Exhibit 10.5
 
MORTGAGE, LOAN AND SECURITY AGREEMENT
 
Among
 
MASSACHUSETTS DEVELOPMENT FINANCE AGENCY
 
And
 
RANOR, INC.
 
And
 
SOVEREIGN BANK, as Bondowner and Disbursing Agent

 
Dated as of December 1, 2010

And providing for the Issue of
 
$4,250,000
Massachusetts Development Finance Agency
Revenue Bonds
Ranor Issue, Series 2010A
 
And
 
$1,950,000
Massachusetts Development Finance Agency
Revenue Bonds
Ranor Issue, Series 2010B

 
 

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TABLE OF CONTENTS
 
ARTICLE 1 INTRODUCTION AND DEFINITIONS
1
Section 101. Description of the Agreement and the Parties.
1
Section 102. Definitions.
1
ARTICLE 2 THE CONVEYANCES; GRANTING OF SECURITY INTERESTS
6
Section 201. Granting of Mortgage, Security Interests.
6
Section 202. The Agency’s Assignment and Pledge of Revenues.
8
Section 203. Defeasance.
8
ARTICLE 3 THE BORROWING
9
Section 301. The Bonds.
9
Section 302. Application of Bond Proceeds.
25
Section 303. Debt Service Fund.
25
Section 304. [Reserved.]
25
Section 305. [Reserved.]
25
Section 306. Rebate.
26
Section 307. [Reserved.]
27
Section 308. Application of Moneys.
27
Section 309. Loan of Proceeds; Payments by the Borrower.
27
Section 310. Unconditional Obligation.
28
Section 311. Redemption of the Bonds.
28
Section 312. Investments.
29
Section 313. Paying Agent.
31
Section 314. Unclaimed Moneys.
31
Section 315. Tender of Bonds.
32
ARTICLE 4 THE PROJECT AND THE MORTGAGED PROPERTY
32
Section 401. Project Fund.
32
Section 402. Borrower’s Obligations to Undertake and Complete Project.
35
Section 403. Use of Project and Mortgaged Property.
36
Section 404. Repair and Current Expenses.
37
Section 405. Insurance.
37
Section 406. Damage to or Destruction or Taking of the Mortgaged Property.
38
Section 407. Additions and Alterations.
39
Section 408. Right of Access to the Mortgaged Property.
39
ARTICLE 5 [RESERVED]
39
ARTICLE 6 DEFAULT AND REMEDIES.
40
Section 601. Default by the Borrower.
40
Section 602. Remedies for Events of Default.
41
Section 603. Court Proceedings.
42
Section 604. Revenues after Default.
43
Section 605. Bondowner May Perform Obligations.
43
Section 606. Remedies Cumulative.
43
ARTICLE 7 THE DISBURSING AGENT.
44
Section 701. Corporate Organization, Authorization and Capacity.
44
Section 702. Rights and Duties of the Disbursing Agent.
44
Section 703. Expenses of the Disbursing Agent.
45
Section 704. Resignation or Removal of the Disbursing Agent.
45
Section 705. Successor Disbursing Agent.
45
ARTICLE 8 THE AGENCY
46
Section 801. Corporate Organization, Authorization and Power.
46
Section 802. Covenants as to Payment; Faith and Credit of Commonwealth Not
Pledged.
46
Section 803. Rights and Duties of the Agency.
47
ARTICLE 9 THE BONDOWNER
48
Section 901. Action by Bondowner.
48
Section 902. Proceedings by the Bondowner.
48
Section 903. Expenses of the Bondowner.
49
ARTICLE 10 THE BORROWER
49
Section 1001. Corporate Organization, Authorization, and Powers
49
Section 1002. Tax Status.
49
Section 1003. Securities Laws.
51
Section 1004. Maintenance of Corporate Existence.
51
Section 1005. Books and Accounts.
51
Section 1006. Notification of Event of Taxability.
51
Section 1007. Indemnification by Borrower.
51
ARTICLE 11 MISCELLANEOUS
52
Section 1101. Amendment.
52
Section 1102. Successor and Assigns.
52
Section 1103. Notices.
52
Section 1104. Agreement Not for the Benefit of Other Parties.
52
Section 1105. Severability.
53
Section 1106. Counterparts.
53
Section 1107. Captions.
53
Section 1108. Governing Law.
53

 
 

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ARTICLE 1
INTRODUCTION AND DEFINITIONS
 
Section 101. Description of the Agreement and the Parties.
 
This MORTGAGE, LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as
of December 1, 2010, by the Massachusetts Development Finance Agency (with its
successors, the “Agency”), Ranor, Inc., a Massachusetts corporation (with its
successors, the “Borrower”), and Sovereign Bank, a Federal savings bank, as
Bondowner and Disbursing Agent (with its successors, the “Disbursing Agent”).
 
This Agreement provides for the following transactions:
 
(a) the Agency’s issue of the Bonds;
 
(b) the Agency’s loan of the proceeds of the Bonds to the Borrower for the
purpose of financing and refinancing the Project;
 
(c) the Borrower’s repayment of the loan of Bond proceeds from the Agency
through payment to the Bondowner of all amounts necessary to pay the Bonds;
 
(d) the Borrower’s mortgage and pledge of the Mortgaged Property to the
Bondowner; and
 
(e) the Agency’s assignment to the Bondowner of the Revenues to be received
hereunder and the rights to receive the same.
 
In consideration of the mutual agreements contained in this Agreement and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Agency, the Borrower, the Bondowner and the Disbursing Agent agree as set
forth herein for their own benefit and for the benefit of the Bondowner,
provided that any financial obligation of the Agency hereunder shall not be a
general obligation of the Agency nor a debt or pledge of the faith and credit of
The Commonwealth of Massachusetts (the “Commonwealth”), but shall be payable
solely from the funds and Revenues pledged under this Agreement.
 
Section 102. Definitions.
 
In addition to terms defined elsewhere herein, the following terms have the
following meanings in this Agreement, unless the context otherwise requires:
 
(a) “Act” means Massachusetts General Laws, Chapter 23G and, to the extent
incorporated therein, Massachusetts General Laws, Chapter 40D, both as amended
from time to time.
 
(b) “Assignment” means, collectively, the Collateral Assignment of Leases, Rents
and Property Income, the Collateral Assignment of Permits and Other Documents,
the Contractor’s Consent to Assignment of Construction Contract, Assignment of
Construction Contract, each dated as of December 30, 2010, by and between the
Borrower and the Bondowner and Bank.

 
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(c) “Authorized Officer” means: (i) in the case of the Agency, the President and
Chief Executive Officer; the Executive Vice President and Chief Operating
Officer; the Treasurer and Executive Vice President of Finance and
Administration and Chief Financial Officer; the Secretary; the General Counsel
and Executive Vice President for Legislative Affairs; the Executive Vice
President for Finance Programs; the Executive Vice President for Real Estate;
the Executive Vice President for Devens Operations; the Executive Vice President
for Marketing and Communications; and the Senior Vice President, Investment
Banking, or any other official of the Agency so designated by a resolution of
the Agency; and (ii) in the case of the Borrower, the Chief Financial Officer
and when used with reference to an act or document of the Borrower, also means
any other person authorized to perform the act or execute the document.
 
(d) “Bank” means Sovereign Bank, a Federal savings bank.
 
(e) “Bank Obligations” means the obligations of the Borrower to the Bank under
that certain Loan Agreement, dated February, 24, 2006, as amended.
 
(f) “Bond Counsel” means Greenberg Traurig, LLP, or any attorney at law or firm
of attorneys selected by the Agency and acceptable to the Bondowner of
nationally recognized standing in matters pertaining to the federal tax
exemption of interest on bonds issued by states and political subdivisions, and
duly admitted to practice law before the highest court of any state of the
United States.
 
(g) “Bond Documents” means the Bonds, this Agreement, the Bond Purchase
Agreement, the Assignment, the Commitment, the Tax Agreement, the Environmental
Indemnification Agreement, dated as of December 30, 2010, between the Borrower
and the Bondowner, the Guaranty, and the Swap Agreement, dated as of December
30, 2010 between the Borrower and the Bondowner.
 
(h) “Bond Purchase Agreement” means the Bond Purchase Agreement, dated as of
December 30, 2010, by and between the Borrower and the Initial Purchaser.
 
(i) “Bond Year” means each one-year period ending on December 1.
 
(j) “Bondowner” means, collectively, the Initial Purchaser and any subsequent
registered owners of the Bonds from time to time as shown in the books kept by
the Disbursing Agent as bond registrar and transfer agent.
 
(k) “Bonds” means, collectively, the Series A Bonds and the Series B Bonds.
 
(l) “Business Day” means a London Banking Day and a day other than a Saturday,
Sunday or legal holiday, on which banks are generally open for business in
Boston, Massachusetts.
 
(m) “Closing Date” means the date of delivery of the Bonds to the Bondowner
against payment therefor.

 
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(n) “Collateral” means all personal property and fixtures of the Borrower of
every kind and description, in each case whether now or hereafter existing,
whether now owned or hereafter acquired, and located at or used in connection
with the Project and the real property described in Exhibit A, including, but
not limited to, all goods (including inventory and equipment and any accessions
thereto), motor vehicles, and fixtures. Notwithstanding the foregoing or any
other provision of this Agreement or any other Bond Document to the contrary, no
Collateral which constitutes “investment property” within the meaning of Section
148(b) of the IRC will be deemed to secure the Borrower’s obligations with
respect to the Bonds unless the Bondowner has received an Opinion of Bond
Counsel to the effect that the Bonds may be so secured without causing the Bonds
to be “arbitrage bonds” under Section 148 of the IRC.
 
(o) “Date of Taxability” means a date on which interest on any Bond is no longer
excludable from gross income for federal or Massachusetts income purposes as a
result of an Event of Taxability.
 
(p) “Debt Service Fund” means the fund so designated and established pursuant to
Section 303.
 
(q) “Default Rate” means an interest rate per annum equal to the interest rate
per annum in effect on the Bonds immediately preceding the Event of Default to
which the Default Rate relates, plus 5% per annum.
 
(r) “Event of Taxability” means any one of the events herein after described.
For purposes of this definition, “Bondowner” means any former or current
Bondowner:
 
(i) The issuance by the Internal Revenue Service of a statutory notice of
deficiency which asserts that the interest payable on the Bonds is includable in
the gross income of the Bondowner for federal income tax purposes or a similar
notice issued by the Massachusetts Department of Revenue with respect to
Massachusetts income tax.
 
(ii) The issuance to the Bondowner of an opinion (the “Opinion”) of Bond Counsel
to the effect that, after the initial issuance of the Bonds, there has been (A)
an amendment to the IRC or the regulations promulgated thereunder, or (B) an
amendment to the Act or other Massachusetts law, any of which has the effect of
requiring that the interest payable on the Bonds be included in the gross income
of the Bondowner for federal or Massachusetts income tax purposes.
 
(iii) Any other event caused by, or act or omission of, the Agency or the
Borrower, including, but not limited to, a breach or violation by the Agency or
the Borrower of any covenant contained in any of the documents, agreements,
certificates or instruments executed and delivered by or on behalf of the Agency
or the Borrower in connection with the issuance, sale and delivery of the Bonds
and the financing of the Project which would, for any reason, require that the
interest payable on the Bonds be includable in the gross income of the Bondowner
for federal or Massachusetts income tax purposes, unless the Borrower furnishes
the Agency and the Bondowner with an unqualified Opinion of Bond Counsel that
interest payable on the Bonds is not includable in the gross income of the
Bondowner for federal or Massachusetts, as applicable, income tax purposes.

 
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(s) “Fund” means the Debt Service Fund, the Project Fund or any other fund
established with the Disbursing Agent pursuant to this Agreement.
 
(t) “Government or Equivalent Obligations” means (i) obligations issued or
guaranteed by the United States; (ii) certificates evidencing ownership of the
right to the payment of the principal of and interest on obligations described
in clause (i), provided that such obligations are held in the custody of a bank
or trust company satisfactory to the Bondowner, in a special account separate
from the general assets of such custodian; and (iii) any open-end or closed-end
management type investment company or trust registered under 15 U.S.C. §80(a)-l
et seq.; provided that the portfolio of such investment company or trust is
limited to obligations described in clause (i) and repurchase agreements fully
collateralized by such obligations, and provided further that such investment
company or trust shall take custody of such collateral either directly or
through a custodian satisfactory to the Bondowner.
 
(u) “Guarantor” means TechPrecision Corporation, a Delaware corporation.
 
(v) “Guaranty” means the Guaranty (Unlimited) from the Guarantor to the
Bondowner, dated as of December 30, 2010.
 
(w) “Initial Purchaser” means Sovereign Bank.
 
(x) “IRC” means the Internal Revenue Code of 1986, as it may be amended and
applied to the Bonds from time to time.
 
(y) “London Banking Day” means any day on which commercial banks are open for
international business (including dealings in U.S. Dollar ($) deposits) in
London, England and Boston, Massachusetts.
 
(z) “Moody’s” means Moody’s Investors Service, Inc., or any successor rating
agency.
 
(aa) “Mortgaged Property” means, collectively, (i) the Collateral, and (ii) the
real property described in the attached Exhibit A, all rights and easements
appurtenant thereto, and all buildings, structures, fixtures, equipment,
furnishings and improvements thereon, whether in existence on the date hereof or
later coming into existence and whether owned by the Borrower on the date hereof
or acquired hereafter, together with any additional real property not included
in the foregoing provisions which may be added to the Mortgaged Property by a
supplemental agreement.
 
(bb) “Opinion of Bond Counsel” means an opinion of Bond Counsel to the effect
that the matter or action in question will not have an adverse impact on the
tax-exempt status of the Bonds for federal income tax purposes. Any Opinion of
Bond Counsel required to be delivered in accordance with the provisions of the
Agreement shall be provided at the sole cost and expense of the Borrower.

 
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(cc) “Outstanding,” when used to modify Bonds, refers to Bonds issued under this
Agreement, excluding: (i) Bonds which have been exchanged or replaced, or
delivered to the Disbursing Agent for credit against a principal payment or a
sinking fund installment; (ii) Bonds which have been paid; (iii) Bonds which
have become due and for the payment of which moneys have been duly provided; and
(iv) Bonds for which there have been irrevocably set aside sufficient funds, or
Government or Equivalent Obligations described in clause (i) or (ii) of
Subsection 102(t) bearing interest at such rates, and with such maturities, as
will provide sufficient funds to pay or redeem them; provided, however, that if
any such Bonds are to be redeemed prior to maturity, the Agency shall have taken
all action necessary to redeem such Bonds and notice of such redemption shall
have been duly mailed in accordance with this Agreement.
 
(dd) “Payment Date” means each date on which any principal of, premium, if any,
or interest on any Bond is due and payable for any reason.
 
(ee) “Permitted Encumbrances” shall have the meaning assigned in Section 201(b).
 
(ff) “Permitted Investment” shall have the meaning assigned in Section 312(c).
 
(gg) “Person” means an individual, corporation, limited liability company,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
 
(hh) “Project” means the financing and refinancing of the acquisition of the
manufacturing facility currently leased by the Borrower, the construction of an
approximate 20,500 square foot addition thereto, and the improvement and
equipping thereof, including the acquisition of a gantry milling machine, as
described in the Application for Tax Exempt Financing, dated August 23, 2010,
submitted to the Agency by the Borrower, together with all amendments thereto,
and supplementary information provided to the Agency.
 
The word “Project” also refers to the facilities which result or have resulted
from the foregoing activities, as more particularly described in the Tax
Agreement.
 
(ii) “Project Costs” means the costs of issuing the Bonds (not in excess of 2%
of the initial principal amount of the Bonds) and carrying out the Project,
including repayment of external loans and reimbursement to the Borrower of costs
incurred for the Project and paid by the Borrower prior to the date of issuance
of the Bonds (“internal advances”) to the extent permitted by this Agreement,
and interest prior to, during and for up to one year after construction is
substantially complete, but excluding general administrative expenses, overhead
of the Borrower and interest on internal advances.
 
(jj) “Project Fund” means the fund so designated and established pursuant to
Section 401.
 
(kk) “Project Officer” means the Borrower’s Chief Financial Officer.
 
(ll) “Purchase Date” means sixty (60) days after the date on which the Borrower
refinances the Bank Obligations with a lender other than the Bondowner.

(mm) “Rebate Provision” shall have the meaning set forth in Section 306.
 
 
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(nn) “Rebate Calculation Date” means December ___, 2015 and the maturity date of
the Bonds.
 
(oo) “Repurchase Agreement” shall have the meaning assigned in Section 312(c).
 
(pp) “Revenues” means all debt service payments, rates, mortgage payments,
rents, fees, charges, and other income and receipts, including proceeds of
insurance, eminent domain and sale, and including proceeds derived from any
security provided hereunder, payable to the Agency under this Agreement,
excluding administrative fees of the Agency, reimbursements to the Agency for
expenses incurred by the Agency, and indemnification of the Agency.
 
(qq) “S&P” means Standard & Poor’s, a business of Standard & Poor’s Financial
Services LLC, or any successor rating agency.
 
(rr) “Swap Agreement” means, collectively, the ISDA Master Agreement (together
with the Schedule thereto and each Confirmation issued thereunder), dated
December 30, 2010, by and between the Borrower and the Bank.
 
(ss) “Series A Bonds” means the $4,250,000 Massachusetts Development Finance
Agency Revenue Bonds, Ranor Issue, Series 2010A, dated the date of delivery
thereof, and any bond or bonds issued in exchange or replacement therefor.
 
(tt) “Series B Bonds” means the $1,950,000 Massachusetts Development Finance
Agency Revenue Bonds, Ranor Issue, Series 2010B, dated the date of delivery
thereof, and any bond or bonds issued in exchange or replacement therefor.
 
(uu) “Tax Agreement” means the Tax Certificate and Agreement, dated December 30,
2010, by and between the Agency and the Borrower.
 
(vv) “Taxable Rate” means an interest rate per annum equal to the sum of LIBOR
plus the 275 basis points.
 
(ww) “UCC” means the Massachusetts Uniform Commercial Code.
 
Words importing persons include firms, associations and corporations, and the
singular and plural form of words shall be deemed interchangeable wherever
appropriate.
 
 
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ARTICLE 2
THE CONVEYANCES; GRANTING OF SECURITY INTERESTS
 
Section 201. Granting of Mortgage, Security Interests.
 
(a) The Mortgage. The Borrower grants to the Bondowner (i) WITH MORTGAGE
COVENANTS the Mortgaged Property upon the terms hereof; (ii) all of its rights,
title and interest in (A) all easements, bridges, rights of way, privileges,
hereditaments, and appurtenances belonging to or inuring to the benefit of the
Mortgaged Property; all right, title, and interest of the Borrower in and to
land lying within any street or roadway adjoining the Mortgaged Property; and
all right, title, and interest of the Borrower in and to any vacated or
hereafter vacated street or road adjoining the Mortgaged Property; (B) any and
all awards or payments, including interest thereon, and the right to receive the
same, which may be made with respect to the Mortgaged Property as a result of
(1) the exercise of the right of eminent domain, (2) the alteration of the grade
of any street, or (3) any other injury to or decrease in the value of the
Mortgaged Property, to the extent of all amounts which may be secured by this
Agreement (including the reasonable counsel fees, costs, and disbursements
incurred by the Bondowner in connection with the collection of such award or
payment) at the date of receipt by the Bondowner of any such award or payment;
(C) as lessor, under any leases of any of the Mortgaged Property, all of the
rents and other payments required of lessees, tenants, occupants, licensees,
concessionaires, or other persons or parties, whether or not designated as rent
or additional rent (including, without limitation, security deposits, tax or
operating expense escalation payments, percentage rent, or any other payments
from any license, use, permit, or concession), and any other issues and profits
arising from any rental units, space, or rentable facilities within, on or
appurtenant to the Mortgaged Property or any portion thereof, and all of the
Borrower’s contractual rights now existing or hereafter arising between the
Borrower and any tenant or occupant with respect to any of the Mortgaged
Property; (iii) to the extent the Mortgaged Property is or may be treated as
personal property under the UCC, a security interest therein; and (iv) with
respect to all of the foregoing, the products and proceeds thereof, including
without limitation, all insurance proceeds; all to secure the payment of all
sums required to be paid by the Borrower under this Agreement and the other Bond
Documents, and the satisfaction and performance of all other covenants,
agreements and obligations made or undertaken by the Borrower hereunder or under
the other Bond Documents for the benefit of the Bondowner, the Disbursing Agent
and the Agency.
 
This Agreement is upon the STATUTORY CONDITION and upon the further condition
that all covenants, agreements and obligations of the Borrower hereunder will be
observed and performed, and upon any Event of Default, as defined in Section
601, the Bondowner shall have, in addition to its other rights and remedies
hereunder, the STATUTORY POWER OF SALE and any other rights granted by law.
 
(b) Title. The Borrower represents and warrants that (i) it is lawfully seized
in fee simple of the real property comprising the Mortgaged Property, free from
all liens and encumbrances except those described in the attached Exhibit A
(“Permitted Encumbrances”), (ii) the Borrower has, or at the time of the
acquisition, construction and installation thereof will have, full title to the
Collateral free from all liens and encumbrances, except Permitted Encumbrances,
and (iii) the Borrower has the full right, power and authority to mortgage and
pledge the Mortgaged Property hereunder. The Borrower covenants that it will
warrant and defend the Mortgaged Property against the lawful claims and demands
of all persons and that it will not permit any mortgage, lien or encumbrance to
be filed or recorded on or against the Mortgaged Property, except Permitted
Encumbrances, without the written consent of the Bondowner. The Borrower shall
from time to time execute, deliver and register, record and file such
instruments as the Bondowner may reasonably require to confirm, perfect or
maintain the security created or intended to be created hereby.
 
(c) Financing Statement. This Agreement is intended to take effect as a security
agreement and is to be recorded and filed with the Worcester County Registry of
Deeds in lieu of a financing statement pursuant to Sec. 9-502 of the UCC.
 
 
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Section 202. The Agency’s Assignment and Pledge of Revenues.
 
The Agency assigns and pledges to the Bondowner upon the terms hereof (a) all
Revenues to be received from the Borrower or derived from any security provided
hereunder, (b) all rights to receive such Revenues and the proceeds of such
rights, (c) all funds and investments held from time to time in the funds
established under this Agreement, and (d) all of its right, title and interest
in this Agreement, including enforcement rights and remedies but excluding
certain rights of indemnification and to reimbursement of certain expenses as
set forth herein. This assignment and pledge does not include: (i) the rights of
the Agency pursuant to provisions for consent, concurrence, approval or other
action by the Agency, notice to the Agency or the filing of reports,
certificates or other documents with the Agency, (ii) the right of the Agency to
any payments or reimbursements pursuant to Sections 309(e), 803, and 1007, or
(iii) the powers of the Agency as stated herein to enforce the provisions
hereof. As further security for its obligations to make payments to the Debt
Service Fund, and for its other payment obligations under this Agreement, the
Borrower grants to the Bondowner a security interest in its interest in the
moneys and other investments held from time to time in the funds and accounts
established under this Agreement.
 
Section 203. Defeasance.
 
When there are in the applicable account within the Debt Service Fund sufficient
funds, or Government or Equivalent Obligations described in clause (i) or (ii)
of Subsection 102(t) in such principal amounts, bearing interest at such rates
and with such maturities as will provide sufficient funds to pay or redeem a
series of Bonds in full, and when all other amounts due under the Bond Documents
with respect to such series of Bonds have been paid and the rights hereunder and
thereunder of the Agency, the Disbursing Agent and the Bondowner have been
provided for, upon written notice from the Borrower to the Agency and the
Bondowner, the Bondowner shall cease to be entitled to any benefit or security
with respect to such series of Bonds under this Agreement except that the
Bondowner shall have the right to receive payment of the funds deposited and
held for payment and other rights which by their nature cannot be satisfied
prior to or simultaneously with termination of the lien hereof (including
obligations of the Borrower under Sections 306 and 1007), title to the Mortgaged
Property shall revert to the Borrower, the security interests created by this
Agreement (except in such funds and investments) shall terminate, and the Agency
and the Bondowner shall execute and deliver such instruments as may be necessary
to discharge the lien and security interests created hereunder; provided,
however, that if any of such Bonds are to be redeemed prior to the maturity
thereof, the Agency shall have taken all action necessary to redeem such Bonds
and notice of such redemption shall have been duly given in accordance with this
Agreement. Upon such defeasance, the funds and investments required to pay or
redeem the Bonds in full shall be irrevocably set aside for that purpose,
subject, however, to Section 314 hereof, and moneys held for defeasance shall be
invested only as provided above in this section. Any funds or property held by
the Disbursing Agent and not required for payment or redemption of the Bonds in
full or to pay any other amounts owing under the Bond Documents shall, after
satisfaction of all the rights of the Agency and after allowance for any
payments required to be made pursuant to Section 306, be distributed to the
Borrower upon such indemnification, if any, as the Agency and the Disbursing
Agent may reasonably require.
 

 
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ARTICLE 3
THE BORROWING
 
Section 301. The Bonds.
 
(a) Details of the Bonds. The Series A Bonds shall be issued in fully registered
form and in the original aggregate principal amount of $4,250,000, and shall be
numbered from R-A-1 upwards in order of their issuance, or in any other manner
deemed appropriate by the Agency. The Series A Bonds shall be in the minimum
denomination of $100,000. The Series A Bonds shall be dated the date of delivery
thereof. Principal and interest on the Series A Bonds until they come due shall
be payable commencing on February 1, 2011 and on the first (1st) day of each
month thereafter, in accordance with the Form of Bonds set forth in Section
301(b)(i). If any payment is due on a day which is not a Business Day, the
payment shall be due on the next subsequent Business Day. The Series A Bonds
shall mature on January 1, 2021, and shall bear interest at the rates per annum
as set forth in the Form of Bonds in Section 301(b)(i), below.
 
The Series B Bonds shall be issued in fully registered form in the original
aggregate principal amount of $1,950,000, and shall be numbered from R-B-1
upwards in order of their issuance, or in any other manner deemed appropriate by
the Agency and the Trustee. The Series B Bonds shall be in the minimum
denomination of $100,000. The Series B Bonds shall be dated the date of delivery
thereof. Principal and interest on the Series B Bonds until they come due shall
be payable commencing on February 1, 2011 and on the first (1st) day of each
month thereafter, in accordance with the Form of Bonds set forth in Section
301(b)(ii). If any payment is due on a day which is not a Business Day, the
payment shall be due on the next subsequent Business Day. The Series B Bonds
shall mature on January 1, 2018, and shall bear interest at the rates per annum
as set forth in the Form of Bonds in Section 301(b)(ii), below.
 
The Bonds shall be signed on behalf of the Agency by the manual or facsimile
signature of an Authorized Officer, and the corporate seal of the Agency or a
facsimile thereof shall be engraved or otherwise reproduced thereon. The
authenticating certificate of the Disbursing Agent shall be manually signed on
behalf of the Disbursing Agent.
 
In case any officer whose manual or facsimile signature shall appear on any Bond
shall cease to be such officer before the delivery thereof, such manual or
facsimile signature shall nevertheless be valid and sufficient for all purposes
as if he or she had remained in office until after such delivery.
 
The Bonds are subject to special redemption and optional redemption, as
described in Section 311 and in the Forms of Bonds.
 
(b) Form of Bonds. (i) The Series A Bonds shall be issued in substantially the
following form.
 
Registered No.
R-A-___                                                                                                                     $___________

 
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UNITED STATES OF AMERICA
COMMONWEALTH OF MASSACHUSETTS
MASSACHUSETTS DEVELOPMENT FINANCE AGENCY
Revenue Bonds
Ranor Issue, Series 2010A

INITIAL LIBOR RATE: ________________ Percent (____%) Per Annum

MATURITY DATE: January 1, 2021

DATE OF THIS BOND: December 30, 2010
(Date as of which the Bonds were initially issued.)

INITIAL RATE PERIOD: From the date of this Bond to and including January 31,
2011.

PAYMENT DATES: February 1, 2011 and the first (1st) day of each month thereafter
to the MATURITY DATE or earlier redemption in full.

DATE OF REGISTRATION:

REGISTERED OWNER:

PRINCIPAL AMOUNT:

  THIS BOND DOES NOT CONSTITUTE A GENERAL OBLIGATION OF THE MASSACHUSETTS
DEVELOPMENT FINANCE AGENCY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE
COMMONWEALTH OF MASSACHUSETTS; THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF
ANY, ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR
THEIR PAYMENT IN ACCORDANCE WITH THE MORTGAGE, LOAN AND SECURITY AGREEMENT
REFERRED TO HEREIN. THE AGENCY HAS NO TAXING POWER UNDER THE ACT.  

 
The Massachusetts Development Finance Agency (the “Agency”), for value received
promises to pay to the REGISTERED OWNER of this bond, or registered assigns, but
solely from the moneys to be provided under the Agreement mentioned below, in
lawful money of the United States of America, in immediately available funds,
the PRINCIPAL AMOUNT, in installments in the amounts as set forth on Schedule 1,
commencing on January ___, 2011, and on each PAYMENT DATE thereafter, with the
remaining principal balance due on the MATURITY DATE, unless paid earlier as
provided below, with interest (computed on the basis of a 360-day year based on
the actual number of days elapsed) on the PRINCIPAL AMOUNT outstanding from the
most recent PAYMENT DATE to which interest has been paid or duly provided for
or, if no interest has been paid, from the DATE OF THIS BOND, at the INITIAL
LIBOR RATE per annum during the INITIAL RATE PERIOD, and thereafter at the LIBOR
Rate (as defined below) per annum, as determined below for each Rate Period (as
defined below), payable on each PAYMENT DATE, until the date on which this bond
becomes due, whether at maturity or by acceleration or redemption.
Notwithstanding the foregoing, if at any time an Event of Taxability occurs, the
interest rate in effect on the Series A Bonds from and after the Date of
Taxability shall be the Taxable Rate and following an Event of Default, the
interest rate in effect on the Series A Bonds shall be the Default Rate. The
Agency also shall pay to the Bondowner, but only from amounts available under
the Agreement, a late charge for any payment of principal or interest not paid
within fifteen (15) days following the date such payment is due equal to five
percent (5.0%) of the amount of any such payment.

 
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Unless otherwise defined herein, capitalized terms used in this bond shall have
the same meanings assigned to them in the Mortgage, Loan and Security Agreement
(the “Agreement”), dated as of December 1, 2010, by and among the Agency, Ranor,
Inc. (the “Borrower”), and Sovereign Bank, as Bondowner and Disbursing Agent
(the “Disbursing Agent”). As used in this bond, the following terms shall have
the following meanings:
 
“Effective Date” means the date on which a new Rate Period takes effect. The
first Effective Date shall be February 1, 2011 and thereafter shall be the first
(1st) day of each month thereafter.
 
“LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest
1/32 of one percent) for deposits in U.S. Dollars for a one-month period, which
appears on the day that is two London Banking Days preceding the next Effective
Date as of 11:00 a.m. London time (x) on the Telerate Page 3750 or (y) if such
rate does not appear on the Telerate Page 3750, then as determined by the Bank
from another recognized source or interbank quotation. In the event that the
Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of the REGISTERED OWNER of this bond,
then for any period during which such Reserve Percentage shall apply, LIBOR
shall be equal to the amount determined above divided by an amount equal to 1
minus the Reserve Percentage.
 
“LIBOR Rate” means 65% times the sum of (i) the Spread plus (ii) LIBOR.
 
“Rate Period” means, when used with respect to any particular LIBOR Rate, the
period during which such rate of interest determined for the Bonds will remain
in effect as described herein, which shall be the period commencing on each
Effective Date and ending on the last day of the calendar month. A new interest
rate shall take effect on each Effective Date.
 
“Reserve Percentage” means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves), which is imposed on
member banks of the Federal Reserve System against “Euro-currency Liabilities”
as defined in Regulation D.
 
“Spread” means 275 basis points.
 
The record date for payment of interest is the Business Day preceding the date
on which the interest is to be paid; provided that, with respect to overdue
interest or interest payable on redemption of this bond other than on a PAYMENT
DATE or interest on any overdue amount, the Disbursing Agent may establish a
special record date. The special record date may not be more than five (5) days
before the date set for payment. The Disbursing Agent will mail notice of a
special record date to the Bondowner at least seven (7) days before the special
record date. The Disbursing Agent will promptly certify to the Agency that it
has mailed such notice to the Bondowner, and such certificate will be conclusive
evidence that such notice was given in the manner required hereby.

 
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This bond is one of a series of bonds (the “Series A Bonds”), in the aggregate
principal amount of $4,250,000, being issued by the Agency under and in
accordance with the laws of The Commonwealth of Massachusetts, including
Massachusetts General Laws Chapter 23G, as amended, and resolutions duly adopted
by the board of directors of the Agency, which resolutions also authorize the
execution and delivery of the Agreement. The Series A Bonds are being issued
pursuant to the Agreement. Simultaneously with the issuance of the Series A
Bonds, the Agency is issuing its $1,950,000 Massachusetts Development Finance
Agency Revenue Bonds, Ranor Issue, Series 2010B (the “Series B Bonds,” and
together with the Series A Bonds, the “Bonds”). Pursuant to the Agreement, the
Agency is loaning the proceeds of the Bonds to the Borrower for the purpose of
financing and refinancing the Project (as defined in the Agreement). The
Borrower has agreed to repay the borrowing in the amounts and at the times
necessary to enable the Agency to pay the principal, premium, if any, and
interest on the Bonds, and the Agency has assigned its rights to receive such
funds to the Bondowner, subject to the provisions of the Agreement. Reference is
made to the Agreement for a description of the funds pledged and the rights,
limitations of rights, duties, obligations and immunities of the Borrower, the
Agency and the Bondowner, including the order of payments in the event of
insufficient funds. The Agreement may be amended to the extent and in the manner
provided therein.
 
In case any Event of Default (as defined in the Agreement) occurs, the principal
amount of this bond together with accrued interest may be declared due and
payable in the manner and with the effect provided in the Agreement.
 
The Series A Bonds are redeemable pursuant to the Agreement prior to maturity,
as a whole or in part on any PAYMENT DATE, in inverse order of principal
installments due, at their principal amounts, without premium, plus accrued
interest to the redemption date, (i) at the direction of the Borrower, (ii) from
excess proceeds on deposit in the Project Fund created under the Agreement upon
completion or termination of the Project, and (iii) in the event of a
substantial loss to the Mortgaged Property, as defined in the Agreement, from
insurance or condemnation award proceeds allocable to the Series A Bonds.
 
If less than all of the Outstanding Series A Bonds are to be called for
redemption, the Series A Bonds to be redeemed will be selected by the Disbursing
Agent by lot.
 
In the event this bond is selected for redemption, notice will be mailed not
less than twenty (20) days prior to the redemption date to the REGISTERED OWNER
at its address shown on the registration books maintained by the Disbursing
Agent. Failure to mail notice to the owner of any other Series A Bond or any
defect in the notice to such an owner shall not affect the redemption of this
bond.
 
 
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If this bond is of a denomination in excess of One Hundred Thousand Dollars
($100,000), portions of the principal amount in excess of One Hundred Thousand
Dollars ($100,000) may be redeemed. If less than all of the principal amount is
to be redeemed, upon surrender of this bond to the Disbursing Agent, there will
be issued to the REGISTERED OWNER, without charge, a new bond or bonds, at the
option of the REGISTERED OWNER, for the unredeemed principal amount.
 
Notice of redemption having been duly mailed, this bond, or the portion called
for redemption, will become due and payable on the redemption date at the
applicable redemption price and, the redemption price having been paid or moneys
for the redemption having been deposited with the Disbursing Agent, from and
after the date fixed for redemption interest on this bond (or such portion) will
no longer accrue.
 
This bond is transferable by the REGISTERED OWNER, subject to the provisions of
the Agreement, in person or by its attorney duly authorized in writing, at the
office of the Disbursing Agent set forth above, upon surrender of this bond to
the Disbursing Agent for cancellation. Upon the transfer, a new bond or bonds of
the same aggregate principal amount will be issued to the transferee at the same
office. No transfer will be effective unless represented by such surrender and
reissue. This bond may also be exchanged at the office of the Disbursing Agent
for a new bond or bonds of the same aggregate principal amount without transfer
to a new registered owner. Exchanges and transfers will be without expense to
the holder except for applicable taxes or other governmental charges, if any.
The Disbursing Agent will not be required to make an exchange or transfer of
this bond during the thirty (30) days preceding (i) any date fixed for
redemption if this bond (or any part thereof) is eligible to be selected or has
been selected for the redemption and (ii) the MATURITY DATE.
 
The Bonds are issuable only in fully registered form in the minimum denomination
of One Hundred Thousand Dollars ($100,000).
 
The Agency, the Disbursing Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes, notwithstanding any notice
to the contrary.
 
Neither the members of the Agency nor any Person executing this bond are liable
personally hereon or subject to any personal liability or accountability by
reason of the issuance hereof.
 
Upon the terms and conditions set forth in the Agreement, this bond is subject
to mandatory tender by the REGISTERED OWNER on the Purchase Date at a price (the
“Purchase Price”) equal to one hundred percent (100%) of the principal amount
Outstanding, plus accrued interest, if any, to the Purchase Date, unless the
REGISTERED OWNER shall give the Agency, the Disbursing Agent and the Borrower
notice of its election to retain this bond by delivery to the Borrower, with a
copy to the Agency and the Disbursing Agent, of a written notice substantially
in the form of the Bondowner’s Non-Tender Election Notice set forth herein, not
less than thirty (30) days prior to the Purchase Date. Upon receipt of the copy
of the Bondowner’s Non-Tender Election Notice, the Disbursing Agent shall give
notice to any other Bondowner of the receipt of such Bondowner’s Non-Tender
Election Notice not less than fifteen (15) days prior to the Purchase Date. In
the event there is more than one Bondowner and the registered owners of Bonds
representing more than fifty percent (50%) of the principal amount of Bonds then
Outstanding elect not to tender their Bonds for purchase, each Bondowner shall
be deemed to have agreed irrevocably to retain their Bonds and that the Bonds
shall not be subject to mandatory tender on the applicable Purchase Date. If the
Borrower does not receive at least thirty (30) days prior to a Purchase Date
Bondowner’s Non-Tender Election Notices from Bondowners representing more than
fifty percent (50%) of the principal amount of Bonds then Outstanding, then the
Bonds will be subject to mandatory tender and purchased on the applicable
Purchase Date. THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO SELL AND
SURRENDER THIS BOND AT THE PURCHASE PRICE TO ANY PURCHASER DETERMINED IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT IN THE EVENT OF A MANDATORY
TENDER AND, ON THE PURCHASE DATE, TO SURRENDER THIS BOND TO THE AGENCY FOR
PAYMENT OF THE PURCHASE PRICE. The Purchase Price of this bond shall be paid to
the REGISTERED OWNER by the Borrower on the Delivery Date, which shall be the
Purchase Date or any subsequent Business Day on which this bond is delivered to
the Agency for cancellation, with a copy to the Borrower. The Purchase Price of
this bond shall be paid only upon surrender of this bond to the Agency as
provided herein. From and after the Purchase Date, no further interest on this
bond shall be payable to the REGISTERED OWNER, provided that there are
sufficient funds available on the Purchase Date to pay the Purchase Price.
Payment of the Purchase Price of this bond to the REGISTERED OWNER shall be made
by the Borrower on the Purchase Date, if presentation and surrender of this bond
to the Agency, with a copy to the Borrower, is made prior to 10:00 a.m. Boston,
Massachusetts time on the Purchase Date, or on such later Business Day upon
which presentation and surrender of this bond to the Agency, with a copy to the
Borrower, is made prior to 10:00 a.m. Boston, Massachusetts time.

 
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This bond will not be valid until the Certificate of Disbursing Agent has been
signed by the Disbursing Agent.
 

  MASSACHUSETTS DEVELOPMENT FINANCE AGENCY           (SEAL)              
 
By:
      Authorized Officer  

CERTIFICATE OF DISBURSING AGENT

This bond is one of the Bonds described in the Agreement.
 

 
SOVEREIGN BANK,
as Disbursing Agent
         
 
By:
     
Authorized Signature
 

 
 
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ASSIGNMENT

For value received the undersigned sells, assigns and transfers this bond to

 
(Name and Address of Assignee)
   

 
Social Security or Other Identifying Number of Assignee

and irrevocably appoints ___________________ attorney-in-fact to transfer it on
the books kept for registration of the bond, with full power of substitution.
 

              NOTE: The signature to this assignment must correspond with the
name as written on the face of the bond without alteration or enlargement or
other change. Dated:             Signature Guaranteed:                    
Participant in a Recognized
Signature Guarantee Medallion
Program
            By:         Authorized Signature    

 
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SCHEDULE 1

Schedule of Principal Payments

[To be inserted]

NON-TENDER ELECTION NOTICE
 
Massachusetts Development Finance Agency
Revenue Bonds
Ranor Issue, Series 2010A

Principal Amount
Bond Numbers
Purchase Date
     

The undersigned hereby certifies that it is the registered owner of the Bonds
described above (the “Non-Tendered Bonds”), and hereby agrees that the delivery
of this instrument to the Agency, the Disbursing Agent and the Borrower
constitutes an irrevocable election to retain the Non-Tendered Bonds and not to
sell the Non-Tendered Bonds to the Borrower or its designee on the Purchase
Date; provided, however, that the undersigned acknowledges and agrees that if
there is more than one Bondowner, then the Non-Tendered Bonds nonetheless shall
be subject to purchase by the Borrower or its designee on the Purchase Date
unless the Owners of more than fifty percent (50%) of the principal amount of
the Outstanding Bonds elect not to tender their Bonds for purchase on the next
Purchase Date. The undersigned further acknowledges and agrees that, subject to
the foregoing provision and subject to all other rights of the undersigned
contained in the Bonds, this election notice is irrevocable.
 
Except as otherwise indicated herein and unless the context otherwise requires,
the terms used herein shall have the meanings set forth in the Mortgage, Loan
and Security Agreement, dated as of December 1, 2010, providing for the issuance
of the Bonds.
 

    Signature(s)  
Date:
 
                         
 Street                      City                      State     Zip  

 
IMPORTANT: The above signature(s) must correspond with the name(s) as set forth
on the face of the Non-Tendered Bond(s) with respect to which this Bondowner’s
Non-Tender Election Notice is being delivered without any change whatsoever. If
this notice is signed by a person other than the registered owner of any
Non-Tendered Bond(s), the Non-Tendered Bond(s) must be either endorsed on the
Assignment appearing on each Bond or accompanied by appropriate bond powers, in
each case signed exactly as the name or names of the registered owner or owners
appear on the bond register. The method of presenting this notice to the Agency,
the Disbursing Agent and the Borrower is the choice of the person making such
presentation. If it is made by mail, it should be by registered mail with return
receipt requested.

[End of Series A Bond Form]
 
 
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(ii) The Series B Bonds shall be issued in substantially the following form.
 

Registered No. R-B-___ $___________

UNITED STATES OF AMERICA
COMMONWEALTH OF MASSACHUSETTS
MASSACHUSETTS DEVELOPMENT FINANCE AGENCY
Revenue Bonds
Ranor Issue, Series 2010B
 
INITIAL LIBOR RATE: ________________ Percent (____%) Per Annum

MATURITY DATE: January 1, 2018

DATE OF THIS BOND: December 30, 2010
(Date as of which the Bonds were initially issued.)

INITIAL RATE PERIOD: From the date of this Bond to and including January 31,
2011.

PAYMENT DATES: February 1, 2011 and the first (1st) day of each month thereafter
to the MATURITY DATE or earlier redemption in full.

DATE OF REGISTRATION:

REGISTERED OWNER:

PRINCIPAL AMOUNT:

  THIS BOND DOES NOT CONSTITUTE A GENERAL OBLIGATION OF THE MASSACHUSETTS
DEVELOPMENT FINANCE AGENCY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE
COMMONWEALTH OF MASSACHUSETTS; THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF
ANY, ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR
THEIR PAYMENT IN ACCORDANCE WITH THE MORTGAGE, LOAN AND SECURITY AGREEMENT
REFERRED TO HEREIN. THE AGENCY HAS NO TAXING POWER UNDER THE ACT.  

 
The Massachusetts Development Finance Agency (the “Agency”), for value received
promises to pay to the REGISTERED OWNER of this bond, or registered assigns, but
solely from the moneys to be provided under the Agreement mentioned below, in
lawful money of the United States of America, in immediately available funds,
the PRINCIPAL AMOUNT, in installments in the amounts as set forth on Schedule 1,
commencing on January ___, 2011, and on each PAYMENT DATE thereafter, with the
remaining principal balance due on the MATURITY DATE, unless paid earlier as
provided below, with interest (computed on the basis of a 360-day year based on
the actual number of days elapsed) on the PRINCIPAL AMOUNT outstanding from the
most recent PAYMENT DATE to which interest has been paid or duly provided for
or, if no interest has been paid, from the DATE OF THIS BOND, at the INITIAL
LIBOR RATE per annum during the INITIAL RATE PERIOD, and thereafter at the LIBOR
Rate (as defined below) per annum, as determined below for each Rate Period (as
defined below), payable on each PAYMENT DATE, until the date on which this bond
becomes due, whether at maturity or by acceleration or redemption.
Notwithstanding the foregoing, if at any time an Event of Taxability occurs, the
interest rate in effect on the Series B Bonds from and after the Date of
Taxability shall be the Taxable Rate and following an Event of Default, the
interest rate in effect on the Series B Bonds shall be the Default Rate. The
Agency also shall pay to the Bondowner, but only from amounts available under
the Agreement, a late charge for any payment of principal or interest not paid
within fifteen (15) days following the date such payment is due equal to five
percent (5.0%) of the amount of any such payment.

 
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Unless otherwise defined herein, capitalized terms used in this bond shall have
the same meanings assigned to them in the Mortgage, Loan and Security Agreement
(the “Agreement”), dated as of December 1, 2010, by and among the Agency, Ranor,
Inc. (the “Borrower”), and Sovereign Bank, as Bondowner and Disbursing Agent
(the “Disbursing Agent”). As used in this bond, the following terms shall have
the following meanings:
 
“Effective Date” means the date on which a new Rate Period takes effect. The
first Effective Date shall be February 1, 2011 and thereafter shall be the first
(1st) day of each month thereafter.
 
“LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest
1/32 of one percent) for deposits in U.S. Dollars for a one-month period, which
appears on the day that is two London Banking Days preceding the next Effective
Date as of 11:00 a.m. London time (x) on the Telerate Page 3750 or (y) if such
rate does not appear on the Telerate Page 3750, as determined by the Bank from
another recognized source or interbank quotation. In the event that the Board of
Governors of the Federal Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of the REGISTERED OWNER of this bond, then for any
period during which such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.
 
“LIBOR Rate” means 65% times the sum of (i) the Spread plus (ii) LIBOR.
 
“Rate Period” means, when used with respect to any particular LIBOR Rate, the
period during which such rate of interest determined for the Bonds will remain
in effect as described herein, which shall be the period commencing on each
Effective Date and ending on the last day of the calendar month. A new interest
rate shall take effect on each Effective Date.
 
“Reserve Percentage” means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves), which is imposed on
member banks of the Federal Reserve System against “Euro-currency Liabilities”
as defined in Regulation D.
 
“Spread” means 275 basis points.
 
 
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The record date for payment of interest is the Business Day preceding the date
on which the interest is to be paid; provided that, with respect to overdue
interest or interest payable on redemption of this bond other than on a PAYMENT
DATE or interest on any overdue amount, the Disbursing Agent may establish a
special record date. The special record date may not be more than five (5) days
before the date set for payment. The Disbursing Agent will mail notice of a
special record date to the Bondowner at least seven (7) days before the special
record date. The Disbursing Agent will promptly certify to the Agency that it
has mailed such notice to the Bondowner, and such certificate will be conclusive
evidence that such notice was given in the manner required hereby.
 
This bond is one of a series of bonds (the “Series B Bonds”), in the aggregate
principal amount of $1,950,000, being issued by the Agency under and in
accordance with the laws of The Commonwealth of Massachusetts, including
Massachusetts General Laws Chapter 23G, as amended, and resolutions duly adopted
by the board of directors of the Agency, which resolutions also authorize the
execution and delivery of the Agreement. The Series B Bonds are being issued
pursuant to the Agreement. Simultaneously with the issuance of the Series B
Bonds, the Agency is issuing its $4,250,000 Massachusetts Development Finance
Agency Revenue Bonds, Ranor Issue, Series 2010A (the “Series A Bonds,” and
together with the Series B Bonds, the “Bonds”). Pursuant to the Agreement, the
Agency is loaning the proceeds of the Bonds to the Borrower for the purpose of
financing and refinancing the Project (as defined in the Agreement). The
Borrower has agreed to repay the borrowing in the amounts and at the times
necessary to enable the Agency to pay the principal, premium, if any, and
interest on the Bonds, and the Agency has assigned its rights to receive such
funds to the Bondowner, subject to the provisions of the Agreement. Reference is
made to the Agreement for a description of the funds pledged and the rights,
limitations of rights, duties, obligations and immunities of the Borrower, the
Agency and the Bondowner, including the order of payments in the event of
insufficient funds. The Agreement may be amended to the extent and in the manner
provided therein.
 
In case any Event of Default (as defined in the Agreement) occurs, the principal
amount of this bond together with accrued interest may be declared due and
payable in the manner and with the effect provided in the Agreement.
 
The Series B Bonds are redeemable pursuant to the Agreement prior to maturity,
as a whole or in part on any PAYMENT DATE, in inverse order of principal
installments due, at their principal amounts, without premium, plus accrued
interest to the redemption date, (i) at the direction of the Borrower, (ii) from
excess proceeds on deposit in the Project Fund created under the Agreement upon
completion or termination of the Project, and (iii) in the event of a
substantial loss to the Mortgaged Property, as defined in the Agreement, from
insurance or condemnation award proceeds allocable to the Series B Bonds.
 
If less than all of the Outstanding Series B Bonds are to be called for
redemption, the Series B Bonds to be redeemed will be selected by the Disbursing
Agent by lot.
 
In the event this bond is selected for redemption, notice will be mailed not
less than twenty (20) days prior to the redemption date to the REGISTERED OWNER
at its address shown on the registration books maintained by the Disbursing
Agent. Failure to mail notice to the owner of any other Series B Bond or any
defect in the notice to such an owner shall not affect the redemption of this
bond.
 
 
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If this bond is of a denomination in excess of One Hundred Thousand Dollars
($100,000), portions of the principal amount in excess of One Hundred Thousand
Dollars ($100,000) may be redeemed. If less than all of the principal amount is
to be redeemed, upon surrender of this bond to the Disbursing Agent, there will
be issued to the REGISTERED OWNER, without charge, a new bond or bonds, at the
option of the REGISTERED OWNER, for the unredeemed principal amount.
 
Notice of redemption having been duly mailed, this bond, or the portion called
for redemption, will become due and payable on the redemption date at the
applicable redemption price and, the redemption price having been paid or moneys
for the redemption having been deposited with the Disbursing Agent, from and
after the date fixed for redemption interest on this bond (or such portion) will
no longer accrue.
 
This bond is transferable by the REGISTERED OWNER, subject to the provisions of
the Agreement, in person or by its attorney duly authorized in writing, at the
office of the Disbursing Agent set forth above, upon surrender of this bond to
the Disbursing Agent for cancellation. Upon the transfer, a new bond or bonds of
the same aggregate principal amount will be issued to the transferee at the same
office. No transfer will be effective unless represented by such surrender and
reissue. This bond may also be exchanged at the office of the Disbursing Agent
for a new bond or bonds of the same aggregate principal amount without transfer
to a new registered owner. Exchanges and transfers will be without expense to
the holder except for applicable taxes or other governmental charges, if any.
The Disbursing Agent will not be required to make an exchange or transfer of
this bond during the thirty (30) days preceding (i) any date fixed for
redemption if this bond (or any part thereof) is eligible to be selected or has
been selected for the redemption and (ii) the MATURITY DATE.
 
The Bonds are issuable only in fully registered form in the minimum denomination
of One Hundred Thousand Dollars ($100,000).
 
The Agency, the Disbursing Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes, notwithstanding any notice
to the contrary.
 
Neither the members of the Agency nor any Person executing this bond are liable
personally hereon or subject to any personal liability or accountability by
reason of the issuance hereof.
 
Upon the terms and conditions set forth in the Agreement, this bond is subject
to mandatory tender by the REGISTERED OWNER on each Purchase Date at a price
(the “Purchase Price”) equal to one hundred percent (100%) of the principal
amount Outstanding, plus accrued interest, if any, to the Purchase Date, unless
the REGISTERED OWNER shall give the Agency, the Disbursing Agent and the
Borrower notice of its election to retain this bond by delivery to the Borrower,
with a copy to the Agency and the Disbursing Agent, of a written notice
substantially in the form of the Bondowner’s Non-Tender Election Notice set
forth herein, not less than thirty (30) days prior to the Purchase Date. Upon
receipt of the copy of the Bondowner’s Non-Tender Election Notice, the
Disbursing Agent shall give notice to any other Bondowner of the receipt of such
Bondowner’s Non-Tender Election Notice not less than fifteen (15) days prior to
the Purchase Date. In the event there is more than one Bondowner and the
registered owners of Bonds representing more than fifty percent (50%) of the
principal amount of Bonds then Outstanding elect not to tender their Bonds for
purchase, each Bondowner shall be deemed to have agreed irrevocably to retain
their Bonds and that the Bonds shall not be subject to mandatory tender on the
applicable Purchase Date. If the Borrower does not receive at least thirty (30)
days prior to a Purchase Date Bondowner’s Non-Tender Election Notices from
Bondowners representing more than fifty percent (50%) of the principal amount of
Bonds then Outstanding, then the Bonds will be subject to mandatory tender and
purchased on the applicable Purchase Date. THE OWNER OF THIS BOND, BY ACCEPTANCE
HEREOF, AGREES TO SELL AND SURRENDER THIS BOND AT THE PURCHASE PRICE TO ANY
PURCHASER DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT IN THE
EVENT OF A MANDATORY TENDER AND, ON THE PURCHASE DATE, TO SURRENDER THIS BOND TO
THE AGENCY FOR PAYMENT OF THE PURCHASE PRICE. The Purchase Price of this bond
shall be paid to the REGISTERED OWNER by the Borrower on the Delivery Date,
which shall be the Purchase Date or any subsequent Business Day on which this
bond is delivered to the Agency for cancellation, with a copy to the Borrower.
The Purchase Price of this bond shall be paid only upon surrender of this bond
to the Agency as provided herein. From and after the Purchase Date, no further
interest on this bond shall be payable to the REGISTERED OWNER, provided that
there are sufficient funds available on the Purchase Date to pay the Purchase
Price. Payment of the Purchase Price of this bond to the REGISTERED OWNER shall
be made by the Borrower on the Purchase Date, if presentation and surrender of
this bond to the Agency, with a copy to the Borrower, is made prior to 10:00
a.m. Boston, Massachusetts time on the Purchase Date, or on such later Business
Day upon which presentation and surrender of this bond to the Agency, with a
copy to the Borrower, is made prior to 10:00 a.m. Boston, Massachusetts time.
 
 
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This bond will not be valid until the Certificate of Disbursing Agent has been
signed by the Disbursing Agent.
 
 
 

  MASSACHUSETTS DEVELOPMENT FINANCE AGENCY   (SEAL)              
 
By:
      Authorized Officer  

CERTIFICATE OF DISBURSING AGENT

This bond is one of the Bonds described in the Agreement.

 
SOVEREIGN BANK,
as Disbursing Agent
         
 
By:
     
Authorized Signature
 

 
 
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ASSIGNMENT

For value received the undersigned sells, assigns and transfers this bond to

 

 

  (Name and Address of Assignee)    

 
Social Security or Other Identifying Number of Assignee

and irrevocably appoints ___________________ attorney-in-fact to transfer it on
the books kept for registration of the bond, with full power of substitution.

              NOTE: The signature to this assignment must correspond with the
name as written on the face of the bond without alteration or enlargement or
other change. Dated:             Signature Guaranteed:                          
 
Participant in a Recognized
Signature Guarantee Medallion
Program
            By:         Authorized Signature    

 
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SCHEDULE 1

Schedule of Principal Payments

[To be inserted]

NON-TENDER ELECTION NOTICE
 
Massachusetts Development Finance Agency
Revenue Bonds
Ranor Issue, Series 2010B

Principal Amount
Bond Numbers
Purchase Date
     

The undersigned hereby certifies that it is the registered owner of the Bonds
described above (the “Non-Tendered Bonds”), and hereby agrees that the delivery
of this instrument to the Agency, the Disbursing Agent and the Borrower
constitutes an irrevocable election to retain the Non-Tendered Bonds and not to
sell the Non-Tendered Bonds to the Borrower or its designee on the Purchase
Date; provided, however, that the undersigned acknowledges and agrees that if
there is more than one Bondowner, then the Non-Tendered Bonds nonetheless shall
be subject to purchase by the Borrower or its designee on the Purchase Date
unless the Owners of more than fifty percent (50%) of the principal amount of
the Outstanding Bonds elect not to tender their Bonds for purchase on the next
Purchase Date. The undersigned further acknowledges and agrees that, subject to
the foregoing provision and subject to all other rights of the undersigned
contained in the Bonds, this election notice is irrevocable.
 
Except as otherwise indicated herein and unless the context otherwise requires,
the terms used herein shall have the meanings set forth in the Mortgage, Loan
and Security Agreement, dated as of December 1, 2010, providing for the issuance
of the Bonds.
 
                                

Date: _________________   Signature(s)                              
Street                      City                      State     Zip  

 
IMPORTANT: The above signature(s) must correspond with the name(s) as set forth
on the face of the Non-Tendered Bond(s) with respect to which this Bondowner’s
Non-Tender Election Notice is being delivered without any change whatsoever. If
this notice is signed by a person other than the registered owner of any
Non-Tendered Bond(s), the Non-Tendered Bond(s) must be either endorsed on the
Assignment appearing on each Bond or accompanied by appropriate bond powers, in
each case signed exactly as the name or names of the registered owner or owners
appear on the bond register. The method of presenting this notice to the Agency,
the Disbursing Agent and the Borrower is the choice of the person making such
presentation. If it is made by mail, it should be by registered mail with return
receipt requested.

[End of Series B Bond Form]

 
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(c) Replacement of Bonds. Replacement Bonds shall be issued pursuant to
applicable law as a result of the destruction, loss or mutilation of the Bonds.
The costs of a replacement shall be paid or reimbursed by the applicant, who
shall indemnify the Agency, the Disbursing Agent, and the Borrower against all
liability and expense in connection therewith.
 
(d) Event of Taxability. The Agency and the Bondowner will afford the Borrower
prompt notice of any inquiry or investigation by the Internal Revenue Service or
the Massachusetts Department of Revenue or the receipt of a statutory notice of
deficiency or any Opinion of Bond Counsel described in clause (ii) of Section
102(r), that are known to the Agency or the Bondowner, as applicable, and the
opportunity, at the Borrower’s sole cost and expense, to contest:
 
(i) the validity of any amendment to the IRC or Massachusetts law (or any
subsequent tax law) which causes the interest on the Bonds to be includable in
the gross income of the Bondowner (including any former Bondowner) for federal
or Massachusetts income tax purposes; or
 
(ii) any challenge to the validity of the tax exemption with respect to the
interest on the Bonds, including the right to direct any contest of such
challenge (including any administrative audit, administrative appeal and
litigation). The right of the Borrower to exercise its rights under this Section
301(d) is subject to the Borrower’s provision of whatever security and
indemnification the Agency or the Bondowner shall reasonably request.
 
The Borrower shall pay to the Agency and the Bondowner a supplemental payment to
reimburse the Agency and the Bondowner for any interest, penalties or other
charges assessed to them, if any, by reason of an Event of Taxability (including
any interest penalties or other charges assessed to a Bondowner for failure to
include interest on the Bonds in the Bondowner’s gross income prior to the date
of an Event of Taxability) (hereinafter, “Unpaid Tax Penalties”). The Borrower
shall make such payments of Unpaid Tax Penalties to the Agency and to any Person
who presents written proof satisfactory to the Disbursing Agent that as of the
Date of Taxability, such Person was a Bondowner. Any Unpaid Tax Penalties which
are not paid upon an Event of Taxability shall continue as an obligation of the
Borrower, and the payment of all Unpaid Tax Liabilities due and owing shall be
required prior to the defeasance of this Agreement pursuant to Section 203.
 
Notwithstanding the foregoing or any provision of the Form of Bonds as set forth
in Section 301(b) to the contrary, if following an Event of Taxability, it is
subsequently determined that the interest payable on the Bonds is properly
excluded from the gross income of the owners thereof for Federal or
Massachusetts income tax purposes, as applicable, then the calculation of the
interest rate, as set forth in the Form of Bonds in Section 301(b), shall be
determined as if no Event of Taxability had occurred, provided that the interest
rate shall be adjusted in order to compensate the Borrower for any increase
imposed in the rate of interest on the Bonds from and after the original Date of
Taxability. Such adjustment to the interest rate shall be made such that the
Borrower shall be fully compensated in not longer than a twelve-month period.
 

 
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(e) Bonds Are Not General Obligations. The Bonds do not now and shall never
constitute a general obligation or debt or pledge of the faith and credit of the
Agency, nor a debt or pledge of the faith and credit of the Commonwealth, and
each covenant and undertaking by the Agency herein and in the Bonds to make
payments is not a general obligation of the Agency or a debt or a pledge of the
faith and credit of the Commonwealth, but is a limited obligation payable solely
from the revenues and other funds provided under this Agreement and is a valid
claim of the Bondowner only against such revenues and other funds. Nothing
herein shall be construed as requiring the Agency to use any funds or revenues
from any source other than the Revenues.
 
Section 302. Application of Bond Proceeds.
 
Upon the receipt of the proceeds of the Bonds, such proceeds shall be used to
reimburse the Borrower for certain internal advances, to pay the cost of issuing
the Bonds and the Agency’s administrative fee, and the balance shall be
deposited in the Project Fund to be applied either directly or indirectly
through reimbursement to the Borrower to pay Project Costs, subject to the
requirements of Section 401 hereof.
 
Section 303. Debt Service Fund.
 
A Debt Service Fund is hereby established with the Disbursing Agent, and within
such a Fund, a Series A Account and a Series B Account, and moneys shall be
deposited therein as provided in this Agreement. The moneys in the Series A
Account of the Debt Service Fund and any investments held as part of such
account shall be held in trust and, except as otherwise provided, shall be
applied solely to the payment of the principal, redemption premium, if any, and
interest on the Series A Bonds. The moneys in the Series B Account shall be held
in trust, and except as otherwise provided, shall be applied solely to the
payment of the principal, redemption premium, if any, and interest on the Series
B Bonds. The Disbursing Agent shall apply moneys in the applicable account
within the Debt Service Fund to the payment of the respective series of Bonds on
each date on which a payment is to be made. Notwithstanding the foregoing, upon
prior agreement with the Disbursing Agent and the Bondowner, the Borrower may
make payments of principal and interest due on the Bonds directly to the
Bondowner, without deposit into the accounts within the Debt Service Fund,
through direct debiting of its accounts by the Bondowner or otherwise, and in
such event no Debt Service Fund shall be established with the Disbursing Agent,
except to the extent necessary in accordance with Section 203.
 
Section 304. [Reserved.]
 
Section 305. [Reserved.]
 
Section 306. Rebate.
 
 
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(a) Payments of Rebate. No later than thirty (30) days following each Rebate
Calculation Date (or any earlier date that may be necessary to make a required
payment to the United States under Subsection 306(c)), the Borrower shall
compute and certify to the Agency and the Bondowner in reasonable detail the
amount of the Excess (as defined in Subsection 306(b)), if any, as of each such
Rebate Calculation Date.
 
(b) Excess. “Excess” means the sum of:
 
A. the aggregate amount earned on all Nonpurpose Investments (other than
investments attributable to an excess described in this subparagraph)
attributable to the Gross Proceeds of Bonds including those on deposit in the
Project Fund (but not including those in the Debt Service Fund so long as the
conditions described below continue to be met) over
 
B. the amount which would have been earned if such Nonpurpose Investments were
invested at a rate equal to the yield (determined in accordance with the Rebate
Provision) on the Bonds to which such Gross Proceeds are attributable, plus any
income attributable to the Excess described in subparagraph (i) above.
 
The amount of any calculated Excess shall be reduced by any payments made to the
United States pursuant to Subsection 306(c). The terms “Nonpurpose Investment”
and “Gross Proceeds” shall have the meanings given in the Rebate Provision and
shall be applied as provided therein. Earnings on amounts deposited in the Debt
Service Fund shall be excluded from the calculation of any Excess if the gross
earnings on such amounts for each Bond Year are less than $100,000 (or a pro
rata portion of $100,000 in the case of a short Bond Year).
 
(c) Payment of Rebate to the United States.
 
(i) No later than forty-five (45) days following each Rebate Calculation Date
(or any earlier date that may be required to comply with the Rebate Provision),
the Borrower shall cause to be paid to the United States on behalf of the Agency
the full amount of rebate then required to be paid under IRC Section 148(f) (the
“Rebate Provision”) as certified by the Borrower in accordance with Paragraph
306(c)(ii). No later than forty-five (45) days after the Bonds have been paid in
full, the Borrower shall cause to be paid to the United States on behalf of the
Agency the full amount of rebate then required to be paid under the Rebate
Provision as certified by the Borrower in accordance with Paragraph 306(c)(ii).
Each such payment shall be made to the Internal Revenue Service Center, Ogden,
Utah 84201 or any successor location specified by the Internal Revenue Service,
accompanied by a Form 8038-T (or other similar information reporting form)
prepared by the Borrower.
 
(ii) No later than fifteen (15) days prior to each date on which a payment could
become due under Paragraph 306(c)(i) (a “Rebate Payment Date”), the Borrower
shall deliver to the Agency and the Bondowner a certificate either summarizing
the determination that no amount is required to be paid or specifying the amount
then required to be paid pursuant to Paragraph 306(c)(i). If the certificate
specifies an amount to be paid, such certificate shall be accompanied by (x) a
completed Form 8038-T, which is to be signed by an officer of the Agency, (y) a
certification stating that the Form 8038-T is accurate and complete, and (z) the
amount required to be paid.
 
 
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(d) Records. The Borrower shall keep such records as will enable it to fulfill
its responsibilities under this section and the Rebate Provision.

(e) Interpretation of this Section. The purpose of this Section 306 is to
satisfy the requirements of the Rebate Provision. Accordingly, this section
shall be construed so as to meet such requirements. The Borrower covenants that
all action taken under this section shall be taken in a manner that complies
with the Rebate Provision and that it shall neither take any action nor omit to
take any action that would cause the Bonds to be arbitrage bonds by reason of
the failure to comply with the Rebate Provision.
 
(f) Prompt Expenditure of Proceeds: Rebate Alternative. The Borrower may exclude
from its computation of an Excess required by Subsection 306(a) any Gross
Proceeds that are not subject to rebate pursuant to IRC Section 148(f)(4)(B) or
(C) or Treas. Reg. § 1.148-7.
 
(g) Compliance by the Borrower. To the extent any payment of rebatable arbitrage
is not timely made to the United States, the Borrower shall pay to the United
States on behalf of the Agency any interest, penalty, or other amount necessary
to prevent the Bonds from becoming arbitrage bonds within the meaning of IRC
Section 148. The Borrower covenants that to the extent necessary it shall obtain
the advice and assistance of experts to aid it in complying with the Rebate
Provision.
 
Section 307. [Reserved.]
 
Section 308. Application of Moneys.
 
If the moneys provided by the Borrower, including any available moneys in the
applicable account within the Debt Service Fund, are not sufficient on any day
to pay all principal, redemption price and interest on the applicable series of
Bonds Outstanding then due or overdue, such moneys (other than any sum in the
applicable account within the Debt Service Fund irrevocably set aside for the
redemption of particular Bonds or required to purchase Bonds of such series
under outstanding purchase contracts) shall be applied first to the payment of
interest, including interest on overdue principal, in the order in which the
same became due (pro rata with respect to interest which became due at the same
time), and second to the payment of principal and redemption premiums, if any,
without regard to the order in which the same became due (in proportion to the
amounts due). For this purpose interest on overdue principal shall be treated as
coming due on the first day of each month.
 
Section 309. Loan of Proceeds; Payments by the Borrower.
 
 
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(a) The Agency shall loan the proceeds of the Bonds to the Borrower for the
purposes of financing and refinancing Project Costs, in accordance with the
provisions of this Agreement. The Borrower shall repay the loan of Bond proceeds
at the times and in the amounts to enable the Agency to make the payments due on
the Bonds as set forth in the Forms of Bonds in Section 301(b). The Borrower
shall pay on or before each Payment Date, either directly to the Bondowner in
accordance with the provisions of Section 303, or to the Disbursing Agent for
deposit in the applicable account within the Debt Service Fund, a sum equal to
all payments due on the Bonds of the applicable series on each such Payment
Date, less amounts already on deposit in the applicable account within the Debt
Service Fund, if any, and available, for that purpose. The Borrower shall pay a
late charge for any payment of principal or interest not paid within five days
following the date such payment is due equal to five percent (5.0%) of the
amount of any such payment. All payment made by the Borrower under this
Agreement shall be made in lawful money of the United States of America, in
immediately available funds. For purposes of convenience only, and without
limiting the Borrower’s obligations hereunder, a Schedule of Principal Payments
for each series of Bonds is included as Exhibit D.

(b) The payments to be made under the foregoing subsection shall be
appropriately adjusted to reflect any earnings on amounts in the Debt Service
Fund, and any purchase or redemption of Bonds.
 
(c) At any time when any principal of a series of Bonds is overdue, the Borrower
also shall have a continuing obligation to pay an amount equal to interest on
the overdue principal, as set forth in the Forms of Bonds in Section 301(b).
Redemption premiums shall not bear interest.
 
(d) Any payments by the Borrower to the Disbursing Agent for deposit in the
applicable account within the Debt Service Fund under this Agreement shall
discharge the obligation of the Borrower to the extent of such payments;
provided, that if any moneys are invested in accordance with this Agreement and
a loss results therefrom so that there are insufficient funds to pay principal
and interest on the respective series of Bonds when due, the Borrower shall
supply the deficiency.
 
(e) Within thirty (30) days after notice from the Agency, the Borrower shall pay
to the Agency all expenditures (except general administrative expenses or
overhead) reasonably incurred by the Agency by reason of this Agreement.
 
Section 310. Unconditional Obligation.
 
To the extent permitted by law, the obligation of the Borrower to make payments
to the Agency and the Bondowner under this Agreement shall be absolute and
unconditional, shall be binding and enforceable in all circumstances whatsoever,
shall not be subject to setoff, recoupment or counterclaim, and shall be a
general obligation of the Borrower to which the full faith and credit of the
Borrower are pledged.
 
Section 311. Redemption of the Bonds.
 
(a) Special Redemption. If moneys are available to redeem Bonds pursuant to
Section 401(h) or Section 406, such moneys (and earnings thereon) shall be used
to redeem Bonds of the applicable series within sixty (60) days. The Bonds are
subject to redemption pursuant to this subsection as a whole or in part on any
Payment Date, at their principal amounts, without premium, plus accrued interest
to the redemption date, in inverse order of principal installments due; provided
that, if less than all of the Bonds of a series Outstanding shall be called for
redemption, the Bonds to be so redeemed shall be selected by lot.
 
 
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(b) Optional Redemption. The Bonds are redeemable prior to maturity at the
written direction of the Borrower to the Agency and the Bondowner. Such
redemption shall be in accordance with the terms of the applicable series of
Bonds, as a whole or in part on any Payment Date, in inverse order of principal
installments due, at redemption price set forth in the applicable Form of Bonds,
plus accrued interest to the redemption date.
 
(c) Payment of Redemption Price and Accrued Interest. Whenever Bonds are called
for redemption, the accrued interest thereon shall become due on the redemption
date and shall be paid from the applicable account within the Debt Service Fund
to the extent of any available moneys therein. To the extent not otherwise
provided, the Borrower shall pay the redemption price of and accrued interest on
the respective series of Bonds.
 
(d) Notice of Redemption. When Bonds of a series are to be redeemed, the
Borrower shall give notice to the Agency and the Bondowner, which notice may be
conditional and shall identify the Bonds to be redeemed and state the date fixed
for redemption. The notice shall further state that on such date there shall
become due and payable upon each Bond to be redeemed the redemption price
thereof, together with interest accrued to the redemption date, and that upon
payment of the same to the Bondowner on such date, from and after such date
interest thereon shall cease to accrue. The Borrower shall mail or deliver the
redemption notice not less than thirty (30) days prior to the date fixed for
redemption.
 
Section 312. Investments.
 
(a) Pending their use under this Agreement, moneys in the Project Fund and the
Debt Service Fund may be invested by the Disbursing Agent, at the direction of
the Borrower, in Permitted Investments (as defined below) maturing or redeemable
at the option of the holder at or before the time when such moneys are expected
to be needed. Any investments pursuant to this subsection shall be held by the
Disbursing Agent as a part of the applicable Fund and shall be sold or redeemed
to the extent necessary to make payments or transfers or anticipated payments or
transfers from such Fund, subject to the notice provisions of Section 9-611 of
the UCC to the extent applicable. The Disbursing Agent shall not be liable for
any loss occurring from any investment, sale or conversion to cash made in
accordance with the provisions of this Agreement.
 
(b) Except as set forth below, any interest realized on investments in any Fund
and any profit realized upon the sale or other disposition thereof shall be
credited to the Fund with respect to which they were earned and any loss shall
be charged thereto. Earnings (which for this purpose include net profit and are
after deduction of net loss) on amounts deposited in the Debt Service Fund (and
the respective accounts thereon) and the Project Fund shall be retained therein.
 
 
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(c) The term “Permitted Investments” means (i) Government or Equivalent
Obligations, (ii) “tax exempt bonds” as defined in IRC § 150(a)(6), other than
“specified private activity bonds” as defined in IRC §57(a)(5)(C), rated at
least AA or Aa2 by S&P and Moody’s, respectively, or the equivalent by any other
nationally recognized rating agency, at the time of acquisition thereof or
shares of a so-called money market or mutual fund that do not constitute
“investment property” within the meaning of IRC §148(b)(2); provided either that
the fund has all of its assets invested in obligations of such rating quality
or, if such obligations are not so rated, that the fund has comparable
creditworthiness through insurance or otherwise and which fund is rated AAm or
AAm-G if rated by S&P, (iii) certificates of deposit of, banker’s acceptances
drawn on and accepted by, and interest bearing deposit accounts of, a bank or
trust company which has a capital and surplus of not less than $50,000,000, (iv)
Repurchase Agreements (as defined below), (v) investment agreements with
providers rated at least AA- or Aa3 by S&P and Moody’s, respectively, (vi) money
market funds rated at least AAm or AAm-G by S&P, and (vii) any other investment
acceptable to the Bondowner. The term “Repurchase Agreement” shall mean a
written agreement under which a bank or trust company which has a capital and
surplus of not less than $50,000,000, or a government bond dealer reporting to,
trading with, and recognized as a primary dealer by the Federal Reserve Bank of
New York, sells to, and agrees to repurchase from the Disbursing Agent,
obligations issued or guaranteed by the United States; provided that the market
value of such obligations is at the time of entering into the agreement at least
one hundred and three percent (103%) of the repurchase price specified in the
agreement and that such obligations are segregated from the unencumbered assets
of such bank or trust company or government bond dealer; and provided further,
that unless the agreement is with a bank or trust company, such agreement shall
require the repurchase to occur on demand or on a date certain which is not
later than one (1) year after such agreement is entered into and shall expressly
authorize the Disbursing Agent to liquidate the purchased obligations in the
event of the insolvency of the party required to repurchase such obligations or
the commencement against such party of a case under the federal Bankruptcy Code
or the appointment of, or taking possession by, a trustee or custodian in a case
against such party under the Bankruptcy Code. Any such investments may be
purchased from or through the Disbursing Agent.
 
A.           Notwithstanding the immediately preceding paragraph, Permitted
Investments with respect to the Debt Service Fund shall not include the
following:

1.           Government or Equivalent Obligations, certificates of deposit and
bankers’ acceptances, in each case with yields lower than either (x) the yield
available on comparable obligations then offered by the United States Treasury,
or (y) the highest yield published or posted by the provider of the Permitted
Investments to be currently available from the provider on reasonably comparable
investments;

2.           Any demand deposit or similar account with a bank, trust company or
broker, unless (x) the account is used for holding funds for a short period of
time until such funds are reinvested or spent, and (y) substantially all the
funds in the account are withdrawn for reinvestment or expenditure within
fifteen (15) days of their deposit therein; or

3.           Repurchase Agreements, unless (x) at least three (3) bids are
obtained on the proposed Repurchase Agreement from Persons other than those with
an interest in the Bonds, (y) the highest yielding Repurchase Agreement for
which a qualifying bid is received is purchased, (z) the provider of the
Repurchase Agreement certifies that the yield on the Repurchase Agreement is not
less than the yield then available from the provider on reasonably comparable
repurchase agreements, if any, offered to Persons who are purchasing the
agreement from a source other than proceeds of tax-exempt bonds, (xx) the terms
of the Repurchase Agreement, including collateral requirements, are reasonable,
and (yy) a written record of the yield offered by each bidder is maintained.
 
 
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Notwithstanding the foregoing, any of the requirements of this paragraph A.
shall not apply if the Borrower shall have received an Opinion of Bond Counsel
regarding the waiver of such requirements. Permitted Investments shall not
include any investment that would cause any of the Bonds to be federally
guaranteed within the meaning of IRC §149(b).
 
(d) Any security interest required by Subsection 312(a) shall be perfected in
such manner as may be provided by law. In the case of a Repurchase Agreement, if
under applicable law, including the federal Bankruptcy Code, the agreement is
recognized as transferring ownership in the underlying securities to the
investing party with a right to liquidate the securities and apply the proceeds
against the repurchase obligation, all free and clear of the claims of creditors
and transferees of the other party, the interest of the investing party shall be
regarded as the equivalent of a perfected security interest for the purposes of
this subsection. In any case, however, if the underlying securities or the
securities subject to the security interest are certificated securities (as
opposed to uncertificated or book-entry securities), they shall be delivered to
the Disbursing Agent, or to a depository satisfactory to the Disbursing Agent,
either as agent for the Disbursing Agent or as bailee with appropriate
instructions and acknowledgement, at the time of or prior to the investment, or,
if the security interest is perfected without delivery, delivery shall be made
within three (3) Business Days. Possession by the Disbursing Agent of the
security for an obligation of the Disbursing Agent shall not be deemed to
satisfy the requirements of this subsection unless there is an opinion of
counsel satisfactory to the Agency to the effect that such possession satisfies
the requirements of this subsection.

(e) The Disbursing Agent may hold undivided interests in Permitted Investments
for more than one Fund (for which they are eligible) and may make interfund
transfers in kind.
 
Section 313. Paying Agent.
 
The Disbursing Agent shall act as paying agent for the Bonds and as Bond
registrar and transfer agent.
 
Section 314. Unclaimed Moneys.
 
Except as may otherwise be required by applicable law, in case any moneys
deposited with the Disbursing Agent for the payment of the principal of, or
interest or premium, if any, on any Bond remain unclaimed for three (3) years
after such principal, interest or premium has become due and payable, the
Disbursing Agent may, and upon receipt of a written request of the Borrower
shall, pay over to the Borrower the amount so deposited in immediately available
funds, without additional interest, and thereupon the Disbursing Agent and the
Agency shall be released from any further liability with respect to the payment
of principal, interest or premium, and the owner of such Bond shall be entitled
(subject to any applicable statute of limitations) to look only to the Borrower
as an unsecured creditor for the payment thereof.
 
 
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Section 315. Tender of Bonds.
 
The Bonds shall be subject to mandatory tender on the Purchase Date, at the
Purchase Price (as defined in the Form of Bonds in Section 301(b)), upon the
terms and conditions described in the Form of Bonds, unless the Bondowner shall
give the Borrower notice of its election not to tender the Bonds by delivery to
the Borrower, with a copy to the Agency and the Disbursing Agent, of a written
notice of non-tender substantially in the form of the Bondowner’s Non-Tender
Election Notice set forth in the Form of Bonds in Section 301(b), not less than
thirty (30) prior to the Purchase Date. Upon receipt of a copy of the
Bondowner’s Non-Tender Election Notice, the Disbursing Agent shall give notice
to any other Bondowners of the receipt of the Bondowner’s Non-Tender Election
Notice and of the Purchase Date. If there is more than one Bondowner and the
owners of more than fifty percent (50%) of the principal amount of Bonds then
Outstanding elect to retain their Bonds, then each Bondowner shall be deemed to
have agreed irrevocably to retain its Bonds and the Bonds shall not be subject
to mandatory tender on the applicable Purchase Date. If Borrower does not
receive at least thirty (30) days prior to a Purchase Date Bondowner’s
Non-Tender Election Notices from Bondowners representing more than fifty percent
(50%) of the principal amount of Bonds then Outstanding, then the Borrower shall
be required to purchase all of the Bonds Outstanding on the applicable Purchase
Date. The Bondowners shall cooperate with the Agency, the Borrower and the
Disbursing Agent in the transfer of the Bonds to the purchaser designated by the
Borrower or any other designee of the Borrower following any such mandatory
tender. The Purchase Price of the Bonds shall be payable to the Bondowners on
the Purchase Date or any subsequent Business Day upon delivery of the Bonds to
the Agency, with a copy to the Borrower, as set forth in the Form of Bonds in
Section 301(b).
 
ARTICLE 4
THE PROJECT AND THE MORTGAGED PROPERTY
 
Section 401. Project Fund.
 
(a) Establishment; Use of Proceeds. A Project Fund is hereby established with
the Disbursing Agent. Bond proceeds deposited into the Project Fund shall be
used to pay requisitions approved by the Bondowner pursuant to this Section 401.
The moneys in the Project Fund and investments held as part of such fund shall
be held in trust and, except as otherwise provided in this Agreement, shall be
applied solely to pay Project Costs, either directly or through reimbursement to
the Borrower. If there is an Event of Default with respect to any payments due
on the Bonds, or to the Agency or the Disbursing Agent, the Disbursing Agent may
use any amounts in the Project Fund without requisition to make up the
deficiency, and the Borrower shall restore the funds so used.
 
(b) Disbursements. Disbursements from the Project Fund to pay Project Costs
shall be made only upon receipt by the Disbursing Agent of written requisitions,
in each instance signed by the Project Officer and (except for requisitions
relating to the costs of issuing the Bonds) approved by the Bondowner, in
accordance with the provisions of this Section. Requisitions shall be in
substantially the form of Exhibit B. Disbursements for construction related
Project Costs shall be subject to the terms and conditions set forth in Exhibit
C. By the filing of each requisition, the Borrower hereby represents and
covenants that each such requisition shall be:
 
 
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(i) for Project Costs that have not been the basis of a prior or contemporaneous
requisition or of a prior payment of an external loan or of a prior
reimbursement of internal advances, and that to the extent it is for the
reimbursement of Project Costs paid by the Borrower before the date of issuance
of the Bonds, such reimbursement is consistent with the representations and
warranties made by the Borrower in Subsection 1002(c);
 
(ii) for Project Costs related to work, services, material or equipment that is
in accordance with all material and applicable building, zoning, land use,
environmental protection, historical, sanitary and safety laws, rules and
regulations, and material and applicable insurance requirements and the
provisions of this Agreement; and that all permits, licenses and approvals
required for the items covered by the requisition have been obtained; and
 
(iii)           accompanied by satisfactory evidence that the monies remaining
undisbursed in the Project Fund (less the retainage described in Exhibit C
hereof) are sufficient for the payment of all direct and indirect costs of
completion of the Project (including closing costs and equipment purchases) in
accordance with all of the terms and provisions hereof. If such satisfactory
evidence is not furnished, it shall be a condition to the Bondowner’s approval
of any Borrower requisition that the Borrower deposit into the Project Fund an
amount which, together with the then undisbursed monies in the Project Fund
(less the aforesaid retainage) will be sufficient to pay the aforesaid costs of
completion of the Project (including the closing costs and equipment purchases).
The Borrower agrees, forthwith upon demand by the Bondowner, to make all such
deposits.
 
(c) Additional Documentation. In addition to the requirements set forth in
Exhibit C, prior to approving a requisition, the Bondowner may require that the
Borrower also provide:
 
(i) lien releases, waivers, partial waiver and subordination forms, or
affidavits from any contractor, subcontractors and materialmen to which the
requisition may apply;
 
(ii) a report of the title insurance company that provided the title insurance
policy to the Bondowner for the Project at the time of issuance of the Bonds
(the “Title Insurance Policy”), which confirms that there are no liens or other
encumbrances on the Project (other than real estate taxes for the then current
year, payment of which is not in default, this Agreement, the Assignment, and
such other liens and encumbrances as appeared in the Title Insurance Policy or
are otherwise permitted under this Agreement), and confirms that there are no
notices of contract or other notices of intention to file liens on the Project
that have not been released, subordinated or waived;
 
(iii) an affidavit of the Borrower to the effect that as of the date of the
requisition, the Borrower knows of no event that will or could negatively affect
completion of the Project, or the Borrower’s ability to make payments on the
Bonds or any other payments required under this Agreement, or otherwise
interfere with the operation of the Project for its intended purpose; and
 
 
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(iv) evidence that the Borrower has obtained all necessary governmental and
private approvals of the Plans (as defined in Exhibit C) and all necessary
building permits from all governmental authorities having jurisdiction.
 
(d) Bondowner Approval. The Bondowner shall have no obligation to approve a
requisition if:
 
(i) it determines that as of the date of such requisition and as a result of the
construction of the Project, the lien of this Agreement with respect to the
Mortgaged Property is subject to a mortgage, lien, encumbrance or claim that did
not appear in the Title Insurance Policy and is not otherwise permitted in
accordance with the provisions of this Agreement;
 
(ii) in the Bondowner’s sole determination, to do so would result in the payment
of the requisition being made more than twenty-five (25) days after the last day
of the period stated in an accurate, duly executed partial waiver and
subordination of lien form in substantially the form provided by Massachusetts
General Laws, Chapter 254, Section 32;
 
(iii) following the Bondowner’s request, the Borrower fails to record, or to
cause to be recorded, a bond pursuant to Massachusetts General Laws, Chapter
254, Section 14, sufficient in form, substance and amount to dissolve any lien
which may encumber the Project or the Mortgaged Property;
 
(iv) there shall have been filed or recorded documents claiming a lien pursuant
to Massachusetts General Laws, Chapter 254, Section 4, which lien or claim of
lien is not dissolved or waived prior to or contemporaneously with the payment
of such requisition;
 
(v) the Borrower has not submitted a requisition in conformance with the
provisions of this Article 4 and Exhibit C, or, if after funding of the
requested advance, the Project Fund will be “out of balance” with respect to the
remainder of the Project Costs; or
 
(vi) an Event of Default shall have occurred and be continuing hereunder.
 
(e) Construction Representative. The Bondowner may engage, in its sole
discretion but at the cost and expense of the Borrower, a construction
representative (the “Construction Representative”). As directed by the
Bondowner, the Construction Representative shall review and approve the
estimated construction costs for the Project and the Plans. In addition to its
other responsibilities as set forth in Exhibit C, the Construction
Representative may conduct periodic inspections of the Project and make periodic
reports to the Bondowner with respect thereto, to ensure that all work performed
on the Project has been performed in a good and workmanlike manner. The function
of the Construction Representative shall be solely to assist the Bondowner, and
neither the Bondowner, nor its agents or employees, shall be liable either
directly or indirectly for any loss, claim or damage which may arise as a result
of negligence, defective or inappropriate design, materials, workmanship or
supervision. The Borrower hereby agrees to hold the Bondowner harmless and
indemnified from any such loss, claim or damage.
 
 
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(f) Final Requisition. At the time of submission of the final requisition for
Project Costs relating to the Project, including all retainage of Project Costs,
in addition to the requirements of Exhibit C, the Borrower shall provide to the
Disbursing Agent and the Bondowner a Completion Certificate, in accordance with
the provisions of Section 401(g).
 
(g) Completion Certificate. The Borrower shall provide the Disbursing Agent and
the Bondowner with a Completion Certificate promptly upon completion or
termination of the Project. The Completion Certificate shall be signed by the
Project Officer and shall specify the date by which the Project has been
completed (or terminated) and shall (i) (in the case of completion of the
Project) (A) state that the Project has been substantially completed so as to
permit efficient use in the operations of the Borrower, (B) be accompanied by
the appropriate occupancy certificate, and (C) set forth any Project Costs
remaining to be paid from the Project Fund or state that all Project Costs have
been paid to the extent applicable; or (ii) (in the case of termination of the
Project) (A) set forth the reasons why the Project is not and will not be
completed by the Borrower, and (B) set forth any Project Costs incurred prior to
termination, or as a result of termination, of the Project that are not yet paid
from the Project Fund.
 
(h) Application of Funds in Project Fund at Project Completion. Except as
otherwise provided in this Agreement, all moneys in the Project Fund (including
moneys earned thereon by investment) remaining after the earliest to occur of
(i) delivery of the Completion Certificate, or (ii) two (2) Business Days next
preceding the third anniversary of the date of issue of the Bonds, shall be
applied (A) to redeem Bonds in accordance with the provisions of Section 311(a),
without premium, on the next Payment Date following notice to the Disbursing
Agent and the Bondowner pursuant to Section 311(d), without further
authorization from the Borrower or the Agency, so to exhaust such amount to the
extent possible, or (B) applied to pay principal of or interest on the Bonds on
the next applicable payment date for the Bonds, or (C) a combination of either
of the foregoing; provided that, before any funds are applied pursuant to this
paragraph, the Disbursing Agent and the Bondowner shall have been provided with
an Opinion of Bond Counsel regarding the proposed application of such funds on
deposit in the Project Fund. Notwithstanding the foregoing, any amounts
previously or then certified to the Disbursing Agent by the Project Officer as
required for payment of Project Costs not yet due shall be retained in the
Project Fund for payment of such costs as they become due. Any retained funds
remaining after full payment of all such Project Costs shall be likewise applied
as described above.
 
If the Bonds shall have been accelerated pursuant to Section 602(a), any balance
remaining in the Project Fund shall, without further authorization, be applied
as provided in Section 604.

Section 402. Borrower’s Obligations to Undertake and Complete Project.
 
(a) Proceeds of the Bonds on deposit in the Project Fund shall be used to pay
Project Costs; provided, however, if the moneys in the Project Fund are not
sufficient to pay in full all Project Costs, the Borrower agrees, in order to
fulfill the purposes of the Act, to pay any such excess Project Costs from its
own funds. The Agency makes no warranty, express or implied, that moneys paid
into the Project Fund or otherwise available to complete the Project will be
sufficient to pay all Project Costs.
 
 
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(b) The Borrower shall cause the Project to be completed diligently and
continuously and with all reasonable dispatch in accordance with applicable
laws, rules, regulations and requirements of all governmental authorities having
jurisdiction with respect to the Project. The materials and workmanship shall be
of high quality, and no materials, fixtures or equipment intended to become part
of the Project shall be purchased by the Borrower subject to any lien,
encumbrance or claim. The Borrower represents that contracts for carrying out
the Project and acquisitions in connection therewith have been and shall be made
by the Borrower in its own name.
 
(c) The Borrower may terminate the Project upon written notice to the Agency and
the Bondowner, in which event upon receipt of a Completion Certificate as set
forth in Section 401(g), all unspent moneys shall be applied pursuant to
Subsection 401(h).
 
Section 403. Use of Project and Mortgaged Property.
 
(a) Compliance with Law. In the maintenance, improvement and operation of the
Project and the Mortgaged Property, the Borrower covenants that it has complied
and will comply with any provisions of the Act applicable to the Borrower, and
all applicable building, zoning, land use, environmental protection, labor and
employment, sanitary and safety laws, rules and regulations, and all applicable
insurance requirements, and will not permit a nuisance thereon; but it shall not
be a breach of this subsection if the Borrower fails to comply with such laws,
rules, regulations and requirements (other than Chapter 21E of the Massachusetts
General Laws, as amended) during any period in which the Borrower is diligently
and in good faith contesting the validity thereof, provided that the security
created or intended to be created hereby is not, in the opinion of the
Bondowner, unreasonably jeopardized thereby. The Borrower shall not suffer or
permit a lien arising pursuant to Chapter 21E of the Massachusetts General Laws,
as amended, to be created of record with respect to the Mortgaged Property or
the rights to the proceeds thereof.
 
(b) Payment of Lawful Charges. The Borrower shall make timely payment of all
taxes and assessments and other municipal or governmental charges and all claims
and demands for work, labor, services, materials or other objects which, if
unpaid, might by law become a lien on the Mortgaged Property or any part
thereof; but it shall not be a breach of this subsection if the Borrower fails
to pay any such item during any period in which the Borrower is diligently and
in good faith contesting the validity thereof, provided that the laws applicable
to contesting its validity do not require payment thereof and proceedings for a
refund, that the security created or intended to be created hereby is not, in
the opinion of the Bondowner, unreasonably jeopardized thereby, and that the
Borrower has posted a bond in the amount of the disputed sum, if so required by
applicable law.
 
(c) Permitted Purposes. The Borrower agrees that the Project shall be used only
for the purposes described in the Act. The Borrower acknowledges that it is
fully familiar with the physical condition of the Project and that it is not
relying on any representation of any kind by the Agency or the Bondowner
concerning the nature or condition thereof. Neither the Agency nor the Bondowner
shall be liable to the Borrower or any other Person for any latent or patent
defect in the Project.
 
 
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Section 404. Repair and Current Expenses.
 
(a) The Borrower agrees that it will maintain and repair the Mortgaged Property
and keep the same in good and serviceable condition and in at least as good
condition and repair (reasonable wear and tear and casualty loss excepted) as it
was on the date the same was placed in service. In the event of damage to or
destruction of all or any part of the Mortgaged Property from any casualty,
unless the Borrower exercises its right under Subsection 406(e), the Borrower
shall repair, replace, restore or reconstruct the Project to the extent
necessary to restore substantially its value and in a manner suitable for its
continued use for the purpose for which it was provided; and this obligation
shall not be limited by the amount of available insurance proceeds.
 
(b) The Borrower shall pay all costs of maintaining and operating the Project
and the Mortgaged Property.
 
Section 405. Insurance.
 
(a) Coverage. The Borrower (i) shall keep its plant, equipment, furnishings and
fixtures (including the Mortgaged Property) insured on a full replacement costs
basis against fire, lightning and extended coverage perils and against such
other risks as are customarily insured against by similar borrowers in the area
in an amount equal to the greater of (A) 100% of the insurable value thereof
(including replacement cost endorsements) exclusive of excavations and
foundations, or (B) in the case of blanket policies, an amount equal to the
greater of (i) or the principal amount of the Outstanding Bonds, but in any case
not less than the amount necessary to avoid coinsurance; (ii) shall, to the
extent required by law, carry workers’ compensation insurance, disability
insurance and other insurance covering injury, sickness, disability or death of
employees; and (iii) shall maintain insurance against liability of the Borrower
imposed by law or assumed by contract for injuries to persons, and for death of
persons from such injuries with limits reasonably acceptable to the Bondowner.
 
(b) Policies. All insurance policies carried under clause (i) of Subsection
405(a) shall be made payable to the Bondowner as its interests may appear and
otherwise to the Borrower, and shall name the Bondowner as additional insured
(as to liabilities coverages), and as mortgagee and loss payee (as to property
coverages). All insurance carried under this section shall be with responsible
and reputable companies authorized to transact business in the Commonwealth, and
shall be reasonably acceptable to the Bondowner. All policies of insurance shall
contain a provision that prior to cancellation of such insurance, the carrier
will give at least thirty (30) days written notice of the proposed cancellation
to the Bondowner. When any insurance is to expire other than by cancellation,
the duplicate or certificate of the new policy shall be furnished to the
Bondowner at least thirty (30) days before such expiration date.

(c) Evidence of Coverage. The policies shall be open to inspection by the
Bondowner at all reasonable times. Certificates of insurance describing the
policies (or, in the case of flood insurance, satisfactory evidence of its
taking effect at or prior to the delivery of the Bonds) shall be furnished by
the Borrower to the Initial Purchaser at or prior to the delivery of the Bonds,
and a complete list describing the policies and certificates in effect as of
each January 1 shall be furnished by the Borrower to the Bondowner annually, no
later than thirty (30) days following such date, together with a certificate of
an Authorized Officer of the Borrower certifying that such insurance meets all
the requirements of this section. In making this certificate, such Authorized
Officer may rely upon certificates of insurance. If any change is made in the
insurance as to either the deductible amount or type of coverage, a description
and notice of the change shall be immediately furnished to the Bondowner by the
Borrower.
 
 
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Section 406. Damage to or Destruction or Taking of the Mortgaged Property.
 
(a) Recovery of Insurance Proceeds. In the event of damage to or destruction of
all or any part of the Mortgaged Property, the parties shall cooperate in order
to recover any applicable proceeds of insurance required under Subsection
405(a), with the Borrower to have primary responsibility to recover the
proceeds. Such proceeds shall be paid to the Disbursing Agent. From such
proceeds the Disbursing Agent shall provide for the payment or reimbursement of
reasonable expenses of obtaining the recovery. The Disbursing Agent shall then
give notice to the Borrower of such expenses and of the amount of the remaining
proceeds (the “Net Proceeds”).
 
(b) Payment to Borrower. Subject to the provisions of paragraph (e) below, the
Disbursing Agent shall pay to the Borrower the Net Proceeds, or so much thereof
as may be needed for the repair, replacement, restoration or reconstruction, at
one time or from time to time as directed by the Bondowner, as such funds are
required by the Borrower, upon notification by the Borrower as to the amount
needed and upon the approval of the Bondowner. Until so paid to the Borrower or
transferred under Subsection 406(c), such funds may be invested by the
Disbursing Agent as provided in Section 312.
 
(c) Balance of Net Proceeds. If no repair, replacement, restoration or
reconstruction is necessary, or when no further funds are needed for such
purposes, the Borrower shall so notify the Disbursing Agent and the Bondowner.
Any remaining Net Proceeds shall be applied to the redemption of Bonds pursuant
to Section 311(a).
 
(d) Eminent Domain. In the event of a taking of all or any part of the Mortgaged
Property by eminent domain, the parties shall cooperate as in Subsection 406(a)
in order to recover any applicable proceeds. Such proceeds shall be paid to the
Disbursing Agent. The Disbursing Agent shall make appropriate deductions from
such proceeds as in the case of insurance proceeds and give notice to the
Borrower of such deductions and of the amount of the Net Proceeds. The Net
Proceeds shall be dealt with as in Subsection 406(c), unless the Bondowner
directs the Borrower or the Borrower elects to defease this Agreement or redeem
Bonds pursuant to Subsection 406(e) with that portion of the Net Proceeds
allocable to the Bonds, or in the case of a partial taking, unless the Borrower,
within thirty (30) days after such notification, gives notice to the Disbursing
Agent and the Bondowner of its election to repair, replace, restore, or
reconstruct the remaining property, subject to the provisions of Subsection
406(e). In the event of such an election to repair, replace, restore or
reconstruct, the foregoing provisions as to insurance proceeds shall apply, and
the Borrower shall be obligated to repair, replace, restore or reconstruct the
remaining property to the extent necessary to restore the operational utility
lost by the taking, and this obligation shall not be limited by the amount of
Net Proceeds available.
 

 
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(e) Election to Obtain Discharge or Redeem Bonds. With respect to any one
casualty or series of related casualties, whenever the Net Proceeds of insurance
or condemnation awards resulting from damage to or destruction or a taking of
all or a portion of the Mortgaged Property exceed twenty-five percent (25%) of
the then full insurable value of the Mortgaged Property, as determined by a
consultant acceptable to the Bondowner, the Bondowner may direct the Borrower or
the Borrower may elect to use such Net Proceeds (or a portion thereof exceeding
twenty-five percent (25%) of such insurable value not used or to be used for
partial repair, replacement, restoration or reconstruction) to redeem Bonds
pursuant to the special redemption provisions of Subsection 311(a). Without
limiting the foregoing, if an Event of Default has occurred that has not been
waived, the Bondowner may direct the Borrower to apply all insurance or
condemnation proceeds to redeem Bonds. In addition, the Borrower may be relieved
of its obligation to repair, replace, restore or reconstruct at any time, by
taking all action necessary to discharge the lien of this Agreement under
Section 203. In order to so redeem Bonds, the Borrower shall give notice of the
redemption of Bonds pursuant to Subsections 311(a) and (d). In order to
discharge the lien of this Agreement as described in this subsection, the
Borrower may direct the Disbursing Agent to deposit into the Debt Service Fund
all Net Proceeds then held by the Disbursing Agent under this section.
 
Section 407. Additions and Alterations.
 
The Borrower may erect additional buildings on the premises described in the
attached Exhibit A and may alter, remodel or improve the Mortgaged Property,
provided that such alteration or remodeling shall not damage the basic structure
thereof or materially decrease its value. Such new buildings, improvements,
alterations or remodeling shall be deemed a part of the Mortgaged Property and
shall be subject to the lien hereof, but the cost thereof shall be paid by the
Borrower. The Borrower shall not take or permit any action which would cause the
Mortgaged Property or a sale thereof under Subsection 602(c) to violate zoning
or other land use regulations.
 
Section 408. Right of Access to the Mortgaged Property.
 
The Agency and the Bondowner and their respective duly authorized agents shall
have the right at all reasonable times to enter upon the Mortgaged Property for
the purpose of inspection or to carry out their powers hereunder and under the
other Bond Documents. The Agency or the Bondowner may enter at any time and from
time to time during normal business hours pursuant to this section except that,
in case of emergency as determined by the Agency or the Bondowner, as the case
may be, the Agency or the Bondowner may enter at any time.
 
 
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ARTICLE 5
[RESERVED]
 
ARTICLE 6
DEFAULT AND REMEDIES.
 
Section 601. Default by the Borrower.
 
(a) Events of Default; Default. “Event of Default” in this Agreement means any
one of the events set forth below and “default” means any Event of Default
without regard to any lapse of time or notice.
 
(i) Debt Service. Any principal or premium, if any, of or interest on any Bond
shall not be paid when the same becomes due and payable, whether at maturity, by
acceleration, upon redemption or otherwise, or the Borrower shall fail to make
any payment required of it under Subsections 309(a) or (c), or 311(c), when the
same becomes due and payable.
 
(ii) Other Obligations. The Borrower shall fail (A) to make any other required
payment required hereunder within ten (10) days after the same is due and
payable, or (B) to perform its obligations under Section 405(a), or (C) to
perform any of its other agreements, covenants or obligations under this
Agreement, and such failure is not remedied within thirty (30) days after
written notice thereof is given by the Bondowner to the Borrower; provided,
however, Borrower shall be permitted such additional time as may be reasonable
and necessary to cure such failure, if such failure cannot be cured within the
aforesaid 30-day period, so long as Borrower promptly commences and diligently
pursues such cure to completion.
 
(iii) Warranties. There shall be a material breach of warranty or representation
made herein by the Borrower as of the date it was intended to be effective.
 
(iv) Voluntary Bankruptcy. The Borrower shall commence a voluntary case under
the federal bankruptcy laws, or shall become insolvent or unable to pay its
debts as they become due, or shall make an assignment for the benefit of
creditors, or shall apply for, consent to or acquiesce in the appointment of, or
taking possession by, a trustee, receiver, custodian or similar official or
agent for itself or any substantial part of its property.
 
(v) Appointment of Receiver. A trustee, receiver, custodian or similar official
or agent shall be appointed for the Borrower or for any substantial part of its
property and such trustee or receiver shall not be discharged within sixty (60)
days.
 
(vi) Involuntary Bankruptcy. The Borrower shall have an order or decree for
relief in an involuntary case under the federal bankruptcy laws entered against
it, or a petition seeking reorganization, readjustment, arrangement,
composition, or other similar relief as to it under the federal bankruptcy laws
or any similar law for the relief of debtors shall be brought against it and
shall be consented to by it or shall remain undismissed for sixty (60) days.
 
 
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(vii) Breach of Other Agreements. If (A) an Event of Default shall occur under
the Bond Purchase Agreement, or (B) a default shall occur under any other Bond
Document, or (C) a breach shall occur (and continue beyond any applicable grace
period) with respect to the payment by the Borrower or the Guarantor (1) of
other indebtedness to the Disbursing Agent or the Bondowner, or (2) with respect
to other indebtedness in excess of $___________, or with respect to the
performance of any agreement securing such indebtedness or pursuant to which the
same was issued or incurred, or an event shall occur with respect to provisions
of any such agreement relating to matters of the character referred to in this
section, so that a holder or holders of such indebtedness or a trustee or
trustees under any such agreement accelerates or is empowered to accelerate any
such indebtedness. The Borrower shall notify the Bondowner of any such breach or
event immediately upon the Borrower’s becoming aware of its occurrence and shall
from time to time furnish such information as the Bondowner may reasonably
request for the purpose of determining whether a breach or event described in
this clause (vii) has occurred.
 
Section 602. Remedies for Events of Default.
 
If an Event of Default occurs and is continuing:
 
(a) Acceleration. The Bondowner may, by written notice to the Borrower and the
Agency, declare immediately due and payable the principal amount of the
Outstanding Bonds and the payments to be made by the Borrower therefor, and
accrued interest on the foregoing, whereupon the same shall become immediately
due and payable without any further action or notice.
 
(b) Entry. The Bondowner may at any time enter the Mortgaged Property without
being liable for any prosecution or damages therefor, may take complete and
peaceful possession of the Mortgaged Property, in whole or in part, with or
without process of law, and may dispossess the Borrower therefrom, and the
Borrower covenants that in any such event it will peacefully and quietly yield
up and surrender the Mortgaged Property. The Bondowner may operate and manage
the property either directly or through its agents, receivers or other similar
officials; exercise all of the powers and privileges and remedies of the
Borrower with respect hereto, either in the name of the Borrower or otherwise;
receive all rents, profits, revenues and other income of the Mortgaged Property;
and make such repairs or alterations in or to the Mortgaged Property as it may
deem necessary to place and maintain the same in good order and condition.
Notwithstanding entry by the Bondowner, the Borrower agrees that any utility
services, including heat, furnished by the Borrower to the Mortgaged Property
prior to such entry shall continue to be furnished by the Borrower to the
Mortgaged Property at the expense of the Borrower. Before making such entry, the
Bondowner shall give such notice to the Borrower as may be required by
applicable law, if any. Entry under this subsection shall not operate to release
the Borrower from any sums to be paid or other obligations under this Agreement
or the other Bond Documents. Any such entry shall not cause the Bondowner to
become a so-called mortgagee in possession unless the Bondowner declares itself
so to be.

 
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(c) STATUTORY POWER OF SALE. The Bondowner, with or without an entry under the
foregoing subsection, at any time may sell the Mortgaged Property or any part or
parts of the same, either as a whole or in parts or parcels, together with any
improvements thereon, by public auction on or near the premises described in the
attached Exhibit A in accordance with the statutes of the Commonwealth relating
to the foreclosure of a mortgage by the exercise of a power of sale, and may
convey the same by proper deed or deeds or bill or bills of sale to the
purchaser or purchasers absolutely and in fee simple; and such sale shall
forever bar the Borrower and all Persons claiming under it from all right and
interest in the Mortgaged Property, whether at law or in equity. The Borrower
covenants that it will, upon request, execute, acknowledge and deliver to the
purchaser or purchasers a deed or deeds of release confirming such sale, and the
Bondowner is hereby irrevocably appointed the Borrower’s attorney to execute and
deliver a full transfer of all policies of insurance on the Mortgaged Property
at the time of such sale, with credit to the Borrower for any unearned premiums
paid by the Borrower. The Borrower, the Agency, the Disbursing Agent or the
Bondowner may become the purchaser at any such sale.
 
(d) Rights as a Secured Party. The Bondowner may exercise all of the rights and
remedies of a secured party under the UCC with respect to that portion of the
Mortgaged Property pledged hereunder which is or may be treated as collateral
under the UCC. The Bondowner may deal with such property as collateral under the
UCC or as provided in Subsection 602(c) or in part the one and in part the
other. Notice of any public sale of such collateral under the UCC shall be given
in the same manner as required by Subsection 602(c). Notice sent by registered
or certified mail, postage prepaid, or delivered during business hours to the
Borrower, at least seven (7) days before an event under UCC Section 9-610 or any
successor provision of law, shall constitute reasonable notification of such
event. To the extent permitted by law, the Bondowner may treat all or any
portion or portions of the Mortgaged Property as personal property and may
remove the same for the purposes of exercising its rights and remedies
hereunder. The Bondowner may exercise all of the rights and remedies of a
secured party under the UCC with respect to securities in the Project Fund and
the Debt Service Fund, including the right to retain such securities and apply
the same against the obligations of the Borrower hereunder.
 
(e) Receiver. The Bondowner may have a receiver appointed to take possession of
any collateral pledged as security hereunder, issues, and profits therefrom, and
apply the same as the court appointing same may direct, and the Bondowner shall
be entitled to the appointment of such a receiver as a matter of right, without
consideration of the value of such collateral as security for the amounts due
hereunder, or the availability of other collateral, or the solvency of any
Person liable for the payment of such amounts. Such receiver may also take
possession of, and for these purposes use, any and all collateral. The expense
(including receiver’s fees, counsel fees, costs, and agents compensation)
incurred pursuant to the powers herein contained shall be secured hereby.
 
(f) Power of Attorney. The Borrower hereby appoints and constitutes the
Bondowner as the Borrower’s lawful attorney in fact with full power of
substitution to perform any action that the Borrower is required to perform
hereunder, including, without limitation, the execution, acknowledgment and
delivery of any notice or document on behalf of the Borrower.

 
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Section 603. Court Proceedings.
 
The Bondowner may enforce the provisions of this Agreement by legal proceedings
for the specific performance of any covenant, obligation or agreement contained
herein, whether or not an Event of Default exists, or for the enforcement of any
other appropriate legal or equitable remedy, and may recover damages caused by
any breach by the Agency or the Borrower of the provisions of this Agreement,
including court costs, reasonable attorneys’ fees and other costs and expenses
incurred in enforcing the obligations of the Agency or the Borrower hereunder.
 
Section 604. Revenues after Default.
 
The proceeds from operation or sale under Subsections 602(c) (including any
proceeds of insurance or eminent domain) and 602(d) of all or any part of the
Mortgaged Property shall be held by the Bondowner. After payment or
reimbursement of the reasonable expenses of the Bondowner and the Agency in
connection therewith (including without limitation the expenses of insurance,
ordinary or extraordinary repairs or alterations deemed advisable by the
Bondowner, and taxes or other charges on the Mortgaged Property which the
Bondowner may deem it advisable to pay, and reserves for the foregoing to the
extent deemed necessary by the Bondowner), the same, together with any other
funds held under this Agreement, shall be applied, first to the remaining
obligations of the Borrower hereunder and under the other Bond Documents (other
than obligations to make payments to the Agency for its own use) in such order
as may be determined by the Bondowner in its sole discretion, and second, to any
unpaid sums due the Agency for its own use. Any surplus thereof shall be paid to
the Borrower so long as the Bonds have been paid in full.
 
Section 605. Bondowner May Perform Obligations.
 
If the Borrower fails to observe or perform any covenant, condition, agreement
or provision contained in this Agreement with respect to the Mortgaged Property
(including, without limitation, the insurance, maintenance or repair of the
Mortgaged Property and the payment of taxes or other governmental charges
thereon), whether or not there is an Event of Default hereunder, the Bondowner
may perform such covenant, condition, agreement or provision in its own name or
in the Borrower’s name, and is hereby irrevocably appointed the Borrower’s
attorney-in-fact for such purpose. The Bondowner shall give at least ten (10)
days’ notice to the Borrower before taking action under this section, except
that following an Event of Default or in the case of emergency as reasonably
determined by the Bondowner, the Bondowner may act on lesser notice or give the
notice promptly after, rather than before, taking the action. The reasonable
cost of any such action by the Bondowner shall be paid or reimbursed by the
Borrower.
 
Section 606. Remedies Cumulative.
 
The rights and remedies under this Agreement shall be cumulative and shall not
exclude any other rights and remedies allowed by law. The failure to insist upon
a strict performance of any of the obligations of the Borrower or of the Agency
or to exercise any remedy for any violation thereof shall not be taken as a
waiver for the future of the right to insist upon strict performance or of the
right to exercise any remedy for the violation or any other violation.

 
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ARTICLE 7
THE DISBURSING AGENT.
 
Section 701. Corporate Organization, Authorization and Capacity.
 
The Disbursing Agent represents and warrants that it is a Federal savings bank
duly organized and validly existing under the laws of the United States of
America, with the capacity to exercise the powers and duties of the Disbursing
Agent hereunder, and that by proper corporate action it has duly authorized the
execution and delivery of this Agreement.
 
Section 702. Rights and Duties of the Disbursing Agent.
 
(a) Moneys to be Held in Trust. All moneys received by the Disbursing Agent
under this Agreement (other than amounts received for its own use) shall be held
by the Disbursing Agent in trust and applied subject to the provisions of this
Agreement.
 
(b) Accounts. The Disbursing Agent shall keep proper accounts of its
transactions hereunder (separate from its other accounts), which shall be open
to inspection by the Agency, the Borrower and the Bondowner and their
representatives duly authorized in writing upon reasonable prior written notice
to the Disbursing Agent.
 
(c) Responsibility. The Disbursing Agent shall be entitled to the advice of
counsel (who may be counsel for any party) and shall not be liable for any
action taken in good faith in reliance on such advice. The Disbursing Agent may
rely conclusively on any notice, certificate or other document furnished to it
under this Agreement and reasonably believed by it to be genuine. The Disbursing
Agent shall not be liable for any action taken or omitted to be taken by it in
good faith and reasonably believed by it to be within the discretion or power
conferred upon it, or taken by it pursuant to any direction or instruction by
which it is governed under this Agreement or omitted to be taken by it by reason
of the lack of direction or instruction required for such action, or be
responsible for the consequences of any error of judgment reasonably made by it.
When any action by the Disbursing Agent is called for by this Agreement, the
Disbursing Agent may defer such action pending receipt of such evidence, if any,
as it may reasonably require in support thereof. A permissive right or power to
act shall not be construed as a requirement to act. The Disbursing Agent shall
in no event be liable for the application or misapplication of funds, or for
other acts or defaults, by any Person except by its own directors, officers,
agents and employees. No recourse shall be had by the Borrower, the Agency or
any Bondowner for any claim based on this Agreement, the Bonds, or any agreement
securing the same against any director, officer, agent or employee of the
Disbursing Agent unless such claim is based upon the bad faith, fraud or deceit
of such Person.
 
(d) Ownership of Bonds. The Disbursing Agent may be or become the owner of or
trade in Bonds with the same rights as if it were not the Disbursing Agent.
 
(e) Surety Bond. The Disbursing Agent shall not be required to furnish any bond
or surety.

 
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(f) Financial Obligations. Nothing contained in this Agreement shall in any way
obligate the Disbursing Agent to pay any debt or meet any financial obligations
to any Person in relation to the Mortgaged Property except from moneys received
under the provisions of this Agreement or from the exercise of the Disbursing
Agent’s rights hereunder, other than the moneys received for its own purposes in
its capacity as Disbursing Agent.
 
Section 703. Expenses of the Disbursing Agent.
 
The Borrower shall pay or reimburse the Disbursing Agent for its reasonable
expenses and disbursements, including attorneys’ fees, hereunder. Any expenses,
reimbursements or other charges which the Disbursing Agent may be entitled to
receive from the Borrower hereunder, if not paid when due, shall bear interest
at the Default Rate.
 
Section 704. Resignation or Removal of the Disbursing Agent.
 
The Disbursing Agent may resign on not less than thirty (30) days’ notice given
in writing to the Agency, the Bondowner and the Borrower, but such resignation
shall not take effect until a successor has been appointed. The Disbursing Agent
will promptly certify to the Agency that it has mailed such notice to the
Bondowner and such certificate will be conclusive evidence that such notice was
given in the manner required hereby. The Disbursing Agent may be removed (i) by
written notice from the Bondowner to the Disbursing Agent, the Agency and the
Borrower; (ii) for cause by the Borrower with the approval of the Agency so long
as no Event of Default has occurred that has not been waived; or (iii) for cause
by the Agency.
 
Section 705. Successor Disbursing Agent.
 
Any corporation or association which succeeds to the business of the Disbursing
Agent as a whole or substantially as a whole, whether by sale, merger,
consolidation or otherwise, shall thereby become vested with all the property,
rights and powers of the Disbursing Agent under this Agreement, without any
further act or conveyance.
 
In case the Disbursing Agent resigns or is removed or becomes incapable of
acting, or becomes bankrupt or insolvent, or if a receiver, liquidator or
conservator of the Disbursing Agent or of its property is appointed, or if a
public officer takes charge or control of the Disbursing Agent, or of its
property or affairs, a successor shall be appointed by written notice from the
Bondowner to the Agency and to the Borrower. Any such successor Disbursing Agent
shall notify the Agency and the Borrower of its acceptance of the appointment
and, upon giving such notice, shall become Disbursing Agent, vested with all the
property, rights and powers of the Disbursing Agent hereunder, without any
further act or conveyance. Such successor Disbursing Agent shall execute,
deliver, record and file such instruments as are required to confirm or perfect
its succession hereunder and any predecessor Disbursing Agent shall from time to
time execute, deliver, record and file such instruments as the incumbent
Disbursing Agent may reasonably require to confirm or perfect any succession
hereunder.

 
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ARTICLE 8
THE AGENCY
 
Section 801. Corporate Organization, Authorization and Power.
 
The Agency represents and warrants as follows:
 
(a) It is a body politic and corporate and a public instrumentality of the
Commonwealth, established under Chapter 23G of the Massachusetts General Laws,
with the power under and pursuant to the Act to execute and deliver this
Agreement and to perform its obligations hereunder, and to issue and sell the
Bonds pursuant to this Agreement.
 
(b) It has taken all necessary action and has complied with all provisions of
the Constitution of the Commonwealth and the Act, required to make this
Agreement and the Bonds the valid obligations of the Agency which they purport
to be; and, when executed and delivered by the parties hereto, this Agreement
will constitute a valid and binding agreement of the Agency enforceable in
accordance with its terms, except as enforceability may be subject to the
exercise of judicial discretion in accordance with general equitable principles
and to applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws for the relief of debtors heretofore or hereafter enacted to the extent
that the same may be constitutionally applied.
 
(c) When delivered to and paid for by the Initial Purchaser in accordance with
the terms of this Agreement and the Bond Purchase Agreement, the Bonds will
constitute valid and binding special obligations of the Agency enforceable in
accordance with their terms, except as enforceability may be subject to the
exercise of judicial discretion in accordance with general equitable principles
and to applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws for the relief of debtors heretofore or hereafter enacted to the extent
that the same may be constitutionally applied, and will be entitled to the
benefits of this Agreement.
 
(d) The Agency makes no other representation or warranty, either express or
implied, of any nature or kind, including, without limitation, a representation
or warranty that interest on the Bonds is or will continue to be exempt from
federal or state income taxation.
 
Section 802. Covenants as to Payment; Faith and Credit of Commonwealth Not
Pledged.
 
The Agency covenants that it will promptly pay or cause to be paid the principal
of, premium, if any, interest and other charges, if any, on all Bonds at the
place, on the dates and in the manner provided herein and in the Bonds,
provided, however, that the Bonds do not now and shall never constitute a
general obligation of the Agency or a debt or pledge of the faith and credit of
the Commonwealth, and all covenants and undertakings by the Agency hereunder and
under the Bonds to make payments are special obligations of the Agency payable
solely from the revenues and funds pledged hereunder. The Agency agrees that the
Bondowner may enforce all rights of the Agency (except those rights not assigned
under this Agreement) and all obligations of the Borrower hereunder, whether or
not the Agency is in default hereunder.

 
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Section 803. Rights and Duties of the Agency.
 
(a)           Remedies of the Agency. Notwithstanding any contrary provision in
this Agreement, the Agency shall have the right to take any action not
prohibited by law or make any decision not prohibited by law with respect to
proceedings for indemnity against the liability of the Agency and its officers,
directors, employees and agents and for collection or reimbursement of moneys
due to it under this Agreement for its own account. The Agency may enforce its
rights under this Agreement which have not been assigned to the Bondowner by
legal proceedings for the specific performance of any obligation contained
herein or for the enforcement of any other legal or equitable remedy, and may
recover damages caused by any breach by the Borrower of its obligations to the
Agency under this Agreement, including court costs, reasonable attorney’s fees
and other costs and expenses incurred in enforcing such obligations.
 
(b)           Limitations on Actions. Without limiting the generality of
Subsection 803(c), the Agency shall not be required to monitor the financial
condition of the Borrower and shall not have any responsibility or other
obligation with respect to reports, notices, certificates or other documents
filed with it hereunder.
 
(c)           Responsibility. The Agency and its officers, directors, employees
and agents shall be entitled to the advice of counsel (who may be counsel for
any party) and shall not be liable for any action taken or omitted to be taken
in good faith in reliance on such advice. They may rely conclusively on any
communication or other document furnished to it under this Agreement and
reasonably believed by it to be genuine. No such Person shall be liable for any
action (i) taken in good faith and reasonably believed to be within the
discretion or powers conferred upon such Person, or (ii) in good faith omitted
to be taken because such Person reasonably believed such action to be beyond the
discretion or powers conferred upon such Person, or (iii) taken pursuant to any
direction or instruction by which such Person is governed under this Agreement,
or (iv) omitted to be taken by reason of the lack of direction or instruction
required for such action, nor shall such Person be responsible for the
consequences of any error of judgment reasonably made by such Person. The Agency
shall in no event be liable for the application or misapplication of funds, or
for other acts or defaults by any Person except its own directors, officers and
employees. When any consent or other action by the Agency is called for by this
Agreement, the Agency may defer such action pending such investigation or
inquiry or receipt of such evidence, if any, as it may require in support
thereof. It shall not be required to take any remedial action (other than the
giving of notice) unless reasonable indemnity is provided for any expense or
liability to be incurred thereby. It shall be entitled to reimbursement for
expenses reasonably incurred or advances reasonably made, with interest at the
“prime rate” of the Bank, as announced from time to time (or, if none, the
nearest equivalent), in the exercise of its rights or the performance of its
obligations hereunder, to the extent that it acts without previously obtaining
indemnity. No permissive right or power to act shall be construed as a
requirement to act; and no delay in the exercise of any such right or power
shall affect the subsequent exercise of that right or power. The Agency shall
not be required to take notice of any breach or default by the Borrower under
this Agreement except when given notice thereof by the Bondowner. No recourse
shall be had by the Borrower or the Bondowner for any claim based on this
Agreement, the Bonds or any agreement securing the same against any director,
officer, agent or employee of the Agency alleging personal liability on the part
of such Person unless such claim is based upon the willful dishonesty of or
intentional violation of law by such Person. No covenant, stipulation,
obligation or agreement of the Agency contained in this Agreement shall be
deemed to be a covenant, stipulation, obligation or agreement of any present or
future director, officer, employee or agent of the Agency in his or her
individual capacity, and no Person executing a Bond shall be liable personally
thereon or be subject to any personal liability or accountability by reason of
the issuance thereof.

 
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Without limiting the generality of the foregoing, the Borrower acknowledges that
in the event of an examination, inquiry or related action by the Internal
Revenue Service with respect to the Bonds or the exclusion of interest thereon
from the gross income of the holders thereof for federal income tax purposes,
the Agency may be treated as the responsible party, and the Borrower agrees to
respond promptly and thoroughly to the satisfaction of the Agency to such
examination, inquiry or related action on behalf of and at the direction of the
Agency. The Borrower further agrees to pay all costs of counsel selected by the
Agency to represent the Agency in connection with such examination, inquiry or
related action. The Borrower shall indemnify and hold harmless the Agency
against any and all costs, losses, claims, penalties, damages or liability of or
resulting from such examination, inquiry or related action by the Internal
Revenue Service, including any settlement thereof by the Agency.

(d)           Financial Obligations. Nothing contained in this Agreement is
intended to impose any pecuniary liability on the Agency nor shall it in any way
obligate the Agency to pay any debt or meet any financial obligations to any
Person at any time in relation to the Project except from moneys received under
the provisions of this Agreement or from the exercise of the Agency’s rights
hereunder other than moneys received for its own purposes.

ARTICLE 9
THE BONDOWNER
 
Section 901. Action by Bondowner.
 
If there is at any time more than one Bondowner, any request, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Bondowner shall, except as otherwise expressly
provided, require the concurrence of the registered owners of Bonds representing
more than fifty percent (50%) of the principal amount of the Outstanding Bonds
and may be contained in and evidenced by one or more writings of substantially
the same tenor signed by such Bondowners or their authorized representatives;
provided, however, that actions to be taken with respect to a single series of
Bonds shall require the concurrence of the registered owners of such series of
Bonds representing more than fifty percent (50%) of the principal amount of the
Outstanding Bonds of such series. In taking or refraining from any such actions,
each Bondowner may act in its sole discretion.
 
Section 902. Proceedings by the Bondowner.
 
The Bondowner may by any available legal proceedings enforce and protect its
rights hereunder and under the laws of the Commonwealth.
 
 
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Section 903. Expenses of the Bondowner.
 
The Borrower will prepay or reimburse the Bondowner within thirty (30) days
after notice for any reasonable expenses and costs (including reasonable
attorney’s fees) incurred by it in taking any action hereunder at the request of
the Borrower or resulting from the failure of the Borrower to pay or perform any
of its obligations hereunder or under any other Bond Document, or incurred in
the exercise of its rights while a default or an Event of Default exists. Any
expenses and costs which the Bondowner may be entitled to receive from the
Borrower hereunder, if not paid when due, shall bear interest at the Default
Rate.

ARTICLE 10
THE BORROWER
 
Section 1001. Corporate Organization, Authorization, and Powers.
 
The Borrower represents and warrants that it is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in the Commonwealth, with the power to enter
into and perform this Agreement. The Borrower further represents and warrants
that the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with or constitute a breach
of or default under any bond, indenture, note or other evidence of indebtedness
of the Borrower, the charter or by-laws of the Borrower, or any contract, lease
or other instrument to which the Borrower is a party or by which it is bound, or
cause the Borrower to be in violation of any applicable statute or rule or
regulation of any governmental authority.
 
Section 1002. Tax Status.
 
(a) The Borrower covenants to comply with its obligations under the Tax
Agreement and warrants that all representations of the Borrower contained
therein are true and correct.
 
(b) The Borrower shall not take or omit to take any action if such action or
omission (i) would cause the Bonds to be “arbitrage bonds” under Section 148 of
the IRC, (ii) would cause the Bonds to not meet any of the requirements of
Section 149 of the IRC, or (iii) would cause the Bonds to cease to be “qualified
small issue bonds” within the meaning of Section 144(a) of the IRC.
 
(c) The Borrower represents, warrants and covenants that:
 
(i) Internal advances to be reimbursed from the proceeds of the Bonds are in
every instance for Project Costs constituting capital expenditures that are
either (A) related to the Project as described in the Agency’s Official Action
Resolution, dated September 16, 2010 (or the date of the Borrower’s declaration
of Official Intent (as such term is defined in Treasury Regulations Section
1.150-2), whichever is earlier) (the “Official Action”), and that were incurred
not earlier than the date that is sixty (60) days prior to the date of the
Official Action, (B) in an amount not in excess of the lesser of $100,000 or
five percent (5%) of the non-refunding proceeds of the Bonds, or (C) in an
amount not in excess of twenty percent (20%) of the non-refunding proceeds of
the Bonds and consisting of preliminary expenditures for the Project, such as
architectural, engineering, surveying and soil testing, but not including such
costs as site preparation or land acquisition.
 
 
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(ii) On the date of any declaration of Official Intent, the Borrower had a
reasonable expectation that the expenditures described therein would be
reimbursed from the proceeds of a debt obligation.
 
(iii) The Borrower has not made declarations of Official Intent as a matter of
course or in amounts substantially in excess of the amounts expected to be
necessary for the project described therein.

(iv) The Borrower shall not within one (1) year after the reimbursement of any
internal advances from Bond proceeds use funds corresponding to such Bond
proceeds in a manner that would cause such funds to be treated as replacement
proceeds (within the meaning of Treas. Reg. §1.148-1(c)) of the Bonds or any
other indebtedness the interest on which is excluded from gross income for
federal income tax purposes; provided, however, that such funds may be deposited
in a bona fide debt service fund (as defined in Treas. Reg. §1.148-1(b)).
 
(v) Each reimbursement of an internal advance (other than an internal advance
described in clause (i)(B) or (i)(C) above) from Bond proceeds will be made not
more than eighteen (18) months after:
 
A. the date the Project Cost was paid, or
 
B. the date the portion of the Project to which the Project Cost related was
placed in service or abandoned, but in no event later than three (3) years after
the Project Cost was paid.
 
(d) The Borrower represents and warrants that no arrangement, formal or
informal, has been, and covenants that none shall be, authorized, permitted or
made for the purchase of any of the Bonds by the Borrower, the Guarantor or any
other substantial user of the Project or any “related party” (as defined in
Treas. Reg. §1.150-1(b)) in an amount related to the amount loaned by the Agency
to the Borrower.
 
(e) The Borrower shall not enter into a Hedge Agreement (as hereinafter defined)
or any other hedging transaction with respect to the Bonds, other than the Swap
Agreement, without obtaining an Opinion of Bond Counsel. “Hedge Agreement” shall
mean a payment exchange agreement, swap agreement, forward purchase agreement or
any other hedge agreement entered into by the Borrower providing for payments
between the parties based on levels of, or changes in interest rates, stock or
other indices or contracts to exchange cash flows or a series of payments or
contracts, including without limitation, interest rate floors, or caps, options,
puts or calls, which allow the Borrower to manage or hedge payment, rate, spread
or similar risk with respect to the Bonds.
 
(f) Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, in no event will the occurrence of an Event of Taxability be a
default or an Event of Default under this Agreement, provided that upon the
occurrence of an Event of Taxability the interest rate in effect on the Bonds
shall be the Taxable Rate, in accordance with the provisions of the Forms of
Bonds in Section 301(b).
 
 
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Section 1003. Securities Laws.
 
In any “Offering” of the Bonds by a “Participating Underwriter,” as those terms
are defined in Rule 15c2-12 (the “Rule”) promulgated under the Securities
Exchange Act of 1934 (the “Exchange Act”), the Borrower shall at all times take
such actions as may be necessary to permit such Participating Underwriter to
comply with applicable federal and state securities laws, including the Exchange
Act and the Rule, and shall cooperate with the Bondowner to the extent necessary
to permit the Bondowner to comply with any obligations imposed on it as a result
of the Participating Underwriter’s obligation to comply with applicable federal
and state securities laws, including the Exchange Act and the Rule.

Section 1004. Maintenance of Corporate Existence.
 
The Borrower shall maintain its existence as a corporation duly organized and
qualified to do business in the Commonwealth, and shall not dissolve, dispose of
or spin off all or substantially all of its assets, or consolidate with or merge
into another entity or entities, or permit one or more other entities to
consolidate with or merge into it, except as provided in the Bond Purchase
Agreement.
 
Section 1005. Books and Accounts.
 
The Borrower will keep proper accounts of its transactions hereunder (separate
from its other accounts), which shall be open to inspection by the Agency and
the Bondowner and their representatives duly authorized in writing at reasonable
times and upon reasonable notice.
 
Section 1006. Notification of Event of Taxability.
 
The Borrower will notify promptly the Agency and the Bondowner in writing of the
occurrence of any Event of Taxability or any basis therefor, and of any
allegation of which the Borrower has or acquires knowledge by any federal or
state agency that any such event has occurred.
 
Section 1007. Indemnification by Borrower.
 
The Borrower, regardless of any agreement to maintain insurance, will indemnify
the Agency, the Disbursing Agent and the Bondowner against (a) any and all
claims by any Person related to the participation of the Agency, the Disbursing
Agent or the Bondowner in the transactions contemplated by this Agreement,
including without limitation claims arising out of (i) any condition of the
Project or the construction, use, occupancy or management thereof; (ii) any
accident, injury or damage to any Person occurring in or about or as a result of
the Project; (iii) any breach by the Borrower of its obligations under this
Agreement; (iv) any act or omission of the Borrower, or any of its agents,
contractors, servants, employees or licensees; or (v) the offering, issuance,
sale or any resale of the Bonds to the extent permitted by law, and (b) all
costs, counsel fees, expenses or liabilities reasonably incurred in connection
with any such claim or any action or proceeding brought thereon. In case any
action or proceeding is brought against the Agency, the Disbursing Agent or the
Bondowner by reason of any such claim, the Borrower will defend the same at its
expense upon notice from the Agency, the Disbursing Agent or the Bondowner, as
applicable, and the Agency, the Disbursing Agent or the Bondowner, as the case
may be, will cooperate with the Borrower, at the expense of the Borrower, in
connection therewith. This indemnification shall survive the termination or
defeasance of this Agreement.
 
 
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ARTICLE 11
MISCELLANEOUS
 
Section 1101. Amendment.
 
This Agreement may be amended by the parties only with the written consent of
the Bondowner. Any amendment of this Agreement shall be accompanied by an
opinion of Bond Counsel to the effect that the amendment (i) is permitted by
this Agreement, and (ii) unless waived by the Bondowner, will not adversely
affect the exclusion of interest on the Bonds from gross income of the owners
thereof for federal income tax purposes.

Section 1102. Successor and Assigns.
 
The rights and obligations of the parties to this Agreement shall inure to their
respective successors and assigns.
 
Section 1103. Notices.
 
Unless otherwise expressly provided, all notices to the Agency, the Disbursing
Agent, the Borrower, and the Bondowner shall be in writing and shall be deemed
sufficiently given if sent by registered or certified mail, postage prepaid, by
recognized courier service providing evidence of receipt, or delivered during a
Business Day as follows: (a) to the Agency at 160 Federal Street, 7th Floor,
Boston, Massachusetts 02110, attention of the Senior Vice President, Investment
Banking, with a copy to the Deputy General Counsel, (b) to the Disbursing Agent
at Sovereign Bank, 446 Main Street, Worcester, Massachusetts 01608, attention of
Edward S. Borden, Senior Vice President, (c) to the Borrower at One Bella Drive,
Westminster, Massachusetts 01473, attention of Stanley Youtt, President and
Chief Executive Officer, and (d) to the Bondowner at Sovereign Bank, 446 Main
Street, Worcester, Massachusetts 01608, attention of Edward S. Borden, Senior
Vice President, or to all of the foregoing, to such other address as the
addressee shall have indicated by prior written notice to the one giving notice.
 
Notice hereunder may be waived prospectively or retrospectively by the Person
entitled to the notice, but no waiver shall affect any notice requirement as to
other Persons.
 
Section 1104. Agreement Not for the Benefit of Other Parties.
 
This Agreement is not intended for the benefit of, and shall not be construed to
create rights in, parties other than the Borrower, the Agency, the Disbursing
Agent and the Bondowner.
 
 
52

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Section 1105. Severability.
 
In the event that any provision of this Agreement shall be held to be invalid in
any circumstance, such invalidity shall not affect any other provisions or
circumstances.
 
Section 1106. Counterparts.
 
This Agreement may be executed and delivered in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts together shall
constitute one and the same instrument.
 
Section 1107. Captions.
 
The captions and table of contents of this Agreement are for convenience only
and shall not affect the construction hereof.
 
Section 1108. Governing Law.
 
This instrument shall be governed by the laws of the Commonwealth.
 
 
 
[Remainder of this page intentionally left blank.]
 
 
 
 
 
 
 
53

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
under seal all as of the date first above written.
 

  MASSACHUSETTS DEVELOPMENT FINANCE AGENCY          
 
By:
/s/ Steven Chilton       Authorized Officer       Title              RANOR, INC.
            By: /s/ Stanley Youtt      
Stanley Youtt
     
President and Chief Executive Officer
           
SOVEREIGN BANK,
as Disbursing Agent
            By: /s/ Edward S. Borden      
Edward S. Borden
     
Senior Vice President
           
SOVEREIGN BANK,
as Bondowner
            By:
/s/ Edward S. Borden
     
Edward S. Borden
Senior Vice President
 

 
54

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COMMONWEALTH OF MASSACHUSETTS
 
Suffolk, ss.
 
On December __, 2010, before me, the undersigned notary public, personally
appeared Steven Chilton, Senior Vice President of the Massachusetts Development
Finance Agency (the “Principal”) and acknowledged to me that the Principal
signed the preceding or attached document voluntarily for its stated purpose.
The Principal proved to me through satisfactory evidence of identification that
the Principal is the person whose name is signed on the preceding or attached
document. The satisfactory evidence of identification provided to me was:
 
o
A current document issued by a federal or state government agency bearing the
photographic image of the Principal’s face and signature; or

 
o
On the oath or affirmation of a credible witness unaffected by the document or
transaction who is personally known to the notary public and who personally
knows the Principal; or

 
o
Identification of the Principal based on the notary public’s personal knowledge
of the identity of the Principal; or

 
o
The following evidence of identification: __________________________________

               
Notary Public
          Printed Name:______________________           My Commission
Expires:______________

 
[Seal]
 
 
55

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COMMONWEALTH OF MASSACHUSETTS
 
Suffolk, ss.
 
On December __, 2010, before me, the undersigned notary public, personally
appeared Stanley Youtt, President and Chief Executive Officer of Ranor, Inc.
(the “Principal”) and acknowledged to me that the Principal signed the preceding
or attached document voluntarily for its stated purpose. The Principal proved to
me through satisfactory evidence of identification that the Principal is the
person whose name is signed on the preceding or attached document. The
satisfactory evidence of identification provided to me was:

o
A current document issued by a federal or state government agency bearing the
photographic image of the Principal’s face and signature; or

 
o
On the oath or affirmation of a credible witness unaffected by the document or
transaction who is personally known to the notary public and who personally
knows the Principal; or

 
o
Identification of the Principal based on the notary public’s personal knowledge
of the identity of the Principal; or

 
o
The following evidence of identification: ___________________________________

                Notary Public           Printed Name:___________________________
          My Commission Expires:___________________

 
[Seal]
 
 
56

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COMMONWEALTH OF MASSACHUSETTS
 
Suffolk, ss.
 
On December __, 2010, before me, the undersigned notary public, personally
appeared Edward S. Borden, Senior Vice President of Sovereign Bank (the
“Principal”) and acknowledged to me that the Principal signed the preceding or
attached document voluntarily for its stated purpose. The Principal proved to me
through satisfactory evidence of identification that the Principal is the person
whose name is signed on the preceding or attached document. The satisfactory
evidence of identification provided to me was:
 
o
A current document issued by a federal or state government agency bearing the
photographic image of the Principal’s face and signature; or

 
o
On the oath or affirmation of a credible witness unaffected by the document or
transaction who is personally known to the notary public and who personally
knows the Principal; or

 
o
Identification of the Principal based on the notary public’s personal knowledge
of the identity of the Principal; or

 
o
The following evidence of identification:
_________________________________________

                Notary Public           Printed Name:_________________________  
        My Commission Expires: ________________

 
[Seal]
 
 
57

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COMMONWEALTH OF MASSACHUSETTS
 
Suffolk, ss.
 
On December __, 2010, before me, the undersigned notary public, personally
appeared Edward S. Borden, Senior Vice President of Sovereign Bank (the
“Principal”) and acknowledged to me that the Principal signed the preceding or
attached document voluntarily for its stated purpose. The Principal proved to me
through satisfactory evidence of identification that the Principal is the person
whose name is signed on the preceding or attached document. The satisfactory
evidence of identification provided to me was:
 
o
A current document issued by a federal or state government agency bearing the
photographic image of the Principal’s face and signature; or

 
o
On the oath or affirmation of a credible witness unaffected by the document or
transaction who is personally known to the notary public and who personally
knows the Principal; or

 
o
Identification of the Principal based on the notary public’s personal knowledge
of the identity of the Principal; or

 
o
The following evidence of identification:
_________________________________________

                Notary Public           Printed Name:_______________________    
      My Commission Expires:_______________

 
[Seal]
 
 
58

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EXHIBIT A

Description of Mortgaged Property

See Attached Exhibit A

Permitted Encumbrances

 
See those exceptions listed in Schedule B, Part II of the
Fidelity National Title Insurance Company Loan Policy
Dated December, 2010
 
 
A-1

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EXHIBIT B

Form of Requisition
 

TO: Sovereign Bank, as Disbursing Agent
under the Mortgage, Loan and Security Agreement,
dated as of December 1, 2010
(the “Agreement”), among
the Massachusetts Development Finance Agency,
Ranor, Inc., and Sovereign Bank, as Bondowner
and said Disbursing Agent.

 
Requisition No.: __

Terms used in this Requisition and not otherwise defined shall have the same
meanings assigned to them in the Agreement.

This Requisition to be funded from proceeds of the Series ___ Bonds.

This Disbursement under the Series B Bonds shall not exceed 80% of the actual
purchase price of the asset(s).

The Disbursing Agent is hereby authorized and directed to make payment from the
Project Fund as follows:

Amount: $___________ to those payees set forth in Attachment A. [Note:
Attachment A is not required if an AIA Requisition Form is provided.]

The proceeds of this Requisition will be used to pay _________________. [Include
a description of the use of the proceeds and attach copies of invoices from
applicable payees;]

1.  
The undersigned hereby certifies on behalf of the Borrower in connection with
the payment requested by this Requisition that the obligations set forth in this
Requisition were incurred in connection with the Project, and the obligations
have not been the basis for a prior Requisition that has been paid. The payments
that are requested by this Requisition are for Project Costs described in
Section 401(b) of the Agreement.

 
2.  
The undersigned has reviewed the provisions of Section 1002 of the Agreement,
and the payment of this Requisition will not result in any proceeds of the Bonds
being expended in violation of the provisions of said Section 1002. Without in
any way limiting the generality of the foregoing, the payment of this
Requisition when added to all previous Requisitions, will not result in more
than an amount equal to ____% ($________________) of the proceeds of the Bonds
being used for issuance costs within the meaning of Section 147(g) of the Code.

 
 
B-1

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3.  
No Event of Default has occurred or will occur by the payment of this
Requisition.

 
4.  
The obligation for which payment is proposed to be made does not represent a
material change from the Project described in the Application as of the date of
delivery of the Bonds.

 
5.  
No notice of any mechanics’ or other lien or encumbrance upon the Project by
reason of work, labor, services or materials supplied or claimed to be supplied
for or in connection with the Project has been received by the Borrower or has
been filed in the Worcester County Registry of Deeds unless such lien or
encumbrance has been discharged or dissolved or will be discharged or dissolved
concurrently with payment of the Requisition, or the Borrower is contesting the
same.

 

    RANOR, INC.              
 
By:
          Project Officer             APPROVED FOR PAYMENT:              
SOVEREIGN BANK,       as Bondowner                 By:           Duly Authorized
     

 
 
B-2

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Attachment A
 
Name of
Payee                           Address                              Invoice
No.                         Date                         Amount
 
 
B-3

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EXHIBIT C
 
Construction and Disbursement Requirements
 
[To be conformed to bank requirements by bank counsel]
 
1.  
General Disbursement Conditions: Disbursements from the Project Fund are to be
made monthly (or less frequently if the Borrower determines not to submit
monthly requisitions) after receipt and review of itemized requisitions
submitted to the Bondowner. Disbursements under the Series B Bonds shall not
exceed 80% of the actual purchase price of the asset(s). Disbursements from the
Project Fund shall be made only at such time as the Project is “in balance.” The
Project shall be deemed to be “in balance” only at such time, and from time to
time, as Borrower has invested sufficient funds in the Project to assure
Bondowner, in its sole judgment, that the undisbursed portion of the Project
Fund is sufficient to complete the construction of the Project, to install all
appliances and fixtures, to operate the Project, and to pay all non-construction
costs associated with the Project until repayment of the Bond. If the Project is
not “in balance” at any time, it shall be a default under the Loan Agreement
unless Borrower deposits with Bondowner and pledges to Bondowner sufficient
funds to place the Project “in balance” within a reasonable time following
written notice from Bondowner that the Project is not “in balance.”

 
2.  
Construction Site Inspections/Title Updates: Prior to each disbursement from the
Project Fund, the Bondowner, or the Construction Representative inspecting on
behalf of the Bondowner, shall perform a site inspection to ensure that the
Project as constructed is consistent with the Project budget submitted to and
approved by the Bondowner (the “Budget”) and the final plans and specifications
submitted to and approved by the Bondowner (the “Plans”). No disbursements shall
be made for materials not yet installed or incorporated into the Project; except
that, on a case-by-case basis, Bondowner may agree in its discretion to disburse
for such materials if (i) they are stored on the Project or in a bonded
warehouse, (ii) they are covered by adequate insurance, (iii) they are
adequately protected against theft and damage, and (iv) Construction
Representative confirms the foregoing and recommends such disbursements.

 
3.  
Cost Breakdown/ Disbursement Schedule: The Borrower shall provide to the
Bondowner, on the 1st day of each month, commencing February 1, 2011, a report
containing the following information, current as of the date of submission of
the report, all of which shall be subject to the approval of the Bondowner: (i)
a construction time and disbursement schedule; (ii) the Budget; (iii) a
construction cost breakdown of the Project itemized as to trade category and
subdivision of work to be done; and (iv) a breakdown of the indirect
(non-construction) costs including without limitation real estate taxes, legal
and accounting fees, surveys, permit and inspection fees, insurance premiums,
architect’s and engineer’s fees, and marketing, management, leasing, and
advertising expenses.

 
 
C-1

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4.  
Plans and Specifications; Contract: As a condition of the approval of any
requisition from the Project Fund after the date of issuance of the Bonds, the
Borrower shall deliver to the Bondowner:

 
(a)  
a complete set of Plans (including site and mechanical plans and specifications
for all proposed improvements), which shall be subject to the Bondowner’s prior
review and approval, and an assignment of such Plans by the Borrower to the
Bondowner in form and substance acceptable to the Bondowner, together with the
written consent of the Project architect to the assignment of the Plans to the
Bondowner. Prior to delivering such Plans to the Bondowner, the Borrower shall
obtain the approval thereof by all local, state, and federal regulatory
authorities having jurisdiction over the Project, including, without limitation,
all required permits (with any appeal periods having expired with no appeal
having been taken) for the construction of the proposed improvements;

 
(b)  
a letter from the Project architect or engineer certifying: (i) all public
utility services, including storm and sanitary sewers, water supply, gas,
electric and telephone facilities of adequate capacity necessary for the
construction and operation of the Project, are located and physically available
at the boundaries of the real property of the Borrower upon which the Project is
located; (ii) upon completion of the improvements in accordance with the Plans,
the Project shall comply with all applicable laws, rules and regulations
including zoning ordinances, building codes, environmental laws, and handicapped
accessibility laws and regulations; and

 
(c)  
a copy of the contract between the Borrower and the general contractor which
shall be either a fixed price or guaranteed maximum price contract, and shall
include a detailed trade payment schedule in form to be utilized in the
requisition process, and an assignment of such contract by the Borrower to the
Bondowner in form and substance acceptable to the Bondowner, together with the
written consent of such general contractor to the assignment of the construction
contract to the Bondowner.

 
5.  
Commencement: The Borrower shall commence construction of the Project within 30
days of the date of issuance of the Bonds and use all diligent efforts to
complete construction of the Project by December 31, 2012, with labor and
materials of high quality in accordance with the Budget and the Plans.

 
6.  
Certificate of Occupancy: Upon completion of construction, the Borrower shall
furnish to the Bondowner a certified copy of a final unconditional certificate
of occupancy for the Project issued by the appropriate governmental authority,
permitting occupancy and use of the premises for the purposes described in the
Agreement.

 
 
C-2

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7.  
Lien Waivers: Monthly requisitions shall be accompanied by notarized lien
waivers from the general contractor and any sub-contractors and materialmen with
contracts in excess of $5,000.00, consistent with applicable state law.

 
8.  
Construction Sign: Upon request of the Bondowner, the Borrower shall, at its
expense, affix one sign satisfactory to the Agency, the Bondowner and the
Borrower in a highly visible place, indicating that the Agency and the Bondowner
are providing financing for the construction of the Project. Any such sign shall
be erected in compliance with state and municipal laws and ordinances.

 
9.  
Making the Advances: Subject to compliance by the Borrower with the terms and
conditions of the disbursement conditions set forth in the Agreement, the
Disbursing Agent shall pay from the Project Fund the Project Costs approved by
the Bondowner, either directly to the contractor/vendor/supplier or, if the
costs were paid by the Borrower, to reimburse the Borrower. The Bondowner shall
not be required to approve requisitions more frequently than once each month.
The Bondowner shall be entitled to withhold from each requisition for payment a
retainage amount equal to 10% of the costs of construction. The Bondowner shall
approve requisitions of amounts representing retainage only following
substantial completion of construction of the Project, subject to any hold-backs
for punch-list items, and satisfaction of the conditions set forth in the Bond
Documents. The amount of each disbursement shall be in an amount equal to the
cost of construction work in place plus materials purchased and securely stored
within the Project, and other non-construction costs, expenses and fees actually
paid or payable by Borrower and set forth in the then-approved Budget or
otherwise approved in writing by Bondowner. In addition, disbursements shall be
limited as follows:

 
 
(a)
in no event will total disbursements exceed seventy-five percent (75%) of the
“as completed” appraised value of the Project;

 
 
(b)
the Project shall be “in balance”;

 
 
(c)
the amount of each disbursement shall equal the cost of construction work in
place as set forth in the Budget or otherwise approved in writing by Bondowner,
subject to Retainage, plus the amount of other non-construction costs, expenses
and fees actually paid or payable by the Borrower for costs set forth in the
Budget or otherwise approved in writing by Bondowner as of the date of the
request for a disbursement, less amounts previously disbursed from the Project
Fund and the Borrower’s equity;

 
 
(d)
the amount of the request for construction work in place shall be confirmed and
approved by the Construction Representative; and

 
 
C-3

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

 

 
(e)
Borrower has paid as they become due all amounts set forth in the Budget with
respect to costs to be paid for by Borrower.

 
10.  
Each requisition for construction-related Project Costs shall be accompanied by
all documentation reasonably deemed necessary by the Bondowner to substantiate
the requested payment. Requisitions for direct costs of constructing the Project
shall require the submission of (i) requisitions from the general contractor
(using the standard AIA forms) approved by the Borrower, the Project architect
and the Construction Representative, and (ii) certifications by the Construction
Representative, the Project architect and the general contractor, and shall be
subject to inspection and approval of work performed by the Construction
Representative. Requisitions for any other direct costs and indirect costs
(other than cost of issuing the Bonds) shall require the submission of bills,
invoices and other documentation satisfactory to the Bondowner. Notwithstanding
the foregoing, or anything to the contrary contained herein, without at any time
waiving any of the Bondowner’s rights hereunder, the Bondowner shall always have
the right to approve a Borrower requisition for a disbursement from the Project
Fund without satisfaction of each and every condition upon the Bondowner’s
obligation to approve such Borrower requisition.

 
11.  
Construction Representative: The Bondowner shall, at the Borrower’s cost and
expense, retain an outside Construction Representative to perform the following
services on behalf of the Bondowner:

 
(a)  
to review and advise the Bondowner whether, in the opinion of the Construction
Representative, the Budget accurately reflects all Project Costs;

 
(b)  
to review and advise the Bondowner whether, in the opinion of the Construction
Representative, the Plans are satisfactory for the intended purpose thereof;

 
(c)  
to make periodic inspections of the Project for the purpose of assuring that
construction to date is in accordance with the Plans;

 
(d)  
to review, and if appropriate approve requisitions filed by the Borrower as
being consistent with the Budget and the Borrower’s obligations under the Bond
Documents;

 
(e)  
to advise the Bondowner of the status of the Project and the adequacy of
available funds to complete construction;

 
(f)  
to review and advise the Bondowner on any proposed change orders; and

 
(g)  
to review and approve construction contracts and subcontracts for amounts at
least equal to $5,000.00, for the purpose of providing the Bondowner with an
opinion as whether they adequately treat the cost of construction to
successfully complete the Project in accordance with the Plans. Neither the
Bondowner nor the Construction Representative shall assume any obligation to the
Borrower or any other party to the Bond Documents, or to any other person
concerning the quality of construction of the Project or the absence therefrom
of any defects.

 
 
C-4

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The final disbursement from the Project Fund shall not be made unless and until
Construction Representative shall have approved such advance.
 
12.  
Change Orders: The Borrower shall not cause or permit any material deviations
from the Plans and shall not approve or consent to any change orders having a
cost in excess of $5,000.00 for any single change order or $30,000.00 in the
aggregate, without the prior approval of the Bondowner. The Borrower shall not
enter into any contract with a general contractor, architect, engineer or
subcontractor for the Project with a face amount in excess of $5,000.00 without
the prior approval of the Bondowner. The Borrower shall not materially amend,
supplement or otherwise modify, whether by change order or otherwise, any of the
terms and conditions of the general contractor’s contract, the architect’s
contract, any engineer’s contract or the subcontracts initially approved by the
Bondowner, without the prior approval of the Bondowner.

 
13.  
Builder’s Risk Insurance: The Borrower shall furnish the Bondowner with
builder’s risk completed value (non-reporting) form insurance written by a
company acceptable to the Bondowner, containing such coverages as the Bondowner
requires. The Bondowner shall be named as loss payee under a standard mortgagee
clause.

 
 
C-5

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EXHIBIT D

Schedule of Principal Payments for the Series A Bonds

Schedule of Principal Payments for the Series B Bonds
 
 
D-1

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