exv10w32



 








Exhibit 10.32



 




COUNTY COMMISSIONERS OF FREDERICK COUNTY,




EMERGENT BIOLOGICS INC.




a  n  d




MERCANTILE POTOMAC BANK




      



      



      


 




BOND PURCHASE AGREEMENT




Dated as of March 31, 2005



 




Frederick County, Maryland

Tax Increment Financing Bonds

(Dudrow Industrial Park Lot Three Development District)

Series 2005




 









 





BOND PURCHASE AGREEMENT




March 31, 2005




County Commissioners of Frederick County

Winchester Hall, 12 East Church Street

Frederick, Maryland 21701




Emergent Biologics Inc.

300 Professional Drive

Gaithersburg, Maryland 20879




Dear Sirs:




     The undersigned (herein called the “Purchaser”) hereby offers to enter into this Bond
Purchase Agreement with you for the purchase and sale of the Tax Increment Financing Bonds (Dudrow
Industrial Park Lot Three Development District) Series 2005 (the “Bonds”) described below. This
offer is made subject to acceptance by County Commissioners of Frederick County (the “Issuer”) and
Emergent Biologics Inc. (formerly Advanced BioSolutions, Inc.) (the “Company”). Upon such
acceptance, this Bond Purchase Agreement shall become effective in accordance with its terms and
shall become binding between you and the undersigned Purchaser.



     Section 1. Definitions. For purposes of this Agreement any word not
conventionally capitalized and not defined herein shall have the meaning indicated in the Bond
Authorization Legislation (hereinafter defined) or in the Proposal Letter dated February 11, 2005
which is attached hereto as Exhibit A and is by this reference incorporated herein (the
“Summary”) and, in addition, the following terms have the meanings specified below:



     “Agreement” means this Bond Purchase Agreement.



     “Bond Authorization Legislation” means the Ordinance No.05-02-363 enacted by the Board of
County Commissioners of Frederick County on March 1, 2005, and the Written Order of the President
of the Board of County Commissioners of Frederick County dated as of the Closing Date.



     “Closing” means the closing held on the Closing Date.



     “Closing Date” means March 31, 2005, or such later date as the Purchaser, the Company, and the
Issuer shall agree upon.



     “Commission” means the Securities and Exchange Commission.



 









 





     “Development Agreement” means the development agreement dated as of the Closing Date between
the Issuer and the Company.



     “Fiscal Year” means the consecutive 12-month period beginning on January 1st of each year and
ending on the December 31st of such year.



     “Governmental Body” means any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.



     “Resolution” means Resolution No. 04-38 adopted on October 5, 2004, by the Board of County
Commissioners of Frederick County which created the Dudrow Industrial Park Lot Three Development
District and the Dudrow Industrial Park Lot Three Development District Special Fund.



     “Servicing Agreement” means the Servicing Agreement dated as of the Closing Date between the
Issuer, the Purchaser and the Company.



     Section 2. Sale and Purchase of Bonds.



     A. Sale of Bonds. Subject to the terms and conditions contained in this
Agreement (including the Summary), the Issuer hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Issuer, for the account of the Purchaser an aggregate
of $300,000 principal amount of the Bonds at a purchase price of $300,000. The Bonds shall be in
substantially the same form as the specimen bond attached to this Agreement as Exhibit B
and shall be delivered as one fully registered certificated bond in the denomination or
denominations authorized under the Bond Authorization Legislation registered in the name of the
Purchaser or such other name as the Purchaser shall have designated in writing at or prior to the
Closing.



     B. Closing. The sale of the Bonds shall take place on the Closing Date at the
offices of Venable LLP, Towson, Maryland. The Purchaser shall make payment of the purchase price
for the Bonds on the Closing Date by certified or official bank check or by credit advice of
transfer to such account as the Issuer may have designated to the Purchaser in writing no later
than the third day prior to such Closing Date. At the Closing, against delivery by Purchaser of the
aggregate purchase price for the Bonds, the Issuer will deliver to Purchaser certificates
representing the Bonds, registered as specified in paragraph, and bearing the following legend:




“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES
WILL BE MADE ON THE BOND REGISTER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN



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EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.




NEITHER THE ISSUER OF THIS BOND NOR THE BOND REGISTRAR OR TRANSFER AGENT FOR THIS
BOND MAY REGISTER THE TRANSFER OF, OR EXCHANGE THIS BOND FOR, A BOND OF THE ISSUE OF
BONDS IN A DENOMINATION WHICH IS LESS THAN THE DENOMINATION OF THIS BOND; PROVIDED
THAT EXCHANGE OF THIS BOND FOR ONE OR MORE BONDS IN DENOMINATIONS OF $100,000 OR
MORE SHALL BE PERMITTED IF SUCH EXCHANGE DOES NOT VIOLATE ANY APPLICABLE SECURITIES
LAWS INCLUDING SECURITIES AND EXCHANGE COMMISSION RULE 15c2-12.




NEITHER THE ISSUER OF THIS BOND NOR THE TRANSFER AGENT FOR THIS BOND MAY REGISTER
THE TRANSFER OF THIS BOND TO A TRANSFEREE UNLESS THE TRANSFEREE IS EITHER A
FINANCIAL INSTITUTION OR A SOPHISTICATED INVESTOR WHO IS EXPERIENCED IN BUSINESS AND
FINANCIAL MATTERS AND WHO IS ALSO ABLE TO EVALUATE THE RISKS AND MERITS OF INVESTING
IN SECURITIES SIMILAR TO THIS BOND.



     C. Right to Rescind. The Purchaser shall have the right to rescind or terminate this
Agreement at any time on or prior to the Closing Date or if the sale and purchase of the Bonds as
provided herein shall in the Purchaser’s reasonable judgment become impossible or impractical
because, since the date hereof: (1) any outbreak of major hostilities or any other national or
international calamity or crisis shall have occurred; (2) a general banking moratorium shall have
been declared by Federal or New York State authorities; or (3) trading on the New York Stock
Exchange shall have been suspended or minimum or maximum for prices shall have been required on the
New York Stock Exchange by such Exchange or by the Commission or any other Governmental Body.



     Section 3. Representations and Warranties of the Issuer. The Issuer represents and
warrants to the Purchaser that:



     A. Organization and Power. The Issuer is a body politic and corporate and political
subdivision of the State of Maryland. The Issuer is authorized and empowered by the provisions of
the Act to enter into the transactions contemplated by this Agreement.



     B. Authorization of Agreements. etc. The execution, delivery and performance of this
Agreement and the Bonds have been duly authorized by all necessary proceedings of the Issuer, and
such execution, delivery and performance do not and will not contravene,



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or constitute a default under, any provision of law, ordinance or regulation applicable to the
Issuer or any judgment, order, decree, agreement or instrument binding on it or result in the
creation of any lien or other encumbrance on any asset of the Issuer other than the restrictions on
the Dudrow Industrial Park Lot Three Development District Special Fund under the provisions of the
Act and the Resolution. This Agreement constitutes the valid and binding agreement of the Issuer,
and the Bonds, when duly executed and delivered by the Issuer in accordance with this Agreement and
the Bond Authorization Legislation, will constitute valid and binding obligations of the Issuer.



     C. Governmental Consents. All authorizations, consents and approvals of Governmental
Bodies required in connection with the execution and delivery by the Issuer of, or in connection
with the performance by the Issuer of its obligations under, this Agreement and the Bonds have been
obtained and are in full force and effect.



     D. No Litigation. There is no action, suit or proceeding pending, or to the Issuer’s
knowledge threatened, against or affecting the Issuer in any court or before any arbitrator or
before or by any Governmental Body calling into question the creation, organization or existence of
the Issuer, the title of any of its officers to their respective offices, the pledge or lien
securing the Bonds, the collection of any amounts pledged to the payment of the Bonds, or the power
of the Issuer to enter into the transactions contemplated hereby or wherein an unfavorable
decision, ruling or finding would adversely affect the transactions contemplated hereby or would
affect the enforceability of the Bonds or any other agreement or instrument to which the Issuer is
a party and that is to be used in connection with, or is contemplated by, this Agreement, nor to
the knowledge of the Issuer is there any basis therefor.



     E. Collection. In the event that the Company or any other owner fails to pay real
estate taxes on the Dudrow Industrial Park Lot Three Development District in a timely manner, the
County covenants to pursue such delinquency in accordance with its ordinary and customary
collection and tax sale procedures generally applicable to delinquent taxpayers.



     F. Grant of Security Interest. In order to secure the payment of the Bonds from the
Dudrow Industrial Park Lot Three Development District Special Fund (the “Special Fund”), the Issuer
hereby assigns, pledges and grants to the Purchaser a first lien security interest under the
Maryland Uniform Commercial Code in the Special Fund and all monies deposited therein, including
investment earnings thereon and all proceeds thereof. The Issuer authorizes the Purchaser to file
Financing Statements and to enter into Control Agreements, if the Purchaser deems necessary, in
order to perfect the Purchaser’s lien and security interest in the Special Fund and all monies
therein, including investment earnings thereon and all proceeds of the Special Fund.



     Section 4. Representations and Warranties of the Company. The Company represents and
warrants to the Issuer and the Purchaser that:



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     A. Organization and Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Maryland, and has all corporate powers
and all material governmental licenses, authorizations, consents and approvals required to carry on
its business as now conducted and to enter into and perform this Agreement.



     B. Authorization of Agreements. etc. This Agreement has been duly authorized by all
necessary corporate action on the part of the Company (no action by the stockholders of the Company
being required). This Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding agreement of the Company except to the extent that enforceability may be
effected by any bankruptcy or insolvency proceeding filed by or against the Company and subject to
the exercise of judicial discretion in accordance with general principals of equity.



     C. INTENTIONALLY OMITTED.



     D. No Material Adverse Change. Since June 30, 2004, there has been no material
adverse change in the business, financial position, results of operations or prospects of the
Company, considered as a whole.



     E. Noncontravention. The execution, delivery and performance by the Company of this
Agreement does not and will not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of
any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or
result in the creation of any lien or other encumbrance on any asset of the Company.



     F. Governmental Consents. No consent or approval is required to be obtained from,
and no action need be taken by, or document filed with, any Governmental Body in connection with
the execution, delivery and performance of this Agreement by the Company, or, if any such action is
required, the same has been duly taken, is in full force and effect and constitutes valid and
sufficient consent or approval therefor.



     G. Brokers. No person, corporation or other entity has, or as a result of any action
of or by the Company in connection with the transactions contemplated hereby and by the Resolution
and the Bond Authorization Legislation will have, any right, interest or valid claim against the
Purchaser for any commission, fee or other compensation as a broker or finder, or in any similar
capacity.



     H. No Litigation. As of the date hereof, there is no action, suit or proceeding
pending, or to the best of the Company’s knowledge threatened, against or affecting the Company in
any court or before any arbitrator or before or by any Governmental Body which in any manner raises
any question affecting the validity or enforceability of this Agreement, the Resolution, the Bond
Authorization Legislation, or any other agreement or instrument to which the Company is a party and
that is to be used in connection with,



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or is contemplated by, this Agreement, or which is likely to result in a materially adverse change
in the business, financial position or results of operations of the Company nor to the best of the
knowledge of the Company is there any basis therefor.



     Section 5. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Issuer that:



     A. Receipt of Information. The Purchaser has received the information with respect
to the Company, it affairs, and the Project which the Purchaser has requested and which the
Purchaser as an informed and experienced investor has deemed necessary in order to make an adequate
and thorough evaluation of the risks and rewards of an investment in the Bonds.



     B. Limited Obligation. The Purchaser acknowledges that the Bonds are limited
obligations of the Issuer and are payable solely from moneys deposited in the Dudrow Industrial
Park Lot Three Development District Special Fund created by the Issuer pursuant to Section 14-207
of the Act and the Resolution and that the Special Fund is subject solely to the limitations and
restrictions of Section 14-208 of the Act and the Resolution as to the use of moneys in that fund.
The Purchaser further acknowledges that the Bonds will be repaid solely by the Issuer’s pledge to
allocate and divide a portion of the property taxes actually received with respect to the real
property located within the Dudrow Industrial Park Lot Three Development District pursuant to
Section 14-206(3) of the Act and the Resolution and to pay that portion into the Special Fund. The
Bonds are not general obligations of the Issuer and the full faith and credit of the Issuer are not
pledged to the payment of the principal of and the interest and any redemption premium on the
Bonds. The Purchaser has no right to compel the levy of any taxes by the Issuer and the
insufficiency of monies in the Special Fund to pay the Bonds shall not constitute a default under
the Bonds.



     C. Review of Documents. The Purchaser has reviewed and approved the form of the
Bonds attached to this Agreement as Exhibit B, the Resolution, the Bond Authorization
Legislation, and such documents contain the terms which have been agreed to by the Purchaser.



     D. Financial Experience. The Purchaser is experienced in financial and business
matters, including the purchase and ownership of taxable and tax-exempt municipal obligations
payable solely from incremental real property tax revenues derived from limited owner development
districts and is able to evaluate the risks and merits of the investment in purchase of the Bonds.



     E. Access to Information. The Purchaser either has been supplied or has had access
to such information with regard to the Company, including financial statements and related
financial data, as it deems appropriate and to which a reasonable investor would attach
significance in making an investment decision to purchase securities such as the Bonds. The Company
has made itself available to the Purchaser at its request to



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enable Purchaser to determine those facts about the nature of Company’s business, the risks
attendant thereto, and the value of the security so as to enable Purchaser to make a knowledgeable
decision to purchase the Bonds. The Purchaser has not obtained any interest in real property as
security for the Bonds.



     F. No Reliance on the Issuer. Purchaser (1) has not relied upon the Issuer’s
decision to create the Dudrow Industrial Park Lot Three Development District and the Dudrow
Industrial Park Lot Three Development District Special Fund and to issue the Bonds as any
confirmation of the creditworthiness of the Company or the security for the Bonds, (2) has not
relied upon the Issuer to supply any information whatsoever about the Company, its business, its
prospects, or its financial affairs, and (3) has made the decision to purchase the Bonds solely on
the basis of its own independent judgment.



     G. Investment Purpose. The Purchaser is purchasing the Bonds for its own account,
with the purpose of investment and not with a view to the distribution or resale of the Bonds other
than to the Participants. The Purchaser has not offered, offered to sell, offered for sale, or sold
the Bonds by means of any form of general advertising and the Purchaser is not an “underwriter”
within the meaning of Section 2(11) of the Securities Act of 1933, as amended, and will not sell
the Bonds without registration under the Securities Act of 1933, as amended, or an exemption from
such registration.



     H. Authority to Execute. The Purchaser has full power and authority to execute this
Agreement and to purchaser or acquire the Bonds.



     I. Lawful Investment. The Purchaser has satisfied itself that the Bonds are a lawful
investment for the Purchaser under all applicable laws.



     J. No Credit Rating. The Purchaser acknowledges that no credit rating has been
sought or obtained with respect to the Bonds.



     K. No Continuing Disclosure. The Purchaser acknowledges that because (1) the
authorized denomination of the Bonds is $100,000 and (2) the sale of the Bonds is limited to no
more than 35 sophisticated persons none of whom is purchasing for more than one account with a view
toward distributing the Bonds, the Issuer shall have no ongoing continuing obligation in connection
with the Bonds under Securities and Exchange Commission Rule 15c2-12.



     Section 6. Conditions of Closing. The Purchaser’s obligation to purchase the Bonds
under this Agreement shall be subject to the satisfaction prior to the Closing Date or concurrently
with the Closing on such date, of the following conditions:



     A. Opinion of Counsel to the Company. The Purchaser shall have received favorable
opinions dated the Closing Date from Arent Fox PLLC, special counsel to the Company, satisfactory
to the Purchaser and the Purchaser’s counsel, to the effect that:



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     (1) the Company is a corporation duly incorporated, validly existing, in good standing
under the laws of Maryland, and duly authorized to transact business in Maryland, and
qualified to do business in Maryland, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals to carry on its business as
now conducted and to enter into and perform this Agreement and the Development Agreement;




     (2) this Agreement and the Development Agreement have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement and the Development
Agreement have been duly executed and delivered by the Company and constitute valid and
binding agreements of the Company, subject to the customary qualifications for bankruptcy
and the application of equitable principles in actions to enforce contracts;




     (3) to the knowledge of such counsel upon reasonable inquiry, there are no actions,
suits or proceedings, pending or threatened against or affecting the Company or any
Subsidiary of the Company in any court or before any arbitrator or before or by any
Governmental Body in which there is a reasonable possibility of an adverse decision which
would materially adversely affect the business, financial position or results of operations
of the Company and its Subsidiaries, or which in any manner raises any question affecting
the validity of this Agreement or the Development Agreement;




     (4) the execution, by the Company of this Agreement and the Development Agreement do
not contravene, or constitute a default under, any provision of applicable law or regulation
or of the certificate of incorporation or by-laws of the Company or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company and known to such
counsel after reasonable inquiry, or result in the creation of any lien or other encumbrance
on any asset of the Company; and




     (5) no consent or approval is required to be by, or document filed with, any
Governmental Body in connection with the execution, delivery and performance of this
Agreement or the Development Agreement by the Company, or, if such action is required, the
same has been duly taken, is in full force and effect and constitutes valid and sufficient
authorization therefor.



     B. Opinion of Counsel to Issuer. The Purchaser shall have received a favorable
opinion dated the Closing Date from Venable LLP, Baltimore, Maryland, in the form attached to this
Agreement as Exhibit C.



     C. Representations and Warranties. The representations and warranties of the Issuer
and the Company contained herein shall be true on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of the Closing Date.



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     D. Performance; No Default. The Company shall have performed and complied with all
agreements and conditions herein required to be performed or complied with by it prior to or on the
Closing Date, and at the time of the Closing no event of default or default shall have occurred and
be continuing with respect to the Development Agreement and the Bonds.



     E. Compliance Certificate. Unless this Agreement is dated the Closing Date, the
Company shall have delivered to the Purchaser on the Closing Date a certificate, dated the Closing
Date, signed by its President or one of its Vice Presidents, certifying that the conditions
relating to it in Section 6.C and Section 6.D have been fulfilled.



     F. Bond Authorization Legislation. The Bond Authorization Legislation shall have
been duly adopted, enacted, and executed by the duly elected or appointed officials of the Issuer,
shall be in full force and effect, and shall not be subject to any referendum.



     G. Other Documents and Proceedings. The Purchaser shall have received all other
documents and opinions as the Purchaser may have requested relating to (1) the existence of the
Company, (2) the corporate and governmental authority for and validity of this Agreement, Bond
Authorization Legislation, the Development Agreement, and the Bonds, and (3) other matters relevant
to the issuance and sale of the Bonds hereto. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, the Resolution, and the Bond Authorization
Legislation, and all documents, opinions and certificates incident to such transactions shall be
satisfactory in form and substance to the Purchaser.



     H. The Bonds. The Purchaser shall have received the duly authenticated Bond in
compliance with the provisions of Section 2.A hereof.



     I. No Legal Action. There shall not be pending before any court or before any
administrative body any action, proceeding or investigation which is directed toward challenging,
restraining, prohibiting or invalidating the transactions contemplated hereby, nor shall the
Company have received from any Governmental Body official notification in writing objecting to the
sale of the Bonds.



     J. The Servicing Agreement. The Purchaser shall have received a duly executed copy
of the Servicing Agreement.



     Section 7.
INTENTIONALLY OMITTED.



     Section 8. A. Environmental Matters. The Company represents and warrants that it is
in compliance with the terms and provisions of the Loan Agreement and Deed of Trust between it and
the Purchaser dated October 12, 2004, in respect to Hazardous Materials (as defined in those
documents).



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               B. Compliance. With respect to the Project, the Company will at all times comply in
all respects with all applicable laws (whether statutory, common law or otherwise), rules,
regulations, orders, permits, licenses, ordinances, judgments, or decrees of any Governmental Body,
including, without limitation, all laws regarding public health or welfare, environmental
protection, water and air pollution, composition of product, underground storage tanks, toxic
substances, hazardous wastes, hazardous substances, hazardous materials, waste or used oil,
asbestos, occupational health and safety, nuisances, trespass, and negligence, except to the extent
the failure to comply would not materially adversely affect the Borrower’s properties (including
the Project), operations or financial conditions.



     Section 9. Payment of Certain Expenses and Taxes by the Company. Whether or not the
transactions contemplated by this Agreement shall be consummated, the Company will:




     (1) pay all reasonable expenses incurred by the Purchaser and the Issuer incident to
the transactions contemplated by this Agreement or in connection with any enforcement,
modification, amendment, or alteration of this Agreement, the Development Agreement, the
Bonds, the Resolution, or the Bond Authorization Legislation (whether or not any such
enforcement, modification, amendment or alteration becomes effective), including, but not
limited to, any out-of-pocket expenses incurred by the Purchaser or the Issuer and the fees,
charges and disbursements of counsel for the Issuer and for the Purchaser; and




     (2) pay and hold the Purchaser and the Issuer harmless against any and all liability
with respect to amounts payable as a result of (a) any taxes which may be determined to be
payable in connection with the execution and delivery of the Bonds, this Agreement, the
Development Agreement, Resolution, or the Bond Authorization Legislation, or any
modification, amendment or alteration, of the terms or provisions of any of the Bonds, this
Agreement, Development Agreement, the Resolution, or the Bond Authorization Legislation, (b)
any interest or penalties resulting from any delays in paying any of such expenses, charges,
disbursements, liabilities or taxes, and (c) any advisory, placement, brokers’, finders’ or
other similar fees incurred in connection with the sale of the Bonds hereunder.


The obligations of the Company under this Section shall survive the payment of the Bonds.




     Section 10. Survival of Covenants; Successors and Assigns. All covenants,
agreements, representations and warranties made by the Company or the Purchaser in this Agreement
or the Development Agreement, and in certificates or other documents delivered pursuant to them,
shall survive the delivery of the Bonds to the Purchaser and shall continue in full force and
effect, until all the Bonds are paid in full and thereafter to the extent provided by Section 9.
All such covenants, agreements, representations and



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warranties shall be binding upon any successors and assigns of the Company or the Purchaser, as the
case may be, and shall inure to the benefit of their successors and assigns.



     Section 11. A. No Oral Change; Amendments in Writing. This Agreement may not be
changed orally, but only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.



     B. No Assignment of Agreement. The Company may not assign any of its rights or
obligations under this Agreement without the Purchaser’s written consent, and the Purchaser shall
not be required to purchase the Bonds under this Agreement except from the Issuer.



     C. Conflicts. In the event of a conflict between the Summary and the terms hereof,
the terms of this Agreement shall control.



     Section 12. Notices. Except as otherwise provided in this Agreement, whenever notice
is required to be given pursuant to the provisions of this Agreement or the Support Agreement, such
notice shall be in writing and shall be mailed by first class mail postage prepaid addressed as set
forth in the Servicing Agreement at the address set forth adjacent to the signatures of the parties
hereto.



     Section 13. Law Governing. This Agreement shall be construed in accordance with and
governed by the laws of the State of Maryland.



     Section 14. Headings. The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part of this Agreement.



     Section 15. Immunity of Officers, Employees and Members of Issuer. No recourse shall
be had for the payment of the principal of or premium or interest on any of the Bonds or for any
claim based thereon or upon any obligation, covenant or agreement in this Agreement contained
against any past, present or future officer, director, member, employee or agent of the Issuer or
of any successor political subdivision, as such, either directly or through the Issuer or any
successor political subdivision, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of any such officers,
directors, members, employees or agents as such is hereby expressly waived and released as a
condition of and consideration for the execution of this Agreement and the issuance of the Bonds.



     Section 16. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.



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     If you agree with the foregoing, please sign two copies of this Agreement in the space
provided below for your acceptance and return one copy so executed to the undersigned Purchaser,
whereupon this Agreement shall then become a binding agreement between the Purchaser, the Issuer,
and the Company.



[SIGNATURES BEGIN ON THE NEXT PAGE]




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The foregoing is hereby accepted as of the date set forth above.




	 	 	 	 	 
	 	Very truly yours,



MERCANTILE POTOMAC BANK

 	 
	 	By:  	/s/ Christopher A. Hesen
 	 
	 	 	Name:  	Christopher A. Hesen 	 
	 	 	Title:  	Senior Vice-President 	 
	 



[Page 1 of 3 signature pages of Bond Purchase Agreement]





 









 




The foregoing is hereby accepted as of the date set forth above.




EMERGENT BIOLOGICS INC.




	 	 	 	 	 
	By:

	 	/s/ Fuad El-Hibri
 

Name:
	 	 
	 

	 	Title:	 	 






[Page 2 of 3 signature pages of Bond Purchase Agreement]




 









 





The foregoing is hereby accepted as of the date set forth above.




COUNTY COMMISSIONERS OF FREDERICK COUNTY




	 	 	 	 	 
	By:

	 	/s/ John L. Thompson Jr.
 

John L. Thompson, Jr.
	 	 
	 

	 	President of the Board of County Commissioners	 	 






[Page 3 of 3 signature pages of Bond Purchase Agreement]




 









 





EXHIBIT A




SUMMARY OF TERMS




 









 





MERCANTILE POTOMAC BANK




                    February 11, 2005




Board of County Commissioners of Frederick County

12 East Church Street

Winchester Hall, MD




Dear Lady and Gentlemen:




     The Mercantile Potomac Bank is pleased to advise you that we have approved your request
associated with the planned Tax Increment Financing (“TIF”) for economic development purposes as
required by the State of Maryland’s Department of Business and Economic Development.



	 	 	 
	Purchaser:

	 	Mercantile Potomac Bank (“Bank”)
	 
	 	 
	Issuer:

	 	County Commissioners of Frederick County (“County” or “Issuer”).
	 
	 	 
	Amount:

	 	Not to exceed $325,000.00 
	 
	 	 
	Purpose:

	 	To fund certain allowable expenditures, including the acquisition of land and site work for the Dudrow Industrial
Park, Lot Three Development District also known as the Units 1, 2 & 3 Wedgewood IV Land Condo.
	 
	 	 
	Term:

	 	Five years.
	 
	 	 
	Repayment:

	 	Annual payments of principal and interest beginning on December 1, 2005 and annually thereafter due on December 1st of each year.
	 
	 	 
	Funding:

	 	Funding will occur on or before March 31, 2005. 
	 
	 	 
	Interest Rate:

	 	Fixed rate for the five year term at 6.625% (taxable) or the 4.08% (tax- exempt).
	 
	 	 
	Facility/
	 	 
	Collateral:

	 	The facility (“Bond”) will be a limited obligation of the County under which
ninety percent (90%) of the incremental increase of real estate taxes
(“Incremental Taxes”) from the TIF district will be deposited in a a special
fund and pledged to pay the Bond. Subject to the county’s consent, in the
event of a default or insufficient debt service coverage, 100% of the
Incremental Taxes then remaining in the special fund created to hold the
Incremental Taxes will be pledged for debt service requirements and
collection expenses of the Bond.







 










 








MERCANTILE POTOMAC BANK




Other Conditions:





	 	1.	 	Ninety percent (90%) of the Incremental Taxes will be pledged to the
debt service assigned to the Bond so that a minimum ratio of 1.0:1.0 of taxes
pledged (as a result of final tax assessed value on the property) to annual
debt service will be maintained. See Schedule A example of calculation.






	 	2.	 	The Bond will also be subject to a Bond Purchase Agreement entered into
by the Purchaser, the County and Emergent Biologics Inc. (“Emergent”), which
will include the terms and provisions set forth above as well as other terms
and conditions reasonably acceptable to the Issuer and Purchaser including the
Issuer’s covenant to treat the Property in a manner consistent with that of
other delinquent taxpayers and to offer the Property for sale under its tax
lien in the ordinary course of its tax collection activities.





General Conditions:





	 	1.	 	Any material change in the conditions contained in this letter, as determined
by the Purchaser in its sole discretion, will allow the Purchaser to terminate this
letter agreement by written notice to the County, and thereupon Purchaser shall have no
further obligations to the County to purchase the bond or otherwise perform any
obligation set forth herein or in other related document or agreement.
	 
	 	2.	 	Documentation: All documents evidencing or securing the Bond and any
other Liabilities (collectively, the “Bond Documents”) or relating to any such documents
and such other documents, instruments, opinions, assurance, consents, and approvals as
the Purchaser may deem necessary shall be subject to the approval of and shall be in
form and content satisfactory to the Purchaser and its counsel in their sole but
reasonable discretion. In particular, such documents may include, without limitation,
but subject to existing and future Deeds of Trust affecting the property, in the sole
discretion of the Purchaser and its counsel, provision for application of condemnation
proceeds for restoration of the improvements.
	 
	 	3.	 	Expenses: Emergent shall pay all fees, expenses, costs and charges with
respect to the issuance of the Bond, or in any way connected therewith, including, but
not limited to attorney’s fees and expenses (including Purchaser’s counsel’s fees and
expenses). The Issuer’s counsel will prepare the Bond Documents. Such expenses may be
funded by the proceeds of the Bond.
	 
	 	4.	 	Interest Computation: Late Charges: Interest on the Bond shall be
computed on the basis of thirty (30) day months and a 360-day year. Upon default under
the Bond documents, a late charge equal to the lesser of five percent (5%) per month or
the interest rate otherwise chargeable for the delinquent tax payments based upon the
incremental tax payment due for that current tax





 









 










MERCANTILE POTOMAC BANK





	 	 	 	year shall be payable from incremental taxes or other funds then available in the
special fund, which charge should accrue if any payment of principal or interest
pursuant to the bond shall be more than fifteen (15) days delinquent and such interest
shall continue to accrue until the default is cured or the Bond is paid in full.
	 
	 	5.	 	Evidence of Compliance, etc. Evidence satisfactory to the Purchaser that:






	 	i.	 	The Bond and actual use of the Property complies in all material
respects with all laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction over the same.
	 
	 	ii.	 	All requisite approvals for occupancy of the facility have been validly
granted without qualifications; and
	 
	 	iii.	 	There are no actions or proceedings pending before any court or
administrative agency or governmental body at the time which materially and
adversely affect the Issuer’s or Emergent ability to honor its obligations
under the Bond






	 	6.	 	Hazardous Materials: Emergent shall represent and warrant that it is in
compliance with the provision of the Deed of Trust and Loan Agreement dated October 12,
2004 between it and the Bank in respect to Hazardous Materials as therein defined.
	 
	 	7.	 	Assignment: Except to reimburse Emergent for qualifying expenditures, the
proceeds of the Bond shall not be assigned by the Issuer without the prior written consent
of the Purchaser, and any such assignment without such consent shall be void and, at the
option of the Purchaser, be deemed a default, hereunder. The Bond and any other bond or
documentation connected with or contemplated by this transaction may be placed, assigned,
serviced, and/or participated out (either in whole or in part) by the Purchaser and/or its
successors and assigns.
	 
	 	8.	 	Termination: The Purchaser may terminate this commitment if, except as may be
otherwise provided herein, the Bond or any other feature of the transaction has been or is
misrepresented by the Issuer, or any third party in the bond application or otherwise, or if
any adverse change, in the sole but reasonable judgment of the Purchaser, shall have
occurred with respect to any part of this transaction.
	 
	 	9.	 	Actions by the Purchaser: No statement, agreements, or representations oral or
written, which may have been made to the Issuer or any third party or to any employee or
agent of the Issuer, either by the Purchaser or by any employee, agent, or broker acting on
the Purchaser’s behalf, with respect to the Bond, shall be of any force or effect, except to
the extend stated in this commitment, and all prior agreements and representations with
respect to the Bond are merged herein. This commitment may not be changed except by written
agreement signed by the Issuer and the Purchaser.





 









 





MERCANTILE POTOMAC BANK




     We are very pleased to be able to make this commitment and we look forward to working with the
County and Emergent on the issuance of the Bond.



With regards,




/s/ Christopher A. Hesen




Christopher A. Hesen

Senior Vice President



Agreed and accepted this ___day of February 2005.




	 	 	 	 	 
	Witness:	 	Board of County Commissioners Of

Frederick County
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 





 









 





MERCANTILE
POTOMAC BANK




Schedule A

TIF Bond Calculations For

Emergent BioLogics Inc. Facility




Assessed Market Value:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Current Estimate	 
	As of January 1, 2004
	 	Land
	 	$	773,600.00	 
	As of July 1, 2005
	 	Building
	 	$	18,716,062.00	 
	 
	 	 	 	 	 	 	 	 
	     Assessment Ratio:	 	 	100	%
	     Assessable Base:	 	$	18,716,062.00	 
	     Less Original Assessable Base:	 	 	(773,600.00	)
	 
	 	 	 	 	 	 	 
	     Adjusted Assessable Base:	 	$	17,942,462.00	 






Tax Calculation:




	 	 	 	 	 
	County Tax Rate
	 	$	1.00	 
	County Base Tax Revenue
	 	$	7,736.00	 
	Tax Increment Revenue
	 	$	179,424.00	 
	Pledged Allocation @ 90%
	 	$	161,481.00	 






Bond Repayment Scenario:




	 	 	 	 	 
	Taxable Rate	 	 	 	Tax-Exempt Rate
	 
	 	 	 	 
	Rate

	 	6.625% 
	 	4.08% 
	Principal

	 	$325,000.00 
	 	$325,000.00 
	Term

	 	60 Months 
	 	60 Months 
	P&I

	 	$78,669.73 
	 	$ 73,287.33 
	 
	 	 	 	 
	Coverage

	 	2.053X 
	 	2.203X 







 









 








EXHIBIT B

SPECIMEN BOND




 









 








			
	 	 	 
	No. R-1
	 	$300,000.00






UNITED STATES OF AMERICA

STATE OF MARYLAND

FREDERICK COUNTY, MARYLAND

TAX INCREMENT FINANCING BOND

(DUDROW INDUSTRIAL PARK LOT THREE DEVELOPMENT DISTRICT)

SERIES 2005




	 	 	 	 	 
	Annual Interest Rate	 	Maturity Date	 	Bond Date
	 	 	 	 	 
	4.08%
	 	December 1, 2009
	 	March ___, 2005






Registered Owner:     Mercantile Potomac Bank




Principal Amount:     Three Hundred Thousand Dollars




     County Commissioners of Frederick County, a body politic and corporate organized and existing
under the Constitution and laws of the State of Maryland (the “County”), hereby acknowledges itself
indebted for value received and, promises to pay to the Registered Owner shown above, or his
registered assigns, on December 1, 2005 and on each December 1 thereafter up to and including the
Maturity Date shown above unless this bond shall have been called for prior redemption and payment
of the redemption price made or provided for, the Principal Amounts set forth on Schedule A
attached hereto and made a part hereof (“Schedule A”) and to pay interest on the outstanding
principal amount hereof from the date hereof in the amounts set forth on Schedule A.



     Interest on this Bond shall be paid at the Annual Interest Rate shown above, payable December
1, 2005 and annually thereafter on December 1 in each year (the “Interest Payment Dates”) until
payment of such Principal Amount shall be discharged in the amounts set forth on Schedule A. Such
interest shall be paid to the person in whose name this bond is registered on the registration
books maintained by the Servicer (as hereafter defined) who shall serve as bond registrar for the
Bond (the “Bond Registrar”) at the close of business on the 15th calendar day of the month next
preceding each Interest Payment Date (the “Record Date”).



     Interest on this Bond shall be computed on the basis of thirty (30) day months and a 360-day
year. If any payment due hereunder is not received within fifteen (15) days after its due date, a
late charge equal to the lesser of one percent (1%) per month or the interest rate then chargeable
by the County for delinquent tax payments shall accrue on such late payment and shall be payable
from any late payment proceeds received by the County on the incremental taxes pledged for
repayment of this Bond.



 









 





     This Bond is a limited obligation of the County, payable as provided in the Ordinance,
and the full faith and credit and unlimited taxing power of County Commissioners of Frederick
County are not pledged to the payment of the principal of this Bond and of the interest to
accrue hereon.



     Principal of, premium, if any, and interest on this Bond are payable in such money of the
United States of America as is lawful at the time of payment.



     This Bond is a single bond, limited in aggregate principal amount to $300,000.00, dated March
    , 2005 and known as “Frederick County, Maryland, Tax Increment Financing Bond (Dudrow
Industrial Park Lot Three Development District) Series 2005 (the “Bond”). The Bond is issued as a
registered bond, without coupons, in the denomination of $300,000.00. The Bond is numbered No. R-1
and matures on December 1, 2009.



     The Bond shall be subject to redemption at the option of the County in whole or in part from
funds available to the County for such purpose at any time without penalty or premium.



     Notice having been given in the required manner hereunder, the Bond or portion of the Bond
called for redemption shall, on the redemption date designated in such notice, become and be due
and payable at the redemption price provided for redemption of such Bond or portion of such Bond on
such date. On the date so designated for redemption, notice having been given as required hereunder
and monies for payment of the redemption price being held in separate accounts by the Servicer or
the County in trust for the Owner of the Bond or portions thereof to be redeemed, interest on the
Bond or portion of Bond shall cease to be entitled to any lien, benefit or security under the Bond
Documents, and the Owner of such Bond or portion of such Bond shall have no right in respect
thereof except to receive payment of the redemption price thereof and, upon presentation and
surrender of the Bond to the Servicer, to receive a new Bond for any unredeemed portion of the
Bond.



     The Bonds will be transferable only upon the Bond Register by the Bond Registrar. Any Bond
presented for transfer, exchange, registration, or redemption shall be accompanied by a written
instrument or instruments of transfer or authorization for exchange, in form and with guaranty of
signature satisfactory to the Bond Registrar, duly executed by the Registered Owner thereof or by
his duly authorized attorney. Upon any transfer or exchange, the County shall execute and the Bond
Registrar shall authenticate and deliver in the name of the Registered Owner or the transferee or
transferees, as the case may be, a new registered Bond or Bonds of any of the authorized
denominations in an aggregate principal amount equal to the principal amount of the Bond exchanged
or transferred and maturing on the same date and bearing interest at the same rate. In each case,
the County and the Bond Registrar may require payment by the Registered Owner requesting the
exchange or transfer of any tax, fee or other governmental charge, shipping charges and insurance
that may be required to be paid with respect thereto, but otherwise no charge shall be made to the
Registered Owner for the exchange or transfer.



-2-









 





     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON
THE BOND REGISTER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
OR SUCH ACT DOES NOT APPLY.



     NEITHER THE ISSUER OF THIS BOND NOR THE BOND REGISTRAR OR TRANSFER AGENT FOR THIS BOND MAY
REGISTER THE TRANSFER OF, OR EXCHANGE THIS BOND FOR, A BOND OF THE ISSUE OF BONDS IN A DENOMINATION
WHICH IS LESS THAN THE DENOMINATION OF THIS BOND; PROVIDED THAT EXCHANGE OF THIS BOND FOR ONE OR
MORE BONDS IN DENOMINATIONS OF $100,000 OR MORE SHALL BE PERMITTED IF SUCH EXCHANGE DOES NOT
VIOLATE ANY APPLICABLE SECURITES LAWS INCLUDING SECURITIES AND EXCHANGE COMMISSION RULE 15C2-12.



     NEITHER THE ISSUER OF THIS BOND NOR THE TRANSFER AGENT FOR THIS BOND MAY REGISTER THE TRANSFER
OF THIS BOND TO A TRANSFEREE UNLESS THE TRANSFEREE IS EITHER A FINANCIAL INSTITUTION OR A
SOPHISTICATED INVESTOR WHO IS EXPERIENCED IN BUSINESS AND FINANCIAL MATTERS AND WHO IS ALSO ABLE TO
EVALUATE THE RISKS AND MERITS OF INVESTING IN SECURITIES SIMILAR TO THIS BOND.



     The Bond Registrar shall not be required to transfer or exchange any Bond after the mailing of
notice calling such Bond or portion thereof for redemption; provided, however, that this limitation
shall not apply to any portion of a Bond which is not being called for redemption.



     The Bond is issued pursuant to the authority of Article 41, Section 14-201 of the Annotated
Code of Maryland and in accordance with Resolution No. 04-38 of the Board of county commissioners
of the County adopted on October 5, 2004 and the Ordinance (as hereafter defined).



     It is hereby certified and recited that each and every act, condition and thing required to
exist, to be done, to have happened and to be performed precedent to and in the issuance of this
Bond, does exist, has been done, has happened and has been performed in full and strict compliance
with the Constitution and laws of the State of Maryland and Ordinance No. 05-02-363 of the Board of
County Commissioners of Frederick County, enacted on March 1, 2005 authorizing the issuance of the
issue of Bonds, of which this bond is the sole Bond (the “Ordinance”) and that said issue of Bonds,
together with all other indebtedness of the County, is within every debt and other limit prescribed
by the Constitution and laws of said State.



-3-









 





     IN WITNESS WHEREOF, the County has caused this Bond to be executed in its name by
the President of the Board of County Commissioners of Frederick County and attested by its
County Manager, and has also caused its corporate seal to be printed hereon.



	 	 	 	 	 	 	 
	ATTEST:	 	COUNTY COMMISSIONERS OF FREDERICK COUNTY
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Douglas D. Browning
	 	 	 	John L. Thompson, Jr.
	 

	 	County Manager
	 	 	 	President, Board of County Commissioners of Frederick
County







-4-









 








ASSIGNMENT




     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Tax
Identification or Social Security No.                                                             ) the within bond and all rights
thereunder, and does hereby constitute and appoint                                                             attorney to
transfer the within bond on the books kept for the registration thereof, with full power of
substitution in the premises.



Dated:                                             




	 	 	 
	Signature Guaranteed:
	 	 
	 
	 	 
	 

	 	 
	NOTICE: Signatures must be guaranteed by
a member firm of the New York Stock Exchange
or a commercial bank or trust
company

	 	(Signature of Registered Owner)
NOTICE: Signature must correspond with the name of the
Registered Owner of the within bond as it appears on
the face of the within bond in every particular,
without alteration or enlargement or any change
whatever







-5-









 








SCHEDULE A




BOND SCHEDULE





	(i)	 	Bond Identifying Number: R-I
	 
	(ii)	 	Company Name: EMERGENT BIOLOGICS INC.
	 
	(iii)	 	Property Address: 7114, 7116 and 7118 Geoffrey Way,
Frederick, Maryland 21701
	 
	(iv)	 	(a)  Original Loan Term: 5 years
	 
	 	 	(b)  Original Final Maturity: December 1, 2010
	 
	(v)	 	Bond Interest Rate: 4.08% per annum
	 
	(vi)	 	First Monthly Payment Due Date: December 1, 2005
	 
	(vii)	 	Annual Payment Amount: 12/01/05 $64,113.84; each 12/01 thereafter $67,649.84 [+
Annual Servicing Fee $0]
	 
	(viii)	 	Original Principal Balance: $300,000.00





-6-









 








EXHIBIT C




BOND OPINION





 









 








	 	 	 	 	 	 	 
	VENABLEllp

	 	210 Allegheny Avenue
	 	Telephone 410-494-6200
	 	www.venable.com
	 

	 	Post Office Box 5517
	 	Facsimile 410-821-0147	 	 
	 

	 	Towson, Maryland 21285-5517	 	 	 	 






March                     , 2005




County Commissioners of Frederick County

Winchester Hall

12 E. Church Street

Frederick, Maryland 21701




Mercantile Potomac Bank

702 Russell Avenue — Suite 200

Gaithersburg, Maryland 20877





			
	     Re:     	 	$300,000 Frederick County, Maryland

Tax Increment Financing Bond

(Dudrow Industrial Park Lot Three Development District) Series 2005





Ladies and Gentlemen:




     We have acted as bond counsel to County Commissioners of Frederick County, a body
politic and corporate and a political subdivision of the State of Maryland (the “Issuer”),
in connection with the issuance of the above-referenced bonds which are issued as a single,
fully registered bond in the amount of $300,000 (the “Bond”) dated the date hereof.



     In such capacity, we have examined the law and such certified proceedings and other
papers as we deem necessary to render this opinion.



     The scope of our engagement as bond counsel extends solely to an examination of the
facts and law incident to rendering the opinion specifically expressed herein.



     Unless the context clearly indicates otherwise, each capitalized term used in this
opinion shall have the same meaning as set forth in the Bond and in the Purchase Agreement.



     The Bond has been authorized and issued pursuant to the Tax Increment Financing Act,
Sections 14-201 through 14-214 of Article 41 of the Annotated Code of Maryland, as amended
(the “Act”), Resolution No. 04-38 of the Issuer adopted on October 5, 2004 (the
“Resolution”), Ordinance No. 05-02-363 enacted on March 1, 2005 (the “Ordinance”), a
Written Order dated of even date herewith executed by the President of the Board of County
Commissioners of Frederick County (the “Written Order”) and under a Bond Purchase Agreement
among the Issuer, Emergent BioLogics Inc. (the “Developer”) and Mercantile Potomac Bank
(the “Purchaser”) dated as of even date herewith (the “Purchase Agreement”). The Bond is a
limited obligation of the Issuer payable solely from tax revenues of the Issuer allocated
and paid to the Special Fund (as defined in the Resolution).




 









 








VENABLEllp




County Commissioners of Frederick County

March                     , 2005

Page 2




     We refer you to the Bond, the Written Order and the Purchase Agreement for a
description of the purposes for which the Bond is issued, the security for the Bond, the
manner in which and times at which the principal of, premium (if any), and interest on,
the Bond are payable, the interest rate or rates payable on the Bond, the provisions under
which the Bond may be redeemed, and all other details of the Bond.



     Mercantile Potomac Bank, as servicer (the “Servicer”) will administer the Bond and
the collection of moneys for the payment thereof as fiscal agent for the Issuer pursuant
to a Servicing Agreement dated of even date herewith among the Issuer, the Servicer, the
Developer and the Purchaser.



     Proceeds of the Bond will be applied by the Issuer to reimburse the Developer for
costs incurred by the Developer in connection with certain improvements to the Dudrow
Industrial Park Lot Three Development District created by the Resolution, pursuant to a
Development Agreement dated of even date herewith among the Issuer and the Developer (the
“Development Agreement”).



     We have not reviewed or examined any financial information or other information with
respect to the Developer or any offering material relating to the Developer, and we
express no opinion relating thereto.



     We have made no investigations of, and are rendering no opinion regarding, title to,
liens on or security interests in real or personal property, and we express no opinion as
to the creation, validity or priority of any lien upon, assignment of, pledge of or
security interest in any real or personal property. It is the responsibility of the
Servicer to continue to maintain the perfection, priority or validity of any liens,
assignments, security interests or pledges created as security for the Bond.



     This opinion does not constitute or imply a recommendation of the market or financial
value of the Bond or an assessment of the strength or appropriateness of the covenants by
any of the parties to any of the documents relating to the issuance of, or securing, the
Bond, the possibility of default (other than on account of the invalidity of the Bond),
the eligibility or suitability of the Bond as an investment, or any other legal or
financial aspect of the Bond not expressly addressed.



     As to questions of fact material to our opinion, we have relied on representations of
the Developer, the Purchaser and the Issuer contained in the Issuer Documents (as defined
below), the certified proceedings and other certifications of public officials furnished to
us without undertaking to verify the same by independent investigation.




 









 








VENABLEllp




County Commissioners of Frederick County

March                     , 2005

Page 3




     We have assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the originals of
such latter documents.



     We do not express any opinion herein concerning any law other than the law of the
State of Maryland and the federal law of the United States of America.



     Based on the foregoing, we are of the opinion that, under existing law and as of the
date hereof:



     1. The Issuer is duly created and validly existing as a body politic and corporate
and a political subdivision of the State of Maryland and has full power and authority under
the laws of the State, including the Act, to issue the Bond and to execute and deliver, and
perform its obligations under, the Purchase Agreement, the Development Agreement and the
Servicing Agreement (the “Issuer Documents”).



     2. The Resolution has been validly adopted by the Issuer and has not been amended,
rescinded or revoked and is in full force and effect.



     3. The Ordinance has been validly enacted by the Issuer and has not been amended,
rescinded or revoked and is in full force and effect.



     4. The Written Order has been duly authorized, executed and delivered by the Issuer
and has not been amended, rescinded or revoked and is in full force and effect.



     5. The Bond has been duly authorized, executed and delivered by the Issuer,
constitutes the valid and legally binding limited obligation of the Issuer and is
enforceable against the Issuer in accordance with its terms. The Bond, the premium (if
any), and the interest thereon, are limited obligations of the Issuer, the principal of,
premium (if any), and interest on, which are payable solely from tax revenues of the Issuer
allocated and paid to the Special Fund (as defined in the Resolution). The Bond, the
premium (if any) and the interest thereon shall never constitute an indebtedness or a
charge against the general credit or taxing powers of the Issuer, the State of Maryland, or
any other public body within the meaning of any constitutional or charter provision or
statutory limitation, and shall never constitute or give rise to any pecuniary liability of
the Issuer, the State of Maryland, or any other public body. The Bond does not constitute
an indebtedness to which the faith and credit of the Issuer, the State of Maryland or any
public body is pledged.




 









 








VENABLEllp




County Commissioners of Frederick County

March                     , 2005

Page 4




     6. The Issuer Documents have been duly authorized, executed and delivered by the
Issuer and, assuming due authorization, execution and delivery of such agreements by the
other parties thereof, constitute legal, valid and binding agreements of the Issuer,
enforceable against the Issuer in accordance with their respective terms.



     7. In accordance with the Act, the principal amount of the Bond, the interest payable
thereon, its transfer, and any income derived therefrom, including any profit made in the
sale or transfer thereof, shall be exempt from taxation by the State of Maryland and by the
several counties and municipalities of this State, but no opinion is expressed as to estate
or inheritance taxes, Maryland franchise taxes on certain financial institutions measured
by income, or to any other taxes not levied or assessed directly on the Bond or the
interest thereon.



     8. Interest on the Bonds is excluded from gross income for federal income tax
purposes, and interest on the Bonds is not an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations; it should be
noted, however, that such interest is taken into account in determining adjusted current
earnings for the purpose of computing the alternative minimum tax imposed on certain
corporations (as defined for federal income tax purposes). The opinion set forth in the
preceding sentence is subject to the condition that the County comply with all requirements
of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or continue to be, excluded from
gross income for federal income tax purposes. The County has covenanted to comply with all
such requirements. Failure to comply with certain of such requirements may cause interest
on the Bonds to be included in gross income for federal income tax purposes retroactively
to the date of issuance of the Bonds. In addition interest on the Bonds may be subject to
the branch profits tax imposed on foreign corporations engaged in a trade or business in
the United States.



     Other than as set forth in the preceding paragraphs 7 and 8, we express no opinion
regarding the federal or state income tax consequences arising with respect to the Bonds.



     The rights of any holder of the Bond and the enforceability of the Bond and the
Issuer Documents are subject to: (a) the exercise of judicial discretion in accordance
with general principles of equity (whether applied by a court of law or a court of
equity), including judicial limitations on rights to specific performance; (b) the valid
exercise of the constitutional powers of the United States of America and of the sovereign
police and taxing powers of state or other governmental units having jurisdiction; and (c)
bankruptcy,




 









 








VENABLEllp




County Commissioners of Frederick County

March                     , 2005

Page 5



insolvency, reorganization, moratorium or other similar laws heretofore or hereafter in
effect affecting creditors’ rights, to the extent constitutionally applicable.




Very truly yours,