EXHIBIT 10.7

EXECUTION COPY

AUTOVAXID, INC.

QLICI LOAN AGREEMENT

December 8, 2006

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TABLE OF CONTENTS

 

ARTICLE 1. RECITALS AND DEFINITIONS    1

Section 1.1

   Incorporation of Recitals    1

Section 1.2

   Defined Terms    1

Section 1.3

   Other Definitional Provisions    5 ARTICLE 2. THE NOTE    5

Section 2.1

   Agreement to Make Loan    5

Section 2.2

   Note    5

Section 2.3

   Purpose    5

Section 2.4

   Repayment of Loan Amounts    5

Section 2.5

   Prepayment of the Loan    5 ARTICLE 3. OTHER LOAN-RELATED PROVISIONS    6

Section 3.1

   Interest Rate and Payments    6

Section 3.2

   Subordination    6

Section 3.3

   Call Right    7 ARTICLE 4. REPRESENTATIONS, WARRANTS AND COVENANTS OF THE
BORROWER    7

Section 4.1

   Subsidiaries    7

Section 4.2

   Organization and Qualification    7

Section 4.3

   Authorization; Enforcement    7

Section 4.4

   No Conflicts    8

Section 4.5

   Filings, Consents and Approvals    8

Section 4.6

   Material Changes    8

Section 4.7

   Compliance    8

Section 4.8

   Regulatory Permits    9

Section 4.9

   Certain Fees    9

Section 4.10

   [Intentionally Omitted]    9

Section 4.11

   Investment Company    9

Section 4.12

   No Additional Agreements    9

Section 4.13

   Full Disclosure    9

Section 4.14

   NMTC Compliance    9 ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE LENDER
   12

Section 5.1

   Organization; Authority    12

Section 5.2

   Survival of the Lender’s Representations and Warranties    13 ARTICLE 6. NMTC
COVENANTS    13

Section 6.1

   Borrower’s NMTC Covenants    13 ARTICLE 7. CONDITIONS OF LENDING    16

Section 7.1

   Representations and Warranties    16

 

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Section 7.2

   No Default    16

Section 7.3

   Other Documentation    16 ARTICLE 8. EVENTS OF DEFAULT    16

Section 8.1

   Event of Default    16

Section 8.2

   Remedies Not Exclusive    18 ARTICLE 9. MISCELLANEOUS    18

Section 9.1

   Fees and Expenses    18

Section 9.2

   NMTC Compliance    18

Section 9.3

   Indemnification    19

Section 9.4

   Usury Limitations    19

Section 9.5

   Entire Agreement    19

Section 9.6

   Notices    20

Section 9.7

   Amendments; Waivers; No Additional Consideration    20

Section 9.8

   Termination    20

Section 9.9

   Construction    21

Section 9.10

   Successors and Assigns    21

Section 9.11

   No Third-Party Beneficiaries    21

Section 9.12

   Governing Law    21

Section 9.13

   Survival    22

Section 9.14

   Execution    22

Section 9.15

   Severability    22

Section 9.16

   Remedies    22

 

EXHIBIT A —

   NOTE

EXHIBIT B —

   CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY
EXCLUSION – LOWER TIER COVERED TRANSACTIONS

 

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QLICI LOAN AGREEMENT

THIS QLICI LOAN AGREEMENT (this “Agreement”) is made by and between AutovaxID,
Inc., a Florida corporation (the “Borrower”), and St. Louis New Markets Tax
Credit Fund-II, LLC, a Missouri limited liability company (the “Lender”), as of
December 8, 2006.

RECITALS

WHEREAS, the Borrower has requested that the Lender provide consideration to the
Borrower in the form of a loan in the amount of Seven Million Seven Hundred
Thousand and 00/100 Dollars ($7,700,000.00) (the “Loan”); and

WHEREAS, the Lender is willing to extend the Loan to the Borrower upon and
subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Borrower and the Lender agree as
follows:

ARTICLE 1.

RECITALS AND DEFINITIONS

Section 1.1 Incorporation of Recitals. It is expressly agreed that the recitals
to this Agreement are incorporated herein and made an operative part of this
Agreement.

Section 1.2 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings. Other capitalized terms are defined elsewhere
herein.

“Accentia” means Accentia Biopharmaceuticals, Inc., a Florida corporation.

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144.

“Business Day” means any day except Saturday, Sunday and any day which is a
federal legal holiday or a day on which banking institutions in the City of New
York or the State of Missouri are authorized or required by law or other
governmental action to close.

“CDE Capital Contribution” means the actual aggregate amount of capital
contributed or agreed to be contributed to the Lender by AutovaxID Investment
LLC, a Missouri limited liability company, designated as “CDE Capital
Contributions” to fund the Loan from the Lender to the Borrower.

“CDFI Fund” means the Community Development Financial Institutions Fund of the
United States Department of Treasury, or any successor agency charged with
oversight responsibility for the New Markets Tax Credit program.

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“Closing” means the closing of the transactions contemplated by this Agreement.

“Commission” means the Securities and Exchange Commission.

“Company” means Biovest International, Inc., a Delaware corporation.

“Compliance Period” means the seven-year credit period applicable to each QEI
made by the Fund in the Lender, commencing on the first Credit Allowance Date
with respect to each such QEI and ending on the last day prior to the seventh
anniversary of such first Credit Allowance Date.

“Credit Allowance Date” means any credit allowance date (as such term is defined
in Section 45D(a)(3) of the Code) with respect to each CDE Capital Contribution
made to the Lender.

“Credit Investment Period” means the period beginning on the date on which the
Fund first makes a CDE Capital Contribution to the Lender and ending on the last
day of the last Compliance Period applicable to the CDE Capital Contribution
paid by the Fund to the Lender.

“Default” means any event, act of condition which with notice or lapse of time,
or both, would constitute an Event of Default.

“Default Rate” has the meaning set forth in Section 3.1(c).

“Delaware Courts” means the state and federal courts sitting in the State of
Delaware.

“Effective Date” of this Agreement and the Loan shall mean the date on which
this Agreement is signed by the last party required on the signature page to
execute same.

“Event of Default” means any of the events specified as an event of default
pursuant to Section 8.1 herein; provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.

“Governmental Authority” has the meaning set forth in Section 4.5.

“Guarantors” means the Company, Hopkins Capital Group II, LLC, Francis
O’Donnell, Jr., Kathleen M. O’Donnell, Trustee of the Francis E. O’Donnell Jr.
Irrevocable Trust, Allan Pearce, Dennis L. Ryll, Ronald Osman, Steven Arikian,
Steven Stogel, Donald L. Ferguson, and Donald L. Ferguson, Trustee of the Donald
L. Ferguson Revocable Trust.

“Guaranty” means that certain Guaranty among the Borrower, Company, USB and
others dated the date hereof guaranteeing the obligations of the Borrower under
the Tax Credit Reimbursement and Indemnity Agreement, the payment of certain
fees and expenses to the Lender and the repayment of the Loan.

 

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“Indemnitee” has the meaning set forth in Section 9.3.

“Lease Agreement” means that certain Lease between the Borrower and Spruce LLC
dated on or around the date hereof.

“Leasehold Occupancy” means occupancy by the Borrower of the portions of
premises located at 1701 Macklind Avenue, St. Louis, MO 63110 as set forth in
the Lease Agreement, which requires completion of tenant improvements and a
Certificate of Occupancy before occupancy can commence.

“Lender Operating Agreement” means that certain Amended and Restated Operating
Agreement of the Lender, dated as of December 8, 2006.

“Lien” means any lien, charge, encumbrance, security interest, right of first
refusal or other restrictions of any kind.

“Loan” means the Seven Million Seven Hundred Thousand and 00/100 Dollar
($7,700,000.00) loan to be provided by the Lender to the Borrower pursuant to
this Agreement.

“Loan Amount” means Seven Million Seven Hundred Thousand and 00/100 Dollars
($7,700,000.00).

“Low-Income Community” means any “low-income community” as defined in
Section 45D of the Code and the Treasury Regulations and Guidance (expressly
including any area not constituting a separate census tract that may be
designated by the Lender and approved as a “low-income community” by the CDFI
Fund.

“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document or (ii) a
material impairment of the Borrower’s ability to perform on a timely basis its
obligations under any Transaction Document to which it is a party.

“Maturity Date” shall mean thirty (30) years from the Effective Date.

“Note” has the meaning set forth in Section 2.2.

“Operational Date” means the date on which tenant improvements have been
completed at the premises located at 1701 Macklind Avenue, St. Louis, MO 63110
and a certificate of occupancy has been granted with respect to such property.

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or not.

 

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“QALICB” means a business which qualifies as a “qualified active low income
community business” under Section 45D of the Code.

“QEI” means a “qualified equity investment” as such term is defined in
Section 45D of the Code and the Treasury Regulations and Guidance.

“Regulations” means the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code.

“Reimbursement Agreement” means that certain Reimbursement Agreement entered
into between St. Louis Development Corporation, a Missouri nonprofit
corporation, and the Company, substantially in the form attached hereto as
Exhibit C.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act of 1933, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

“Second-Lien Security Agreement” means that certain Second-Lien Security
Agreement between the Borrower and the Lender dated the date hereof.

“Senior Indebtedness” means any existing or future indebtedness owed by the
Borrower to Laurus Master Fund, Ltd. or any of its Affiliates (or their
respective successors and assigns), as the same may be amended, supplemented or
otherwise modified from time to time.

“Subordination Agreement” means that certain Subordination Agreement entered
into by and among Laurus Master Fund, Ltd., Lender, USB, Borrower and the
Company.

“Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of
Regulation S-X promulgated by the Commission under the Securities Exchange Act
of 1934, as may be amended from time to time.

“Tax Credit Reimbursement and Indemnity Agreement” means that certain Tax Credit
Reimbursement and Indemnity Agreement between the Borrower and USB dated the
date hereof.

“Transaction Documents” means this Agreement, the Note, the Second-Lien Security
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

“Treasury Regulations and Guidance” means and includes any temporary and/or
final regulations promulgated under the Code and any guidance, rule, or
procedure published by the CDFI Fund, including without limitation the Community
Development Entity Certification Application and the New Markets Tax Credit
Allocation Application.

“USB” means U.S. Bancorp Community Investment Corporation.

 

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Section 1.3 Other Definitional Provisions.

(a) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection and Exhibit
references are to this Agreement unless otherwise specified.

(b) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

(c) “Includes” “including” and like expressions are not limiting, i.e.,
“including” implies “including, without limitation,” etc.

(d) “Or” shall have the meaning ordinarily attributed to “and/or.”

ARTICLE 2.

THE NOTE

Section 2.1 Agreement to Make Loan. The Lender agrees to loan the Loan Amount to
the Borrower in accordance with the terms and conditions hereof. The obligation
of the Lender to enter into this Agreement and to make the Loan hereunder is
subject to the following loan disbursement requirements:

(a) Delivery of all transaction documentation in connection with the Loan,
including the Guaranty, the Subordination Agreement and the Second-Tier Security
Agreement;

(b) Copies of Borrower documents authorizing the transactions contemplated
hereinafter; and

(c) Entry by the Company into the Reimbursement Agreement, pursuant to which
Biovest agrees to pay all Expenses (as such term is defined in the Lender
Operating Agreement) of the Lender, except to the extent such Expenses relate to
investments other than this Loan.

Section 2.2 Note. In order to evidence this Loan, the Lender shall require the
Borrower to execute and deliver to Lender a promissory note substantially in the
form of Exhibit A hereto (the “Note”), payable to the order of the Lender and in
a principal amount equal to the Loan.

Section 2.3 Purpose. The proceeds of the Loan shall be used by the Borrower to
purchase assets from the Company in the approximate amount of $5,600,000.00 and
to make tenant improvements to the property located at 1701 Macklind Avenue, St.
Louis, Missouri in the approximate amount of $2,000,000.

Section 2.4 Repayment of Loan Amounts. Subject to Section 3.3, the outstanding
principal amount on the Loan shall be due and payable in full in cash by the
Borrower on the Maturity Date.

Section 2.5 Prepayment of The Loan. Except as set forth below, the Borrower
shall not have the right to prepay all or any portion of any principal amount of
the Loan. At any time

 

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seven years and six months after the Effective Date, the Borrower shall have the
right to prepay all or any portion of the then outstanding principal amount of
the Loan, so long as such prepayment does not result in an event of recapture
(as defined in Section 45D(g) of the Code and Treasury Regulation
Section 1.45D-1(e) of the Regulations). Except as otherwise set forth in
Section 3.3, at any time prior to seven years and six months after the Effective
Date, the Borrower shall only have the right to prepay the entire amount of the
Loan, in the event that (i) the Lender consents to such prepayment, and USB and
the managing member of the Lender agree on the reinvestment of such proceeds in
an alternative investment identified by the Borrower in the service area of the
Lender set forth in the Community Development Entity Certification Application
of the Lender, as amended, and which investment constitutes a qualified
low-income community investment as defined in Section 45(d)(1) of the Code, and
in amounts and on terms that are consistent with the terms of that certain Loan
and Security Agreement between Biolender II, LLC and AutovaxID Investment LLC
dated the date hereof and are designed to cause the re-investment of such
proceeds within twelve (12) months following the Lender’s receipt thereof, and
the Borrower (or the Company, on behalf of the Borrower) pays for or reimburses
the Lender and USB for reasonable costs and expenses arising out of the
structuring, negotiation and documentation of such reinvestment, or (ii) the
Borrower or the Guarantors that are guaranteeing the obligations of the Borrower
under the Tax Credit Reimbursement and Indemnity Agreement, as the case may be,
pay to USB the Recapture Amount as defined in Section 2(c) of the Tax Credit
Reimbursement and Indemnity Agreement.

ARTICLE 3.

OTHER LOAN-RELATED PROVISIONS

Section 3.1 Interest Rate and Payments.

(a) Interest on the outstanding principal amount of the Loan shall accrue at a
rate per annum of five and eighty-two one hundredths percent (5.82%), but not
more than the maximum rate allowed by law, non-compounding, commencing on the
Effective Date, and shall be payable in arrears on an annual basis commencing on
the first Business Day after December 31, 2006, and continuing on the first
Business Day after each December 31 thereafter until (and including) the
Maturity Date.

(b) All interest on the Loan shall accrue based on the actual number of days
elapsed and calculated based upon a year of three hundred and sixty (360) days.

(c) Immediately following the Maturity Date, whether by acceleration, demand or
otherwise, and at the Lender’s option, during the continuance of any Event of
Default, amounts outstanding under the Note shall bear interest at a rate per
annum (based on the actual number of days that principal is outstanding over a
year of 360 days) of eight and eighty-two one hundredths percent (8.82%), but
not more than the maximum rate allowed by law (the “Default Rate”). The Default
Rate shall continue to apply whether or not judgment shall be entered on the
Note.

Section 3.2 Subordination. All indebtedness owed by the Borrower and its
Subsidiaries to the Lender and its Affiliates, including the Lender’s right to
receive payments of

 

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principal and interest under this Loan, shall be secured by the Second-Lien
Security Agreement and is expressly subordinated to the extent and in the manner
set forth in the Subordination Agreement.

Section 3.3 Call Right. For a period of six (6) months commencing on the date
seven years after the Effective Date (the “Exercise Period”), the Lender shall
have the right to call for the payment of the Loan in the amount of $5,721,000,
in full satisfaction of the principal on the Loan. If Lender elects to exercise
its call right, it shall do so by giving written notice to the Borrower at any
time during the Exercise Period or not more than 15 days before the beginning of
the Exercise Period. If the Lender exercises its call right, the Borrower shall
pay to the Lender $5,721,000, together with all accrued but unpaid interest, and
the Note shall be cancelled.

ARTICLE 4.

REPRESENTATIONS, WARRANTS AND COVENANTS OF THE BORROWER

The Borrower hereby represents, warrants and covenants to the Lender as of the
date hereof (or such other date as specified below) that:

Section 4.1 Subsidiaries. As of the Effective Date, the Borrower has no direct
or indirect Subsidiaries.

Section 4.2 Organization and Qualification. The Borrower is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Borrower is not in violation of any of the provisions of its certificate or
articles of incorporation, bylaws or other organizational or charter documents.
The Borrower is duly qualified to conduct its respective business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect, and no
proceedings have been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, such power and authority or qualification.

Section 4.3 Authorization; Enforcement. The Borrower has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Borrower and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Borrower and no further action is required by the Borrower in
connection therewith. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Borrower and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 

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Section 4.4 No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Borrower and the consummation by the Borrower of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Borrower’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, or result in the imposition of any Lien upon
any of the material properties or assets of the Borrower pursuant to, any
agreement, credit facility, debt or other instrument (evidencing a Borrower debt
or otherwise) or other understanding to which the Borrower or is a party or by
which any property or asset of the Borrower is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Borrower is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Borrower is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.

Section 4.5 Filings, Consents and Approvals. The Borrower is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority (a “Governmental Authority”) or other Person in
connection with the execution, delivery and performance by the Borrower of the
Transaction Documents and the consummation of the transactions contemplated
thereby, other than those that have been made or obtained prior to the date of
this Agreement.

Section 4.6 Material Changes. As of the Effective Date, (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Borrower has not
incurred any liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the ordinary course
of business consistent with past practice, and (B) liabilities not required to
be reflected in the Borrower’s financial statements pursuant to GAAP, and
(iii) the Borrower has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock.

Section 4.7 Compliance. The Borrower is not (i) in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Borrower under or in
violation of), nor has the Borrower received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) in violation of any order of any applicable
Governmental Authority, or (iii) nor has it been in violation of any statute,
rule or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental
protection,

 

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occupational health and safety, product quality and safety and employment and
labor matters, except in each case as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

Section 4.8 Regulatory Permits. The Borrower possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business, except where
the failure to possess such permits would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, and the
Borrower has not received any notice of proceedings relating to the revocation
or modification of any such permits.

Section 4.9 Certain Fees. No brokerage or finder’s fees or commissions are or
will be payable by the Borrower to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement.

Section 4.10 Leasehold Occupancy. Within two (2) Business Days after the
Closing, the Borrower shall deliver to Lender a timeline setting forth the
actions the Borrower intends to take in order to achieve Leasehold Occupancy and
a description of start-up activities in the St. Louis area prior to achieving
Leasehold Occupancy, and the Borrower shall use diligence in achieving the
milestones set forth in such timeline. The Borrower shall commence construction
on the leasehold improvements set forth in the Lease Agreement as soon as
commercially practicable after the Closing. The Borrower shall use its best
efforts to achieve Leasehold Occupancy on or before March 1, 2007, and the
Borrower shall have achieved Leasehold Occupancy on or before June 15, 2007

Section 4.11 Investment Company. The Borrower is not, and is not an Affiliate
of, and immediately following the Effective Date will not have become, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

Section 4.12 No Additional Agreements. The Borrower does not have any agreement
or understanding with the Lender with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

Section 4.13 Full Disclosure. All disclosure provided to the Lender regarding
the Borrower, its business and the transactions contemplated hereby, furnished
by or on behalf of the Borrower (including the Borrower’s representations and
warranties set forth in this Agreement) are true and correct and do not contain
any untrue statement of a material fact or omit to state any material public
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

Section 4.14 NMTC Compliance. The Borrower acknowledges that the Loan is
intended to constitute a “qualified low-income community investment” and that,
for such purpose, the Borrower will be required to maintain separate books and
records with regard to the business activities to which the proceeds of the Loan
are allocated in order for the Loan to qualify as being invested in a “qualified
active low-income community business” as such terms are defined in Section 45D
of the Code, as amended. In particular, the Loan will be used in a

 

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qualified active low-income community business as such term is defined in
Section 45D(d)(2) of the Code. Accordingly, as a material inducement to the
Lender to enter into this Agreement and to make the Loan and the Borrower hereby
represents and warrants the following:

(i) The Borrower is and will remain located within a low-income community under
Section 45D(e) of the Code.

(ii) With respect to any taxable year, at least fifty percent (50%) of the use
of the tangible property of the Borrower (whether owned or leased) will be
within census tract number 29510113500, which constitutes a low-income community
under Section 45D(e) of the Code, as indicated in that certain NMTC Online
Geocoder Report, dated November 8, 2006, from the CDFI Fund’s website; provided,
that prior to the Operational Date, the use of the tangible property of the
Buyer need not take place in census tract number 29510113500 so long as at least
fifty percent (50%) of the use of the tangible property of the Borrower (whether
owned or leased) will be within a low-income community under Section 45D(e) of
the Code. This percentage shall be determined utilizing the following
methodology set out in Section 1.45D-1(d)(4)(i)(B) of the Regulations: the ratio
of (i) the average value of the tangible property owned or leased by the
Borrower and used by the Borrower in a low-income community during the current
fiscal year of the Borrower to date, to (ii) the total average value of the
tangible property owned or leased by the Borrower and used by the Borrower in
the current fiscal year to date. For purposes of the preceding sentence,
tangible property owned by the Borrower shall be valued at its cost basis as
determined under Section 1012 of the Code, and tangible property leased by the
Borrower shall be valued at a reasonable amount established by the Borrower. The
Borrower has provided to the Lender a true, correct, and complete inventory of
its tangible property, including therein the value of such property (determined
in the manner described immediately above), the unadjusted cost basis of such
property, and the location(s) where it is used.

(iii) With respect to any taxable year, at least fifty percent (50%) of the
services performed for the Borrower by its employees will be within census tract
number 29510113500; provided, that prior to the Operational Date, the employees
need not be within census tract number 29510113500 so long as at least fifty
percent (50%) of the services performed for the Borrower by its employees will
be within a low-income community under Section 45D(e) of the Code. This
percentage shall be determined utilizing the following methodology set out in
Section 1.45D-1(d)(4)(i)(C) of the Regulations: the ratio of (i) the total
amount paid by the Borrower for employee services performed in a low-income
community during the current fiscal year of the Borrower to date, to (ii) the
total amount paid by the Borrower for employee services performed by the
Borrower in the current fiscal year to date. The Borrower will provide to the
Lender a true, correct, and complete list of its employees, including therein
the location of where the employees’ services are performed and the total amount
paid by the Borrower for such employee services.

(iv) As of the date hereof, less than five percent (5%) of the average of the
unadjusted bases of the property of the Borrower is attributable to collectibles
(as defined in Section 408(m)(2) of the Code, and which includes (1) any work of
art; (2) any rug or

 

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antique; (3) any metal or gem; (4) any stamp or coin; and (5) any alcoholic
beverage) other than collectibles that are held primarily for sale to customers
in the ordinary course of business. The Borrower has provided to the Lender a
true, correct, and complete listing of any collectibles which the Borrower owns
as of the date of this Agreement, if any, including therein the unadjusted basis
of such property.

(v) As of the date hereof, less than five percent (5%) of the average of the
unadjusted bases of the property of the Borrower is attributable to nonqualified
financial property (as defined in Section 1397C(e) of the Code and in
Section 1.45D-1(d)(4)(i)(E) of the Regulations, and which includes debt, stock,
partnership interests, options, futures contracts, forward contracts, warrants,
notional principal contracts, annuities and other similar property). The
Borrower has provided to the Lender a true, correct, and complete listing of any
non-qualified financial property which the Borrower owns, if any, including
therein the unadjusted basis of such property.

(vi) As of the date hereof, no part of the Borrower’s business activities
consists of the operation of any: (i) private or commercial golf course,
(ii) country club, (iii) massage parlor, hot tub facility, or suntan facility,
(iv) race track or other facility used for gambling, or (v) store the principal
business of which is the sale of alcoholic beverages for consumption off
premises.

(vii) No part of the Borrower’s business activities includes the rental to
others of residential rental property (the term “residential rental property” is
defined in Section 168(e)(2)(A) of the Code as meaning any building or structure
if eighty percent (80%) or more of the gross rental income from such building or
structure for the taxable year is rental income from dwelling units).

(viii) The predominant trade or business of the Borrower does not include the
development or holding of intangibles for sale or license, as provided under
Section 1.45D-1(d)(5)(iii) of the Regulations.

(ix) Farming (within the meaning of Section 2032A(e)(5)(A) or (B) of the Code)
is not an activity of the Borrower.

(x) The Borrower has fully and accurately stated in writing to the Lender the
nature of the Borrower’s business and of the goods or services provided, the
Borrower’s primary sources of revenue, and the Borrower’s primary expenditures.
The Borrower has no present plans or intentions to change the nature or manner
in which it would conduct its business that would cause it not to be in
compliance with the provisions of this Section or Article 6 hereof.

(xi) The Borrower has no information or knowledge that it does not satisfy the
current requirements for a QALICB as set forth in Section 1.45D-1(d)(4) of the
Regulations.

(xii) The Borrower has not had communications with the CDFI Fund concerning
noncompliance with, or deficiencies in, reporting practices.

 

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(xiii) The Borrower is not a bank, credit union or other financial institution.

(xiv) No property maintained by Borrower constitutes a qualified low-income
building under Section 42 of the Code.

(xv) There have been no irregularities or illegal acts that would have a
material effect on the matter described in this Section, there has been no fraud
involving management or employees who have significant roles in the internal
control structure of the Borrower; fraud involving other employees that could
have a material effect on the matter described in this Section; or
communications from the CDFI Fund or other regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices that could
have a material effect on the matter described in this Section.

(xvi) Neither the Borrower nor any Affiliate thereof is presently debarred,
suspended, proposed for debarment, declared ineligible, or voluntarily excluded
from participation in this transaction by any Federal department or agency, as
such terms are defined in Executive Order 12549, nor is any such action pending
or proposed. The Borrower shall, simultaneously with execution and delivery of
this Agreement, execute and deliver to the Lender a certification in the form
attached hereto as Exhibit B to further evidence this representation and
warranty.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF THE LENDER

The Lender hereby represents and warrants to the Borrower and the Company that:

Section 5.1 Organization; Authority. The Lender is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite limited liability company power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by the Lender of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or, if the Lender is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of the Lender.
This Agreement has been duly executed by the Lender, and when delivered by the
Lender in accordance with terms hereof, will constitute the valid and legally
binding obligation of the Lender, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. Neither the execution and
delivery by the Lender of this Agreement nor the performance of any of the
duties and obligations of the Lender under this Agreement constitutes a
violation of (a) the certificate of formation or the operating agreement of the
Lender; (b) any material agreement by which the Lender is bound or to which any
of its property or assets is subject, or (c) any applicable law.

 

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Section 5.2 Survival of the Lender’s Representations and Warranties. The
foregoing representations and warranties shall survive the execution of the
Transaction Documents, as well as any investigation made by any Person relying
on the foregoing.

The Borrower and the Company acknowledge and agree that the Lender has not made
or is making any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section.

ARTICLE 6.

NMTC COVENANTS

Section 6.1 Borrower’s NMTC Covenants. The Borrower hereby covenants and agrees
that, in order to maintain the making of the Loan by the Lender as a “qualified
low-income community investment” and the status of the Borrower as a “qualified
active low-income community business” as such terms are defined in Section 45D
of Code, and to enable the Lender to comply with the requirements applicable to
it under Section 45D of the Code and related regulations and obligations, the
Borrower shall comply with and perform the covenants and obligations under this
Section.

(a) At all times during the Credit Investment Period, the Borrower shall comply
with the following:

(i) The Borrower shall maintain its status as a qualified active low-income
community business.

(ii) At least fifty percent (50%) of the use of the tangible property of the
Borrower (whether owned or leased) will be within census tract number
29510113500 which constitutes a low-income community under Section 45D(e) of the
Code, as indicated in that certain NMTC Online Geocoder Report dated November 8,
2006 from the CDFI Fund’s website or within other census tracts which constitute
low-income communities under Section 45D(e) of the Code. This percentage shall
be determined utilizing the following methodology set out in
Section 1.45D-1(d)(4)(i)(B) of the Regulations: the ratio of (i) the average
value of the tangible property owned or leased by the Borrower and used by the
Borrower in a low-income community during the current fiscal year of the
Borrower to date, to (ii) the total average value of the tangible property owned
or leased by the Borrower and used by the Borrower in the current fiscal year to
date. For purposes of the preceding sentence, tangible property owned by the
Borrower shall be valued at its cost basis as determined under Section 1012 of
the Code, and tangible property leased by the Borrower shall be valued at a
reasonable amount established by the Borrower and reasonably acceptable to the
Lender. The Borrower has provided to the Lender a true, correct, and complete
inventory of its tangible property, including therein the value of such property
(determined in the manner described immediately above), the unadjusted cost
basis of such property, the location(s) where it is used.

 

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(iii) At least fifty percent (50%) of the services performed for the Borrower
performed by its employees will be within census tract number 29510113500 or
within other census tracts which constitute low-income communities under
Section 45D(e) of the Code. This percentage shall be determined utilizing the
following methodology set out in Section 1.45D-1(d)(4)(i)(C) of the Regulations:
the ratio of (i) the total amount paid by the Borrower for employee services
performed in a low-income community during the current fiscal year of the
Borrower to date, to (ii) the total amount paid by the Borrower for employee
services performed by the Borrower in the current fiscal year to date. If the
Property has no employees, the Borrower is deemed to satisfy this requirement if
the Borrower meets the tangible property requirement in Section 6.1(a)(iii) if
eighty-five percent (85%) is applied instead of fifty percent (50%). The
Borrower has provided to the Lender a true, correct, and complete list of its
employees, including therein the location of where the employees’ services are
performed and the total amount paid by the Borrower for such employee services.

(iv) Less than five percent (5%) of the average of the unadjusted bases of the
property of the Borrower will be attributable to collectibles (as defined in
Section 408(m)(2) of the Code, and which includes (1) any work of art; (2) any
rug or antique; (3) any metal or gem; (4) any stamp or coin; and (5) any
alcoholic beverage) other than collectibles that are held primarily for sale to
customers in the ordinary course of business.

(v) Less than five percent (5%) of the average of the unadjusted bases of the
property of the Borrower will be attributable to nonqualified financial property
(as defined in Section 1397C(e) of the Code and in Section 1.45D-1(d)(4)(i)(E)
of the Regulations, and which includes debt, stock, partnership interests,
options, futures contracts, forward contracts, warrants, notional principal
contracts, annuities and other similar property).

(vi) No part of the business activities of the Borrower will consist of the
operation of any: (i) private or commercial golf course, (ii) country club,
(iii) massage parlor, hot tub facility, or suntan facility, (iv) race track or
other facility used for gambling, or (v) store the principal business of which
is the sale of alcoholic beverages for consumption off premises.

(vii) No part of the Borrower’s business activities will include the rental to
others of residential rental property (the term “residential rental property” is
defined in Section 168(e)(2)(A) of the Code as meaning any building or structure
if eighty percent (80%) or more of the gross rental income from such building or
structure for the taxable year is rental income from dwelling units).

(viii) The predominant trade or business of the Borrower will not include the
development or holding of intangibles for sale or license, as provided under
Section 1.45D-1(d)(5)(iii) of the Regulations.

(ix) Farming (within the meaning of Section 2032A(e)(5)(A) or (B) of the Code)
will not be an activity of the Borrower.

 

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(x) The Borrower will generate revenues within three (3) years after the date
hereof.

(xi) The Borrower shall not discontinue conducting business, shall not
materially change the nature of its business, and shall not materially change
the manner in which its business activities are conducted, other than changes in
the nature of its business or the manner in which it conducts its business that
do not cause the making of the Loan by the Lender to cease to constitute a
“qualified low-income community investment” as such term is used in Section 45D
of the Code (as determined by the Lender in its good faith judgment and based
upon the advice of counsel).

(xii) The Borrower will not be a bank, credit union or other financial
institution.

(xiii) The Borrower will not maintain a qualified low-income building under
Section 42 of the Code.

(xiv) The Borrower will not become a single-member entity treated as disregarded
as separate from its owner for federal income tax purposes, nor be liquidated or
merged into another entity without the Lender’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed.

(xv) The Borrower and the Company will operate consistently with the Asset
Purchase and License Agreement between the Borrower and the Company dated on or
around the date hereof, and will not amend such agreement without the Lender’s
prior written consent, which shall not be unreasonably withheld, conditioned or
delayed.

(b) At six-month intervals after the end of the first year following the
Effective Date and for each year thereafter until the end of the Credit
Investment Period (and no later than on the dates that will be established by
the Lender by written notice to the Borrower), the Borrower agrees to certify in
writing to the Lender that the Borrower remains in compliance with the
provisions of Section 6.1(a) above, including in such certification the current
percentages or ratios under the above paragraphs that are applicable to the
Borrower at such time, and agrees to provide such reports relating to the
Borrower’s activities and this Loan as are required by the CDFI Fund, in form
and substance suitable for submission to the CDFI Fund. In addition, the
Borrower shall maintain records of:

(i) the activities and services performed by employees and the administration of
their employment (including the location of where their services are performed
and, in instances where such employees also perform services for persons or
entities other than the Borrower, the allocation of their time between the
Borrower and any such other person or entity) that are sufficient to establish
compliance with the requirements of Section 6.1(a) above;

(ii) the average values and locations of the tangible personal property of the
Borrower that are sufficient to establish compliance with the requirements of
Section 6.1(a)(iii) above;

 

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(iii) the total amount paid to the employees of the Borrower and locations of
where their services are performed, which amount is sufficient to establish
compliance with the requirements of Section 6.1(a)(iv) above; and

(iv) the unadjusted bases of the property of the Borrower generally and in
particular, any collectibles and any nonqualified financial property it may own,
that are sufficient to establish compliance with the requirements of
Section 6.1(a)(v) and Section 6.1(a)(vi) above.

The Borrower shall make all such records available to the Lender for inspection
and copying from time to time (at the Borrower’s expense) as the Lender may
request.

ARTICLE 7.

CONDITIONS OF LENDING

The obligation of the Lender to make any Loan hereunder is subject to the
following conditions precedent, each of which may be waived in the discretion of
the Lender:

Section 7.1 Representations and Warranties. Each of the representations and
warranties made by the Borrower pursuant to this Agreement (or in any amendment,
modification or supplement hereto or thereto) shall, except to the extent that
they relate to a particular date, be true and correct in all material respects
on and as of such date as if made on and as of such date.

Section 7.2 No Default. The Borrower shall have complied with each and every
covenant and agreement applicable to it contained in this Agreement and no Event
of Default shall have occurred and be continuing on such date or after giving
effect to the applicable Loan.

Section 7.3 Other Documentation. The Lender shall have received such other
documentation and information as required under the Transaction Documents,
including the Second-Lien Security Agreement.

ARTICLE 8.

EVENTS OF DEFAULT

Section 8.1 Event of Default. The following are Events of Default under this
Agreement and the Note hereunder:

(a) The Borrower shall fail to pay: (i) any principal of the Loan when due in
accordance with the terms hereof or of the Note or (ii) any interest on the
Loan, in either case within fifteen (15) Business Days of the date when due in
accordance with the terms hereof or of the Note;

(b) The Borrower shall default in the observance or performance of any other
covenant or agreement (other than under Article 6) contained in this Agreement
and such default continues for fifteen (15) Business Days after the date that
the Lender has given written notice to the Borrower specifying such default and
requiring that it be remedied;

 

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(c) The Borrower shall default in the observance or performance of any covenant
or agreement set forth under Article 6 and such default continues unremedied
after the applicable cure period set forth in Section 1.45D-1(e)(6) of the
Regulations;

(d)(i) The Borrower shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or the Borrower shall make a general assignment for the benefit
of its creditors, or (C) cease doing business in the ordinary course; or
(ii) there shall be commenced against the Borrower any case, proceeding or other
action or a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged, unstayed or unbonded for a period of
sixty (60) Business Days; or (iii) there shall be commenced against the Borrower
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for such
relief which shall not have been vacated, discharged, stayed or bonded pending
appeal within fifty (50) Business Days from the entry thereof; or (iv) the
Borrower shall take any corporate action in furtherance of, or indicating its
consent to, approval of or acquiescence in any of the acts set fort in clause
(i), (ii), or (iii) above; or (v) the Borrower shall be generally unable to, or
shall admit in writing its general inability to, pay its debts as they become
due;

(e) Any representation or warranty made by the Borrower under this Agreement
shall be false or incorrect in any material respect on the date such
representation or warranty was made and such default shall continue unremedied
for a period of thirty (30) days after notice thereof to the Borrower by the
Lender; or

(f) This Agreement or the Note shall, for any reason, fail or cease to be
enforceable in any material respect;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of subsection (d) above, with respect to the Borrower,
automatically the Loan hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement or the Note shall immediately become due and
payable, (B) if such event is any other Event of Default, the Lender may, by
written notice to the Borrower, declare the Loan hereunder (with accrued but
unpaid interest thereon) and all other amounts owing under this Agreement or the
Note to be due and payable forthwith, whereupon the same shall immediately
become due and payable, (C) the Lender may exercise all rights and remedies
available to it in equity, at law, or pursuant to the provisions of this
Agreement or otherwise, (D) the Lender may terminate its commitment, if any, to
make any future Loans to the Borrower (and such commitment, if any,
automatically shall terminate if such event is an Event of Default specified in
clause (i) or (ii) of subsection (d) above with respect to the Borrower).

 

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Section 8.2 Remedies Not Exclusive. The remedies conferred upon or reserved to
the Lender are intended to be in addition to, and not in limitation of, any
other remedy or remedies available to the Lender under applicable law.

ARTICLE 9.

MISCELLANEOUS

Section 9.1 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of the Transaction Documents. The Lender and Borrower
shall pay for Lender’s out-of-pocket costs and administrative and operating
expenses as provided in Section 6.01 of the Amended and Restated Operating
Agreement of the Lender as in effect on the date the Loan is funded, and, to the
extent the Company shall not pay the costs and expenses of the Lender pursuant
to the Reimbursement Agreement, the Borrower shall pay, or promptly reimburse
the Lender, for any reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with any Event of Default and any enforcement or collection
proceedings resulting therefrom or in connection with the negotiation of any
restructuring or “work-out” of the obligations under this Agreement.

Section 9.2 NMTC Compliance. The Borrower will supply all data, reports or
statements reasonably required by the Lender for purposes of satisfying the
reporting requirements imposed upon the Lender by the CDFI Fund; monitoring
compliance with Section 45D of the Code; and measuring the community benefit of
the Borrower’s activities. In connection therewith, the Borrower shall maintain
records of:

(i) maintain records of, if applicable, the activities and services performed by
employees and the administration of their employment (including where their
services are performed and, in instances where such employees also perform
services for persons or entities other than Borrower, the allocation of their
time between Borrower and any such other person or entity) that are sufficient
to establish compliance with the requirements of this Section;

(ii) maintain records of the average values and locations of its tangible
personal property that are sufficient to establish compliance with the
requirements of this Section;

(iii) maintain records of the unadjusted bases of its property generally and in
particular, any collectibles and any nonqualified financial property it may own,
that are sufficient to establish compliance with the requirements of this
Section; and

(iv) promptly supply the Lender with any reports, records, statements, documents
or other information reasonably requested by the Lender in connection with
responding to any request by the CDFI Fund or as may be required to comply with
the New Markets Tax Credit requirements.

 

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(b) The Borrower shall maintain its records, books of account, bank accounts,
financial statements, accounting records and other entity documents separate and
apart from those of any other person; shall not maintain its assets in such a
manner that it will be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other person; shall not become an entity
disregarded as separate from any other entity for federal income tax purposes;
and shall file its own tax returns as required under federal and state law.

(c) The Borrower shall not by its action or inaction cause an event of recapture
(as defined in Section 45D(g) of the Code and Treasury Regulation
Section 1.45D-1(e) of the Regulations).

Section 9.3 Indemnification. The Borrower hereby agrees to indemnify the Lender,
each of its Affiliates and USB (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or the Note, (ii) the
performance by the parties to this Agreement and the Note of their respective
obligations thereunder, (iii) a breach of the obligations of the Borrower under
Section 9.2 above, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee. The Borrower’s indemnification obligations shall
not extend to any indirect or consequential damages relating to this Agreement
or the Note or arising out of its activities in connection herewith or therewith
(whether before or after the date hereof).

Section 9.4 Usury Limitations. It is the intention of the Borrower and the
Lender to conform strictly to applicable usury laws. Accordingly,
notwithstanding anything to the contrary in this Agreement or the Note, amounts
constituting interest under applicable law and contracted for, chargeable or
receivable hereunder or under the Note shall under no circumstances, together
with any other interest, late charges or other amounts which may be interpreted
to be interest contracted for, chargeable or receivable hereunder or thereunder,
exceed the maximum amount of interest permitted by law, and in the event any
amounts were to exceed the maximum amount of interest permitted by law, such
excess amounts shall be deemed a mistake and shall either be reduced immediately
and automatically to the maximum amount permitted by law or, if required to
comply with applicable law, be canceled automatically and, if theretofore paid,
at the option of the Lender, be refunded to the Borrower or credited on the
principal amount of the Note then outstanding.

Section 9.5 Entire Agreement. The Transaction Documents, together with the
exhibits thereto, contain the entire understanding of the parties with respect
to the subject matter

 

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hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents and exhibits.

Section 9.6 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Business Day
or later than 6:30 p.m. (New York City time) on any Business Day, (c) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as follows:

 

If to the Borrower:   AutovaxID, Inc.   Attn.: James Carroll   1701 Macklind
Avenue   St. Louis, Missouri 63110   Telephone: (813) 264-2554   Facsimile:
(813) 258-6912 With a copy to:   Nixon Peabody LLP   Attn.: Herbert F. Stevens  
Suite 900   401 9th Street, NW   Washington, DC 20004   Telephone:
(202) 585-8811   Facsimile: (202) 585-8080 If to the Lender:   To the address
set forth under the Lender’s name on the Lender’s counterpart signature page
hereto;

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

Section 9.7 Amendments; Waivers; No Additional Consideration. No provision of
this Agreement may be waived or amended except in a written instrument signed by
the Borrower and the Lender. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

Section 9.8 Termination. This Agreement may be terminated prior to Closing by
written agreement of the Lender and the Borrower. Upon a termination in
accordance with this Section 9.8, the Borrower and the Lender shall have no
further obligation or liability (including as arising from such termination) to
the other.

 

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Section 9.9 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

Section 9.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Either party, or the Company, as applicable, may not assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
other parties.

Section 9.11 No Third-party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

Section 9.12 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and of the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective Affiliates,
employees or agents) shall be commenced exclusively in the Delaware Courts. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Delaware Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such Delaware Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.

 

- 21 -

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Section 9.13 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Effective Date and the Closing.

Section 9.14 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

Section 9.15 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

Section 9.16 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Lender and
the Borrower will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence.

[BALANCE OF PAGE LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this QLICI Loan Agreement to
be duly executed by their respective authorized signatories as of the date first
indicated above.

 

AutovaxID, Inc. By:  

/s/ Steven Arikian

Name:   Steven Arikian, M.D. Title:   Chairman and CEO

[COUNTERPART SIGNATURE PAGES FOLLOW]

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Lender’s Counterpart Signature Page to QLICI Loan Agreement

The undersigned hereby agrees to become a party as the Lender to the QLICI Loan
Agreement between AutovaxID, Inc. (the “Borrower”) and the Lender (the “Loan
Agreement”), agreeing to make the Loan (as such term is defined in the Loan
Agreement) set forth below. The undersigned hereby authorizes the Borrower
Company to attach this Counterpart Signature Page to the Loan Agreement.

 

    St. Louis New Markets Tax Credit Fund-II, LLC     By: St. Louis Development
Corp.,     Its Managing Member Date: December 8, 2006   By:  

/s/ Rodney Crim

  Name:   Rodney Crim   Title:   Executive Director   Loan Amount:  
$7,700,000.00   Tax ID No.:  

 

ADDRESS FOR NOTICE

St. Louis New Markets Tax Credit Fund-II, LLC

1015 Locust Street, Suite 1200

St. Louis, MO 63101

Attention: Rodney Crim

Phone: (314) 622-3400

Facsimile: (314) 259-3442

With a copy to:

Bryan Cave LLP

One Metropolitan Square

211 North Broadway, Suite 3600

St. Louis, Mo 63102-2750

Attention: Mary Gassmann Reichert, Esquire

Phone: (314) 259-2188

Facsimile: (314) 259-2020

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EXHIBIT A

NOTE

[attached]

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EXHIBIT B

CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY

AND

VOLUNTARY EXCLUSION – LOWER TIER COVERED TRANSACTIONS

Instructions for Certification

1. By signing and submitting this proposal, the prospective lower tier
participant is providing the certification set out below.

2. The certification in this clause is a material representation of fact upon
which reliance was placed when this transaction was entered into. If it is later
determined that the prospective lower tier participant knowingly rendered an
erroneous certification, in addition to other remedies available to the federal
government, the department or agency with which this transaction originated may
pursue available remedies, including suspension and/or debarment.

3. The prospective lower tier participant shall provide immediate written notice
to the person to whom this proposal is submitted if at any time the prospective
lower tier participant learns that its certification was erroneous when
submitted or had become erroneous by reason of changed circumstances.

4. The terms covered transaction, debarred, suspended, ineligible, lower tier
covered transaction, participant, person, primary covered transaction,
principal, proposal, and voluntarily excluded, as used in this clause, have the
meaning set out in the Definitions and Coverage sections of rules implementing
Executive Order 12549. You may contact the person to which this proposal is
submitted for assistance in obtaining a copy of those regulations.

5. The prospective lower tier participant agrees by submitting this proposal
that, should the proposed covered transaction be entered into, it shall not
knowingly enter into any lower tier covered transaction with a person who is
proposed for debarment under 48 C.F.R. part 9, subpart 9.4, debarred, suspended,
declared ineligible, or voluntarily excluded from participation in this covered
transaction, unless authorized by the department or agency with which this
transaction originated.

6. The prospective lower tier participant further agrees by submitting this
proposal that it will include this clause titled “Certification Regarding
Debarment, Suspension, Ineligibility and Voluntary Exclusion – Lower Tier
Covered Transaction,” without modification, in all lower tier covered
transactions and in all solicitations for lower tier covered transactions.

7. A participant in a covered transaction may rely upon a certification of a
prospective participant in a lower tier covered transaction that it is not
proposed for debarment under 48 C.F.R. part 9, subpart 9.4, debarred, suspended,
ineligible, or voluntarily excluded from covered transactions, unless it knows
that the certification is erroneous. A participant may decide the method and
frequency by which it determines the eligibility of its principals. Each
participant may, but is not required to, check the List of Parties Excluded from
Federal Procurement and Nonprocurement Programs.

--------------------------------------------------------------------------------

8. Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith the
certification required by this clause. The knowledge and information of a
participant is not required to exceed that which is normally possessed by a
prudent person in the ordinary course of business dealings.

9. Except for transactions authorized under paragraph 5 of these instructions,
if a participant in a covered transaction knowingly enters into a lower tier
covered transaction with a person who is proposed for debarment under 48 C.F.R.
part 9, subpart 9.4, suspended, debarred, ineligible, or voluntarily excluded
from participation in this transaction, in addition to other remedies available
to the Federal Government, the department or agency with which this transaction
originated may pursue available remedies, including suspension and/or debarment.

Certification Regarding Debarment, Suspension, Ineligibility and

Voluntary Exclusion – Lower Tier Covered Transactions

1. The prospective lower tier participant certifies, by submission of this
proposal, that neither it nor its principals are presently debarred, suspended,
proposed for debarment, declared ineligible, or voluntarily excluded from
participation in this transaction by any Federal department or agency.

2. Where the prospective lower tier participant is unable to certify to any of
the statements in this certification, such prospective participant shall attach
an explanation to this proposal.

Date: December 8, 2006

 

AutovaxID, Inc.,

a Florida corporation

By:  

/s/ Steven Arikian

Name:   Steven Arikian, M.D. Title:   Chairman & CEO

--------------------------------------------------------------------------------

EXHIBIT C

REIMBURSEMENT AGREEMENT

[attached]