Exhibit 10.18

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT is made this 26th day of May, 2011, and effective as of
May 26, 2011 (the “Effective Date”), BY AND BETWEEN THE PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY (“PIDA”), a public body corporate and politic, organized
and existing under and by virtue of the laws of the Commonwealth of
Pennsylvania, having its principal place of business at Commonwealth Keystone
Building, 400 North Street, Fourth Floor, Harrisburg, Pennsylvania  17120; PIDC
FINANCING CORPORATION, a Pennsylvania nonprofit corporation with an address at
2600 Centre Square, 1500 Market Street, Philadelphia, Pennsylvania  19102-2126
(the “IDC”); and LANNETT COMPANY, INC., a corporation with its principal place
of business at 9000 State Road, Philadelphia, Pennsylvania  19136 (the
“Industrial Occupant”).

 

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises
herein contained, and intending to be legally bound hereby, covenant and agree
as follows:

 

ARTICLE I

 

Definitions and Background

 

Section 1.01.               When used herein the following words and phrases
shall have the following meanings:

 

“Act” means the Pennsylvania Industrial Development Authority Act, as amended,
73 P.S. § 301 et seq.

 

“Affiliate” shall mean any individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof (collectively, a “Person”) which directly or
indirectly controls, or is controlled by, or is under common control, with, the
Industrial Occupant, including, without limitation, any record or beneficial
holder of more than 25% of any class of the Industrial Occupant’s equity
securities and any executive officer or person employed or engaged in a senior
management capacity of Industrial Occupant.

 

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“Application” means the application for the Loan submitted by the IDC and the
Industrial Occupant to PIDA, including all attachments and exhibits thereto.

 

“Assignment” means the Assignment of Installment Sale Agreement effective as of
the Effective Date, under which the IDC has assigned to PIDA its rights under
the Premises Agreement as security for repayment of the Loan.

 

“Bank” means Wells Fargo Bank, N.A.

 

“Bank Mortgage” means the mortgage on the Premises held by the Bank.

 

“CERCLA” means The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

 

“Commitment” means PIDA’s letter of April 8, 2010, as amended, setting forth its
agreement to make the Loan, and the conditions under which the Loan would be
made.

 

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Cost” or “Costs” means those costs of the Project that are embraced by the
definition of “cost of establishing an industrial development project” set forth
in the Act.

 

“Cost Affidavit” means PIDA’s form Affidavit as to Costs of Project Incurred, as
completed by the IDC and the Industrial Occupant, with supporting invoices, and
submitted to PIDA prior to disbursement of the Loan.

 

“Due Inquiry” shall mean that the Industrial Occupant, consistent with good
commercial or customary practice, have caused to be made by a responsible
officer or agent of the Industrial Occupant respectively appropriate inquiry
among those directors, officers, employees, agents, accountants and attorneys
for the Industrial Occupant who might reasonably be expected to have knowledge
of the particular matter and, when such matter includes the condition of the
Premises or other facility, has further undertaken appropriate inquiries into
the present and past ownership and uses thereof.

 

“Environmental Laws” shall mean The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, The Resource Conservation and Recovery Act of 1976,
as amended by the Hazardous and Solid Waste Amendments of 1984, The Clean Water
Act, The Toxic Substances Control Act,

 

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The Clean Air Act, the Pennsylvania Hazardous Sites Cleanup Act, the
Pennsylvania Solid Waste Management Act, the Pennsylvania Storage Tank and Spill
Prevention Act, the Pennsylvania Worker and Community Right to Know Act, the
Pennsylvania Clean Streams Law, as amended, or any rule or regulation
promulgated pursuant to any of the foregoing statutes, or any other applicable
law, statute, rule, regulation or ordinance regulating the manufacture, use,
possession, discharge or disposal of substances injurious to the natural
environment or to human health, whether federal, state or local.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Event of Default” means those occurrences listed in Section 10.01 herein.

 

“Hazardous Materials” shall include, without limitation, asbestos (including
asbestos in friable form), polychlorinated biphenyls, petroleum products,
flammable or explosive materials, radioactive materials, hazardous materials,
hazardous waste, hazardous or toxic substances or related materials, each as
defined under or pursuant to any Environmental Law.

 

“Illegal Alien” means a non-citizen of the United States who is violating
Federal immigration laws and is providing compensated labor within this
Commonwealth.

 

“Improvements” means the building and infrastructure improvements on the
Premises, whether now existing or hereafter constructed.

 

“Indemnified Parties” or “Indemnified Party” means one or more of PIDA and the
IDC and their respective employees, agents, officers and directors, including,
without limitation, any engineer or environmental consultant retained by the IDC
or PIDA.

 

“Industrial Occupant” means Lannett Company, Inc.

 

“Loan” means a loan in the maximum principal amount of $2,000,000 to be used
exclusively by the IDC and the Industrial Occupant to defray a portion of the
Cost not to exceed the Participation Percentage.

 

“Loan Documents” means this Loan Agreement, the Note, the Mortgage, the Premises
Agreement, the Assignment, the opinions of counsel hereinafter referred to, and
all other agreements, instruments and documents to be delivered hereunder.

 

“Mortgage” means the Mortgage effective as of the Effective Date given by the
IDC to PIDA which constitutes not less than a second lien upon the Premises,
subordinate only to a the Bank Mortgage.

 

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“Note” means the $2,000,000 promissory note given by the IDC and the Industrial
Occupant to PIDA, effective as of the Effective Date.

 

“Participation Percentage” means 50%.

 

“Premises” means a tract of land in City of Philadelphia, Philadelphia County,
Pennsylvania.

 

“Premises Agreement” means the Installment Sale Agreement dated May 26, 2011
between the IDC as seller and the Industrial Occupant as buyer, under which the
IDC has agreed to sell the Premises to the Industrial Occupant.

 

“Project” means the industrial development project, as defined in the Act, to be
established by the IDC on the Premises.

 

“Project Documents” means all material written agreements relating to the
acquisition and construction of the Project, including any amendments thereto.

 

Section 1.02.               The IDC, to facilitate the financial transactions
referred to herein, has acquired or is acquiring as of the date hereof legal
title to the Premises, upon which the IDC proposes to establish the Project to
be purchased by the Industrial Occupant under the Premises Agreement.  The IDC
has filed with PIDA the Application and accepted from PIDA the Commitment for
the Loan, to be used exclusively to defray a portion (not to exceed the
Participation Percentage) of the Cost. PIDA is willing to make the Loan upon the
terms and subject to the conditions hereinafter set forth. The IDC and the
Industrial Occupant will each benefit substantially by the Loan.

 

ARTICLE II

 

The Loan

 

Section 2.01.               The Loan.  Subject to the terms and conditions set
forth herein, including without limitation the time limitations for
disbursements of the Loan set forth in Section 6.03 below, PIDA agrees to make
the Loan to the IDC and the Industrial Occupant, and the IDC and the Industrial
Occupant each agree to accept the Loan from PIDA, for the purposes set forth in
the Application.

 

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ARTICLE III

 

Note, Mortgage and Additional Security

 

Section 3.01.               The Note.  The Loan shall be evidenced by the Note,
which shall be executed by the IDC and the Industrial Occupant. The Loan shall
be repaid with interest as specified in the Note.

 

Section 3.02.               The Mortgage.  Payment of the Note and satisfaction
of all obligations of the IDC and the Industrial Occupant hereunder and under
the Note shall be secured by the Mortgage.  The Industrial Occupant agrees that
whatever right, title and interest which it and its successors and assigns may
have in and to the Premises under the Premises Agreement or otherwise shall be,
and the same are hereby expressly made subject and subordinate to the lien of
the Mortgage and any other judgment, lien or encumbrance pursuant to the Note,
the Mortgage or this Loan Agreement.

 

Section 3.03.               Additional Security.  The following shall constitute
additional collateral security for the payment of the Note and satisfaction by
the IDC and the Industrial Occupant of all of their obligations hereunder and
under the Mortgage:

 

(a)                    the Assignment; and other collateral security (list
specifically).

 

ARTICLE IV

 

Representations and Warranties of the IDC

 

To induce PIDA to enter into this Agreement and to make the Loan, the IDC
represents and warrants that:

 

Section 4.01.               Due Authorization.  The execution, delivery and
performance of this Agreement, the performance of the transactions contemplated
by the provisions hereof, and the execution, issuance, delivery and performance
of each of the Loan Documents to be executed and delivered by the IDC hereunder
have each been duly authorized by all necessary corporate action on the part of
the IDC.

 

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Section 4.02.               Execution and Delivery.  This Agreement and each of
the Loan Documents being executed and delivered by the IDC concurrently herewith
have been duly and validly executed and delivered by the IDC and constitute
valid and legally binding obligations of the IDC, enforceable in accordance with
their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other substantially similar laws of general
application relating to or affecting the enforcement of creditors’ rights or by
general principles of equity.

 

Section 4.03.               Litigation.  There is no material litigation or
governmental proceeding pending or, to the knowledge of the IDC, threatened
against the IDC.

 

Section 4.04.               Taxes.  The IDC has filed all required federal,
state and local tax returns and has paid all taxes shown on such returns as they
have become due.

 

All of the representations and warranties of the IDC set forth herein shall
survive and continue until the Loan is paid in full and all of the IDC’s
obligations hereunder have been satisfied.

 

ARTICLE V

 

Representations and Warranties of the Industrial Occupant

 

The Industrial Occupant makes the following representations and warranties to
PIDA and the IDC:

 

Section 5.01.               Organization.  The Industrial Occupant is a
corporation validly existing and in good standing under the laws of
Pennsylvania.

 

Section 5.02.               Power and Authority.  The Industrial Occupant has
all necessary power and authority to purchase, own, mortgage and sell its
properties and to carry on its business as now being conducted, and to carry out
the transactions contemplated by the Loan Documents.

 

Section 5.03.               Loan Documents Consistent with Law and Agreements. 
The execution and delivery of this Agreement and of each of the Loan Documents
to be executed and delivered by the Industrial Occupant, consummation of the
transactions herein contemplated, and compliance with the terms and provisions
hereof and of the Loan Documents which Industrial Occupant has executed and
delivered or to which it is otherwise subject do not (i) contravene any

 

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provision of law, statute, rule or regulation to which Industrial Occupant is
subject or any judgment, decree, franchise, order or permit applicable to the
Industrial Occupant or (ii) conflict with, or result in, a breach of any of the
terms, conditions or provisions of the organizational documents of the
Industrial Occupant, or of any material agreement, indenture or other instrument
to which the Industrial Occupant is a party or by which it is bound or to which
it or its property is subject.

 

Section 5.04.               Due Authorization.  The execution, delivery and
performance of this Agreement, the performance of the transactions contemplated
by the provisions hereof, and the execution, issuance, delivery and performance
of each of the Loan Documents to be executed and delivered by Industrial
Occupant hereunder have each been duly authorized by all necessary action on the
part of the Industrial Occupant.

 

Section 5.05.               Execution and Delivery.  This Agreement and each of
the Loan Documents being executed and delivered by Industrial Occupant
concurrently herewith have been duly and validly executed and delivered by the
Industrial Occupant and constitute valid and legally binding obligations of the
Industrial Occupant, enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other substantially similar laws of general application relating to or affecting
the enforcement of creditors’ rights or by general principles of equity.

 

Section 5.06.               Litigation.  There is no material litigation or
governmental proceeding pending or, to the knowledge of the Industrial Occupant,
threatened against the Industrial Occupant other than that which has been
previously disclosed to PIDA in writing.  If such litigation or proceeding
exists, it shall be set forth in an exhibit which shall be attached hereto and
made a part hereof.

 

Section 5.07.               Taxes.  The Industrial Occupant has filed all
required federal, state and local tax returns and has paid all taxes shown on
such returns as they have become due unless the obligation to file such return
or pay such tax is the subject of a pending administrative or judicial appeal or
proceeding with respect to which the Industrial Occupant has posted or caused to
be posted a bond or other security satisfactory to PIDA in an amount which is at
least equal to the sum which is the subject of the appeal or proceeding,
together with all interest, costs, and charges relating thereto.

 

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Section 5.08.               Infrastructure Improvements.  Adequate street and
public infrastructure improvements, including without limitation water and
sanitary and surface sewers, in and about the Project (i) have been fully
authorized or approved by appropriate ordinance or other required municipal
action and (ii) have either (A) been completed, (B) are the subject of contracts
being let by the municipality involved, (C) are covered by a bond that the
Industrial Occupant has posted with the municipality in an amount deemed
sufficient by the municipality to secure the completion of such improvements; or
(D) are otherwise available at the Premises for the use and benefit of, inter
alia, the Industrial Occupant.

 

Section 5.09.               Project Documents.  The Industrial Occupant has
furnished to PIDA originals or true and correct copies of the Project Documents
or, to the extent PIDA shall have permitted summaries of Project Documents to be
furnished in lieu of the actual documents, fair and accurate summaries of the
Project Documents.  All Project Documents are in full force and effect.  There
are in existence no agreements, laws, rules, regulations, orders, judgments,
injunctions, decrees, resolutions, determinations, awards or other instruments
whatsoever amending, supplementing or affecting, or affecting the rights and
obligations of the Industrial Occupant under the Project Documents in a manner
which could have a material adverse effect on the ability of the Industrial
Occupant to make payments or to perform and observe its other material
obligations under this Agreement or under the other Loan Documents to which it
is a party or by which it is bound or the terms of which it has assumed.

 

Section 5.10.               Prepayments.  The Industrial Occupant has not
prepaid any amount payable under the Premises Agreement.

 

Section 5.11.               No Default For Borrowed Money.  No default with
respect to any agreement pursuant to which the Industrial Occupant has borrowed
money or guaranteed the obligations of others has occurred and is continuing as
of the date hereof.

 

Section 5.12.               Financial Statements and Financial Condition.  All
financial statements of the Industrial Occupant (including all related notes)
and all supplementary financial information delivered to PIDA fairly present
what they purport to present as of the dates and for the respective fiscal
periods presented, and were prepared in accordance with generally accepted
accounting principles consistently applied, except as disclosed in such
financial statements. The Industrial Occupant has no material liabilities,
direct or indirect, fixed or contingent, as of the date of such financial
statements which are not reflected therein.  There has been no material

 

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adverse change in the financial condition of the Industrial Occupant from that
disclosed in the most recent annual financial statements delivered to PIDA prior
to the initial approval of the Loan by the PIDA Board.

 

Section 5.13.               Employee Benefits.    Any employee pension benefit
plans and employee welfare benefit plans, collectively referred to as employee
benefit plans, within the meaning of ERISA maintained by the Industrial Occupant
or any Affiliate of the Industrial Occupant, comply in all material respects
with the reporting and disclosure and fiduciary responsibility provisions of
Title I of ERISA.

 

Section 5.14.               Environmental Matters.  With respect to the
Premises, and with respect to any other facility as defined in CERCLA (a
“facility”) where a breach of any of the representations and warranties
contained in this section could potentially have a material adverse effect on
the financial condition or operations of the Industrial Occupant:

 

(a)                                  To the best knowledge of Industrial
Occupant after Due Inquiry, neither Industrial Occupant nor any of its
Affiliates is in violation of any of the Environmental Laws;

 

(b)                                 To the best knowledge of Industrial Occupant
after Due Inquiry, neither the Industrial Occupant nor any of its Affiliates,
nor any officer, employee, agent or independent contractor of the Industrial
Occupant, has arranged, by contract, agreement or otherwise, (i) for the
disposal or treatment of, or (ii) with a transporter for the transport for
disposal or treatment of, any Hazardous Material owned, used or possessed by the
Industrial Occupant or any of its Affiliates, in a manner which violates any
applicable Environmental Laws;

 

(c)                                  To the best knowledge of the Industrial
Occupant after Due Inquiry, there are no Hazardous Materials now present on the
Premises that may require remediation under any Environmental Laws;

 

(d)                                 Neither (i) the Industrial Occupant nor
(ii) in connection with the operations of the Industrial Occupant, any Affiliate
of the Industrial Occupant, is an “operator” or, to the best knowledge of
Industrial Occupant after Due Inquiry, an “owner,” (each as defined in CERCLA)
of a facility at which Hazardous Materials were disposed of;

 

(e)                                  To the best knowledge of Industrial
Occupant after Due Inquiry, neither (i) the Industrial Occupant nor (ii) in
connection with the operations of the Industrial Occupant, any Affiliate of the
Industrial Occupant, “owned” or “operated” (as defined in CERCLA) any facility
containing Hazardous Materials at the time such Hazardous Materials were
disposed of;

 

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Section 5.15.               Bankruptcy, etc.  Neither the Industrial Occupant
nor any Affiliate of the Industrial Occupant has within seven (7) years prior to
the date hereof filed any voluntary petition for relief under the U.S.
Bankruptcy Code.

 

Section 5.16.               Criminal Convictions.  Neither the Industrial
Occupant nor any owner, director, officer or person employed or engaged by the
Industrial Occupant in a senior management capacity or as a manager or
comptroller of the Project, has been convicted by any court of any felony or any
misdemeanor involving theft, dishonesty, deception, false swearing, or the
filing or submission of any false or misleading information to any agency of
government.

 

Section 5.17.               Occupancy Agreements.  Except for the Premises
Agreement, there exist no agreements between the Industrial Occupant and any
other person, corporation or other entity regarding use or occupancy of any
portion of the Premises. The Industrial Occupant has requested the IDC to
acquire title to the Premises and sell and convey the Premises to the Industrial
Occupant solely for the purpose of obtaining the Loan, all benefit of which will
be received by the Industrial Occupant.  Such title as the IDC holds to the
Premises is solely as security for the Loan being made by PIDA to the IDC,
exclusively for Industrial Occupant’s benefit. Except as expressly set forth to
the contrary in the Premises Agreement, the IDC has not had, does not have, and
will not have any right to occupy or access the Premises, or control any of the
operations of Industrial Occupant thereon.

 

Section 5.18                  Permits.  The construction of the Project as
provided in the Application, the use of the Project for the purposes stated in
the Application, and the operation of the Project, comply in all respects with,
and are lawful, permitted and conforming uses under, all applicable building,
fire, safety, subdivision, zoning, sewer, environmental, securities, health,
insurance and other laws, ordinances, rules, regulations and plan approval
conditions of any governmental, public or other body or authority having
jurisdiction over the Project except where failure to so comply will not have a
material adverse effect on operations to be carried on at the Project.

 

Except for a permit for occupancy of the Project to be issued by the
Pennsylvania Department of Labor and Industry (where the Project is not complete
as of the date hereof) the Industrial Occupant has received all material
administrative permits required for the operations to be carried on at the
Project, including without limitation zoning permits and permits under all
Environmental Laws. The Industrial Occupant, after Due Inquiry, has no reason to
believe that

 

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any required permits not yet obtained will not be timely issued in the ordinary
course of business of the issuing agency.

 

ARTICLE VI

 

Borrowing Procedures and Agreements

 

Section 6.01.               Conditions Precedent to All Disbursements.  The
obligation of PIDA to make the initial disbursement of the proceeds of the Loan
to the IDC and the Industrial Occupant and to make each subsequent disbursement
thereof is subject to the satisfaction of the following conditions precedent at
the time of each such disbursement:

 

(a)                                  The closing requirements transmitted by
PIDA’s counsel to the IDC’s counsel following issuance of the Commitment have
been satisfied; the Loan Documents shall have been properly executed and, where
appropriate, delivered to PIDA; and the Mortgage, the waivers of liens and any
other document requested to be recorded by PIDA shall have been duly
acknowledged and delivered for recording in the appropriate public office.

 

(b)                                 Each and all of the representations and
warranties of the IDC and the Industrial Occupant set forth in Articles IV and V
hereof, respectively, and in any of the other Loan Documents, shall be true and
correct in all respects, as though separately and independently made on and as
of the date of each such disbursement.

 

(c)                                  There shall be no event of default under
any of the Loan Documents or any event which, with the passage of time or the
giving of notice, or both, could constitute an event of default under any of the
Loan Documents.

 

(d)                                 All disbursements made hereunder shall be
disbursed by PIDA as the work progresses pursuant to the Cost Affidavit with
supporting invoices signed by the IDC’s and the Industrial Occupant’s authorized
representatives.  Each Cost Affidavit shall be subject to the approval of PIDA
but the approval of such Cost Affidavit by PIDA shall not constitute an approval
or acceptance of the work or materials, nor be binding upon PIDA, except to the
extent that the facts actually are as so represented when so approved, nor shall
such approval give rise to, any liability or responsibility relating to (i) the
quality of the work, the quantity of the work, the rate of progress in
completion of the work, or the sufficiency of materials or labor being

 

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supplied in connection therewith, or (ii) any errors, omissions, inconsistencies
or other defects of any nature in the Plans and Specifications.

 

(e)           There shall have been no material adverse change in the financial
condition of the IDC or the Industrial Occupant from that disclosed in financial
statements heretofore delivered to and approved by PIDA.

 

(f)            In no event shall the Loan be in excess of $2,000,000 or 50% of
the Cost, whichever is less.  If, upon final determination of the Cost by PIDA
there is such an excess, the entire amount of such excess shall be repaid to
PIDA by the IDC and/or the Industrial Occupant within thirty (30) days of notice
thereof.

 

(g)           In the event any material environmental, building, subdivision,
use, zoning or other permits relating to the Premises or the construction or
operation of the Project are revoked, rescinded, suspended or materially
adversely affected by any preliminary or final injunction or decision by any
court or other body issuing such permit or otherwise having jurisdiction, PIDA
may refuse to make further disbursements under this Agreement until the matter
is resolved to PIDA’s reasonable satisfaction, whether or not PIDA has declared
an Event of Default hereunder or such revocation, rescission, suspension, or
material adverse effect would comprise an Event of Default hereunder.

 

Section 6.02.     Conditions Precedent to Final Disbursement.

 

In addition to the requirements set forth in Section 6.01, the obligation of
PIDA to make the final disbursement of the proceeds of the Loan to the IDC and
the Industrial Occupant is subject to the satisfaction of the following
conditions precedent at the time of such final disbursement:

 

(a)           Unless waived by PIDA in writing, receipt by PIDA of an as-built
survey prepared by a licensed surveyor or civil engineer dated not more than
thirty (30) days prior to the final disbursement showing the location of all
improvements, the boundary lines of the Project, the rights-of-way of the
nearest streets, the location of all utility and other easements and
rights-of-way affecting the Project, and such other details as PIDA may require
or, in lieu of the foregoing, PIDA in its sole and absolute discretion may
accept certifications from the appropriate officials as to the information which
would be contained in the foregoing surveys.

 

(b)           Receipt by PIDA of certified copies of all appropriate
certificates, including, without limitation, certificates of occupancy,
approvals, documents, writings and drawings issued

 

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by the governmental departments or agencies authorized to issue such writings or
drawings, evidencing that the Improvements are in compliance with all applicable
statutes, laws, ordinances, rules, regulations and requirements, including,
without limitation, all zoning requirements.

 

(c)           A certificate of occupancy in form and substance satisfactory to
PIDA.

 

(d)           Such other documents and assurances as PIDA may reasonably
require, in form and substance satisfactory to PIDA.

 

The IDC and Industrial Occupant agree that by making a request for a
disbursement hereunder, they shall each be deemed to be reconfirming to PIDA
that all of their respective representations and warranties set forth in this
Agreement and all related instruments, agreements and documents remain true and
correct as of the date of each request.

 

Section 6.03      Deadlines for Requesting Disbursements.

 

(a)           Unless otherwise agreed to by PIDA, the IDC  and Industrial
Occupant shall comply with the conditions stated in Sections 6.01 and 6.02, as
applicable, and submit a request to PIDA for a disbursement of not less than ten
percent (10%) of the Loan by the end of the twelfth full calendar month
following the Effective Date.  If the IDC and/or Industrial Occupant fail to
comply with this deadline PIDA may, in its sole discretion, rescind the
Commitment and terminate this Loan Agreement.

 

(b)           Unless otherwise agreed to by PIDA, the IDC and Industrial
Occupant shall comply with the conditions stated in Sections 6.01 and 6.02, as
applicable, and submit a request or requests to PIDA for disbursement of one
hundred percent (100%) of the Loan by the end of the  twenty-fourth full
calendar month following the Effective Date.  If the IDC and/or Industrial
Occupant fail to comply with this deadline the interest rate on the Loan shall
be increased by one percent (1.00%). Annually thereafter until the IDC and/or
Industrial Occupant comply with the conditions stated in Sections 6.01 and 6.02,
as applicable, and submit a request or requests to PIDA for disbursement of one
hundred percent (100%) of the Loan, PIDA may, in its sole discretion, further
increase the interest rate on the Loan.

 

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ARTICLE VII

 

Covenants of the IDC

 

Until the Loan has been entirely repaid and all of its obligations to PIDA in
connection therewith and herewith have been satisfied, the IDC hereby covenants
that:

 

Section 7.01.     Use of Proceeds.  The IDC shall use the proceeds of the Loan
solely for the purpose of defraying the Cost.

 

Section 7.02.     Preservation of Existence.  The IDC shall preserve its
corporate existence, rights, privileges and franchises, and maintain its good
standing as a nonprofit corporation under the laws of the Commonwealth of
Pennsylvania and its certification by PIDA as an industrial development agency.

 

Section 7.03.     Compliance with Law.  The IDC shall comply with all laws,
regulations and orders of any court or governmental body having jurisdiction
over the Project.  To the extent the IDC is required to do so by applicable law
or by agreement with the Industrial Occupant, the IDC shall obtain all
environmental, zoning, subdivision, building and other permits required for
completion of the Project.  To the extent that such permits are (i) required for
the Project but (ii) pursuant to agreement with the Industrial Occupant and in
accordance with applicable law are being obtained by Industrial Occupant or some
other person other than the IDC, the IDC shall in its agreements with the
Industrial Occupant require the Industrial Occupant to obtain such permits and
the IDC shall thereafter exercise reasonable diligence to determine whether such
permits are being timely and appropriately obtained, and shall promptly advise
PIDA if the IDC believes such permits are not being so obtained.  As and when
requested by PIDA, the IDC shall deliver to PIDA copies of all permits required
for completion of the Project.

 

Section 7.04.     Provision of Information.  The IDC shall, not less frequently
than annually and at such other times as PIDA may reasonably request, provide
financial information and other information in form reasonably satisfactory to
PIDA, including at least (i) financial statements of the IDC for its most recent
fiscal year, including its balance sheet and income statement, duly certified by
an authorized officer of the IDC and (ii) a certificate of an authorized officer
of the IDC stating (A) that it has complied with all terms and conditions of
each of the Loan Documents to which the IDC is subject, including, without
limitation, the requirements of the Mortgage with

 

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respect to insurance on the Premises and (B) that it has complied with its
bylaws with respect to the holding of regular and annual meetings and the
election of officers.

 

Section 7.05.     Compliance with Loan Documents.  The IDC shall comply with all
of the terms and conditions of this Agreement and each of the Loan Documents to
be executed and delivered by the IDC.

 

Section 7.06.     Notice of Defaults.  The IDC shall give immediate notice to
PIDA of the occurrence of (i) any breach or Event of Default on the part of the
IDC, (ii) any breach or Event of Default on the part of Industrial Occupant of
which the IDC becomes aware, under this Agreement or under any Loan Document, or
(iii) any material breach or event of default by any other person of which the
IDC becomes aware, under any other material agreement relating to the Project,
including without limitation the construction contracts for the Improvements.

 

Section 7.07.     Enforcement of Terms Against Industrial Occupant. The IDC
shall specifically enforce, as and to the extent PIDA shall request, all
material provisions of all agreements between the IDC and the Industrial
Occupant relating to the Project and shall not waive any material breach of, or
material default under, any of such agreements of which the IDC becomes aware,
without the prior written consent of PIDA.

 

Section 7.08.     Mergers, etc.  Without the prior written consent of PIDA, the
IDC shall not merge or consolidate with any other corporation or other entity,
whether or not the IDC is the surviving corporation, nor divide into two or more
corporations, nor convey, transfer or dispose of all or any material part of its
assets.

 

Section 7.09.     Debt Secured by Premises.  Without the prior written consent
of PIDA, the IDC shall not take any action to cause or permit any mortgage, lien
or encumbrance to be placed against the Premises or any interest therein,
including without limitation the equitable interest of the Industrial Occupant
therein, except such mortgages, liens and encumbrances as may be expressly
permitted by the Mortgage.   The IDC shall, in its agreements with the
Industrial Occupant, prohibit the Industrial Occupant from causing or permitting
any mortgage, lien or encumbrance to be placed against the Premises or any
interest therein, including without limitation the equitable interest of the
Industrial Occupant therein.

 

Section 7.10.     Extensions and Prepayments of Premises Debt.  Without the
prior written consent of PIDA, the IDC shall not request, consent to, or enter
into any agreement providing for, the extension of the time of payment of the
Bank Mortgage (except as required under Section

 

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7.16 below).  The IDC shall in its agreements with the Industrial Occupant
prohibit the Industrial Occupant from requesting, consenting to or entering into
any agreement providing for the extension of the time of payment of the Bank
Mortgage without the prior written consent of PIDA and the IDC.  The IDC and/or
the Industrial Occupant may not prepay the Bank Mortgage in part or in whole at
any time without the prior written consent of PIDA.  Neither the IDC nor the
Industrial Occupant shall, without the prior written consent of PIDA, prepay any
indebtedness secured by a lien on the Premises or any interest therein which is
subordinate to the Mortgage.

 

Section 7.11.     Nondiscrimination/Sexual Harassment.  The IDC hereby accepts
and agrees to be bound by the nondiscrimination/sexual harassment provisions set
forth in Exhibit A attached hereto.  The IDC shall cause comparable provisions
to be included in the Premises Agreement and all other Project contracts to
which the IDC is a party and shall, in the agreements to which the IDC is a
party with the Industrial Occupant and all other persons relating to the Project
(including, without limitation, contractors and professionals), require the
insertion of comparable provisions in all Project contracts to which the
Industrial Occupant or such other persons are party.

 

Section 7.12.     Compliance with Governmental Requirements.  The IDC shall
require, in all Project contracts to which the IDC is a party, (i) that the
Project be in compliance with all applicable governmental regulations, including
without limitation all anti-pollution regulations and standards, and (ii) that
comparable provisions be included in all other Project contracts to which
persons, who are parties to Project contracts with the IDC, are themselves a
party.

 

Section 7.13.     Submission of Recorded Documents and Title Policy; Recording
and Other Costs.  Within ninety (90) days after the Effective Date, the IDC
shall provide, or cause to be provided, to PIDA the original filed or recorded
Loan Documents that were filed or recorded, and a standard ALTA form of
mortgagee title insurance policy, premium paid, issued by a title insurance
company acceptable to PIDA, insuring the lien of the Mortgage for the full
amount of the Loan subject only to such title objections and conditions as may
have been approved in writing by PIDA, issued in accordance with the binder or
commitment received by PIDA at or prior to the disbursement of the first stage
payment hereunder. The IDC shall pay all the costs of recording and any other
costs that PIDA may incur in connection with closing the Loan, to the extent
such costs are not paid by the Industrial Occupant.

 

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Section 7.14.     Inspection.  The IDC shall in its agreements with the
Industrial Occupant require the Industrial Occupant to provide proper facilities
at all times for inspection of the Project before and after completion thereof
by PIDA and PIDA’s authorized representatives, and afford full and free access
to the Project to such persons as may from time to time be designated by PIDA.

 

Section 7.15.     Completion of Project.  The IDC shall by agreement with the
Industrial Occupant or otherwise require that the Project be constructed on the
Premises, in strict accordance with all plans and specifications delivered to
PIDA; that all fixtures, equipment and other property constituting a part of the
Premises be timely acquired and installed; and that construction proceed
diligently, continuously and expeditiously, employing sufficient workmen and
supplying sufficient materials to fully finish and complete the same, inside and
outside, with the appurtenant areas, paving, grading and curbing, sewers,
laterals, water and all public utility connections and all necessary street,
footway and other improvements, free and clear and discharged of all liens and
municipal claims and the possibility of liens therefor.

 

Section 7.16.     Bank Term.  The IDC shall provide or shall cause to be
provided to PIDA evidence that the term of the promissory note executed in
connection with the Bank Mortgage (the “Bank Note”) has been extended from  84 
months to 180 months ninety days before the expiration of the Bank Note. 
Failure to extend the term of the Bank Note shall reduce the term of the Loan as
set forth in the Note.

 

ARTICLE VIII

 

Special Covenants of the Industrial Occupant

 

The Industrial Occupant covenant and agree as follows:

 

Section 8.01.     Necessary Machines.  The Industrial Occupant will supply or
cause to be supplied all machinery and equipment necessary for the operation of
the Project.

 

Section 8.02.     No Removal of Jobs.  Except as otherwise approved by PIDA, the
Project will not cause the removal of an industrial or manufacturing plant or
facility or research and development facility or agricultural enterprise
controlled directly or indirectly by the Industrial Occupant or any Affiliate
from one area of the Commonwealth of Pennsylvania to another area of the
Commonwealth, nor result in the reduction of the number of employees at any
other plant

 

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controlled by the Industrial Occupant or any Affiliate currently located in the
Commonwealth of Pennsylvania.

 

Section 8.03.     Operations and Number of Jobs.  The Industrial Occupant will
create, or retain, as the case may be, at the Premises within three years from
the date of the PIDA loan closing, no less than the number of jobs specified to
be created and/or retained in the Application.

 

(a)           A breach by the Industrial Occupant of this Section 8.03 shall be
an Event of Default under this Loan Agreement.  The remedies of PIDA for an
Event of Default arising solely from a breach by the Industrial Occupant of this
Section 8.03 are governed by Section 10.04 of the Loan Agreement.

 

(b)           The PIDA Policy For Failure to Meet Job Projections (the “PIDA
Policy”) is incorporated herein by reference and is attached hereto as Exhibit E
and PIDA may, in compliance with the PIDA Policy and such other regulations and
statements of policy, if any, as are then in effect, raise the rate of interest
on the Loan as permitted under the Note.

 

(c)           The Industrial Occupant shall be required to meet job projections
within the three (3) year period referred to above and shall not be penalized if
there is a reduction in the number of jobs once the projections have been
achieved even if such reduction occurs within the three (3) year period.

 

Section 8.04.     Certificate re Jobs.  The Industrial Occupant will annually
provide PIDA with a certificate executed by an authorized officer setting forth
the number of employees, and their respective job classifications (skilled,
semi-skilled and unskilled), employed by the Industrial Occupant or any
subsidiary during the previous year at the Project, together with such other
related information as PIDA may request.

 

Section 8.05.     Nondiscrimination/Sexual Harassment.  The Industrial Occupant
and its Affiliates will not discriminate against or intimidate any employee or
any applicant for employment because of gender, race, creed, or color, in any
manner, including but not limited to the following activities:  employment;
upgrading, demotion or transfer; recruitment or recruitment advertising; layoff
or termination; rates of pay or other forms of compensation; and selection for
training, including apprenticeship.  The Industrial Occupant hereby accepts and
agrees to be bound by the nondiscrimination/sexual harassment provisions set
forth in Exhibit A

 

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hereto, and will cause comparable nondiscrimination/sexual harassment provisions
to be inserted into all Project contracts.

 

Section 8.06.     Employee Benefit Plans.  The Industrial Occupant and its
Affiliates shall:  (1) fund all of their employee pension benefit plans, to the
extent required, in accordance with the minimum funding standards of Section 302
of ERISA and Section 412 of the Internal Revenue Code of 1986 (the “Code”),
except where the failure to do so would not have a material adverse effect on
the continuing operations of the Industrial Occupant; (2) make all payments of
contributions to all employee benefit plans within the time periods established
in ERISA and the Code, except where the failure to do so would not have a
material adverse effect on the continuing operations of the Industrial Occupant;
(3) furnish PIDA, upon its request, with copies of all reports or other
statements filed with the United States Department of Labor, the Internal
Revenue Service or the Pension Benefit Guaranty Corporation, or any other
agencies, whether federal, state, or local, with respect to all employee benefit
plans; (4) advise PIDA within ten days of the occurrence of any “reportable
event” or “prohibited transaction,” within the respective meanings of these
terms in ERISA and the Code, with respect to any employee benefit plan to which
the Industrial Occupant or any Affiliate contributes, potentially having a
material adverse effect on the continuing operations of the Industrial Occupant;
(5) promptly advise PIDA of any audit or investigation of any employee benefit
plans by the Internal Revenue Service or Department of Labor or any other
governmental agency or any threatened or proposed action by any such agency
affecting the status of, and deductibility of contributions to, any employee
benefit plans, potentially having in any such case a material adverse effect on
the continuing operations of the Industrial Occupant.

 

Section 8.07.     Environmental Compliance.

 

(a)           The Project and the Industrial Occupant’s operations at the
Premises shall comply with all Environmental Laws in all material respects
(including, without limitation, in all respects having a significant effect on
the quality of air or surface or ground water in the vicinity of the Premises).

 

(b)           Without limiting the generality of the foregoing, the Industrial
Occupant shall keep the Project and Premises free of Hazardous Materials except
to the extent that such Hazardous Materials are stored and/or used in compliance
with all Environmental Laws.  The Industrial Occupant shall not suffer or permit
the Premises to be used to generate, manufacture,

 

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refine, transport, treat, dispose of, transfer, produce or process Hazardous
Materials in violation of any Environmental Laws.  In addition, the Industrial
Occupant shall not suffer or permit any tenant, subtenant or occupant to release
any Hazardous Materials onto the Premises or onto adjacent property in violation
of any Environmental Laws.

 

Section 8.08.     Compliance with Agreements and Laws; Payment of Obligations. 
The Industrial Occupant will each act in accordance with all applicable
agreements, laws, rules, regulations, orders, judgments, injunctions, decrees,
resolutions, permits, franchises, determinations or awards of any administrative
or governmental authority or administrative or governmental organization,
non-compliance with which could have a material adverse effect on the ability of
the Industrial Occupant to carry on the operations at the Project contemplated
in the Application or make payments or perform and observe its other material
obligations under any of the Loan Documents.

 

The Industrial Occupant will pay and discharge all bills, claims and charges
relating to the Project or the Premises, including without limitation claims for
taxes and claims of laborers, mechanics and materialmen (collectively, “Project
Claims”), prior to the time the holder of any Project Claim lawfully may cause
any judgment or writ of execution to be filed or lodged against the Premises as
a result of such Project Claim.

 

Section 8.09.     Maintenance and Operations of Project.  The Industrial
Occupant will diligently maintain the Project, and the Industrial Occupant will
diligently operate the Project, in a good and workmanlike manner consistent with
sound operating procedures, and cause all machinery, equipment and facilities of
any kind now or hereafter forming part of the Project or necessary for the
development thereof or the operation or maintenance of the Project, to be
provided and to be kept in good and efficient operating condition, and all
repairs, replacements, additions and improvements thereto required to such end
to be promptly made.

 

The Industrial Occupant will not permit, commit or suffer any material waste
with respect to the Project, nor use or permit the use of the Project for any
unlawful purpose or any purpose other than (i) the purpose stated in the
Application or (ii) a purpose eligible, at the time of commencement thereof, for
financing by PIDA under the PIDA Act, regulations, statements of policy,
guidelines and interpretations of the PIDA Board and staff as in effect from
time to time (“PIDA-Eligible”) or permit any nuisance to exist on the Premises,
and not sell, transfer, lease,

 

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mortgage, pledge, convey or otherwise dispose of the Project or Premises or any
interest therein except with the written consent of PIDA.

 

The Industrial Occupant will carry on in good faith at the Premises substantial
PIDA-Eligible manufacturing, industrial or other activities.

 

Section 8.10.     Preservation of Existence, etc.  Except as otherwise permitted
in Section 8.21, the Industrial Occupant will (a) maintain and preserve its
existence as a corporation, limited liability company, limited partnership, or
general partnership, as the case may be, and the right to carry on its business
with respect to the Project, and (b) duly procure and maintain all necessary
licenses, franchises, permits and other documents necessary or appropriate in
connection therewith and all necessary renewals and extensions thereof.

 

Section 8.11.     Inspection.  The Industrial Occupant will allow upon
reasonable prior written notice by PIDA to the Industrial Occupant, any
representative of PIDA to visit and inspect the Project and all or any of the
facilities or operations thereof, all at such reasonable times and as often as
PIDA or any such representative may request.

 

Section 8.12.     Financial Statements.  During the term of the Loan, the
Industrial Occupant will provide PIDA with:

 

(a)           financial statements for the Industrial Occupant within one
hundred twenty (120) days after the close of each fiscal year including balance
sheets, statements of income and reconciliations of equity, in accordance with
generally accepted accounting principles, reviewed by an independent certified
public accountant satisfactory to PIDA, provided that if the Industrial Occupant
is a corporation subject to the reporting requirements of the Exchange Act, the
relevant entity’s obligation under this paragraph shall be satisfied by delivery
to PIDA of the financial statements required to be filed by the Industrial
Occupant under the Exchange Act in its annual reports;

 

(b)           with reasonable promptness, such other information respecting the
business, operations and condition (financial or otherwise) of the Industrial
Occupant as PIDA may from time to time reasonably request, including information
relating to the Project; and

 

(c)           with reasonable promptness, after it becomes known to the
Industrial Occupant, reasonably complete information on material adverse
developments which may reasonably be expected to threaten the completion or
continued operation of the Project.

 

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Section 8.13.     Compliance Certificates.  If PIDA shall so request, the
Industrial Occupant will provide PIDA with annual Compliance Certificates,
executed (in the case of entities other than natural persons) by officers
authorized to execute and deliver the same, within 120 days of each fiscal
year’s end reciting compliance with representations, warranties and covenants.

 

Section 8.14.     Insurance.  The Industrial Occupant will maintain the
insurance required by the Mortgage.

 

Section 8.15.     Assignment and Subleases.  Except as expressly permitted in
writing by PIDA, the Industrial Occupant shall not assign or sublease any
portion of the Premises, and shall not lease any portion of the Premises to or
permit any portion thereof to be occupied by any person other than Industrial
Occupant, and in no event shall the portion of the Project occupied by persons
other than the Industrial Occupant exceed 49% of the leasable space of the
Project or if a portion of the Project is leased to an ineligible tenant, no
more than 15% of the leasable space of the Project.

 

Section 8.16.     Direct Payment.  The Industrial Occupant will make all
payments required to be made by them to PIDA directly to PIDA, at such address
as PIDA may specify from time to time.

 

Section 8.17.     Accuracy of Information Supplied.  The Industrial Occupant
will ensure that all information prepared by the Industrial Occupant and
supplied to PIDA or any third party under the provisions of this Agreement for
the purpose of any report or certificate to be furnished to PIDA in connection
with this Agreement or any of the Loan Documents will at the time it is supplied
be true and accurate in all material respects, except that (i) financial
statements and other statements expressly effective as of a particular date
prior to the date when furnished are required only to be true and accurate or
(in the case of financial statements) fairly to present what they purport to
present, in either case as of the effective date thereof, and (ii) to the extent
any such information is based upon or constitutes a forecast, projection or
other data which by its nature is uncertain, the Industrial Occupant is
committed only to act in good faith and utilize due and careful consideration
and the best information then known to it in preparing such information.  With
respect to all information prepared by third parties and supplied by the
Industrial Occupant to PIDA and/or any third party under the provisions hereof
for the purpose of any report or certificate to be furnished to PIDA in
connection with this Agreement or any of the Loan Documents, the Industrial
Occupant shall deliver a written notice to PIDA as soon as

 

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possible if it believes that such information is not complete and accurate in
all material respects, which written notice shall include the basis for such
belief.

 

Section 8.18.     Notice of Defaults.  The Industrial Occupant will give prompt
notice to PIDA of the occurrence of any Event of Default under the Loan
Documents either on its part, or on the part of the IDC of which the Industrial
Occupant becomes aware.

 

Section 8.19.     Further Assurances.  The Industrial Occupant will make,
execute or endorse, and acknowledge and deliver or file, all such vouchers,
invoices, notices and certifications and additional agreements, undertakings,
conveyances, transfers, assignments, financing statements, continuation
statements or further assurances, and take any and all such other actions, as
PIDA may reasonably deem necessary or advisable from time to time in connection
with the Loan or the Loan Documents to assure or confirm to PIDA and perfect all
or any part of the security for the Loan and any other obligations of the
Industrial Occupant.

 

Section 8.20.     Indemnification.  The Industrial Occupant hereby indemnifies
and holds harmless the Indemnified Parties from and against any and all claims,
damages, losses, liabilities, costs or expenses (including all reasonable fees
or expenses resulting from the settlement of any claims or liabilities and
reasonable attorneys’ fees) (collectively, “Indemnified Claims”) whatsoever
which the Indemnified Party may incur (or which may be claimed against the
Indemnified Party by any person or entity whatsoever) by reason of or in
connection with (a) the issuance of the Loan, (b) any breach by the Industrial
Occupant of any representation, warranty, covenant, term or condition in, or the
occurrence of any default under, this Agreement or the Loan Documents, and
(c) involvement of the Indemnified Party in any legal suit, investigation,
proceeding, inquiry or action as a consequence, direct or indirect, of PIDA’s
issuance of the Loan, PIDA’s or the IDC’s entering into this Agreement or any of
the Loan Documents or any other event or transaction contemplated by any of the
foregoing; provided, however, that (i) the Indemnified Party shall within sixty
(60) days of becoming aware of (A) its actual or potential liability for any
Indemnified Claim or (B) the formal assertion against it in writing of any
Indemnified Claim, have notified the Industrial Occupant of such Indemnified
Claim and tendered to the Industrial Occupant the defense of such claim;
(ii) that no Indemnified Claim shall be paid or compromised without the consent
of the Industrial Occupant, which shall not unreasonably be withheld and shall
be deemed given if the Industrial Occupant does not object, by a notice in
writing to the Indemnified Party, to the payment or compromise of such

 

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Indemnified Claim within 10 calendar days after the Indemnified Party has given
to the Industrial Occupant notice of the proposed payment or compromise thereof,
and (iii) the Industrial Occupant shall not be required to indemnify an
Indemnified Party hereunder for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by the gross
negligence or willful misconduct of such Indemnified Party.

 

The liability under this Section 8.20 shall in no way be limited or impaired by
(i) any extension of time for performance required by any of the Loan Documents,
(ii) any sale, assignment or foreclosure of the Note or any sale or transfer of
all or part of the Project or the Premises, (iii) the discharge of the Note,
(iv) any exculpatory provisions in any of the Loan Documents limiting PIDA’s
recourse to any other security, (v) the accuracy or inaccuracy of the
representations and warranties made by the Industrial Occupant; (vi) the release
of the Industrial Occupant or any other person from performance or observance of
any of the agreements, covenants, terms or conditions contained in any of the
Loan Documents by operation of law, PIDA’s voluntary act (other than the
execution and delivery by PIDA of an instrument of release expressly and
specifically referring to Industrial Occupant’s indemnification obligations), or
otherwise, (vii) the release or substitution in whole or in part of any security
for the Note; or (viii) PIDA’s failure to file any mortgage or UCC financing
statements (or PIDA’s improper filing of any thereof) or to otherwise perfect,
protect, secure or insure any mortgage, security interest or lien given as
security for the Note; and, in any such case, whether with or without notice to
the Industrial Occupant and with or without consideration.

 

The indemnity provisions contained in this Section 8.20 hereof shall survive any
judicial foreclosure, foreclosure by power of sale, deed in lieu of foreclosure,
transfer of the property by the Industrial Occupant or PIDA, and payment of the
Loan in full, provided, however, that such indemnity provisions shall at no time
accrue to, or be construed to benefit, any other third-party entity (other than
an Indemnified Party or a successor in interest or assign of PIDA) no matter how
such other third-party entity obtains title or any interest in the Project or
Premises.

 

The liability covered by the indemnity provision shall include, but not be
limited to, losses sustained by an Indemnified Party for (i) amounts owing under
the Loan and the Loan Documents, (ii) amounts arising out of personal injury or
death claims, (iii) amounts charged to an Indemnified Party for any
environmental or Hazardous Materials clean up costs and expenses,

 

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liens, or other such charges or impositions, (iv) payment for fees, court costs,
environmental tests and design studies, and (v) any other amounts reasonably
expended by an Indemnified Party.

 

Section 8.21.     Negative Covenants.

 

(a)           The Industrial Occupant will not prepay the sums to be paid by the
Industrial Occupant to the IDC under the Premises Agreement, in whole or in
part, without the prior written consent of PIDA.

 

(b)           Without the prior written consent of PIDA, the Industrial Occupant
shall not permit, allow or suffer to exist, any lien, judgment, mortgage, or
encumbrance to be placed against the Premises or any interest therein
(including, without limitation, the Industrial Occupant’s interest under the
Premises Agreement), or enter into any agreement requiring, contemplating or
providing for placement of any such judgment, mortgage, lien or encumbrance,
except (i) mortgages, liens and encumbrances expressly provided for in the
Application to which PIDA shall not have objected in writing, and (ii) that the
terms of this Section 8.21(a)/(b) shall not be deemed to prohibit execution of
any note or credit instrument not providing for any specific lien against the
Premises but permitting confession of judgment against the Industrial Occupant
subsequent to an event of default thereunder so long as judgment is not
confessed thereunder.

 

(c)           The Industrial Occupant will not change its name without notice to
PIDA.

 

(d)           Without the prior written consent of PIDA, the Industrial Occupant
may not (i) merge or consolidate with any other corporation or other entity or
dispose of all or any substantial portion of its assets, except in the ordinary
course of business, unless the Industrial Occupant or the surviving corporation,
as the case may be, shall have a tangible net worth (after giving effect to such
merger, consolidation or sale of assets) not less than that shown in the most
recent audited financial statements for the Industrial Occupant, delivered to
PIDA prior to approval of the Loan, and, if a corporation different from the
Industrial Occupant shall have expressly assumed the obligations of the
Industrial Occupant hereunder, or (ii) take any corporate action to permit or
facilitate any change in control from that set forth in the Application.

 

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ARTICLE IX

 

Repayment of Excess Loan Amounts

 

If, upon final determination by PIDA of the Cost of the Project, the amount of
the Loan previously disbursed to the IDC exceeds the Cost (as so determined)
multiplied by the Participation Percentage, the entire amount of such excess
shall be repaid to PIDA within thirty (30) days of notice thereof to the IDC and
the Industrial Occupant.

 

ARTICLE X

 

Events of Default

 

Section 10.01.   Events of Default.  The following shall each constitute an
Event of Default hereunder:

 

(a)       there shall not have been paid when due any amount payable by any
person under any of the Loan Documents (including, without limitation, any
installment of principal or interest under the Note or any prepayment under
Article IX hereof), and such failure shall continue for a period of thirty (30)
days;

 

(b)      the IDC shall fail to observe or perform any of the terms, covenants,
promises and agreements on the IDC’s part to be observed and performed under
this Agreement or under the Note, Mortgage or any of the other Loan Documents;

 

(c)       the Industrial Occupant shall fail to observe or perform any of the
terms, covenants, promises and agreements on the Industrial Occupant’s part to
be observed and performed under this Agreement or under the Note, Mortgage or
any of the other Loan Documents;

 

(d)      any representation, warranty or statement made by the IDC or the
Industrial Occupant herein or in the Application or in any of the Loan Documents
or in any certificate or financial or other statement furnished pursuant to the
provisions of any of the Loan Documents or the Application (except for any
representation, warranty or statement expressly made effective as of a date
prior to the date when made or furnished), shall have been false or misleading
in any material respect as of the time made or furnished or as of the date
hereof, whichever is later; any representation, warranty or statement expressly
made effective as of a date prior to the date when made or furnished shall have
been false or misleading in any material respect as of the effective date
thereof;

 

(e)       the IDC, the Industrial Occupant, shall (i) become insolvent,
(ii) admit its inability to pay its debts as they come due, (iii) make an
assignment for the benefit of its

 

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creditors, (iv) be adjudicated bankrupt or insolvent, (v) voluntarily initiate
proceedings under any bankruptcy or reorganization law either now or hereafter
in effect, (vi) become the subject of any involuntary proceedings under any
bankruptcy or reorganization law either now or hereafter in effect that shall
not have been dismissed within ninety (90) days of the initiation thereof, or
(vii) seek to take advantage of any moratorium law either now or hereafter in
effect;

 

(f)       a receiver, liquidator or trustee shall be appointed for either the
IDC, the Industrial Occupant, and shall not have been dismissed within ninety
(90) days;

 

(g)      the Premises or any interest therein are sold, leased, sub-leased,
mortgaged, liened, encumbered, or otherwise conveyed without the prior written
consent of PIDA, which consent will not unreasonably be withheld, provided that
(i) the new occupant and the Industrial Occupant of the Premises remain
substantially related to each other, (ii) the Project remains in substantial use
for a PIDA-Eligible purpose (as defined in the Act), (iii) the Industrial
Occupant remains financially responsible, and (iv) the security for the Loan is
not impaired;

 

(h)      the Industrial Occupant ceases or fails to operate the Project
substantially as described in the Application;

 

(i)        any building, subdivision, use, zoning, environmental or other permit
material to the construction of the Project or the use thereof as contemplated
in the Application shall be effectively revoked, rescinded, suspended or
materially adversely affected or the use of the Project as contemplated in the
Application shall have been effectively enjoined or prohibited;

 

(j)        one of the following occurs (an “Immigration Law Event of Default”):

 

(i) The IDC or Industrial Occupant is sentenced under Federal law for an offense
involving knowing use of labor by an Illegal Alien on the Project; or

 

(ii) A contractor on the Project is sentenced under Federal law for an offense
involving knowing use of labor by an Illegal Alien on the Project, and the IDC
or Industrial Occupant knew or had reason to know of the contractor’s knowing
use of labor by an Illegal Alien on the Project; or

 

(k)       there shall have occurred and be continuing, after giving effect to
any applicable notice and cure periods, a default under any other loan or debt
instrument secured by the Premises, including without limitation the Bank
Mortgage.

 

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Section 10.02.   Remedies Upon Event of Default.  Immediately and without
further notice to any person (including, without limitation, the IDC or the
Industrial Occupant), upon the occurrence of an Event of Default hereunder other
than (i) an Event of Default arising solely from a breach by the Industrial
Occupant of Section 8.03 “Operations and Number of Jobs” pertaining to job
creation or retention, or (ii) an Event of Default arising solely from the
internal operations of the IDC over which the Industrial Occupant has no
control, during which the Industrial Occupant have paid all amounts required to
be paid by them and performed all acts required to be performed by them under
each of the Loan Documents, or (iii) an Immigration Law Event of Default arising
under Section 10.01(j), PIDA may exercise any one or more of the following
remedies:

 

(a)           Cease making any further disbursements of disbursements hereunder;

 

(b)           Enter upon the Project and take possession thereof, together with
the Improvements in the course of construction or completed and all materials,
supplies, tools, equipment and construction facilities and appliances located
thereon.

 

(c)           declare the Note and all liabilities of the IDC, and the
Industrial Occupant thereunder to be immediately due and payable, and the same
shall thereupon become and be due and payable;

 

(d)           raise the rate of interest on the Loan as provided in the Note;

 

(e)           foreclose on the Mortgage;

 

(f)            bring an action (which may be by confession of judgment to the
extent permitted by the particular instrument) against the IDC and/or the
Industrial Occupant under the Note and/or the Mortgage; against the Industrial
Occupant under the Premises Agreement as assigned to PIDA by the Assignment;
and/or against any Guarantor under the particular Guaranty executed by such
Guarantor;

 

(g)           bring an action of ejectment to recover possession of the
Premises; and/or

 

(h)           exercise any other remedy available to it under any of the Loan
Documents applicable law.

 

Except as expressly required by the particular Loan Document pursuant to which
such remedies are exercised or by applicable law, PIDA may exercise any of the
foregoing remedies without presentment, demand, protest or notice of any kind to
any person (including, without limitation, the IDC or the Industrial Occupant),
all of which are hereby expressly and knowingly waived.

 

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Subject solely to the limitation that PIDA is limited to one recovery for the
aggregate amounts due and owing under the Loan Documents, PIDA’s remedies under
the Loan Documents are cumulative and concurrent and may, in PIDA’s sole
discretion, be exercised, deferred, compromised, settled or discontinued without
affecting any other remedy available to PIDA under any of the Loan Documents or
under applicable law.

 

Notwithstanding anything to the contrary herein contained, so long as the
Industrial Occupant shall keep and perform all the provisions, covenants and
conditions to be performed by the Industrial Occupant respectively under the
Loan Documents, including the payment of all amounts due thereunder and
performance of all obligations set forth therein, PIDA shall not terminate,
impair or otherwise adversely affect the rights of the Industrial Occupant
thereunder.  It is further agreed that PIDA shall use its best efforts to supply
the Industrial Occupant with a copy of each notice required to be supplied to
the IDC hereunder, but failure to so supply copies of such notices shall not
adversely affect any right of PIDA hereunder.

 

Section 10.03.   Remedies for Event of Default Arising From Internal Operations
of the IDC.  Upon the occurrence of an Event of Default arising solely from the
internal operations of the IDC over which the Industrial Occupant has no
control, during which the Industrial Occupant  have paid all amounts required to
be paid by them and performed all acts required to be performed by them under
each of the Loan Documents, PIDA may (i) suspend or revoke the certification of
the IDC as an Industrial Development Agency under the Act, or (ii) initiate or
participate or intervene in any action or legal proceeding (including, without
limitation, any action or proceeding under the U.S. Bankruptcy Code) to
(A) compel compliance with the terms of the Loan Documents, (B) to appoint a
trustee or receiver for the IDC or to dissolve, reorganize or liquidate the IDC,
or (C) otherwise to protect the interests of PIDA and/or the Industrial
Occupant.

 

Section 10.04.   Remedies for Event of Default Arising From Failure to Create or
Preserve Jobs.  Upon the occurrence of an Event of Default arising solely from a
breach by the Industrial Occupant of Section 8.03 “Operations and Number of
Jobs”, PIDA may, in compliance with such regulations and statements of policy,
if any, as are then in effect, raise the rate of interest on the Loan as
permitted under the Note.

 

Section 10.05.   Remedies for an Immigration Law Event of Default.  Upon the
occurrence of an Immigration Law Event of Default arising under
Section 10.01(j), PIDA may exercise one or both of the following remedies:

 

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(i)        declare the Note and all liabilities of the IDC and the Industrial
Occupant thereunder to be immediately due and payable, and the same shall
thereupon become and be due and payable; and/or

 

(ii)       raise the rate of interest on the Loan to six percent (6.00%) per
annum effective retroactively as of the Effective Date and continuing until the
Loan is paid in full. The additional interest that accrues from the Effective
Date through the date PIDA exercises its rights under this Section shall be
immediately due and payable, and the monthly payments on the Loan shall be
adjusted prospectively to provide for full amortization of the Loan by the
Maturity Date at the higher rate of interest.

 

ARTICLE XI

 

Confession of Judgment Against the Industrial Occupant

 

Section 11.01.   THE FOLLOWING PARAGRAPHS SET FORTH WARRANTS OF AUTHORITY FOR AN
ATTORNEY TO CONFESS JUDGMENT AGAINST THE INDUSTRIAL OCCUPANT.  EXCEPT AS
SPECIFICALLY PROVIDED HEREIN, IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS
JUDGMENT AGAINST THE INDUSTRIAL OCCUPANT, THE INDUSTRIAL OCCUPANT HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE
COUNSEL OF THE INDUSTRIAL OCCUPANT, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS
THE INDUSTRIAL OCCUPANT HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR
HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE
COMMONWEALTH OF PENNSYLVANIA, EXCEPT AS EXPRESSLY SET FORTH HEREIN AND IN THE
RULES OF THE PENNSYLVANIA RULES OF CIVIL PROCEDURE PERTAINING TO CONFESSED
JUDGMENTS, AS FROM TIME TO TIME IN EFFECT.

 

(A)          IF THERE EXISTS AN EVENT OF DEFAULT AS DEFINED IN THIS LOAN
AGREEMENT WHICH REMAINS UNCURED THIRTY (30) DAYS AFTER WRITTEN NOTICE THEREOF IS
GIVEN BY PIDA TO THE INDUSTRIAL OCCUPANT (OF WHICH AN AFFIDAVIT ON BEHALF OF
PIDA SHALL BE SUFFICIENT EVIDENCE), THEN THE INDUSTRIAL OCCUPANT HEREBY
IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF

 

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PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR AND TO ENTER AND CONFESS JUDGMENT
AGAINST THE INDUSTRIAL OCCUPANT, AT ANY TIME OR TIMES AND AS OF ANY TERM, FOR
ANY AND ALL SUMS DUE AND OWING TO PIDA UNDER THE NOTE, THE MORTGAGE AND THIS
LOAN AGREEMENT, WITH OR WITHOUT DECLARATION, WITH INTEREST AND COSTS OF SUIT,
WITHOUT STAY OF EXECUTION, AND WITH REASONABLE ATTORNEY’S FEES.  THE INDUSTRIAL
OCCUPANT AGREES THAT ANY OF ITS PROPERTY MAY BE LEVIED UPON TO COLLECT SAID
JUDGMENT AND MAY BE SOLD UPON A WRIT OF EXECUTION, AND HEREBY WAIVES AND
RELEASES ALL LAWS, NOW OR HEREAFTER IN FORCE, RELATING TO EXEMPTION,
APPRAISEMENT OR STAY OF EXECUTION.  THE AUTHORITY HEREBY GRANTED TO CONFESS
JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF, BUT SHALL CONTINUE FROM
TIME TO TIME AND AT ALL TIMES UNTIL THE INDUSTRIAL OCCUPANT HAS PAID ALL SUMS
REQUIRED TO BE PAID BY THE INDUSTRIAL OCCUPANT AND HAS PERFORMED ALL OF THE
OTHER OBLIGATIONS REQUIRED OF INDUSTRIAL OCCUPANT HEREUNDER. PIDA MAY CONFESS
ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR ANY
PART OF THE AMOUNT OWING HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT HAS
THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION FOR THE SAME AMOUNT. IN THE
EVENT ANY JUDGMENT CONFESSED AGAINST THE INDUSTRIAL OCCUPANT HEREUNDER IS
STRICKEN OR OPENED UPON APPLICATION BY OR ON THE INDUSTRIAL OCCUPANT’S BEHALF
FOR ANY REASON, PIDA IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND
CONFESS JUDGMENT AGAINST THE INDUSTRIAL OCCUPANT FOR ANY PART OR ALL OF THE
AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF DOING SO WILL CURE ANY
ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.

 

(B)           IF THERE EXISTS AN EVENT OF DEFAULT AS DEFINED IN THIS LOAN
AGREEMENT WHICH REMAINS UNCURED THIRTY (30) DAYS AFTER WRITTEN NOTICE THEREOF IS
GIVEN BY PIDA TO THE INDUSTRIAL OCCUPANT (OF WHICH AN AFFIDAVIT ON BEHALF OF
PIDA SHALL BE SUFFICIENT EVIDENCE), THEN, AND IN ANY SUCH EVENT, ANY ATTORNEY OF
ANY COURT OF RECORD OF

 

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PENNSYLVANIA OR ELSEWHERE IS HEREBY AUTHORIZED AND EMPOWERED TO APPEAR FOR THE
INDUSTRIAL OCCUPANT AND ALL PERSONS CLAIMING UNDER OR THROUGH THE INDUSTRIAL
OCCUPANT, AND AS ATTORNEY FOR THE INDUSTRIAL OCCUPANT AND ALL PERSONS CLAIMING
UNDER OR THROUGH THE INDUSTRIAL OCCUPANT, TO SIGN AN AGREEMENT FOR ENTERING AN
AMICABLE ACTION OF EJECTMENT FOR POSSESSION OF THE PREMISES OR ANY PART THEREOF
AND TO CONFESS JUDGMENT THEREIN AGAINST THE INDUSTRIAL OCCUPANT, IN FAVOR OF
PIDA, WHEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY ISSUE FOR THE POSSESSION OF
THE PREMISES, WITHOUT ANY PRIOR COMPLAINT, WRIT OR PROCEEDING WHATSOEVER; AND
FOR SO DOING THIS AGREEMENT, OR A COPY HEREOF VERIFIED BY AFFIDAVIT, SHALL BE
HIS SUFFICIENT WARRANT.  THIS POWER MAY BE EXERCISED AS OFTEN AS PIDA SHALL
REQUIRE AND SHALL NOT BE EXHAUSTED BY ONE OR MORE OR BY ANY IMPERFECT EXERCISE
THEREOF.

 

IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED THE SAME SHALL BE
DISCONTINUED OR POSSESSION OF THE PREMISES SHALL REMAIN IN OR BE RESTORED TO THE
INDUSTRIAL OCCUPANT, PIDA SHALL HAVE THE RIGHT FOR THE SAME DEFAULT OR ANY
SUBSEQUENT DEFAULT TO BRING ONE OR MORE FURTHER AMICABLE ACTIONS AS ABOVE
PROVIDED TO RECOVER POSSESSION OF THE PREMISES.  PIDA MAY BRING SUCH AMICABLE
ACTION IN EJECTMENT BEFORE OR AFTER JUDGMENT ON THIS MORTGAGE OR ON THE NOTE, OR
AFTER A SALE OF THE PREMISES BY THE SHERIFF.  IF AFTER EXECUTION AND RETURN OF
THE WRIT OF POSSESSION, THE INDUSTRIAL OCCUPANT SHALL RE-ENTER INTO POSSESSION
OF THE PREMISES, PIDA SHALL HAVE THE RIGHT, WITHIN THREE (3) YEARS AFTER THE
DATE OF RETURN OF THE ORIGINAL WRIT OF POSSESSION, TO FILE ADDITIONAL PRAECIPES
AND AFFIDAVITS FOR NEW WRITS OF POSSESSION TO BE ISSUED BY THE PROTHONOTARY
BASED UPON THE SAME JUDGMENT.

 

(C)           IF INDUSTRIAL OCCUPANT WISHES TO CHALLENGE ANY JUDGMENT CONFESSED
PURSUANT TO THIS SECTION, IT SHALL DO SO ONLY BY FILING A PETITION STRIKE OR TO
OPEN THE JUDGMENT PURSUANT TO PENNSYLVANIA

 

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RULES OF CIVIL PROCEDURE RULE 2959, AS IN EFFECT FROM TIME TO TIME, (“RULE
2959”) AND SHALL NOT OTHERWISE INTERFERE (BY FILING ANY CIVIL ACTION BILL IN
EQUITY, OR OTHERWISE) WITH THE OPERATION OF THIS JUDGMENT GRANTED PURSUANT TO
THIS SECTION.  INDUSTRIAL OCCUPANT EXPRESSLY ACKNOWLEDGES THAT THE PROCEDURE
AVAILABLE TO IT THROUGH RULE 2959 WILL PROVIDE IT WITH A FULL AND FAIR
OPPORTUNITY TO BE HEARD AS TO ANY REASON WHY JUDGMENT SHOULD NOT BE ENTERED
AGAINST IT.

 

THE INDUSTRIAL OCCUPANT ACKNOWLEDGES THAT IT UNDERSTANDS THE MEANING AND EFFECT
OF THE CONFESSION CONTAINED IN THE FOREGOING PARAGRAPHS.  SPECIFICALLY, THE
INDUSTRIAL OCCUPANT UNDERSTANDS AMONG OTHER THINGS THAT (1) IT IS RELINQUISHING
THE RIGHT TO HAVE THE BURDEN OF PROOF OF DEFAULT REST ON PIDA PRIOR TO THE ENTRY
OF JUDGMENT, (2) THE ENTRY OF JUDGMENT MAY RESULT IN A LIEN ON ITS PROPERTY,
(3) IT WILL BEAR THE BURDEN AND EXPENSE OF ATTACKING THE JUDGMENT AND
CHALLENGING EXECUTION ON THE LIEN AND SALE OF THE PROPERTY COVERED THEREBY, AND
(4) ENOUGH OF ITS PROPERTY MAY BE TAKEN TO PAY THE PRINCIPAL AMOUNT, INTEREST
COSTS AND ATTORNEY’S FEES.

 

ARTICLE XII

 

Miscellaneous

 

Section 12.01.   Obligations Unconditional.  The obligations to PIDA under this
Agreement and each of the Loan Documents shall be absolute and unconditional
without defense or set-off by reason of any default by the contractors under the
contracts relating to the Project or by PIDA under this Agreement, any of the
Loan Documents, or under any other agreement between the IDC, the Industrial
Occupant and PIDA, or for any other reason, including without limitation failure
to complete the Project, any acts or circumstances that may constitute failure
of consideration, destruction of or damage to the Project, commercial
frustration of purpose, or failure of PIDA to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of
or connected with this Agreement, it being the intention of

 

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the parties that the payments required under each of the Loan Documents will be
paid in full when due without any delay or diminution whatsoever.  Payments and
additional sums required to be paid to PIDA under any of the Loan Documents
shall be received by PIDA as net sums and the IDC, the Industrial Occupant agree
to pay or cause to be paid all charges against or which might diminish such net
sums.  The provisions of this Section shall not impair the ability of the IDC or
the Industrial Occupant or any other persons to bring an independent action
against PIDA with respect to any cause of action such person may have against
PIDA.

 

Section 12.02.   Provisions Complementary.  The provisions of this Agreement
shall be in addition to those of any other Loan Document.  All of such
provisions shall be construed as complementary to each other.  Nothing contained
herein shall prevent PIDA from enforcing any and all of such provisions in
accordance with their respective terms.

 

Section 12.03.   Rights and Remedies.  The terms of all Loan Documents shall be
liberally construed in favor of PIDA to effectuate the purposes hereof.  No
delay or failure on the part of PIDA in exercising any right, power or privilege
under any of the Loan Documents shall affect such right, power or privilege; nor
shall any single or partial exercise thereof or any abandonment, waiver, or
discontinuance of steps to enforce such a right, power or privilege preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege.  The rights and remedies of PIDA under any of the Loan Documents are
cumulative and concurrent and not exclusive of any rights or remedies which PIDA
might otherwise have.  PIDA shall have the right at all times to enforce the
provisions of each of the Loan Documents and all related documentation in strict
accordance with the terms hereof and thereof, notwithstanding any conduct or
custom on the part of PIDA in refraining from so doing at any time or times. 
The failure of PIDA at any time or times to enforce PIDA’s rights under such
provisions, strictly in accordance with the same, shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
such Loan Documents or any such documentation, or as having in any way or manner
modified or waived the same.

 

Section 12.04.   Writing Required.  Any permit, consent or approval of any kind
or character on the part of PIDA under any of the Loan Documents, and any waiver
of any provision or condition thereof, must be in writing and executed by PIDA
and shall be effective only to the extent specifically set forth in such
writing.

 

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Section 12.05.   Duration of Covenants.  All covenants and agreements of the IDC
and/or the Industrial Occupant, in any of the Loan Documents, or otherwise made
in writing in connection herewith, shall survive and continue until the Loan is
entirely paid and all of the obligations of the IDC and the Industrial Occupant
hereunder have been entirely satisfied, unless a longer term is expressly
provided for, in which event such longer term shall apply.

 

Section 12.06.   Pennsylvania Law to Govern.  Each of the Loan Documents shall
be deemed to be contracts made under the laws of the Commonwealth of
Pennsylvania and, for all purposes, shall be construed in accordance with the
laws of such Commonwealth, including its statutes of limitations, but without
regard to its rules regarding conflict of laws.

 

Section 12.07.   Counterparts.  Each of the Loan Documents may be executed in as
many counterparts as may be deemed necessary and convenient and each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.  All signatures need not appear on
the same copy of any Loan Document.

 

Section 12.08.   PIDA Project Inspections Solely for PIDA’s Benefit.  It is
understood and agreed that PIDA, its agents, servants, invitees and employees,
may inspect the plans and specifications for the Project and enter the Premises
and conduct such tests, surveys, examinations and inspections as it shall, from
time to time, deem appropriate.  The IDC and the Industrial Occupant hereby
acknowledge and agree (i) that such project inspections are solely for the
protection and benefit of PIDA, and (ii) that PIDA, its agents, servants,
invitees and employees, carry no responsibility whatsoever for the design or
construction of the Project, its quality or the compliance or lack of compliance
with the plans and specifications.

 

Section 12.09.   Setoff.  The IDC and the Industrial Occupant agree that the
Commonwealth of Pennsylvania may set off the amount of any state tax liability
or other debt of the IDC and the Industrial Occupant or their respective
subsidiaries that is owed to the Commonwealth and not being contested on appeal
against any payments due the IDC and the Industrial Occupant under this or any
other contract with the Commonwealth.

 

Section 12.10.   Contractor Responsibility.  Included in and made a part of this
Agreement is Exhibit B, a clause pertaining to Contractor Responsibility.

 

Section 12.11.   Contractor Integrity.  The IDC and the Industrial Occupant each
represent, warrant and covenant that it currently has no interest and shall not
acquire any interest, direct or indirect, which would conflict in any manner or
degree with the performance of its obligations

 

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hereunder.  Included in and made a part of this Agreement is Exhibit C, a clause
pertaining to Contractor Integrity.

 

Section 12.12    Americans with Disabilities Act.  Included in and made a part
of this Agreement is Exhibit D, a clause pertaining to compliance with the
Americans with Disabilities Act.

 

Section 12.13.   Successors and Assigns.  This Agreement and each of the Loan
Documents shall inure to the benefit of, and shall be binding upon, the
respective successors and assigns of PIDA and the IDC and the Industrial
Occupant.  Although PIDA has no present intention to convey, pledge or otherwise
assign its rights under the Loan Documents, it may nevertheless do so in whole
or in part without notice to any person (including, without limitation, the IDC
and the Industrial Occupant).  The IDC and the Industrial Occupant have no right
to assign any of their rights or obligations hereunder or under any of the Loan
Documents without the prior written consent of PIDA, and any such assignment
without the prior written consent of PIDA shall be void. The IDC and the
Industrial Occupant and PIDA intend that no person shall have any claim or
interest under this Agreement or right of action hereunder.

 

Section 12.14.   Notices.  Notices required hereunder, or any correspondence
concerning this Agreement shall be directed to the following addresses and shall
be deemed properly given (a) if delivered by hand, (b) if sent by certified
mail, return receipt requested, postage prepaid, or by recognized overnight
courier service (including, without limitation, Federal Express or United Parcel
Service overnight service), charges prepaid; or (c) if sent by facsimile, with a
copy sent by first class U.S. Mail, postage prepaid.

 

To PIDA:

 

THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY

 

 

c/o Department of Community and Economic Development

 

 

Commonwealth Keystone Building

 

 

400 North Street, Fourth Floor

 

 

Harrisburg, PA 17120

 

 

FAX:  (717) 772-2890

 

 

Attention:  Executive Director

 

 

 

To the IDC:

 

PIDC FINANCING CORPORATION

 

 

2600 Centre Square, 1500 Market Street

 

 

Philadelphia, Pennsylvania 19102-2126

 

 

Attention: Senior Vice President

 

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To Industrial:

 

LANNETT COMPANY, INC.

Occupant

 

9000 State Road

 

 

Philadelphia, Pennsylvania 19136

 

 

Attention: President

 

Notices and communications hereunder shall be deemed sufficiently given when
dispatched pursuant to the foregoing provisions.  Notices and communications
delivered by hand shall be effective upon receipt; notices and communications
sent by fax, with a copy by first class U.S. Mail, shall be effective upon
dispatch; notices and communications sent by recognized overnight courier
service shall be effective on the business day following dispatch; and notices
sent by certified mail shall be effective on the third business day following
dispatch.  The parties hereto may, by a notice given hereunder, designate any
further or different addresses to which any subsequent notice or communication
hereunder shall be sent.

 

Section 12.15.   Severability.  If any provision hereof or of the Loan Documents
is found by a court of competent jurisdiction to be prohibited or unenforceable
in any jurisdiction, it shall be ineffective as to such jurisdiction only to the
extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision as to such
jurisdiction to the extent it is not prohibited or unenforceable, nor invalidate
such provision in any other jurisdiction, nor invalidate the other provisions of
the Loan Documents, all of which shall be liberally construed in favor of PIDA
in order to effect the provisions of this Agreement.  Notwithstanding anything
to the contrary herein contained, the total liability of the IDC and the
Industrial Occupant for payment of interest pursuant hereto shall not exceed the
maximum amount, if any, of such interest permitted by applicable law to be
contracted for, charged or received, and if any payments by the IDC or the
Industrial Occupant to PIDA include interest in excess of such a maximum amount,
PIDA shall apply such excess to the reduction of the unpaid principal amount due
pursuant hereto, or if none is due, such excess shall be refunded to the IDC or
the Industrial Occupant, as appropriate; provided that, to the extent permitted
by applicable law, in the event the interest is not collected, is applied to
principal or is refunded pursuant to this sentence and interest thereafter
payable pursuant hereto shall be less than such maximum amount, then such
interest thereafter so payable shall be increased up to such maximum amount to
the extent necessary to recover the amount of interest, if any, theretofore
uncollected, applied to principal or refunded pursuant to this sentence.  Any
such application or refund shall not cure

 

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or waive any Event of Default.  In determining whether or not any interest
payable under the Loan Documents exceeds the highest rate permitted by law, any
nonprincipal payment (except payments specifically stated to be “interest”)
shall be deemed, to the extent permitted by applicable law, to be an expense,
fee, premium or penalty rather than interest.

 

Section 12.16.   Consent to Jurisdiction.  The IDC and the Industrial Occupant
each hereby irrevocably (a) agree that any suit, action or other legal
proceeding arising out of or relating to this Agreement or the Loan Documents
may be brought in any federal or state court located in or whose district
includes Harrisburg, Pennsylvania or the county wherein the Project is located
and consent to the jurisdiction of such court in any such suit, action or
proceeding, and (b) waive any objection which they may have to the laying of
venue of any such suit, action or proceeding in any such court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum.  The IDC and the Industrial Occupant each hereby irrevocably consent to
the service of any and all process in any such suit, action or proceeding by
mailing of copies of such process to the IDC or the Industrial Occupant at its
respective address provided under or pursuant to Section 12.14.  The IDC and the
Industrial Occupant each agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  All mailings under
this section shall be by certified or registered mail, return receipt
requested.  Nothing in this section shall affect the right of PIDA to serve
legal process in any other manner permitted by law or affect the right of PIDA
to bring any suit, action or proceeding against the IDC or the Industrial
Occupant or their respective property in the courts of any other jurisdiction.

 

Section 12.17.   Defined Terms.  In each of the Loan Documents, unless otherwise
indicated, (i) defined terms may be used in the singular or the plural and the
use of any gender includes all genders, (ii) the words, “hereof”, “herein”,
“hereto”, “hereby” and “hereunder” refer to the particular Loan Document in
which they occur in such document’s entirety, (iii) the term, the “Loan
Documents”, and the words, “thereof”, “therein”, “thereto”, “thereby” and
“thereunder” refer to all the Loan Documents, taken together as a whole,
(iv) all references to particular Articles, Sections or Paragraphs are
references to the particular Article, Section or Paragraph of the particular
Loan Document in which such references occur, and (v) the IDC shall be referred
to as Contractor in Exhibits A, B, C, D and F.

 

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Section 12.18.   Incorporation by Reference.  All exhibits to this Agreement and
the terms of all Loan Documents shall be incorporated herein by reference as
though expressly set forth herein.  The IDC and the Industrial Occupant each
agree to be bound as the “Contractor” under the provisions of the exhibits to
this Agreement.

 

Section 12.19.   Descriptive Headings.  Descriptive headings of the several
Articles and Sections of each of the Loan Documents are intended for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

Section 12.20.   Further Assurances.  The IDC and the Industrial Occupant from
time to time, shall execute such further instruments as PIDA may reasonably
request to further confirm and assure the interests and rights created or
intended to be created in favor of PIDA hereunder or under the Loan Documents.

 

Section 12.21.   Right-To-Know Law.   Included in and made a part of this
Agreement is Exhibit “F”, a clause pertaining to compliance with the
Pennsylvania Right-To-Know Law.

 

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Section 12.22.   Complete Agreement.  The Loan Documents constitute the entire
agreement between PIDA and the IDC and the Industrial Occupant with respect to
the Project and the Loan.  The Loan Documents supersede and replace all prior
agreements related to the subject matter thereof including, without limitation,
the Commitment, except to the extent such prior agreements are expressly
incorporated by reference or otherwise referred to.  This Agreement, the
Premises Agreement and the Assignment, may be modified or amended only by a
written instrument duly executed by PIDA, the IDC and the Industrial Occupant. 
Each of the remaining Loan Documents may be modified only by a written
instrument duly executed by PIDA and the remaining parties to the particular
Loan Document.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

ATTEST:

 

THE PENNSYLVANIA INDUSTRIAL

 

 

DEVELOPMENT AUTHORITY

 

 

 

 

 

 

/s/ Evelyn C. Deardorff

 

By

/s/ Kevin Rowland

Assistant Secretary

 

 

Administrator

 

 

 

(CORPORATE SEAL)

 

 

 

 

 

 

 

 

ATTEST:

 

PIDC FINANCING CORPORATION

 

 

 

 

 

 

/s/ Teresa A. DeMussis

 

By

/s/ Paul J. Deegan

Assistant Secretary

 

 

Senior Vice President

 

 

 

 

(CORPORATE SEAL)

 

 

 

 

 

 

 

 

ATTEST:

 

LANNETT COMPANY, INC.

 

 

 

 

 

 

/s/ Arthur P. Bedrosian

 

By

/s/ Keith R. Ruck

President

 

 

Chief Financial Officer

 

41

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