit Bank....................... 16
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Closing Fee................................................. 17
Section 4.02. Documentation............................................... 17
Section 4.03. Issuance of Bonds........................................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Existence................................................... 20
Section 5.02. Power, Authorization and No Conflicts....................... 20
Section 5.03. Governmental Authorizations; Permits,
Licenses and Other Approvals................... 20
Section 5.04. Validity and Binding Effect................................. 21
Section 5.05. No Litigation............................................... 21
Section 5.06. No Violations............................................... 21
Section 5.07. Project Compliance.......................................... 21
Section 5.08. No Liens.................................................... 22
Section 5.09. Utilities and Access........................................ 22
Section 5.10. Financial Information....................................... 22
Section 5.11. Taxes....................................................... 23
Section 5.12. ERISA Representations....................................... 23
Section 5.13. Environmental Representations............................... 24
Section 5.14. Representations in Other Documents.......................... 25
ARTICLE VI
GENERAL COVENANTS
Section 6.01. Maintenance of Existence; Mergers........................... 25
Section 6.02. Compliance with Laws........................................ 25
Section 6.03. Maintenance of Governmental Authorizations.................. 25
Section 6.04. Maintenance of Insurance.................................... 26
Section 6.05. Compliance with Bond Documents and Other
Contracts...................................... 26
Section 6.06. Maintenance of Properties................................... 26
Section 6.07. Visitation Rights........................................... 26
Section 6.08. Keeping of Books............................................ 26
Section 6.09. Reporting Requirements...................................... 27
Section 6.10. Payment of Debt............................................. 28
Section 6.11. Payment of Taxes............................................ 28
Section 6.12. Consents Under Bond Documents............................... 28
Section 6.13. Amendments to Bond Documents................................ 28
Section 6.14. Limitation on Conversion to Term Rate....................... 28
Section 6.15. Limitation on Optional Calls................................ 28
Section 6.16. Leases...................................................... 29
Section 6.17. ERISA....................................................... 29
Section 6.18. Environmental Covenants..................................... 30
Section 6.19. Further Assurances.......................................... 31
Section 6.20. Financial Covenants......................................... 31
Section 6.21. Principal Prepayments....................................... 33
Section 6.22. Working Capital..............................................33
Section 6.23 Deposit Relationship.........................................33
ARTICLE VII
PROJECT FUND AND CONSTRUCTION COVENANTS
Section 7.01. Project Cost Schedule; Application of
Project Fund....................................33
Section 7.02. Requisition Approvals........................................35
Section 7.03. Construction; Completion Date................................35
Section 7.04. Certain Contracts Prohibited.................................36
Section 7.05. Certain Notices..............................................36
Section 7.06. Releases.....................................................36
Section 7.07. Change Orders................................................36
Section 7.08. Builder's Risk, Liability and Workers'
Compensation Insurance..........................37
ARTICLE VII
DEFAULTS AND REMEDIES
Section 8.01. Defaults.................................................... 37
Section 8.02. Remedies.................................................... 40
Section 8.03. Waivers; Consents........................................... 41
Section 8.04. No Waiver; Remedies Cumulative.............................. 42
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices..................................................... 42
Section 9.02. Successors and Assigns...................................... 43
Section 9.03. Survival of Representations, Warranties and
Covenants.......................................43
Section 9.04. Counterparts................................................ 44
Section 9.05. Costs, Expenses and Taxes................................... 44
Section 9.06. Amendments...................................................44
Section 9.07. Severability.................................................44
Section 9.08. Conflicts....................................................44
Section 9.09. Complete Agreement...........................................45
Section 9.10. Governing Law................................................45
Section 9.11. Table of Contents and Headings...............................45
Section 9.12. Participation................................................45
Section 9.13. Judicial Proceedings.........................................46
EXECUTION...................................................................46
EXHIBIT A - Form of Note
EXHIBIT B - Project Description and Cost Schedule
EXHIBIT C - Environmental Matters
EXHIBIT D - Optional Prepayment Schedule
REIMBURSEMENT AGREEMENT
THIS AGREEMENT, made as of March 1, 1997 between NEOSE
TECHNOLOGIES, INC. (the "Borrower"), a corporation organized and existing under
the laws of the State of Delaware, and JEFFERSON BANK (the "Bank"), a banking
institution organized and existing under the laws of the Commonwealth of
Pennsylvania,
W I T N E S S E T H :
▇. ▇▇▇▇▇▇▇▇▇▇ County Industrial Development Authority (the
"Issuer") has issued its Federally Taxable Variable Rate Demand Revenue Bonds
(Neose Technologies, Inc. Project) Series B of 1997, in the aggregate principal
amount of $8,400,000 (the "Bonds") under a Trust Indenture, dated as of March 1,
1997 (the "Indenture") between the Issuer and Dauphin Deposit Bank and Trust
Company, as Trustee (including any successor trustee, the "Trustee").
B. Pursuant to a Loan Agreement, dated as of March 1, 1997
between the Issuer and the Borrower (the "Loan Agreement"), the proceeds of the
Bonds are being applied to finance the acquisition, improvement and equipping of
a facility which will be used for the development of complex carbohydrates for
research and development relating to a variety of health care applications. The
facility consists of a one-story, 45,000 square foot building situated on
approximately 4.0 acres of land, located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ (collectively, the "Project"), to be owned by the Borrower.
Under the Loan Agreement, the Borrower is obligated to make loan payments to the
Trustee in amounts and at times corresponding to the principal and interest debt
service required in respect of the Bonds.
C. In order to facilitate the issuance and sale of the Bonds
and to enhance the marketability of the Bonds, the Issuer has asked CoreStates
Bank, N.A. to issue its Irrevocable Letter of Credit (together with any
amendment thereto and any substitute letter of credit issued by the Letter of
Credit Bank therefor, the "Letter of Credit") to the Trustee authorizing the
Trustee to make one or more draws on CoreStates Bank, N.A., the issuer of the
Letter of Credit or on the issuer of any letter of credit issued in substitution
therefor (the "Letter of Credit Bank") up to an aggregate of $8,579,967.12 (as
reduced and reinstated from time to time in accordance with the provisions of
the Letter of Credit, the "Letter of Credit Amount"), of which originally (i)
$8,400,000 shall be in respect of principal of the Bonds and (ii) $179,967.12
shall be in respect of accrued interest on the Bonds. The purpose of the Letter
of Credit is to provide funds for the payment of principal of and interest on
the Bonds and purchase price of Bonds which have been tendered for purchase
pursuant to the tender option provisions thereof and of the Indenture to the
extent remarketing proceeds or other funds are not available therefor in
accordance with the provisions of the Indenture.
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D. The Letter of Credit Bank will only issue the Letter of
Credit for the account of a banking institution acceptable to the Letter of
Credit Bank. To such end and in order to achieve interest cost savings and other
savings for the Borrower, the Borrower has asked the Bank to enter into a
Participation and Reimbursement Agreement, dated as of March 1, 1997 with the
Letter of Credit Bank (the "Participating Bank Agreement") under which the Bank
will become primarily and unconditionally obligated to reimburse the Letter of
Credit Bank for all drawings under the Letter of Credit and to make certain
other payments to the Letter of Credit Bank.
E. The Bank is willing to enter into the Participating Bank
Agreement for the account of the Borrower upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
undertakings herein set forth and intending to be legally bound, the Borrower
and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms shall have the
meanings specified in the foregoing recitals:
Bank Letter of Credit Amount
Bonds Letter of Credit Bank
Borrower Loan Agreement
Indenture Participating Bank Agreement
Issuer Project
Letter of Credit Trustee
In addition, the following terms shall have the meanings specified in this
Article, unless the context otherwise requires:
"Base Rate" means the rate of interest designated and
established by the Bank, from time to time, with changes effective immediately.
The Base Rate is determined from time to time by the Bank as a means of pricing
some loans to its borrowers and is neither tied to any external rate of interest
or index, nor necessarily reflects the lowest rate of interest actually charged
by the Bank to any particular class or category of customers.
"Bond Documents" means the Bonds, the Indenture, the Loan
Agreement, the Remarketing Agreement and any other agreements or instruments
relating thereto.
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"Bond Pledge Agreement" means the Pledge, Security and
Indemnification Agreement, dated as of March 1, 1997 among the Borrower, the
Letter of Credit Bank and the Bank with respect to Pledged Bonds.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banks located in Philadelphia, Pennsylvania, or any other city
in which the principal corporate trust office of the Trustee or the principal
office of the Bank or the office of the Letter of Credit Bank at which drawing
documents are required to be presented under the Letter of Credit is located are
required or authorized to close or a day on which The New York Stock Exchange is
closed.
"Change Order" shall have the meaning ascribed to such term in
Section 7.07.
"Closing Date" means the date of execution and delivery of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder, including any amendments and successor
provisions thereto.
"Completion Date" shall have the meaning ascribed to such term
in Section 7.03.
"Contamination" means the presence of Hazardous Substances at
the Premises, or arising from the Premises or activities at the Premises, which
may require remediation under any applicable law.
"Custodial Bank" shall have the meaning ascribed to such
phrase in Section 3.06 hereof.
"Custodial Bank Agreement" shall have the meaning ascribed to
such phrase in Section 3.06 hereof.
"Debt" of any Person means: (a) all obligations of such Person
for borrowed money; (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (c) all obligations of such Person
upon which interest charges are customarily paid; (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person; (e) all obligations of such Person
issued or assumed as deferred construction price for completed work or deferred
purchase price of property or services (other than trade payables incurred in
the ordinary course of business but only if and so long as the same are payable
on customary trade terms); (f) all Guarantees by such Person of Debt of others;
(g) all capital lease obligations of such Person; (h) all obligations for
unfunded pension liabilities to the extent that the projected benefit
obligations of all employee pension plans maintained by such Person or any ERISA
Affiliate exceeds the fair value of the plan assets of such plans, as determined
in accordance with GAAP; and (i) all reimbursement obligations of such Person in
respect of letters of credit and similar instruments.
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"Default" means an event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default.
"Environmental Laws" means all statutes, ordinances,
regulations, orders, permits and requirements of common law concerning
environmental matters and relating to: (i) activities at the Premises; (ii)
repairs or construction of any improvements at the Premises; (iii) handling of
any materials at the Premises; (iv) discharges to the air, soil, surface water
or ground water from any facilities at the Premises; and (v) storage, treatment
or disposal (on-site or off-site) of any waste at or connected with any activity
at the Premises.
"ERISA" shall have the meaning ascribed to such term in
Section 5.12.
"ERISA Affiliate" shall have the meaning ascribed to such term
in Section 5.12.
"Event of Default" shall have the meaning ascribed to such
term in Section 8.01.
"Expiration Date" shall have the meaning ascribed to such term
in the Letter of Credit.
"Final Payment Drawing" shall have the meaning ascribed to
such term in the Letter of Credit.
"Fiscal Year" means the annual accounting year of the
Borrower, which currently begins on January 1 in each calendar year.
"GAAP" means generally accepted accounting principles
consistently applied.
"General Contract" means the construction contract between the
Borrower and the General Contractor for the construction of the Improvements.
"General Contractor" means ▇▇▇▇▇ & Leighton, Inc., the general
contractor for the construction of the Improvements pursuant to the General
Contract.
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or becoming surety for or
having the economic effect of guaranteeing or becoming surety for any Debt of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including without limitation: (a) any obligation of such Person,
direct or indirect: (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such Debt; (ii) to lease or
purchase property or purchase services for the purpose of assuring the owner of
such Debt of the payment of such Debt; or (iii) to maintain working capital,
equity capital or other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Debt; and (b)
any Lien (or existing right to be secured by a Lien) on property of such Person
to secure Debt
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of others, whether or not such Debt has been assumed by such Person; provided
that the term Guarantee shall not include endorsements for collection or
deposit, in either case, in the ordinary course of business. For purposes of
this Agreement, the amount of a Guarantee shall be the amount of the Debt
guaranteed thereby.
"Hazardous Substances" means: (a) "hazardous substances" as
defined in or pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. (section)9601(14)), as amended from time to time,
and the regulations promulgated thereunder; (b) "regulated substances" within
the meaning of subtitle I of the Resource Conservation and Recovery Act (42 U.S.
C. (section)6991(2)), as amended from time to time, and the regulations
promulgated thereunder; (c) "contaminants" or "hazardous substances" as defined
in or pursuant to the Pennsylvania Hazardous Sites Cleanup Act (35 P.S.
(section)6020.101 et seq.), as amended from time to time, and the regulations
promulgated thereunder; (d) "hazardous wastes" as defined pursuant to the
Pennsylvania Solid Waste Management Act (35 P.S. (section)6018.101 et seq.), as
amended from time to time, and the regulations promulgated thereunder; (e) any
other substances which may be the subject of liability pursuant to Sections 316
or 401 of the Pennsylvania Clean Streams Law (35 P.S. (section)691.1 et seq.),
as amended from time to time, and the regulations promulgated thereunder; (f)
any "hazardous substances", "hazardous wastes", "hazardous materials", "medical
wastes" or other substances as defined in or prohibited by or regulated pursuant
to any federal, state or local law relating to environmental matters, as amended
from time to time, and regulations promulgated thereunder; (g) any substance the
presence of which on the applicable property is prohibited by or regulated
pursuant to law similar to those set forth in this definition; and (h) any other
substance which by law requires special handling in its collection, storage,
treatment or disposal.
"Improvements" means the building and the renovations and
improvements thereto included in the Project.
"Interest Component" shall have the meaning ascribed to such
term in the Letter of Credit.
"Interest Drawing" shall have the meaning ascribed to such
term in the Letter of Credit.
"Lien" means any lien (statutory or otherwise), security
interest, mortgage, deed of trust, pledge, hypothecation, assignment (for the
purpose of providing security), deposit arrangement, encumbrance, preference,
priority or other security or preferential arrangement of any kind or nature
whatsoever (including without limitation any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction).
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"Liquidity Drawing" shall have the meaning ascribed to such
term in the Letter of Credit.
"Mortgage" shall have the meaning ascribed to such term in
Section 3.04.
"Note" shall have the meaning ascribed to such term in Section
2.01(b).
"Participating Banks" shall have the meaning ascribed to such
term in Section 9.12.
"PBGC" shall have the meaning ascribed to such term in Section
5.12.
"Permitted Liens" shall have the meaning ascribed to such term
in Section 5.08.
"Person" means any individual, for-profit or nonprofit
corporation, partnership, joint venture, association, joint-stock company,
estate, trust, unincorporated organization, governmental body or any agency or
political subdivision thereof, or other legal entity.
"Plans" means the plans, drawings and specifications prepared
for the General Contractor for the Improvements delivered to the Bank pursuant
to Section 7.01(a), as modified by Change Orders effected in accordance with
Section 7.07.
"Pledged Bonds" shall have the meaning ascribed to such term
in Section 3.03.
"Premises" means the real estate located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, together with all improvements located thereon, now or in
the future, all of which is more fully described in the Mortgage.
"Principal Drawing" shall have the meaning ascribed to such
term in the Letter of Credit.
"Project Cost Schedule" shall have the meaning ascribed to
such term in Section 7.01.
"Project Fund" shall have the meaning ascribed to such term in
the Indenture.
"Remarketing Agent" means CoreStates Capital Markets, a
division of CoreStates Bank, N.A. and its successors and assigns as Remarketing
Agent under the Indenture.
"Remarketing Agreement" means the Remarketing Agreement, dated
as of March 1, 1997 between the Remarketing Agent and the Borrower relating to
the Remarketing Agent's duties under the Indenture.
"Security Agreement" shall have the meaning ascribed to such
term in Section 3.04.
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"Security Documents" means the Bond Pledge Agreement, the
Mortgage, the Security Agreement, the financing statements and continuation
statements delivered pursuant to Section 3.05, the Custodial Bank Agreement and
any other instruments delivered to the Bank from time to time to guarantee
and/or secure obligations of the Borrower under this Agreement or the Note.
"Series A Bonds" shall have the meaning ascribed to such
phrase in Section 6.20.
"Series A Reimbursement Agreement" shall have the meaning
ascribed to such phrase in Section 6.20.
"Standby Letter of Credit", "Standby Bank" and "Standby
Reimbursement Agreement" shall have the meanings ascribed to such terms in
Section 2.02(d).
"Term Rate" shall have the meaning ascribed to such term in
the Indenture.
"Unremarketed Tendered Bonds" means Bonds which: (a) have been
tendered for purchase pursuant to the tender option provisions of the Bonds and
the Indenture; and (b) have not been successfully remarketed by the Remarketing
Agent prior to 10:00 a.m. on the date of purchase thereof pursuant to such
tender.
Section 1.02. Accounting and Commercial Terms. All accounting
terms used but not otherwise defined herein, shall have the respective meanings
generally accorded to them under GAAP. All terms used but not otherwise defined
herein which are defined in the Uniform Commercial Code of any applicable state
relating to secured transactions shall have the respective meanings assigned to
them therein.
Section 1.03. Rules of Construction; Time of Day. In this
Agreement, unless otherwise indicated: (i) defined terms may be used in the
singular or the plural and the use of any gender includes all genders; (ii) the
words "hereof", "herein", "hereto", "hereby" and "hereunder" refer to this
entire Agreement (including all Schedules and Exhibits hereto); and (iii) all
references to particular Articles, Sections, Schedules or Exhibits are
references to the Articles, Sections, Schedules or Exhibits of this Agreement
unless otherwise specified. References to any time of the day in this Agreement
shall, unless otherwise specified, refer to eastern standard time or eastern
daylight saving time, as in effect in Philadelphia, Pennsylvania on such day.
Section 1.04. Security Agreement. The Borrower agrees that
with respect to personal property constituting security in this Agreement,
including, but not limited to the personal property described in Sections 6.20
and 6.21 hereof, the Bank shall have all of the rights and remedies of a secured
party under the Pennsylvania Uniform Commercial Code.
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ARTICLE II
CREDIT AND REIMBURSEMENT
Section 2.01. Credit.
(a) Participating Bank Agreement. The Borrower hereby
requests the Bank to enter into the Participating Bank Agreement with the Letter
of Credit Bank. At the request and for the account of the Borrower and subject
to the conditions precedent hereinafter set forth, the Bank will enter into the
Participating Bank Agreement with the Letter of Credit Bank on the Closing Date.
The Borrower hereby acknowledges and agrees that: (i) the Borrower has received
copies of the Participating Bank Agreement and the Letter of Credit and is
familiar with their terms; (ii) the Borrower will be obligated under this
Agreement to promptly reimburse the Bank for all advances made by the Bank to
the Letter of Credit Bank under the Participating Bank Agreement in accordance
with the terms of this Agreement; (iii) the Borrower will take all action
required on its part to comply with the terms of the Participating Bank
Agreement; and (iv) the Bank agrees not to consent to any amendments to the
Participating Bank Agreement to the material detriment of the Borrower without
the Borrower's prior written consent.
(b) Note. Each drawing under the Letter of Credit for which
the Bank is obligated to reimburse the Letter of Credit Bank shall constitute a
principal loan advance in the amount of such drawing (regardless of the purpose
of such drawing) by the Bank to the Borrower evidenced by this Agreement and by
the Borrower's Note, dated as of the Closing Date in the stated principal amount
of $8,579,967.12 (the "Note"), which the Borrower shall execute and deliver to
the Bank in the form of Exhibit A. Each such loan advance shall be payable by
the Borrower to the Bank, with interest, as described in Section 2.02(a). The
principal of the Note may be advanced, repaid and readvanced on a revolving
basis in accordance with this Agreement. The Note shall be retained by the Bank
until such time as no further credit is available to the Trustee under the
Letter of Credit and all amounts payable hereunder and under the Note have been
paid in full with interest.
Section 2.02. Reimbursement and Other Payments to Bank.
(a) Reimbursement Payments and Interest. The Borrower
hereby agrees to pay or cause to be paid to the Bank:
(1) a sum equal to each commitment fee payable by the
Bank to the Letter of Credit Bank under Section 2.5 of the
Participating Bank Agreement, on the earlier of: (i) the day such
commitment fee becomes due and payable by the Bank; or (ii) the day
such commitment fee is actually paid by the Bank;
(2) a sum equal to each amount drawn under the Letter of
Credit by an Interest Drawing, a Principal Drawing or a Final
Payment Drawing, on the
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earlier of: (i) the day reimbursement for such amount becomes due
and payable by the Bank to the Letter of Credit Bank under Section
2.2 of the Participating Bank Agreement or any other provision of
the Participating Bank Agreement; or (ii) the day reimbursement for
such amount is actually made by or on behalf of the Bank to the
Letter of Credit Bank;
(3) a sum equal to each amount drawn against the
Interest Component of the Letter of Credit Amount by a Liquidity
Drawing: (A) in the case of any such amount drawn on an Interest
Payment Date (as defined in the Indenture) of the Bonds being
purchased with the proceeds of such Liquidity Drawing, on the same
Business Day that such amount is so drawn; and (B) in all other
cases, on the first to occur of: (i) the first Business Day of the
first calendar month following the calendar month in which said
amount is so drawn; (ii) the date on which the Bonds purchased with
the proceeds of such Liquidity Drawing are remarketed by the
Remarketing Agent and the proceeds thereof delivered to the Trustee;
(iii) the date on which the Bonds purchased with the proceeds of
such Liquidity Drawing are redeemed or otherwise paid in full; or
(iv) the Expiration Date;
(4) a sum equal to each amount drawn against the
Principal Component of the Letter of Credit Amount by a Liquidity
Drawing, on the first to occur of: (i) the date on which the Bonds
purchased with the proceeds of such Liquidity Drawing are remarketed
by the Remarketing Agent and the proceeds thereof are delivered to
the Trustee; (ii) the date on which the Bonds purchased with the
proceeds of such Liquidity Drawing are redeemed or otherwise paid in
full; or (iii) the Expiration Date;
(5) a sum equal to each drawing fee and each transfer
fee payable by the Bank to Letter of Credit Bank under Section 2.6
of the Participating Bank Agreement, on the day that such drawing
fee or transfer fee becomes due and payable by the Bank;
(6) a sum equal to each amount of costs, fees or
expenses incurred by or imposed on the Letter of Credit Bank and
payable by the Bank to the Letter of Credit Bank under Section 9.3
of the Participating Bank Agreement, on the day that such amount
becomes due and payable by the Bank;
(7) a sum equal to each other amount payable by the Bank
to the Letter of Credit Bank under Section 4.4 or 8.4 or any other
Section of the Participating Bank Agreement, on the day that such
amount becomes due and payable by the Bank; and
(8) a sum equal to each amount of interest payable by
the Bank to the Letter of Credit Bank under Section 2.3 or 4.5 of
the Participating Bank Agreement, on the earlier of: (i) the day
such interest becomes due and payable by the Bank; or (ii) the day
such interest is actually paid by the Bank.
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Each sum payable to the Bank under this Section 2.02(a) shall bear interest, in
the case of any sum payable under Section 2.02(a)(2), (3) or (4) from the date
the corresponding amount is drawn under the Letter of Credit until such sum is
paid in full and in the case of any sum payable under Section 2.02(a)(1), (5),
(6), (7) or (8) from the date such sum is due until such sum is paid in full (it
being understood and agreed that any sum paid after 3:00 p.m. on a Business Day
shall bear interest as if it was paid at 9:00 a.m. on the next following
Business Day), at a fluctuating rate per annum (computed for the actual number
of days elapsed, based on a 360-day year) equal to one percent (1.0%) per annum
above the Base Rate; provided that if any such sum or interest thereon or any
other amount payable by the Borrower under this Agreement or the Note is not
paid within 10 days of the date such sum, interest or other amount is due and
payable to the Bank under this Agreement or the Note, after written notice has
been sent by the Bank to the Borrower, then such sum shall thereafter bear
interest at a fluctuating rate per annum (computed for the actual number of days
elapsed, based on a 360-day year) equal to five percent (5.0%) per annum above
the Base Rate until such sum or interest and all other amounts due and payable
under this Agreement have been paid in full. All interest accruing on amounts
payable under Section 2.02(a)(2) shall be payable on the date the respective
amount is paid and otherwise on demand. All interest accruing on amounts payable
under Section 2.02(a)(3) shall be payable on the first Business Day of each
calendar month after the date of the corresponding drawing is honored under the
Letter of Credit and on the date the respective amount is paid. All other
interest accruing pursuant to this Section 2.02(a) shall be due and payable on
demand. All payments under this Section 2.02(a) shall be applied first to the
payment of interest due and payable under this Section 2.02(a) and then to the
reduction of the principal balance of sums due and payable under this Section
2.02(a).
(b) Intentionally Omitted.
(c) Commitment Fees. On the Closing Date and quarterly on
each June 1, September 1, December 1 and March 1 thereafter so long as any
credit remains available to the Trustee under the Letter of Credit, the Borrower
shall pay to the Bank a commitment fee computed in advance at the rate of one
percent (1.0%) per annum (i.e. one quarter of one percent (.25%) per quarter) of
the sum of: (i) the Letter of Credit Amount as of the first day of such period;
plus (ii) the aggregate amount of any drawings theretofore honored by the Letter
of Credit Bank in respect of which the Letter of Credit Bank may thereafter be
required to reinstate the Letter of Credit pursuant to the terms thereof.
Computations of commitment fees to be paid to the Bank under this Section shall
be for the actual number of days in the applicable period, based on a 360-day
year. There shall be no reduction or refund of any portion of any such
commitment fee in the event the Letter of Credit expires or is drawn upon,
reduced (automatically or otherwise), or otherwise modified during the quarterly
period in respect of which a commitment fee is computed.
-10-
On the Closing Date and quarterly on each June 1,
September 1, December 1 and March 1 thereafter so long as any credit remains
available to the Trustee under the Letter of Credit, the Borrower shall pay to
the Bank for the benefit of the Letter of Credit Bank a commitment fee computed
in advance at the rate of one quarter percent (.25%) per annum (i.e. one
sixteenth of one percent (1/16%) per quarter) of the sum of: (i) the Letter of
Credit Amount as of the first day of such period; plus (ii) the aggregate amount
of any drawings theretofore honored by the Letter of Credit Bank in respect of
which the Letter of Credit Bank may thereafter be required to reinstate the
Letter of Credit pursuant to the terms thereof. Computations of commitment fees
to be paid to the Letter of Credit Bank under this Section shall be for the
actual number of days in the applicable period, based on a 360-day year. Except
as set forth below, there shall be no reduction or refund of any portion of any
such commitment fee in the event the Letter of Credit expires or is drawn upon,
reduced (automatically or otherwise) or otherwise modified during the quarterly
period in respect of which a commitment fee is computed.
The Bank and the Letter of Credit Bank agree to
reimburse a pro rata portion of Commitment Fees paid by the Borrower in advance,
if subsequent to any such quarterly payments, but in the period for which the
payments were made, the Letter of Credit is terminated by deliverying of a
notice in the form of Annex 7 to the Letter of Credit.
(d) Standby Letter of Credit Costs. In the event that the
Bank is required to cause a standby letter of credit (a "Standby Letter of
Credit") of another bank (the "Standby Bank") to be delivered to the Letter of
Credit Bank pursuant to Section 6.09 of the Participating Bank Agreement to
secure the Bank's obligations thereunder, the Borrower shall reimburse the Bank
on demand, from time to time, for any and all reimbursement payments, interest
payments, commitment fees, charges and other costs (including reasonable fees
and expenses of counsel for the Standby Bank) paid or incurred by the Bank under
the related reimbursement agreement between the Bank and the Standby Bank (the
"Standby Reimbursement Agreement") or otherwise in connection with the issuance
or maintenance of or any drawing on the Standby Letter of Credit.
(e) Increased Costs. If after the Closing Date any
enactment, promulgation or adoption of or change in any applicable foreign or
domestic law, regulation or rule or in the interpretation or administration
thereof by any court, administrative or governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank (or any controlling affiliate) with any guideline,
request or directive issued after the date hereof (whether or not having the
force of law) of any such authority, central bank or comparable agency, shall
either: (i) impose, modify or deem applicable any reserve, special deposit,
insurance assessment or similar requirement (including without limitation a
guideline, request or directive which affects the manner in which the Bank
allocates capital resources to its commitments and/or risks, including its
obligations and/or risks under the Participating Bank Agreement, this Agreement
or the Note); (ii) affect the amount of capital required or expected to be
maintained the Bank (or any controlling affiliate); (iii) subject the Bank to
any tax, levy, impost, duty, deduction, withholding or other
-11-
charge or change the basis of taxation of the Bank (other than a change in a
rate of tax based on income of the Bank); or (iv) impose on the Bank any other
condition regarding this Agreement, the Note or the Security Documents and the
result of any event referred to in clause (i), (ii), (iii) or (iv) of this
sentence shall be to increase the direct or indirect cost to the Bank of
entering into or maintaining the Participating Bank Agreement, of agreeing to
make, making or maintaining the loans evidenced by the Note or of funding or
maintaining the obligations and/or risks of the Bank under this Agreement or the
Note or to reduce the amounts receivable by the Bank hereunder or under the Note
or to reduce the rate of return on the capital of the Bank (or any controlling
affiliate) in connection with the Participating Bank Agreement, this Agreement
or the Note (which increase in cost, reduction in amounts receivable or
reduction in rate of return shall be determined by the Bank's reasonable
allocation of such cost increase, reduction in amounts receivable or reduction
in rate of return resulting from such event), then within 15 Business Days after
demand by the Bank accompanied by the related certificate described in the last
sentence of this Section, the Borrower shall pay to the Bank, from time to time,
as specified by the Bank, additional amounts that in the aggregate shall be
sufficient to compensate the Bank for such increased cost, reduction in amounts
receivable or reduction in rate of return. A certificate as to such increased
cost, reduction in amounts receivable or reduction in rate of return submitted
by the Bank to the Borrower containing an explanation of such increased cost,
reduction in amounts receivable or reduction in rate of return and the manner of
calculation thereof shall, in absence of manifest error, be conclusive and
binding for all purposes.
(f) General Interest Accrual. Except as otherwise provided
in Section 2.02(a), all payments to the Bank under this Agreement (including
without limitation all payments becoming due under Sections 2.02(c), 2.02(d) and
2.02(e)) shall be accompanied by interest thereon, from the date such payments
become due until they are paid in full, at a fluctuating rate per annum
(computed for the actual number of days elapsed, based on a 360-day year) equal
to one percent (1.0%) per annum above the Base Rate; provided that if any amount
that is not paid within 10 days of the date such amount is due and payable to
the Bank under this Agreement after written notice has been sent by the Bank to
the Borrower, then (except as otherwise provided in Section 2.02(a)) all amounts
payable pursuant to this Agreement shall thereafter bear interest at a
fluctuating rate per annum (computed for the actual number of days elapsed,
based on a 360-day year) equal to five percent (5.0%) per annum above the Base
Rate, until all amounts due and payable pursuant to this Agreement have been
paid in full.
(g) Place of Payment. All payments by the Borrower to the
Bank under this Agreement shall be made in lawful currency of the United States
at the Bank's office at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or at such other address and to the
attention of such other person as the Bank may stipulate by written notice to
the Borrower.
Section 2.03. Payments Under Loan Agreement. The Borrower
shall make all Loan Payments, Purchase Payments and Additional Payments (as
defined in the Loan Agreement) as and when due under the Loan Agreement. In
furtherance of the foregoing, the Borrower shall make all Loan Payments to the
Bank at least one Business Day prior to the corresponding due dates thereof
under the Loan Agreement.
-12-
Section 2.04. Obligations Absolute. The obligations of the
Borrower under this Article shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including without limitation the following
circumstances: (i) any lack of validity or enforceability of the Letter of
Credit, the Participating Bank Agreement, the Standby Letter of Credit, the
Standby Reimbursement Agreement, the Bond Documents or any other agreement or
document relating thereto; (ii) any amendment or waiver of or any consent to or
departure from the Letter of Credit, the Participating Bank Agreement, the
Standby Letter of Credit, the Standby Reimbursement Agreement, the Bond
Documents or any document relating thereto; (iii) the existence of any claim,
set-off, defense or other right which the Borrower may have at any time against
the Letter of Credit Bank or the Trustee (or any persons or entities for whom
the Letter of Credit Bank or the Trustee may be acting), the Remarketing Agent,
the Bank or any other person or entity, whether in connection with this
Agreement, the transactions described herein or any unrelated transaction; or
(iv) any of the circumstances contemplated in clauses (1) through (7),
inclusive, of Section 2.06(a). The Borrower understands and agrees that no
payment by it under any other agreement (whether voluntary or otherwise) shall
constitute a defense to its obligations hereunder, except to the extent that the
Bank has been indefeasibly paid in full or indefeasibly credited for such
payment.
Section 2.05. Indemnification. In addition to any and all
rights of the Bank to reimbursement, indemnification or subrogation or any other
rights of the Bank at law or in equity, to the extent permitted by applicable
law, the Borrower hereby indemnifies and holds harmless the Bank (and its
directors, officers, employees and agents) from and against any and all claims,
damages, losses, liabilities, costs or expenses (including interest, penalties
and reasonable attorneys' fees for counsel of the Bank's choice) whatsoever
which the Bank may incur (or which may be claimed against the Bank by any Person
whatsoever) by reason of or in connection with: (a) the issuance or a transfer
of, or payment or failure to pay under, the Letter of Credit; (b) the entering
into, or payment or failure to pay under, the Participating Bank Agreement or
the Standby Reimbursement Agreement; (c) any breach by the Borrower or the
Issuer of any representation, warranty, covenant, term or condition in, or the
occurrence of any default under, this Agreement, the Security Documents or the
Bond Documents, including all reasonable fees or expenses resulting from the
settlement or defense of any claims or liabilities arising as a result of any
such breach or default; and (d) involvement of the Bank in any legal suit,
investigation, proceeding, inquiry or action as a consequence, direct or
indirect, of the Bank's entering into this Agreement, the Participating Bank
Agreement, the Standby Reimbursement Agreement or any other event or transaction
contemplated by any of the foregoing; provided the Borrower shall not be
required to indemnify the Bank for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the willful
misconduct or negligence of the Bank. Nothing in this Section is intended to
limit the Borrower's reimbursement and interest payment obligations contained in
Section 2.02(a). The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
-13-
Section 2.06. Liability of Bank.
(a) As between the Borrower and the Bank, the Borrower
assumes all risks of the acts or omissions of the Trustee, the Letter of Credit
Bank or the Standby Bank with respect to the Letter of Credit, the Participating
Bank Agreement or the Standby Reimbursement Agreement. Neither the Bank nor any
of its officers or directors shall be liable or responsible for: (1) the use
which may be made of the Letter of Credit or the Standby Letter of Credit or for
any acts or omissions of the Trustee or the Letter of Credit Bank in connection
therewith or with the Participating Bank Agreement; (2) the form, validity,
sufficiency, accuracy or genuineness of any documents (including without
limitation any documents presented under the Letter of Credit, the Participating
Bank Agreement or the Standby Letter of Credit), or of any statement therein or
endorsement thereon, even if any such documents, statements or endorsements
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent, forged, inaccurate or untrue; (3) the payment by the Letter of
Credit Bank, the Bank or the Standby Bank against presentation of documents
which do not comply with the terms of the Letter of Credit, the Participating
Bank Agreement or the Standby Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit,
the Participating Bank Agreement or the Standby Letter of Credit, or any other
failure by the Trustee, the Letter of Credit Bank or the Standby Bank to comply
fully with conditions required in order to effect or honor a drawing under the
Letter of Credit or the Standby Letter of Credit or in order to entitle the
Letter of Credit Bank or the Standby Bank to payment under the Participating
Bank Agreement or the Standby Reimbursement Agreement; (4) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign the Letter of Credit or the rights or benefit thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (5) errors, omissions, interruptions, losses or
delays in transmission or delivery of any messages by mail, cable, telegraph,
telex, telephone or otherwise; (6) any loss or delay in the transmission or
otherwise of any document or draft required in order to effect a drawing under
the Letter of Credit or the Standby Letter of Credit or in order to entitle the
Letter of Credit Bank or the Standby Bank to payment under the Participating
Bank Agreement or the Standby Reimbursement Agreement; or (7) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, the Participating Bank Agreement, the Standby Letter of Credit or the
Standby Reimbursement Agreement; except only that the Borrower shall have a
claim against the Bank, and the Bank shall be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused by: (i)
the Bank's willful misconduct or gross negligence; or (ii) the Bank's willful
failure to pay under the Participating Bank Agreement or the Standby
Reimbursement Agreement after written demand by the Letter of Credit Bank or the
Standby Bank to the Bank for payment of an amount due and payable under the
Participating Bank Agreement or the Standby Reimbursement Agreement, unless the
Bank in good faith believes that it is prohibited by law or other legal
authority from making such payment.
(b) Except for the Bank's payment obligations under the
Participating Bank Agreement and the Standby Reimbursement Agreement, the Bank
shall have no liability
-14-
to the Borrower or any other person as a result of any reduction of the credit
rating of the Bank or any deterioration in the Bank's financial condition. No
reduction of the credit rating of the Bank or any deterioration in the Bank's
financial condition shall reduce or in any way diminish the obligations of the
Borrower to the Bank under this Agreement, including without limitation the
Borrower's obligation to pay commitment fees to the Bank and to reimburse the
Bank for any amounts paid to the Letter of Credit Bank or the Standby Bank.
ARTICLE III
SECURITY
Section 3.01. Security and Subrogation under Indenture. The
Borrower and the Bank intend that: (i) the Bank will have the security and
benefit of the Bond Documents as provided in the Indenture; and (ii) in the
event of reimbursement of the Letter of Credit Bank by the Bank for one or more
draws under the Letter of Credit and the application thereof to the payment of
Bonds, the Bank will be subrogated pro tanto to the rights of the Trustee and
the holders of such Bonds and the Letter of Credit Bank in and to all funds and
security held by the Trustee under the Indenture for the payment of the
principal of and interest on such Bonds, including, without limitation, all
project funds, debt service funds and other funds and securities and other
instruments comprising investments thereof. In addition, the Bank shall have any
and all other subrogation rights available to the Bank at law or in equity.
Section 3.02. Pledge of Rights to Certain Funds and
Investments. To secure the Borrower's obligations to the Bank under this
Agreement and the Note, the Borrower hereby pledges to the Bank, and grants to
the Bank a security interest in, all of the Borrower's right, title and interest
in and to all funds and investments thereof now or hereafter held by the Trustee
under the Indenture as security for the payment of the Bonds, including without
limitation any and all project funds, debt service funds and other funds and
securities and other instruments comprising investments thereof and interest and
other income derived therefrom held as security for the payment of the Bonds,
such pledge, assignment and grant being under and subject only to the rights of
the Trustee and the Letter of Credit Bank under the Indenture. The Borrower
covenants and agrees that it will defend the Bank's rights and security
interests created by this Section against the claims and demands of all persons.
In addition to its other rights and remedies under this Agreement and the Bond
Documents, the Bank shall have all the rights and remedies of a secured party
under the Pennsylvania Uniform Commercial Code or other applicable law with
respect to the security interests created by this Section. The Bank's rights
under this Section are in addition to, and not in lieu of, its rights described
in Section 3.01.
Section 3.03. Pledged Bonds. To secure the Bank's
reimbursement and interest payment obligations to the Letter of Credit Bank with
respect to drawings on the Letter of Credit to purchase Bonds pursuant to the
Indenture and to secure the Borrower's obligations to the Bank under this
Agreement and the Note to reimburse the Bank therefor with interest, the
Borrower shall enter into the Bond Pledge Agreement by which it pledges and
assigns to the Letter of
-15-
Credit Bank and the Bank, and grants to the Letter of Credit Bank and the Bank a
security interest in, all of the Borrower's right, title and interest, now owned
or hereafter acquired, in and to any and all Unremarketed Tendered Bonds
(together with all income therefrom and proceeds thereof) purchased pursuant to
the Indenture with funds derived in whole or in part from a drawing under the
Letter of Credit. Unremarketed Tendered Bonds shall be pledged to the Letter of
Credit Bank and the Bank and delivered to and held by the Trustee as agent for
the Letter of Credit Bank and the Bank under the Bond Pledge Agreement.
Unremarketed Tendered Bonds which are so held by the Trustee as agent for the
Letter of Credit Bank and the Bank are herein referred to as "Pledged Bonds".
Any principal of, premium on and interest on Pledged Bonds which becomes due and
payable shall be paid to the Letter of Credit Bank as provided in the Bond
Pledge Agreement. All sums of money so paid to the Letter of Credit Bank in
respect of Pledged Bonds shall be credited against the Bank's obligation to
reimburse the Letter of Credit Bank and the Borrower's obligation to reimburse
the Bank, with interest, in respect of the amount drawn to fund the purchase of
such Pledged Bonds pursuant to the Indenture.
Section 3.04. Mortgage; Security Agreement. To further secure
the Borrower's obligations to the Bank under this Agreement and the Note, the
Borrower shall execute and deliver to the Bank: (a) a Mortgage, Assignment of
Lease and Security Agreement, dated March 20, 1997 covering the Premises (the
"Mortgage"); and (b) a Security Agreement, dated as of March 1, 1997 covering
the fixtures and equipment included in the Project (the "Security Agreement").
Section 3.05. Financing Statements. The Borrower will execute
and deliver such financing statements and continuation statements under the
Pennsylvania Uniform Commercial Code or other applicable law as the Bank may
specify in order to perfect and maintain perfection of the Bank's security
interests under this Agreement, and the Mortgage and the Security Agreement, and
will pay the costs of filing the same in such public offices as the Bank may
designate.
Section 3.06. Custodial Bank Agreement. To further secure the
Borrower's obligations to the Bank under this Agreement and the Note, the
Borrower shall execute and deliver to the Bank a Custodial and Collateral
Security Agreement, dated March 20, 1997 (the "Custodial Bank Agreement"). The
Custodial Bank Agreement shall be entered into with a financial institution
acceptable to the Bank in its sole discretion (the "Custodial Bank").
Section 3.07. Benefit, Security and Subrogation Rights of
Letter of Credit Bank. The Bank and the Borrower hereby agree for the benefit of
the Letter of Credit Bank that: (a) the Letter of Credit Bank shall have the
benefit and security of this Agreement and the Security Documents with respect
to the amounts payable by the Borrower under this Agreement corresponding to the
amounts payable by the Bank to the Letter of Credit Bank under the Participating
Bank Agreement, as if this Agreement and the Security Documents expressly named
the Letter of Credit Bank as an obligee, grantee, secured party and/or other
beneficiary hereunder and thereunder with respect to such amounts; and (b) in
the event of a draw under the Letter of Credit and failure of the Bank to
reimburse the Letter of Credit Bank, with interest,
-16-
in accordance with the Participating Bank Agreement, the Letter of Credit Bank
will be subrogated and succeed to the rights of the Bank in, to and under this
Agreement and the Security Documents with respect thereto; provided that in the
Participating Bank Agreement, the Letter of Credit Bank has agreed not to
exercise any such rights against the Borrower unless the Bank is in default of
the Participating Bank Agreement and the Bonds have been called for mandatory
purchase or accelerated pursuant to the Indenture. In furtherance of the
foregoing, the Borrower agrees for the benefit of the Letter of Credit Bank to
execute and deliver to the Letter of Credit Bank from time to time as requested
by the Letter of Credit Bank such instruments and take such further actions as
the Letter of Credit Bank may request from time to time to confirm and effect
such benefit, security and rights of subrogation and succession.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Intentionally Omitted.
Section 4.02. Documentation. As conditions precedent to the
Bank's entering into the Bank Participation Agreement, the Bank shall have
received each of the following in form and substance satisfactory to the Bank:
(a) Executed copies of this Agreement, the Note, the
Mortgage, the Bond Pledge Agreement, the Security Agreement and the Custodial
Bank Agreement, and true and correct copies of the Bond Documents and all
documentation delivered in connection therewith;
(b) Such financing statements as the Bank may require
pursuant to Section 3.05;
(c) Certified copies of the articles of incorporation, the
bylaws and authorizing resolutions of the Borrower;
(d) A certificate of an officer of the Borrower as of the
Closing Date stating that: (i) the representations and warranties contained in
Article V are true and correct; and (ii) no Default or Event of Default has
occurred and is continuing;
(e) An opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
counsel to the Borrower to the effect that: (1) the Borrower is a duly organized
and validly existing corporation in good standing under the laws of the State of
Delaware with all requisite power and authority to execute, deliver and perform
its obligations under this Agreement, the Note, the Security Documents to which
the Borrower is a party, the Loan Agreement and the Remarketing Agreement and to
acquire, construct and/or equip the Project as contemplated by the Bond
Documents and this Agreement; (2) the Borrower has obtained from the
governmental
-17-
authorities, boards, agencies, courts, officers or commissions having
jurisdiction over the Borrower all approvals, consents, authorizations,
certifications, reviews and other orders that are necessary for the execution,
delivery and performance by the Borrower of its obligations under this
Agreement, the Note, the Security Documents to which the Borrower is a party,
the Loan Agreement and the Remarketing Agreement and the acquisition,
construction and/or equipping of the Project; (3) the form, terms, execution and
delivery of this Agreement, the Note, Security Documents to which the Borrower
is a party, the Loan Agreement and the Remarketing Agreement have been duly
authorized, and all conditions precedent to the execution and delivery of this
Agreement, the Note, the Security Documents to which the Borrower is a party,
the Loan Agreement and the Remarketing Agreement by the Borrower have been
fulfilled; (4) this Agreement, the Note, the Security Documents to which the
Borrower is a party, the Loan Agreement and the Remarketing Agreement constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
other laws affecting the rights of creditors generally and by the application of
general principles of equity; (5) the execution and delivery of and the
performance by the Borrower of its obligations under, this Agreement, the Note,
the Security Documents to which the Borrower is a party, the Loan Agreement and
the Remarketing Agreement will not violate, conflict with or constitute a
default under any provision of the Borrower's articles of incorporation or
bylaws or any law, rule, regulation, order or judgment applicable to the
Borrower or, to the best knowledge of such counsel, any agreement, indenture or
other instrument to which the Borrower is a party or by which it or any of its
properties may be bound; and (6) there is no pending or, to the best knowledge
of such counsel, threatened action, suit, proceeding, inquiry or investigation
before or by any court, governmental agency or arbitrator against or involving
the Borrower which, in any case, might materially and adversely affect the
financial condition or operations of the Borrower, the validity or
enforceability of this Agreement, the Note, the Security Documents or the Bond
Documents or the construction, acquisition or equipping of the Project as
contemplated by the Bond Documents and this Agreement;
(f) Intentionally Omitted;
(g) Intentionally Omitted;
(h) Audited financial statements of the Borrower for the
Fiscal Year ended December 31, 1995;
(i) A prepaid title insurance policy issued by a reputable
carrier satisfactory to the Bank, insuring the Mortgage in an amount acceptable
to the Bank, subject only to such liens and encumbrances as the Bank may
approve, such policy to be on the American Land Title Association Standard Loan
Policy - Revised Coverage, 1992 Form, without a pending disbursements clause,
containing (i) an endorsement against unrecorded easements, discrepancies or
conflicts in boundary lines, shortage in area and encroachments which an
accurate and complete survey would disclose and against loss or damage by reason
of encroachment other than by party walls and (ii) copies of any restrictions or
easements affecting
-18-
the Premises and, with respect to any restrictions, an endorsement that they
have not been violated and that future violation would not work a forfeiture or
reversion of title to the Premises;
(j) Evidence of the insurance required under Section 6.04
hereof and the Security Documents, including certificates of insurance,
mortgagee or lender loss payee endorsements in favor of the Bank, and certified
copies of insurance policies (if and as requested by the Bank); and evidence
that the Premises is not located in a Special Flood Hazard area as defined by
the United States Department of Housing and Urban Development;
(k) A certified legal description and survey of the land
included in the Premises by a surveyor approved by the Bank showing proposed
locations of all present and contemplated improvements, driveways, easements and
any encroachments;
(l) A "Phase I" environmental audit of the Premises, which
shall reveal no violations of any Environmental Laws and no other conditions
which are unacceptable to the Bank in its sole discretion. The Phase I
Environmental Site Audit, dated January 8, 1997, prepared by D.C.R.
Environmental Securities, Inc. is acceptable to the Bank;
(m) An appraisal in compliance with federal and state laws
applicable to the Bank, valuing the Project in an amount satisfactory to the
Bank in its sole discretion;
(n) Intentionally Omitted;
(o) Intentionally Omitted;
(p) Intentionally Omitted;
(q) Such other documents, certificates, approvals,
assurances and opinions as are listed in the closing memorandum filed with the
Trustee in connection with the issuance of the Bonds or as the Bank may
reasonably request.
Section 4.03. Issuance of Bonds. On the Closing Date all
conditions precedent to the issuance and original sale of the Bonds shall have
been satisfied, and the Bonds shall have been duly issued and delivered.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 5.01. Existence. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in the Commonwealth of Pennsylvania.
Section 5.02. Power, Authorization and No Conflicts. The
Borrower has the power and authority and the legal right to own and operate its
properties, to lease the properties it operates under lease, and to carry on its
business as it is now being conducted, and is duly qualified to transact
business as a foreign corporation (or partnership) in good standing under the
laws of each state where its ownership, lease or operation of property or the
conduct of its business requires such qualification, except to the extent that
failure to qualify to transact business would not have a material adverse affect
on the financial condition or operations of the Borrower and would not
materially adversely affect the Borrower's ability to perform its obligations
under this Agreement and the Note and the Security Documents and Bond Documents
to which it is a party. The execution, delivery and performance by the Borrower
of this Agreement and the Note and the Security Documents and the Bond Documents
to which it is a party: (i) are within its power and authority; (ii) have been
duly authorized by all necessary action of the Borrower, and (iii) do not
conflict with, violate or constitute a default under the articles of
incorporation or the bylaws of the Borrower or any law, rule, regulation,
decree, order or judgment applicable to the Borrower or any indenture, mortgage,
agreement, instrument, contract or other restriction binding on or affecting the
Borrower or any of its properties, or result in the creation of any mortgage,
pledge, lien or encumbrance upon any of its properties other than as provided by
the terms thereof.
Section 5.03. Governmental Authorizations; Permits, Licenses
and Other Approvals. To the best of its knowledge, the Borrower has all
licenses, permits, approvals, qualifications, consents and other authorizations
necessary for the lawful conduct of its business and operations wherever now
conducted, pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all governmental authorities having, asserting or claiming
jurisdiction over the Borrower or over any part of its operations, except to the
extent that failure to have the same would not have a material adverse effect on
the financial condition or operations of the Borrower. Copies of all such
licenses, permits, approvals, qualifications, consents and other authorizations
shall be provided to the Bank, upon request. The Borrower is not in default
under any of such license, permit, approval, consent, qualification or
authorization and no event has occurred, and no condition exists, which, with
the giving of notice or the passage of time or both, would constitute a default
thereunder or would result in the suspension, revocation, impairment, forfeiture
or non-renewal of any such license, permit, approval, qualification, consent or
authorization, except to the extent that the same would not have a material
adverse
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effect on the financial condition or operations of the Borrower. The
continuation, validity and effectiveness of all such licenses, permits,
approvals, consents, qualifications and authorizations will not be adversely
affected by the transactions contemplated in this Agreement. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority, regulatory body or court is required for the due execution, delivery
and performance by the Borrower of this Agreement, the Note and the Security
Documents and the Bond Documents to which the Borrower is a party, except such
as have been obtained.
Section 5.04. Validity and Binding Effect. To the best of the
knowledge of the Borrower, this Agreement, the Note, the Security Documents and
the Bond Documents to which the Borrower is a party are the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, subject to the application by a court of general
principles of equity and to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally.
Section 5.05. No Litigation. Except as disclosed to the Bank
in writing prior to the Closing Date, there is no pending action or proceeding
before any court, governmental agency or arbitrator against or involving the
Borrower and, to the best knowledge of the Borrower, there is no threatened
action or proceeding affecting the Borrower before any court, governmental
agency or arbitrator which, in any case, might materially and adversely affect
the financial condition or operations of the Borrower, or the validity or
enforceability of this Agreement, the Note, the Security Documents or the Bond
Documents, or the construction, acquisition, equipping or operation of the
Project.
Section 5.06. No Violations. To the best of the knowledge of
the Borrower, the Borrower is not in any material way in breach of or in default
under: (a) any applicable law, rule or regulation of any local government, the
Commonwealth of Pennsylvania or the United States or any applicable judgment or
decree; or (b) any material loan agreement, indenture, lease, sublease, bond,
note, resolution, agreement or other instrument to which it is a party or
otherwise subject, and no event has occurred and is continuing which, with the
passage of time or the giving of notice or both, would constitute a material
event of default under any such instrument, except for violations, if any, which
the Borrower has disclosed to the Bank in writing and is proceeding in good
faith to remove or correct. The Borrower has no knowledge of any violation, nor
has it received any notice or other record of any violation, of any zoning,
subdivision, environmental, building, fire, safety, health or other statute,
ordinance, regulation, restrictive covenant or other restriction applicable to
the Premises, except for violations, if any, which the Borrower has disclosed to
the Bank in writing and is proceeding in good faith to remove or correct.
Section 5.07. Project Compliance. To the best of the knowledge
of the Borrower, the acquisition, construction and/or equipping of the Project
as contemplated by this Agreement, the use of the Project for the purpose
contemplated hereby and the operation of the Project do and shall, in all
material respects, comply with, and are lawful, permitted and conforming uses
under, all applicable building, fire, safety, subdivision, zoning, sewer,
-21-
environmental, securities, health, insurance and other laws, ordinances, rules,
regulations and plan approval conditions of any governmental or public body or
authority, and the Borrower has obtained, or will obtain prior to commencement
of acquisition, construction and/or equipping of the Project, all permits,
licenses or approvals from such governmental or public bodies or authorities
which are a necessary precondition to the acquisition, construction and/or
equipping of the Project.
Section 5.08. No Liens. There exist no recorded Liens against
the Premises (including statutory and other liens of mechanics, workmen,
contractors, subcontractors, suppliers, taxing authorities and others), except
the Mortgage, the Security Agreement and those additional liens, encumbrances
and charges disclosed in the Bank's title insurance policy insuring the Lien of
the Mortgage and that certain Declaration of Covenants and Restrictions, dated
March 20, 1997, between Pennsylvania Business Campus Delaware, Inc. and the
Borrower (the "Permitted Liens"); and the Borrower has not made a contract or
arrangement of any kind, the performance of which by the other party thereto
could give rise to a Lien on the Premises by operation of law or otherwise
except such as are adequately and fully covered by the Bank's title insurance
insuring the lien of the Mortgage. The Borrower has no knowledge of any
unrecorded Liens.
Section 5.09. Utilities and Access. All utility services
necessary for construction and/or operation of the Project, including water
supply, storm and sanitary sewer facilities, gas, electricity and telephone
facilities are, or prior to the Completion Date will be, available within the
boundaries of the Premises; and all roads necessary for the full utilization of
the Project for its intended purposes either have been completed or the
necessary rights-of-way therefor have been acquired by the appropriate
governmental authority or others or have been or will, prior to the Completion
Date, be dedicated to public use and accepted by such governmental authority,
and all necessary steps have been taken by the Borrower and all such
governmental authority or others to assure complete construction and
installation thereof by the Completion Date.
Section 5.10. Financial Information.
(a) The balance sheet of the Borrower as of December 31,
1995 and the related statements of income and changes in financial position of
the Borrower for the Fiscal Year then ended: (i) have been prepared in
accordance with GAAP; (ii) have been examined by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, Certified
Public Accountants; (iii) are true and complete and present fairly the financial
condition and results of operations of the Borrower as of December 31, 1995 for
the period covered thereby; and (iv) said balance sheet, together with the notes
thereto, accurately reflects all liabilities, including contingent liabilities,
of the Borrower as of the date thereof.
(b) Intentionally Omitted.
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(c) Since December 31, 1995 the Borrower has conducted its
operations in the ordinary course, and there has been no material adverse change
in the financial condition or operations of the Borrower.
Section 5.11. Taxes. The Borrower has filed all tax returns
which were required to be filed in any jurisdiction, and has paid all taxes
shown thereon to be due or otherwise due upon the Borrower or any of its
properties, income or franchises, including interest, assessments, fees and
penalties, or has provided adequate reserves for the payment thereof. To the
best knowledge of the Borrower, no claims are threatened, pending or being
asserted with respect to, or in connection with, any return referred to in this
Section, which, if adversely determined, would have a material adverse effect on
the financial condition or operations of the Borrower, or would affect the
Borrower's ability to perform its obligations under this Agreement, the Note,
the Security Documents and the Bond Documents.
Section 5.12. ERISA Representations. The fair value of the
plan assets of all employee pension plans maintained by the Borrower or its
ERISA Affiliates exceed the projected benefit obligations of such plans for
service rendered to the close of the most recent complete plan year of such
plans, as determined in accordance with GAAP. No employee pension plan
maintained by the Borrower or any ERISA Affiliate which is subject to Part 3 of
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") has an accumulated funding deficiency (as defined in Section 302(a) of
ERISA), no reportable event (as defined in Section 4043 of ERISA) has occurred
with respect to any employee pension plan maintained for employees of the
Borrower or any ERISA Affiliate and covered by Title IV of ERISA, no liability
has been asserted against the Borrower or any ERISA Affiliate by the Pension
Benefit Guaranty Corporation ("PBGC") or by a trustee appointed pursuant to
Section 4042(b) or (c) of ERISA, and no lien has been attached and no Person has
threatened to attach a lien to any of the Borrower's or any ERISA Affiliate's
property as a result of failure to comply with ERISA or as a result of the
termination of any employee pension plan covered by Title IV of ERISA. Each
employee pension plan (as defined in Section 3(2) of ERISA) maintained for
employees of the Borrower or any ERISA Affiliate which is intended to be
qualified under Section 401(a) of the Code, including all amendments to such
plan or to any trust agreement, group annuity or insurance contract or other
governing instrument, is the subject of a favorable determination by the
Internal Revenue Service with respect to its qualification under Section 401(a)
of the Code or, as to those amendments not yet subject to such a determination,
such amendments meet the requirements of Section 401(a) of the Code in all
material respects or, if they do not, the Borrower will take all necessary
action to conform such nonconforming amendments to the requirements of Section
401(a) of the Code and the Borrower will exercise its best efforts to obtain
such a favorable determination letter within a reasonable period of time. With
respect to any multiemployer pension plan (as defined in Section 3(37) of ERISA)
to which the Borrower or any ERISA Affiliate is or has been required to
contribute subsequent to September 25, 1980: (i) no material withdrawal
liability (within the meaning of Section 4201 of ERISA) has been incurred by the
Borrower or any ERISA Affiliate; (ii) no material withdrawal liability has been
asserted against the Borrower or any ERISA Affiliate by a sponsor or an agent of
a sponsor of any such multiemployer plan; (iii) no such multiemployer pension
plan is in
-23-
reorganization (as defined in Section 4241(a) of ERISA); and (iv) neither the
Borrower nor any ERISA Affiliate has any unfilled obligation to contribute to
any such multiemployer pension plan. As used in this Agreement, "ERISA
Affiliate" means: (i) any corporation included with the Borrower in a controlled
group of corporations within the meaning of Section 414(b) of the Code; (ii) any
trade or business (whether or not incorporated or for-profit) which is under
common control with the Borrower within the meaning of Section 414(c) of the
Code; (iii) any member of an affiliated service group of which the Borrower is a
member within the meaning of Section 414(m) of the Code, and (iv) any other
entity treated as being under common control with the Borrower under Section
414(o) of the Code.
Section 5.13. Environmental Representations. The Borrower has
conducted the inquiries described in Exhibit C, which is attached hereto and
made a part hereof, and, except as set forth in Exhibit C, the Borrower has no
knowledge of: (a) any activity at Premises, or any storage, treatment or
disposal of any Hazardous Substance or solid waste connected with any activity
at the Premises, which has been conducted, or is being conducted, in violation
of any Environmental Law; (b) any of the following present at the Premises which
could give rise to material liabilities, material costs for remediation or a
material adverse change in the financial condition or operations of the
Borrower: (i) Contamination; (ii) polychlorinated biphenyls; (iii) asbestos or
materials containing asbestos; (iv) urea formaldehyde foam insulation; or (v)
tanks presently or formerly used for the storage of any liquid or gas; (c) any
investigation or findings pertaining to the Premises regarding the presence of
radon gas or radioactive decay products of radon at the site of the Premises in
a concentration materially in excess of either the concentrations disclosed in
any investigation or the "acceptable level" as defined in Section 6.18; or (d)
any tanks presently or formerly used for the storage of any liquid or gas below
ground at the Premises. The Borrower has commissioned an expert in site
contamination acceptable to the Bank to conduct a Phase I investigation for site
contamination prior to the Closing Date, the scope of which, in the expert's
professional opinion, would be reasonably likely to discover Contamination of
sufficient severity to warrant inclusion of the Premises on the National
Priorities List or contamination of parallel severity by a substance which does
not constitute a "Hazardous Substance" for purposes of the Comprehensive
Environmental Response, Compensation and Liability Act, and has provided a
report of that investigation to the Bank. Except as set forth in Exhibit C: (1)
all notices, permits, licenses or similar authorizations, if any, required to be
obtained or filed by the Borrower relating to Hazardous Substances or solid
waste in connection with the Premises, including without limitation past or
present treatment, storage, disposal or release of any Hazardous Substances or
solid waste into the environment, have been obtained or filed; (2) all Hazardous
Substances and solid waste generated by the Borrower have in the past been, to
the best of the Borrower's knowledge, transported, treated and disposed of only
by carriers maintaining valid permits under all applicable Environmental Laws
and only at treatment, storage and disposal facilities maintaining valid permits
under applicable Environmental Laws, which carriers and facilities have been and
are, to the best of the Borrower's knowledge, operating in compliance with such
permits; and (3) the Borrower has no material contingent liability in connection
with any release of any Hazardous Substance or solid waste into the environment.
-24-
Section 5.14. Representations in Other Documents. The Borrower
hereby makes to and for the benefit of the Bank each of the representations and
warranties of the Borrower contained in the Bond Documents and the other
documents delivered by the Borrower in connection therewith.
ARTICLE VI
GENERAL COVENANTS
So long as any amount is available under the Letter of Credit
or any amount is due and owing to the Letter of Credit Bank under the
Participating Bank Agreement or to the Standby Bank under the Standby
Reimbursement Agreement or any amount is due and owing to the Bank hereunder,
the Borrower covenants that, except to the extent the Bank shall otherwise
consent in writing, each of the following covenants shall be performed and
complied with by the Borrower as indicated:
Section 6.01. Maintenance of Existence; Mergers. The Borrower
will maintain its existence, rights and privileges and its qualification to do
business in the Commonwealth of Pennsylvania, will not dissolve or otherwise
dispose of all or substantially all of its assets and will not consolidate with
or merge into another entity or permit one or more other entities to consolidate
with or merge into it; except that the Borrower may consolidate with or merge
into another corporation or permit another corporation to consolidate with or
merge into it, provided that (a) the resulting or surviving corporation is
qualified to do business in the Commonwealth of Pennsylvania and the resulting
or surviving corporation, if other than the Borrower, delivers to the Bank at
the time of such consolidation or merger a written instrument by which it
assumes all of the obligations of the Borrower under this Agreement, the Note
and the Security Documents to which the Borrower is a party and agrees to be
bound by all of the terms hereof and (b) such consolidation or merger shall not
result in an immediate or projected violation of any other provision of this
Agreement, the Security Documents or the Bond Documents.
Section 6.02. Compliance with Laws. The Borrower will comply
in all material respects with all applicable laws, rules, regulations and orders
of any governmental authority the noncompliance with which could materially and
adversely affect its operations or financial condition, except for any such
laws, rules, regulations and orders which the Borrower is contesting in good
faith by appropriate proceedings and the noncompliance with which during such
contest would not materially and adversely affect the Borrower's operations or
financial condition if the result of such contest were adverse to the Borrower.
Section 6.03. Maintenance of Governmental Authorizations. The
Borrower will obtain and maintain in full force and effect all governmental and
other authorizations, approvals, consents, permits, licenses, certifications and
qualifications necessary for the ownership and operation of the Project.
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Section 6.04. Maintenance of Insurance. The Borrower will
maintain or cause to be maintained with respect to the Project: (i) hazard
insurance (including builder's risk insurance with respect to the original
construction of the Project and any other construction), with fire and extended
coverage, vandalism and malicious mischief coverage; (ii) business interruption
insurance; (iii) comprehensive general liability insurance and motor vehicle
insurance for bodily injury and property damage; and (iv) worker's compensation
insurance. Each of the policies described in the preceding sentence shall be in
form, amounts and substance and with insurance companies reasonably satisfactory
to the Bank, containing 30-day notification of cancellation or material change
in coverage clauses in favor of the Bank. The Borrower will maintain such other
insurance with responsible and reputable insurance companies in such amounts and
covering such risks as are customarily maintained by entities similar to the
Borrower or as the Bank may reasonably require by written notice to the
Borrower. The Borrower shall furnish to the Bank, upon written request: (a) full
information as to all insurance carried by it; (b) mortgagee or lender loss
payee endorsements in favor of the Bank; and (c) certified copies of such
insurance policies.
Section 6.05. Compliance with Bond Documents and Other
Contracts. The Borrower will comply with all of its covenants and agreements
under the Bond Documents, in all material respects, as the same may hereafter be
amended or supplemented from time to time, and comply with, or cause to be
complied with, all material requirements and conditions of all contracts and
insurance policies which relate to the Borrower or the Project.
Section 6.06. Maintenance of Properties. The Borrower will
maintain and preserve all of its properties (including the Premises) in good
working order and condition, ordinary wear and tear excepted; not permit, commit
or suffer any waste of any of its properties; not use or permit the use of any
of its properties for any unlawful purpose or permit any nuisance to exist
thereon; and not sell, lease, transfer or otherwise dispose of any substantial
part of its properties, except in the ordinary course of its operations.
Section 6.07. Visitation Rights. The Borrower will, at any
reasonable time and from time to time, after its receipt of reasonable advance
notice from the Bank, permit the Bank or its agents or representatives to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower, and to discuss the affairs,
finances and accounts of the Borrower with the officers and accountants of the
Borrower. The Bank agrees to comply with the Borrower's rules and regulations
during any such visits.
Section 6.08. Keeping of Books. The Borrower will keep proper
books of record and account, in which full and correct entries shall be made of
financial transactions and the assets and operations of the Borrower in
accordance with GAAP, and have a complete audit of such books of record and
account made by certified public accountants reasonably acceptable to the Bank
for each Fiscal Year.
-26-
Section 6.09. Reporting Requirements. The Borrower will
furnish or cause to be furnished to the Bank the following (in such number of
copies as the Bank may reasonably request for itself and the Participating
Banks):
(a) As soon as available and in any event within 45 days
after the close of each fiscal quarter of each Fiscal Year of the Borrower,
unaudited financial statements for the Borrower, including a balance sheet and
related statement of income as of the end of such fiscal quarter and for such
fiscal quarter and the current Fiscal Year to the end of such fiscal quarter,
which shall be internally prepared and presented on a consistent basis and in
accordance with GAAP (subject to normal year-end adjustments);
(b) As soon as available and in any event within 90 days
after the close of each Fiscal Year of the Borrower:
(1) financial statements for the Borrower, including a
balance sheet and related statements of income and changes in
financial position as of the end of such Fiscal Year and for such
Fiscal Year, which shall be prepared and reported on without
qualification by independent certified public accountants reasonably
acceptable to the Bank in accordance with GAAP, and shall fairly
present the financial condition of the Borrower as at the end of
such Fiscal Year; and
(2) a certificate signed by an officer of the Borrower
stating that to the best of its knowledge: (i) during such Fiscal
Year the Borrower has observed and performed all of its covenants
and agreements set forth in this Agreement, the Security Documents
and the Bond Documents, except as disclosed in such certificate; and
(ii) no Default or Event of Default has occurred and is continuing,
except as disclosed in such certificate;
(c) Upon receipt thereof by the Borrower, copies of any
letter or report with respect to the management, operations or properties of the
Borrower submitted to the Borrower by its accountants in connection with any
annual audit of the Borrower's accounts, and a copy of any written response of
the Borrower to any such letter or report;
(d) As soon as possible and in any event within 30 days
after receipt of notice thereof: (1) notice of any pending or threatened
litigation, investigation or other proceeding involving the Premises or the
Borrower: (i) which could have a material adverse effect on the Project or the
operations or financial condition of the Borrower; or (ii) wherein the potential
damages, in the reasonable judgment of the Borrower based upon the advice of
counsel experienced in such matters, are not fully covered by the insurance
policies maintained by the Borrower (except for the deductible amounts
applicable to such policies); and (2) any and all information with respect to
such litigation, investigation or proceeding as the Bank may reasonably request;
-27-
(e) As soon as possible, notice of any material adverse
change in the operations, financial condition or prospects of the Borrower;
(f) As soon as possible and in any event within 15 days
after the Borrower has knowledge of a Default and upon the occurrence of each
Event of Default, a statement of an officer of the Borrower setting forth the
details of such Default or Event of Default and the action which the Borrower
proposes to take with respect thereto;
(g) Concurrently with any filing made to the Securities
Exchange Commission, by the Borrower, a copy of all such filings, including but
not limited to the Borrower's Quarterly Reports on Form 10Q and Annual Reports
on Form 10K, Current Reports on Form 8K, as well as proxy statements and other
information.
(h) Such other information respecting the operations and
properties, financial or otherwise, of the Borrower as the Bank may from time to
time reasonably request.
Section 6.10. Payment of Debt. The Borrower will make full and
timely payment of the principal of and interest on each outstanding Debt of the
Borrower, whether now existing or hereafter arising, and comply in all material
respects with all covenants and agreements set forth in instruments evidencing,
securing or governing such Debt.
Section 6.11. Payment of Taxes. The Borrower will file all
required tax returns. The Borrower will pay before the same shall become
delinquent and before penalties have accrued thereon, all taxes, assessments and
governmental charges or levies imposed on the income, profits, franchises,
property or business of the Borrower, as the case may be, except to the extent
and so long as: (a) the same are being contested in good faith by appropriate
proceedings; and (b) adequate reserves in conformity with GAAP with respect
thereto have been provided on the books of the Borrower. Upon request, the
Borrower will provide to the Bank copies of such returns and receipts for
payment of such taxes.
Section 6.12. Consents Under Bond Documents. The Borrower will
obtain the consent of the Bank whenever the consent of the Issuer or the Trustee
is required to be obtained under the Bond Documents.
Section 6.13. Amendments to Bond Documents. The Borrower will
not consent to or enter into any amendment of or supplement to the Bond
Documents other than as may be required by law or as may be mandated by the
terms thereof.
Section 6.14. Limitation on Conversion to Term Rate. The
Borrower will not exercise its rights under the Bond Documents to request the
Issuer to establish a Term Rate for the Bonds.
Section 6.15. Limitation on Optional Calls. The Borrower will
not exercise its rights under the Bond Documents to direct the Issuer to call
the Bonds for any optional
-28-
redemption thereof, unless the Borrower first demonstrates to the reasonable
satisfaction of the Bank that at the time of such optional redemption the Letter
of Credit Bank and the Bank will be fully reimbursed with respect to all
drawings on the Letter of Credit in connection with such optional redemption.
Section 6.16. Leases. The Borrower hereby represents that
there are no leases or agreements to lease all or any part of the Premises now
in effect except those leases, if any, approved in writing by the Bank. The
Borrower agrees not to enter into any leases or agreements to lease all or any
part of the Premises, unless: (i) the Borrower shall have obtained the prior
written approval thereof and of the respective tenant by the Bank; and (ii) the
Borrower shall have fully complied with the provisions of the Loan Agreement
with respect thereto. Each such lease shall be on a form of lease approved by
the Bank. All leases shall be net leases and shall include subordination and
attornment provisions satisfactory to the Bank in its sole discretion.
Section 6.17. ERISA. The Borrower will at all times maintain
the fair value of the plan assets of all employee pension plans and life,
accident and health plans maintained by the Borrower or any ERISA Affiliate at a
level equal to or greater than the projected benefit obligations of such plans
for service rendered to the close of the most recent complete plan year of such
plans, as determined in accordance with GAAP. Neither the Borrower nor any ERISA
Affiliate will: (i) voluntarily terminate any employee pension plan covered by
Title IV of ERISA, so as to cause material liability of the Borrower to PBGC or
to a trustee appointed pursuant to Section 4042(b) or (c) of ERISA; (ii) permit
to exist any Prohibited Transaction (as defined in Section 4975 of the Code or
in Section 406 of ERISA) involving an employee benefit plan within the meaning
of Section 3(3) of ERISA for which there is no statutory or administrative
exemption and which may result directly or indirectly in material liability of
the Borrower to the Internal Revenue Service or the United States Department of
Labor; (iii) cause the occurrence of any Reportable Event (as defined in Title
IV of ERISA) which may result in material liability of the Borrower to the
Internal Revenue Service or the United States Department of Labor; (iv) permit
the occurrence of any event or the existence of any condition which may result
in material withdrawal liability (within the meaning of Section 4201 of ERISA)
of the Borrower or any ERISA Affiliate to any multiemployer pension plan (as
defined in Section 3(37) of ERISA); or (v) allow or suffer to exist any other
event or condition known to the Borrower or any ERISA Affiliate with respect to
an employee benefit plan within the meaning of Section 3(3) of ERISA which may
result in material liability of the Borrower to PBGC, the Internal Revenue
Service or the United States Department of Labor. Upon obtaining direct
knowledge of the occurrence of any event described in (1), (2) or (3) below, the
Borrower will give prompt written notice to the Bank of: (1) each failure to
comply with the provisions of this Section; (2) any notification of assessment
of withdrawal liability (within the meaning of Section 4201 of ERISA) received
by the Borrower or any ERISA Affiliate from any multiemployer pension plan (as
defined in Section 3(37) of ERISA); and (3) any lien arising under Section
302(f) of ERISA in favor of any employee pension plan maintained for employees
of the Borrower or any ERISA Affiliate which is subject to Part 3 of Title I of
ERISA.
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Section 6.18. Environmental Covenants.
(a) The Borrower will cause all activities at the Premises,
and all storage, transportation, treatment and disposal of any Hazardous
Substances or solid waste connected with any activity at the Project, to be
conducted in compliance with all Environmental Laws. The Borrower will cause all
permits, licenses or approvals to be obtained, and will cause all notifications
to be made, with respect to the Premises as required by Environmental Laws, and
will, at all times, cause compliance with the terms and conditions of any such
approvals or notifications. If requested by the Bank, the Borrower will provide
to the Bank with respect to the Premises copies of: (i) applications or other
materials submitted to any governmental agency in compliance with Environmental
Laws; (ii) any notifications submitted to any Person pursuant to Environmental
Laws; (iii) any permit, license, approval, amendment or modification thereto
granted pursuant to Environmental Laws; (iv) any record or manifest required to
be maintained pursuant to Environmental Laws; and (v) any correspondence, notice
of violation, summons, order, complaint or other document received by the
Borrower, its lessees, sublessees or assigns, pertaining to compliance with any
Environmental Laws.
(b) The Borrower will not cause, contribute to or permit
any Contamination during the term of this Agreement. The Borrower will, at all
times during the term of this Agreement, cause Hazardous Substances created,
used or otherwise present at the Premises to be handled in a manner which will
not cause an undue risk of Contamination.
(c) The Borrower will cause all construction of new
structures at the Premises during the term of this Agreement to use design
features which safeguard against or mitigate the accumulation of radon or radon
products in concentrations exceeding an acceptable level in any such new
structure. At the earliest feasible time during or after construction of any new
structure at the Premises, the Borrower will commission an investigation of such
new structure for the presence of radon or radon products and shall provide a
report of such investigation to the Bank. The presence of radon or radon
products in any existing structure at the Premises in a concentration materially
in excess of concentrations disclosed pursuant to Section 5.13 or in any new
structure in excess of the acceptable level shall constitute a default
hereunder. For purposes of this paragraph, "acceptable level" shall mean the
lowest applicable maximum concentration established by any governmental agency
with jurisdiction over the Premises. In the absence of a legally binding maximum
concentration, the "acceptable level" shall be an air concentration of 4
picocuries per liter average annual concentration.
(d) Upon the occurrence of an Event of Default, the Bank
may, at its discretion, commission an investigation at the Borrower's expense
of: (i) compliance at the site of the Premises with Environmental Laws; (ii) the
presence of Hazardous Substances or Contamination at the Premises; (iii) the
presence at the Premises of materials which are described in clause (b) of
Section 5.13; (iv) the presence at the Premises of environmentally sensitive
areas; (v) the presence at the Premises of radon products; or (vi) the presence
at the Premises of tanks of the type described in clause (d) of Section 5.13. In
connection with any investigation pursuant to this paragraph, the Borrower, and
its lessees, sublessees and assigns,
-30-
will comply with any reasonable request for information made by the Bank or its
agents in connection with any such investigation. Any response to any such
request for information will be full and complete. The Borrower will assist the
Bank and its agents to obtain any records pertaining to the Project or the
Premises or to the Borrower and the lessees, sublessees or assigns of the
Borrower in connection with an investigation pursuant to this paragraph. The
Borrower will accord the Bank and its agents access to all areas of the Premises
at reasonable times and in reasonable manners in connection with any
investigation pursuant to this paragraph. No investigation commissioned pursuant
to this paragraph shall relieve the Borrower from any responsibility for its
representations and warranties under Section 5.13.
(e) The Borrower hereby agrees to indemnify and to hold
harmless the Bank of, from and against any and all expense, loss or liability
suffered by the Bank by reason of the Borrower's breach of any of the provisions
of Section 5.13 or this Section including, but not limited to: (1) any and all
expenses that the Bank may incur in complying with any Environmental Laws; (2)
any and all costs that the Bank may incur in studying or remedying any
Contamination; (3) any and all fines, penalties or other sanctions (including a
voiding of any transfer of the Project) assessed upon the Bank by reason of a
failure of the Borrower to have complied with Environmental Laws; (4) any and
all loss of value of the Project by reason of: (i) failure to comply with
Environmental Laws; (ii) the presence at the Premises of any Hazardous
Substances; (iii) the presence at the Premises of any materials which are
described in clause (b) of Section 5.13; (iv) the presence at the Premises of
any environmentally sensitive areas; (v) the presence at the Premises of radon
or radon products in concentrations not disclosed pursuant to Section 5.12; or
(vi) the presence at the Premises of any tank below ground undisclosed pursuant
to Section 5.13; and (5) any and all reasonable legal and professional fees and
costs incurred by the Bank in connection with the foregoing.
Section 6.19. Further Assurances. The Borrower will execute
and deliver from time to time such further instruments and take such further
actions as may be required to carry out the purposes and provisions of this
Agreement and to assure the Bank of the subrogation and security rights in favor
of the Bank contemplated by Article III and by the Indenture.
Section 6.20. Financial Covenants. (a) The Borrower shall
maintain all of its investment accounts, up to a maximum aggregate amount of
$50,000,000, with the Custodial Bank. The Borrower shall maintain in such
investment accounts created with the Custodial Bank a combined total of its
unencumbered cash and liquid short term investments (investments with a
remaining maturity of less than three years) ("Unrestricted Cash") in an amount
which shall have a fair market value equal to at least $20,000,000. If the value
of the Unrestricted Cash held by the Custodial Bank, from time to time, shall
fall below a fair market value equal to $20,000,000 (but not less than
$15,000,000) the Custodial Bank, shall, in accordance with the Custodial Bank
Agreement, immediately transfer an amount of the Unrestricted Cash, with a fair
market value equal to fifty percent (50%) of the Letter of Credit Amount at that
time, to the Bank, for deposit into the "Bank's Pledge Account B" which is
hereby created. If the total fair market value of the Unrestricted Cash,
together with the funds held in the Bank's Pledge Account B shall, from time to
time, be valued at a fair market value equal to less than
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$15,000,000, the Custodial Bank shall, in accordance with the Custodial Bank
Agreement, immediately transfer an amount of Unrestricted Cash to the Bank for
deposit into the Bank's Pledge Account B, so that the value of the total amount
held in the Bank's Pledge Account B shall have a fair market value equal to one
hundred percent (100%) of the Letter of Credit Amount at that time.
(b) If, from time to time, after the transfer or transfers of
Unrestricted Cash to the Bank's Pledge Account B described in (a) above, the
Borrower is able to provide additional Unrestricted Cash to the Custodial Bank
in: (i) an amount so that the fair market value of the Unrestricted Cash held by
the Custodial Bank together with the funds held in the Bank's Pledge Account B
shall have a fair market value equal to at least $15,000,000, but less than
$20,000,000, the Bank shall transfer an amount of the funds held in the Bank's
Pledge Account B to the Custodial Bank, in order that the funds remaining in the
Bank's Pledge Account B shall have a fair market value equal to fifty percent
(50%) of the Letter of Credit Amount at that time; or (ii) an amount so that the
fair market value of the Unrestricted Cash held by the Custodial Bank together
with the funds held in the Bank's Pledge Account B shall have a fair market
value equal to at least $20,000,000, the Bank shall transfer the entire amount
of funds held in the Bank's Pledge Account B to the Custodial Bank.
(c) The Bank shall satisfy the lien of the Mortgage and
release other collateral securing the Borrower's obligations hereunder, if
Unrestricted Cash, with a fair market value equal to one hundred percent (100%)
of the Letter of Credit Amount is held by the Bank in the Bank's Pledge Account
B, and the Borrower delivers a written request to the Bank: (i) stating that the
Borrower desires to continually maintain Unrestricted Cash in the Bank's Pledge
Account B with a fair market value equal at all times to the Letter of Credit
Amount for as long as any credit remains available to the Trustee under the
Letter of Credit; (ii) requesting the Bank to satisfy the lien of the Mortgage
and to release any other collateral securing the Borrower's obligations
hereunder upon the deposit of the Unrestricted Cash in the Bank's Pledge Account
B; and (iii) acknowledging that the Unrestricted Cash held in the Bank's Pledge
Account B shall remain in the Bank's Pledge Account B for so long as any credit
remains available to the Trustee under the Letter of Credit and notwithstanding
the value of any funds held, if any, by the Custodial Bank pursuant to the
Custodial Bank Agreement.
(d) Upon the occurrence of an Event of Default hereunder, or
upon the occurrence of an "Event of Default" under the Reimbursement Agreement,
dated as of March 1, 1997 (the "Series A Reimbursement Agreement"), between the
Borrower and the Bank, executed in connection with the issuance by the Issuer of
its Variable Rate Demand Revenue Bonds (Neose Technologies, Inc. Project),
Series A of 1997 (the "Series A Bonds"), the Custodial Bank shall, in accordance
with the terms of the Custodial Bank Agreement, immediately and automatically
transfer an amount of the investment securities held by the Custodial Bank for
the Borrower into the Bank's Pledge Account B, so that the total amount held in
the Bank's Pledge Account B shall be equal to the Letter of Credit Amount. Upon
the occurrence of any such Event of Default and the funding of the Bank's Pledge
Account B as set forth above, the Borrower will cooperate with the Bank and
execute any and all documentation
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necessary to provide the Bank with a perfected first lien security interest in
the investment securities held in the Bank's Pledge Account B in accordance with
the laws of the Commonwealth of Pennsylvania.
Section 6.21. Principal Prepayments. The Borrower agrees to
optionally redeem the Bonds in the amounts, on the dates and in accordance with
the optional prepayment schedule set forth on Exhibit D which is attached hereto
and made a part hereof. On April 15, 1997, and on the fifteenth day of each
calendar month thereafter so long as any Bonds are outstanding under the
Indenture, the Borrower shall pay to the Bank, for deposit by the Bank into the
"Bond Prepayment Fund B" which is hereby created, an amount equal to 1/12 of the
amount of the Bonds to be optionally redeemed by the Borrower on the following
April 1. Funds held in the Bond Prepayment Fund B shall be immediately and
automatically transferred to the Bank to reimburse the Letter of Credit Bank for
draws made by the Trustee in accordance with the Letter of Credit to optionally
redeem the principal of the Bonds on such dates. The Borrower agrees to take all
steps necessary and required by the Indenture to require the Trustee to make the
optional redemptions of the Bonds on such dates, in accordance with the terms
and provisions of the Indenture.
Section 6.22. Working Capital. The Borrower will at all times
maintain a "working capital position", as defined in accordance with GAAP, of
$20,000,000. Unrestricted Cash plus amounts held in the Bank's Pledge Account B
may be included by the Borrower and its accountants in determining the
Borrower's "working capital position". If the Borrower decides to comply with
the provisions of Section 6.20(c) hereof, upon the Borrower's compliance thereof
to the satisfaction of the Bank, this covenant shall no longer be operative.
Section 6.23. Deposit Relationship. The Bank shall be the
Borrower's primary bank of non-investment accounts. The Borrower agrees to
consider using the Bank's asset management affiliates as investment managers for
all short term investments, provided such affiliates deliver proposals which are
competitive with those of non-affiliated asset managers. Any cash or investments
held by the Bank (other than funds held in the Bank's Pledge Account B and in
the Bond Prepayment Fund B) shall not be considered collateral for the
Borrower's Obligations hereunder and under the Note, any more than if they were
being held or managed by entities not affiliated with the Bank.
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ARTICLE VII
PROJECT FUND AND CONSTRUCTION COVENANTS
Section 7.01. Project Cost Schedule; Application of Project
Fund. The Project Costs and Sources of Funds Schedule (the "Project Cost
Schedule") set forth in Exhibit B is an estimate of the capital requirements for
the Project. The Borrower shall not submit any requisition to the Trustee for
disbursement of funds from the Project Fund for Project costs which are
materially inconsistent with the Project Cost Schedule, and the Borrower shall
not apply any Bond proceeds in a manner materially inconsistent with the
requisition therefor submitted to the Trustee. Any Project costs incurred in
excess of the budgeted amounts set forth in the Project Cost Schedule will be
paid for by the Borrower upon demand of the Bank. Notwithstanding the foregoing
provisions, if the whole amount allocated to any component of Project cost as
set forth in the Project Cost Schedule is not, or in the Bank's judgment will
not be, expended for such component, then, with the Bank's approval, the
Borrower may cause such excess to be reallocated and used for any other
component of Project cost set forth on the Project Cost Schedule. The Borrower
shall not submit to the Trustee under the Loan Agreement or the Indenture any
requisition for hard construction costs with respect to the Improvements unless
the Bank shall have first received each of the following in form and substance
satisfactory to the Bank:
(a) Copies of the Plans for the Improvements, approved by
the General Contractor, the Borrower and any governmental authorities whose
approvals of the Plans are required under applicable law;
(b) Intentionally Omitted;
(c) A certified copy of the General Contract, which shall
provide for: (i) a fixed price or guaranteed maximum cost satisfactory to the
Bank; (ii) advance requests to be on a form satisfactory to the Bank, supported
by invoices for work completed; and (iii) 5% holdback until completion of all
work thereunder of payments for the work under the General Contract;
(d) Intentionally Omitted;
(e) To the extent and at the time or times permitted by
applicable law, general waivers or stipulations against mechanic's and
materialman's liens by the General Contractor for the Project;
(f) Copies of all building permits, licenses and special
ordinances required for or relating to the construction and equipping of the
Project;
(g) Intentionally Omitted;
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(h) An assignment by the Borrower to the Bank of the
General Contract, with the consent of the General Contractor together with a
letter from the General Contractor agreeing to perform the General Contract for
the Bank's account if requested by the Bank upon the occurrence of an Event of
Default;
(i) Intentionally Omitted;
(j) Intentionally Omitted; and
(k) Evidence of the insurance required by Section 7.08.
Section 7.02. Requisition Approvals. The Borrower shall submit
to the Bank, for its approval prior to disbursement thereon, each requisition
and related supporting materials required by the Loan Agreement or the
Indenture, together with: (a) an itemization of the funds requisitioned against
the Project Cost Schedule; (b) in the case of hard construction costs, a
construction advance request on a form satisfactory to the Bank and an approval
by the Bank's construction inspector (the fees and expenses of which
construction inspector shall be paid by the Borrower); (c) supporting invoices;
(d) if requested by the Bank, a title bringdown search showing no additional
liens; (e) such other supporting documentation as the Bank may reasonably
request; and (f) a request to the Bank for approval of such requisition
certifying, among other things, that: (i) the funds to be advanced against the
requisition will be fully applied in accordance with the Project Cost Schedule;
(ii) the construction of the Improvements to date has been performed in a good
and workmanlike manner; (iii) no Default or Event of Default has occurred and is
continuing; (iv) the undisbursed balance of the Bond proceeds is sufficient to
complete Project; and (v) reaffirming the representations and warranties of the
Borrower in this Agreement. The Borrower will withdraw any requisition which the
Bank does not approve. The Bank's review and approval of the requisitions and
the acquisition, construction and/or equipping of the Project is solely for the
protection of the Bank's interests under this Agreement, and the Bank shall not
be deemed, by virtue of its inspection of the Project or approval of any
requisition, to have made any representation to any person with respect to the
acquisition, construction and/or equipping of the Project, the validity of any
costs thereof, or the satisfaction of any conditions under the Loan Agreement or
the Indenture with respect to the funding of requisitions (other than the Bank's
consent thereto). All conditions to the obligation of the Bank to approve
requisitions hereunder are imposed solely and exclusively for the benefit of the
Bank and its assigns, and no other person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that the Bank will approve or not approve advances in the absence of
strict compliance with any or all thereof, and no other person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by the Bank at any time if, in
its sole discretion, it deems it advisable to do so. The Bank shall not in any
way or for any purpose be deemed to be or to become a partner of or a joint
venturer or a member of a joint enterprise with the Borrower in connection with
the acquisition, construction and/or installation of the Improvements or the
ownership, development or operation of the Project.
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Section 7.03. Construction; Completion Date. The Borrower will
proceed diligently to acquire, construct and/or and equip the Project, in
accordance with the Project Cost Schedule and the Plans, without delay. The
Project shall be completed on or before September 30, 1997 (the "Completion
Date"), absent the occurrence of an unanticipated event or events which are
beyond the control of the Borrower or the General Contractor and at completion
the Premises shall be free of any and all private or governmental charges or
claims (filed or not) of any nature, except for the Permitted Liens. The
Borrower will deliver to the Bank certified copies of all use, occupancy or
completion certificates in connection with the Project, immediately upon
issuance. As used in this Agreement the terms "complete", "completed" and
"completion" mean, with respect to the Project, that: (i) the Improvements are
substantially physically complete in accordance with the Plans and equipped;
(ii) the Borrower has received all permits, approvals and certificates required
by law prior to the use and occupancy thereof and has furnished true copies of
such permits, approvals and certificates to the Bank; (iii) the Bank has
received from the Bank's inspector certificates of substantial completion of the
Project in accordance with the Plans; (iv) the Premises is free of any and all
private or governmental charges, claims or liens (filed or not) of any nature
except the Permitted Liens; and (iv) the Borrower has obtained all general
releases of mechanic's and materialman's liens required by Section 7.06 and
delivered true copies thereof to the Bank.
Section 7.04. Certain Contracts Prohibited. The Borrower will
not, without first notifying the Bank: (i) execute any contract or purchase
order or permit any subcontract or purchase order to be executed by any person
or persons with whom it has contracted in connection with the Improvements
(except for such contracts, subcontracts or purchase orders that have been
executed prior to the Closing Date and that have been approved by the Bank),
unless the amounts thereof are within the amounts budgeted therefor in the
Project Cost Schedule and are Project Costs (as defined in the Loan Agreement);
(ii) execute any material amendment or modification to any of the Plans, the
General Contract or any other contract the effect of which would be either to
increase or decrease the amount to be paid by or on behalf of the Borrower under
any contract except as permitted by Section 7.07; or (iii) contract for any
services, work or materials for the Project if such are not required by the
Plans or if payment therefor is required to be made regardless of the
nondelivery or nonfurnishing of such materials, services or work.
Section 7.05. Certain Notices. The Borrower will forward to
the Bank promptly after receipt, copies of all notices, permits or other
documents (excepting only notices for nondelinquent taxes due) received by the
Borrower from any governmental authority relating to the Improvements or from
any person claiming a mechanic's or materialmen's lien against the Improvements
or any other property of the Borrower.
Section 7.06. Releases. Prior to making final payment under
any contract relating to construction of the Improvements, the Borrower will,
upon the Bank's written request and to the extent permitted by applicable law,
make a good faith effort to require the contractor thereon to deliver to the
Borrower, from such contractor and all of such contractor's subcontractors or
materialmen, a general unconditional release of mechanic's and materialman's
liens, and the Borrower will promptly deliver or cause to be delivered to the
Bank true and correct copies of all such releases so obtained.
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Section 7.07. Change Orders. The Borrower will not permit,
without the prior written notice being sent to the Bank, the performance of any
work pursuant to any amendment or modification of any of the Plans, the General
Contract or any subcontract or purchase order (any such amendment or
modification being herein called a "Change Order") which: (a) would result in an
increase or decrease in excess of $100,000 of the contract prices for the
construction of the Improvements as shown on the Project Cost Schedule; or (b)
when aggregated with other Change Orders theretofore effected, would result in
an increase or decrease in excess of $500,000 in the aggregate of the contract
prices for the construction of the Improvements as shown in the Project Cost
Schedule.
Section 7.08. Builder's Risk, Liability and Workers'
Compensation Insurance. The Borrower will maintain, or cause to be maintained,
builders' risk (or equivalent coverage) insurance upon any work done or
materials furnished under the General Contract and any construction
subcontracts, except excavations, foundations and any other structures not
customarily covered by such insurance. The policies for such insurance shall be
issued by companies satisfactory to the Bank and shall be written in completed
value form for 100% of the insurable value of the contract in the names of the
Borrower and the General Contractor as their interests may appear and shall name
the Bank as a loss payee as its interest may appear. The Borrower will also
maintain, or cause to be maintained, workers' compensation insurance covering
all employees of the General Contractor and all subcontractors in amounts
required by law, and public liability and property damage insurance in such
amounts as are customarily insured against by entities of like size similarly
situated.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 8.01. Defaults. Each of the following, at the option
of the Bank, shall constitute an event of default hereunder ("Event of
Default"):
(a) Failure by the Borrower to pay or cause to be paid when
due any amount under Section 2.02(a)(2), Section 2.02(a)(3), Section 2.02(a)(4)
or Section 2.02(a)(5) hereof or a failure of the Borrower or the Custodial Bank
to comply with Section 6.20 hereof or of the Custodial Bank Agreement;
(b) Failure by the Borrower to make any other payment
within 10 days of the date when it is due under this Agreement or the Note after
the receipt of written notice from the Bank to make such payment;
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(c) Failure by the Borrower to perform or comply with any
of the terms or conditions contained in Section 6.01 or 6.17 or 6.18 within 15
days of the receipt of written notice from the Bank to perform or comply with
such terms or conditions;
(d) Failure by the Borrower to perform or comply with any
of the other terms or conditions contained in this Agreement, the Note or any
Security Document and continuance of such failure for 30 days after written
notice from the Bank to the Borrower, or such longer period to which Bank may
agree in the case of a default not curable by the exercise of due diligence
within such 30 day period, provided that the Borrower shall have commenced
to cure such default within such 30 day period and shall complete such cure as
quickly as reasonably possible with the exercise of due diligence;
(e) Any of the representations, warranties or covenants of
the Borrower set forth in this Agreement, the Note, the Security Documents, the
Bond Documents or any other document furnished to the Bank pursuant to the terms
hereof is false or misleading in any material respect and such false or
misleading representation, warranty or covenant is not cured within 15 days of
the receipt of written notice by the Borrower from the Bank;
(f) Any material provision of this Agreement, the Note or
the Security Documents to which the Borrower is a party shall at any time for
any reason cease to be valid and binding on the Borrower, or shall be declared
to be null and void, or shall be violative of any applicable law relating to a
maximum amount of interest permitted to be contracted for, charged or received,
or the validity or enforceability thereof shall be contested by the Borrower or
any governmental agency, court or authority, or the Borrower shall deny that it
has any or further liability or obligation under this Agreement, the Note or the
Security Documents to which the Borrower is a party and any such occurrence or
event is not cured by the Borrower within 3 days of the receipt by the Borrower
of written notice from the Bank;
(g) The occurrence of an Event of Default as defined in the
Indenture, the Loan Agreement or any of the Security Documents;
(h) The Borrower shall: (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the like of the
Borrower or of property of the Borrower; or (ii) admit in writing the inability
of the Borrower 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 the Borrower in any bankruptcy,
reorganization or insolvency proceeding, or action of the Borrower shall be
taken 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 or liquidation, a composition or
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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 the assets of the Borrower 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 undismissed and undischarged for a period of 60 days;
(i) The Premises or any material portion thereof is
subjected to a material condemnation proceeding and such a material condemnation
proceeding is not terminated by the condemnor within 10 days of the receipt by
the Borrower of written notice from the Bank;
(j) The Borrower fails to maintain in full force and effect
the hazard or other insurance required pursuant to this Agreement and
continuance of such failure for 10 days after the receipt of written notice from
the Bank to the Borrower;
(k) The Premises suffers a material loss by fire or other
casualty and such loss is not fully insured and any deficiency in the amount of
insurance proceeds paid with respect to such loss is not posted with the Trustee
or the Bank within 10 days of the determination of such deficiency;
(l) Any litigation or administrative proceeding ensues, and
is not dismissed within 30 days, involving the Borrower or any instrument,
contract or document delivered to the Bank in compliance with this Agreement,
and the adverse result of such litigation or proceeding would have in the Bank's
reasonable opinion, a materially adverse effect on the Borrower's ability to pay
its obligations and comply with the covenants under this Agreement, the Security
Documents or the Bond Documents; provided, however, that if such litigation or
administrative proceeding by its nature cannot be dismissed within such 30 day
period, no Event of Default shall be deemed to have occurred so long as the
Borrower provides written notice to the Bank and diligently and continuously
proceeds to have such litigation or administrative proceeding dismissed.
(m) Any one or more judgments or orders are entered against
the Borrower and either: (1) continue unsatisfied and unstayed for 30 days; or
(2) a judgment lien on any property of the Borrower is recorded in respect
thereof and is not stayed pending appeal by a bond or other arrangement given or
obtained by the Borrower on terms which do not violate any of the Borrower's
covenants under this Agreement;
(n) Failure by the Borrower in respect of any Debt or Debts
to make any payment or payments when due (after the lapse of any applicable
grace period) that results in the acceleration of such Debt or Debts or enables
the holder or holders of such Debt or Debts or any person acting on behalf of
such holder or holders to accelerate the maturity of such Debt or Debts;
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(o) The occurrence of an "Event of Default" under the
Series A Reimbursement Agreement or with respect to the Series A Bonds; or
(p) The occurrence of a default or an event of default
(after the lapse of any applicable grace period) with respect to any other
credit arrangement under which the Borrower is indebted to the Bank that results
in the acceleration of the Borrower's obligations under such credit arrangement.
Section 8.02. Remedies. If an Event of Default has occurred
and is continuing uncured, the Bank may:
(a) Notify the Trustee and the Letter of Credit Bank of
such Event of Default, direct the Trustee to declare an Event of Default, as
defined in the Indenture, to call the Bonds for mandatory purchase or declare
the principal of the Bonds immediately due and payable and to draw on the Letter
of Credit, and direct the Trustee to exercise remedies under the Bond Documents;
(b) Declare the Borrower's obligations hereunder and under
the Note to be, whereupon the same shall become, immediately due and payable;
and
(c) Decline to approve any further disbursement of the Bond
proceeds from the Project Fund to or for the benefit of the Borrower or any
other person;
(d) Order construction of the Improvements stopped;
(e) Subject to the provisions of the Bond Documents: (i)
enter upon or take possession of the Premises and call upon or employ
contractors, subcontractors, materialmen, suppliers, agents, managers,
maintenance personnel, security guards, architects, engineers and inspectors to
complete, manage or operate the Premises or to protect the Premises from injury;
(ii) make such additions, changes or corrections in the Plans as the Bank shall
deem necessary or desirable; (iii) direct the Trustee to disburse moneys from
the Project Fund, and pay out additional sums of the Bank (which sums shall be
immediately due and payable by the Borrower to the Bank, shall bear interest
from the date of payment by the Bank until the date of repayment at the rate
specified in Section 2.02(f) for sums more than 10 days overdue, and shall be
secured by the Security Documents) and use any property of the Borrower
associated with the Project, or any property of the Borrower in which the Bank
has or obtains an interest, including any funds which have not been disbursed
from the Project Fund and any funds which may be transferred by the Trustee to
the Bank (which funds the Borrower hereby assigns and quitclaims to the Bank),
for application to or as a reserve for payment of any or all of the following
with respect to the completion, protection, management, operation or maintenance
of the Project or the protection of the Bank's interest therein, and in such
connection deliver or disburse the same to such entities in such amounts and
with such preferences and priorities as the Bank in its sole discretion shall
determine, either with or without vouchers or orders executed by the Borrower:
(A) all sums due from the Borrower to the Bank; (B) premiums and costs of title
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and any other insurance; (C) leasing fees and brokerage or sales commissions;
(D) fees, costs and expenses of the Bank and its counsel in connection with the
preparation, enforcement, performance and filing of this Agreement, the Security
Documents and the other documents contemplated hereby; (E) any taxes (including
federal, state and local taxes) or other governmental charges; (F) any sums
required to indemnify and hold the Bank harmless from any act or omission of the
Bank (except such as are grossly negligent or due to its willful misconduct)
under this Agreement or any other document; (G) architectural and engineering
costs; (H) any sums due to contractors, subcontractors, mechanics or materialmen
for work or services actually furnished on or for the Premises; (I) federal or
state claims for any required withholding of taxes on wages; and (J) other costs
and expenses which are required to complete, manage or operate the Project or to
protect the Premises from injury or maintain the Bank's security position prior
to the rights of all others; (iv) place additional encumbrances upon the
Premises; (v) with the Borrower's consent, convey the Premises, subject to the
Bank's rights, to any nominee of the Bank; and (vi) employ leasing and sales
agents and negotiate and execute leases, sales contracts and financing
undertakings in connection with all or any part of the Premises; and
(f) Exercise, or cause to be exercised, any and all such
remedies as it may have under this Agreement, the Note, the Security Documents
or any other document or at law or in equity, including, but not limited to, the
right to liquidate all investment securities held in the Bank's Pledge Account B
created under Section 6.20 hereof and use such funds to reimburse itself for any
amounts owed to the Bank by the Borrower.
Section 8.03. Confession of Judgment. IF THE BORROWER OR THE
CUSTODIAL BANK FAIL TO FULFILL OR CANNOT FULFILL ITS OBLIGATIONS UNDER THE
CUSTODIAL BANK AGREEMENT AS SET FORTH IN SECTIONS 6.20(a), (b) OR (d) HEREOF,
AND THE BORROWER OR THE CUSTODIAL BANK DO NOT CURE ANY SUCH UNFULFILLED
OBLIGATIONS WITHIN ONE (1) BUSINESS DAY AFTER RECEIPT BY THE BORROWER OF WRITTEN
NOTICE FROM THE BANK TO DO SO, THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND
EMPOWERS THE BANK, BY ITS ATTORNEY, OR THE PROTHONOTARY OR THE CLERK OF ANY
COURT OF RECORD IN THE COMMONWEALTH OR IN ANY JURISDICTION WHERE PERMITTED BY
LAW, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AS DEFINED IN THIS AGREEMENT OR
AT ANY TIME THEREAFTER, TO APPEAR FOR THE BORROWER AND CONFESS AND ENTER
JUDGMENT AGAINST IT IN FAVOR OF THE BANK IN ANY JURISDICTION IN WHICH THE
BORROWER OR ANY OF ITS PROPERTY IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS,
TOGETHER WITH COSTS OF SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING
REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT DECLARATION, AND WITHOUT STAY OF
EXECUTION, AND WITH RELEASE OF ERRORS AND THE RIGHT TO ISSUE EXECUTION
FORTHWITH, AND FOR DOING SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL
-41-
BE A SUFFICIENT WARRANT. THE BORROWER HEREBY WAIVES AND RELEASES ALL RELIEF FROM
ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE
EXERCISE THEREOF AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID,
PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON
THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE BANK UNDER
THIS AGREEMENT BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF THE BORROWER
CAN BE GARNISHED AND ATTACHED, THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO THE BANK,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING
JUDGMENT AGAINST THE BORROWER BY CONFESSION AND ATTACHING AND GARNISHING THE
BANK ACCOUNTS AND OTHER ASSETS OF THE BORROWER, WITHOUT PRIOR NOTICE OR
OPPORTUNITY FOR A HEARING. THE BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND FURTHER
ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING
CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THE BORROWER BY SUCH
COUNSEL.
Section 8.04. Waivers; Consents. No waiver of, or consent with
respect to, any provision of this Agreement or the Note or the Security
Documents shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
Section 8.05. No Waiver; Remedies Cumulative. No failure on
the part of the Bank to exercise, and no delay in exercising, any right
hereunder or under the Note or the Security Documents shall operate as a waiver
thereof; and no single or partial exercise of any right hereunder shall preclude
any other or further exercise thereof or the exercise of any other right. To the
extent permitted by applicable law, the remedies herein and in the Note, the
Security Documents and the Bond Documents provided are cumulative and not
exclusive of any remedies available under any other document or at law or in
equity.
ARTICLE IX
MISCELLANEOUS
-42-
Section 9.01. Notices. All notices and other communications
provided for hereunder shall be in writing and sent by United States certified
or registered mail, return receipt requested, or by telegraph, telex, telecopier
or private delivery service, addressed as follows:
If to the Bank:
Jefferson Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
If to the Borrower:
Neose Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: P. ▇▇▇▇▇▇▇▇ ▇▇▇▇, President
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
If to the Trustee:
Dauphin Deposit Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Either party hereto and the Trustee may change the address to which notices to
it are to be sent by written notice given to the other persons listed in this
Section. All notices shall, when mailed as aforesaid, be effective on the date
indicated on the return receipt, and all notices given by other means shall be
effective when received.
-43-
Section 9.02. Successors and Assigns. This Agreement shall
inure to the benefit of and shall be binding upon the parties hereto and their
respective successors and assigns, including without limitation the
Participating Banks. The Borrower may not assign its rights under this Agreement
without the prior written consent of the Bank. The Borrower and the Bank intend
that no other person shall have any claim or interest under this Agreement or
right of action hereon or hereunder, except as provided with respect to the
Letter of Credit Bank in Section 3.07.
Section 9.03. Survival of Representations, Warranties and
Covenants. All representations, warranties and covenants made by the Borrower
herein and in any document delivered pursuant hereto shall survive the delivery
of this Agreement and the Participating Bank Agreement and any advances under
the Participating Bank Agreement.
Section 9.04. Counterparts. The execution hereof by each party
hereto shall constitute a contract between them for the uses and purposes herein
set forth, and this Agreement may be executed in any number of counterparts,
with each executed counterpart constituting an original and all counterparts
together constituting one agreement.
Section 9.05. Costs, Expenses and Taxes. The Borrower agrees
to pay on demand all reasonable costs and expenses of the Bank in connection
with the preparation, execution and delivery of this Agreement, the
Participating Bank Agreement, the Note, the Security Documents, the Standby
Letter of Credit, the Standby Reimbursement Agreement, the Bond Documents and
any other documents that may be delivered in connection with this Agreement, the
Participating Bank Agreement, the Note, the Security Documents, the Standby
Letter of Credit, the Standby Reimbursement Agreement or the Bond Documents or
any amendments thereto, including, without limitation, the reasonable fees and
expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank and/or any one or more Participating Banks as to their rights
and responsibilities under this Agreement, the Participating Bank Agreement, the
Note, the Security Documents, the Standby Reimbursement Agreement, the Bond
Documents and such other documents, and all costs and expenses, if any,
including without limitation reasonable counsel fees and expenses of the Bank,
in connection with the enforcement of this Agreement, the Participating Bank
Agreement, the Note, the Security Documents, the Bond Documents and such other
documents. In addition, the Borrower shall pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Participating Bank Agreement, the Note, the
Security Documents and such other documents and agrees to indemnify and to hold
the Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees;
provided the Bank promptly notifies the Borrower of any such taxes and fees.
Section 9.06. Amendments. This Agreement may be amended by an
instrument in writing executed and delivered by the Borrower and the Bank.
Section 9.07. Severability. If any provision hereof or of the
Note is found by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction, it shall be ineffective as to such
-44-
jurisdiction only to the extent of such prohibition or unenforceability, and
such prohibition or unenforceability shall not invalidate the balance of such
provision as to such jurisdiction to the extent it is not prohibited or
unenforceable, nor invalidate such provision in any other jurisdiction, nor
invalidate the other provisions hereof, all of which shall be liberally
construed in favor of the Bank in order to effect the provisions of this
Agreement and the Note.
Section 9.08. Conflicts. Insofar as possible the provisions of
this Agreement shall be deemed complementary to the terms of the Note and the
Security Documents, but in the event of conflict the terms hereof shall control
to the extent such are enforceable under applicable law.
Section 9.09. Complete Agreement. Taken together with the
Note, the Security Documents and the other instruments and documents delivered
in compliance herewith, this Agreement is a complete memorandum of the agreement
of the Borrower and the Bank. Waivers or modifications of any provision hereof
must be in writing signed by the party to be charged with the effect thereof.
Section 9.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the Commonwealth of
Pennsylvania without reference to its principles of conflicts of law.
Section 9.11. Table of Contents and Headings. The table of
contents and section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
Section 9.12. Participation. Notwithstanding any other
provision of this Agreement, the Borrower understands that the Bank is or may be
entering into a participation agreement with other banks and may at any time
enter into other participation agreements with one or more additional
participating banks ("Participating Banks") whereby the Bank will allocate to
the Participating Banks certain percentages of the payment obligations of the
Borrower under this Agreement and the Note and the funding obligations of the
Bank under the Participating Bank Agreement. The Borrower acknowledges, that,
for the convenience of all parties, this Agreement is being entered into with,
and the Note and Security Documents are being delivered to, the Bank only and
that the Borrower's obligations under this Agreement, the Note and the Security
Documents are and will be undertaken for the benefit of, and as an inducement
to, the Participating Banks as well as the Bank. Without limiting the foregoing,
the Borrower acknowledges that Sections 2.02(e) and 2.05 and the indemnity of
the Bank under Section 9.05 are also for the benefit of the Participating Banks
as if such sections specifically referred to the Participating Banks and their
participations in the payment obligations of the Borrower and the funding
obligations of the Bank, and the Borrower agrees to make any payments required
by such provisions for the account of any one or more Participating Banks to the
Bank on demand of the Bank and, in the case of such payments under Section
2.02(e), submission by the Bank to the Borrower of the respective Participating
Bank's certificate contemplated by such Section.
The Bank agrees that it shall be the agent for the
Participating Banks and that if any legal actions or claims are instituted by or
to be instituted by a Participating Bank against the Borrower, the Bank shall
act as agent to said Participating Bank with regard to any such legal actions or
claims.
Section 9.13. Judicial Proceedings. Each party to this
Agreement agrees that any suit, action or proceeding, whether claim or
counterclaim, brought or instituted by any party hereto or any successor or
assign of any party, on or with respect to this Agreement or any of the other
documents or the dealings of the parties with respect hereto, or thereto, shall
be tried only by a court and not by a jury. EACH PARTY HEREBY KNOWINGLY,
-45-
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING. Further, each party waives any right it may have to
claim or recover, in any such suit, action or proceeding, any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS
SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE BANK
WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION
WERE NOT A PART OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be duly executed and delivered as of the date first above written.
[Corporate Seal] NEOSE TECHNOLOGIES, INC.
Attest: /s/ A. ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ P. ▇▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------- ------------------------------
Secretary (Vice) President
[Corporate Seal] JEFFERSON BANK
Attest: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
(Assistant) Secretary Senior Vice President
-46-
EXHIBIT A
NOTE
March 20, 1997
$8,579,967.12 Philadelphia, Pennsylvania
For value received and intending to be legally bound, NEOSE
TECHNOLOGIES, INC. ("Maker"), a Delaware corporation promises to the order of
JEFFERSON BANK ("Payee"), a Pennsylvania banking corporation at its offices at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as
Payee may designate in writing, on demand subject to the provisions of Section
2.02(a) of the Agreement described below, the principal sum of Eight Million
Five Hundred Seventy Nine Thousand Nine Hundred Sixty-Seven Dollars and Twelve
Cents ($8,579,967.12) lawful money of the United States of America, or so much
thereof as may be outstanding from time to time, together with interest on the
outstanding balance thereof at a fluctuating rate per annum (computed for the
actual number of days elapsed, based on a 360-day year) equal to one percent
(1.0%) per annum above the Base Rate (as such phrase is defined below); provided
that if any portion of such sum or any other amount payable under the Agreement
(defined below) or interest thereon is not paid within 10 days of the date such
sum, amount or interest is due and payable to Payee under this Note or the
Agreement, after written notice has been sent by the Payee to the Maker, then
such sum shall thereafter bear interest at a fluctuating rate per annum
(computed for the actual number of days elapsed, based on a 360-day year) equal
to five percent (5.0%) per annum above the Base Rate until such sum, amount or
interest and all other amounts due and payable under this Note or the Agreement
have been paid in full. "Base Rate" means the rate of interest so designated and
established by the Bank, from time to time, with changes effective immediately.
The Base Rate of the Payee is determined from time to time by Payee as a means
of pricing some loans to its borrowers and neither is tied to any external rate
of interest or index, nor necessarily reflects the lowest rate of interest
actually charged by Payee to any particular class or category of customers.
The indebtedness evidenced by this Note represents advances to
be made by Payee pursuant to and as described in a Reimbursement Agreement,
dated as of March 1, 1997 (the "Agreement") between Maker and Payee. Terms and
phrases used herein and not defined herein shall have the meanings ascribed to
them in the Agreement. Each advance against this Note shall be due and payable,
with interest, on the date required in Section 2.02(a) of the Agreement, on
which date demand for such payment shall be deemed to have been made under this
Note. Interest accruing pursuant to this Note shall be payable on demand and as
otherwise provided in Section 2.02(a) of the Agreement.
A-1
The principal of this Note may be advanced, repaid and
readvanced on a revolving basis in accordance with the Agreement. This Note
shall be retained by Payee until such time as no further advances are available
under the terms of the Agreement and all principal due and payable under this
Note and all other amounts payable under the Agreement have been paid in full
with interest, and until such time, Payee shall not be required to produce this
Note to Maker in connection with any demand hereon.
Payment of this Note is secured as described in the Agreement.
Such security includes, among other things, the Mortgage on the Premises.
Should any default be made in the payment of any principal or
interest due and payable under this Note, then payment of the same may be
enforced and recovered in whole or in part at any time by one or more of the
remedies provided to or for the benefit of Payee in this Note, the Agreement or
the Security Documents or in any other instrument delivered to or for the
benefit of Payee or otherwise available at law or in equity; and in such case
Payee may also recover all costs of suit and other expenses in connection
therewith, including reasonable attorneys' fees and expenses.
SUBJECT TO THE PRECONDITIONS SET FORTH IN SECTION 8.03 OF THE
AGREEMENT, THE MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS THE PAYEE, BY
ITS ATTORNEY, OR THE PROTHONOTARY OR THE CLERK OF ANY COURT OF RECORD IN THE
COMMONWEALTH OR IN ANY JURISDICTION WHERE PERMITTED BY LAW, UPON THE OCCURRENCE
OF A DEFAULT IN PAYMENT HEREUNDER, OR AT ANY TIME THEREAFTER, TO APPEAR FOR THE
MAKER AND CONFESS AND ENTER JUDGMENT AGAINST IT IN FAVOR OF THE PAYEE IN ANY
JURISDICTION IN WHICH THE MAKER OR ANY OF ITS PROPERTY IS LOCATED FOR THE AMOUNT
OF ALL OBLIGATIONS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND WITH ACTUAL
COLLECTION COSTS (INCLUDING REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT
DECLARATION, AND WITHOUT STAY OF EXECUTION, AND WITH RELEASE OF ERRORS AND THE
RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO THIS NOTE OR A COPY
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE MAKER HEREBY WAIVES AND
RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY
STATE NOW IN FORCE OR HEREAFTER ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE
EXHAUSTED BY THE EXERCISE THEREOF AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE
FULLY PAID, PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON
THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE PAYEE UNDER
THIS NOTE BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF THE MAKER CAN BE
GARNISHED AND ATTACHED, THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND
A-2
INTENTIONALLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO THE
PAYEE, UPON THE OCCURRENCE OF A DEFAULT IN PAYMENT HEREUNDER, OR AT ANY TIME
THEREAFTER, ENTERING JUDGMENT AGAINST THE MAKER BY CONFESSION AND ATTACHING AND
GARNISHING THE PAYEE ACCOUNTS AND OTHER ASSETS OF THE MAKER, WITHOUT PRIOR
NOTICE OR OPPORTUNITY FOR A HEARING. THE MAKER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS NOTE AND FURTHER
ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING
CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THE MAKER BY SUCH COUNSEL.
The remedies of Payee as provided herein or in the Agreement
or the Security Documents shall be cumulative and concurrent and may be pursued
singly, successively or together against Maker and/or any other obligor under
the Security Documents and/or against the property covered by the Security
Documents and/or any other property mortgaged, pledged or assigned to Payee as
security for this Note, at the sole discretion of Payee, and such remedies shall
not be exhausted by any exercise thereof but may be exercised as often as
occasion therefor shall occur.
Payee shall not by any act of omission or commission be deemed
to have waived any of its rights or remedies hereunder or under the Agreement or
the Security Documents unless such waiver be in writing and signed by Payee, and
then only to the extent specifically set forth therein; a waiver on one event
shall not be construed as continuing or as a bar to or waiver of such right or
remedy on a subsequent event.
Maker hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by Payee under the terms of this
Note, or of the Agreement or the Security Documents, as well as all benefit that
might accrue to Maker by virtue of any present or future laws exempting any of
the property covered by the Security Documents or any other property, real or
personal, or any part of the proceeds arising from any sale of such property,
from attachment, levy or sale under execution, or providing for any stay of
execution, exemption from civil process or extension of time for payment, as
well as the right of inquisition on any real estate that may be levied upon
under a judgment obtained by virtue hereof, and Maker hereby voluntarily
condemns the same and authorizes the entry of such voluntary condemnation on any
writ of execution issued thereon, and agrees that such real estate may be sold
upon any such writ in whole or in part in any order desired by Payee.
Maker hereby waives presentment for payment, notice of
nonpayment, notice of protest and protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note, and agrees that the liability of Maker shall be
unconditional without regard to the liability of any other party and shall not
be in any manner affected by any indulgence, extensions of time, renewal, waiver
or modification granted or consented to by Payee; and Maker hereby consents to
any and all
A-3
extensions of time, renewals, waivers or modifications that may be granted by
Payee with respect to the payment or other provisions of this Note, and to the
release of the Security Documents, or any part thereof, with or without
substitution, and agrees that makers, indorsers, guarantors or sureties may
become parties hereto without notice to Maker or affecting Maker's liability
hereunder.
Maker shall pay the cost of any revenue, tax or other stamps
now or hereafter required by law at any time to be affixed to this Note or the
Mortgage or any other Security Document; and if any taxes be imposed with
respect to debts secured by mortgages, or with respect to notes evidencing debts
so secured, Maker agrees to pay to the holders hereof upon demand the amount of
such taxes, and hereby waives any contrary provisions of any laws or rules of
court now or hereafter in effect.
If any provision hereof is found by a court of competent
jurisdiction to be prohibited or unenforceable, it shall be ineffective only to
the extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision to the
extent it is not prohibited or unenforceable, nor invalidate the other
provisions hereof, all of which shall be liberally construed in favor of Payee
in order to effect the provisions of this Note.
As used herein, the words "Payee" and "Maker" shall be deemed
and construed to include the respective successors and assigns of Payee and
Maker. This Note shall be construed according to and governed by the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, Maker has duly executed this Note under
seal as of the day and year first above written.
[Corporate Seal] NEOSE TECHNOLOGIES, INC.
Attest: By:
-------------------------------- --------------------------------
Secretary (Vice) President
A-4
EXHIBIT B
PROJECT DESCRIPTION
AND
COST SCHEDULE
Project Description
The Project to be undertaken by the Borrower includes the
acquisition, improvement and equipping of a facility located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, which will be used for the development and pilot
production of complex carbohydrates for research and development relating to a
variety of healthcare applications, to be owned and operated by the Borrower.
Cost Schedule
(TO FOLLOW)
B-1
EXHIBIT C
INQUIRIES CONDUCTED BY THE BORROWER WITH RESPECT TO
ENVIRONMENTAL MATTERS
1) A Phase I Environmental Site Audit, dated January 8, 1997, prepared by
D.C.R. Environmental Securities, Inc.
2) The subsurface soil investigation performed by Pennoni Associates Inc.,
the results of which were set forth in a letter report dated February
5, 1997 (including soil sample analytical results) from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, C.P.G. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, of the Borrower.
C-1
EXHIBIT D
OPTIONAL PREPAYMENT SCHEDULE
Date of Optional Redemption Amount of Bonds to be
--------------------------- Optionally Redeemed
-------------------
April 1, 1998 $ 500,000
April 1, 1999 600,000
April 1, 2000 1,000,000
April 1, 2001 1,100,000
April 1, 2002 1,100,000
April 1, 2003 1,200,000
April 1, 2004 1,200,000
April 1, 2005 100,000
April 1, 2006 200,000
April 1, 2007 100,000
April 1, 2008 200,000
April 1, 2009 200,000
April 1, 2010 200,000
April 1, 2011 200,000
April 1, 2012 300,000
April 1, 2013 200,000
April 1, 2014 0
April 1, 2015 0
April 1, 2016 0
April 1, 2017 0
----------
$8,400,000
==========
D-1
