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BOND AGREEMENT

By and Among

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

and

PCT ALLENDALE, LLC

and

COMMERCE BANK/NORTH

as Purchaser

Dated as of October 1, 2007
 

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BOND AGREEMENT

(PCT Allendale, LLC - 2007 Project)

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TABLE OF CONTENTS
 

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ARTICLE I       DEFINITIONS      
Section 1.01.
Definitions
3
     
ARTICLE II
 
THE FINANCING
     
Section 2.01.
Opinion of Counsel for the Borrower
13
Section 2.02.
Opinion of Bond Counsel
13
Section 2.03.
Loan and Other Documents
14
Section 2.04.
Legal Matters
14
Section 2.05.
Bond Issuance Fee/Bond Purchase Fee
14
Section 2.06.
The Loan
14
Section 2.07.
Findings of Authority
15
     
ARTICLE III
 
THE BONDS
     
Section 3.01.
The Bonds
16
Section 3.02.
Transfer of Bonds; Restriction on Transfer
16
Section 3.03.
Execution of Indenture
  17
Section 3.04.
Replacement of Mutilated, Destroyed, Lost or Stolen Bonds
 18
Section 3.05.
Cancellation of Bonds Upon Payment in Full
18
Section 3.06.
Election of Section 144(a)(4)
  18
     
ARTICLE IV
 
THE LOAN
     
Section 4.01.
The Loan
19
Section 4.02.
The Note
19
Section 4.03.
Security
19
Section 4.04.
Incorporation of Terms
19

 
 
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Section 4.05.
Payments
19
Section 4.06.
Method of Payment
20
Section 4.07.
Prepayment of the Note
20
Section 4.08.
Late Charge
20
Section 4.09.
No Abatement of Payments
20
Section 4.10.
Application of Net Proceeds of Insurance or Condemnation
21
Section 4.11.
Repair, Restoration and Relocation
21
     
ARTICLE V
 
ESCROW ACCOUNT, REBATE ACCOUNT AND ESCROW AGENT
     
Section 5.01.
Creation of the Loan, Sale of the Bonds, Deposits in the Escrow Account
23
Section 5.02.
Disbursements from the Escrow Account
23
Section 5.03.
Disbursements of Construction Proceeds from the Escrow Account
24
Section 5.04.
No Liability of Authority or Escrow Agent
25
Section 5.05.
Furnishing Documents to the Authority
26
Section 5.06.
Establishment of Completion Date
26
Section 5.07.
Borrower Required to Pay if Escrow Account Insufficient
26
Section 5.08.
Escrow Account in Event of Default or Cancellation
27
Section 5.09.
Rebate Account
27
Section 5.10.
Investment of the Escrow Account
27
Section 5.11.
The Escrow Agent
28
Section 5.12.
Duties of the Escrow Agent with Respect to this Bond Agreement
29
Section 5.13.
Resignation of the Escrow Agent
30
Section 5.14.
Removal of the Escrow Agent
30
Section 5.15.
Appointment of Successor Escrow Agent
30
Section 5.16.
Transfer of Rights and Property to Successor Escrow Agent
30
Section 5.17.
Merger or Consolidation
31
Section 5.18.
Conflicts
31
     
ARTICLE VI
 
REPRESENTATIONS OF THE AUTHORITY
     
Section 6.01.
Authority Representations 
32
      ARTICLE VII       REPRESENTATIONS AND DUTIES OF THE PURCHASER      
Section 7.01.
Purchaser Representations
34
Section 7.02.
Tax Consequences
34
Section 7.03.
Filing of Other Documents
34
Section 7.04.
Notice of Events of Default
35

 
 
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ARTICLE VIII
 
REPRESENTATIONS AND WARRANTIES
     
Section 8.01.
Organization, Powers, etc
36
Section 8.02.
Execution of Loan Documents
36
Section 8.03.
Title to Collateral
36
Section 8.04.
Litigation
36
Section 8.05.
Payment of Taxes
37
Section 8.06.
No Defaults
37
Section 8.07.
No Material Adverse Change
37
Section 8.08.
Obligations of the Borrower and Guarantor
37
Section 8.09.
No Action
37
Section 8.10.
Design of the Project
37
Section 8.11.
Commencement of Project; Proper Changes
37
Section 8.12.
Limitation on Expenditures; Principal User
37
Section 8.13.
Outstanding Tax-Exempt Bonds
38
Section 8.14.
Project Municipality
38
Section 8.15.
No Tenancies
38
Section 8.16.
Substantial Users
39
Section 8.17.
Placement in Service
39
Section 8.18.
No Common Plan of Financing
39
Section 8.19.
Use of Proceeds
39
Section 8.20.
Economic Life
40
Section 8.21.
Aggregation of Issues for Single Project
40
Section 8.22.
Environmental Representation
40
Section 8.23.
Rehabilitation Requirement
40
     
ARTICLE IX
 
COVENANTS OF THE BORROWER
     
Section 9.01.
Insurance Required
41
Section 9.02.
Payment of Taxes, etc
44
Section 9.03.
Compliance with Code and Arbitrage Regulations
44
Section 9.04.
Compliance with Applicable Laws
49
Section 9.05.
Environmental Covenant
49
Section 9.06.
Financial Statements
 49
Section 9.07.
Mergers, etc
50
Section 9.08.
Assignment of Bond Agreement
50
Section 9.09.
Indemnification
51
Section 9.10.
Capital Expenditures
52
Section 9.11.
Aggregate Limit
53
Section 9.12.
Brokerage Fee
53
Section 9.13.
Cost Recovery
53
Section 9.14.
Publicity
53

 
 
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Section 9.15.
Operating Accounts
53
Section 9.16.
No Secondary Financing
53
Section 9.17.
Financial Covenants
53
Section 9.18.
Appraisals
54
     
ARTICLE X
 
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS TO THE AUTHORITY
     
Section 10.01.
Inducement
55
Section 10.02.
No Untrue Statements
55
Section 10.03.
Project Users
55
Section 10.04.
Maintain Existence, Merge, Sell, Transfer
55
Section 10.05.
Relocate Project
56
Section 10.06.
Operate Project
56
Section 10.07.
Annual Certification
56
Section 10.08.
Affirmative Action and Prevailing Wage Regulations
56
Section 10.09.
Preservation of Project
57
Section 10.10.
Access to the Project and Inspection
58
Section 10.11.
Additional Information
58
Section 10.12.
Project Sign and Publicity
58
     
ARTICLE XI
 
DEFAULTS AND REMEDIES
     
Section 11.01.
Event of Default
59
Section 11.02.
Purchaser’s Remedies
60
Section 11.03.
Authority’s Remedies
62
Section 11.04.
Effect of Cancellation of the Bonds
62
Section 11.05.
No Remedy Exclusive
63
Section 11.06.
Waiver of Event of Default
63
Section 11.07.
Agreement to Pay Attorneys’ Fees and Expenses
63
Section 11.08.
Immunity of the Authority
64
Section 11.09
No Additional Waiver Implied by One Waiver
64

 
 
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ARTICLE XII
 
MISCELLANEOUS
     
Section 12.01.
Notice
65
Section 12.02.
Concerning Successors and Assigns
66
Section 12.03.
Costs and Expenses
66
Section 12.04.
New Jersey Law Governs
66
Section 12.05.
Modification in Writing
66
Section 12.06.
Failure to Exercise Rights
66
Section 12.07.
Assignment of Loan Documents
66
Section 12.08.
Further Assurances and Corrective Instruments
67
Section 12.09.
Authority May Rely on Certificates
67
Section 12.10.
Captions
67
Section 12.11.
Severability
67
Section 12.12.
Counterparts
67
Section 12.13.
Effective Date and Term
67
Section 12.14.
Waiver of Jury Trial
67

 
Exhibit A
 
Addendum to Construction Contract
Exhibit B
 
Affirmative Action Certificate
Exhibit C
 
Completion Certificate
Exhibit D
 
Form of Requisition
     
Schedule A
 
Exceptions to Section 8.10
Schedule B
 
Metes and Bounds Description

 
 
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BOND AGREEMENT

 
THIS BOND AGREEMENT dated as of the 1st day of October, 2007 by and among the
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the “Authority”), a public body
corporate and politic constituting an instrumentality of the State of New
Jersey, PCT ALLENDALE, LLC (the “Borrower”), a New Jersey limited liability
company and COMMERCE BANK/NORTH (the “Purchaser”), a New Jersey banking
corporation organized and existing under the laws of the State of New Jersey.

 
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
foster and promote the economy of the State, increase opportunities for gainful
employment and improve living conditions, assist in the economic development or
redevelopment of political subdivisions within the State, and otherwise
contribute to the prosperity, health and general welfare of the State and its
inhabitants by inducing manufacturing, industrial, commercial, recreational,
retail, service and other employment promoting enterprises to locate, remain or
expand within the State by making available financial assistance; and
 
WHEREAS, 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, the Borrower has applied to the Authority for financial assistance in
the principal amount of $3,120,000 for the purpose of refinancing a loan used
for the acquisition of condominium units in an existing building located in the
Borough of Allendale, County of Bergen in the State of New Jersey (the
“Project”), and the Authority has, by resolution duly adopted in accordance with
the Act on August 14, 2007, accepted the application of the Borrower for
assistance in financing the Project; and
 
WHEREAS, the Authority has by resolution, duly adopted in accordance with the
Act on September 11, 2007, also authorized the issuance of its Economic
Development Bonds (PCT Allendale, LLC - 2007 Project) in the aggregate principal
amount of $3,120,000 to be executed, delivered and sold to the Purchaser for the
purpose of making a loan to the Borrower in order to finance the Project; and
 
WHEREAS, the execution and delivery of this Bond Agreement have been duly
authorized by the parties and all conditions, acts and things necessary and
required by the Constitution or statutes of the State of New Jersey or otherwise
to exist, to have happened, or to have been performed precedent to or in the
execution and delivery of this Bond Agreement do exist, have happened and have
been performed.
 
 
 

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NOW THEREFORE, in consideration of the premises and the mutual covenants and
representations herein, and intending to be legally bound the parties hereto
hereby mutually agree as follows:
 
 
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ARTICLE I

 
DEFINITIONS
 
Section 1.01. Definitions. As used herein, the following terms shall have the
following meanings unless a different meaning clearly appears from the context:

 
“Act” shall mean the New Jersey Economic Development Authority Act, constituting
Chapter 80 of the Pamphlet Laws of 1974 of the State, approved on August 7,
1974, as amended and supplemented;

 
“Affirmative Action Program” shall mean the provisions of the Act, and the
resolution, rules and regulations of the Authority, as adopted, amended and
supplemented from time to time, requiring that the Borrower and all Contractors
make every effort to hire minority workers or to cause minority workers to be
hired for employment in performance of Construction Contracts in fulfillment of
the minority employment goals fixed by the Authority, and that the Borrower and
all Contractors file such certificates, reports and records and do other
prescribed acts as are necessary to demonstrate or assure compliance;

 
“Application” shall mean the Borrower’s application to the Authority, dated June
19, 2007, as amended in writing, directed to the Authority, seeking financial
assistance for the Project, and all attachments, exhibits, correspondence and
modifications submitted in writing to the Authority in connection with said
application;

 
“Article” shall mean a specified article hereof, unless otherwise indicated;

 
“Assignment of Certificate of Deposit” shall mean the Assignment of Certificate
of Deposit from the Borrower to the Authority and the Purchaser assigning a
Certificate of Deposit representing the Pledged Funds to the Purchaser;

 
“Assignment of Leases” shall mean the Assignment of Leases and Rents from the
Borrower to the Authority and the Purchaser in connection with the Premises, as
amended and/or restated from time to time;

 
“Authority” shall mean the New Jersey Economic Development Authority, a public
body corporate and politic constituting an instrumentality of the State,
exercising public and essential governmental functions;

 
“Authority’s Assignment” shall mean the assignment dated the Closing Date which
is made part of the Record of Proceedings, wherein the Authority assigns to the
Purchaser its right, title and interest in and to the Loan Documents (subject to
the Authority’s Reserved Rights) and pledges the revenues payable to the
Authority in connection with the Project;

 
“Authorized Authority Representative” shall mean any individual or individuals
duly authorized by the Resolution and the by-laws of the Authority to act on its
behalf;

 
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“Authorized Borrower Representative” shall mean any individual or individuals
duly authorized by the Borrower to act on its behalf;

 
“Authorized Purchaser Representative” shall mean any individual or individuals
duly authorized by the Purchaser to act on its behalf;

 
“Bank” shall mean Commerce Bank/North, as Purchaser, and/or its successors and
assigns;

 
“Bond” or “Bonds” shall mean the Economic Development Bonds (PCT Allendale, LLC
- 2007 Project) in the aggregate principal amount of $3,120,000 dated the
Closing Date;

 
“Bond Agreement” shall mean this Bond Agreement;

 
“Bond Counsel” shall mean the law firm of Wolff & Samson PC, One Boland Drive,
West Orange, New Jersey, or any other attorney or firm of attorneys of
nationally recognized standing on the subject of municipal bonds;

 
“Bond Proceeds” shall mean the amount paid to the Authority by the Purchaser as
the purchase price of the Bonds, and interest income earned thereon prior to the
Completion Date;

 
“Bond Year” when used in the context of the rebate requirement imposed under
Section 148(f) of the Code means, with respect to the first Bond Year, the
period beginning on the date of issuance of the Bonds, i.e., the date of initial
delivery of the Bonds in exchange for the issue price from the Purchaser, and
ending on the date one (1) year later or the close of business of such earlier
date selected by the Authority at the direction of the Borrower which is the
last day of a compounding interval used in computing the Yield on the Bonds.
Each subsequent Bond Year begins on the day after the expiration of the
preceding Bond Year;
 
“Borrower” shall mean PCT Allendale, LLC, a New Jersey limited liability company
validly existing and in good standing under the laws of the State and authorized
to do business under the laws of the State;

 
“Borrower’s Completion Certificate” shall mean the certificate described in
Section 5.06, executed by the Borrower in form and substance acceptable to the
Authority, wherein the Borrower certifies as to such matters as the Authority
shall require;

 
“Business Day” shall mean any day other than (i) Saturday or Sunday or, (ii) a
day on which commercial banks in New Jersey, or the city in which are located
the principal office of the Purchaser are authorized by law or executive order
to close;

 
“Cancellation Date” shall have the meaning specified therefor in Section 11.03;

 
“Closing Date” shall mean October 31, 2007;

 
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“Code” shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder from time to time in effect;

 
“Collateral” shall mean the Pledged Funds, the Premises and a security interest
in all personal property, fixtures and building materials owned by the Borrower
in which the Authority and/or the Purchaser are granted a security interest
herein and in the Mortgage;

 
“Commitment Letter” shall mean the Commitment Letter from the Purchaser to the
Borrower dated August 15, 2007, as amended in writing;

 
“Completion Date” shall mean the date of completion of the Project as stated in
the Borrower’s Completion Certificate described in Section 5.06;

 
“Construction Contract” shall mean, for purposes of the Prevailing Wage Rate
Provision, any contract or subcontract in the amount of $2,000 or more for
construction, reconstruction, demolition, alteration, repair, or maintenance
work, including painting and decorating, undertaken in connection with the
Premises and shall mean, for purposes of the Affirmative Action Program, any
contract or subcontract for construction, reconstruction, renovation or
rehabilitation undertaken in connection with the Premises;

 
“Construction Proceeds” shall mean the proceeds from any insurance award or
condemnation award, which are to be used pursuant to the terms of this Agreement
to restore or rebuild the premises;

 
“Contractor” shall mean the principal or general contractor or contractors
engaged by the Borrower in the performance of a Construction Contract;

 
“Contractor’s Certificate and Agreement” shall mean the instrument executed by
the Contractor in form and substance acceptable to the Authority, wherein the
Contractor agrees to undertake or perform such obligations and certifies as to
such matters as the Authority shall require, including, without limitation, that
for purposes of the Prevailing Wage Rate Provision all workers engaged in the
performance of Construction Contracts shall be paid a wage rate not less than
the Prevailing Wage Rate and that all Construction Contracts will so provide and
that for purposes of the Affirmative Action Program the Contractor will make
every effort to hire or cause to be hired minority workers so as to meet the
minority employment goals of the Affirmative Action Program and that all
Construction Contracts will so provide;

 
“Contractor’s Completion Certificate” shall mean the certificate or certificates
executed by the Contractor and any Subcontractors, upon substantial completion
of Project construction, in form and substance acceptable to the Authority,
wherein the Contractor certifies as to such matters as the Authority shall
require, including, without limitation, that the Contractor has made every
effort to satisfy the minority employment goals established in the Affirmative
Action Program and that the Contractor has submitted all certificates, reports,
and records required by the Authority;
 
 
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“Corporate Guarantors” or “Guarantors” shall mean Progenitor Cell Therapy,
L.L.C. and DomaniCell, LLC;

 
“Corporate Guaranty” or “Guaranty” shall mean the Corporate Guaranty dated the
Closing Date which is made a part of the Record of Proceedings, executed by the
Corporate Guarantors and delivered to the Authority unconditionally guarantying
any payments due to the Authority and the Purchaser by the Borrower’s
obligations under the Loan Documents;

 
“Counsel for the Borrower” shall mean the law firm of Epstein, Becker & Green,
P.C., New York, New York;

 
“Counsel for the Purchaser” shall mean the law firm of Harwood Lloyd, LLC,
Hackensack, New Jersey;

 
“Debtor” shall mean the Borrower and the Corporate Guarantors.

 
“Debt Service” shall mean the scheduled amount of interest and amortization of
principal payable for any Bond Year with respect to the Bonds as defined in
Section 148(d)(3)(D) of the Code, and for the purposes of the Debt Service
Coverage Ratio in Section 9.17 shall mean the amount of interest and
amortization of principal payable during any fiscal year;

 
“Determination of Taxability” shall be deemed to have occurred upon the
happening of any of the following:

 
(1)           if a Borrower shall:

 
(i)              file with the Internal Revenue Service any statement,
supplemental statement or other tax schedule, return or document, or

 
(ii)            be advised in writing by the Commissioner or any district
director of the Internal Revenue Service of a final, nonappealable
administrative determination, or
 
(iii)           make an admission in writing to the Purchaser,

 
to the effect that there have been incurred capital expenditures, as such term
is used in Section 144(a)(4) of the Code, in excess of those permitted in order
for the interest on the Bonds to retain tax-exempt status under the Code; or

 
(2)           if there shall occur:

 
(i)             the issuance of a published or private ruling of the Internal
Revenue Service, or

 
(ii)            a final, nonappealable determination by a court of competent
jurisdiction in the United States, or
 
 
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(iii)           the enactment of legislation of the Congress of the United
States,

 
to the effect that the interest payable on the Bonds is wholly includable in the
gross income of one or more Holders thereof (other than a Holder who is a
Substantial User or a Related Person) within the meaning of Section 103 of the
Code;

 
“Environmental Agreement” shall mean the Environmental Indemnity and
Responsibility Agreement dated the Closing Date from the Borrower and the
Guarantors to the Authority and the Purchaser;

 
“ERISA” shall mean the federal Employee Retirement Income Security Act;

 
“Escrow Account” shall mean the special account entitled “Commerce Bank/North
-PCT Allendale, LLC” maintained by the Escrow Agent at its offices and
established for the deposit of the proceeds of the Bonds and proceeds resulting
from damage to or condemnation of the Project, as described in Article IV;

 
“Escrow Agent” shall mean Commerce Bank/North;

 
“Event of Default” shall mean any event of default as defined in Section 11.01;

 
“Financing Statements” shall mean the Uniform Commercial Code financing
statements which are made part of the Record of Proceedings, delivered by the
Borrower, as Debtor;

 
“Future Value” means, with respect to any payment or receipt paid or received on
any date (or treated as paid or received), the value of the payment or receipt
on that date increased by interest assumed to be earned and compounded at the
end of each compounding interval over any specified future period using a
compounding rate equal to the Yield on the Bonds and the compounding interval
and financial conventions used to compute Yield on the Bonds;

 
“GAAP” or “Generally Accepted Accounting Principles” shall mean those principles
of accounting set forth in pronouncements of the Financial Accounting Standard
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are from time to time supplemented
or amended;

 
“General Certificate of the Authority” shall mean the certificate of the
Authority which is made a part of the Record of Proceedings;

 
“Gross Proceeds” shall have the meaning given it in Section 148(f)(6)(b) of the
Code, presently including, without limitation, the original proceeds of the
Bonds, investment proceeds, amounts held in a sinking fund, amounts invested in
a Reasonably Required Reserve or Replacement Fund (as defined in Section 148(d)
of the Code), any amounts used to pay Debt Service on the Bonds and any amounts
received as a result of investing any of the foregoing. Gross Proceeds shall not
include Gross Proceeds held in a bona fide Debt Service fund to the extent that
the earnings on such fund do not exceed $100,000 in any one Bond Year;

 
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The terms “herein”, “hereunder”, “hereby”, “hereto”, “hereof”, and any similar
terms, refer to this Bond Agreement; the term “heretofore” means before the date
of execution of this Bond Agreement; and the term “hereafter” means after the
date of execution of this Bond Agreement;

 
“Holder” shall mean the Purchaser or each other Person to whom the Bond is
transferred pursuant to Section 3.02 or, if there is an Indenture, the Holders
of the Indentured Bonds, as provided in the Indenture;

 
“Indebtedness” shall mean (i) all items (other than capital stock, capital
surplus, retained earnings and general contingencies) which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet as at the date on which Indebtedness is to be
determined; and (ii) whether or not so reflected, all indebtedness, obligations
and liabilities, whether unsecured or secured by any lien, and all capitalized
lease obligations;

 
“Indemnified Parties” shall mean the State, the Authority, the Purchaser, the
Escrow Agent, any person who “controls” the State, the Authority, the Purchaser
or the Escrow Agent within the meaning of Section 15 of the Securities Act of
1933, as amended, and any member, officer, official, employee or attorney of the
Authority, the State, the Escrow Agent or the Purchaser;

 
“Indenture” shall have the meaning specified therefor in Section 3.03;

 
“Indentured Bonds” shall have the meaning specified therefor in Section 3.03;

 
“Investment Obligations” shall mean any of the following: (a) obligations of or
guarantied by the State or the United States of America; (b) obligations of or
guarantied by any instrumentality or agency of the United States of America,
whether now existing or hereafter organized; (c) obligations of or guarantied by
any state of the United States or the District of Columbia; (d) repurchase
agreements fully secured by obligations of the kind specified in (a), (b) or (c)
above; (e) interest-bearing deposits and certificates of deposit in the Escrow
Agent or any other bank or trust company which has combined capital, surplus and
undivided profits of at least $50,000,000; (f) commercial paper with one of the
two highest ratings from a nationally accepted rating service; and (g) a money
market fund consisting of United States Treasury securities;

 
“Loan” shall mean the loan from the Authority to the Borrower in the aggregate
principal amount of $3,120,000, which is being made under the terms and
conditions provided for herein and in the manner set forth in Section 2.06
hereof;

 
“Loan Documents” shall mean any or all of this Bond Agreement, the Note, the
Mortgage, the Assignment of Leases, the Financing Statements, the Guaranty, the
Authority’s Assignment, the Environmental Agreement, the Assignment of
Certificate of Deposit, the Commitment Letter and all documents and instruments
executed by the Borrower or the Guarantors and delivered to the Authority and/or
the Purchaser in connection with the Loan;

 
 
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“Mortgage” shall mean the Mortgage and Security Agreement from the Borrower to
the Authority and the Purchaser, as amended and/or restated from time to time;
 
“Net Proceeds” shall mean the Bond Proceeds less any amounts placed in a
reasonably required reserve or replacement fund (as defined in Section 148(d) of
the Code);

 
“Non-Purpose Obligations” shall mean any “investment property” (within the
meaning of Section 148(b)(2) of the Code) which is (i) acquired with the Gross
Proceeds of the Bonds and (ii) not acquired in order to carry out the
governmental purpose of the Bonds;

 
“Note” shall mean the Note dated the Closing Date, from the Borrower to the
Authority in the aggregate principal amount of $3,120,000 and made part of the
Record of Proceedings;

 
“Obligations” shall mean the obligations of the Borrower created pursuant to the
Loan Documents;

 
“Obligated Parties” shall mean the Borrower, the Guarantors and any Person,
other than the Borrower and/or the Guarantors, providing collateral pursuant to,
or obligated to perform under any, loan document given to the Authority or the
Purchaser;

 
“Paragraph” shall mean a specified paragraph of a Section, unless otherwise
indicated;

 
“Permitted Encumbrances” shall mean, as of any particular time: (i) liens for
taxes and assessments not then delinquent or which are being contested in good
faith and for which adequate reserves have been deposited with the Purchaser;
(ii) the liens created by this Bond Agreement and the Mortgage; (iii) utility
access and other easements and rights of way, restrictions and exceptions that
are reflected in the title commitment of First American Title Insurance Company
#219141 delivered by the Borrower on the Closing Date, including without
limitation the Master Deed and other documents on record with the Bergen County
Clerk’s office pertaining to the Four Pearl Court Condominium; (iv) such minor
defects, irregularities, encumbrances and clouds on title as normally exist with
respect to property similar in character to the Project; (v) any liens from the
Borrower or the Corporate Guarantors in favor of the Purchaser to secure any
other indebtedness from the Borrower or the Corporate Guarantors to the
Purchaser; (vi) any liens which are subordinate to the lien of the Mortgage; and
(vii) all other liens and encumbrances expressly permitted under this Bond
Agreement and the other Loan Documents;

 
“Person” or “Persons” shall mean any individual, corporation, partnership, joint
venture, trust, or unincorporated organization, or a governmental agency or any
political subdivision thereof;
 
 
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“Pledged Funds” shall mean the time deposit of the Borrower maintained in an
account pledged to the Purchaser in an amount approved by the Purchaser, which
may be up to eighteen (18) months Debt Service;

 
“Premises” shall mean the premises located at 4 Pearl Court, Borough of
Allendale, Bergen County, New Jersey which are more particularly described in
and are subject to the Mortgage, together with all improvements thereon and
which are also described in Schedule B hereto;

 
“Prevailing Wage Rate Provision” shall mean the provisions of the Act and the
resolutions, rules and regulations of the Authority, as adopted, amended and
supplemented from time to time, requiring that workers engaged in Construction
Contracts be paid a wage rate not less than the Prevailing Wage Rate, and that
the Borrower and all Contractors file such certificates, reports and records and
do other prescribed acts as are necessary to demonstrate or assure compliance;

 
“Prevailing Wage Rate” shall mean the prevailing wage rate established by the
Commissioner of the New Jersey Department of Labor and Industry from time to
time in accordance with the provisions of N.J.S.A. 34:11-56.30 for the locality
in which the Project is located;

 
“Principal User” shall mean any principal user within the meaning of the
proposed amendments to Treas. Reg. Sec. 1.103-10 published by the Internal
Revenue Service in the Federal Register on February 21, 1986 or any Related
Person to a Principal User within the meaning of Section 144(a) of the Code;

 
“Project Municipality” shall mean the Borough of Allendale, County of Bergen, in
the State of New Jersey;

 
“Proper Charge” shall mean: (i) issuance costs of the Bonds, including, without
limitation, certain attorneys’ fees, printing costs, initial agent’s fees and
similar expenses, which shall at no time exceed two per centum (2%) of the face
amount of the Bonds; (ii) an expenditure for the Project, paid and incurred
after the date which is sixty days prior to August 14, 2007, used for (A) the
acquisition or improvement of land or the acquisition, construction,
reconstruction or improvement of land or property of a character subject to the
allowance for depreciation or (B) to redeem part or all of a prior loan which
was issued for purposes described in subparagraph (A) or this subparagraph; or
(iii) expenditures for the Project which, after taking into account all
expenditures under (i) above, will not result in more than five per centum (5%)
of the Net Proceeds being expended for expenditures other than those referred to
in (ii) above;

 
“Purchaser” shall mean Commerce Bank/North, 1100 Lake Street, Ramsey, New Jersey
and its successors and/or assigns;

 
 
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“Qualified Administrative Costs” means all reasonable, direct administrative
costs (other than carrying costs) such as separately stated brokerage or selling
commissions, but not legal and accounting fees, record keeping, custody and
similar costs. General overhead costs and similar indirect costs of the Borrower
such as employee salaries and office expenses and costs associated with
computing the Rebate Amount are not Qualified Administrative Costs. In general,
administrative costs are not reasonable unless they are comparable to
administrative costs that would be charged for the same Investment or a
reasonably comparable Investment if acquired with a source of funds other than
gross proceeds of Tax-Exempt bonds;
 
“Rebate Account” shall mean the special account maintained by the Escrow Agent
at its offices and established for the deposit of the amounts to be paid to the
United States on behalf of the Authority pursuant to Section 9.03, as described
in Section 5.09 hereof;

 
“Rebate Amount” shall have the meaning set forth in Section 9.03(f) of this
Agreement;

 
“Rebate Expert” means any of the following chosen by the Borrower and acceptable
to the Purchaser: (a) Bond Counsel, (b) any nationally recognized firm of
certified public accountants, (c) any reputable firm which offers to the
tax-exempt bond industry rebate calculation services and holds itself out as
having expertise in that area, or (d) such other person as is approved by Bond
Counsel;

 
“Record of Proceedings” shall mean the Loan Documents, certificates, affidavits,
opinions and other documentation executed in connection with the sale of the
Bonds and the making of the Loan;

 
“Related Person” shall mean a related person within the meaning of Section
144(a) or Section 147(a) of the Code as is applicable;

 
“Requisition Form” shall mean the form of requisition required by Section
5.02(a) as a condition precedent to the disbursement of moneys from the Escrow
Account, in the form of Exhibit D hereto;

 
“Reserved Rights” means the rights of the Authority under the Environmental
Agreement and the rights of the Authority to receive payments and notices under
this Bond Agreement or any other Loan Document, to consent to any amendments,
modifications or supplements to this Bond Agreement or any other Loan Document,
to enforce pursuant to Article XI hereof the Defaults and Remedies herein and
the covenants or other provisions in this Bond Agreement under the following
Sections of this Bond Agreement: 5.02(c), (d) and (e) (Disbursements from the
Escrow Account), 5.04 (No Liability of Authority), 5.05 (Furnishing Documents to
the Authority), 5.06 (Establishment of Completion Date), 5.07 (Borrower Required
to Pay if Escrow Account Insufficient), 5.09 (Rebate Account), 5.12 (Duties of
the Escrow Agent), 7.01 (Purchaser Representations), 7.03 (Filing of Other
Documents), 7.04 (Notice of Events of Default), 8.09 (No Action), 8.22
(Environmental Representation), 9.01 (Insurance Required), 9.03 (Compliance with
Code and Arbitrage Regulations), 9.05 (Environmental Covenant), 9.06 (Financial
Statements), 9.07 (Mergers), 9.08 (Assignment of Bond Agreement), 9.09
(Indemnification), 9.12 (Brokerage Fee), 10.01 (Inducement), 10.02 (No Untrue
Statements), 10.03 (Project Users), 10.04 (Maintain Existence, Merge, Sell,
Transfer), 10.05 (Relocate Project), 10.06 (Operate Project), 10.07 (Annual
Certification), 10.08 (Affirmative Action and Prevailing Wage Regulations),
10.09 (Preservation of Project), 10.10 (Access to the Project and Inspection),
10.11 (Additional Information), 10.12 (Project Sign), 11.01 (Events of Default),
11.03 (Authority’s Remedies), 11.04 (Effect of Cancellation of the Bonds), 11.05
(No Remedy Exclusive), 11.06 (Waiver of Event of Default), 11.07 (Agreement to
Pay Attorneys’ Fees and Expenses), 11.08 (Immunity of Authority), 12.03 (Costs
and Expenses), 12.06 (Failure to Exercise Rights), 12.07 (Assignment of Loan
Documents), 12.08 (Further Assurances and Corrective Instruments) and 12.09
(Authority May Rely On Certificates). These Reserved Rights have been assigned
to the Purchaser but are also held and retained by the Authority concurrently
with the Purchaser and may be exercised and enforced whether or not the
Purchaser shall have exercised or shall have purported to exercise such rights
and remedies, without limiting the obligation of the Purchaser to do so;

 
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“Resolution” shall mean, collectively, the resolutions of the Authority dated
August 14, 2007, accepting the Application and making certain findings and
determinations and the resolution of the Authority dated September 11, 2007
authorizing the issuance and sale of the Bonds and determining other matters in
connection with the Project;

 
“Section” shall mean a specified section hereof, unless otherwise indicated;

 
“State” shall mean the State of New Jersey;

 
“Subcontractor” shall mean any Person engaged by a Contractor or a Subcontractor
in the performance of any Construction Contract;

 
“Substantial User” shall mean a substantial user of the Project or any Related
Person to a Substantial User within the meaning of Section 147(a) of the Code;

 
“Taxable Rate” shall have the same meaning set forth in the Note;

 
“Tax Certificate” shall mean the certificate executed by the Borrower in form
and substance acceptable to the Authority, wherein the Borrower certifies as to
such matters as the Authority shall require;

 
“Test Period Beneficiary” shall mean any Person who was an owner or Principal
User of any facilities being financed by any issue of tax-exempt
related-facility bonds (as defined in Section 144(a)(10)(B) of the Code) at any
time during the three-year period beginning on the later of the date such
facilities were placed in service or the date of such issue;

 
“Yield” shall mean a yield as shall be determined under Section 1.103-13(c) of
the Regulations and Section 1.148-3 of the Regulations, as applicable;

 
“Yield Reduction Payments” means payments made to the United States with respect
to any Nonpurpose Investment allocated to the Bonds that (i) are paid at the
same time and the same manner as Rebate Amounts are required to be paid and (ii)
are paid with respect to Investments that are allocable to Gross Proceeds that
previously qualified for a temporary investment period that has since expired.
 
 
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ARTICLE II

 
THE FINANCING

 
The Authority’s obligations to make the Loan and issue the Bonds are subject to
the following conditions precedent:

 
Section 2.01. Opinion of Counsel for the Borrower. The Authority shall have
received the opinion of Counsel for the Borrower dated the date of the Loan,
addressed to the Authority, and satisfactory in form and substance to the
Authority, Bond Counsel and Counsel for the Purchaser:
 
(a)           to the effect that each of the Loan Documents to be executed by
the Borrower and the Corporate Guarantors have been duly executed and delivered
by the Borrower and the Corporate Guarantors in accordance with the provisions
hereof, and each such Loan Document constitutes a legal, valid and binding
obligation of the Borrower and the Corporate Guarantors, enforceable in
accordance with its terms, subject to bankruptcy laws, creditors’ rights laws
and equitable rights and remedies; and
 
(b)           to the effect that the Authority has a valid mortgage lien upon
the Premises based upon the title commitment of First American Title Insurance
Company #219141_ and perfected security interests in the Collateral.
 
(c)           to the effect that 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, the Corporate Guarantors or any of their properties or rights
which, if adversely determined, would (i) affect the transactions contemplated
by the Loan Documents, (ii) affect the validity or enforceability of the Loan
Documents, (iii) affect the ability of the Borrower or the Corporate Guarantors
to perform their respective obligations under the Loan Documents, (iv)
materially impair the value of the Collateral, (v) materially impair the
Borrower’s or the Corporate Guarantors’ right to carry on their businesses
substantially as now conducted (and as now contemplated by the Borrower or the
Corporate Guarantors) or (vi) have a material adverse effect on the Borrower’s
or the Corporate Guarantors’ financial condition; and
 
(d)           covering the matters set forth in the Commitment Letter and such
additional matters as may be reasonably required by Counsel for the Purchaser
and Bond Counsel.

 
Section 2.02. Opinion of Bond Counsel. The Authority shall have received the
opinion of Bond Counsel that interest income on the Bonds is exempt from
inclusion as gross income under the Code (subject to the limitations set forth
in Section 7.02 hereof); that the offering of the Bonds is not required to be
registered under the Securities Act of 1933, as amended, or under the rules and
regulations promulgated thereunder; that the offering of the Bonds is exempt
from Rule 15c2-l2; and that the Bonds have been duly authorized and issued under
the provisions of the Act.
 
 
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Section 2.03. Loan and Other Documents. The Authority and the Purchaser shall
have received:

 
(a)           the Loan Documents duly executed by all parties thereto;
 
(b)          certificates, in form and substance acceptable to the Authority,
evidencing the insurance required to be maintained by this Bond Agreement;
 
(c)          a capital expenditures certificate, in form and substance
satisfactory to Bond Counsel, completed by the Borrower, setting forth the
amounts of all expenditures described in Section 8.12. One such certificate
shall be delivered for the Borrower and each Principal User;

 
(d)          the Tax Certificate, in form and substance satisfactory to Bond
Counsel; and

 
(e)           all other documents reasonably required by the Authority and the
Purchaser.

 
Section 2.04. Legal Matters. Legal matters in connection with the making of the
Loan shall be satisfactory to the Authority, the Purchaser, the Borrower and
their respective counsel.

 
Section 2.05. Bond Issuance Fee/Bond Purchase Fee. The Authority shall have
received from the Borrower the bond issuance fee of $15,600.00 and the Purchaser
shall have received from the Borrower the $20,000.00 commitment fee for the
Loan, plus all other fees, if any, set forth in the Commitment Letter.

 
Section 2.06. The Loan. The Purchaser has agreed with the Authority to purchase
the Bonds and the Authority has agreed to make the Loan to the Borrower from the
proceeds received from the sale of the Bonds. To accomplish this financing, the
following acts will be deemed to occur simultaneously and concurrently with the
execution and delivery of this Bond Agreement and all of the other Loan
Documents:

 
(i)           The Authority will sell, issue and deliver the Bonds to the
Purchaser;

 
(ii)           The Purchaser shall deposit the purchase price of the Bonds,
$3,120,000, in the Escrow Account;

 
(iii)          The Borrower will execute and deliver the Loan Documents to the
Authority and the Purchaser;

 
(iv)         The Corporate Guarantors will execute and deliver the Corporate
Guaranty and the other Loan Documents to the Authority; and
 
 
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(v)          The Authority will assign the Loan Documents to the Purchaser in
accordance with the Authority’s Assignment.

 
Section 2.07. Findings of Authority. The Authority is making the Loan to the
Borrower under this Bond Agreement in order to promote the purposes and
objectives of the Act. In the Resolution, the Authority has made certain
findings and determinations with regard to the Project. The Authority has
determined that the Project would: (i) tend to maintain or provide gainful
employment opportunities within and for the people of the State; or (ii) aid,
assist and encourage the economic development or redevelopment of any political
subdivision of the State; or (iii) maintain or increase the tax base of the
State or of any political subdivision of the State; or (iv) maintain or
diversify and expand employment promoting enterprises within the State.

 
The Authority made the above findings and determinations based on the
Application received by the Authority. The Borrower represented in the
Application that the Project will increase employment in the State by
approximately 20 jobs.
 
 
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ARTICLE III
 
THE BONDS

 
Section 3.01. The Bonds. The State of New Jersey is not obligated to pay, and
neither the faith and credit nor taxing power of the State of New Jersey is
pledged to the payment of, the principal or redemption price, if any, of or
interest on the Bonds. The Bonds are a special, limited obligation of the
Authority, payable solely out of the revenues or other receipts, funds or moneys
of the Authority pledged under this Bond Agreement and from any amounts
otherwise available hereunder for the payment of the Bonds. The Bonds do not now
and shall never constitute a charge against the general credit of the Authority.
The Authority has no taxing power.

 
Pursuant to the Act, neither the members of the Authority nor any person
executing bonds for the Authority shall be liable personally on said bonds by
reason of the issuance thereof.

 
Subject to the terms and conditions and upon the basis of the representations
hereinafter set forth, the Authority hereby agrees to sell the Bonds to the
Purchaser, and the Purchaser hereby agrees to purchase the Bonds from the
Authority and to deposit the purchase price thereof in the Escrow Account.

 
The Bonds shall be issued in typewritten form as a registered Bond without
coupons. The Bonds shall be signed by or executed with the manual or facsimile
signature of the members or officers of the Authority authorized to execute the
Bonds pursuant to the Resolution and the official seal or a facsimile thereof of
the Authority shall be impressed thereon and attested by the manual or facsimile
signature of Authorized Authority Representatives. Payment for the Bonds by the
Purchaser and delivery thereof by the Authority shall be made at the offices of
the Authority in Trenton, New Jersey or at such other place as the Authority and
Purchaser mutually agree.

 
The offering of the Bonds has not been registered under the Securities Act of
1933, as amended, and this Bond Agreement has not been qualified under the Trust
Indenture Act of 1939, as amended. The Bonds may not be offered or sold by the
Purchaser in contravention of said acts.

 
Section 3.02. Transfer of Bonds; Restriction on Transfer. The Bonds shall be
transferable only upon the records of the Authority maintained by the Authority
at the principal office of the Authority by a Holder in person or by its
attorney duly authorized in writing, upon surrender thereof together with a
written instrument of transfer satisfactory to the Authority and duly executed
by the Holder or its duly authorized attorney. No transfer of the Bonds shall be
valid unless (i) made on such books and similarly noted by endorsement of the
Holder on the Bonds or, at the expense of the Holder, the Authority shall
execute and deliver a new Bond registered in the name of the transferee; and
(ii) the Holder requesting the transfer shall assign to the transferee all of
the rights of the Authority assigned to the Holder pursuant to Section 12.07 and
the Authority’s Assignment and, in that connection, will execute and deliver all
such instruments and documents as may be deemed necessary or appropriate by
counsel for the Authority and by such independent counsel as shall be designated
by the Holder. Notwithstanding any other provision of this Bond Agreement or any
other Loan Document, the Bonds shall be transferable only as a whole to a single
purchaser and may not be transferred in part except after full compliance with
the provisions of this Article III.

 
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Section 3.03. Execution of Indenture. (a) If the Holder at any time proposes to
sell, pledge, assign or otherwise transfer the Bonds so that thereafter there
will be or may be more than one Holder, the Authority will, as soon as
reasonably possible after the receipt of a written request from the Holder,
execute and deliver to a bank or trust company, as trustee, having a capital and
surplus of at least $10,000,000 (if there be such an institution willing,
qualified and able to accept the trust upon reasonable or customary terms), an
Indenture of Trust (the “Indenture”), providing for the execution and delivery
thereunder of new Economic Development Bonds (PCT Allendale, LLC - 2007 Project)
of the Authority (herein called the “Indentured Bonds”), equal in aggregate
principal amount to the outstanding and unpaid principal amount of the Bonds at
the time of such authorization and in all other respects substantially similar
to, and having substantially all the rights and privileges carried by, the
Bonds.
 
(b)           Any action taken by the Authority pursuant to this Section 3.03
shall be taken by the Authority as soon as practicable (as determined by the
Authority) after such written request from the Holder; provided however, no such
action under this Section 3.03 shall be taken (i) without the approval of
counsel chosen by the Authority, (ii) without an approving legal opinion of Bond
Counsel and (iii) if it shall constitute an Event of Default.
 
(c)           In connection with the execution of the Indenture, the Holder
shall assign to the trustee under the Indenture, to be held by such trustee for
the benefit of all the Holders of the Indentured Bonds, all of the rights of the
Authority assigned to such Holder pursuant to Section 12.07 and the Authority’s
Assignment and, in that connection, will execute and deliver all such
instruments and documents as may be deemed necessary or appropriate by counsel
for the Authority and by such independent counsel as shall be designated by such
Holder. The terms and provisions of the Indentured Bonds shall be set forth in
the Indenture which shall also embody the substance of all covenants, conditions
and provisions set forth in the Loan Documents.
 
(d)           Prior to taking any of the foregoing actions, the Authority shall
have received indemnification satisfactory to it for any costs and expenses it
may bear, including the costs of counsel.
 
(e)           Prior to a proposed sale of 100% of the Bonds outstanding,
provided no Event of Default has occurred and is continuing, the holder/seller
shall provide the Borrower with fifteen (15) days notice of the terms of the
proposed sale and the opportunity to purchase or cause the purchase of the Bonds
on the proposed sale date for the same terms. In the event the Borrower intends
to purchase or cause the purchase of the Bonds, it shall provide notice to the
holder/seller within such fifteen (15) day period and at least two (2) days
prior to the proposed sale date.

 
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Section 3.04. Replacement of Mutilated, Destroyed, Lost or Stolen Bonds. In case
any Bond shall become mutilated or be destroyed, lost or stolen, the Authority
shall cause to be executed a new Bond of like series, tenor and, upon the
cancellation of the mutilated Bond or, in lieu of and in substitution for the
Bond destroyed, lost or stolen, upon the Holder’s paying the expenses and
charges of the Authority in connection therewith and, in the case of a Bond
being destroyed, lost or stolen, his filing with the Authority evidence
satisfactory to it that the Bond was destroyed, lost or stolen, and of his
ownership thereof, and his furnishing to the Authority indemnity satisfactory to
it.

 
Section 3.05. Cancellation of Bonds Upon Payment in Full. Upon the Cancellation
Date or payment in full of the principal of, premium, if any and interest on the
Bonds, the Holder shall provide timely notice to the Authority that the Bonds
have been paid or cancelled and shall surrender the Bonds to the Authority.

 
Section 3.06. Election of Section 144(a)(4). The Authority hereby elects that
the provisions of Section 144(a)(4) of the Code (the $10,000,000 election) be
applicable to the issuance of the Bonds.
 
 
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ARTICLE IV

 
THE LOAN

 
Section 4.01. The Loan. The Authority agrees, upon the terms and subject to the
conditions hereinafter set forth, to make the Loan to the Borrower for the
purposes set forth in the recitals hereinabove. The Loan amount ($3,120,000)
shall be disbursed in accordance with Section 5.02 hereof.

 
Section 4.02. The Note. To evidence its obligation to repay the Loan, the
Borrower shall execute the Note. The Loan and the Note shall be secured by the
Collateral, subject only to the Permitted Encumbrances. The Loan shall be repaid
as provided in the Note.

 
Section 4.03. Security. The Loan shall be secured by the Collateral, which
includes without limitation a mortgage lien in the Premises, arising by reason
of the Mortgage which, when recorded in the appropriate recording office, shall
constitute a first lien on the Premises. In addition, the Borrower hereby grants
the Authority a security interest in (i) the Pledged Funds and (ii) all cash,
certificates and other instruments evidencing Investment Obligations and the
proceeds thereof in the Escrow Account and all proceeds of any or all of the
foregoing and all property which is within the definition of proceeds as it is
defined in the Uniform Commercial Code, including without limitation, whatever
is received upon the use, lease, sale, exchange, collection, any other
utilization or any disposition of any of the foregoing property described in
this Section 4.03, whether cash or non-cash, substitutions, additions,
accessions, replacements, products, and renewals of, for, or to such property
and all insurance therefor, including insurance proceeds and products thereof
and all funds deposited from time to time in the Escrow Account. In addition to
the foregoing, the Loan shall also be secured by the Guaranty and by the
Collateral described in the Security Agreement. It is the intention of the
parties hereto that the Collateral secure the Loan. It is the intention of the
parties hereto that this Bond Agreement constitute a security agreement pursuant
to the Uniform Commercial Code as enacted into law in the State for the purpose
of creating the security interests granted herein.

 
Section 4.04. Incorporation of Terms. The other Loan Documents shall be made
subject to all the terms and conditions contained in this Bond Agreement to the
same extent and effect as if this Bond Agreement were fully set forth in and
made a part of the other Loan Documents. This Bond Agreement is made subject to
all the conditions, stipulations, agreements and covenants contained in the
other Loan Documents to the same extent and effect as if the other Loan
Documents were fully set forth herein and made a part hereof. Notwithstanding
any of the foregoing, if any provisions in the other Loan Documents are
inconsistent with this Bond Agreement, this Bond Agreement shall control.

 
Section 4.05. Payments. Payments to be made under this Bond Agreement or the
Note which are stated to be due on a Saturday, Sunday or public holiday under
the laws of the State shall be made on the next succeeding day which is not a
Saturday, Sunday or public holiday under the laws of the State. Payments
hereunder shall be made by direct charge to the demand deposit accounts
maintained by the Borrower with the Purchaser. The Borrower hereby consents to
Purchaser making such charge.

 
 
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Section 4.06. Method of Payment. Not later than the close of business on the day
of any installment due pursuant to the terms of the Note, the Borrower agrees to
tender payment to the Purchaser in immediately available funds. All payments of
the Borrower on the Note shall be credited against corresponding payments due
from the Authority on the Bonds.
 
Section 4.07. Prepayment of the Note. The Borrower may prepay the Loan, in whole
or in part, at any time upon the giving of a minimum of thirty (30) days
irrevocable prior express written notice to the Purchaser of its intention to
prepay the Loan, subject to the following conditions. Any principal prepayment
made by the Borrower shall be accompanied by any prepayment penalty due under
the Note, any late fees due under the Note, any other outstanding charges due
hereunder or due under the Note and any accrued interest. Any partial prepayment
of principal shall be applied in the inverse order of maturity. Upon the payment
of any sum in reduction of the amount of the Loan which exceeds the amount the
Borrower is required to pay under any term or provision of the Note or any other
Loan Document, including prepayment of the entire debt, the Purchaser shall be
entitled to charge and the Borrower shall be obligated to pay, in addition to
interest and all other charges then properly due, a prepayment premium as
follows:

 
(i)           5% of the amount of principal which is being prepaid shall
accompany any principal prepayment made in the first year following the date of
the Note;

 
(ii)           4% of the amount of principal which is being prepaid shall
accompany any principal prepayment made in the second year following the date of
the Note;

 
(iii)         3% of the amount of principal which is being prepaid shall
accompany any principal prepayment made in the third year following the date of
the Note;

 
(iv)         2% of the amount of principal which is being prepaid shall
accompany any principal prepayment made in the fourth year following the date of
the Note;

 
(v)          1 % of the amount of principal which is being prepaid shall
accompany any principal prepayment made in the fifth year following the date of
the Note; and

 
(vi)         no prepayment penalty shall be due with respect to any amount of
principal which is being prepaid at any time after the fifth year following the
date of this Note.

 
Section 4.08. Late Charge. A late charge of five percent (5%) may be assessed
against the Borrower in accordance with the terms of the Note for any payment
due under the Note which is not received within fifteen (15) days of its due
date.

 
Section 4.09. No Abatement of Payments. If any of the Collateral shall be
damaged or either partially or totally destroyed, or if title to, or the
temporary use of the whole or any part of the Collateral shall be taken or
condemned by a competent authority for any public use or purpose, there shall be
no abatement or reduction in the amounts payable by the Borrower hereunder or
under the Note, and the Borrower shall continue to be obligated to make such
payments.

 
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Section 4.10. Application of Net Proceeds of Insurance or Condemnation. The net
proceeds from any insurance or condemnation award with respect to the Collateral
shall be deposited with the Escrow Agent in the Escrow Account and subject to
the provisions of Section 4.11 hereof either (i) applied to pay for the cost of
making repairs, restorations or relocations, or to reimburse the Borrower for
payment therefor or (ii) if the Borrower determines, or because of an Event of
Default, is required to prepay the Note, applied against payment of the Note,
said payments to be applied against outstanding principal amounts in inverse
order of their maturity, without premium.

 
Section 4.11. Repair, Restoration and Relocation. (i) In the event of any
damage, destruction, taking or condemnation of any of the Collateral (each an
“Event”), provided that no Event of Default shall have occurred and then be
continuing or with the passage of time or giving of notice, would be existing on
the date the proceeds are received, the Borrower shall be permitted to apply the
proceeds to the reduction of the Loan or to repair, restore or relocate such
Collateral. In all such events where the Borrower determines to repair, restore
or relocate the Collateral, the Borrower shall restore the Collateral to an
economic unit not less valuable than the same was prior to such Event. The
proceeds in respect of such Event shall be made available to reimburse the
Borrower on such terms as the Purchaser may specify, as work progresses and
costs are incurred, for the sole purpose of restoring or replacing the portion
of the Premises provided that no Event of Default shall have occurred and then
be continuing or with the passage of time or giving of notice, would be
existing, on any date proceeds are requested to be disbursed in accordance with
Section 5.02 hereof. The Borrower shall first apply its funds to such
restoration or replacement. The Borrower shall proceed diligently after such
damage, destruction or taking to repair, restore or relocate such Collateral.
For the purposes of this Section 4.11, the Collateral shall be deemed to be in a
condition substantially equivalent to its condition or value immediately prior
to the Event, if the Purchaser determines, in its reasonable discretion, that
the Collateral can be utilized effectively for substantially the same
operational purposes for which it was utilized immediately prior to such damage,
destruction or taking.
 
 
 

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(ii)          If required by the Purchaser for the restoration of the Premises,
the Borrower shall submit plans for the restoration of the Project to the
Purchaser as set forth in Section 5.03(a)(v) hereof (the “Plans”), which shall
have been prepared by a licensed New Jersey architect. The Plans shall be a true
and accurate reflection of the Project when restored and shall have been
approved as required by all governmental bodies or agencies having jurisdiction.
The budget for the construction costs required for the restoration of the
Project shall be submitted by the Borrower to the Purchaser (the “Budget”),
which shall be an accurate current estimate of all costs necessary to
reconstruct the Project in accordance with the Plans. If the cost of any item
for the reconstruction of the Project or any portion thereof exceeds the cost
therefor set forth in the Budget, the Borrower shall deposit the amount of the
excess in the Escrow Account in accordance with the terms of Section 5.07
hereof, unless the Borrower submits evidence satisfactory to the Purchaser of
savings in any other line item which can then be applied to the line item for
which the cost exceeds the cost set forth in the Budget.
 
 
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ARTICLE V

 
ESCROW ACCOUNT, REBATE ACCOUNT AND ESCROW AGENT

 
Section 5.01. Creation of the Loan, Sale of the Bonds, Deposits in the Escrow
Account. In order to create the Loan, the Authority, concurrently with the
execution and delivery of this Bond Agreement, will sell, issue and deliver the
Bonds to the Purchaser in consideration for which the Purchaser is hereby
directed by the Authority to deposit the purchase price of the Bonds in the
Escrow Account.

 
Section 5.02. Disbursements from the Escrow Account. (a) All of the proceeds of
the Loan shall be utilized for the purpose of refinancing a loan used for the
acquisition of condominium units by the Borrower and to pay costs related to the
issuance of the Bonds. Subject to the provisions of Section 5.07, the Borrower
agrees as a condition precedent to the disbursement from the Escrow Account of
any portion of the Bond proceeds or insurance proceeds or condemnation award, if
any, to furnish the Escrow Agent with the following:

 
(i)           a Requisition Form signed by an Authorized Borrower Representative
and approved by an Authorized Purchaser Representative accompanied by the
applicable invoices and/or proofs of payment. The Requisition Form shall state:
(A) the requisition number; (B) the name and address of the Person to whom
payment is to be made by the Escrow Agent or, if the payment is to be made to
the Borrower for a reimbursable advance, the name and address of the Person to
whom such advance was made together with proof of payment by the Borrower; (C)
the amount to be paid; (D) that each obligation for which payment is sought is a
Proper Charge against the Escrow Account, is unpaid or unreimbursed, and has not
been the basis of any previously paid requisition; (E) if such payment is a
reimbursement to the Borrower for costs or expenses incurred by reason of work
performed or supervised by officers or employees of the Borrower or any of its
affiliates, that the amount to be paid does not exceed the actual cost thereof
to the Borrower or any of its affiliates; (F) that no Event of Default has
occurred under this Bond Agreement; and (G) the Borrower has received no written
notice of any lien, right to lien or attachment upon, or other claim affecting
the right to receive payment of, any of the moneys payable under such
Requisition Form to any of the Persons named therein or, if any of the foregoing
has been received, it has been released or discharged or will be released or
discharged upon payment of the Requisition Form;

 
(ii)           with respect to any requisition for Bond proceeds from the Escrow
Account to be applied toward the renovation of the Premises, no funds shall be
disbursed by the Escrow Agent until the Borrower has met the requirements of
subparagraph (iv) of this Section 5.02(a);

 
(iii)          except for costs of issuance, such additional documents,
affidavits, certificates and opinions as the Authority or the Purchaser may
reasonably require, including, as applicable, to insure compliance with the
above section;
 
 
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(iv)        prior to the first disbursement from the Escrow Account for any
Construction Contract, the Borrower shall deliver either (i) a certificate of an
Authorized Borrower Representative stating that, for purposes of the Prevailing
Wage Rate Provision and the Affirmative Action Program, none of the moneys
disbursed at any time from the Escrow Account 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 Escrow Agent an executed Contractor’s
Certificate and Agreement or (ii) a Contractor’s Certificate and Agreement
executed by the Contractor. Nevertheless, prior to the initial disbursement from
the Escrow Account for payment of any Construction Contract, if not theretofore
furnished, a Contractor’s Certificate and Agreement shall be submitted; and

(v)         with respect to any requisition for the acquisition of equipment,
such requisition shall be accompanied by Financing Statements in such form and
substance as the Purchaser may require to perfect a security interest in such
equipment.

(b)         There shall be retained in the Escrow Account an amount equal to ten
per centum (10%) of each sum requisitioned for payment or reimbursement for
payment of a Construction Contract for purposes of the Affirmative Action
Program (a “holdback”); provided, however, if any such requisitioned sum is for
payment or reimbursement of a payment by the Borrower, which payment itself is
or was for only ninety per centum (90%) of the payment requested by the
Contractor or Subcontractor pursuant to such Construction Contract, then such
requisitioned sum may be paid or reimbursed without regard to the aforementioned
holdback, but the remaining ten per centum (10%), when requisitioned by the
Borrower, shall only be disbursed upon the holdback conditions set forth in
paragraph (c) below.

(c)         The holdback shall be disbursed from the Escrow Account upon
compliance with the Affirmative Action and Prevailing Wage Rate Provision of
this Bond Agreement and (i) the execution and filing of the Contractor’s
Completion Certificate, (ii) the execution and filing of the Borrower’s
Completion Certificate, (iii) receipt by the Borrower of a written notice issued
by the Authority’s Office of Affirmative Action that the Contractor has complied
with the requirements of the Affirmative Action Program and (iv) certification
to the Escrow Agent by an Authorized Borrower Representative of compliance with
the conditions stated in clauses (i) through (iii) above.

Section 5.03.   Disbursements of Construction Proceeds from the Escrow Account.

(a)         The Purchaser’s obligation to approve any advance of Construction
Proceeds shall be subject to satisfaction of the following conditions precedent:

(i)           The Borrower shall be in compliance with all terms and conditions
of this Agreement and there shall have occurred no Event of Default hereunder;

(ii)          No order or notice shall have been given by any governmental
agency stopping construction or stating that the work or construction is in
violation of any law, ordinance, code or regulation;
 
 
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(iii)         The mortgagee’s title insurance policy obtained by the Borrower
for the benefit of the Purchaser shall have been continued to the date of the
advance and shall confirm that the Purchaser has a continued lien on the
Premises, subject only to Permitted Encumbrances;

(iv)         The Borrower shall have submitted to the Escrow Agent a requisition
for an advance in form acceptable to the Purchaser and a Certification signed by
the Borrower and Borrower’s counsel in the form attached hereto as Exhibit D;

(v)          The Plans and Budget (as both terms are defined in Section 4.1
l(ii) hereof) have been submitted to the Purchaser and found acceptable;

(vi)         The Borrower shall have provided to the Bank original prepaid
insurance policies as required herein;

(vii)        Completion of a satisfactory inspection of the Property and the
Project by the Purchaser or its designee, the cost to be paid by the Borrower;

(viii)       The Borrower shall have submitted such additional documents as the
Purchaser may require.

(b)         No advance will be made for the commencement of the construction of
the Project. Each advance of Construction Proceeds by the Escrow Agent shall
reimburse the Borrower for construction costs incurred and paid for by the
Borrower.

(c)         Disbursements of Construction Proceeds shall be made upon the
Borrower’s compliance with the terms hereof in such proportion of the total cost
of that part of the work acceptably completed as determined by the Purchaser, so
that at all times the undisbursed portion of the Construction Proceeds shall be
sufficient, in the Purchaser’s sole discretion, to complete the Project. The
Purchaser shall have the right to make the final determination as to the amount
of each advance. The Purchaser may, in its sole discretion, determine the number
of and frequency of disbursement of Construction Proceeds, which shall in no
event be made more frequently than monthly.

(d)         There shall be no material revisions to the Plans without the
consent of the Purchaser.

Section 5.04. No Liability of Authority or Escrow Agent. Nothing contained
herein or in any documents and agreements contemplated hereby or in any other
Loan Document shall impose upon the Escrow Agent or the Authority any obligation
to see to the proper application of such disbursements by the Borrower or any
other recipient thereof, and, in making such disbursements from the Escrow
Account, the Escrow Agent may rely on such Requisition Forms and proof delivered
to it. The Escrow Agent and the Authority shall be relieved of any liability
with respect to making such disbursements in accordance with the foregoing.
 
 
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Section 5.05. Furnishing Documents to the Authority. The Escrow Agent agrees
that it shall hold all documents, affidavits, certificates and opinions
delivered to the Escrow Agent pursuant to Section 5.02 for a period of at least
two (2) years after the Completion Date. The Authority shall have the right to
inspect such documents, affidavits, certificates and opinions at the principal
corporate trust office of the Escrow Agent at reasonable times and upon
reasonable notice. The Escrow Agent shall provide copies of such documents,
affidavits, certificates and opinions to the Authority at its request.

Section 5.06. Establishment of Completion Date. Completion of the Project shall
be evidenced by delivery to the Authority and to the Purchaser of the Borrower’s
Completion Certificate signed by an Authorized Borrower Representative stating
the date of completion of the Project and that, as of such date, except for
amounts retained by the Escrow Agent at the Borrower’s direction for any cost of
the Project not then due and payable or, if due and payable not then paid: (i)
the Project has been completed; (ii) the cost of all labor, services, materials
and supplies used in the Project have been paid, or will be paid from amounts
retained by the Escrow Agent at the Borrower’s direction for any cost of the
Project not then due and payable or, if due and payable, not then paid; (iii)
the Project is being operated as an authorized “project” under the Act and
substantially as proposed in the Application; (iv) the Borrower has reviewed the
Contractor’s Completion Certificate and the Borrower has no knowledge or
information that the representations contained therein are false or misleading;
and (v) the Borrower has required in all Construction Contracts that wages paid
to workers employed in the performance of Construction Contracts be paid at a
rate not less than the Prevailing Wage Rate. Notwithstanding the foregoing, the
Borrower’s Completion Certificate may state that it is given without prejudice
to any rights against third parties which exist at the date of the Borrower’s
Completion Certificate or which may subsequently come into being. Any amount
remaining in the Escrow Account on the Completion Date (except for amounts
therein sufficient to cover costs of the Project not then due and payable or not
then paid) shall be used upon the written instructions of the Borrower or the
Authority by the Escrow Agent to make prepayments of principal only on the Note
in accordance with its terms, without premium or penalty, and following such
date the Borrower shall not permit such funds to be invested at a yield
materially higher than the yield on the Bonds.

Section 5.07. Borrower Required to Pay if Escrow Account Insufficient. In the
event the moneys in the Escrow Account available for payment of the costs of the
Project are not sufficient to pay all costs of the Project in full, whether upon
the initial acquisition of the Premises or upon the occurrence of a Land
Condemnation or a Casualty Event under Section 4.11 hereof, the Borrower agrees
to complete the Project and to pay that portion of the cost in excess of the
moneys available therefor in the Escrow Account. The Authority, the Purchaser
and the Escrow Agent make no warranty, either express or implied, that the
moneys paid into the Escrow Account and available for payment of the costs of
the Project will be sufficient to pay all of such costs. The Borrower agrees
that if, after disbursement of all the money in the Escrow Account available for
payment of costs of the Project, the Borrower shall pay any portion of the costs
of the Project pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Authority, the Purchaser or the
Escrow Agent.
 
 
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Section 5.08. Escrow Account in Event of Default or Cancellation. If the
Purchaser should, because of the occurrence of an Event of Default, declare the
entire principal amount of the Note due and payable, or if the Authority should
cancel the Bonds pursuant to Section 11.03 then any moneys in the Escrow Account
shall, after payment to the Authority of any fees or expenses incurred by it in
connection with the cancellation of the Bonds, be paid over to the Purchaser to
satisfy the amount of the Obligations due and payable and any other amounts due
and payable pursuant to the Loan Documents. Any excess moneys available in the
Escrow Account, after the Obligations and the obligations due and payable under
any Loan Document have been paid in full, shall, upon the written concurrence of
the Purchaser and the Authority, be paid over to the Borrower.

Section 5.09. Rebate Account. A special fund is hereby created and designated as
the Rebate Account. The Borrower shall transfer or cause to be transferred by
the Escrow Agent from the Rebate Fund at such times and to such person as
required by Section 148 of the Code an amount equal to the Rebate Amount.
Amounts in the Rebate Account shall be exempt from the lien of this Bond
Agreement. To the extent such amounts on deposit in the Rebate Account are not
sufficient to meet the Rebate Amount, the amount of the deficiency shall be
immediately paid by the Borrower to the Escrow Agent for deposit in the Rebate
Account. Notwithstanding anything contained in this Bond Agreement to the
contrary, neither the Authority nor the Escrow Agent shall be responsible or
liable for any loss, liability, or expense incurred to the extent incurred as a
result of the failure of the Borrower to fulfill its obligations with respect to
the calculation and payment of the Rebate Amount. The Authority and Escrow Agent
shall be entitled to rely conclusively upon the calculations provided by the
Borrower.

The Escrow Agent, at the direction of the Borrower given in accordance with this
Bond Agreement, shall apply or cause to be applied the amounts in the Rebate
Account at the times and in the amounts required by Section 148 of the Code
solely for the purpose of paying the United States of America in accordance with
Section 148 of the Code.

Moneys held in the Rebate Account shall be invested and reinvested upon the
written direction of the Borrower by the Escrow Agent in Investment Obligations
that mature at such times specified in such written direction, which times shall
be not later than such times as shall be necessary to provide moneys when needed
for the payments to be made from such Rebate Account and in accordance with the
provisions hereof. The interest earned on any moneys or investments in the
Rebate Account shall be retained in such Account.

Notwithstanding the final payment of the Loan, moneys held in the Rebate Account
shall be held by the Escrow Agent until the Rebate Amount has been paid or until
the Borrower has provided the Escrow Agent with a report of a Rebate Expert as
required by Section 9.03 of this Agreement showing that no Rebate Amount is
owed.

Section 5.10. Investment of the Escrow Account. Any moneys held as a part of the
Escrow Account shall be invested and reinvested by the Escrow Agent, only as
directed in writing by the Borrower, in Investment Obligations. The Escrow Agent
may make any and all such investments through its own investment department or
its branch(es). Absent written directions from the Borrower to the Escrow Agent
to invest moneys in other Investment Obligations, the Escrow Agent is hereby
directed by the Borrower to invest monies held in the Escrow Account in a money
market fund maintained with the Purchaser.
 
 
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The Borrower shall direct investments of amounts in the Escrow Account so that
such Investment Obligations shall mature in such amounts and at such times or
shall be redeemable by the Escrow Agent at such times as may be necessary to
provide funds when, at the time of the investment, it is anticipated the same
will be needed to make payments from the Escrow Account in accordance with the
provisions of Section 5.02. To the extent required for payments from the Escrow
Account, the Escrow Agent may, at any time, sell any of such Investment
Obligations. The proceeds of any such sale, all payments at maturity and all
payments upon redemption of such Investment Obligations shall be held in the
Escrow Account or the Rebate Account, as applicable, and, as to the Escrow
Account, accounted for separate and apart from the proceeds from the sale of the
Bonds. Interest and other income shall be held in the respective subaccounts
within the Escrow Account and accounted for on a separate basis.

Interest and other income received on Investment Obligations in the Escrow
Account shall, within the later of (i) three (3) years from the date of issue of
the Bonds or (ii) one (1) year after receipt of such investment income, upon
written instruction from the Borrower be used to pay interest accruing on the
Bonds during the construction period or otherwise spent on other costs of the
Project. In making such investments as described in this Section, the Escrow
Agent shall rely upon the written direction of the Borrower as to the investment
purchased and shall be and hereby is relieved of all liability with respect to
making, redeeming and selling such investments in accordance with the foregoing.

The Escrow Agent shall furnish the Borrower annually and at such other times as
the Borrower may reasonably request, and shall furnish the Authority upon its
request, a statement of account of any moneys held in the Escrow Account and the
Rebate Account by the Escrow Agent.

Section 5.11. The Escrow Agent. Commerce Bank/North is hereby appointed by the
Authority under the direction of the Borrower to serve as Escrow Agent
hereunder. The Escrow Agent, shall act on behalf of the Authority under this
Bond Agreement as specifically provided for herein only insofar as its duties
are expressly set forth and shall not have any implied duties but may exercise
such additional powers as are reasonably incidental thereto. Neither the Escrow
Agent nor any of its officers, directors or employees shall be liable for any
action taken or omitted to be taken by it hereunder or in connection herewith
except for its or their own gross negligence or willful misconduct. The Escrow
Agent shall not be under a duty to examine or pass upon the validity,
effectiveness or genuineness of any Loan Document or any direction, report,
affidavit, certificate, opinion or other instrument, document or agreement
related thereto, and shall be entitled to assume that the same are valid,
effective, genuine and what they purport to be. The Escrow Agent may consult
with legal counsel selected by it, and any action taken or suffered by it in
accordance with the opinion of such counsel shall be full justification and
protection to it. The Escrow Agent shall have the same rights and powers as any
other bank or lender and may exercise the same as though it were not the Escrow
Agent; and it may accept deposits from, lend money to and generally engage in
any kind of business with the Borrower as though it were not the Escrow Agent.
 
 
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The Borrower shall be responsible for the fees and costs of the Escrow Agent.
The Escrow Agent shall not be obliged to act or perform hereunder or to incur
any expenses in connection herewith unless and until the Escrow Agent has been
properly indemnified by the Borrower for all actions to be taken or expenses to
be incurred in connection with its duties as Escrow Agent hereunder.

Section 5.12. Duties of the Escrow Agent with Respect to this Bond Agreement.
The Escrow Agent agrees to act and do the following on behalf of the Authority:

(a)         establish and maintain the Escrow Account, to receive and make
disbursements of proceeds of the Bonds or insurance proceeds and condemnation
awards as provided in Article IV hereof;

(b)         upon receipt of notice by or actual knowledge of any officer
responsible for the administration of the Escrow Account, report to the
Authority any breach of any covenant or any Event of Default by the Borrower
under this Bond Agreement or any fact or circumstance which, except for any
grace period permitted by this Bond Agreement, would result in any breach of a
covenant or Event of Default by the Borrower hereunder. The Escrow Agent shall
report such breach, Event of Default or information to the Authority immediately
after the Escrow Agent becomes aware of such breach, Event of Default, fact or
circumstance;

(c)         furnish the Borrower and the Authority with written notice of the
Borrower’s obligation to file its report with the Authority in accordance with
Section 9.03 hereof and to file its rebate calculation and make its rebate
payment, if any, to the Internal Revenue Service. Such reminder notice shall be
furnished to the Borrower and the Authority at least 90 days prior to each fifth
anniversary of the issuance of the Bonds as set forth in Section 9.03 hereof and
within 30 days following the redemption or final payment of the Bonds. The
Escrow Agent shall have no further obligation for the computation of the Rebate
Amount or the filing or payment thereof;

(d)         upon the written request of the Authority, the Escrow Agent shall
furnish the Authority with a record of the requisitions and disbursements from
the Escrow Account; and

(e)         provide timely notice to the Authority that some or all of the Bonds
have been redeemed or paid in full.

The Borrower hereby acknowledges that it is familiar with all of the duties of
the Escrow Agent as set forth herein and agrees to be bound by the provisions
hereof. The Borrower further agrees that the Escrow Agent, the Authority and
their respective employees shall not be liable for, and agrees to hold the
Escrow Agent, the Authority, their respective employees and the Authority’s
members, officers, directors, agents and attorneys harmless against, any loss or
damage suffered by the Borrower as a result of the Escrow Agent’s good faith
performance hereunder except loss or damage to the Escrow Agent or its employees
suffered as a result of the gross negligence or willful misconduct of the Escrow
Agent or its employees.
 
 
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Section 5.13. Resignation of the Escrow Agent. The Escrow Agent or any successor
thereto may at any time resign and be discharged of its duties and obligations
created by this Bond Agreement by giving not less than sixty (60) days prior
written notice to the Authority and the Borrower specifying the date when such
resignation shall take effect. Such resignation shall take effect upon the day
specified in such notice if a successor Escrow Agent has been duly appointed and
qualified; but if a successor shall have been previously appointed by the
Authority as herein provided, such resignation shall take effect immediately on
the appointment of such successor; provided, however, that subsequent to the
Completion Date the Escrow Agent may resign and such resignation shall be
effective without the necessity of the appointment of a successor Escrow Agent,
subject to reappointment in the event condemnation or insurance proceeds are
received pursuant to Article IV hereof. In the event a successor Escrow Agent is
not appointed within the 60 day period set forth above, the Escrow Agent shall
have the right to pay any remaining proceeds of the Bond into, and to seek the
appointment of a Successor Escrow Agent by, a court of competent jurisdiction.

Section 5.14. Removal of the Escrow Agent. The Escrow Agent or any successor
thereto may be removed at any time by the Authority by an instrument in writing
signed and duly acknowledged by the Authority, and upon a sale of the entire
principal outstanding amount of the Bonds by the Purchaser, the Borrower shall
have the right to remove the Escrow Agent by an instrument signed and duly
acknowledged by the Borrower.

Section 5.15. Appointment of Successor Escrow Agent. In case at any time the
Escrow Agent or any successor thereto shall resign, be removed, become incapable
of acting, or be adjudicated a bankrupt or insolvent, or if a custodian,
receiver, liquidator or conservator of the Escrow Agent or of its property shall
be appointed, or if any public officer shall take charge or control of the
Escrow Agent or of its property or affairs, a successor may be appointed by the
Borrower by an instrument or concurrent instruments in writing signed by the
Authority and the Borrower and delivered to the successor Escrow Agent,
notification thereto being given to the predecessor Escrow Agent and the
Borrower. An Escrow Agent appointed under the provisions of this Section shall
be a bank, trust company or a national banking association, having capital and
surplus aggregating at least ten million dollars ($10,000,000), willing and able
to accept the office on reasonable and customary terms, and authorized by law to
perform all the duties imposed upon it by this Bond Agreement.

Section 5.16. Transfer of Rights and Property to Successor Escrow Agent. Any
successor Escrow Agent appointed shall execute, acknowledge and deliver to its
predecessor Escrow Agent, the Purchaser, the Borrower and the Authority an
instrument accepting such appointment, and thereupon such successor Escrow
Agent, without any further act, deed or conveyance, shall become fully vested
with all moneys, estates, properties, rights, powers, duties and obligations of
such predecessor Escrow Agent, with like effect as if named herein as such
Escrow Agent. Nevertheless, on the written request of the Authority or of the
successor Escrow Agent, the predecessor Escrow Agent shall execute, acknowledge
and deliver such instruments of conveyance and further assurance and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Escrow Agent all the right, title and interest
of the predecessor Escrow Agent in and to any property held by it under the Loan
Documents, and shall pay over, assign and deliver to the successor Escrow Agent
any money or other property subject to the trust and conditions herein or set
forth in the other Loan Documents. Should any deed, conveyance or instrument in
writing from the Authority be required by such successor Escrow Agent for more
fully and certainly vesting in and confirming to such successor Escrow Agent any
such moneys, estates, properties, rights, powers and duties, then all such
deeds, conveyances and instruments in writing shall be prepared by the successor
Escrow Agent at the expense of the Borrower and shall be executed, acknowledged
and delivered by the Authority, but only upon written request and so far as may
be authorized by law.
 
 
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Section 5.17. Merger or Consolidation. Any entity into which the Escrow Agent
may be merged or converted, or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which it shall be a
party, or any entity to which the Escrow Agent may sell or transfer all or
substantially all of its business, shall be the successor to the Escrow Agent
without the execution or filing of any paper or the performance of any further
act except to notify the Authority, the Borrower and the Purchaser within thirty
(30) days of such merger, conversion or consolidation, provided such entity
shall be a bank, trust company or national banking association which is
qualified to be a successor to the Escrow Agent under Section 5.15 and shall be
authorized by law to perform all the duties imposed upon it by this Bond
Agreement.

Section 5.18. Conflicts. In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions with respect
to the Escrow Fund which, in its sole discretion, are in conflict either with
other instructions received by it or with any provision of this Agreement, the
Escrow Agent shall have the absolute right to suspend all further performance
under this Escrow Agreement (except for the safekeeping of the Escrow Account)
until the resolution of such uncertainty or conflicting instructions. In the
event the Escrow Agent believes that there is a conflict as defined herein that
warrants the Escrow Agent’s suspension of all further performance, the Escrow
Agent shall immediately notify all of the parties in writing of that conflict,
and further, shall convene a meeting of all interested parties within ten (10)
days of the receipt of such notice in which meeting the parties shall confer in
good faith to try to resolve such conflicts. In the event the conflicts are not
resolved as a result of that meeting, the parties agree that they will submit
the matters in dispute to arbitration to be addressed on an expedited basis.
 
 
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ARTICLE VI
 
REPRESENTATIONS OF THE AUTHORITY
 
Section 6.01. Authority Representations. The Authority represents to and agrees
with the Purchaser that as of date hereof and as of the date of the Closing:

(a)         The Authority is a public body corporate and politic, duly created
and existing as a political subdivision of the State, with the power and
authority set forth in the Act, including the power and authority to authorize
the issuance of the Bonds under the Act.

(b)         The Authority has the requisite authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Authority and, assuming the due authorization, execution and delivery by the
other parties hereto, will constitute a valid and binding obligation of the
Authority, enforceable in accordance with its terms (subject to any applicable
bankruptcy, insolvency, moratorium or the similar laws or equitable principles
affecting creditors’ rights or remedies generally.)

(c)         The Authority has the requisite authority to execute the Bonds and
when delivered to and paid for by the Purchaser at the Closing in accordance
with the provisions of this Agreement, and the Resolution, the Bonds will have
been duly authorized, executed and issued and will constitute valid and binding
limited obligations of the Authority enforceable in accordance with their
respective terms and entitled to the benefits and security of this Agreement
(subject to any applicable bankruptcy, insolvency, moratorium or other similar
laws or equitable principles affecting creditors’ rights or remedies generally).

(d)         The adoption of the Resolution and the execution of this Agreement,
and the Bonds and compliance by the Authority with the provisions thereof and
hereof, under the circumstances contemplated thereby and hereby, to the
knowledge of the Authority, do not and will not in any material respect conflict
with or constitute on the part of the Authority a breach of or default under any
indenture, deed of trust, mortgage, agreement, or other instrument to which the
Authority is a party, or conflict with, violate, or result in a breach of any
existing law, public administrative rule or regulation, judgment, court order or
consent decree to which the Authority is subject.

(e)         The Resolution and the forms of this Agreement, and the Bonds were
adopted or approved at a duly convened meeting of the Authority, with respect to
which all legally required notices were duly given, and at which meetings
quorums were present and acting at the time of adoption thereof.

(f)          The State of New Jersey is not obligated to pay, and neither the
faith and credit nor taxing power of the State of New Jersey is pledged to the
payment of, the principal or redemption price, if any, of or interest on the
Bond. The Bond is a special, limited obligation of the Authority, payable solely
out of the revenues or other receipts, funds or moneys of the Authority pledged
under this Agreement and from any amounts otherwise available under this
Agreement for the payment of the Bond. The Bond does not now and shall never
constitute a charge against the general credit of the Authority. The Authority
has no taxing power.
 
 
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(g)         The Authority makes no representation as to (i) the financial
position or business condition of the Borrower or (ii) the correctness,
completeness or accuracy of any of the statements, materials (financial or
otherwise), representations or certifications furnished or to be made by the
Borrower in connection with the sale or transfer of the Bonds, the execution and
delivery of this Bond Agreement or the consummation of the transactions
contemplated hereby.

(h)         Pursuant to Section 9.03 hereof, the Borrower has covenanted to
comply with the provisions of Sections 103 and 141 through 150 of the Code. The
Authority hereby covenants not to take or omit to take any action so as to cause
interest on the Bonds to be no longer excluded from gross income for the
purposes of federal income taxation and to otherwise comply with the
requirements of Sections 103 and 141 through 150 of the Code, and all applicable
regulations promulgated with respect thereto, throughout the term of the Bonds.
Pursuant to this Bond Agreement all investments of the proceeds of the Bonds
will be at the direction of the Borrower.
 
 
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ARTICLE VII

REPRESENTATIONS AND DUTIES OF THE PURCHASER

 
Section 7.01. Purchaser Representations.

(a)         The Purchaser has made an independent investigation and evaluation
of the financial position and business condition of the Borrower and the value
of the Project, or has caused such investigation and evaluation of the Borrower
and the Project to be made by persons it deems competent to do so. The Purchaser
has not relied on the Authority for any information regarding the Borrower or
the Project and the Purchaser expressly relieves the Authority and its agents,
representatives and attorneys of any liability for failure to provide such
information or for any untrue fact or material omission in any information
regarding the Borrower or the Project that may have been provided by the
Borrower or the Authority, and their agents, representatives and attorneys.

(b)         The Purchaser is purchasing the Bonds for its own account, with the
purpose of investment and not with the intention of distribution or resale
thereof. The Bonds will not be sold unless registered in accordance with the
rules and regulations of the Securities and Exchange Commission or the Authority
is furnished with an opinion of counsel or a “No Action” letter from the
Securities and Exchange Commission that such registration is not required.

Section 7.02. Tax Consequences. The Purchaser hereby acknowledges the following
tax consequences arising under the Code including, but not limited to:

(a)         interest on specified private activity bonds within the meaning of
Section 57(a)(5) of the Code may be included as a tax preference item for
purposes of calculating any alternative minimum tax for individuals and
corporations under Section 57 of the Code. It is further acknowledged that such
interest may also be included in calculating the modified adjusted gross income,
defined in Section 86(b) of the Code, of a taxpayer who is a recipient of social
security benefits;

(b)         the alternative minimum taxable income of any corporation shall be
adjusted for “net book income”, as provided under Section 56(c) of the Code, the
calculation of which may include interest on tax-exempt obligations for any
taxable year beginning in 1987, 1988, or 1989, and shall be adjusted for
earnings and profits for taxable years beginning after 1989; and

(c)         the Bonds are not “bank qualified,” accordingly no deduction may be
allowed for interest incurred by financial institutions to carry tax-exempt
obligations acquired after August 7, 1986 under Section 265(b) of the Code.
 
 
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Section 7.03. Filing of Other Documents.   The parties hereto shall execute, at
the request of the Borrower, and the Borrower shall file financing statements,
continuation statements, notices and such other documents necessary to perfect
all security interests created pursuant to the terms of this Agreement, the
other Loan Documents and to preserve and protect the rights of the Purchaser in
the Collateral, under this Agreement and the Note and the granting by the
Authority of certain rights of the Authority pursuant to this Bond Agreement and
the Authority’s Assignment, and the Authority shall have no responsibilities for
such filings whatsoever, other than executing the documents requested by the
Borrower.

Section 7.04. Notice of Events of Default. The Purchaser, the Escrow Agent and
the Authority shall each notify the other parties promptly in writing of any
event of which it has notice which constitutes an Event of Default or which,
with the passage of time, will become an Event of Default.
 
 
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ARTICLE VIII
 
REPRESENTATIONS AND WARRANTIES

The Borrower and Corporate Guarantors (to the extent applicable) each hereby
represents and warrants to the Authority and to the Purchaser that:

Section 8.01. Organization, Powers, etc. The Borrower is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of New Jersey. The Corporate Guarantors are limited liability
companies duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each has the power and authority to own its properties
and assets and to carry on its business as now being conducted (and as now
contemplated by the Borrower) and has the power to perform all the undertakings
of the Loan Documents, to borrow hereunder and to execute and deliver the Loan
Documents.

Section 8.02. Execution of Loan Documents. The execution, delivery and
performance of the Loan Documents and other instruments required by this Bond
Agreement:

(a)         have been duly authorized by all requisite member or corporate
action, as the case may be;

(b)         to the best of its knowledge, do not and will not contravene any
provision of law, governmental rule, regulation or order of any court or other
agency of government applicable thereto;

(c)         do not and will not conflict with or violate any provision of any
charter document, operating agreement or other governing documents;

(d)        do not and will not violate or result in a default under any
provision of any indenture, mortgage, contract or other instrument to which it
is a party or any order, writ, injunction or decree to which it is a party or by
which it or its properties or assets are bound;

(e)         to the best of its knowledge, 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 the Loan Documents and the Permitted Encumbrances.

Section 8.03. Title to Collateral. Each has or will have good and marketable
title to the Collateral and other assets free and clear of any lien or
encumbrance, except for the Permitted Encumbrances. Based upon the title
commitment of First American Title Insurance Company #219746, upon filing the
Mortgage and the financing statements the Authority will have a first lien upon
the Premises. The Borrower and the Corporate Guarantors have all of the
trademarks and licenses necessary for the conduct of their businesses.
 
 
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Section 8.04. Litigation. To its knowledge, there is no action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency now pending against or affecting it or any of its properties or
rights which, if adversely determined, would (i) materially adversely affect the
transactions contemplated hereby, (ii) affect the validity or enforceability of
the Loan Documents, (iii) affect its ability to perform its obligations under
the Loan Documents, (iv) materially impair the value of the Collateral, (v)
materially impair its right to carry on its business substantially as now
conducted (and as now contemplated by it) or (vi) have a material adverse effect
on its financial condition.

Section 8.05. Payment of Taxes. It has filed or caused to be filed all Federal,
State and local tax returns which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns or on any assessment
received by it, to the extent that such taxes have become due.

Section 8.06. No Defaults. To the best of its knowledge, it is not in default in
the performance, observance or fulfillment of any order, arbitrator or
governmental or non-governmental body; and to the best of its knowledge is not
subject to or a party to any order of any court or governmental or
non-governmental body arising out of any action, suit, or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters.

Section 8.07. No Material Adverse Change. There has been no material adverse
change in its financial condition since the date of the financial statements
submitted to the Purchaser in connection with this transaction.

Section 8.08. Obligations of the Borrower and Guarantors. The Loan Documents
have been duly executed and delivered and are legal, valid and binding
obligations of each of the Borrower and the Guarantors and are enforceable
against each in accordance with their respective terms, subject to bankruptcy
laws, creditors’ rights laws and equitable rights and remedies.

Section 8.09. No Action. To the best of its knowledge, the Borrower has not
taken and will not take any action and knows of no action that any other Person
has taken or intends to take, which would cause interest income on the Bonds to
be includable in the gross income of the recipients thereof under the Code
(subject to the limitations set forth in Section 7.02 hereof).

Section 8.10. Design of the Project. Except as set forth in Schedule A hereto,
to its knowledge, the present operation of the Project and the operation as
presently contemplated and as described in the Application does not and will not
conflict with any current building, zoning, health, safety, water, air pollution
or other ordinances, orders, laws or regulations applicable thereto.

Section 8.11. Commencement of Project; Proper Charges. No cost of the Project
for which the Borrower intends to seek reimbursement was incurred prior to the
sixtieth day prior to August 14, 2007. The proceeds of the Bonds are only to be
used to pay Proper Charges.

Section 8.12. Limitation on Expenditures; Principal User. (a) The sum of the
following does not exceed $10,000,000:
 
 
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(i)          the aggregate face amount of any outstanding issues of obligations
(other than the Bonds) exempt from taxation under Section 144(a)(4) of the Code,
the proceeds of which were or will be used primarily with respect to facilities
(A) located within the Project Municipality or “contiguous” or “integrated”
facilities located in any adjacent political jurisdiction and (B) the Principal
User of which is or will be the Borrower or any other Principal User of the
Project or any Related Person; and

(ii)         the aggregate principal amount of the Bonds.

(b)          The sum of the foregoing and the sum of the following does not
exceed $20,000,000:

the aggregate amount of all capital expenditures paid or incurred by the
Borrower or any Related Person (other than those financed out of the Bond
Proceeds or the proceeds of any other bond or bonds, if any, referred to in
paragraph (a)(ii) above) within the meaning of Treas. Reg. §§1.103-10(b)(2)(ii)
and (iii) for the three year period prior to the Closing Date with respect to
facilities located within the Project Municipality.

(c)          As of the date hereof, the Borrower and the Corporate Guarantors
are the only Principal Users of the Project.

Section 8.13. Outstanding Tax-Exempt Bonds.

(a)         Except for the Bonds there is outstanding no issue of tax-exempt
bonds (including industrial development bonds), as defined in Section 103 of the
Code, the proceeds from the sale of which have been or will be used with respect
to facilities, the Test-Period Beneficiary of which is or will be the Borrower
or any Test-Period Beneficiary of the Project and which are or will be wholly or
partially located in the Project Municipality; and

(b)         The aggregate face amount of the Bonds when added to the tax-exempt
facility-related bonds (as defined in Section 144(a)(10)(B) of the Code)
allocated to the Borrower or any other Test Period Beneficiary which are
outstanding at the time of the issuance of the Bonds (not including any bond
which is to be redeemed from the Net Proceeds), does not exceed $40,000,000.

Section 8.14. Project Municipality. The Project is located wholly within the
borders of the Project Municipality and the Premises are not contiguous with the
borders of any portion of the Project Municipality. The operation of the Project
is not integrated with any other facility in any neighboring municipality
operated by any Principal User of the Project. All of the facilities financed by
the Bond Proceeds are located within one state, and neither the Borrower nor any
Related Person is a user of any facility financed by the proceeds of the Bonds
other than the Project.

Section 8.15. No Tenancies. No Principal User of the Project is a tenant in any
facility in the Project Municipality, the landlord of which is a Person other
than a Principal User of the Project.
 
 
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Section 8.16. Substantial Users. No Person (or any Related Person within the
meaning of Section 144(a)(3) of the Code) who was a substantial user of the
Project, within the meaning of Treas. Reg. Sec. 1.103-8(a)(5)(iv), at any time
during the five (5) year period immediately preceding the date hereof, and who
will receive, directly or indirectly, Bond Proceeds of the Bonds in an amount
equal to five per centum (5%) or more of the face amount of the Bonds in payment
for such user’s interest in the Project, will be a Substantial User of the
Project or a Related Person at any time during the five (5) year period
beginning on the date of issuance of the Bonds.

Section 8.17. Placement in Service. The Project was not acquired or placed in
service by the Borrower (determined in accordance with the provisions of Section
103 of the Code and applicable regulations thereunder) more than one (1) year
prior to the date of issuance of the Bonds.

Section 8.18. No Common Plan of Financing. Subsequent to fifteen (15) days prior
to the date hereof, the Borrower or any Related Person (or group of related
persons which includes the Borrower) has not guarantied, arranged, participated
in, assisted with, borrowed the proceeds of, or leased facilities financed by
obligations issued under Section 103 of the Code by any state or local
governmental unit or any constituted authority empowered to issue obligations by
or on behalf of any state or local governmental unit other than the Authority.
During the period commencing on the date of issuance of the Bonds and ending
fifteen (15) days thereafter, there will be no obligations issued under Section
103 which are guarantied by the Borrower or any Related Person (or group of
related persons which includes the Borrower) or which are issued with the
assistance or participation of, or by arrangement with, the Borrower or any
Related Person (or group of related persons which includes the Borrower) without
the written opinion of Bond Counsel to the effect that the issuance of such
obligation will not adversely affect their opinion as to exemption from present
Federal income taxes of interest on the Bonds. Other than the Borrower or any
Related Person (or group of related persons including the Borrower), no person
has (i) guarantied, arranged, participated in, assisted with the issuance of, or
paid any portion of the cost of the issuance of the Bonds, or (ii) provided any
property or any franchise, trademark or trade name (within the meaning of Code
Section 1253) which is to be used in connection with the Project.

Section 8.19. Use of Proceeds. (a) Less than twenty-five per centum (25%) of the
Net Proceeds will be used directly or indirectly to acquire land or an interest
therein.

(b)         No more than twenty-five per centum (25%) of the Net Proceeds will
be used to provide facilities the primary purpose of which is: (i) retail food
and beverage services, (ii) automobile sales or service and (iii) the provision
of recreation or entertainment.

(c)         No portion of the Bond Proceeds will be used to provide any private
or commercial golf course, country club, massage parlor, tennis club, skating
facility (including roller skating, skateboard and ice skating), racquet sports
facility (including any handball or racquetball court), hot tub facility, suntan
facility, racetrack, airplane, skybox (or other private luxury box), any health
club facility, gambling facility or liquor store.
 
 
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(d)         The proceeds will be used to acquire the Premises and to pay costs
of issuance.

Section 8.20. Economic Life. The information contained in the Tax Certificate,
setting forth the respective cost, economic life, ADR midpoint life, if any,
under Rev. Proc. 72-10, 1972-1 C.B. 721, as supplemented and amended from time
to time, and guideline life, if any, under Rev. Proc. 62-21, 1962-2 C.B. 118, as
supplemented and amended from time to time, of each asset constituting the
Project to be financed with the proceeds of the Bonds is true, accurate and
complete.

Section 8.21. Aggregation of Issues for Single Project. The Project does not
share “substantial common facilities”, within the meaning of Section 144(a)(9)
of the Code, with any other facility financed by an outstanding tax-exempt bond.

Section 8.22. Environmental Representation. The provisions of the Environmental
Agreement are incorporated herein by reference as if set forth at length.

Section 8.23. Rehabilitation Requirement. The Borrower covenants and agrees that
(a) it shall incur Rehabilitation Expenditures in an amount equal to or
exceeding fifteen percent (15%) of that portion of the proceeds of the Bonds
used to acquire Existing Property and (b) it shall not use any of the proceeds
of the Bonds to acquire any equipment as to which the Borrower is not the
initial user, all terms being used within the meaning of Code Section 147(d)(2)
and (3).
 
 
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ARTICLE IX

COVENANTS OF THE BORROWER

The Borrower covenants and agrees, so long as this Bond Agreement shall remain
in effect or the Note and Guaranty shall be outstanding, as follows:

Section 9.01. Insurance Required.

(a)         The Borrower agrees to insure the Project and Collateral and other
business assets or cause such to be insured with insurance companies qualified
to do business in the State, financially responsible, and of recognized
standing, in such amounts, in such manner and against such loss, damage and
liability (including liability to third parties), as is customary with companies
in the same or similar business and located in the same or similar areas; and
pay the premiums thereon and shall be in such form and have such provisions as
are generally considered standard provisions for the type of insurance involved
and as required by the Commitment Letter and herein.

(b)         Each insurance policy issued pursuant to this Section 9.01 shall
name both the Borrower and the Purchaser as a loss payee, as their interests may
appear, and the Purchaser as first mortgagee/lender loss payee. In addition, the
public liability insurance shall also name the Authority and the Purchaser as
additional insureds.

(c)         Such insurance coverage shall include:

(i)           general comprehensive liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the Project or
the Project site (such coverage to include provisions waiving subrogation
against the Authority and the Purchaser) in amounts not less than $1,000,000
with respect to bodily injury to any one person, $3,000,000 aggregate with
respect to bodily injury to two or more persons in any one accident and
$1,000,000 aggregate with respect to property damage resulting from any one
occurrence, naming the Authority and the Purchaser, as additional insureds;

(ii)          commercial casualty insurance insuring loss by reason of casualty
of any kind (except only as limited by the standard form of extended coverage
endorsement used in the State) to the Project or the Collateral in a minimum
amount equal to the greater of (x) the outstanding principal amount of the Bonds
and (y) the replacement value thereof, naming the Authority and the Purchaser as
additional insureds;

(iii)         during any period of construction “Special Perils” builders’ all
risk insurance written in “100% builders risk completed value, non-reporting
form”, including coverage therein for “completion and/or premises occupancy”,
such insurance to be in the amounts specified in paragraph (ii) above;
 
 
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(iv)         such other insurance in such amounts and against such insurable
hazards as the Authority or the Purchaser from time to time may reasonably
request.

(d)         At all times during the term of this Agreement, the Borrower shall
comply with the laws of the State relating to workers’ compensation with respect
to the Project.

(e)         At all times during the term of this Agreement, the Borrower shall
keep in effect a policy of flood insurance for any part of the Premises and any
improvements upon the Premises lying or being within a designated flood-plain in
the amount and with the insurer specified in subsection (a) above.

(f)          Each insurance policy obtained in satisfaction of the requirements
of this section:

(i)           shall be by such insurer (or insurers) as shall be financially
responsible, qualified to do business in the State and of recognized standing,
which shall be companies which have an A.M. Best Stability Rating of A or better
and a financial rating of VII or better;

(ii)          shall be in such form and have such provisions as are generally
considered standard provisions for the type of insurance involved;

(iii)         as provided in (g)(v) below, shall prohibit cancellation or
substantial modification, termination or lapse in coverage by the insurer
without at least 30 days prior written notice to the Authority and the
Purchaser;

(iv)         without limiting the generality of the foregoing, policies carried
on the Project and the Project site shall name the Authority and the Purchaser
as additional insureds;

(v)          as provided in (h) below, prior to expiration of any such policy,
the Borrower shall furnish the Authority and the Purchaser with evidence
satisfactory to the Authority and the Purchaser that the policy or certificates
has been renewed or replaced in compliance with this Agreement.

(g)         Each of the policies or binders evidencing the insurance required
above to be obtained shall:

(i)           provide that all insurance proceeds with respect to loss or damage
to the property of the Project or the Collateral be endorsed and made payable to
the Purchaser and shall name the Purchaser as lender loss payee with respect to
business personal property coverage, additional insured as to all liability
coverage and mortgagee under a standard mortgagee clause with respect to
building and plant coverage, which insurance proceeds shall be paid over to the
Purchaser;
 
 
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(ii)          provide that there shall be no recourse against the Authority or
the Purchaser for the payment of premiums or commissions or (if such policies or
binders provide for the payment thereof) additional premiums or assessments;

(iii)         provide that in respect of the respective interests of the
Authority and the Purchaser in such policies, the insurance shall not be
invalidated by any action or inaction of the Borrower or any other person and
shall insure the Authority and the Purchaser regardless of, and any losses shall
be payable notwithstanding, any such action or inaction;

(iv)         provide that such insurance shall be primary insurance without any
right of contribution from any other insurance carried by the Authority or the
Purchaser to the extent that such other insurance provides the Authority or the
Purchaser, as the case may be, with contingent and/or excess liability insurance
with respect to its respective interest as such;

(v)          provide that if the insurers cancel such insurance for any reason
whatsoever, including the insured’s failure to pay any accrued premium, or the
same is allowed to lapse or expire, or there shall be any reduction in amount,
or any material change is made in the coverage, such cancellation, lapse,
expiration, reduction or change shall not be effective as to the Authority or
the Purchaser until at least thirty (30) days after receipt by the Authority and
the Purchaser, respectively, of written notice by such insurers of such
cancellation, lapse, expiration or change;

(vi)         provide a waiver of any right of subrogation of the insurers
thereunder against any person insured under such policy, and a waiver of any
right of the insurers to any set off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any person
insured under such policy; and

(vii)        provide such other terms and provisions as any owner or operator of
facilities similar to the Borrower’s would, in the prudent management of its
properties, require to be provided in policies, binders or interim insurance
contracts with respect to facilities similar to the Project owned or operated by
it.

(h)         Concurrently with the original issuance of the Bonds, the Borrower
shall deliver or cause to be delivered to the Authority and the Purchaser
duplicate copies of insurance policies and/or binders evidencing compliance with
the insurance requirements of this Section. At least thirty (30) days prior to
the expiration of any such policy, the Borrower shall furnish the Authority and
the Purchaser with evidence that such policy has been renewed or replaced or is
no longer required by this Agreement.

(i)          The Borrower shall, at its own cost and expense, make all proofs of
loss and take all other steps necessary or reasonably requested by the Authority
or the Purchaser to collect from insurers for any loss covered by any insurance
required to be obtained by this Section 9.01. The Borrower shall not do any act,
or suffer or permit any act to be done, whereby any insurance required by this
Section 9.01 would or might be suspended or impaired.
 
 
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(j)          The Authority and the Purchaser shall each be supplied with an
annual certificate, within thirty (30) days after the close of the Borrower’s
Fiscal Year, certifying that the Borrower is in compliance with this Section
9.01 and that the insurance policies required to be maintained by the Borrower
under this Section are still in force and effect.

(k)         In the event the Borrower shall fail to maintain the insurance
coverage required by this Agreement, the Authority or the Purchaser may (but
shall be under no obligation to), after ten (10) days written notice to the
Borrower unless cured within such ten (10) days contract, for the required
policies of insurance and pay the premiums on the same and the Borrower agrees
to reimburse the Authority or the Purchaser to the extent of the amounts so
advanced with interest thereon at the maximum rate permitted by law.

(1)         The Authority is not under any obligation to effect or maintain
insurance or to renew any policies of insurance or to inquire as to the
sufficiency of any policies of insurance carried by the Borrower, or to report,
or make or file claims or proof of loss for, any loss or damage insured against
or which may occur, or to keep itself informed or advised as to the payment of
any taxes or assessments, or to require any such payment to be made. The
Authority shall have no responsibility in respect of the sufficiency of the
security provided by this Agreement. The Authority shall not be under any
obligation to see that any duties herein imposed upon any party other than
itself, or any covenants herein contained on the part of any party other than
itself to be performed, shall be done or performed, and the Authority shall not
be under any liability for failure to see that any such duties or covenants are
so done or performed. The immunities and exemptions from liability of the
Authority hereunder shall extend to its directors, members, attorneys, officers,
employees and agents.

Section 9.02. Payment of Taxes, etc. It will promptly pay and discharge or cause
to be promptly paid and discharged all taxes, assessments and governmental
charges or levies imposed upon it or in respect of any of its property and
assets before the same shall become in default, as well as all lawful claims
which, if unpaid, might become a lien or charge upon such property and assets or
any part thereof, except such that are contested in good faith in an appropriate
forum and for which it has set aside adequate reserves.

Section 9.03. Compliance with Code and Arbitrage Regulations. (a) The Borrower
shall at all times do and perform all acts and things necessary or desirable in
order to assure that interest paid on the Bonds shall, for the purposes of
Federal income taxation, be excludable from the gross income of the recipients
thereof and exempt from such taxation, except in the event that such recipient
is a Substantial User or Related Person to a Substantial User. To that end, the
Borrower covenants that it: (i) will not take any action, or fail to take any
action, if any such action or failure to take action would adversely affect the
exclusion from gross income of the interest on the Bonds under Section 103 of
the Code; (ii) will not directly or indirectly cause the Project to exceed the
$10,000,000 bond limitation or the $20,000,000 capital expenditure limitation,
as set forth in Section 144(a) of the Code, for the three years following the
issue date of the Bonds, as such requirement may be amended from time to time,
including any prohibition on transferring equipment into the Project
Municipality; (iii) shall pay the Rebate Amounts set forth in this Section 9.03;
and (iv) shall direct the Escrow Agent to make investments of amounts in the
Escrow Account only at market prices within the meaning of Treasury Regulations
Section 1.148-1.
 
 
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For purposes of this Section, any and all actions of any Principal User of the
Project or any Related Person to any such Principal User shall be deemed to be
actions of the Borrower. In addition, any and all actions to be undertaken by
the Borrower or by any other Person as to which the Authority or the Purchaser
must, pursuant to the terms hereof, consent or approve in advance, shall be
deemed to be the actions of the Borrower or such other Person (and not the
actions of the Authority or the Purchaser).

(b)         The Borrower shall not permit at any time or times any of the Gross
Proceeds to be used, directly or indirectly, to acquire any Investment Property
(within the meaning of Section 148(b)(2) of the Code) the acquisition of which
would cause the Bonds to be an “arbitrage bond” for the purposes of Section 148
of the Code. The Borrower shall utilize the Bond Proceeds so as to satisfy the
reasonable expectations of the Borrower set forth in the arbitrage certificate
of the Borrower delivered as part of the Record of Proceedings.

(c)         The Borrower shall use the Bond Proceeds to acquire, construct and
equip the Project in the manner and as specifically set forth in the Tax
Certificate furnished to Bond Counsel and the Authority. The Borrower shall not
expend the Bond Proceeds on assets other than those listed in the Tax
Certificate without the express written consent of Bond Counsel.

(d)         Six months after closing or eighteen months after the closing, as
the case may be, the Borrower will provide a written certification to the
Authority and the Escrow Agent indicating whether the Borrower complied with the
six-month exception to the arbitrage rebate requirement set forth in Section
148(f)(4) of the Code or the eighteen-month exception to the arbitrage rebate
requirement set forth in Section 1.148-7(d) of the Treasury Regulations
promulgated under the Code.

(e)         The Borrower will retain a person or firm having expertise to
calculate the amount of rebate, if any, due to the United States pursuant to
Section 148(f) of the Code, as set forth in paragraph (f) below (the “Rebate
Expert”), on or no later than 30 days before the initial rebate Computation Date
(as defined below) and on each rebate Computation Date thereafter, (A) to
compute the Rebate Amount with respect to the Bonds for the period ending on
such rebate Computation Date, (B) to deliver an opinion to the Authority and
Escrow Agent 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 Escrow Agent that all of the Gross Proceeds of the Bonds (within the meaning
of Section 148(f) of the Code), other than Gross Proceeds of the 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. The Computation Date shall include (i) maturity of the Bonds,
(ii) if the Bonds are redeemed prior to maturity, the date on which the Bonds
are redeemed, (iii) on the first day of each fifth anniversary date of the Bond
Year, and (iv) any other date that may be required by the Code.
 
 
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(f)          The Borrower shall direct the Escrow Agent in writing to pay the
Rebate Amount to the United States on behalf of the Authority in accordance with
paragraphs (h), (i) and (j) below. The Rebate Amount as of any Computation Date
is defined as the excess of the Future Value of all receipts on Nonpurpose
Investments (“Nonpurpose Receipts”) over the Future Value of all payments on
Nonpurpose Investments (“Nonpurpose Payments”). To the extent amounts received
from Nonpurpose Investments are reinvested, these amounts may be netted against
each other and not taken into account in the computation of the Rebate Amount.
Nonpurpose Receipts and Nonpurpose Payments shall be determined as described
below.

 
(i)
Nonpurpose Payments. Nonpurpose Payments include actual payments (amounts of
Gross Proceeds actually or constructively paid to acquire a Nonpurpose
Investment including Qualified Administrative Costs); “allocation” payments (for
a Nonpurpose Investment that is allocated to the Bonds after already having been
acquired by the Borrower (e.g., sinking fund proceeds), an amount equal to the
Value of the Investment on the allocation date); Computation Date payments (for
a Nonpurpose Investment allocated to the Bonds at the end of the preceding
Computation Period, the Value of the Investment at the beginning of the
Computation Period); Yield Reduction Payments, if any; and the Computation Date
credit equal to $1,000.

 
(ii)
Nonpurpose Receipts. Nonpurpose Receipts include actual receipts (amounts
actually or constructively received with respect to a Nonpurpose Investment,
such as earnings and return of principal, reduced by Qualified Administrative
Costs); “deallocation” receipts (for a Nonpurpose Investment that ceases to be
allocated to the Bonds or subject to rebate, the Value of the Investment on the
“deallocation” date); Computation Date receipts (the Value of any Nonpurpose
Investment held at the end of any Computation Period); and rebate receipts (any
recovery of an overpayment of rebate).

Investments of amounts held in a Bona Fide Debt Service Fund for the Bonds will
be excepted from the rebate requirement but only if the gross earnings on such
fund for such Bond Year do not exceed $100,000.

(g) For each investment of Gross Proceeds in a Non-Purpose Investment, the
Borrower shall direct the Escrow Agent to record, without limitation, the
following information: purchase date, purchase price, fair market value, face
amount, stated interest rate, any accrued interest due on its purchase date,
frequency of interest payments, disposition date, disposition price, any accrued
interest due on the disposition date and Yield to maturity. The Yield to
maturity for an investment presently means that discount rate, based on a
compounding frequency the same as the Bond’s (or such other compounding
permitted by the Code), which when used to determine the present value, on the
purchase date of such investment or the date on which the investment becomes a
Non-Purpose Investment, whichever is later, of all payments of principal and
interest on such investment gives an amount equal to the fair market value of
such investment including accrued interest due on such date. The Escrow Agent
shall have no responsibility to calculate “yield” or to make any calculation
with respect to the rebate requirements under the Code.
 
 
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(h)         In the event the amount in the Escrow Account is insufficient to
fund the Rebate Account, the Borrower shall within ten (10) days of receipt of
the report furnished by the Rebate Expert pursuant to paragraph (e) above, pay
or cause to be paid to the Escrow Agent for deposit into the Rebate Account the
difference between the amount required to fund the rebatable arbitrage. If the
Borrower fails to make, or causes to be made, any payment required pursuant to
this paragraph (h) when due, the Authority shall have the right, but shall not
be required, to make such payment to the Escrow Agent on behalf of the Borrower.
Any amount advanced by the Authority pursuant to this paragraph (h) shall be
added to the moneys owing by the Borrower under this Agreement and shall be
payable on demand with interest at the Default Rate (as defined in the Note).

On each Computation Date, if such Rebate Amount payable exceeds the amount then
on deposit in the Rebate Account, the Borrower shall promptly pay to the Escrow
Agent, the amount necessary to make up such deficiency and direct the Escrow
Agent to pay the same to the United States within sixty (60) days of the
Computation Date. The Borrower shall, in a timely fashion, give all written
notices and directions to the Escrow Agent as are called for hereunder for the
payment of the Rebate Amount. Any sums remaining in the Rebate Account following
such payments shall be returned to the Borrower.

(i)          The rebate shall be paid in installments which shall be made at
least once every five (5) years from the date of issuance of the Bonds. The
first such installment shall be due to the United States on behalf of the
Authority not later than thirty (30) days after the end of the fifth (5th) year
following the date of issuance of the Bonds and shall be in an amount which
ensures the Rebatable Arbitrage required under the Code with respect to the
Bonds, as of the current Rebate Computation Date, will have been paid to the
United States. Each subsequent payment shall be made not later than five (5)
years after the date the preceding payment was due. Within sixty (60) days after
the retirement of the Bonds, the Borrower shall direct the Escrow Agent in
writing to pay to the United States on behalf of the Authority all of the
Rebatable Arbitrage required under the Code with respect to the Bonds not
theretofore paid.

(j)          Each payment of the Rebate Amount to be paid to the United States
shall be filed with the Internal Revenue Service, Ogden Submission Processing
Center, Ogden, Utah 84201, or such other address that may be specified by the
Internal Revenue Service. Each payment shall be accompanied by Form 8038-T (or
such other form required by the Internal Revenue Service furnished by the
Borrower or the Authority) and a statement identifying the Authority, the date
of the issue, the CUSIP number for the Bonds with the longest maturity and a
copy of the applicable Form 8038.

 
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(k)         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 Escrow Agent the information necessary to determine the
Rebate Amount required to be paid to the United States pursuant to Section
148(f) of the Code. Additionally, the Authority may, with reasonable cause, (i)
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 (ii) 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 Rebate
Expert retained by the Authority, and to pay to the Escrow Agent any additional
amounts for deposit in the Rebate Account required as the result of any such
review or determination.

(1)         Except as may be permitted pursuant to Section 148(c) of the Code
(relating to certain temporary periods for investment), at no time during the
term of the Bonds shall the amount invested by the Borrower in Non-Purpose
Obligations with a Yield higher than the Yield on the Bonds exceed 10% of the
proceeds of the Bonds. The aggregate amount invested in Non-Purpose Obligations
shall be promptly and appropriately reduced as the outstanding principal of the
Bonds is reduced.

(m)        Notwithstanding any provision of this Section 9.03 to the contrary,
the Borrower shall be liable, and shall indemnify and hold the Authority and the
Escrow Agent 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 Escrow Agent shall be
held liable, or in any way responsible, and the Borrower shall indemnify and
hold harmless the Escrow Agent and Authority against any liability, for any
mistake or error in the filing of the payment or the determination of the Rebate
Amount due to the United States or for any consequences resulting from any such
mistake or error. The provisions of this paragraph shall survive termination of
this Agreement. In the event of any conflict between the provisions of this
Section 9.03 and the provisions of Code, the provisions of the Code shall
control.

(n)         The Authority, the Purchaser and the Borrower acknowledge that the
provisions of this Section 9.03 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 Section 9.03 shall be permitted
or necessary to assure continued compliance with Section 148(f) of the Code and
the regulations promulgated thereunder, then with written notice to the
Purchaser, the Authority and the Borrower shall be empowered to amend this
Section 9.03 and the Authority may require, by written notice to the Borrower
and the Purchaser, the Borrower to amend this Section 9.03 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 Purchaser 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 (i) such
amendment is required to maintain the exclusion from gross income under Section
103 of the Code of interest paid and payable on the Bonds or (ii) 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 Bonds.
 
 
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(o)        The Borrower shall give immediate telephonic notice, promptly
confirmed in writing, to the Authority and the Purchaser of a Determination of
Taxability whether the Borrower is on notice of such Determination of Taxability
by its own filing of any statement, tax schedule, return or document with the
Internal Revenue Service which discloses that a Determination of Taxability
shall have occurred, by its receipt of any oral or written advice from the
Internal Revenue Service that a Determination of Taxability shall have occurred,
or otherwise.

Section 9.04. Compliance with Applicable Laws. The Borrower agrees to comply, in
all material respects with all applicable Federal, State, county and municipal
laws, ordinances, rules and regulations now in force or that may be enacted
hereafter pertaining to the operation, conduct and maintenance of the Project
and its existence and business including, without limitation, all federal, state
and local laws relating to benefit plans, environmental, safety, or health
matters, and hazardous or liquid waste or chemicals or other liquids (including
use, sale, transport and disposal thereof).

Section 9.05. Environmental Covenant. The Borrower shall not permit any action
to occur which would be in direct violation of any and all applicable Federal,
State, county and municipal laws, ordinances, rules and regulations now in force
or hereinafter enacted, including the regulations of the Authority and the
regulations of the Department of Environmental Protection.

The Borrower shall give immediate written notice to the Authority and the
Purchaser of any notices of investigation or any similar communication from the
Department of Environmental Protection or other governmental authorities
regarding potential violations of I.S.R.A. and/or the Spill Compensation and
Control Act.

Within five (5) Business Days of receipt, the Borrower shall give the Authority
and the Purchaser notice or copies if written of all claims, complaints, orders,
citations or notices, whether formal or informal, written or oral, from any
governmental body or private person or entity, relating to air emissions, water
discharge, noise emission, solid or liquid waste disposal, hazardous waste or
materials, or any other environmental, health or safety matter, if alleged to be
a violation of applicable law. Such notices shall include, among other
information, the name of the party who filed the claim, the potential amount of
the claim, and the nature of the claim.

Section 9.06. Financial Statements. (a) The Borrower and the Corporate
Guarantors shall furnish the Purchaser (and the Authority upon its request) with
“audited” financial statements, including a balance sheet, income statement and
statement of cash flows and any other financial statements as requested by the
Purchaser, within one hundred fifty (150) days after the end of each fiscal year
during the term of the Loan. All such statements will be prepared by a certified
public accountant reasonably acceptable to the Purchaser and in accordance with
generally accepted accounting principles, consistently applied.
 
 
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(b)         The Borrower and the Corporate Guarantors shall furnish the
Purchaser (and the Authority upon its request) with quarterly financial
statements, including a balance sheet, income statement and statement of cash
flows and any other financial statements as requested by the Purchaser, within
forty-five (45) days after the end of each quarterly period during the term of
the Loan. All such statements will be prepared by management of the Borrower and
the Corporate Guarantors and in accordance with generally accepted accounting
principles, consistently applied.

The Borrower and the Guarantors shall each furnish their filed tax returns
within 15 days of filing same, or, in the event, any such tax return is on
extension, then a copy of such extension within 120 days of the end of the
fiscal year or calendar year, as the case may be, and a copy of the extended
filed tax return within 15 days of filing same.

At the time of the delivery of any of the financial or other statements provided
for herein, the Borrower and the Corporate Guarantors shall each furnish to the
Purchaser (and the Authority upon its request) a certificate of their respective
chief financial officers stating that it has no knowledge that an Event of
Default, or an event of which, with notice or lapse of time, or both, would
constitute an Event of Default, has occurred and is continuing, or if such an
Event of Default has occurred, a statement as to the nature thereof and the
action which the Borrower propose to take with respect thereto.

Section 9.07. Mergers, etc. The Borrower will not permit a change in the persons
who control the Borrower, merge into or consolidate with or into, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) any of its assets (whether now owned or hereafter acquired) to
any Person without the prior express written consent of the Authority and the
Purchaser.

Without limiting the effect of the first paragraph of Section 9.07, if at any
time during the period the Bonds are outstanding, the Borrower, any Principal
User of the Project or any Related Person thereto proposes (i) to merge or
consolidate with any person, firm or corporation owning or occupying facilities
located wholly or partly within the Project Municipality, or (ii) to gain
control of any such person, firm or corporation, or (iii) to acquire a greater
than 50% ownership interest of any such person, firm or corporation (whether by
ownership of stock or otherwise), or (iv) to assume or guarantee liabilities
incurred in connection with any facility located wholly or partly within the
Project Municipality owned or occupied by any such person, firm or corporation,
or (v) 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 (vi) to enter into any transaction with any such person, firm or corporation
the result of which shall be to cause such person, firm or corporation to become
a Principal User of the Project or a Related Person to the Borrower or any such
Principal User, the Borrower shall, prior to the taking of any of the foregoing
proposed actions, deliver to the Authority and the Purchaser an opinion of
nationally recognized bond counsel to the effect that the proposed action will
not violate the provisions of Sections 9.10 and 9.11 hereof nor in any way cause
the interest on the Bonds to become includable in the gross income of the
Holders of the Bonds for Federal income tax purposes except in the event such
holder is a Substantial User or a Related Person thereto. In addition to the
foregoing, the Borrower will comply with the provisions of Section 10.04 of this
Agreement.
 
 
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Section 9.08. Assignment of Bond Agreement. The Borrower may not assign or
transfer the whole or any part of this Bond Agreement without the prior express
written consent of the Authority and the Purchaser. Any assignment of this Bond
Agreement by the Borrower without the prior express written consent of the
Authority and the Purchaser shall be void.

Section 9.09. Indemnification. (a) The Borrower agrees to and does hereby
indemnify and hold harmless the Authority, the Purchaser or the Escrow Agent any
person who “controls” the Authority, the Purchaser or the Escrow Agent (within
the meaning of Section 15 of the Securities Act of 1933, as amended), and any
member, officer, director, official, agent, employee, and attorney of the
Authority or the State, the Purchaser or the Escrow Agent (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, relating to, arising out of, resulting from, or in any
way connected with (a) the condition, use, possession, conduct, management,
planning, design, acquisition, construction, installation, financing or sale of
the Project or any part thereof or the payment of rebate to the federal
government; (b) any untrue statement of a material fact contained in information
provided by the Borrower with respect to the transactions contemplated hereby;
(c) any omission of a material fact necessary to be stated therein in order to
make such statement not misleading or incomplete; or (d) the acceptance or
administration by the Authority of its duties under this Agreement. 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 except where the Borrower is the claimant the Borrower shall assume
the defense thereof, including the employment of counsel satisfactory to the
Indemnified Party, the payment of all costs and expenses and the right to
negotiate and consent to settlement. Any one or more of the Indemnified Parties
shall have the right to employ separate counsel at the Borrower’s expense in any
such action and to participate in the defense thereof if, in the opinion of the
Indemnified Party, a conflict of interest could arise out of the representation
of the parties by the same counsel. 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 Bond.

(b)         The Borrower agrees to and does hereby indemnify and hold harmless
the Indemnified Parties against any and all losses, claims, damages or
liabilities (including all costs, expenses, and reasonable counsel fees incurred
in investigating or defending such claim) suffered by any of the Indemnified
Parties and caused by relating to, arising out of, resulting from, or in any way
connected to an examination, investigation or audit of the Bonds by the Internal
Revenue Service (“IRS”). In the event of such examination, investigation or
audit, the Indemnified Parties shall have the right to employ counsel at the
Borrower’s expense. In such event, the Borrower shall assume the primary role in
responding to and negotiating with the IRS, but shall inform the Indemnified
Parties of the status of the investigation. In the event Borrower fails to
respond adequately and promptly to the IRS, the Authority shall have the right
to assume the primary role in responding to and negotiating with the IRS and
shall have the right to enter into a closing agreement, for which Borrower shall
be liable.
 
 
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(c)         The Borrower further agrees to indemnify, protect, defend and hold
harmless the Indemnified Parties against any and all losses, claims, damages,
liabilities or expenses whatsoever, including reasonable counsel fees, caused
by, or which arise out of or relate to, any untrue statement or misleading
statement or alleged untrue statement or alleged misleading statement, of a
material fact contained or incorporated in any material supplied by the Borrower
in connection with the placement of the Bonds (the “Disclosure Materials”), or
which arise out of or relate to, any omission or alleged omission from such
Disclosure Materials of any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading This indemnity
agreement is in addition to any other liability which the Borrower may otherwise
have.

(d)         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 Bond.

Section 9.10. Capital Expenditures.

(a)         The Authority has elected that the provisions of Section 144(a)(4)
of the Code shall be applicable with respect to the Bonds. In order to
effectuate and to continue such election in full force and effect so long as the
Bonds shall remain outstanding, the Borrower agrees to take such actions as may
from time to time be required by applicable law or regulation in connection
therewith.

(b)         During the period commencing on the issue date of the Bonds and
continuing for three (3) years thereafter, the Borrower or any person shall not
pay or incur, with respect to any facility located wholly or partly within the
Project Municipality and a Principal User of which is or will be the Borrower,
any Principal User of the Project or any Related Person thereto, any capital
expenditure which would cause the sum of all amounts listed in Section 8.12 to
exceed $20 million during the six (6) year period beginning three (3) years
prior to the issue date of the Bonds and ending three (3) years after such date.

(c)         The Borrower shall, during the period commencing on the issue date
of the Bonds and continuing for three (3) years thereafter, maintain or cause to
be maintained separate books and records with respect to the Project and any and
all other facilities located wholly or partly within the Project Municipality of
which the Borrower, any Principal User of the Project or any Related Person
thereto is a Principal User, which books and records shall be sufficient to
indicate the nature of any and all capital expenditures with respect to the
Project and such other facilities.
 
 
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(d)        The Borrower shall cause any Principal User of the Project and any
Related Person thereto to comply with all of the provisions of this Section as
to its own operations or space at the Project site or in the Project
Municipality.

Section 9.11. Aggregate Limit. The Borrower shall not allow the aggregate face
amount of any outstanding issue or issues of tax-exempt facility-related bonds
within the meaning of Section 144(a)(10)(B) of the Code (including the face
amount of the Bonds) allocable to any Test-Period Beneficiary (not including as
outstanding any issue which is to be redeemed from the Net Proceeds of any such
issue) to exceed $40,000,000.

Section 9.12. Brokerage Fee. The Authority and the Purchaser shall not be liable
to the Borrower for any brokerage fee, finders fee, or loan servicing fee and
the Borrower shall jointly and severally hold the Authority and the Purchaser
harmless from any such fees or claims.

Section 9.13. Cost Recovery. To the extent that any property is financed by Bond
Proceeds, the cost recovery deduction allowed for such property shall be
determined by using the alternative depreciation system determined in accordance
with Section 168(g) of the Code.

Section 9.14. Publicity. The Purchaser, in its sole discretion, shall have the
right to announce and publicize the source of financing made pursuant to this
Bond Agreement, as it deems appropriate, by means and media selected by the
Purchaser. Such publication shall include all pertinent information relating to
such financing, including without limitation, the term, purpose, pricing, loan
amount, name of borrowing entity and location of property.

Section 9.15. Operating Accounts. The Borrower and the Corporate Guarantors
shall each maintain its operating accounts with the Purchaser for the life of
the Loan. Payments hereunder shall be made by direct charge to the demand
deposit account maintained by the Borrower with the Purchaser. Borrower hereby
consents to Purchaser making such charge.

Section 9.16. No Secondary Financing. Except for Permitted Encumbrances, there
shall be no secondary financing encumbering the Premises nor shall there be any
encumbrances or security interests conveyed in any fixture or fixtures, nor in
any personal property intended to be incorporated in the Premises whether
affixed to the realty or otherwise.

Section 9.17. Financial Covenants. Progenitor Cell Therapy, L.L.C. shall
maintain the following ratios:

(a)           a minimum Debt Service Coverage Ratio of 1.35x. The covenant is to
be tested semi-annually, beginning December 31, 2007. Debt Service Coverage
Ratio to be defined as Net Income plus Depreciation and Amortization plus
Interest Expense Less distributions Divided by the Current Portion of Long Term
Debt, including Current Portion of Leases, plus Interest Expense.

(b)           a total debt to tangible net worth ratio not to exceed 2x, to be
tested annually beginning December 31, 2007. Debt shall be defined as total
liabilities less any debt specifically subordinated to the Lender. Tangible net
worth shall be defined as Net Worth plus any debt specifically subordinated to
the Lender, less tangible assets as defined by GAAP less assets due from or
notes receivable due from officers, directors, shareholders, employees or
affiliates.
 
 
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For purposes of calculating the Financial Covenants, non-refundable deferred
revenue will be subtracted from Total Liabilities, and it will be included in
Gross Revenue. When subsequently recognized, amounts of previously included
deferred revenue will be subtracted from Gross Revenue.
 
Section 9.18. Appraisals. In the event that during the term of the Loan or any
extension thereof, the Purchaser shall deem it necessary to obtain a current
appraisal of the Premises, the Purchaser shall engage the services of any
appraiser acceptable to it. The Borrower agrees to pay the fee charged by such
appraiser in providing the current appraisal if the Borrower is in default under
this Agreement or if the appraisal is sought under any regulatory or
governmental requirement. In any case, the Borrower agrees to permit entrance to
the Premises and access to information regarding the Premises in order to
facilitate the appraisal.

 
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ARTICLE X

 
BORROWER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
TO THE AUTHORITY
 
The Borrower hereby represents, warrants and covenants to the Authority that:
 
Section 10.01. Inducement. The availability of financial assistance from the
Authority as provided for herein has been an important inducement to the
Borrower to undertake the Project and to locate the Project in the State.
 
Section 10.02. No Untrue Statements. The Borrower covenants that the
representations, statements and warranties of the Borrower set forth in the
Application, this Agreement, or any other Loan Document (1) are true, correct
and complete, (2) do not contain any untrue statement of a material fact, and
(3) do not omit to state a material fact necessary to make the statements
contained herein or therein not misleading or incomplete. The Borrower
understands that all such statements, representations and warranties have been
relied upon as an inducement by the Authority to issue the Bond.
 
Section 10.03. Project Users. (a)     Prior to leasing, subleasing or consenting
to the subleasing or assignment of any lease of all or any part of the Project,
during the period commencing on the date hereof and terminating three years
after the Borrower has completed the acquisition, renovation and construction of
all or substantially all of the Project, and
 
(b)       upon the request of the Authority from time to time thereafter, 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 Bond from
the gross income of the Purchaser thereof for purposes of federal income
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.
 
Section 10.04. Maintain Existence, Merge, Sell, Transfer. The Borrower shall
maintain its existence as a legal entity and shall not sell, assign, transfer or
otherwise dispose of the Project or substantially all of its assets without the
written consent of the Authority and the Purchaser; provided however that the
Borrower may merge with or into or consolidate with another entity, and the
Project or this Agreement may be transferred pursuant to such merger or
consolidation without violating this section provided (a) the Borrower causes
the proposed surviving, resulting or transferee company to furnish the Authority
with a Change of Ownership Information Form; (b) the net worth of the surviving,
resulting or transferee company following the merger, consolidation or transfer
is equal to or greater than the net worth of the Borrower immediately preceding
the merger, consolidation or transfer; (c) any litigation or investigations in
which the surviving, resulting or transferee company or its principals, officers
and directors are involved, and any court, administrative or other orders to
which the surviving, resulting or transferee company or its officers and
directors are subject, relate to matters arising in the ordinary course of
business; (d) the merger, consolidation or transfer shall not impair the
excludability of interest paid on the Bond from the gross income of the
Purchaser thereof for purposes of federal income taxation or cause a reissuance
pursuant to an opinion of a nationally recognized bond counsel; (e) the
surviving, resulting or transferee company assumes in writing the obligations of
the Borrower under this Agreement and the Note, and (f) after the merger,
consolidation or transfer, the Project shall be operated as an authorized
project under the Act. The foregoing shall not abrogate the requirement that the
Borrower obtain the consent of the Purchaser.

 
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Section 10.05. Relocate Project. During the term of this Loan, the Borrower
shall not relocate the Project or any part thereof out of the State. During the
term of this Loan, the Borrower shall not relocate the project within the State
without the prior written consent of an authorized Authority Representative and
an opinion of Bond Counsel that the relocation will not affect the tax-exempt
status of the Bond.
 
Section 10.06. Operate Project. The Borrower shall operate or cause the Project
to be operated as an authorized project for a purpose and use as provided for
under the Act until the expiration or earlier termination of this Agreement.
 
Section 10.07. Annual Certification. On each anniversary hereof, the Borrower
shall furnish to the Authority the following:
 
(a)       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 Loan Documents;
 
(b)       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
 
(c)       a report from every entity that leases or occupies space at the
Project indicating the number of persons the entity employs at the Project.
 
Section 10.08. Affirmative Action and Prevailing Wage Regulations. The Borrower
shall comply with the Authority’s Affirmative Action and Prevailing Wage Rate
Regulations and to that end to the extent applicable:
 
(a)        (i)       insert in all construction bid specifications for any
construction contract the following provisions:
 
Construction of this project is subject to the Affirmative Action Regulations of
the New Jersey Economic Development Authority which establishes hiring goals for
minority and female workers. Any contractor or subcontractor must agree to make
every effort to meet the established goals and to submit certified reports and
records required by the Authority. Copies of the Affirmation Action Regulations
may be obtained by writing to:  Office of Affirmative Action, New Jersey
Economic Development Authority, Gateway One, Suite 2403, Newark, New Jersey
07102;

 
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Submission of a bid signifies that the bidder knows the requirements of the
Affirmative Action Regulations and signifies the bidder’s intention to comply.
Construction of this project is subject to N.J.A.C. 19:30-3.1 et seq. Workers
employed in construction of this project must be paid at a rate not less than
the prevailing wage rate established by the New Jersey Commissioner of Labor;
 
(ii)       Include in all construction contracts those provisions which are set
forth in the Addendum to Construction Contract annexed hereto as Exhibit A;
 
(iii)      Obtain from all contractors and submit to the Authority a
contractor’s certificate in the form annexed hereto as Exhibit B within 3
business days of the execution of any construction contract;
 
(iv)      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;
 
(v)       Submit to the Authority on the Completion Date, a Completion
Certificate in the form annexed hereto as Exhibit C; and
 
(vi)      Furnish to the Authority all other reports and certificates required
under the Authority’s Affirmative Action and Prevailing Wage Rate Regulations.
 
(b)       (i)       The Borrower shall, in every Construction Contract to which
it is a party, require the Contractor to pay workers engaged in the performance
of such Construction Contract a wage rate not less than the Prevailing Wage
Rate;
 
(ii)       The Borrower shall further require, in every Construction Contract to
which it is a party, that the Contractor execute the Contractor’s Certificate
and Agreement, submit certified copies of payroll records to the Authority as
required by the Authority, and execute and file the Contractor’s Completion
Certificate.
 
Section 10.09. Preservation of Project. (a)    The Borrower will at all times
preserve and protect the Project, or cause the Project to be preserves and
protected, in good repair, working order and safe condition, and from time to
time will make, or will cause to be made, all needed and proper repairs,
renewals, replacements, betterments and improvements thereto including those
required after a casualty loss. The Borrower shall pay, or cause to be paid, 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.

 
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(b)       The Borrower will not use as a basis for contesting any assessment or
levy of any tax the financing under this Bond 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 Facility is exempt from taxation
by reason of the financing under this Bond 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.
 
Section 10.10. Access to the Project and Inspection. The Authority and their
duly authorized agents shall have the right, at all reasonable times upon the
furnishing of notice that is reasonable under the circumstances to the Borrower,
to enter upon the Project site and to examine and inspect the Project and the
Project Site.
 
Section 10.11. Additional Information. Until payment of the Bonds shall have
occurred the Borrower shall promptly, from time to time, deliver to the
Authority, the Purchaser and the Escrow Agent such information and materials
relating to the Project and the Borrower as the Authority, the Purchaser or the
Escrow Agent may reasonably request. An authorized representative shall also be
permitted, at all reasonable times, to examine the books and records of the
Borrower with respect to the Project and the obligations of the Borrower
hereunder, but such representative shall not be entitled to access to trade
secrets or other proprietary information (other than financial information of
the Borrower.)
 
Section 10.12. Project Sign. During the period from the effective date of this
Bond Agreement and until thirty (30) days after the Completion Date, the
Borrower shall cause to be posted and maintained at the site of the Project, a
sign to be provided to the Borrower by the Authority indicating that financial
assistance for the Project has been provided by the Authority. The maintenance
of the sign shall be at the expense of the Borrower.

 
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ARTICLE XI
 
DEFAULTS AND REMEDIES
 
Section 11.01. Event of Default. Any one or more of the following events shall
constitute an Event of Default hereunder:
 
(a)       A breach by the Obligated Parties of any term, covenant, condition,
obligation or agreement under any Loan Document (after taking into account any
applicable notice and/or grace period), including the failure to make any
payment of principal or interest when due.
 
(b)       If any representation or warranty made by or on behalf of any
Obligated Party made herein, in the Application 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.
 
(c)       The Obligated Parties transfer title to or possession of any interest
in all or any part of the Premises, to any party, without the prior express
written consent of the Authority and Purchaser pursuant to the terms of the Loan
Documents;
 
(d)       The Obligated Parties enter into any additional financing with regard
to, or permits the filing of any additional lien upon the Premises without the
prior written consent of the Purchaser;
 
(e)       The filing of a petition seeking relief, or the granting of relief,
under the Bankruptcy Reform Act of 1978 or any similar federal or state statute
by or against any of the Obligated Parties, the making of a general assignment
for the benefit of creditors by any of the Obligated Parties or any action by
any of the Obligated Parties for the purpose of effecting the foregoing;
 
(f)        The filing, entry or issuance of any judgment, execution,
garnishment, attachment, distraint or lien against any of the Obligated Parties
or their property;
 
(g)       Seizure or foreclosure of any of the properties or assets of the
Obligated Parties pursuant to process of law or by respect of legal self-help,
involving monetary damages.
 
(h)       Any substantial change in the nature or character of the business or
the voluntary permanent closing of the business or ceasing of operations of any
of the Obligated Parties;
 
(i)        Any change in the management or ownership of any of the Obligated
Parties without the consent of both the Authority and the Purchaser pursuant to
the terms of this Agreement;

 
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(j)         The dissolution, merger, consolidation or reorganization of any of
the Obligated Parties, except as otherwise permitted by this Agreement;
 
(k)       Default by any of the Obligated Parties in any of the terms or
conditions of any agreement covering the payment of borrowed money from the
Purchaser, if such a default would permit the Purchaser to accelerate the debt
irrespective of whether the default is waived or not waived by the Purchaser;
 
(1)       A material deterioration in the financial condition of any of the
Obligated Parties or the occurrence of any event, which in the sole opinion of
the Purchaser, impairs the financial responsibility of any of the Obligated
Parties; and/or
 
(m)      When any of the Obligated Parties becomes insolvent or is not paying
its debts as they become due.
 
Section 11.02. Purchaser’s Remedies. Upon the occurrence of an Event of Default
and at any time thereafter during the continuance of such Event of Default, the
Purchaser may take one or more of the following remedial steps:
 
(a)       by notice to the Borrower and the Authority, declare the entire
principal amount of the Note to be due and payable forthwith, whereupon the Note
shall become forthwith due and payable, both as to principal and interest,
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding;
 
(b)       take any action at law or in equity to collect the payments then due
and thereafter to become due under the Note or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under any
Loan Document;
 
(c)       take possession of the Borrower’s interest in the Collateral without
terminating this Bond Agreement, and pursue remedies of a creditor under the
Uniform Commercial Code as adopted in the State and assign, sell or lease, or
otherwise dispose of the Borrower’s interest in the Collateral for the account
of the Borrower, and the Borrower shall then be liable for the amounts due under
this Bond Agreement and the Note less amounts received pursuant to such
assignment or contract of sale or lease or other disposition of the Borrower’s
interest in the Collateral and the amount of such difference shall then be
immediately due and payable. The Borrower hereby agrees that, in the event the
Purchaser does take possession of the Collateral as provided herein, the
obligation of the Borrower to pay such amounts due or to become due under this
Bond Agreement and the Note shall survive such repossession;
 
(d)       without further notice or demand or legal process, enter upon any
premises of the Borrower and take possession of the Collateral all records and
items relating to the Collateral and, at the Purchaser’s request, the Borrower
will assemble the Collateral and such records and items relating to the
Collateral and deliver them to the Purchaser; and

 
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(e)       with or without judicial process, sell, lease or otherwise dispose of
any or all of the Collateral at public or private sale or proceedings, by one or
more contracts, in one or more parcels, at the same or different times and
places, with or without having the Collateral at the place of sale or other
disposition, to such persons or entities, for cash or credit or for future
delivery and upon such other terms, as the Purchaser may in its discretion deem
best in each such matter. The purchaser of any of the Collateral at any such
sale shall hold the same free of any equity of redemption of other right or
claim of the Borrower, all of which, together with all rights, of stay,
exemption or appraisal under any statute or other law now or hereafter in
effect, the Borrower hereby unconditionally waives to the fullest extent
permitted by law. If any of the Collateral is sold on credit or for future
delivery, the Purchaser shall not be liable for the failure of the purchaser to
pay for same and, in the event of such failure, the Purchaser may resell such
Collateral.
 
(f)        The Borrower further agrees that notice of the time after which any
private sale or other intended disposition or action relating to any of the
Collateral is to be made or taken, shall be deemed commercially reasonable
notice thereof, and shall satisfy the requirements of any applicable statute or
other law, if such notice is delivered or mailed (by ordinary first class mail,
postage prepaid) not less than ten (10) business days prior to the date of the
sale, disposition or other action to which the notice related. The Purchaser
shall not be obligated to make any sale or other disposition or take other
action pursuant to such notice and may, without other notice or publication,
adjourn or postpone any public or private sale or other disposition or action by
announcement at the time and place fixed therefor, and such sale, disposition or
action may be held or accomplished at any time or place to which the same may be
so adjourned or postponed.
 
(g)       The Purchaser may purchase any or all of the Collateral at any public
sale and may purchase at private sale any of the Collateral that is of a type
customarily sold in a recognized market or the subject of widely distributed
price quotations or as may be further permitted by law. The Purchaser may make
payment of the purchase price for any Collateral by credit against the then
outstanding amount of the Obligations.
 
(h)       The Purchaser may at its discretion retain any or all of the
Collateral and apply the same in satisfaction of part or all of the Obligations.
 
Upon the institution of any such action hereunder by the Purchaser, the
Purchaser shall be entitled to the appointment of a receiver for the Collateral
without proof of the depreciation of the value of same.
 
If the Purchaser shall have proceeded to enforce its rights under this Bond
Agreement and such proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Purchaser, then the
parties hereto shall be restored respectively to their several positions and
rights hereunder, and all obligations, rights, remedies and powers of the
parties hereto shall continue as though no such proceedings had taken place.
 
Without limiting the generality of the foregoing, upon the happening of any
Event of Default, all of the Borrower’s legal or equitable right, title and
interest in the Premises and the Borrower’s right to possession thereof may be
terminated by an action for foreclosure or repossession in accordance with the
statutes of the State.

 
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For so long as the Purchaser is the holder of the Bonds, the Purchaser will have
the right to immediately and without notice or other acts to set off against any
of the Borrower’s or Guarantors’ obligations to the Purchaser any sum owed by
the Purchaser or any of its affiliates in any capacity to the Borrower or
Guarantors whether due or not, or any property of the Borrower’s or Guarantors’
in the possession of the Purchaser or any of its affiliates, and the Purchaser
will be deemed to have exercised such right of set off and to have made a charge
against any such sum or property immediately upon the occurrence of any Event of
Default, even though the actual book entries may be made at some time subsequent
thereto.
 
Section 11.03. Authority’s Remedies. (a)  Upon the occurrence of an Event of
Default as set forth in Section 11.01 or a Determination of Taxability and at
any time thereafter during the continuance of such Event of Default or
determination of taxability, as the case may be, the Authority may call and
cancel the Bonds by giving written notice in accordance with the provisions of
Section 12.01. The Borrower, the Guarantors, the Purchaser and any assigns
hereby expressly agree that the Bonds may be called and cancelled by the
Authority and upon the date specified in the notice from the Authority (the
“Cancellation Date”), which shall be at least thirty (30) and no more than sixty
(60) days after the giving of such notice, the Bonds will be called and
cancelled. The Purchaser will deliver the Bonds to the Authority for
cancellation upon the Cancellation Date, but even if such delivery does not
occur, the Bonds will be considered cancelled and of no further force or effect
on the Cancellation Date.
 
(b)       If the Borrower commits a breach or threatens to commit a breach, of
any of the provisions of this Agreement or any other Loan Document, the
Authority shall have the right and remedy, without posting bond or other
security to have the provisions of this Agreement or any other Loan Document
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Authority and that money damages will not provide an
adequate remedy therefor.
 
Section 11.04. Effect of Cancellation of the Bonds. (i) Upon the Cancellation
Date, the Note will evidence the indebtedness from the Borrower to the Purchaser
and all of its terms, including the interest rate at the Taxable Rate and
payment terms therein specified, will control the obligations of the Borrower to
the Purchaser.
 
(ii)       If this occurs, the monthly payment shall be modified to reflect the
difference between the interest stated in the Bond and Note and the increased
interest rate called for in this Section. This condition may be reflected in a
separate agreement to be prepared by counsel for the Purchaser. The Authority
will no longer be a party to the transaction and shall have no further rights
with respect thereto (except its right to obtain outstanding fees and its right
of indemnification, which shall survive) and shall be released of any and all
debts, liabilities and obligations to any party under this Agreement, the Bond
or any other Loan Document. The Authority and the Purchaser shall execute and
deliver to each other such other documents and agreements as the other may
reasonably request in order to evidence the cancellation of the Bond and the
withdrawal of the Authority from the transaction.

 
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(iii)      Upon cancellation of the Bond pursuant to the provisions hereof, the
Authority hereby agrees that the Purchaser (except as stated above) shall
automatically be vested with all of the Authority’s right, title and interest in
and to the Loan Documents. Any amounts remaining in the Escrow Account on the
Cancellation Date after deduction of amounts which may be due the Authority
pursuant to the terms of this Agreement are assigned to the Purchaser. The
Authority hereby authorizes the holder of any such funds to pay to the Purchaser
any such amounts remaining in the Escrow Account on the Cancellation Date after
payments which may be due the Authority.
 
(iv)      In the event that there is a dispute among any of the parties
concerning the right of the Authority to cancel the Bond pursuant to the
provisions of this Section, the Borrower shall nevertheless comply with the
terms of the Note as hereinabove amended and make all payments required
thereunder from and after the Cancellation Date directly to the Bond Purchaser.
If a court of competent jurisdiction determines finally that the Authority’s
attempted cancellation of the Bond violated the terms of this Agreement, the
Bond will be reinstated in accordance with the final order of the court, but
until such final order is made, the Borrower will continue to comply with the
terms of the Note as hereinabove amended. Any overpayment by the Borrower will
be returned to it by the Bond Purchaser upon reinstatement of the Bond.
 
Section 11.05. No Remedy Exclusive. No remedy herein conferred or reserved to
the Authority or the Purchaser 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 Bond Agreement
or now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority or the Purchaser to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give notice, other than such notice as may be required in this Article.
 
Section 11.06. Waiver of Event of Default. Notwithstanding anything in this
Agreement or in any of the other Loan Documents to the contrary, neither the
Escrow Agent nor the Purchaser shall have the right to waive an Event of Default
under any of the Loan Documents which arises out of a violation of a Reserved
Right without the prior written consent of the Authority, which the Authority
shall give in its sole and complete discretion. Notwithstanding anything herein
or in any other Loan Document to the contrary, nothing herein shall affect the
Authority’s unconditional right to enforce its Reserved Rights.
 
Section 11.07. Agreement to Pay Attorneys’ Fees and Expenses. In the event the
Borrower should default under any of the provisions of this Bond Agreement or
other Loan Documents and either the Authority or the Purchaser shall require and
employ attorneys or incur other expenses for the collection of payments due or
to become due or for the enforcement or performance or observance of any
obligation or agreement on the part of the Borrower or enforcement of the Bonds
under any Loan Document, the Borrower agrees that it will, on demand therefor,
pay to the Authority or the Purchaser, as the case may be, the reasonable fees
of such attorneys and such other expenses so incurred by the Authority or the
Purchaser.

 
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Section 11.08. Immunity of the Authority. In the exercise of the powers of the
Authority and its members, officers, employees or agents under this Agreement,
and including without limitation the application of moneys, the investment of
funds, the assignment or other disposition of the Collateral upon an Event of
Default in the event of default by the Borrower, neither the Authority nor its
members, officers, employees or agents shall be accountable to the Purchaser,
the Escrow Agent or the Borrower for any action taken or omitted by it or them
in good faith and believed by it or them to be authorized or within the
discretion or rights or powers conferred. The Authority and its members,
officers, employees and agents shall be protected in its or their acting upon
any paper or document believed by it or them to be genuine, and it and they may
conclusively rely upon the advice of counsel and may (but need not) require
further evidence of any fact or matter before taking any action.
 
Section 11.09. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in any Loan Document should be breached by any party and
thereafter such breach should be waived by any party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
 
 
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ARTICLE XII
 
MISCELLANEOUS

Section 12.01. Notice. All notices, consents, approvals and other communications
given hereunder shall be in writing and delivered by personal hand delivery,
sent by nationally recognized overnight carrier or mailed by certified mail,
return receipt requested, addressed as follows and deemed to be delivered on the
day of hand delivery to the individual set forth below, the business day after
pick up by nationally recognized overnight courier or on the third business day
following the date of deposit in the mail:
 
Authority:
 
New Jersey Economic Development Authority
   
36 West State Street
   
PO Box 990
   
Trenton, New Jersey 08625
   
Attn:   Director of Program Services
     
Borrower:
 
PCT Allendale, LLC
   
21 Main Street
   
Hackensack, New Jersey 07601
   
Attn: Jerry Miano, Controller
     
With a copy to:
 
Epstein, Becker & Green, PC
   
250 Park Avenue
   
New York, New York 10177
   
Attn: Philip Gassel, Esq.
     
Purchaser:
 
Commerce Bank/North
   
1100 Lake Street
   
Ramsey, New Jersey 07446
   
Attn: Charles M. Ponti, Regional Vice President
     
With a copy to:
 
Harwood Lloyd, LLC
   
130 Main Street
   
Hackensack, New Jersey 07601
   
Attn: Michael Brady, Esq.
     
Escrow Agent:
 
Commerce Bank/North
   
1100 Lake Street
   
Ramsey, New Jersey 07446
 
  
Attn: Charles M. Ponti, Regional Vice President

 
The addresses set forth hereinabove may be changed pursuant to notice given in
accordance with this Section 12.01.

 
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Section 12.02. Concerning Successors and Assigns. All covenants, agreements,
representations and warranties made herein, in the other Loan Documents and in
the certificates delivered pursuant hereto and thereto shall survive the making
of the Loan herein contemplated and the execution and delivery of the Note and
shall continue in full force and effect so long as the Obligations are
outstanding and unpaid. Whenever in this Bond Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrower which are contained in this Bond Agreement shall bind its
successors and assigns and inure to the benefit of the successors and assigns of
the Authority and the Purchaser.
 
Section 12.03. Costs and Expenses. All expenses in connection with the
preparation, execution, delivery, recording and filing of this Bond Agreement,
the Note, the Mortgage and other collateral documents and in connection with the
preparation, issuance and delivery of the Bonds, the Authority’s fees, the
reasonable fees and expenses of Bond Counsel, the fees and expenses of the
Purchaser and the reasonable fees and expenses of Purchaser’s counsel shall be
paid directly by the Borrower. The Borrower shall also pay throughout the term
of the Bonds the Authority’s annual fees and expenses and the Purchaser’s annual
and special fees and expenses under this Agreement, the Note and the Mortgage,
including, but not limited to, reasonable attorney’s fees and all costs of
issuing the Bonds, and any costs and expenses in connection with any approval,
consent or waiver under, or modification of, any such document.
 
Section 12.04. New Jersey Law Governs. This Bond Agreement and the other Loan
Documents shall be construed in accordance with and governed by the laws of the
State (without regard to the State’s conflicts of laws principles).
 
Section 12.05. Modification in Writing. The waiver of any provision of this Bond
Agreement or any other Loan Document, or consent to any departure by the
Borrower therefrom shall, in no event, be effective unless the same shall be in
writing and signed by the Authority, the Purchaser and the Borrower. Any such
waiver shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand upon the Borrower in any case shall entitle
it to any other further notice or demand in the same circumstances.
 
Section 12.06. Failure to Exercise Rights. Neither any failure nor any delay on
the part of the Authority, the Purchaser or the Borrower in exercising any
right, power or privilege hereunder or under any other Loan Document shall
operate as a waiver hereof or thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise of any other right, power or
privilege.
 
Section 12.07. Assignment of Loan Documents. The Borrower acknowledges that the
Loan Documents shall be assigned by the Authority to the Purchaser as security
for the Bonds pursuant to the terms of the Authority’s Assignment. The Authority
retains the Reserved Rights and the right, jointly and severally with the
Purchaser, to specifically enforce the provisions contained in the Loan
Documents.

 
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The Borrower assents to such assignment and hereby agrees that, as to the
Purchaser, its obligation to make payments under the Loan Documents shall be
absolute, and shall not be subject to any defense or any right of set-off,
counterclaim or recoupment arising out of any breach by the Authority of any
duty or obligation to the Borrower, whether hereunder or otherwise, or out of
indebtedness or liability at any time owing to the Borrower by the Authority.
 
Section 12.08. Further Assurances and Corrective Instruments. The Authority, the
Purchaser and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
or for carrying out the intention of or facilitating the performance of this
Bond Agreement.
 
Section 12.09. Authority May Rely on Certificates. The Authority shall be
protected and shall incur no liability in acting or proceeding, or in not acting
or not proceeding, in good faith and in accordance with the terms of this Bond
Agreement, upon any resolution, order, notice request, consent, waiver,
certificate, statement, affidavit, requisition, bond or other paper or document
which it shall in good faith believe to be genuine and to have been adopted or
signed by the proper board or person or to have been prepared and furnished
pursuant to any of the provisions of this Bond Agreement, or upon the written
opinion of any attorney, engineer, accountant or other expert believed by it to
be qualified in relation to the subject matter, and the Authority shall not be
under any duty to make any investigation or inquiry as to any statements
contained or matters referred to in any such instrument.
 
Section 12.10. Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Bond Agreement.
 
Section 12.11. Severability. In the event any provision of this Bond Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render any other provision hereof
unenforceable.
 
Section 12.12. Counterparts. This Bond Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
 
Section 12.13. Effective Date and Term. This Bond Agreement shall become
effective upon its execution and delivery by the parties hereto, and all
representations and warranties shall be deemed to have been made as of such date
of execution and delivery and shall remain in full force and effect from the
date hereof and, subject to the provisions hereof, shall expire on such date as
the Bonds and the interest thereon, the Note and the interest thereon and all
other expenses, penalties, fees, additions to tax or sums to which the Authority
and the Purchaser are entitled, have been fully paid and retired.
 
Section 12.14. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE ALL RIGHTS THEY
MAY HAVE TO A JURY TRIAL IN ANY AND ALL DISPUTES RELATING TO, OR ARISING UNDER,
THIS BOND AGREEMENT AND/OR THE NOTE.

 
67

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IN WITNESS WHEREOF, the parties hereto have executed and attested this Bond
Agreement, as of the date first written above.

ATTEST:
 
NEW JERSEY ECONOMIC DEVELOPMENT
   
AUTHORITY
       
/s/ John J. Rosenfeld
 
By: 
/s/ Teri Dunlop
John J. Rosenfeld
   
Teri Dunlop
Assistant Secretary
   
Director of Closing Services

 
68

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WITNESS:
 
PCT ALLENDALE, LLC
        /s/ Daniel R. Lewis  
By: 
/s/ George S. Goldberger
Daniel R. Lewis, Esq.
   
George S. Goldberger
     
Managing Member

 
The undersigned Guarantors hereby acknowledge all of the terms, conditions,
provisions of the foregoing Bond Agreement, including without limitation the
Events of Default, and acknowledges its representations in Article VIII thereof
and covenants in Article IX thereof, and hereby agree to comply with the same.
 
WITNESS AS TO BOTH:
 
PROGENITOR CELL THERAPY, L.L.C.
       
/s/ Daniel R. Lewis
 
By:
/s/ George S. Goldberger
Daniel R. Lewis, Esq.
   
George S. Goldberger
     
Chief Financial Officer
           
DOMANICELL, LLC
           
By:
/s/ George S. Goldberger
     
George S. Goldberger
     
Chief Financial Officer

 
69

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ATTEST:
 
COMMERCE BANK/NORTH
       
/s/ Rebecca Larmore
 
By: 
/s/ Charles M. Ponti
Rebecca Larmore
   
Charles M. Ponti
Assistant Cashier
   
Regional Vice President

 
70

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The duties of the Escrow Agent as set forth in the foregoing Bond Agreement
dated as of October 1, 2007 are hereby accepted this 31st day of October, 2007.

 
COMMERCE BANK/NORTH, as Escrow Agent
       
By: 
/s/ Charles M. Ponti
   
Charles M. Ponti
   
Regional Vice President

 
71

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EXHIBIT A
 
ADDENDUM TO CONSTRUCTION CONTRACT
 
Every construction contract must require that:
 
a)       Ten percent of each disbursement for the construction of the project
will be retained by the Project Owner/Applicant, Agent or Trustee until the
Authority’s Affirmative Action Officer gives written notice that the amount may
be released.
 
b)       The Contractor, where applicable, will not discriminate against any
employee or applicant for employment because of age, race, creed, color,
national origin, ancestry, marital status, affectional or sexual orientation or
sex. Except with respect to affectional or sexual orientation, the contractor
will take affirmative action to ensure that such applicants are recruited and
employed, and that employees are treated during employment, without regard to
their age, race, creed, color, national origin, ancestry, marital status,
affectional or sexual orientation or sex. Such action shall include, but not be
limited to the following: employment, upgrading, demotion, or transfer;
recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for training, including
apprenticeship. The contractor agrees to post in conspicuous places, available
to employees and applicants for employment, notices to be provided by the AA
Officer setting forth provisions of this nondiscrimination clause;
 
c)       The contractor, where applicable will, in all solicitations or
advertisements for employees placed by or on behalf of the contractor, state
that all qualified applicants will receive consideration for employment without
regard to age, race, creed, color, national origin, ancestry, marital status,
affectional or sexual orientation or sex;
 
d)       The contractor or subcontractor, where applicable, will send to each
labor union or representative or workers with which it has a collective
bargaining agreement or other contract or understanding, a notice, to be
provided by the agency contracting officer, advising the labor union or workers’
representative of the contractor’s commitments under this act and shall post
copies of the notice in conspicuous places available to employees and applicants
for employment;
 
e)       The contractor or subcontractor agrees to make good faith efforts to
employ minority and women workers consistent with applicable county employment
goals established in accordance with N.J.A.C. 17:27-7.3.
 
f)        The contractor awarded a construction contract by the Authority or the
Project Owner/Applicant must submit an Initial Project Workforce Report, EDA
Form AA201, within three (3) business days of signing.
 
g)       The Contractor must submit Weekly Certified Payrolls to the Authority
on a weekly basis.

 
 

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h)       The Contractor must submit a Monthly Project Workforce Report, EDA Form
AA202, within seven (7) business days of the end of each month for which the
project is underway.
 
i)        The contractor or subcontractor agrees to inform in writing its
appropriate recruitment agencies including, but not limited to, employment
agencies, placement bureaus, colleges, universities, labor unions, that it does
not discriminate on the basis of age, creed, color, national origin, ancestry,
marital status, affectional or sexual orientation or sex, and that it will
discontinue the use of any recruitment agency which engages in direct or
indirect discriminatory practices.
 
j)        The contractor or subcontractor agrees to revise any of its testing
procedures, if necessary, to assure that all personnel testing conforms with the
principles of job-related testing, as established by the statutes and court
decisions of the State of New Jersey and as established by applicable Federal
law and applicable Federal court decisions.
 
k)       The Contractor must submit an Affirmative Action Certificate to the
Authority as required by the application for financial assistance.
 
1)       The Addendum to Construction Contract, which is provided by the
Authority, with its application for financial assistance must be part of all
construction contracts and must be signed by the Contractor.
 
m)      The Contractor shall comply with any applicable rules promulgated by the
Treasurer pursuant to N.J.S.A. 10:5-31 et.seq., N.J.A.C. 17: 27 and P.L.1975,
c.127 as amended and supplemented from time to time.
 
n)       The Contractor shall comply with any regulations promulgated by the New
Jersey Department of Labor pursuant to P.L. 1963, c. 150 as amended and
supplemented from time to time requiring the payment of prevailing wages.
 
o)       The Contractor shall ascertain from the New Jersey Department of Labor
the prevailing wage rate in the locality in which the Project is located for
each craft or trade needed to complete the Project.

 
 

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EXHIBIT B
 
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
 
AFFIRMATIVE ACTION CERTIFICATE

 

 
NJEDA PROJECT NUMBER
 
 
PROJECT OWNER/APPLICANT NAME
   
PROJECT LOCATION (include Street, City and County)
   
 

 
NOTE:
Upon completion, this certificate must be mailed to: Affirmative Action Officer,
New Jersey Economic Development Authority, Gateway One, Suite 2403, Newark, New
Jersey 07102. If there are any questions, contact the Affirmative Action Officer
at 973-648-4130.

 
CERTIFICATE SUBMITTED BY (Check One)
¨
General Contractor
 
¨
Engineer
¨
Subcontractor
 
¨
Architect
¨
Construction Manager
 
¨
Professional Planner

 
I/We, the undersigned engaged in the construction of the above named project
certify that:

 
1.
The full name and business address of the undersigned is:

NAME
 

ADDRESS
PO BOX
   

CITY
COUNTY
STATE
ZIP CODE

TELEPHONE
FAX
E-MAIL ADDRESS
Area Code (     )
Area Code (     )
 

AFFIRMATIVE ACTION CONTACT PERSON w/your company (NOT NJEDA)
 

 
Exh. B - 1

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Affirmative Action Certificate
Page 2 of 3

 
2.
Has the aforementioned party been denied a business-related license or had it
suspended or revoked by any administrative, governmental or regulatory agency?

 
¨           Yes                       ¨           No
 
3.
Is the aforementioned debarred, suspended or disqualified from contracting with
any federal, state or municipal agency?

 
¨           Yes                       ¨           No
 
4.
I/We are fully familiar with the provisions of the Prevailing Wage Regulations
of the New Jersey Economic Development Authority, N.J.A.C. 19:30-4.1, and the
applicable prevailing wage rates established by the New Jersey Commissioner of
Labor, and the sanctions for failure to pay the prevailing wage provided in
N.J.S.A. 34:11-56.35 - 34:11-56.40.

 
¨           Yes                       ¨           No
 
5.
I/We have received a copy of the Affirmative Action Regulations of the New
Jersey Economic Development Authority, revised August 8, 1990. I/We have agreed
as part of the construction contract to comply with the provisions of the
Affirmative Action Regulations, to meet the minority employment goals, and to
submit to the Authority weekly payroll reports showing the name, race, sex,
craft or trade, gender, Social Security Number and all deductions made from
wages earned. I/We will also provide the Monthly Project Manning Report within
seven (7) days of the end of each month.

 
¨           Yes                      ¨            No
 
6.
I/We have agreed as part of the contract to pay to workers employed in the
construction of the project wages at a rate not less than the prevailing wage
rate established by the Commissioner of Labor for the Locality in which the
project is located.

 
¨           Yes                      ¨            No
 
7.
I/We require each subcontractor as part of the contract to agree to pay to
workers employed in the construction of the project at a rate not less than the
prevailing wage rate as determined by the Commissioner of Labor and to comply
with the Authority’s Affirmative Action Regulations.

 
¨           Yes                      ¨            No
 
8.
I/We are aware that I/we will be required to provide copies of weekly payroll
records and minority hiring reports for all workers employed in the construction
of the project including workers employed by subcontractors. Also, the Monthly
Project Manning Reports will be submitted within seven (7) days of the end of
each month.

 
¨           Yes                      ¨            No
 
9.
I/We require each of my/our subcontractors and lower-tier subcontractors to
complete and execute a Subcontractor’s Certificate before entering into any
contracts with the subcontractor.

 
¨           Yes                      ¨            No

 
Exh. B - 2

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Affirmative Action Certificate
Page 3 of 3

 
10.
I/We agree in consideration of any amount paid by the Project/Owner under the
construction contract and in consideration of the approval of the Affirmative
Action Officer of any construction advance, that the Authority in its own name
or in the name of the Project/Owner may take action, in law or in equity, to
enforce the provisions of the construction contract regarding compliance with
the Affirmative Action Regulations.

 
¨           Yes                      ¨            No
 
11.
I/We will provide to the Authority, or its designated representative, complete
access to all payroll records and other records necessary to purposes of
determining compliance with the Authority’s Affirmative Action Regulations.

 
¨           Yes                     ¨            No
 
12.
I/We will keep accurate records identifying the name, address, Social Security
Number, race, sex, craft or trade, number of hours worked in each craft or
trade, hourly wage rate, gross earnings paid and all deductions made from wages
earned to each worker employed by me/us in connection with the performance of
the Construction Contract and will preserve such records for two years from the
date of completion of the project.

 
¨           Yes                      ¨            No
 
13.          The approximate date for the start of construction is/was:
 
MONTH                                                DAY
                      YEAR                                    
 
14.
“This Contract is subject to the requirement of the Affirmative Action
Regulations N.J.A.C. 19:30-3.1 of the New Jersey Economic Development Authority
revised August 8, 1990. The Subcontractor agrees to make every effort to meet
the applicable employment goals and to comply with all applicable provisions of
the Affirmative Action Regulation N.J.A.C. 19:30-3.1, as amended and
supplemented from time to time, including the submission of the employment
reports to the Authority. This contract is subject to N.J.A.C. 19:30-4.1 et.
seq. The construction of the work shall be paid at a rate not less than the
prevailing wage rate established by the New Jersey Commissioner of Labor
pursuant to N.J.S.A. 34:11-56:30. The Subcontractor shall keep accurate records
showing the name, race, sex, craft or trade, and actual hourly rate of wages
paid to each worker employed in connection with construction of the work and to
preserve such records for two (2) years from completion of the Work.”

 

 
SIGNATURE
 
NAME (Please Print)
 
TITLE
 
DATE

 
(Rev. 2/98)
 
 
Exh. B - 3

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EXHIBIT C
 
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
 
COMPLETION CERTIFICATE

 
NJEDA PROJECT NUMBER
   

PROJECT OWNER/APPLICANT NAME
 

PROJECT LOCATION (include Street, City and County)
    

 
Completion Certificate to be completed by Subcontractor, Construction Manager,
General Contractor AND
Project Owner/Applicant and forwarded to:
NJ Economic Development Authority
 
ATTN: Affirmative Action
 
Gateway One - Suite 2403
 
Newark, NJ 07102.

 
I/We the undersigned ¨ Subcontractor ¨ Construction Manager ¨ General
Contractor, certify to the New Jersey Economic Development Authority and the
Project Owner/Applicant as follows:
 
1. 
Construction of the above project is substantially complete.

2.
All workers employed in construction of the Project have been paid at a rate not
less than the Prevailing Wage rate. In making this certification I have relied
on payroll records submitted by subcontractors and lower-tier contractors.

3.
We have met the minority availability required percentage goals established by
the Authority’s Affirmative Action Regulations (N.J.A.C. 19:30-3.1 et seq.). We
have submitted all reports and certificates required by the Authority

 
DATE
           
Signature of Authorized Representative for Subcontractor
                     
Print Name & Title
                     
Print OR Type Company Name of Subcontractor
                     
Street Address OR PO Box of Subcontractor
                     
City, State and Zip Code of Subcontractor
       
DATE
           
Signature of Authorized Representative for (check one)
     
¨ Construction Manager   ¨ General Contractor
                     
Print Name & Title
                     
Print or Type Company Name of (check one)
     
¨ Construction Manager   o General Contractor
                     
Street Address or PO Box of (check one)
     
¨ Construction Manager   o General Contractor
                     
City, State and Zip Code of (check one)
     
¨ Construction Manager   o General Contractor

 
 
Exh. C - 1

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Completion Certificate
Page 2

 
I/We, the undersigned authorized representative of the Project Owner/Applicant,
certify as follows:
 

 
1. 
I/We have reviewed the attached Completion Certificate of the Contractor.

 
2.
I/We have no knowledge or information which would cause me/us to believe that
any facts, information or representations made herein are false or misleading.

 
DATE
           
Signature of Authorized Representative for Project Owner/Applicant
                     
Print Name & Title
                     
Print OR Type Project Owner/Applicant Name
                     
Street Address OR PO Box of Project Owner/Applicant
                     
City, State and Zip Code of Project Owner/Applicant

DO NOT WRITE BELOW THIS LINE - FOR NJEDA USE ONLY

DATE INFO RECEIVED
REQUEST OUTSTANDING
RELEASE AUTHORIZED
Certificate
CPRs
Certificate
CPRs
By
Date
                       

Please Note:
Outstanding information requested on                                            
has not been received

Special Considerations:
 

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Exh. C - 2

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EXHIBIT D
 
TO:
Commerce Bank/North

 
1100 Lake Street

 
Ramsey, New Jersey 07446

 
REQUISITION NO.     

 
The undersigned, an Authorized Representative of PCT Allendale, LLC (the
“Borrower”), pursuant to the Bond Agreement by and among the Borrower, the New
Jersey Economic Development Authority (the “Authority”) and Commerce Bank/North
(“the Purchaser”), dated as of October 1, 2007 (the “Bond Agreement”) makes the
following requisition for payment from the Escrow Account established pursuant
to the Bond Agreement entered into with regard to the PCT Allendale, LLC
Project.
 
Payment to: 
Amount:        $                              
Reason for Payment:   See Schedule A attached hereto.
 
Such amount is based on an obligation properly incurred pursuant to the
provisions of the Bond Agreement, is a Proper Charge against said Escrow Account
is unpaid or unreimbursed from the Escrow Account and has not been the basis of
any previous withdrawal. The amount requested, to the extent it represents work
performed or supervised by officers or employees of the Borrower, does not
exceed the actual cost to the Borrower of any cost or expense incurred by reason
of work performed or supervised by officers or employees of the Borrower or any
of its affiliates. No Event of Default has occurred and is continuing under any
provision of the Bond Agreement.   Of the foregoing amount $          
represents payments to contractors, from which a holdback equal to $          
(10%) has already been deducted.

 
Such amount will be used for the purposes detailed in Schedule A attached
hereto.

 
All proceeds of all prior Requisitions have been expended solely for the
purposes for which they were requisitioned, and no proceeds of the current or
any prior Requisition have been or will be returned to the Borrower as a rebate,
refund or otherwise.

 
Each condition precedent to the making of this Requisition under the Bond
Agreement has been satisfied.

 
All required licenses, approvals and permits covering or required for the
development of the Project have been issued and are in force, and there are no
actions pending or threatened to revoke, rescind, alter or declare invalid any
laws, ordinances, regulations, permits, variances, certificates or agreements
for or relating to the Project.
 
 
Exh. D - 1

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Neither the Borrower nor any guarantor of the Loan is a party to any lawsuit.

 
There have been no adverse changes in the financial condition of the Borrower or
any guarantor of the Loan.

 
The Borrower has attached hereto a paid receipt for any taxes which were due
since the date of the last Requisition.

 
I further certify that no written notice of any lien, right to lien, mechanic
lien, notices of intention, contracts, stop notices, liens or claims, attachment
upon or claim, affecting the right to receive payment of, any of the monies
payable under this requisition has been received, or am I aware of any thereof
of the same, or if any notice of any such lien, attachment or claim has been
received, such lien, attachment or claim has been released or discharged or will
be released or discharged upon payment of this requisition.

 
IN WITNESS WHEREOF, I have hereunto set my hand this         day of           ,
       

 
PCT ALLENDALE, LLC
       
By:
     
Authorized Representative

Approved:
 
COMMERCE BANK/NORTH, as Purchaser
       
By:
     
Authorized Representative
 

 
 
Exh. D - 2

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SCHEDULE A TO REQUISITION NO.         
 
Closing Cost:
 
Acquisition Cost (attach invoices):
 
Construction Cost:
 
Contractor:
 
Type of Work:
 
Type of Equipment:
 
Manufacturer:
 
Model #:
 
Serial #:
 
Date of Receipt:
 
 
Exh. D - 3

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SCHEDULE A

 
Exceptions to Section 8.10
 
NONE.
 
 
Sch. A-1

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SCHEDULE B
 
Metes and Bounds Description

All that certain Lot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the Borough of
Allendale, County of Bergen, State of New Jersey:
 
Tract I
 
Being Known and designated as Unit A in Four Pearl Court Condominium, a
condominium, together with an undivided 25.3% interest in the Common elements
appurtenant thereto, in accordance with and subject to the terms, conditions,
easements, covenants, restrictions, limitations and other provisions as set
forth in the Master Deed for Four Pearl Court Condominium, about to be recorded
in the Office of the Bergen County Clerk/Register, as same may now or hereafter
be lawfully amended.
 
Tract II

 
Being Known and designated as Unit No. B in Four Pearl Court Condominium, a
condominium, together with an undivided 24.4% interest in the Common elements
appurtenant thereto, in accordance with and subject to the terms, conditions,
easements, covenants, restrictions, limitations and other provisions as set
forth in the Master Deed for Four Pearl Court Condominium, about to be recorded
in the Office of the Bergen County Clerk/Register, as same may now or hereafter
be lawfully amended.
 
Tract III
 
Being Known and designated as Unit C in Four Pearl Court Condominium, a
condominium, together with an undivided 23.4% interest in the Common elements
appurtenant thereto, in accordance with and subject to the terms, conditions,
easements, covenants, restrictions, limitations and other provisions as set
forth in the Master Deed for Four Pearl Court Condominium, about to be recorded
in the Office of the Bergen County Clerk/Register, as same may now or hereafter
be lawfully amended.
 
NOTE FOR INFORMATION ONLY: Being a portion of Lot 4.05, Block 601, Tax Map of
the Borough of Allendale, County of Bergen.
 
 
Sch. B-1

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