EXHIBIT 10.8
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LOAN AGREEMENT
Dated as of June 1, 1999
by and between
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
and
ABLE LABORATORIES, INC.
Relating to New Jersey Economic Development Authority
$1,700,000 Industrial Development Revenue Bonds
(Able Laboratories, Inc. Project) Series 1999A
and
$300,000 Industrial Development Revenue Bonds
(Able Laboratories, Inc. Project) Series 1999B (Taxable)
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS.......................................................4
Section 1.01. Definitions...........................................4
Section 1.02. Content of Certificates and Opinions..................4
Section 1.03. Interpretation........................................4
ARTICLE II - THE LOAN; USE OF PROCEEDS........................................6
Section 2.01. Loan of Funds to the Borrower.........................6
Section 2.02. Use of Proceeds.......................................6
Section 2.03. Excess Proceeds.......................................6
Section 2.04. Covenants for Benefit of Bondholders..................6
ARTICLE III - PAYMENT PROVISIONS..............................................7
Section 3.01. Loan Payments.........................................7
Section 3.02. Restoration of Debt Service Reserve Fund; Payments
into Operating Expense Reserve Fund and Capital
and Maintenance Fund................................7
Section 3.03. Time of Loan Payments.................................8
Section 3.04. Additional Payments; Taxes............................8
Section 3.05. Acceleration of Payment to Redeem Bonds..............10
Section 3.06. No Defense or Set-Off................................10
Section 3.07. Termination Upon Payment or Defeasance of Bonds......10
Section 3.08. Assignment of Authority's Rights.....................10
Section 3.09. Assignment by Borrower...............................11
Section 3.10. Indemnity Against Claims.............................11
Section 3.11. Authority is Conduit Issuer; Borrower is Real Party
in Interest........................................13
Section 3.12. Operating Account....................................13
ARTICLE IV - BORROWER OBLIGATIONS............................................16
Section 4.01. General Obligation of the Borrower...................16
Section 4.02. [Reserved]...........................................16
Section 4.03. Maintenance and Operation of the Project.............16
Section 4.04. Maintenance of Existence.............................17
Section 4.05. Compliance with Laws.................................17
Section 4.06. Notice of Bankruptcy Case Commencement...............17
Section 4.07. Project Users........................................18
ARTICLE V - THE PROJECT......................................................19
Section 5.01. Acquisition, Construction and Installation of the
Project............................................19
Section 5.02. Plans and Specifications.............................19
Section 5.03. Issuance of the Bonds; Application of Proceeds.......19
Section 5.04. Disbursements from the Project Fund..................19
Section 5.05. Borrower Required to Pay Costs in Event Project Fund
Insufficient.......................................22
Section 5.06. Completion Date......................................22
Section 5.07. Investment of Fund Moneys............................22
ARTICLE VI - INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN..................23
Section 6.01. Insurance to be Maintained...........................23
Section 6.02. Destruction, Damage and Eminent Domain...............24
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Section 6.03. Notice of Property Loss..............................24
Section 6.04. Disposition of Casualty Insurance and Condemnation
Award Proceeds.....................................24
ARTICLE VII - COVENANTS OF THE BORROWER......................................26
Section 7.01. Compliance with Laws.................................26
Section 7.02. Power to Perform Obligations.........................26
Section 7.03. Inspection...........................................26
Section 7.04. Additional Information...............................26
Section 7.05. Tax-Exemption........................................27
Section 7.06. Hazardous Substances.................................32
Section 7.07. No Material Proceedings Affecting Borrower...........33
Section 7.08. Tax Filings..........................................33
Section 7.09. No Existing Defaults.................................33
Section 7.10. No Material Misstatements or Omissions...............33
Section 7.11. Inducement to Borrower...............................34
Section 7.12. Borrower's Reporting Obligations.....................34
Section 7.13. Cooperation with Trustee.............................34
Section 7.14. Affirmative Action and Prevailing Wage Regulations...34
Section 7.15. Costs and Expenses...................................35
Section 7.16. Rate Covenant........................................36
Section 7.17. Operating Budget.....................................36
Section 7.18. Operating Expense Reserve Fund; Capital and
Maintenance Fund...................................36
Section 7.19. Liquidity Covenant...................................37
Section 7.20. Trade Payables Covenant..............................37
Section 7.21. Additional Indebtedness..............................37
Section 7.22. Financial Statements.................................38
Section 7.23. Year 2000 Compliance.................................38
Section 7.24. Continuing Disclosure................................38
ARTICLE VIII - EVENTS OF DEFAULT AND REMEDIES................................40
Section 8.01. Events of Default....................................40
Section 8.02. Acceleration.........................................41
Section 8.03. Payment of Loan Payments on Default; Suit Therefor...41
Section 8.04. Other Remedies.......................................42
Section 8.05. Waiver...............................................42
Section 8.06. Cumulative Rights....................................42
Section 8.07. No Exercise of Remedies Without Consent of
Majority Owners....................................43
Section 8.08. Determination of Taxability Not a Default............43
ARTICLE IX - OPTIONS.........................................................44
Section 9.01. Option to Terminate Upon Defeasance..................44
ARTICLE X - MISCELLANEOUS....................................................45
Section 10.01. Approval of Indenture...............................45
Section 10.02. Taxes -Rights of Authority to Pay...................45
Section 10.03. Illegal Provisions Disregarded......................45
Section 10.04. Limitation of Liability of the Authority............45
Section 10.05. No Recourse as to the Authority.....................46
Section 10.06. Reference to Statute or Regulation..................46
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Section 10.07. Notices.............................................46
Section 10.08. Applicable Law......................................47
Section 10.09. Amendments..........................................47
Section 10.10. Term of Agreement...................................47
Section 10.11. Amounts Remaining in Debt Service Fund..............48
Section 10.12. Survival of Covenants, Conditions and
Representations...................................48
Section 10.13. Headings............................................48
Section 10.14. Multiple Counterparts...............................48
Section 10.15. Consent.............................................48
Section 10.16. Filing of Other Documents...........................48
Exhibit A - Addendum to Construction Contract...............................A-1
Exhibit B - Contractor's Certificate and Agreement..........................B-1
Exhibit C - Contractor's Completion Certificate.............................C-1
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THIS LOAN AGREEMENT, dated as of June 1, 1999 (this "Agreement"), by
and between NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate
and politic constituting an instrumentality of the State of New Jersey (the
"Authority") and ABLE LABORATORIES, INC. a Delaware corporation, duly qualified
to transact business in the State of New Jersey corporation (the "Borrower").
WITNESSETH:
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WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
approved on August 7, 1974, as amended and supplemented (the "Act"), declares it
to be in the public interest and to be the policy of the State of New Jersey
(the "State") to ▇▇▇▇▇▇ and promote the economy of the State, increase
opportunities for gainful employment and improve living conditions, assist in
the economic development or redevelopment of political subdivisions within the
State, and otherwise contribute to the prosperity, health and general welfare of
the State and its inhabitants by inducing manufacturing, industrial, commercial,
recreational, retail, service and other employment-promoting enterprises to
locate, remain or expand within the State by making available financial
assistance; and
WHEREAS, the Authority, to accomplish the purposes of the Act, is
empowered to extend credit to such employment-promoting enterprises in the name
of the Authority on such terms and conditions and in such manner as it may deem
proper for such consideration and upon such terms and conditions as the
Authority may determine to be reasonable; and
WHEREAS, Borrower has requested that the Authority provide funds to
finance a project (the "Project") consisting of (i) acquiring additional
equipment for an existing manufacturing facility in South Plainfield, New
Jersey, (ii) providing certain initial deposits into Funds and Accounts
established under the Indenture, (iii) paying certain costs of issuance of the
Bonds, and (iv) funding a debt service reserve fund for the Bonds; and
WHEREAS, pursuant to and in accordance with the provisions of the Act
and resolutions adopted by the Authority on April 13, 1999, May 11, 1999 and
June 8, 1999 (collectively, the "Resolution"), the Authority has authorized and
undertaken to issue $1,700,000 aggregate principal amount of its Industrial
Development Revenue Bonds (Able Laboratories, Inc. Project) Series 1999A (the
"Series 1999A Bonds") and $300,000 aggregate principal amount of its Industrial
Development Revenue Bonds (Able Laboratories, Inc. Project) Series 1999B
(Taxable) (the "Series 1999B Bonds" and together with the Series 1999A Bonds,
the "Bonds") for the purpose of providing funds for, among other things,
financing the Project; and
WHEREAS, the Act provides that the Bonds shall be secured by a pledge
of, and have a lien upon, the revenues and receipts of Borrower pursuant to this
Agreement; and
WHEREAS, the Bonds are to be issued under and secured by a Trust
Indenture of even date herewith (the "Indenture"), between the Authority and
U.S. Bank Trust National Association, as trustee (the "Trustee"); and
WHEREAS, this Agreement provides that the Authority will loan the
proceeds of the Bonds to the Borrower to finance, among other things, the
Project and the Borrower will agree, among other things, to repay the loan in
installments equal to payments of debt service on the Bonds when due; and
WHEREAS, the Borrower has agreed to make payments pursuant to this
Agreement sufficient in the aggregate to pay fully when due the principal of and
interest on the Bonds, and related expenses; and
WHEREAS, as additional evidence of and security for all of its payment
obligations hereunder, the Borrower has executed and delivered its promissory
note (as amended from time to time, the "Note") to the Authority, which the
Authority will assign to the Trustee, and payments made pursuant to the Note
will be sufficient to repay the loan at the times and in the installments
sufficient to provide the Authority with money to pay the debt service on the
Bonds; and
WHEREAS, the Borrower, to secure the Bonds and its obligations under
this Agreement and the Note in connection with the Bonds, will execute and
deliver to the Authority, and the Authority will assign to the Trustee, a
Leasehold Mortgage, Security Agreement, Assignment of Rents and Financing
Statement, dated as of June 1, 1999 (as amended and supplemented from time to
time, the "Mortgage"), granting (i) a first mortgage lien on its leasehold
interest in the Project, (ii) a first security interest in the Borrower's
Equipment purchased with the proceeds of the Bonds (as such term is defined in
the Uniform Commercial Code as in effect in the State), subject to Permitted
Encumbrances identified therein and (iii) a subordinate security interest in the
Accounts, Chattel Paper, Gross Revenues, Documents, Equipment of the Borrower
not financed with the proceeds of the Bonds, General Intangibles, Instruments
and Inventory (as such terms are defined in the Uniform Commercial Code as in
effect in the State), subject to Permitted Encumbrances identified therein; and
WHEREAS, as additional evidence of and security for all of its payment
obligations hereunder, the Borrower has caused its corporate parent, DynaGen,
Inc., a Delaware corporation (the "Guarantor") to execute and deliver a Guaranty
Agreement dated as of June 1, 1999 (as amended from time to time, the
"Guaranty") to the Authority, which the Authority will assign to the Trustee,
subject to reserved rights, in which the Guarantor guarantees the payment and
performance obligations of the Borrower under this Agreement, the Note and the
Mortgage; and
WHEREAS, as security for the full and prompt payment and performance of
all its obligations under the Indenture, including, specifically, without
limiting the generality of the foregoing, its obligation to make payment of
principal of and interest on the Bonds when due, the Authority has, pursuant to
the provisions of the Indenture, assigned to the Trustee all of its right, title
and interest in, to and under this Agreement (except its right to
indemnification and to receive its fees and expenses hereunder and to enforce
the public purpose covenants of the Borrower set forth in this Agreement),
including without limitation, the right to receive the installment payments
payable by the Borrower hereunder; and
WHEREAS, the Authority hereby finds and determines that the financing
of the Project will comply with the purposes and provisions of the Act; and
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WHEREAS, the execution and delivery of this Agreement and the
Indenture, and the issuance of the Bonds under the Act, have been in all
respects duly and validly authorized by the Resolution of the Authority, duly
adopted and approved; and
WHEREAS, the Authority and the Borrower desire to enter into this
Agreement to set forth the terms and conditions upon which the Authority will
make the Loan, as hereinafter defined.
NOW, THEREFORE, in consideration of the above premises and of the
mutual covenants hereinafter contained, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Terms used as defined terms in the recitals
shall have the same meanings throughout this Agreement and, in addition thereto,
capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Indenture.
Section 1.02. Content of Certificates and Opinions. The Trustee may,
but shall not be obligated to, require that every certificate or opinion
provided for in this Agreement with respect to compliance with any provision
hereof shall include (i) a statement to the effect that the Person making or
giving such certificate or opinion has read such provision and the definitions
herein relating thereto; (ii) a brief statement as to the nature and scope of
the examination or investigation upon which the certificate or opinion is based;
(iii) a statement to the effect that in the opinion of such Person, he has made
or caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion with respect to the subject matter referred
to in the instrument to which his signature is affixed; (iv) a statement of the
assumptions upon which such certificate or opinion is based, and that such
assumptions are reasonable; and (v) a statement as to whether, in the opinion of
such Person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the
Authority or the Borrower may be based, insofar as it relates to legal or
accounting matters, upon a certificate or opinion of or representation by
counsel or an Accountant, unless such officer knows, or in the exercise of
reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or
statement may be based, as aforesaid, is erroneous. Any such certificate or
opinion made or given by counsel or an Accountant may be based, insofar as it
relates to factual matters (with respect to which information is in the
possession of the Authority or the Borrower, as the case may be) upon a
certificate or opinion of or representation by an officer of the Authority or
the Borrower, unless such counsel or Accountant knows that the certificate or
opinion or representation with respect to the matter upon which such certificate
or opinion or representation may be based, as aforesaid, is erroneous. The same
officer of the Authority or the Borrower, or the same counsel or Accountant, as
the case may be, need not certify to all of the matters required to be certified
under any provision of this Agreement, but different officers, counsel or
Accountants may certify to different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the
singular shall include the plural and vice versa and the use of the neuter,
masculine or feminine gender is for convenience only and shall be deemed to mean
and include the neuter, masculine or feminine gender, as appropriate.
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(b) Headings of articles and sections herein and the table of contents
hereof are solely for convenience of reference, do not constitute a part hereof
and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or subdivision hereof.
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ARTICLE II
THE LOAN; USE OF PROCEEDS
Section 2.01. Loan of Funds to the Borrower. The Authority hereby
agrees that simultaneously with the execution and delivery of this Agreement, it
will loan to the Borrower, upon the terms and conditions specified herein and in
the Indenture, the proceeds of the sale of the Bonds (the "Loan"), and the
Borrower agrees to receive such Loan from the Authority for the purposes
provided herein and in the Indenture.
Section 2.02. Use of Proceeds. The proceeds of the Bonds shall be
deposited with the Trustee and applied as provided in the Indenture and in this
Agreement to finance the Project and to pay costs of issuance of the Bonds.
Section 2.03. Excess Proceeds. If after completion of the Project at
least ninety-five percent (95%) of the sum of (i) the actual amount of the
proceeds received by the Authority from the sale of the Bonds less amounts
expended for issuance expenses and (ii) any investment earnings on moneys in the
Project Fund, have not been used, any amount (exclusive of amounts retained by
the Trustee in the Project Fund for payment of Costs of the Project not then due
and payable) remaining in the Project Fund shall be segregated by the Trustee in
a separate subaccount of the Debt Service Fund and used by the Trustee in
accordance with the terms of Section 5.08 of the Indenture.
Section 2.04. Covenants for Benefit of Bondholders. This Agreement is
executed in part to induce the purchase by others of the Bonds. Accordingly, all
covenants and agreements on the part of the Borrower and the Authority, as set
forth in this Agreement, are hereby declared to be for the benefit of the Owners
from time to time of the Bonds.
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ARTICLE III
PAYMENT PROVISIONS
Section 3.01. Loan Payments.
(a) The Borrower hereby agrees to pay duly and punctually (i) the
principal and interest due and payable on the Bonds and (ii) any other amounts
due and payable by the Borrower under this Agreement. All loan payments due
under this Agreement shall be paid to the Trustee directly by the Borrower as
provided in Section 3.03 hereof. Any other amounts required to be paid under
this Agreement shall be paid by the Borrower to the party entitled to receive
same hereunder and in the manner provided for herein. Loan payments shall be
made by the Borrower with the Borrower's funds. It is the intention of the
Authority and the Borrower that, notwithstanding any other provision of this
Agreement, the Authority shall receive funds from the Borrower under this
Agreement at such times and in such amounts as will enable the Authority to meet
all of its obligations under the Bonds and the Indenture, including any such
obligations surviving the payment of the Bonds and the defeasance of the
Indenture and including amounts due upon the redemption or acceleration of the
maturity of the Bonds. The loan payments required by this Section 3.01(a) shall
be reduced after payment of the principal and interest on the Bonds in
accordance with the terms of the Indenture has been made.
(b) All loan payments and other sums due and payable to the Authority
or the Trustee under this Agreement shall be absolutely net to the Authority or
the Trustee, as applicable, free of any taxes, costs, liabilities or other
deductions whatsoever, so that this Agreement shall yield all amounts due
hereunder net to the Authority or the Trustee throughout the term hereof.
Section 3.02. Restoration of Debt Service Reserve Fund; Payments into
Operating Expense Reserve Fund and Capital and Maintenance Fund .
(a) Without limiting the generality of Sections 3.01 and 3.04 hereof,
the Borrower agrees that if any additional amounts become payable by the
Authority to the Owners of the Bonds or the Trustee pursuant to the terms
thereof or the terms of the Indenture, then additional amounts shall be due and
payable by the Borrower to the Trustee, as the assignee of the Authority,
hereunder equal to any additional amounts that may be so payable by the
Authority, before or after payment of principal on the Bonds and the Loan
hereunder, all of which amounts shall be paid by the Borrower on the date that
the comparable amounts are due by the Authority to the Trustee under the Bonds
or the Indenture. The Borrower expressly acknowledges receipt of a copy of the
Indenture and assumes all of the Borrower's obligations thereunder and agrees to
pay all amounts and perform all obligations of the Borrower under the Indenture
so that at all times there shall be no default thereunder.
(b) In the event of any withdrawal from the Debt Service Reserve Fund
pursuant to Section 5.12 of the Indenture to cure any deficiency in the Debt
Service Fund or in the event that the Trustee notifies the Borrower of a decline
in the value of the securities in such Fund, the Borrower shall pay, or cause to
be paid, over to the Trustee, the full amount of such withdrawal or decline in
value for deposit in the Debt Service Reserve Fund, in no more than six (6)
equal, consecutive,
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installments, each payable on the first Business Day of the month commencing
with the month immediately succeeding the month in which the Trustee notifies
the Borrower of the withdrawal or decline in value.
(c) The Borrower shall make, or cause to be made, to the Trustee, the
monthly payments for deposit in the Operating Expense Reserve Fund as described
in Section 5.15 of the Indenture; provided that any failure to make a deposit in
the Operating Expense Reserve Fund because of insufficient Gross Revenues shall
not be an Event of Default hereunder.
(d) The Borrower shall make, or cause to be made, to the Trustee, the
monthly payments for deposit in the Capital and Maintenance Fund as described in
Section 5.16 of the Indenture; provided that any failure to make the deposit
into the Capital and Maintenance Fund because of insufficient Gross Revenues
shall not be an Event of Default hereunder.
(e) Any payments made from the Revenue Fund pursuant to Section 5.17 of
the Indenture shall be considered payment made in compliance with subsections
(b), (c) and (d) of this Section.
Section 3.03. Time of Loan Payments.
(a) The Borrower shall pay to the Trustee, as assignee of the
Authority, for deposit in the Debt Service Fund on any Interest Payment Date or
any other date that any payment of interest or principal is required to be made
in respect of the Bonds pursuant to the Indenture, until the principal of and
interest on the Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the Indenture, in immediately
available funds, a sum which, together with any moneys available for such
payment in the Debt Service Fund, will enable the Trustee to pay the amount
payable on such date as principal of (whether at maturity or upon redemption or
acceleration or otherwise), and interest on the Bonds as provided in the
Indenture.
It is understood and agreed that all payments payable by the Borrower
under this subsection 3.03 (a) are assigned by the Authority to the Trustee for
the benefit of the Owners of the Bonds. The Borrower assents to such assignment.
(b) Additionally, from time to time, the Borrower shall make such
payments as shall be necessary to make up any deficiency in or to fully fund any
of the funds established under the Indenture.
(c) No later than April 1, 2000, the Borrower will deposit with the
Trustee an additional $65,895 for deposit in the Lease Reserve Fund.
Section 3.04. Additional Payments; Taxes. As Additional Payments
hereunder, the Borrower, during the term of this Agreement, shall pay or cause
to be paid the following:
(a) To the public officers charged with the collection thereof,
promptly as the same become due, all taxes (or contributions or payments in lieu
thereof), including but not limited to
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income, profits or property taxes, which may now or hereafter be imposed by the
United States of America, any state or municipality or any political subdivision
or subdivisions thereof, and all assessments for public improvements or other
assessments, levies, license fees, charges for publicly supplied water or sewer
services, excises, franchises, imposts and charges, general and special,
ordinary and extraordinary (including interest, penalties and all costs
resulting from delayed payment of any of the foregoing) of whatever name, nature
and kind and whether or not now within the contemplation of the parties hereto
and which are now or may hereafter be levied, assessed, charged or imposed or
which are or may become a lien upon the payments due under this Agreement, or
upon the Borrower or the Authority, provided, however, that the Borrower shall
not be required to pay or discharge or cause to be paid or discharged any tax,
assessment, lien or other matter hereunder so long as the validity thereof is
being contested in good faith and by appropriate legal proceedings diligently
pursued.
(b) All reasonable fees, charges and expenses of the Trustee and the
Underwriter, as and when the same become due and payable.
(c) The reasonable fees and expenses of such Accountants, consultants,
attorneys and other experts as may be engaged by the Authority or the Trustee to
prepare audits, financial statements, reports, opinions or provide such other
services required under this Agreement or the Indenture.
(d) The reasonable fees and expenses of the Authority in connection
with the preparation, execution, delivery, recording and filing of this
Agreement, the Bonds, the Indenture and the other Bond Documents, and any and
all other expenses incurred in connection with the authorization, issuance, sale
and delivery of the Bonds or incurred by the Authority in connection with any
litigation which may at any time be instituted involving this Agreement, the
Bonds, the Indenture or any of the other Bond Documents contemplated thereby, or
incurred in connection with the supervision or inspection of the Project, or
otherwise in connection with this Agreement, the Indenture, the Bonds or any of
the other Bond Documents, instruments or agreements in connection therewith
including, without limitation, the Authority's annual fees and expenses and the
Trustee's annual fees and expenses under the Indenture, this Agreement and the
other Bond Documents, which fees and expenses may include, but shall not be
limited to, reasonable attorneys' fees and all costs of marketing, collecting
payment on and redeeming the Bonds thereunder, and any costs and expenses of any
Owner of the Bonds in connection with any approval, consent or waiver under, or
modification of, any such document.
(e) The Borrower further agrees to pay all costs of maintenance and
repair, insurance premiums and other costs and expenses concerning or in any way
related to ownership, maintenance and use of the Project, or any part thereof,
during the term of this Agreement or any renewal thereof.
Such Additional Payments shall be billed to the Borrower by the
appropriate party, together with a statement certifying that the amount billed
has been paid or incurred and attaching reasonable supporting documentation
indicating that the amount billed has been paid or incurred for one or more of
the above items. After such a demand, amounts so billed shall be paid by the
Borrower within thirty (30) days after receipt of the ▇▇▇▇ by the Borrower.
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Section 3.05. Acceleration of Payment to Redeem Bonds. Whenever the
Bonds are subject to optional redemption or extraordinary optional redemption
pursuant to the Indenture and the provisions hereof, the Authority will, upon
request of the Borrower, direct the Trustee to call the same for redemption as
provided in the Indenture. Whenever any Bond is subject to mandatory redemption
pursuant to the Indenture, the Borrower will cooperate with the Authority and
the Trustee in effecting such redemption. In the event of any mandatory,
optional or extraordinary optional redemption of the Bonds, the Borrower will
pay or cause to be paid to the Trustee an amount equal to the applicable
redemption price as a prepayment of that portion of the loan payment
corresponding to the Bonds to be redeemed, together with interest accrued to the
date of redemption, and will also pay all reasonable fees and expenses of the
Authority and the Trustee arising with respect to such redemption or otherwise
due and owing hereunder or under the Indenture at such times and in such amounts
as are required to effect the mandatory, optional or extraordinary optional
redemption of the Bonds under the terms of the Indenture.
Section 3.06. No Defense or Set-Off. The obligations of the Borrower to
make loan payments shall be absolute and unconditional without any defense or
set-off for any reason, including, without limitation, any acts or circumstances
that may constitute failure of consideration, invalidity or unenforceability of
the Bonds, commercial frustration of purpose or failure of the Authority to
perform and observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with this Agreement, it
being the intention of the parties that the payments required of the Borrower
hereunder will be paid in full when due without any delay or diminution
whatsoever.
Section 3.07. Termination Upon Payment or Defeasance of Bonds. When the
interest on and the principal or redemption price (as the case may be) of all
Bonds issued under the Indenture, together with all other amounts due and
payable by the Borrower hereunder, shall have been paid, or there shall have
been deposited with the Trustee an amount evidenced by moneys or Government
Obligations, the principal of and interest on which, when due, without
reinvestment, will provide sufficient moneys to pay fully the principal or
redemption price (as the case may be) of and all accrued interest on all Bonds
then Outstanding, as well as all other sums payable or to become payable by the
Borrower under this Agreement, as evidenced by a verification report from an
Accountant, delivered to the Trustee, satisfactory in form and content to the
Trustee, no further loan payments shall be payable hereunder and this Agreement
shall thereupon be terminated. The Authority shall cause the Trustee to pay over
to the Borrower any additional moneys then remaining in any Fund (other than the
Rebate Fund) established under the Indenture (and which will not be required to
pay any amounts as set forth in the preceding sentence), and shall pay over to
the Borrower any additional moneys which may be paid to the Authority by the
Trustee.
Section 3.08. Assignment of Authority's Rights.
(a) As security for the payment of the Bonds, the Authority will assign
to the Trustee all of the Authority's rights under this Agreement, the Mortgage,
the Note and the Guaranty. The Authority expressly reserves from the foregoing
assignments to the Trustee the following rights (collectively, the "Reserved
Rights"):
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(i) the Authority's right to indemnification contained in
Section 3.10 and 7.05(e) hereof;
(ii) the Authority's right to payment of its fees and expenses
contained in Sections 3.04, 3.05, 3.10, 7.05(e), 7.15, 8.03
and 10.02 hereof;
(iii) the Authority's right to enforce the Borrower's
covenants and obligations set forth in Sections 3.09, 3.11,
4.03, 4.04, 4.07, 6.01, 7.03, 7.04, 7.05, 7.10, 7.11, 7.12,
7.13, 7.14 and 10.16 hereof and the remedies set forth in
Sections 8.02, 8.03 and 8.04 hereof and the rights set forth
in Section 10.15 hereof;
(iv) the Authority's right to grant or withhold its consent to
assignments, sales, conveyances and dispositions; and
(v) the Authority's right to receive notices set forth in
Section 4.06 hereof.
(b) The Borrower: (i) consents to such assignments and accepts notice
thereof with the same legal effect as though such acceptances were embodied in
separate instruments, separately executed after execution of such assignments;
(ii) agrees to pay directly to the Trustee, all payments payable hereunder for
application to amounts then due and payable or to become due and payable under
the Indenture, such payments to be paid by the Borrower to the Trustee without
any defense, set-off or counterclaim arising out of any default on the part of
the Authority under this Agreement or any transaction between the Borrower and
the Authority or the Borrower and the Trustee; and (iii) agrees that the Trustee
may exercise any and all rights and pursue any and all remedies granted the
Authority hereunder.
Section 3.09. Assignment by Borrower. This Agreement may be assigned in
whole or in part by the Borrower without the necessity of obtaining the consent
of the Trustee or the Owners of the Bonds; provided, however, that any such
assignment shall require the prior written consent of the Authority; and further
provided that no assignment pursuant to this Section shall be made otherwise
than in accordance with the Act and the Code. The Borrower shall, within thirty
(30) days after execution thereof, furnish or cause to be furnished to the
Authority and the Trustee a true and complete copy of each such assignment
together with any instrument of assumption.
Section 3.10. Indemnity Against Claims.
(a) The Borrower agrees to and does hereby indemnify and hold harmless
the Authority, the State, the Underwriter and any person who "controls" the
Authority, the State or the Underwriter (within the meaning of Section 15 of the
Securities Act of 1933, as amended), and any member, officer, director,
official, employee, and attorney of the Authority, the State or the Underwriter
(collectively called the "Indemnified Parties") against any and all losses,
claims, damages or liabilities (including all costs, expenses and reasonable
counsel fees incurred in investigating or defending such claim) suffered by any
of the Indemnified Parties and caused by,
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relating to, arising out of, resulting from, or in any way connected with (i)
the condition, use, possession, conduct, management, planning, design,
acquisition, construction, installation, financing or sale of the Project or any
part thereof, including the payment of any rebate amount to the federal
government; or (ii) any untrue or misleading statement of a material fact
contained in information provided by the Borrower with respect to the
transactions contemplated hereby; or (iii) any omission of a material fact
necessary to be stated therein in order to make such statement not misleading or
incomplete. In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect to which
indemnity may be sought against the Borrower, such Indemnified Party shall
promptly notify the Borrower in writing, and the Borrower shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party, the payment of all costs and expenses and the right to
negotiate and consent to settlement. Any one or more of the Indemnified Parties
shall have the right to employ separate counsel at the expense of such
Indemnified Parties in any such action and to participate in the defense thereof
and such representation shall be at the expense of the Borrower if the
Indemnified Party has separate or additional defenses available to it. The
Borrower shall not be liable for any settlement of any such action effected
without Borrower's consent, but if settled with the consent of the Borrower, or
if there is a final judgment for the claimant on any such action, the Borrower
agrees to indemnify and hold harmless the Indemnified Parties from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
anything in this Agreement to the contrary which may limit recourse to the
Borrower or may otherwise purport to limit the Borrower's liability, the
provisions of this Section shall control the Borrower's obligations and shall
survive repayment of the Bonds.
(b) The Borrower hereby covenants and agrees that it will indemnify the
Trustee against any and all claims arising out of the Trustee's exercise and
performance of powers and duties granted unto it by the Indenture and hereunder,
and not resulting from the Trustee's willful misconduct or gross negligence.
(c) The Borrower will indemnify, hold harmless and defend the
Authority, the State, the Underwriter and their officers, members, directors,
officials, attorneys and employees of each of them against all losses, costs,
damages, expenses, suits, judgments, actions and liabilities of whatever nature
including, specifically, any liability under any state or federal securities
laws (including but not limited to reasonable attorneys' fees, litigation and
court costs, amounts paid in settlement and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to: any
material misstatements, misrepresentations or omissions with respect to the
Borrower, this Agreement, the Bonds, the Indenture or any other documents or
instruments delivered at or in connection with the issuance of the Bonds on the
Closing Date (including any statements or representations made in connection
with the offer or sale thereof) made or given to the Authority, the Trustee, the
Underwriter or purchasers of any of the Bonds, by the Borrower or any of its
officers, agents or employees, including, but not limited to, misstatements,
misrepresentations or omissions of facts, financial information or corporate
affairs. The Borrower also will pay and discharge and indemnify and hold
harmless the Authority and the Trustee from (x) any lien or charge upon payments
by the Borrower to the Authority or the Trustee under this Agreement and (y) any
taxes (other than income taxes imposed against the Authority or the Trustee)
relating to the Project. If any such claim is asserted, or any such lien or
charge upon payments, or any such taxes, or other charges are
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sought to be imposed, the Authority or the Trustee, as the case may be, will
give prompt notice to the Borrower, and the Borrower will have the sole right
and duty to assume, and will assume, the defense thereof, with full power to
litigate, compromise or settle the same in its sole discretion.
(d) If the indemnification provided heretofore is for any reason
determined to be unavailable to the Authority or the Trustee with respect to any
such loss, claim, demand or liability, including expenses in connection
therewith, the Authority or the Trustee as appropriate, shall be entitled as a
matter of right to contribution by the Borrower. The amount of such contribution
shall be in such proportion as is appropriate to reflect relative culpability of
the parties.
Section 3.11. Authority is Conduit Issuer; Borrower is Real Party in
Interest. The Borrower hereby expressly acknowledges that the Authority is a
conduit issuer and that all of the right, title and interest of the Authority in
and to this Agreement are to be assigned to the Trustee (except for the Reserved
Rights of the Authority), naming the Trustee, as applicable, its true and lawful
attorney and as its assignee to enforce the terms and conditions of this
Agreement. Notwithstanding any other provision contained herein, the Borrower
hereby expressly agrees, acknowledges and covenants that it shall duly and
punctually perform or cause to be performed each and every duty and obligation
of the Authority under and pursuant to the Indenture.
Section 3.12. Operating Account.
(a) The Borrower shall establish an Operating Account to be held by it
outside of the lien of the Indenture. The Borrower agrees to collect or cause to
be collected with all due dispatch, all Gross Revenues, including amounts
payable under this Agreement and the Note.
(b) So long as (i) no Event of Default has occurred and is continuing,
(ii) the Debt Service Reserve Fund has not been drawn upon or, if it has been
drawn upon, such amounts have been replenished, and (iii) the Borrower is in
compliance with all of its Financial Covenants, or is out of compliance for no
more than one calendar quarter, the Borrower may deposit the Gross Revenues in
the Operating Account. The Borrower shall pay from the Operating Account all
Operating Expenses pursuant to the Operating Budget filed with the Trustee or a
Certificate of the Borrower showing any deviation of more than 10% from such
Operating Budget and, no later than the 25th day of each month, will remit to
the Trustee monies sufficient to permit the Trustee to make the payments or
deposits set forth below in the following order of priority:
(i) Beginning in July, 1999, to the Interest Account of the Debt
Service Fund, an amount equal to one-fifth of the interest
payment coming due on December 1, 1999, and beginning in
December, 1999, one-sixth of the interest payment coming due
on the Bonds on the next Interest Payment Date;
(ii) Beginning in July, 1999 to the Principal Account of the Debt
Service Fund, an amount equal to one-eleventh of the
principal payment coming due on the Bonds on June 1, 2000
and beginning in June, 2000, an amount equal to one-
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twelfth of the principal payment coming due on the Bonds on
the next principal or mandatory sinking fund payment date;
(iii) Commencing on the first day of the month next following the
month in which there shall have occurred a withdrawal from
or decline in the value of the Debt Service Reserve Fund, to
the Debt Service Reserve Fund, an amount equal to one sixth
of the deficiency in such Fund;
(iv) to the Operating Expense Reserve Fund, commencing on June 1,
2000, an amount equal to $12,500 per month until such time
as the amount on deposit in such Fund equals the Operating
Expense Reserve Requirement;
(v) to the Lease Reserve Fund, commencing the month next
following the month in which there shall have occurred any
transfer from, or decline in value of, the Lease Reserve
Fund, an amount equal to the amount of such transfer or
decline in value;
(vi) to the Capital and Maintenance Fund, commencing on June 1,
2000, an amount equal to $5,000 per month until such time as
the amount on deposit in such Fund equals the Capital and
Maintenance Reserve Requirement;
(vii) to the Debt Service Reserve Fund, commencing the month next
following the month in which there shall have occurred any
transfer from, or decline in value of the Debt Service
Reserve Fund, an amount equal to the lesser of (A) cash in
excess of the amount required to satisfy the Liquidity
Covenant remaining after the payment described in clauses
(i) through (vi) above ("Available Cash") shall have been
made or (B) the amount by which the Debt Service Reserve
Fund Requirement exceeds the amount then on deposit in the
Debt Service Reserve Fund..
(c) In the event that (i) an Event of Default shall have occurred and
be continuing or (ii) the Debt Service Reserve Fund shall have been drawn upon
and such amounts have not been replaced as provided in Section 5.12 of the
Indenture or (iii) the Borrower shall have failed to meet any of the Financial
Covenants for two consecutive fiscal quarters, the Borrower shall be required to
transfer, on a daily basis, the maximum amount of money permitted under the
Senior Credit Agreement to the Trustee for deposit in the Revenue Fund.
(d) The Borrower may resume the use of the Operating Account only after
(i) no Event of Default shall have occurred and be continuing, (ii) the moneys
on deposit in the Debt Service Reserve Fund are equal to the Debt Service
Reserve Fund Requirement and (iii) the Borrower shall have complied with all
Financial Covenants for two consecutive fiscal quarters.
(e) The failure of the Borrower to make the deposits required by
clauses (iv), (v) and (vi) of subsection (b) above shall not constitute an Event
of Default hereunder if Gross Revenues are insufficient therefor.
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(f) The failure of the Borrower to make the deposits required by clause
(vii) of subsection (b) above shall not constitute an Event of Default hereunder
if Available Cash is insufficient therefor.
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ARTICLE IV
BORROWER OBLIGATIONS
Section 4.01. General Obligation of the Borrower. This Agreement
constitutes a general obligation of the Borrower and the full faith and credit
of the Borrower is pledged to the payment of all amounts due hereunder.
Section 4.02. [Reserved].
Section 4.03. Maintenance and Operation of the Project.
(a) The Borrower will at all times preserve and protect the Project in
good repair, working order and safe condition, and from time to time will make,
or will cause to be made, all necessary repairs, renewals, replacements,
betterments and improvements thereto including those required after a casualty
loss. The Borrower shall pay all operating costs, utility charges and other
costs and expenses arising out of ownership, possession, use or operation of the
Project. The Authority shall have no obligation and makes no warranties
respecting the condition or operation of the Project.
(b) The Borrower agrees to make timely payment for any improvements to
the Project lawfully done or lawfully ordered to be done by any municipal, State
or federal authority and to comply in all material respects at its own cost and
expense with all lawful and enforceable notices received (whether by the
Authority or the Borrower) from public authorities from and after the date
hereof that affect the Project and the use and operation thereof, other than
those improvements, orders and notices, the amount, validity or application of
which is at the time being contested, in whole or in part, in good faith by
appropriate proceedings promptly initiated and diligently conducted.
(c) The Borrower covenants and agrees that the Project shall be used
only for the purpose of industrial or commercial activities or activities
accessory thereto, and only as an authorized project under the Act, until
expiration or earlier termination of this Agreement.
(d) The Borrower covenants and agrees that it shall not relocate the
Project or any part thereof out of the State.
(e) The Borrower will not use as a basis for contesting any assessment
or levy of any tax the financing under this Agreement or the issuance of the
Bonds by the Authority and, if any administrative body or court of competent
jurisdiction shall hold for any reason that the Project is exempt from the
transaction by reason of the financing under this Agreement or issuance of the
Bonds by the Authority or other Authority action in respect thereto, the
Borrower covenants to make payments in lieu of all such taxes in an amount equal
to such taxes and, if applicable, interest and penalties.
(f) The Borrower agrees that it shall not discriminate or permit any
discrimination in the use of the Project against any person on the grounds of
race, color, religion, age, gender or
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national origin in any manner prohibited by the laws of the United States or the
State, and shall provide the State with all information required by law
concerning employment practices and procedures.
Section 4.04. Maintenance of Existence.
(a) The Borrower agrees that it will maintain its status as an entity
authorized to conduct business in the State, will not dissolve or consolidate
with or merge into another entity, and will not sell, assign, transfer or
otherwise dispose of substantially all of its assets without the consent of the
Authority.
(b) Notwithstanding subsection (a) of this Section 4.04, the Borrower
may, merge with or into or consolidate with another entity, and the Project or
this Agreement may be transferred without violating this Section, provided (i)
in the event that the Borrower is not the surviving entity, the Borrower causes
the proposed surviving, resulting or transferee entity to furnish the Authority
with a "Change of Ownership Information Form" or similar form then in use by the
Authority; (ii) the net worth of the surviving, resulting or transferee entity
following the transfer is substantially equal to or greater than the net worth
of the Borrower immediately preceding the merger, consolidation or transfer as
certified by the independent auditors of the Borrower; (iii) any litigation or
investigations known to the Borrower after due inquiry in which the surviving,
resulting or transferee entity or, where applicable, its officers and directors
are involved at the time of such transfer, and any court, administrative or
other orders to which the transferee is or, where applicable, its officers and
directors are, subject, relate to matters arising in the ordinary course of
business; (iv) the surviving, resulting or transferee entity assumes in writing
the obligations of the Borrower under this Agreement, the Mortgage, the Note and
the Bonds; (v) after the merger, consolidation or transfer, the Project shall
continue to be an authorized project under the Act; and (vi) the merger,
consolidation of transfer does not cause a reissuance or affect the tax-exempt
status of the Series 1999A Bonds pursuant to an opinion of Bond Counsel.
(c) Subject to the consent of the Authority, but without any other
consent, the Borrower may sell up to 49% of its outstanding capital stock to the
public or to a strategic partner; provided, however, that the Borrower may not
pledge such stock as collateral.
Section 4.05. Compliance with Laws. With respect to the Project and any
additions, alterations or improvements thereto, the Borrower will at all times
comply in all material respects with all applicable requirements of federal,
State and local laws and with all applicable lawful requirements of any agency,
board, or commission created under laws of the State or of any other duly
constituted public authority, and will use and permit the use of the Project
only for such purposes as are lawful under the Act; provided, however, that the
Borrower shall be deemed in compliance with this Section 4.05 so long as it is
contesting in good faith any such requirement by appropriate legal proceedings.
Section 4.06. Notice of Bankruptcy Case Commencement. The Borrower
covenants and agrees that it shall immediately notify the Authority, the Trustee
and the Underwriter of the commencement of any case by or against it under the
Bankruptcy Code.
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Section 4.07. Project Users. Prior to leasing, subleasing or consenting
to the subleasing or assignment of any lease of all or any part of the Project
during the term of this Agreement, the Borrower shall cause a Project Occupant
Information Form to be submitted to the Authority by every prospective lessee,
sublessee or lease assignee of the Project. The Borrower shall not permit any
such leasing, subleasing or assigning of leases that would impair the
excludability of interest paid on the Series 1999A Bonds from the gross income
of the owners thereof for purposes of federal taxation, or that would impair the
ability of the Borrower to operate the Project or cause the Project not to be
operated as an authorized project under the Act.
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ARTICLE V
THE PROJECT
Section 5.01. Acquisition, Construction and Installation of the
Project. The Borrower covenants that it will acquire, construct, equip and
improve the Project with due diligence substantially in accordance with the
Plans and Specifications. The Borrower shall (a) pay when due all fees, costs
and expenses incurred in connection with the foregoing from funds made available
therefor in accordance with this Agreement or otherwise, unless any such fees,
costs or expenses are being contested by the Borrower in good faith and by
appropriate proceedings, (b) ask, demand, ▇▇▇ for, ▇▇▇▇, recover and receive all
those sums of money, debts and other demands whatsoever which may be due, owing
and payable under the terms of any contract, order, receipt, writing and
instruction in connection with the acquisition, construction and installation of
the Project, and (c) enforce the provisions of any contract, agreement,
obligation, bond or other performance security with respect thereto if necessary
to complete the Project with due diligence.
Section 5.02. Plans and Specifications. The Borrower may revise the
Plans and Specifications from time to time, provided that no revision shall be
made which would change the purposes of the Project to other than purposes
permitted by the Act.
Section 5.03. Issuance of the Bonds; Application of Proceeds. To
provide funds to make the Loan for purposes of assisting the Borrower in the
financing of the Project, the Authority will issue, sell and deliver the Bonds
upon the order of the Underwriter as provided in the Purchase Agreement. The
Bonds will be issued pursuant to the Indenture in the aggregate principal
amount, will bear interest, will mature and will be subject to redemption as set
forth therein. The Borrower hereby approves the terms and conditions of the
Indenture and the Bonds, and the terms and conditions under which the Bonds will
be issued, sold and delivered.
The proceeds from the sale of the Bonds shall be loaned to the Borrower
and paid over to the Trustee for the benefit of the Borrower and the Owners of
the Bonds and deposited as provided in Section 3.03 of the Indenture. Pending
disbursement pursuant to Section 5.04 hereof, the proceeds deposited in the
Project Fund, together with any investment earnings thereon, shall constitute a
part of the Revenues assigned by the Authority to the payment of Debt Service
Requirements as provided in the Indenture.
Section 5.04. Disbursements from the Project Fund.
(a) Subject to the provisions below and to the representations,
warranties and covenants contained herein, disbursements from the Project Fund
shall be made only to pay (or to reimburse the Borrower for payment of) the
following costs of the Project:
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(i) Costs incurred directly or indirectly for or in connection
with the acquisition, construction or installation of the Project, including
costs incurred with respect to the Project for preliminary planning and studies;
architectural, legal, engineering, accounting, consulting, supervisory and other
services; labor, services and materials; and recording of documents and title
work;
(ii) Costs incurred directly or indirectly in seeking to
enforce any remedy against any contractor or subcontractor in respect of any
actual or claimed default under any contract relating to the Project;
(iii) Financial, legal, accounting, printing and engraving
fees, charges and expenses, and all other fees, charges and expenses incurred in
connection with the authorization, sale, issuance and delivery of the Bonds,
including, without limitation, the fees and expenses of the Authority and Bond
Counsel, the fees and expenses of the Trustee and the fees and expenses of the
Underwriter and its counsel; and
(iv) Any other incidental and necessary costs, expenses, fees
and charges relating to the acquisition, construction or installation of the
Project.
(b) Any disbursements from the Project Fund described above shall be
made by the Trustee only upon the written order of the Authorized
Representative. Each such written order shall be in substantially the form of
the requisition attached as Exhibit D to the Indenture and shall be
consecutively numbered and accompanied by invoices or other appropriate
documentation supporting the payments or reimbursements requested, including
those set forth in clauses (i) through (iv) below. Such order shall contain a
certification of the Borrower to the effect that the cost to be paid or
reimbursed (x) is a proper charge against the Project Fund and (y) has not
formed the basis of any previous requisition. In case any contract provides for
the retention by the Borrower of a portion of the contract price, there shall be
paid from the Project Fund only the net amount remaining after deduction of any
such portion and, only when that retained amount is due and payable, may it be
paid from the Project Fund.
(i) Prior to the first disbursement from the Project Fund,
either (A) an executed Contractor's Certificate and Agreement or (B) a Borrower
Certificate stating that, for purposes of the prevailing wage regulation and the
Affirmative Action Program, none of the moneys disbursed at any time from the
Project Fund will be used to pay or reimburse a payment for work done in
performance of any Construction Contract unless prior thereto there shall be
submitted to the Trustee an executed Contractor's Certificate and Agreement.
Nevertheless, prior to the initial disbursement from the Project Fund for
payment of any Construction Contract, if not theretofore furnished, a
Contractor's Certificate and Agreement shall be submitted;
(ii) For all disbursements from the Project Fund which will be
used to pay or reimburse a payment for work done in the performance of any
Construction Contract, the Trustee shall be provided with a requisition
evidencing the written approval of the payment by an Independent architect,
engineer or contractor and delivery to the Trustee of a rundown to the title
report showing no intervening liens or new matters of record through the date of
the requisition
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other than Permitted Encumbrances and a mechanic's lien waiver executed by the
contractor or subcontractor that performed such work;
(iii) Such additional documents, including, but not limited
to, paid invoices, bills, receipts, affidavits, certificates and opinions as the
Authority or the Trustee may reasonably require.
(c) For purposes of the Affirmative Action Program, there shall be
retained in the Project Fund an amount equal to ten per centum (10%) of each sum
requisitioned for payment or reimbursement for payment of any Construction
Contract (a "holdback"); provided, however, if any such requisitioned sum is for
reimbursement of a payment by the Borrower, which payment itself was for only
ninety per centum (90%) of the payment requested by the contractor or
subcontractor pursuant to such Construction Contract, then such requisitioned
sum may be reimbursed without regard to the aforementioned holdback, but the
remaining ten per centum (10%), when requisitioned by the Borrower, shall only
be disbursed upon the holdback conditions hereinafter set forth. Said holdback
shall be disbursed from time to time from the Project Fund upon compliance with
the preceding terms and conditions of this Section and (w) the execution and
filing with the Authority of the Contractor's Completion Certificate; (x) the
execution and filing with the Authority and the Trustee of the Borrower's
Completion Certificate; (y) receipt by the Borrower and the Trustee of a written
notice issued by the Authority's Office of Affirmative Action that the
contractor has complied with the requirements of the Affirmative Action Program;
and (z) a Borrower Certificate delivered to the Trustee certifying compliance
with the conditions stated in clauses (w) through (y) hereinabove.
(d) Any moneys in the Project Fund remaining after the Completion Date
and payment, or provision for payment, of the costs of financing the Project
described above, at the direction of the Authorized Representative, promptly
shall be:
(i) used to acquire, construct, equip and install such
additional real or personal property in connection with the Project as is
designated by the Authorized Representative, the acquisition, construction,
equipping and installation of which will be permitted under the Act;
(ii) used to redeem Bonds in accordance with the terms of the
Indenture;
(iii) used for the purchase of Bonds in the open market for
the purpose of cancellation; or
(iv) used to accomplish a combination of the foregoing as is
provided in that direction.
(e) In the event that all of the Bonds are either redeemed or
accelerated pursuant to the terms of the Indenture, any remaining funds in the
Project Fund shall be transferred to the Debt Service Fund.
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Section 5.05. Borrower Required to Pay Costs in Event Project Fund
Insufficient. If moneys in the Project Fund are not sufficient to pay all costs
of the Project, the Borrower, nonetheless, will complete the Project in
accordance with the Plans and Specifications, and shall pay all such additional
costs of the Project from the Borrower's own funds. The Borrower shall not be
entitled to any reimbursement for any such additional costs of the Project from
the Authority, the Trustee or any Owner; nor shall it be entitled to any
abatement, diminution or postponement of its obligation to make the Loan
Payments.
Section 5.06. Completion Date. The Borrower shall notify the Authority
and the Trustee of the Completion Date by a Certificate signed by the Authorized
Representative stating:
(a) the date on which the Project was substantially completed, which
date shall be not later than three years after initial delivery of the Bonds;
(b) that the acquisition, construction and installation of the Project
has been accomplished in such a manner as to conform with all applicable
planning, building, environmental and other similar governmental regulations;
(c) that except as provided in subsection (d) of this Section, all
costs of that acquisition, construction and installation then or theretofore due
and payable have been paid; and
(d) the amounts which the Trustee shall retain in the Project Fund for
the payment of costs of the Project not yet due or for liabilities which the
Borrower is contesting or which otherwise should be retained and the reasons
such amounts should be retained.
The certificate may state that it is given without prejudice to any
rights against third parties which then exist or subsequently may come into
being. The certificate shall be delivered as promptly as practicable after the
occurrence of the events and conditions referred to in subsections (a) through
(c) of this Section.
Section 5.07. Investment of Fund Moneys. At the written or oral request
(promptly confirmed in writing) of the Authorized Representative, any moneys
held as part of the Debt Service Fund (except moneys held in the Debt Service
Fund for purposes of defeasing the Bonds pursuant to Article X of the Indenture)
or the Project Fund shall be invested or reinvested by the Trustee in Investment
Securities.
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ARTICLE VI
INSURANCE; DESTRUCTION, DAMAGE AND EMINENT DOMAIN
Section 6.01. Insurance to be Maintained. The Borrower covenants to
provide and maintain continuously unless otherwise herein provided, at its sole
cost and expense, property insurance, including all improvements, equipment and
personal property, and all other property of an insurable character insured at
all times throughout the term of this Agreement and to maintain a minimum of the
following insurance:
(a) "All-Risk" insurance on the Project. The amount of such insurance
shall be equal to 100% of the "Full Replacement Cost" of the Project and other
property without deduction for depreciation and not less than the aggregate
principal amount of the Note and in an amount sufficient to prevent the Trustee,
the Authority or the Borrower from becoming a co-insurer within the terms of the
applicable policies. Each policy shall contain a "Replacement Cost Endorsement".
(b) Flood Hazard Insurance or evidence that it is not required for the
Project and other property.
(c) Business interruption insurance in the amount of not less than
$900,000, protecting the Borrower and the Trustee, covering the Borrower's
payments due under this Agreement, the salaries and expenses of key personnel
and other minimum operating expenses required for the operation of the Project
during such period or periods.
(d) Boiler and machinery coverage (direct damage and use and occupancy)
on a replacement cost basis in an amount not less than $2,500,000.
(e) Public liability insurance (insuring the interests of the Borrower)
and automobile liability insurance, in an occurrence form, in the minimum amount
of $1,000,000 bodily injury and property damage combined single limit and
aggregate where applicable.
(f) Product liability insurance insuring the Borrower against liability
for death, injury, loss or damage resulting from the use of any of its products
in the minimum amount of $3,000,000 per occurrence and $3,000,000 annual
aggregate.
(g) Excess liability coverage in the amount of at least either straight
excess or umbrella excess, covering excess of paragraphs (e) and (f) to be
maintained in force so that the total coverage available under each of the
aforementioned paragraphs, including this subsection, is not less than
$1,000,000 per occurrence and in the aggregate, where applicable, as excess of
employer's liability, general liability, product liability and automobile
liability coverage.
(h) Worker's compensation and employer's liability insurance meeting
the Borrower's statutory obligations.
(i) Such other insurance on the Project and other property, or any
replacements or substitutions therefor, or additions thereto, and in such
amounts as may be agreed to by the Trustee
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against other insurable hazards or casualties which at the time are commonly
insured against in the case of premises similarly situated, due regard being
given to the height and type of buildings and improvements, their construction,
location, use and occupancy.
Each insurance policy with respect to the Project shall name the
Authority and the Authority's assignee as additional insured "as its interest
may appear". The Authority's assignee shall be named as loss payee on all
property insurance policies respecting the Project. The Borrower shall provide
or cause to be provided to the Authority and the Authority's assignee evidence
of the renewal or cancellation of any insurance coverage respecting the Project.
Section 6.02. Destruction, Damage and Eminent Domain. If the Project
shall be wholly or partially destroyed or damaged by fire or other casualty
covered by insurance, or shall be wholly or partially condemned, taken or
injured by any Person, including any Person possessing the right to exercise the
power of or a power in the nature of eminent domain or shall be transferred to
such a Person by way of a conveyance in lieu of the exercise of such a power by
such a Person, the Borrower covenants that it will take all actions and will do
all things which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation, conveyance,
damage or injury. The Borrower is authorized, in its own name, as trustee of an
express trust, to demand, collect, ▇▇▇, settle claims, receipt and release
monies which may be due and payable under policies of insurance covering such
damage or destruction or on account of such condemnation, damage or injury. Any
moneys recovered on policies of insurance required to be maintained hereunder or
as a result of any taking, condemnation, conveyance, damage or injury shall be
deposited in the Project Fund held by the Trustee under the Indenture and shall
be applied in accordance with the provisions of Section 6.04 hereof.
Any appraisement or adjustment of loss or damage and any settlement or
payment therefor, shall be agreed upon by the Borrower and the appropriate
insurer or condemnor or Person, shall be evidenced to the Trustee by the
certificate and approvals set forth in the Indenture. The Trustee may rely
conclusively upon such certificates.
Section 6.03. Notice of Property Loss. After the occurrence of loss or
damage to, or after receipt of notice of condemnation of, the Project, the
Borrower shall within five (5) Business Days thereof notify the Authority and
the Trustee, in writing, of such damage.
Section 6.04. Disposition of Casualty Insurance and Condemnation Award
Proceeds. As long as there is no continuing Event of Default under the terms of
this Agreement, the Borrower may elect, in its discretion, whether to apply the
proceeds of any casualty insurance coverage and/or condemnation awards to the
repair, reconstruction or replacement of damaged, destroyed or injured property
included in the Project or the redemption of Bonds pursuant to the applicable
provisions of the Indenture. Absent timely direction from the Borrower as to the
application of any casualty insurance coverage and/or condemnation awards or if
there shall exist an Event of Default under the terms of this Agreement, the
proceeds thereof shall be applied to the extraordinary redemption of the Bonds
at par plus accrued interest through the date of redemption. For purposes of the
preceding sentence, "timely direction" shall mean thirty (30) days after the
Borrower has agreed, in connection with any damage to or condemnation of the
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Project, upon the settlement or payment with respect to any appraisement or
adjustment of loss or damage, as appropriate.
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ARTICLE VII
COVENANTS OF THE BORROWER
The Borrower makes the following representations and covenants:
Section 7.01. Compliance with Laws. The Borrower covenants that all
actions heretofore and hereafter taken by the Borrower to acquire and carry out
the Project have complied and will comply in all material respects with all
pertinent laws, ordinances, rules, regulations and orders applicable to the
Borrower. The Borrower acknowledges that any review by the Authority or Counsel
to the Authority of any action heretofore or hereafter taken by the Borrower has
been or will be solely for the protection of the Authority. Such reviews shall
not prevent the Authority from enforcing any of the covenants made by the
Borrower.
Section 7.02. Power to Perform Obligations.
(a) The Borrower covenants and represents that it has full power and
legal right to enter into this Agreement and perform its obligations hereunder.
The making and performance of this Agreement by the Borrower have been duly
authorized by all necessary action and will not conflict with or constitute a
breach of or default under its certificate of organization, or any bond,
contract, indenture, agreement or any other instrument by which the Borrower or
any of its properties is or may be bound.
(b) The Borrower is duly qualified to do business in the State, has the
power and authority to own its properties and assets and to carry on its
business as now being conducted.
(c) The execution, delivery and performance by the Borrower of this
Agreement and other instruments required hereunder:
(i) do not and will not in any material respect conflict with
or violate any provision of law, rule or regulation, any order of any
court or other agency of government; and
(ii) do not and will not result in the creation or imposition
of any lien, charge or encumbrance of any nature, other than the liens
created by this Agreement, the Indenture and all documents and
instruments executed in connection herewith or therewith.
Section 7.03. Inspection. The Borrower covenants that the Authority, by
its duly authorized representatives, the Trustee, the Underwriter or any Owner
holding twenty-five percent (25%) or more in principal amount of all Outstanding
Bonds, or any duly authorized representatives of any of the foregoing, at
reasonable times and with reasonable notice, may examine, visit and inspect any
part of the Project and its accounts, books and records, and to supply such
reports and information as the Authority and the Trustee may reasonably request.
Section 7.04. Additional Information. The Borrower agrees, whenever
reasonably requested by the Authority, to provide and certify or cause to be
provided and certified such
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information as is necessary to enable the Authority to make any reports or
supply any information required by the Indenture, law or governmental
regulation.
Section 7.05. Tax-Exemption.
(a) The Borrower covenants and agrees that it will not take any action,
omit to take any action or permit any action to be taken on its behalf, or cause
or permit any circumstances within its control to arise, if such action or
circumstances would cause the interest paid on the Series 1999A Bonds to be
included in the gross income of the Bondholders for purposes of federal income
taxation, provided that the Borrower shall not have violated this covenant if
the interest on the Series 1999A Bonds becomes taxable to a person because the
person is a substantial user of the Project or a related person within the
meaning of Section 147 of the Code. The Borrower further covenants and agrees
that it will not use or permit the use by any Person of any of the funds
provided by the Authority hereunder or any other of its funds, directly or
indirectly, or direct the Trustee to invest any funds held by it under the
Indenture or this Agreement, in such manner as would, or enter into or allow any
Related Person to enter into any arrangement, formal or informal, that would, or
take or omit to take any other action that would, cause any Series 1999A Bond to
be an "arbitrage bond" within the meaning of Section 148(a) of the Code. The
Borrower acknowledges having read Sections 5.13 and 6.06 of the Indenture and
agrees to perform all duties imposed upon it by such Sections and by the Tax
Certificate. Insofar as said Sections, or the Tax Certificate impose duties and
responsibilities on the Borrower, they are specifically incorporated herein by
reference.
(b) The Borrower acknowledges that the Series 1999A Bonds are subject
to a $10,000,000 limitation on the sum of the face amount of the Series 1999A
Bonds, the outstanding amount of certain prior tax-exempt obligations and the
amount of Capital Expenditures made in the Project Municipality during a
six-year period beginning three years before the date of issue of the Series
1999A Bonds and ending three years after the date of issue of the Series 1999A
Bonds (the "Capital Expenditure Limit"). If Capital Expenditures are made that
cause the Capital Expenditure Limit to be exceeded, interest on the Series 1999A
Bonds will be included in gross income of the owners thereof retroactive to the
date the Capital Expenditure Limit is exceeded. The Borrower covenants that it
shall furnish to the Issuer a statement setting forth in reasonable detail all
Capital Expenditures paid or incurred by the Borrower, any other Principal User,
or any Related Person to such persons which are required to be taken into
account in determining the aggregate face amount of such issue pursuant to
Sections 144(a)(2) and (4) of the Code and any regulations implementing those
provisions, (i) within one hundred five (105) days following the close of each
fiscal year of the Borrower occurring within three (3) years after the date of
issuance of the Series 1999A Bonds, (ii) within one hundred five (105) days
following the third anniversary of the date of issuance of the Series 1999A
Bonds, and (iii) within thirty (30) days after the aggregate face amount of the
Series 1999A Bonds, by virtue of Capital Expenditures" paid or incurred exceeds
$9,000,000.
The Borrower further covenants that it will file with the Authority and
the Trustee any statement, supplemental statement or other tax schedule, return
or document which discloses that an event shall have occurred which will or
might cause the loss of the exclusion from gross
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income provided in Section 103(a) of the Code for interest paid in respect of
the Series 1999A Bonds.
(c) If the Borrower, any Principal User of the Project or any Related
Person thereto proposes during the Test Period: (i) to merge or consolidate with
any person, firm or corporation and if such action is to occur, (I) such person,
firm or corporation was, is, or will be a Principal User of facilities located
wholly or partly within the Project Municipality, with respect to which there
were obligations issued prior to, and outstanding on the date of issuance of the
Series 1999A Bonds, exempt from taxation under Section 144(a) of the Code or
under Section 103(b)(6) of the Internal Revenue Code of 1954, as amended, the
proceeds of which are or will be primarily used with respect to such facilities;
(II) such person, firm or corporation was, is, or will be a Principal User,
during the 6-year period beginning three (3) years before the date of issuance
of the Series 1999A Bonds and ending three (3) years after such date, of
facilities located wholly or partly within the Project Municipality; or (III)
there is allocable to such person, firm or corporation (within the meaning of
Section 144(a)(10) of the Code) any portion of the face amount of any Tax-Exempt
Facility-Related Bonds which were issued prior to, and outstanding on the date
of issuance of the Series 1999A Bonds, by virtue of being a Principal User of
such facilities financed with such obligations; or (ii) to gain control of any
such person, firm or corporation; or (iii) to acquire a greater than 50%
ownership interest in any such person, firm or corporation (whether by ownership
of stock or otherwise); or (iv) to enter into any exchange of property for stock
or stock for property pursuant to a plan of reorganization with any such person,
firm or corporation; or (v) to otherwise cause such persons to be the same or
Related Persons to the Borrower or any Principal User of the Project, the
Borrower, any Principal User of the Project, or any Related Person shall, prior
to the taking of any of the foregoing proposed actions, obtain the consent of
the Authority and a written opinion of ▇▇▇▇▇▇▇▇ & English, LLP or other
nationally recognized bond counsel satisfactory to the Issuer to the effect that
the proposed action will not cause the interest on the Series 1999A Bonds to
become included in the gross income of the holder of the Series 1999A Bonds for
Federal income tax purposes except in the event such holder is a substantial
user or a related person thereto within the meaning of Section 147 of the Code.
(d) The Borrower hereby covenants not to enter into any lease or other
agreement during the Test Period which will result in the other party to the
agreement becoming a Principal User of the Project unless such lease or other
agreement is approved by the Authority, and a written opinion of ▇▇▇▇▇▇▇▇ &
English, LLP or other nationally recognized bond counsel has been obtained, to
the effect that the proposed lease or other agreement will not cause the loss of
the exclusion from gross income provided under Section 103(a) of the Code for
interest on the Series 1999A Bonds except in the event the Holder or holders are
a substantial user or a related person thereto within the meaning of Section 147
of the Code.
(e) The Borrower hereby covenants that in connection with complying
with the requirement for payment of the Rebate Amount to the United States with
respect to the Series 1999A Bonds the Borrower will take the following actions:
(i) Eighteen (18) months after the Closing Date, the Borrower
will provide a written certification to the Authority and the Trustee indicating
whether the Borrower complied
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with the 6-month exception to the arbitrage rebate requirement set forth in
Section 148(f)(4)(B) of the Code or the 18-month exception to the rebate
requirement set forth in Treas. Reg. Section 1.148-7(d).
(ii) Unless the Borrower has complied with the 6-month
exception or the 18-month exception, the Borrower will retain a Rebate Expert on
or within thirty (30) days before the Initial Rebate Computation Date and on
each Rebate Computation Date thereafter, (A) to compute the Rebate Amount with
respect to the Series 1999A Bonds for the period ending on the Initial Rebate
Computation Date, (B) to deliver an opinion to the Authority and Trustee
concerning its conclusions with respect to the amount (if any) of such Rebate
Amount together with a written report providing a summary of the calculations
relating thereto and (C) to deliver an opinion to the Authority and Trustee that
all of the gross proceeds of the Series 1999A Bonds (within the meaning of
Section 148(f) of the Code), other than gross proceeds of the Series 1999A Bonds
on deposit in a bona fide debt service fund (within the meaning of Section
148(f)(4) of the Code), have been expended on or prior to the Initial Rebate
Computation Date. Rebate Expert means any of the following chosen by the
Borrower: (1) Bond Counsel, (2) any nationally recognized Accountant, (C) any
reputable firm which offers to the tax-exempt bond industry rebate calculation
services and holds itself out as having expertise in that area, or (4) such
other person as is approved by Bond Counsel.
(iii) In the event the amount in the Project Fund is
insufficient to fund the Rebate Fund, the Borrower shall within ten (10) days of
receipt of the report furnished by the Rebate Expert pursuant to paragraph (ii)
above, pay or cause to be paid to the Trustee for deposit into the Rebate Fund
the difference required to fund the Rebate Amount. If the Borrower fails to make
or causes to be made any payment required pursuant to this paragraph (iii) when
due, the Authority shall have the right, but shall not be required, to make such
payment to the Trustee on behalf of the Borrower. Any amount advanced by the
Authority pursuant to this paragraph (iii) shall be added to the moneys owing by
the Borrower under this Agreement.
(iv) In the event Rebate Amount is due, the Borrower will
direct the Trustee to withdraw from the Rebate Fund and pay over to the United
States the Rebate Amount with respect to the Series 1999A Bonds in installments
as follows: each payment shall be made not later than sixty (60) days after the
current Rebate Computation Date and shall be in an amount which ensures that 100
percent of the Rebate Amount with respect to the Series 1999A Bonds, as of the
current Rebate Computation Date, will have been paid to the United States.
(v) The Borrower acknowledges that the Authority shall have
the right at any time and in the sole and absolute discretion of the Authority
to obtain from the Borrower and the Trustee the information necessary to
determine the amount required to be paid to the United States pursuant to
Section 148(f) of the Code. Additionally, the Authority may, with reasonable
cause, (A) review or cause to be reviewed any determination of the amount to be
paid to the United States made by or on behalf of the Borrower and (B) make or
retain a Rebate Expert to make the determination of the amount to be paid to the
United States. The Borrower hereby agrees to be bound by any such review or
determination, absent manifest error, to pay the costs of such review, including
without limitation the reasonable fees and expenses of counsel or a
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Rebate Expert retained by the Authority, and to pay to the Trustee any
additional amounts for deposit in the Rebate Fund required as the result of any
such review or determination.
(vi) Notwithstanding any provision of this subsection (b) to
the contrary, the Borrower shall be liable, and shall indemnify and hold the
Authority and the Trustee harmless against any liability, for payments due to
the United States pursuant to Section 148(f) of the Code. Further, the Borrower
specifically agrees that neither the Authority nor the Trustee shall be held
liable, or in any way responsible, and the Borrower shall indemnify and hold
harmless the Trustee and Authority against any liability, for any mistake or
error in the filing of the payment or the determination of the amount due to the
United States or for any consequences resulting from any such mistake or error.
The provisions of this paragraph (vi) shall survive termination of this
Agreement.
(vii) The Authority, the Trustee and the Borrower acknowledge
that the provisions of this subsection (b) are intended to comply with Section
148(f) of the Code and the regulations promulgated thereunder and if as a result
of a change in such section of the Code or the promulgated regulations
thereunder or in the interpretation thereof, a change in this Subsection shall
be permitted or necessary to assure continued compliance with Section 148(f) of
the Code and the promulgated regulations thereunder, then with written notice to
the Trustee, the Authority and the Borrower shall be empowered to amend this
subsection (b) and the Authority may require, by written notice to the Borrower
and the Trustee, the Borrower to amend this subsection (b) to the extent
necessary or desirable to assure compliance with the provisions of Section 148
of the Code and the regulations promulgated thereunder; provided that either the
Authority or the Trustee shall require, prior to any such amendment becoming
effective, at the sole cost and expense of the Borrower, an opinion of Bond
Counsel satisfactory to the Authority to the effect that either (A) such
amendment is required to maintain the exclusion from gross income under Section
103 of the Code of interest paid and payable on the Series 1999A Bonds or (B)
such amendment shall not adversely affect the exclusion from gross income under
Section 103 of the Code of the interest paid or payable on the Series 1999A
Bonds.
(f) For purposes of this Section 7.05 the following terms shall have
the meanings set forth below:
"Capital Expenditure" shall mean expenditures as defined in section
144(a)(4) of the Code, i.e., of any expenditure (regardless of how paid, whether
in cash, or stock in a taxable or non-taxable transaction) if:
(A) the capital expenditure was financed or is to be financed other
than out of (I) the proceeds of obligations taken into account as a
prior issue (within the meaning of section 144(a)(2) of the Code), to
the extent so taken into account; or (II) the original proceeds of the
Series 1999A Bonds;
(B) the capital expenditure was incurred during the 6-year period
beginning 3 years prior to the date of issuance of the Series 1999A
Bonds in question and ending 3 years subsequent to the date of issuance
of such Bonds;
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(C) the capital expenditure was paid or incurred with respect to a
facility, the principal user of which is or will be the Borrower or a
related person to the Borrower and such facility is or will be located
within the Applicable Project Location; and
(D) the capital expenditure was properly chargeable to the capital
account of any person or State or local governmental unit (whether or
not such person is a principal user of the facilities to be financed
with the proceeds of the Series 1999A Bonds) determined, for this
purpose, without regard to any rule of the Code which permits
expenditures properly chargeable to capital account to be treated as
current expenses (except expenditures described in section 41(b)(2)(A)
of the Code for which a deduction was allowed under section 174(a) of
the Code) and including any expenditures which may, under any rule or
election under the Code be treated as a capital expenditure (whether or
not such expenditure is so treated).
"Initial Rebate Computation Date" means the date that is not later than
5 years after the issue date of the Series 1999A Bonds.
"Principal User" shall mean principal user as defined in section 144(a)
of the Code and Proposed Treasury Regulations ss.1.103-10(h), and may include:
(a) any person which has an ownership interest in the facility; (b) any person
which uses more than 10 percent of the facility, measured by fair rental value
or use of space (as measured as a percentage of the square footage of non-common
areas); (c) under certain circumstances, any person which manages a facility;
(d) a lessor having a reversionary interest in a facility; (e) under certain
circumstances, any person who is a principal customer of the output of a
facility; and (f) any other person which both enjoys the primary use of the
facility and directly or indirectly constitutes the primary source of payment of
either the principal of or interest on any issue of debt obligations used to
finance the facility.
"Project Municipality" shall mean the Borough of South Plainfield in
the County of Middlesex, New Jersey
"Rebate Amount", as of any date means the excess of the future value,
as of that date, of all receipts on nonpurpose investments allocated to the
Series 1999A Bonds over the future value as of that date, of all Payments on
nonpurpose investments allocated to the Series 1999A Bonds, determined pursuant
to Section 148(f) of the Code and described in Section 4 of the Letter of
Instructions attached to the Authority's Arbitrage Certificate.
"Rebate Computation Date" means (i) the Initial Rebate Computation
Date; (ii) each fifth year thereafter, and (iii) the date that the last of the
Series 1999A Bonds are discharged (i.e., the date of the retirement of the last
obligation of the Series 1999A Bonds).
"Related Person" shall mean a related person as defined in section
144(a)(3) of the Code and includes (i) any relationship between such persons
which would result in a disallowance of losses under section 267 or 707(b) of
the Code, or (ii) such persons who are members of the same controlled group of
corporations (as defined in section 1563(a), except that "more than 50 percent"
shall be substituted for "at least 80 percent" each place it appears therein).
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"Tax-Exempt Facility Related Bonds" shall mean tax-exempt bonds that
are exempt facility bonds (within the meaning of section 142(a) of the Code),
qualified small issue bonds (within the meaning of section 144(a) of the Code),
qualified redevelopment bonds (within the meaning of section 144(c) of the Code)
and industrial development bonds (as defined in section 103(b)(2) of the
Internal Revenue Code of 1954, as amended, as in effect on the day before the
date of enactment of the Tax Reform Act of 1986) to which section 141(a) of the
Code does not apply.
"Test Period" shall mean the three-year period beginning on the later
of the date the facility financed with the proceeds of the Series 1999A Bonds is
placed in service or the date of issue of the Series 1999A Bonds.
In addition, The terms "Initial Rebate Computation Date," "Rebate
Computation Date" and "Rebate Amount" shall have the respective meanings
assigned to such terms as set forth in Treasury Regulation Section 1.148-1 et.
seq. and the Indenture.
Section 7.06. Hazardous Substances.
(a) The Borrower shall comply in all material respects with all
applicable federal, State and local laws, ordinances, rules and regulations,
with respect to Hazardous Substances (as hereinafter defined), and shall keep
the Project free and clear of any liens imposed pursuant to such laws,
ordinances, rules and regulations. Except as previously disclosed to the
Authority, in the event that the Borrower receives any notice from any
governmental authority with regard to Hazardous Substances on, from or affecting
the Project, the Borrower shall (i) immediately notify the Authority and any
other Person, governmental or quasi-governmental authority that it is required
to notify pursuant to any applicable law at such time as it is aware of a
release or threatened released of a Hazardous Substance on, from or affecting
the Project, (ii) immediately notify the Authority at such time as an
environmental investigation or clean-up proceeding is instituted by any Person
in connection with the Project, (iii) comply fully with and assist any such
environmental investigation and clean-up proceeding, (iv) promptly execute and
complete any remedial actions necessary to ensure that no environmental liens or
encumbrances are levied against or exist with respect to the Project, and (v)
promptly, upon the written request of the Authority provide the Authority with
an environmental site assessment or report, in form and substance reasonably
satisfactory to Trustee, and (vi) provide the Authority with copies of all
notices received by the Borrower from any governmental authority or other person
with regard to Hazardous Substances on, from or in any way affecting the
Project. The Borrower shall conduct and complete all investigations, studies,
sampling, and testing, and all remedial, removal, and other actions necessary to
clean up and remove all Hazardous Substances on, from or affecting the Project
in accordance or otherwise in compliance with all applicable federal, State and
local laws, ordinances, rules, regulations and policies.
(b) As used herein, the term "Hazardous Substances" shall include,
without limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, hazardous or toxic
pollutant, or related materials, asbestos or any material containing asbestos,
or petroleum, petroleum by-products or materials containing
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petroleum, or any other substance, mixture, waste, compound, material, element,
product, or matter as defined by any Federal, State or local environmental law,
ordinance, rule, or regulation including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, amended (42 U.S.C. Section 9601 et seq.), the Clean Water Act, as amended
(33 U.S.C. Section 1251 et seq.), and the Clean Air Act, as amended (42 U.S.C.
Section 7401 et seq.), and in the regulations adopted and publications
promulgated pursuant thereto at any time.
(c) The indemnity provisions set forth in Section 8.04 of the Mortgage
are specifically incorporated herein by reference and such provisions shall
survive the term of this Agreement.
Section 7.07. No Material Proceedings Affecting Borrower. Except as
disclosed in the Official Statement, there is no action, suit or proceeding at
law or in equity or by or before any governmental instrumentality or other
agency now pending or, to the knowledge of the Borrower, threatened against or
affecting it or any of its properties or rights which, if adversely determined,
would (i) materially affect the transactions contemplated hereby, (ii) affect
the validity or enforceability of this Agreement, the Indenture and all
documents and instruments executed in connection herewith or therewith, (iii)
materially affect the ability of the Borrower to perform its obligations under
this Agreement, the Indenture and all documents and instruments executed in
connection herewith or therewith, (iv) materially impair the value of the
Project, (v) materially impair the Borrower's right to carry on its business
substantially as now conducted, or (vi) have a material adverse effect on the
Borrower's financial condition.
Section 7.08. Tax Filings. The Borrower has filed or caused to be filed
all federal, state and local tax returns which are required to be filed, and has
paid or caused to be paid all taxes as shown on said returns or on any
assessment it has received, to the extent that such taxes have become due,
except such taxes as are being contested by the Borrower in appropriate
proceedings or for which Borrower has filed extensions.
Section 7.09. No Existing Defaults. Except as disclosed in the audited
financial statements delivered to the Authority and the Underwriter, the
Borrower, to its knowledge, is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material agreement or instrument to which it is a party or by which it is bound.
Section 7.10. No Material Misstatements or Omissions. The application
submitted by Borrower to the Authority to obtain financing for the Project, the
Official Statement, the Indenture, this Agreement and all other documents,
certificates, or statements furnished to the Underwriter or the Authority by the
Borrower are true, correct and complete, do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements contained herein and therein regarding the Borrower not misleading or
incomplete. It is specifically represented that the Borrower is neither involved
in any litigation required to be disclosed in the Official Statement nor the
subject of any investigation or administrative proceeding except as disclosed in
the Official Statement. It is specifically understood by the
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Borrower that all such statements, representations and warranties shall be
deemed to have been relied upon by the Authority as an inducement to make the
Loan and that if any such statements, representations and warranties were false
in any material respect at the time they were made, the Authority may, in its
sole discretion, consider any such misrepresentation or breach of warranty an
Event of Default and exercise the remedies provided for in this Agreement.
Section 7.11. Inducement to Borrower. Financial assistance provided by
the Authority is an important inducement to the Borrower to locate or retain the
Project within the State.
Section 7.12. Borrower's Reporting Obligations.
(a) On each anniversary of the Closing Date of the Bonds, the Borrower
shall furnish or cause to be furnished to the Authority and the Trustee the
following: (i) a certification indicating whether or not the Borrower is aware
of any condition, event or act which constitutes an Event of Default or which
would constitute an Event of Default with the giving of notice or passage of
time, or both, under any of the Bond Documents; (ii) a written description of
the present use of the Project and a description of any anticipated material
change in the use of the Project or in the number of employees employed at the
Project; and (iii) an employment report.
(b) The Borrower shall furnish or cause to be furnished to the
Authority, promptly upon request by the Authority, and to the Trustee, upon
receipt thereof by the Borrower: (i) a copy of any letter or report with respect
to the management of the Borrower's operations submitted to the Guarantor or the
Borrower by their Accountant and a copy of any written response of the Guarantor
or the Borrower thereto and (ii) copies of any correspondence to or from the
Food and Drug Administration relating to approvals already issued to the
Borrower, or for which the Borrower is making application.
(c) The Borrower will send to the Underwriter, to each Owner of not
less than $1,000,000 in aggregate principal amount of Bonds and, upon written
request by any Owner, at such Owner's expense, a copy of any information
supplied to the Trustee pursuant to this Section 7.12.
Section 7.13. Cooperation with Trustee. The Borrower covenants and
agrees that it will not interfere with the exercise of the power and authority
granted to the Trustee in the Indenture. The Borrower further agrees to aid in
furnishing to the Authority or the Trustee any documents, financial reports,
certificates or opinions that may be required under the Indenture or reasonably
requested by the Trustee and to comply in all material respects with the
provisions thereof to the extent applicable to the Borrower.
Section 7.14. Affirmative Action and Prevailing Wage Regulations. To
the extent that any of the proceeds of the Loan are used for construction, the
Borrower shall comply with the Authority's Affirmative Action and Prevailing
Wage Rate Regulations with respect to such construction, and to that end:
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(a) Insert in all construction bid specifications for any construction
contract (as such term is defined in the Authority's Affirmative Action and
Prevailing Wage Rate Regulations) the following provisions:
(i) Construction of this project is subject to the
Affirmative Action Regulations of the New Jersey Economic
Development Authority which establishes hiring goals for
minority and female workers. Any contractor or subcontractor
must agree to make a every effort to meet the established
goals and to submit certified reports and records required by
the Authority. Copies of the Affirmation Action Regulations
may be obtained by writing to: Office of Affirmative Action,
New Jersey Economic Development Authority, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇;
(ii) Submission of a bid signifies that the bidder
knows the requirements of the Affirmative Action Regulations
and signifies the bidder's intention to comply. Construction
of this project is subject to N.J.A.C. 19:30-3.1 et seq.
Workers employed in construction of this project must be paid
at a rate not less than the prevailing wage rate established
by the New Jersey Commissioner of Labor;
(b) Include in all construction contracts those provisions which are
set forth in the Addendum to Construction Contract annexed hereto as Exhibit A;
(c) Obtain from all contractors and submit to the Authority a
contractor's certificate in the form annexed hereto as Exhibit B within three
(3) business days of the execution of any construction contract;
(d) Create an office of Borrower Affirmative Action Officer and
maintain in that office until the completion date an individual having
responsibility to coordinate compliance by the Borrower with the Authority's
Affirmative Action Regulations and to act as liaison with the Authority's Office
of Affirmative Action;
(e) Submit to the Authority on the completion date, a completion
certificate in the form annexed hereto as Exhibit C; and
(f) Furnish to the Authority all other reports and certificates
required under the Authority's Affirmative Action and Prevailing Wage Rate
Regulations.
Section 7.15. Costs and Expense. All expenses in connection with the
preparation, execution, delivery, recording and filing of this Agreement, the
Mortgage, the Note and other collateral documents and in connection with the
preparation, issuance and delivery of the Bonds, the Authority's fees, the fees
and expenses of Bond Counsel, the fees and expenses of the Authority's counsel,
the fees and expenses of the Trustee, the fees and expenses of Trustee's counsel
and the fees and expenses of counsel to the initial owners of the Bonds shall be
paid directly by the
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Borrower. The Borrower shall also pay throughout the term of the Bonds the
Trustee's annual fees and expenses under the Indenture, this Agreement and the
Mortgage, including, but not limited to, reasonable attorney's fees, fees and
expenses incurred by the Authority or the Trustee in enforcing the full and
punctual performance by the Borrower of its covenants, agreements and
obligations under this Agreement, the Note and the Mortgage, and all costs of
issuing, marketing, collecting payment on and redeeming the Bonds thereunder,
including any fees and expenses incurred by the Authority under this Agreement
or the Indenture and any costs and expenses of any Owner in connection with any
approval, consent or waiver under, or modification of, any such document.
Section 7.16. Rate Covenant.
(a) The Borrower agrees that during each fiscal quarter beginning with
the fiscal quarter ending December 31, 2000, it will produce a Debt Service
Coverage Ratio of at least 1.50 for such fiscal quarter (the "Rate Covenant").
(b) On or before the end of each fiscal quarter, the Borrower shall
submit to the Trustee a report evidencing its compliance or non-compliance with
the Rate Covenant for the fiscal quarter in question. The report may be prepared
by the Borrower.
Section 7.17. Operating Budget. At least sixty (60) days prior to the
beginning of each of its Fiscal Years, the Borrower shall prepare and file an
Operating Budget adopted by the Borrower for the next Fiscal Year with the
Trustee. Within 30 days after the end of each Fiscal Year, the Borrower shall
provide to the Trustee a report with respect to any monthly expenditure for
Operating Expenses that exceeds the amount therefor set forth in the Operating
Budget by more than 10%.
Section 7.18. Operating Expense Reserve Fund; Capital and Maintenance
Fund.
(a) The Borrower may request withdrawals from the Operating Expense
Reserve Fund to pay Operating Expenses, Debt Service Requirements on the Bonds
(but only after exhausting all amounts in the Debt Service Reserve Fund and the
Capital and Maintenance Fund), the non-capitalizable costs of maintenance of or
repairs to the Project or its rebate obligations, all as provided in the
Indenture. The Borrower shall cause any monies received from such withdrawals to
be used as soon as practicable.
(b) The Borrower may request a withdrawal from the Capital and
Maintenance Fund pursuant to the provisions of the Indenture to be used to
finance capital repairs to or extraordinary maintenance expenses of the Project
(but not new capital projects) if other moneys of the Borrower are insufficient
therefor. In addition, the Borrower may request a withdrawal from the Capital
and Maintenance Fund pursuant to the provisions of the Indenture for Debt
Service Requirements on the Bonds (but only after exhausting all amounts in the
Debt Service Reserve Fund) and its rebate obligations. The Borrower shall cause
any monies received from such withdrawal to be applied as soon as practicable.
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Section 7.19. Liquidity Covenant.
(a) The Borrower agrees to maintain at a minimum unrestricted cash or
unrestricted marketable securities which, as of the end of each fiscal quarter:
(i) for the fiscal quarters ending March 31, 2000 through March 31, 2004, is not
less than 30 Days-Cash-On-Hand; and (ii) for each fiscal quarter thereafter, is
not less than 60 Days-Cash-On-Hand (collectively, the "Liquidity Covenant").
(b) On or before the end of each fiscal quarter, the Borrower shall
submit to the Trustee a report evidencing its compliance or non-compliance with
the Liquidity Covenant for such fiscal quarter. The report may be prepared by
the Borrower, but shall be reviewed by an Accountant.
Section 7.20. Trade Payables Covenant. As of the end of each fiscal
quarter, beginning with the fiscal quarter ending December 31, 1999, the
Borrower shall maintain no more than 20% of trade accounts payable in excess of
120 days (the "Trade Payables Covenant").
Section 7.21. Additional Indebtedness. So long as there shall not have
occurred and be continuing any Event of Default hereunder, the Borrower may,
from time to time, incur other indebtedness which may be on a parity with the
Bonds, and which may be secured by a lien on, or security interest in, on the
Project , which is subordinate, or which is equal and ratable (but no senior or
superior), to the lien on or security interest in the Project held by or for the
benefit of the Trustee, but only upon the following terms and conditions:
(a) to finance (i) the costs of enlarging, improving, modifying,
altering or replacing the Project or any Equipment therein, (ii) refunding any
Outstanding bonds; or (iii) any combination of the foregoing; and (iv) paying
the costs and expenses incurred in connection with such indebtedness;
(b) the Borrower first files with the Trustee (i) a certificate of an
independent public accountant to the effect that the Debt Service Coverage Ratio
for each of the two full most recent Fiscal Years of the Borrower was not less
than 1.40 and that based upon a financial feasibility study prepared by such
independent public accountant, the forecasted Debt Service Coverage Ratio for
each of the two full Fiscal Years of the Borrower next following the incurrence
of such indebtedness will not be less than 1.40 and setting forth in detail all
calculations relevant to the computation of such Debt Service Coverage Ratios
and (ii) an opinion of Bond Counsel that the incurrence of such indebtedness
will not impair (A) the exclusion of interest on the Series 1999A Bonds or any
other tax-exempt series of Bonds issued under the Indenture from the gross
income of the recipients thereof for federal income tax purposes or (B) the
status of the Project as an authorized "project" under the Act.
Notwithstanding the foregoing, the Borrower shall have the right to
incur debt for the purpose of refinancing any debt of the Borrower existing as
of the date hereof without having to satisfy the requirements set forth in this
Section 7.21, so long as such indebtedness does not exceed 85% of the Borrower's
accounts receivable, inventory (as such terms are defined in the New Jersey
Uniform Commercial Code), and the appraised value of property, plant and
equipment.
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Section 7.22. Financial Statements. The Borrower shall provide the
Authority (upon request) and the Trustee with copies of the following items
(each of which must show budgeted and actual results for the relevant period,
the year-to-date and the corresponding period and year-to-date for the
immediately preceding Fiscal Year):
(a) Within thirty (30) days after the end of each month, unaudited
monthly statements of the Borrower's operations, its balance sheet and statement
of cash flows.
(b) Within forty-five (45) days after the end of each calendar quarter
(including the fourth such quarter), unaudited quarterly statements of the
Borrower's operations, its balance sheet, a calculation of compliance with the
Financial Covenants and a statement of cash flows.
(c) Within one hundred twenty (120) days after the end of each Fiscal
Year, audited financial statements of the Guarantor prepared in accordance with
Generally Accepted Accounting Principles and an Accountant's report thereon,
including a calculation of the Borrower's compliance with the Financial
Covenants.
(d) The Borrower will send to the Underwriter, to each Owner of not
less than $1,000,000 in aggregate principal amount of Bonds and, upon written
request by any Owner, at such Owner's expense, a copy of any information
supplied to the Trustee pursuant to this Section 7.22.
Section 7.23. Year 2000 Compliance. All software or computer programs
used by the Borrower in the operations of its business and material to its
operations after calendar year 1999 is designed to be used prior to, during and
after the calendar year 2000, and such software or computer programs will
operate during each time period without material error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century. Without
limiting the generality of the foregoing, (i) all such software or computer
programs will not abnormally end or provide invalid or incorrect results as a
result of date data and (ii) all such software and computer programs have been
designed to ensure year 2000 compatibility, including date data, century
recognition, calculations which accommodate same century and multi-century
formulas and date values, and date data interface values that reflect the
century.
Section 7.24. Continuing Disclosure. The Borrower hereby covenants and
agrees that it will comply with and carry out all of the provisions of the
Continuing Disclosure Agreement among the Guarantor, the Borrower and the
Trustee, as the dissemination agent, dated as of June 1, 1999 as the same may be
amended or supplemented from time to time in connection with the Bonds (the
"Continuing Disclosure Agreement"). The Trustee may (and, at the request of any
Participating Underwriter or Owners of at least 25% aggregate principal amount
in Outstanding Bonds, shall) or any Owner or Beneficial Owner of Bonds may take
such actions as may be necessary and appropriate, including seeking specific
performance by court order, to cause the Borrower to comply with its obligations
under this Section 7.24. For purposes of this Section 7.24, (a) "Beneficial
Owner" means any person which (i) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including
persons holding Bonds through nominees, depositories or other intermediaries),
or (ii) is treated as the
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owner of any Bonds for federal income tax purposes and (b) "Participating
Underwriter" shall have the meaning set forth for such term in Rule 15(c)2-12 of
the Securities and Exchange Commission.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default. Each of the following events shall
constitute an "Event of Default" under this Agreement:
(a) if the Borrower fails to make any payment required under this
Agreement within ten days of the date when due; or
(b) if the Project or any part thereof necessary for efficient
operation is destroyed, damaged or rendered unusable to such extent that the
same cannot yield sufficient revenues to make payments required under this
Agreement, and the damage is not promptly repaired in accordance with the
provisions hereof for any reason whatsoever; or
(c) if the Borrower fails to perform any of its other covenants or
conditions or fails to perform any of its obligations hereunder and such failure
continues for thirty (30) days after the Authority or the Trustee gives the
Borrower notice thereof; provided, however, that failure to comply with Section
7.24 hereof shall not constitute an Event of Default hereunder; or
(d) if the Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian of the Borrower or of the
property of the Borrower, or (ii) admit in writing its inability to pay the
debts of the Borrower generally as they become due; or (iii) make a general
assignment for the benefit of creditors; or (iv) be adjudicated a bankrupt or
declared 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 corporate action of the Borrower
shall be taken for the purpose of effecting any of the foregoing; or (vi) if
without the application, approval or consent of the Borrower, a proceeding shall
be instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect
of the Borrower an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a liquidator or custodian 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 of (B)
not have been vacated, dismissed and discharged subject to no further appeal
within sixty (60) days from the date of entry thereof; or
(e) the occurrence of any event of default under the Indenture or the
Mortgage, subject to any periods for cure or provisions for annulment; or
(f) if any representation or warranty by or on behalf of the Borrower
made herein or in any report, certificate, financial statement or other
instrument furnished in connection with this Agreement shall prove to be false
or misleading in any material respect when made; or
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(g) If the Borrower defaults (and such default continues beyond any
applicable cure period) under any of the documents evidencing or securing any of
its other substantial obligations.
Section 8.02. Acceleration. Upon the occurrence of any Event of Default
hereunder, the Trustee shall, but only upon demand therefor by the Majority
Owners, declare the principal of the then Outstanding Bonds and all accrued
interest immediately due and payable. Upon such declaration by the Trustee, the
Authority shall have the right to terminate this Agreement and, upon such
termination, there shall become immediately due and payable hereunder as then
current damages of the Authority under this Agreement, an amount equal to all
amounts due and owing as loan payments hereunder. Until such amount is paid by
the Borrower, at the time or times and in the manner required to permit the
Authority to meet its obligations under the Indenture, the Authority shall
continue to have all of the rights, powers and remedies herein (notwithstanding
the termination hereof), and, for such time as may be necessary to enable the
Authority to satisfy in full its obligations under the Indenture, the term of
this Agreement shall, at the election of the Authority, be extended at the will
of the Authority, and the Borrower's obligations hereunder shall continue in
full force and effect.
Section 8.03. Payment of Loan Payments on Default; Suit Therefor.
(a) The Borrower covenants that, if default shall be made in the
payment of any sum payable by the Borrower under this Agreement as and when the
same shall become due and payable, whether at maturity or by acceleration or
otherwise, then, upon demand of the Authority or its assignee, the Borrower will
pay to the Authority or its assignee the whole amount of the loan payments that
then shall have become due and payable hereunder and to the extent such loan
payments represent payments due on the Bonds, such payments shall be applied to
the payment of the Bonds in accordance with the terms of the Indenture; and, in
addition thereto, such further amount as shall be sufficient to pay the costs
and expenses of collection, including reasonable compensation based upon actual
time expended by the Authority and its assignee and their respective agents,
attorneys and counsel, and any expenses or liabilities incurred by the Authority
or its assignee (other than through the Authority's or its assignee's own gross
negligence or bad faith). In case the Borrower shall fail forthwith to pay such
amounts upon such demand, the Authority or its assignee shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Borrower and collect in the manner provided by law out
of the property of the Borrower the money adjudged or decreed to be payable.
(b) In case there shall be pending proceedings in bankruptcy or for the
reorganization of the Borrower under the Bankruptcy Code or any other applicable
law, or in case a receiver or trustee shall have been appointed for the benefit
of the creditors or the property of the Borrower, or in the case of any other
similar judicial proceedings relative to the Borrower, the Authority or its
assignee shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of the loan
payments, and any other amounts due and owing hereunder by Borrower, including
interest owing and unpaid in respect
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thereof, and, in case of any judicial proceedings, to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Authority or its assignee allowed, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Authority or its assignee, and to pay to
the Authority or its assignee any amount due it for compensation based upon
actual time expended and expenses, including counsel fees incurred by it up to
the date of such distribution.
Section 8.04. Other Remedies. Whenever the Borrower is in default
hereunder, the Authority or its assignee shall be entitled to any one or more of
the following remedies:
(a) The Authority or its assignee shall be entitled to all the remedies
under the New Jersey Uniform Commercial Code as secured party in respect of the
property subject to the security interests created hereunder, including without
limitation the right to take possession of such property and sell the same at
private or public sale, the proceeds of such sale to be applied as provided in
subsection (b) of this Section 8.04;
(b) Any money received by the Authority under this Section 8.04 shall
be paid to its assignee and applied pursuant to the provisions of Section 7.10
of the Indenture; or
(c) The Authority or its assignee may, without posting bond or other
security, pursue whatever remedies may be available at law or in equity as may
appear necessary or desirable to collect any other amounts payable by the
Borrower hereunder, or to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under this Agreement, it being
acknowledged and agreed by Borrower that any such breach or threatened breach
will cause immediate and irreparable injury to the Authority and its assigns and
that money damages will not provide an adequate remedy therefor.
No action taken pursuant to this Section 8.04 shall relieve the
Borrower of the Borrower's obligations pursuant to Section 3.01, 3.03, 3.05 and
8.03 hereof, all of which shall survive any such action.
Section 8.05. Waiver. The Borrower hereby waives and relinquishes the
benefits of any present or future law exempting the Project from attachment,
levy or sale on execution, or any part of the proceeds arising from the sale
thereof, and all benefit of stay of execution or other process.
Section 8.06. Cumulative Rights. No remedy conferred upon or reserved
to the Authority or its assignee by this Agreement is intended to be exclusive
of any other available remedy or remedies, but each and every such remedy shall
be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
waiver by the Authority or its assignee of any breach by the Borrower of any of
its obligations, agreements or covenants hereunder shall be a waiver of any
subsequent breach, and no delay or omission to exercise any right or power shall
impair any such right or
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power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient.
Section 8.07. No Exercise of Remedies Without Consent of Majority
Owners. Notwithstanding anything to the contrary contained in this Agreement,
neither the Authority nor any assignee of the Authority under this Agreement
shall exercise or pursue remedies or declare an Event of Default or cause an
acceleration of the obligations contained in this Agreement without the prior
written consent of the Majority Owners as long as no voluntary or involuntary
case has been commenced by the filing of a petition under the Bankruptcy Code or
any other law relating to insolvency, bankruptcy, reorganization, winding-up or
composition or adjustment of debts by or against the Borrower; provided,
however, that the Authority shall not be required to obtain the consent of the
Majority Owners to enforce the public purpose covenants of the Borrower set
forth in this Agreement or to effect a mandatory redemption of the Bonds
pursuant to Section 4.01(c)(i) of the Indenture.
Section 8.08. Determination of Taxability Not a Default.
Notwithstanding anything to the contrary contained in this Agreement, in the
event of a breach or inaccuracy of any applicable statutory or regulatory
requirement or of a covenant or representation of the Borrower relating to the
exclusion from gross income of interest on the Series 1999A Bonds for purposes
of federal income taxation, such breach or inaccuracy shall not be considered an
Event of Default hereunder so long as the Borrower performs all of its
obligations arising out of the breach or inaccuracy including, without
limitation, the payment of all amounts due under Sections 3.01 and 3.05 hereof
if such breach or inaccuracy results in a Determination of Taxability with
respect to the Series 1999A Bonds.
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ARTICLE IX
OPTIONS TO TERMINATE AGREEMENT
Section 9.01. Option to Terminate Upon Defeasance. The Borrower shall
have, and is hereby granted, the option to terminate its obligations under this
Agreement prior to full payment of the Bonds by providing for the payment of all
of the Outstanding Bonds in accordance with Article X of the Indenture.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Approval of Indenture. The Borrower acknowledges that it
has received an executed copy of the Indenture and that it is familiar with its
provisions, and agrees that it will take all such actions as are required or
contemplated under the Indenture to preserve and protect the rights of the
Trustee thereunder and that it will not take any action which would cause an
"Event of Default" thereunder. It is agreed by the Borrower and the Authority
that any redemption of the Bonds prior to maturity shall be effected as provided
in the Indenture.
Section 10.02. Taxes - Rights of Authority to Pay. If the Borrower, at
any time, fails to pay any taxes or other impositions payable by it in
accordance with Section 3.04 hereof, or shall fail, within the time provided for
in Article VIII hereof after the notice therein specified of any Event of
Default, as therein defined, has been given thereunder, to make any other
payment or perform any other act on its part to be made or performed, then the
Authority may, but shall not be obligated so to do, and without further notice
to or demand upon the Borrower and without waiving or releasing the Borrower
from any of its obligations under this Agreement, (a) pay any taxes or other
impositions payable by the Borrower in accordance with Section 3.04 hereof, or
(b) make any other payment or perform any other act on the Borrower's part to be
made or performed as provided in this Agreement. All sums so paid by the
Authority and all necessary incidental costs and expenses in connection with the
performance of any such act by the Authority shall, together with interest
thereon at the tax-exempt rate, be payable to the Authority, within five (5)
days of demand, or, at the option of the Authority, may be added to any
installment of the loan payments then due or thereafter becoming due under this
Agreement, and the Borrower covenants to pay any such sums.
Section 10.03. Illegal Provisions Disregarded. If any term or provision
hereof or the application thereof for any reason or circumstance shall to any
extent be held to be invalid or unenforceable, this Agreement shall be invalid
or unenforceable only to the extent of such invalidity or unenforceability and
such invalidity or unenforceability shall not invalidate the balance of such
provision or the remaining terms or provisions of this Agreement or the
application of such terms or provisions to persons other than those as to which
it has been held invalid or unenforceable; each term and provision hereof shall
be valid and enforceable to the fullest extent permitted by law, and shall be
liberally construed in favor of the Authority or its assignee in order to effect
the intent of this instrument.
Section 10.04. Limitation of Liability of the Authority. THE STATE IS
NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE
STATE IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF
OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE
AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS
OF THE AUTHORITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE
AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW
AND SHALL NEVER
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CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY
HAS NO TAXING POWER.
Section 10.05. No Recourse as to the Authority. No recourse under or
upon any obligation, covenant or agreement contained herein or in any Bond shall
be had against the Authority or any member, officer, employee or agent, past,
present or future, of the Authority or of any successor of the Authority under
this Agreement, any other agreement, any rule of law, statute or constitutional
provision, or by enforcement of any assessment or by any legal or equitable
proceeding or otherwise, it expressly being agreed and understood that the
obligations of the Authority hereunder, and under the Bonds and elsewhere, are
solely corporate obligations of the Authority to the extent specifically limited
in the Act and that no personal liability whatsoever shall attach to or shall be
incurred by the Authority or such members, officers, employees or agents, past,
present or future, of the Authority or of any successor of the Authority, or any
of them, because of such indebtedness or by reason of any obligation, covenant
or agreement contained herein, in the Bonds or implied therefrom.
Section 10.06. Reference to Statute or Regulation. A reference herein
to a statute or to a regulation issued by a governmental agency includes the
statute or regulation in force as of the date hereof, together with all
amendments and supplements thereto and any statute or regulation substituted for
such statute or regulation, unless the specific language or the context of the
reference herein clearly includes only the statute or regulation in force as of
the date hereof.
A reference herein to a governmental agency, department, board,
commission or other public body or to a public officer includes an entity or
officer which or who succeeds to substantially the same functions as those
performed by such public body or officer as of the date hereof, unless the
specific language or the context of the reference herein clearly includes only
such public body or public officer as of the date hereof.
Section 10.07. Notices. All notices required or authorized to be given
by the Borrower, the Authority or the Trustee under the Indenture or pursuant to
this Agreement shall be in writing and shall be sent by registered or certified
mail, postage prepaid, to the following addresses:
If to the Authority,
If sent by U. S. Mail, to:
New Jersey Economic Development Authority
P. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Director of Investment Banking
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If sent by overnight courier service, to:
New Jersey Economic Development Authority
▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Director of Investment Banking
If to the Borrower, to:
Able Laboratories, Inc.
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Attention: Director of Finance
If to the Trustee, to:
U.S. Bank Trust National Association
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Attention: Corporate Trust Services
If to the Underwriter, to:
▇▇▇▇▇▇▇▇▇ Securities, Inc.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇
or to such other addresses as may from time to time be furnished to the parties,
effective upon the receipt of notice thereof given as set forth above. Each of
the above agrees that it shall send a duplicate copy or executed copy of all
certificates, notices, correspondence or other data and materials required to be
sent to one of the above to all other parties.
Section 10.08. Applicable Law. This Agreement shall be deemed to be a
contract made in the State and governed by the laws of the State.
Section 10.09. Amendments. This Agreement may not be amended except by
an instrument in writing signed by the parties and, if such amendment occurs
after the issuance of any of the Bonds, consented to by the Trustee, pursuant to
Section 6.07 of the Indenture.
Section 10.10. Term of Agreement. This Agreement and the respective
obligations of the parties hereto shall be in full force and effect from the
date hereof until all principal of and interest on the Bonds shall have been
paid or provision for such payment shall have been made pursuant to the terms
and provisions of the Indenture.
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Section 10.11. Amounts Remaining in Debt Service Fund. It is agreed by
the parties hereto that any amounts remaining in the Debt Service Fund
established under the Indenture upon expiration or sooner termination of this
Agreement after payment in full of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Indenture) and of the
fees, charges and expenses of the Trustee and the Authority in accordance with
the Indenture, shall belong to and be paid to the Borrower by the Trustee.
Section 10.12. Survival of Covenants, Conditions and Representations.
All covenants, conditions and representations of the Borrower contained herein
that, by nature, implied or expressly involve performance in any particular
manner after the termination of this Agreement or that cannot be ascertained to
have been performed until after termination of this Agreement, shall survive
said termination. Without intending to limit the generality of the foregoing,
the Borrower's covenant to indemnify the Authority and the Trustee, as set forth
in Section 3.10 hereof, shall survive any termination of this Agreement.
Section 10.13. Headings. The captions or headings in this Agreement are
for convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.
Section 10.14. Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be regarded for all purposes as an
original and such counterparts shall constitute but one and the same instrument.
Section 10.15. Consent. Whenever the consent of the Authority is given
pursuant to the terms of this Agreement, such consent shall create no liability
or responsibility upon the Authority, and whenever required, shall not be
unreasonably withheld, conditioned or delayed.
Section 10.16. Filing of Other Documents. The parties hereto shall
execute, at the request of the Borrower, and the Borrower shall file such other
documents necessary to perfect all security interests created pursuant to the
terms of this Agreement, the Mortgage and the Indenture, and the Authority shall
have no responsibilities for such filings whatsoever, other than executing the
documents requested by the Borrower.
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IN WITNESS WHEREOF, the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY has
caused this Agreement to be executed in its name and on its behalf by its
Executive Director and its official seal to be affixed hereunto and attested by
its Secretary or Assistant Secretary, and ABLE LABORATORIES, INC. has caused
this Agreement to be executed in its name and on its behalf by an authorized
officer and its official seal to be affixed hereunto and attested by its
Secretary or Assistant Secretary as of the day and year first above written.
NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
By:__________________________
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Executive Director
(SEAL) Attest:_______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Assistant Secretary
ABLE LABORATORIES, INC.
By:__________________________
(SEAL) Attest:_______________________
[Assistant] Secretary
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Exhibit A
Addendum to Construction Contract
A-1
Exhibit B
Contractor's Certificate and Agreement
B-1
Exhibit C
Contractor's Completion Certificate
C-1