exv10w6





Exhibit 10.6




PROMISSORY NOTE




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal	 	Loan Date	 	Maturity	 	Loan No	 	Call / Coll	 	Account	 	Officer	 	Initials
	$1,080,000.00	 	12-30-2005	 	12-30-2020	 	3354188	 	 	 	 	 	2104	 	 
	References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any
item above containing “***” has been omitted due to text length limitations.






	 	 	 	 	 	 	 
	Borrower:

	 	Integrated BioSciences, Inc. (TIN: 11-3679944)
	 	Lender:
	 	COMMERCE BANK / HARRISBURG N.A.
	 

	 	637 Lowther Road
	 	 	 	COMMERCIAL BUSINESS DEPARTMENT
	 

	 	Lewisberry, PA 17339
	 	 	 	100 SENATE AVENUE
	 

	 	 	 	 	 	CAMP HILL, PA 17011
	 

	 	 	 	 	 	(717) 975-5630






					
	 
	Principal Amount: $1,080,000.00
	 	Initial Rate: 8.750%
	 	Date of Note: December 30, 2005






PROMISE TO PAY. Integrated BioSciences, Inc. (“Borrower”) promises to pay to COMMERCE
BANK/HARRISBURG N.A. (“Lender”), or order, in lawful money of the United States of America, the
principal amount of One Million Eighty Thousand & 00/100 Dollars ($1,080,000.00), together with
interest on the unpaid principal balance from December 30, 2005, until paid in full.



PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay
this loan in 180 payments of $10,874.44 each payment. Borrower’s first payment is due January 30,
2006, and all subsequent payments are due on the same day of each month after that. Borrower’s
final payment will be due on December 30, 2020, and will be for all principal and all accrued
interest not yet paid. Payments include principal and interest. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid interest; then to
principal; then to any unpaid collection costs; and then to any late charges. The annual interest
rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding. Borrower will pay Lender at
Lender’s address shown above or at such other place as Lender may designate in writing.



VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time
based on changes in an independent index which is the Prime Rate as published in the Money Rate
Section of the Wall Street Journal. If a range of rates is published, the highest will be used.
(the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If
the Index becomes unavailable during the term of this loan, Lender may designate a substitute index
after notice to Borrower. Lender will tell Borrower the current Index rate upon Borrower’s
request. The interest rate change will not occur more often than each day. Borrower understands
that Lender may make loans based on other rates as well. The Index currently is 7.250% per annum.
The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of
1.500 percentage points over the Index, resulting in an initial rate of 8.750% per annum. NOTICE:
Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by
applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one
or more of the following: (A) increase Borrower’s payments to ensure Borrower’s loan will be paid
off by its original final maturity date, (B) increase Borrower’s payments to cover accruing
interest, (C) increase the number of Borrower’s payments, and (D) continue Borrower’s payments at
the same amount and increase Borrower’s final payment.



PREPAYMENT PENALTY. Borrower agrees that all loan fees and other prepaid finance charges are
earned fully as of the date of the loan and will not be subject to refund upon early payment
(whether voluntary or as a result of default), except as otherwise required by law. Upon
prepayment of this Note, Lender is entitled to the following prepayment penalty: Prepayment of any
amount of the principal sum shall be subject to a penalty charge of 5% during the first year of
amortization and declining 1% per year thereafter to par. Except for the foregoing, Borrower may
pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make
payments under the payment schedule. Rather, early payments will reduce the principal balance due
and may result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments
marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will
remain obligated to pay any further amount owed to Lender. All written communications concerning
disputed amounts, including any check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be mailed or delivered to: COMMERCE
BANK/HARRISBURG N.A., LOAN SERVICING, PO BOX 1195 CAMP HILL, PA 17011-1195.



LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the
regularly scheduled payment.


 


 









 





					
	 
	 	PROMISSORY NOTE	 	 
	Loan No.: 3354188
	 	(Continued)
	 	Page 2






INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, Lender, at its
option, may, if permitted under applicable law, increase the variable interest rate on this Note to
3.500 percentage points over the Index. The interest rate will not exceed the maximum rate
permitted by applicable law. If judgment is entered in connection with this Note, interest will
continue to accrue on this Note after judgment at the interest rate applicable to this Note at the
time judgment is entered.



DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under
this Note:




Payment Default. Borrower fails to make any payment when due under this Note.




Other Defaults. Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Note or in any of the related documents or to comply
with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.




Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension
of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of
any other creditor or person that may materially affect any of Borrower’s property or Borrower’s
ability to repay this Note or perform Borrower’s obligations under this Note or any of the
related documents.




False Statements. Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading
in any material respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.




Insolvency. The dissolution or termination of Borrower’s existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Borrower.




Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the loan. This includes
a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the
validity or reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or reserve or bond for the dispute.




Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of
any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In
the event of a death, Lender, at its option, may, but shall not be required to, permit the
Guarantor’s estate to assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure any Event of Default.




Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common
stock of Borrower.




Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of this Note is impaired.




Insecurity. Lender in good faith believes itself insecure.




Cure Provisions. If any default, other than a default in payment is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within the preceding
twelve (12) months, it may be cured if Borrower, after receiving written notice from Lender
demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the
cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in
Lender’s sole discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.



LENDER’S RIGHTS. Upon default, Lender may, after giving such notices as required by applicable
law, declare the entire unpaid principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.


 


 









 






					
	 
	 	PROMISSORY NOTE	 	 
	Loan No.: 3354188
	 	(Continued)
	 	Page 3





ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is
a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable
law, Borrower also will pay any court costs, in addition to all other sums provided by law.



GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent
not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its
conflicts of law provisions. This Note has been accepted by Lender in the Commonwealth of
Pennsylvania.



RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in
all Borrower’s accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open
in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the indebtedness against any and all such
accounts.



COLLATERAL. Borrower acknowledges this Note is secured by Blanket 1st lien priority security
interest in all business assets.



POST CLOSING COMPLIANCE. Borrower agrees to execute, re-execute, cause a Guarantor(s) or other
third party(ies) involved in the loan transaction to execute and/or re-execute and to deliver to
Lender or its legal counsel, as may be deemed appropriate, any document or instrument signed in
connection with the Loan which was incorrectly drafted and/or signed, as well as any document or
instrument which should have been signed at or prior to the closing of the Loan, but which was not
so signed and delivered. Borrower agrees to comply with any written request by Lender within ten
(10) days after receipt by Borrower of such request. Failure to Borrower to so comply shall, at
the option of Lender, upon notice to Borrower, constitute an event of default under the Loan.



COMMITMENT LETTER COMPLIANCE. This loan is contingent upon Borrower’s compliance with all of the
terms and conditions in the commitment letter issued by Lender to Borrower on or about December 23,
2005. Upon breach of any term of condition therein Lender shall have the right to declare this
loan in default and demand payment in full of the principal balance remaining unpaid, together with
all interest, which shall have accrued thereon.



REQUIRED DEPOSIT ACCOUNT. Borrower and guarantor shall be required to establish and maintain
primary deposit account relationship with Commerce Bank.



LOAN PURPOSE CONDITION. Funds will be used for machinery and equipment ($250,000), working capital
($100,000), the refinance of debt owed to PNC Bank ($178,000), accounts payable ($125,000),
convertible debt/note payable to Brian and Shelly Lesher ($300,000), Inventory ($215,000), and fees
and costs associated with this loan ($32,000). Upon final disbursement of loan funds, a copy of
the Lender’s detailed loan settlement must be provided to USDA Rural Development as evidence that
all funds were disbursed in amounts and for purposes outlined above.



PERCENTAGE OF GUARANTEE CONDITION. A 90% Guarantee will be issued.



INTEREST RATE CONDITION. The loan will be evidenced by 2 notes. The rates on both will be prime
+1.5. The interest rate is to vary not more often than quarterly. The loan is to be fully
amortized with monthly installments and no balloon payments.



COLLATERAL CONDITIONS. This loan is to be secured by a first lien on all of the Borrower’s
machinery and equipment, including the items listed in the appraisal by Bernard M. Spencer, Senior
Appraiser dated May 2, 2005 and all items financed with this B&I loan. A first lien will also be
taken on inventory and accounts receivable. The Lender will not require compensating balances or
other collateral as a means of eliminating the Lender’s exposure for the unguaranteed portion of
the loan. The entire loan will be secured by the same security with equal lien priority for the
guaranteed and unguaranteed portions of the loan. The unguaranteed portion of the loan will
neither be paid first nor given any preference or priority over the guaranteed portion.



GUARANTOR CONDITION. In addition to the full liability of Integrated Biosciences Inc., Edward J.
Paukovits, Jr. is to pledge a full and unconditional personal guarantee for the loan. An example
of language that the Lender’s personal
guarantee agreement must contain is as follows: “Guaranty: Guarantor hereby unconditionally
guarantees the prompt and full payment and performance of Borrower’s present and future, joint
and/or several, direct and indirect, absolute and contingent, express and implied, indebtedness,
liabilities, obligations and covenants to Lender, including any amendments, extensions,
modifications, renewals, or substitutions thereto (cumulatively “obligations”). Guarantor must pay
all amounts due under the Note, when the Lender makes written demand upon guarantor.” Guarantor’s
obligations under this Guaranty shall be unlimited and shall include all present or future
obligations between Borrower and Lender (whether executed for the same or different purpose),
together with all interest and all Lenders’ expenses and costs incurred in connection with the
obligations.”.


 


 









 






					
	 
	 	PROMISSORY NOTE	 	 
	Loan No.: 3354188
	 	(Continued)
	 	Page 4





INSURANCE CONDITIONS. 1.) Hazard insurance naming the Lender as beneficiary will be maintained in
an amount at least equal to the outstanding loan balance or the replacement value (whichever is
greater) of the collateral. Hazard insurance includes fire, windstorm, lightning, hail, explosion,
riot, civil commotion, aircraft, vehicle, marine, smoke, builder’s risk during construction, and
property damage. A Fidelity Bond is to be provided for the positions of officials who have access
to the funds of the Borrower equal to the maximum funds on hand at any time, the Lender may waive
this requirement however, if a loss was to occur due to theft of funds by an officer, the amount of
the guarantee pay may be impacted. Worker’s Compensation must be carried in accordance with State
law. 2.) Key person life insurance naming the Lender as beneficiary will be maintained on
Edward J. Paukovits, Jr., in the amount of $1,200,000. Any proceeds of this policy shall be shared
pro rata between the two notes evidencing this loan.



EQUITY CONDITION. A minimum of 10 percent tangible balance sheet equity will be required.
Tangible balance sheet equity will be determined in accordance with Generally Accepted Accounting
Principles and will not include subordinated debt or appraisal surplus. Prior to issuance of the
Loan Note Guarantee, the Lender will provide USDA Rural Development with a pro forma balance sheet,
prepared by an independent Certified Public Accountant, reflecting new debt and a certification
that the Borrower meets the minimum tangible balance sheet equity requirement.



LOAN AGREEMENT CONDITIONS. A loan agreement between the Lender and Borrower will be executed which
conforms to RD Instruction 4279-B, ° 4279.161(b) (11), as outlined below: a.) The Borrower will
provide reviewed financial statements annually, prepared by a Certified Public Accountant in
accordance with Generally Accepted Accounting Principles for the next fiscal year, and submit them
to the Lender within 90 days of the business’ fiscal yearend. Financial statements will contain,
at a minimum, a balance sheet, and a profit and loss statement reflecting the financial condition
of the Borrower as of its yearend. The Lender is responsible for obtaining all required financial
statements from the Borrower, analyzing them, and providing copies of statements with a detailed
written analysis to USDA Rural Development within 120 days. b.) All personal guarantors of this
loan must provide compiled financial statements to the Lender within 90 days of guarantor’s fiscal
or calendar year. c.) The Borrower shall not co-sign or otherwise becoming liable for obligations
or liabilities of others without the written concurrence of the Lender. d.) Dividend payments will
be limited to an amount that, when taken, will not adversely affect the repayment ability of the
Borrower. No dividend payments will be made unless (1) an after-tax profit was made in the
preceding fiscal year, (2) the Borrower is and will remain in compliance with covenants of the Loan
Agreement and Conditional Commitment, (3) all Borrower debts are paid to a current status, and
(4) prior written concurrence of the Lender is obtained. This is not intended to apply to dividend
payments to cover personal tax liability resulting from profitability of the business.
e.) Borrower shall not invest in additional fixed asset purchases in an annual aggregate of more
than $50,000 without the written concurrence of the Lender. Borrower will not lease, sell,
transfer, or otherwise encumber fixed assets without the concurrence of the Lender. Disposition of
fixed assets serving as collateral for this loan must also have the concurrence of USDA Rural
Development. f.) Compensation of officers and owners will be limited to an amount that, when
taken, will not adversely affect the repayment ability of the Borrower. This amount may not be
increased year to year unless (1) an after-tax profit was made in the preceding fiscal year,
(2) the Borrower is and will remain in compliance with covenants of the Loan Agreement and
Conditional Commitment, (3) all Borrower debts are paid to a current status, and (4) prior written
concurrence of the Lender is obtained. g.) Borrower shall not permit the ratio of its Funded Debt
to earnings before interest, taxes, depreciation, and amortization (EBITDA) minus distributions to
shareholders and extraordinary gains to exceed a ratio of 1.20:1.00 measured annually by Lender
from the Borrower’s annual financial statements prepared by its certified public accountants.
Lender’s determination of the ratio shall be final and controlling in all events. As used herein,
the term “Funded Debt” shall mean indebtedness owed by Borrower to and secured in favor of banks
and other institutional Lenders. h.) Borrower shall not enter into any merger or consolidation or
sell the business without prior written concurrence of the Lender. i.) Outside investment and
loans/advances to stockholders, owners, officers, or affiliates require the prior written consent
of the Lender. Loans from stockholders, owners, officers, or affiliates must subordinated to the
guaranteed loan or converted to stock. No payments are to be made on these debts unless the B&I
loan is current and in good standing.


 


 









 






					
	 
	 	PROMISSORY NOTE	 	 
	Loan No.: 3354188
	 	(Continued)
	 	Page 5





GUARANTEE CLOSING CONDITIONS. Prior to issuance of the guarantee, the Lender will provide USDA
Rural Development with the following: a.) A guarantee fee of $21,600 = ($1,200,000 x 90% x 2%)
made payable to the U.S. Treasury. b.) An executed Form RD 4279-4, “Lender’s” Agreement.” c.) A
Loan Agreement, signed by the Borrower and Lender, that contains loan conditions set forth by the
Agency, including any from the National Office. d.) Written certification that the 15 conditions
set forth in RD Instruction 4279-B, ° 4279.181, have been met. e.) A copy of the executed loan and
security instruments, with documentation of lien position, and evidence of the hazard and key
person life insurance coverage required above. Documents include, but are not limited to, title
opinions, title insurance policies, UCC filings, UCC searches, promissory note(s), mortgage(s),
etc. f.) A current (not more than 90 days old) balance sheet for the business prepared by a
Certified Public Accountant in accordance with Generally Accepted Accounting Principles. The
balance sheet must reflect the business’ post-loan closing status. The business must have a
tangible balance sheet equity position of no less than 10 percent at the time the Loan Note
Guarantee is issued. g.) The Lender is required to hold in its own portfolio or retain a minimum
of 5 percent of the total guaranteed loan amount. The amount required to be retained must be of
the unguaranteed portion of the loan and cannot be participated to another. The Lender may sell
the remaining amount of the unguaranteed portion of the loan only through participation.
h.) Agency personnel and any person(s) accompanying Agency personnel shall be authorized to enter
upon the premises and into any building thereon, whether permanent or temporary, jointly or
separately, with personnel of the Lender to carry out the functions involving their interests.
Scheduled and unscheduled inspections may be conducted by these personnel to determine the
effectiveness of the loan program. i.) The Lender will always retain the responsibility for loan
servicing and for notifying the Agency of any violations of the terms of the Loan Agreement or
Conditional Commitment. Agency regulations require the Lender to provide a loan classification,
with justification, for each loan. Whenever there is a change in the loan that would impact the
original classification, a revised classification will be completed and sent to the Agency. The
Lender will arrange with the Borrower and the Agency for a visit during the first year and, at a
minimum, every three years thereafter. Lender visits will be conducted by the Agency at least
annually. j.) Commerce Bank/Harrisburg, NA, (Lender) certifies by accepting this Conditional
Commitment for a $1,080,000 guarantee the Lender understands that the intent of RD Instruction
4279-B, section 4279.181(m), is that no adverse change may occur during the period of time from
Agency issuance of the Conditional Commitment to issuance of the Loan Note Guarantee relating to
Integrated Biosciences, Inc.(Borrower) regardless of the cause or causes of the change and whether
the change or cause(s) of the change were within the Lender’s or Borrower’s control. Prior to each
disbursement, Lender shall be in receipt of satisfactory evidence that there has been no unremedied
adverse change in the financial or any other condition of the Borrower since the date of the
application or since any preceding disbursements which would warrant withholding or not making
further disbursements. k.) Integrated Biosciences, Inc, by accepting Form 4279-3, “Conditional
Commitment,” certifies that it is not delinquent on any Federal debt. l.) By signing this
Conditional Commitment, the Lender and Borrower certify that they understand and accept the
conditions outlined herein.



SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s
heirs, personal representatives successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.



NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if
we report any inaccurate information about your account(s) to a consumer reporting agency. Your
written notice describing the specific inaccuracy(ies) should be sent to us at the following
address: COMMERCE BANK/HARRISBURG N.A. LOAN SERVICING PO BOX 1195 CAMP HILL, PA 17011-1195.



GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the
rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this
Note without losing them. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may renew or extend (repeatedly and
for any length of time) this loan or release any party or guarantor or collateral or impair, fail
to realize upon or perfect Lender’s security interest in the collateral and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. The obligations under this Note are joint and several. If any
portion of this Note is for any reason determined to be unenforceable, it will not affect the
enforceability of any other provisions of this Note.


 


 









 






					
	 
	 	PROMISSORY NOTE	 	 
	Loan No.: 3354188
	 	(Continued)
	 	Page 6





CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE
PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT
ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS
OR ENTER JUDGMENT AGAINST BORROWER FOR
THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL
AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THIS NOTE, TOGETHER WITH
COSTS OF SUIT, AND AN ATTORNEY’S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE
AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON
WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS
NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY
GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF
THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL
AMOUNTS DUE UNDER THIS NOTE. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A
HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE
OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER’S ATTENTION OR
BORROWER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL.



PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING
THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.



BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.




THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE
THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.



BORROWER:




	 	 	 	 	 
	INTEGRATED BIOSCIENCES. INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Edward J. Paukovits, Jr.
 

	 	(Seal) 
	 

	 	Edward J. Paukovits, Jr.,
President, of Integrated BioSciences, Inc.	 	 
	 

	 		 	 






 


 









 






BUSINESS LOAN AGREEMENT




Loan No.: 3354188




BUSINESS LOAN AGREEMENT




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal	 	Loan Date	 	Maturity	 	Loan No	 	Call / Coll	 	Account	 	Officer	 	Initials
	$1,080,000.00	 	12-30-2005	 	12-30-2020	 	3354188	 	 	 	 	 	2104	 	 
	References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has
been omitted due to text length limitations.






	 	 	 	 	 	 	 
	Borrower:

	 	Integrated BioSciences, Inc. (TIN: 11-3679944)
	 	Lender:
	 	COMMERCE BANK / HARRISBURG N.A.
	 

	 	637 Lowther Road
	 	 	 	COMMERCIAL BUSINESS DEPARTMENT
	 

	 	Lewisberry, PA 17339
	 	 	 	100 SENATE AVENUE
	 

	 	 	 	 	 	CAMP HILL, PA 17011
	 

	 	 	 	 	 	(717) 975-5630






	 	 	 	 	 
	Principal Amount: $1,080,000.00
	 	Initial Rate: 8.750%
	 	Date of Note: December 30, 2005






THIS BUSINESS LOAN AGREEMENT dated December 30, 2005, is made and executed between Integrated
BioSciences. Inc. (“Borrower”) and COMMERCE BANK/HARRISBURG N.A. (“Lender”) on the following terms
and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender
for a commercial loan or loans or other financial accommodations, including those which may be
described on any exhibit or schedule attached to this Agreement (“Loan”). Borrower understands and
agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s
representations, warranties, and agreements as set forth in this Agreement; (B) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole
judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.



TERM. This Agreement shall be effective as of December 30,2005, and shall continue in full force
and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full,
including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or
until such time as the parties may agree in writing to terminate this Agreement.



CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each
subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s
satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.




Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the
Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3)
financing statements and all other documents perfecting Lender’s Security Interests; (4)
evidence of insurance as required below; (5) guaranties; (6) together with all such Related
Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender
and Lender’s counsel.




Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to
Lender properly certified resolutions, duly authorizing the execution and delivery of this
Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender or its counsel, may
require.




Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other
expenses which are then due and payable as specified in this Agreement or any Related Document.




Representations and Warranties. The representations and warranties set forth in this Agreement,
in the Related Documents, and in any document or certificate delivered to Lender under this
Agreement are true and correct.




No Event of Default. There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement or under any Related Document.


 


 









 





					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 






REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this
Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal,
extension or modification of any Loan, and at all times any Indebtedness exists:




Organization. Borrower is a corporation for profit which is, and at all times shall be, duly
organized, validly existing, and in good standing under and by virtue of the laws of the State
of Delaware. Borrower is duly authorized to transact
business in all other states in which Borrower is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation
in all states in which the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority to own its
properties and to transact the business in which it is presently engaged or presently proposes
to engage. Borrower maintains an office at 637 Lowther Road, Lewisberry, PA 17339. Unless
Borrower has designated otherwise in writing, the principal office is the office at which
Borrower keeps its books and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Borrower’s state of organization or
any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep
in full force and effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.




Assumed Business Names. Borrower has filed or recorded all documents or filings required by law
relating to all assumed business names used by Borrower. Excluding the name of Borrower, the
following is a complete list of all assumed business names under which Borrower does business:
None.




Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the
Related Documents have been duly authorized by all necessary action by Borrower and do not
conflict with, result in a violation of, or constitute a default under (1) any provision of (a)
Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other
instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower’s properties.




Financial Information. Each of Borrower’s financial statements supplied to Lender truly and
completely disclosed Borrower’s financial condition as of the date of the statement, and there
has been no material adverse change in Borrower’s financial condition subsequent to the date of
the most recent financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.




Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required
to give under this Agreement when delivered will constitute legal, valid, and binding
obligations of Borrower enforceable against Borrower in accordance with their respective terms.




Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s
financial statements or in writing to Lender and as accepted by Lender, and except for property
tax liens for taxes not presently due and payable. Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All of Borrower’s
properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last live (5) years.




Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under, about or from any of the
Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any
breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous Substance on, under, about
or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any
actual or threatened litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and
its agents to enter upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes
only and shall not be construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties contained herein are
based on Borrower’s due diligence in investigating the Collateral for hazardous waste and
Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a
breach of this section of the Agreement or as a consequence of any use, generation, manufacture,
storage, disposal, release or threatened release of a hazardous waste or substance on the
Collateral. The provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest
in any of the Collateral, whether by foreclosure or otherwise.


 


 









 





					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 






Litigation and Claims. No litigation, claim, investigation, administrative proceeding or
similar action (including those for unpaid taxes) against Borrower is pending or threatened, and
no other event has occurred which may materially adversely affect Borrower’s financial condition
or properties, other than litigation, claims, or other events, if any, that have been disclosed
to and acknowledged by Lender in writing.




Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are
or were required to be filed, have been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate reserves have been
provided.




Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not
entered into or granted any Security Agreements, or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to
Lender’s Security Interests and rights in and to such Collateral.




Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related
Documents are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with their respective
terms.



AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement
remains in effect, Borrower will:




Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse
changes in Borrower’s financial condition, and (2) all existing and all threatened litigation,
claims, investigations, administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower or the financial
condition of any Guarantor.




Financial Records. Maintain its books and records in accordance with GAAP, applied on a
consistent basis, and permit Lender to examine and audit Borrower’s books and records at all
reasonable times.




Financial Statements. Furnish Lender with the following:




Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120)
days after the end of each fiscal year, Borrower’s balance sheet and income statement for the
year ended, compiled by a certified public accountant satisfactory to Lender.




Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days
after the applicable filing date for the tax reporting period ended, Federal and other
governmental tax returns, prepared by a professional accountant satisfactory to Lender.




All financial reports required to be provided under this Agreement shall be prepared in
accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and
correct.




Additional Information. Furnish such additional information and statements, as Lender may
request from time to time.




Insurance. Maintain fire and other risk insurance, public liability insurance, and such other
insurance as Lender may require with respect to Borrower’s properties and operations, in form,
amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of insurance in
form satisfactory to Lender, including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such fender’s loss payable or other
endorsements as Lender may require.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing
insurance policy showing such information as Lender may reasonably request, including without
limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of
the policy; (4) the properties insured; (5) the then current property values on the basis of
which insurance has been obtained, and the manner of determining those values; and (6) the
expiration date of the policy. In addition, upon request of Lender (however not more often than
annually), Borrower will have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.




Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the
Loans in favor of Lender, executed by the guarantor named below, on Lender’s forms, and in the
amount and under the conditions set forth in those guaranties.



	 	 	 
	Name of Guarantor	 	Amount
	 
	 	 
	Edward J. Paukovits, Jr.

	 	Unlimited







Other Agreements. Comply with all terms and conditions of all other agreements, whether now or
hereafter existing, between Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such agreements.




Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless
specifically consented to the contrary by Lender in writing.




Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations,
including without limitation all assessment taxes, governmental charges, levies and liens, of
every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien
or charge upon any of Borrower’s properties, income, or profits.




Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions
set forth in this Agreement, in the Related Documents, and in all other instruments and
agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of
any default in connection with any agreement.




Operations. Maintain executive and management personnel with substantially the same
qualifications and experience as the present executive and management personnel; provide written
notice to Lender of any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.




Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such
investigations, studies, samplings and testings as may be requested by Lender or any
governmental authority relative to any substance, or any waste or by-product of any substance
defined as toxic or a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any facility owned, leased or
used by Borrower.




Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations,
now or hereafter in effect, of all governmental authorities applicable to the conduct of
Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower may contest in good
faith any such law, ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing
so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender’s interest.




Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all
Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit
Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books,
accounts, and records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may request, all at Borrower’s
expense.




Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually,
with a certificate executed by Borrower’s chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further certifying that, as
of the date of the certificate, no Event of Default exists under this Agreement.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





Environmental Compliance and Reports. Borrower shall comply in all respects with any and all
Environmental Laws; not cause or permit exist, as a result of an intentional or unintentional
action or omission on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty (30) days after
receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower’s part in connection with any environmental
activity whether or not there is damage to the environment and/or other natural resources.




Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages,
deeds of trust, security agreements, assignments, financing statements, instruments, documents
and other agreements as Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.



LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect
Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or
pay when due any amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens,
security interests, encumbrances and other claims, at any time levied or placed on any Collateral
and paying all costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the date of repayment by
Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will
(A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment
which will be due and payable at the Note’s maturity.



NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in
effect, Borrower shall not, without the prior written consent of Lender:




Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and
indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease,
grant a security interest in, or encumber any of Borrower’s assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.




Continuity of Operations. (1) Engage in any business activities substantially different than
those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock
(other than dividends payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred and is continuing or would
result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in
the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to
its shareholders from time to time in amounts necessary to enable shareholders to pay income
taxes and make estimated income tax payments to satisfy their liabilities under federal and
state law which arise solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of Borrower’s stock, or purchase or retire any of
Borrower’s outstanding shares or alter or amend Borrower’s capital structure.




Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other
person, enterprise or entity, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the
ordinary course of business.




Agreements. Borrower will not enter into any agreement containing any provisions which would be
violated or breached by the performance of Borrower’s obligations under this Agreement or in
connection herewith.



CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether
under this Agreement or under any other agreement, Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the
terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt;
(C) there occurs a material adverse change in Borrower’s financial condition, in the financial
condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims
or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other
loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of
Default shall have occurred.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in
all Borrower’s accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open
in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such
accounts.



DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:




Payment Default. Borrower fails to make any payment when due under the Loan.




Other Defaults. Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Agreement or in any of the Related Documents or to
comply with or to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.




Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension
of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of
any other creditor or person that may materially affect any of Borrower’s or any Grantor’s
property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.




False Statements. Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.




Insolvency. The dissolution or termination of Borrower’s existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Borrower.




Defective Collateralization. This Agreement or any of the Related Documents ceases to be in
full force and effect (including failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any reason.




Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the Loan. This includes
a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Borrower as to the
validity or reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies on a surety bond for the creditor or forfeiture proceeding, in
an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for
the dispute.




Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of
any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death,
Lender, at its option, may, but shall not be required to, permit the Guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner satisfactory to
Lender, and, in doing so, cure any Event of Default.




Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common
stock of Borrower.




Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of the Loan is impaired.




Insecurity. Lender in good faith believes itself insecure.




Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower
or Grantor, as the case may be, has not been given a notice of a similar default within the
preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after
receiving written notice from Lender demanding cure of such default:


(1) cure the default within fifteen (15) days; or (2) if the cure requires more than
fifteen (15) days, immediately initiate steps which Lender deems in Lender’s sole discretion to
be sufficient to cure the default and thereafter continue and complete all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably practical.




 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 






EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise
provided in this Agreement or the Related Documents, all commitments and obligations of Lender
under this Agreement or the Related Documents or any other agreement immediately will terminate
(including any obligation to make further Loan Advances or disbursements), and, at Lender’s option,
all Indebtedness immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described in the “Insolvency”
subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall
have all the rights and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies
shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue
any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s
right to declare a default and to exercise its rights and remedies.



POST CLOSING COMPLIANCE. Borrower agrees to execute, re-execute, cause a Guarantor(s) or other
third party(ies) involved in the loan transaction to execute and/or re-execute and to deliver to
Lender or its legal counsel, as may be deemed appropriate, any document or instrument signed in
connection with the Loan which was incorrectly drafted and/or signed, as well as any document or
instrument which should have been signed at or prior to the closing of the Loan, but which was not
so signed and delivered. Borrower agrees to comply with any written request by Lender within
ten (10) days after receipt by Borrower of such request. Failure to Borrower to so comply shall,
at the option of Lender, upon notice to Borrower, constitute an event of default under the Loan.



COMMITMENT LETTER COMPLIANCE. This loan is contingent upon Borrower’s compliance with all of the
terms and conditions in the commitment letter issued by Lender to Borrower on or about December 23,
2005. Upon breach of any term of condition therein Lender shall have the right to declare this
loan in default and demand payment in full of the principal balance remaining unpaid, together with
all interest, which shall have accrued thereon.



REQUIRED DEPOSIT ACCOUNT. Borrower and guarantor shall be required to establish and maintain
primary deposit account relationship with Commerce Bank.



LOAN PURPOSE CONDITION. Funds will be used for machinery and equipment ($250,000), working capital
($100,000), the refinance of debt owed to PNC Bank ($178,000), accounts payable ($125,000),
convertible debt/note payable to Brian and Shelly Lesher ($300,000), Inventory ($215,000), and fees
and costs associated with this loan ($32,000). Upon final disbursement of loan funds, a copy of
the Lender’s detailed loan settlement must be provided to USDA Rural Development as evidence that
all funds were disbursed in amounts and for purposes outlined above.



PERCENTAGE OF GUARANTEE CONDITION. A 90% Guarantee will be issued.



INTEREST RATE CONDITION. The loan will be evidenced by 2 notes. The rates on both will be prime
+1.5. The interest rate is to vary not more often than quarterly. The loan is to be fully
amortized with monthly installments and no balloon payments.



COLLATERAL CONDITIONS. This loan is to be secured by a first lien on all of the Borrower’s
machinery and equipment, including the items listed in the appraisal by Bernard M. Spencer, Senior
Appraiser dated May 2, 2005 and all items financed with this B&I loan. A first lien will also be
taken on inventory and accounts receivable. The Lender will not require compensating balances or
other collateral as a means of eliminating the Lender’s exposure for the unguaranteed portion of
the loan. The entire loan will be secured by the same security with equal lien priority for the
guaranteed and unguaranteed portions of the loan. The unguaranteed portion of the loan will
neither be paid first nor given any preference or priority over the guaranteed portion.



GUARANTOR CONDITION. In addition to the full liability of Integrated Biosciences Inc., Edward J.
Paukovits, Jr. is to pledge a full and unconditional personal guarantee for the loan. An example
of language that the Lender’s personal guarantee agreement must contain is as follows: “Guaranty:
Guarantor hereby unconditionally guarantees the prompt and full payment and performance of
Borrower’s present and future, joint and/or several, direct and indirect, absolute and contingent,
express and implied, indebtedness, liabilities, obligations and covenants to Lender, including any
amendments, extensions, modifications, renewals, or substitutions thereto (cumulatively
“obligations”). Guarantor must pay all amounts due under the Note, when the Lender makes written
demand upon guarantor.” Guarantor’s obligations under this Guaranty shall be unlimited and shall
include all present or future obligations between Borrower and Lender
(whether executed for the same or different purpose), together with all interest and all Lenders’
expenses and costs incurred in connection with the obligations.”


 


 









 







					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





INSURANCE CONDITIONS. 1.) Hazard insurance naming the Lender as beneficiary will be maintained in
an amount at least equal to the outstanding loan balance or the replacement value (whichever is
greater) of the collateral. Hazard insurance includes fire, windstorm, lightning, hail, explosion,
riot, civil commotion, aircraft, vehicle, marine, smoke, builder’s risk during construction, and
property damage. A Fidelity Bond is to be provided for the positions of officials who have access
to the funds of the Borrower equal to the maximum funds on hand at any time, the Lender may waive
this requirement however, if a loss was to occur due to theft of funds by an officer, the amount of
the guarantee payment may be impacted. Worker’s Compensation must be carried in accordance with
State law. 2.) Key person life insurance naming the Lender as beneficiary will be maintained on
Edward J. Paukovits, Jr., in the amount of $1,200,000. Any proceeds of this policy shall be shared
pro rata between the two notes evidencing this loan.



EQUITY CONDITION. A minimum of 10 percent tangible balance sheet equity will be required.
Tangible balance sheet equity will be determined in accordance with Generally Accepted Accounting
Principles and will not include subordinated debt or appraisal surplus. Prior to issuance of the
Loan Note Guarantee, the Lender will provide USDA Rural Development with a pro forma balance sheet,
prepared by an independent Certified Public Accountant, reflecting new debt and a certification
that the Borrower meets the minimum tangible balance sheet equity requirement.



LOAN AGREEMENT CONDITIONS. A loan agreement between the Lender and Borrower will be executed which
conforms to RD Instruction 4279-B, ° 4279.161(b) (11), as outlined below: a.) The Borrower will
provide reviewed financial statements annually, prepared by a Certified Public Accountant in
accordance with Generally Accepted Accounting Principles for the next fiscal year, and submit them
to the Lender within 90 days of the business’ fiscal yearend. Financial statements will contain,
at a minimum, a balance sheet, and a profit and loss statement reflecting the financial condition
of the Borrower as of its yearend. The Lender is responsible for obtaining all required financial
statements from the Borrower, analyzing them, and providing copies of statements with a detailed
written analysis to USDA Rural Development within 120 days. b.) All personal guarantors of this
loan must provide compiled financial statements to the Lender within 90 days of guarantor’s fiscal
or calendar year. c.) The Borrower shall not co-sign or otherwise becoming liable for obligations
or liabilities of others without the written concurrence of the Lender, d.) Dividend payments will
be limited to an amount that, when taken, will not adversely affect the repayment ability of the
Borrower. No dividend payments will be made unless (1) an after-tax profit was made in the
preceding fiscal year, (2) the Borrower is and will remain in compliance with covenants of the Loan
Agreement and Conditional Commitment, (3) all Borrower debts are paid to a current status, and
(4) prior written concurrence of the Lender is obtained. This is not intended to apply to dividend
payments to cover personal tax liability resulting from profitability of the business.
e.) Borrower shall not invest in additional fixed asset purchases in an annual aggregate of more
than $50,000 without the written concurrence of the Lender. Borrower will not lease, sell,
transfer, or otherwise encumber fixed assets without the concurrence of the Lender. Disposition of
fixed assets serving as collateral for this loan must also have the concurrence of USDA Rural
Development. f.) Compensation of officers and owners will be limited to an amount that, when
taken, will not adversely affect the repayment ability of the Borrower. This amount may not be
increased year to year unless (1) an after-tax profit was made in the preceding fiscal year,
(2) the Borrower is and will remain in compliance with covenants of the Loan Agreement and
Conditional Commitment, (3) all Borrower debts are paid to a current status, and (4) prior written
concurrence of the Lender is obtained. g.) Borrower shall not permit the ratio of its Funded Debt
to earnings before interest, taxes, depreciation, and amortization (EBITDA) minus distributions to
shareholders and extraordinary gains to exceed a ratio of 1.20:1.00 measured annually by Lender
from the Borrower’s annual financial statements prepared by its certified public accountants.
Lender’s determination of the ratio shall be final and controlling in all events. As used herein,
the term “Funded Debt” shall mean indebtedness owed by Borrower to and secured in favor of banks
and other institutional Lenders h.) Borrower shall not enter into any merger or consolidation or
sell the business without prior written concurrence of the Lender. i.) Outside investment and
loans/advances to stockholders, owners, officers, or affiliates require the prior written consent
of the Lender. Loans from stockholders, owners, officers, or affiliates must be subordinated to
the guaranteed loan or converted to stock. No payments are to be made on these debts unless the
B&I loan is current and in good standing.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





GUARANTEE CLOSING CONDITIONS. Prior to issuance of the guarantee, the Lender will provide USDA
Rural Development with the following: a.) A guarantee fee of $21,600 = ($1,200,000 x 90% x 2%)
made payable to the U.S. Treasury, b.) An executed Form RD 4279-4, “Lender’s Agreement.” c.) A
Loan Agreement, signed by the Borrower and Lender, that contains loan conditions set forth by the
Agency, including any from the National Office, d.) Written certification that the 15 conditions
set forth in RD Instruction 4279-B, ° 4279.181, have been met. e.) A copy of the executed loan and
security instruments, with documentation of lien position, and evidence of the hazard and key
person
life insurance coverage required above. Documents include, but are not limited to, title opinions,
title insurance policies, UCC filings, UCC searches, promissory note(s), mortgage(s), etc. f.) A
current (not more than 90 days old) balance sheet for the business prepared by a Certified Public
Accountant in accordance with Generally Accepted Accounting Principles. The balance sheet must
reflect the business’ post-loan closing status. The business must have a tangible balance sheet
equity position of no less than 10 percent at the time the Loan Note Guarantee is issued. g.) The
Lender is required to hold in its own portfolio or retain a minimum of 5 percent of the total
guaranteed loan amount. The amount required to be retained must be of the unguaranteed portion of
the loan and cannot be participated to another. The Lender may sell the remaining amount of the
unguaranteed portion of the loan only through participation, h.) Agency personnel and any person(s)
accompanying Agency personnel shall be authorized to enter upon the premises and into any building
thereon, whether permanent or temporary, jointly or separately, with personnel of the Lender to
carry out the functions involving their interests. Scheduled and unscheduled inspections may be
conducted by these personnel to determine the effectiveness of the loan program. i.) The Lender
will always retain the responsibility for loan servicing and for notifying the Agency of any
violations of the terms of the Loan Agreement or Conditional Commitment, Agency regulations require
the Lender to provide a loan classification, with justification, for each loan. Whenever there is
a change in the loan that would impact the original classification, a revised classification will
be completed and sent to the Agency, The Lender will arrange with the Borrower and the Agency for a
visit during the first year and, at a minimum, every three years thereafter. Lender visits will be
conducted by the Agency at least annually, j.) Commerce Bank/Harrisburg, NA, (Lender) certifies by
accepting this Conditional Commitment for a $1,080,000 guarantee the Lender understands that the
intent of RD Instruction 4279-B, section 4279.181 (m), is that no adverse change may occur during
the period of time from Agency issuance of the Conditional Commitment to issuance of the Loan Note
Guarantee relating to Integrated Biosciences, Inc.(Borrower) regardless of the cause or causes of
the change and whether the change or cause(s) of the change were within the Lender’s or Borrower’s
control. Prior to each disbursement, Lender shall be in receipt of satisfactory evidence that
there has been no unremedied adverse change in the financial or any other condition of the Borrower
since the date of the application or since any preceding disbursements which would warrant
withholding or not making further disbursements, k.) Integrated Biosciences, Inc, by accepting
Form 4279-3, “Conditional Commitment,” certifies that it is not delinquent on any Federal debt.
I.) By signing this Conditional Commitment, the Lender and Borrower certify that they understand
and accept the conditions outlined herein.



MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:




Amendments. This Agreement, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration or amendment.




Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and
expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection
with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit,
including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such additional fees as may be
directed by the court.




Caption Headings. Caption headings in this Agreement are for convenience purposes only and are
not to be used to interpret or define the provisions of this Agreement.




Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer,
whether now or later, of one or more participation interests in the Loan to one or more
purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating to the Lean, and Borrower
hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as well as all
notices of any repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation interests will be considered as the absolute owners of such
interests in the Loan and will have ail the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further agrees that
the purchaser of any such participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 






Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard
to its conflicts of law provisions. This Agreement has been accepted by Lender in the
Commonwealth of Pennsylvania.




No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or omission on the part
of Lender in exercising any right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and
Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights
or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever
the consent of Lender is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.




Notices. Unless otherwise provided by applicable law, any notice required to be given under
this Agreement shall be given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the United States
mail, as first class, certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties, specifying that the purpose
of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep
Lender informed at all times of Borrower’s current address. Unless otherwise provided by
applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower
is deemed to be notice given to all Borrowers.




Severability. If a court of competent jurisdiction finds any provision of this Agreement to be
illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the
offending provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it becomes legal, valid
and enforceable, if the offending provision cannot be so modified, it shall be considered
deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.




Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this
Agreement makes it appropriate, including without limitation any representation, warranty or
covenant, the word “Borrower” as used in this Agreement shall include all of Borrower
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or other financial
accommodation to any of Borrower’s subsidiaries or affiliates.




Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in
this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower shall not, however,
have the right to assign Borrower’s rights under this Agreement or any interest therein, without
the prior written consent of Lender.




Survival of Representations and Warranties. Borrower understands and agrees that in making the
Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower to Lender under
this Agreement or the Related Documents. Borrower further agrees that regardless of any
investigation made by Lender, ail such representations, warranties and covenants will survive
the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in
nature, and shall remain in full force and effect until such time as Borrower’s Indebtedness
shall be paid in full, or until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.




Time is of the Essence. Time is of the essence in the performance of this Agreement.


 


 









 







					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 





DEFINITIONS. The following capitalized words and terms shall have the following meanings when used
in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts
shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not
otherwise defined in this Agreement shall have the meanings assigned to them in accordance with
generally accepted accounting principles as in effect on the date of this Agreement:




Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower
or on Borrower’s behalf on a line of credit or multiple advance basis under the terms and
conditions of this Agreement.




Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan
Agreement may be amended or modified from time to time, together with all exhibits and schedules
attached to this Business Loan Agreement from time to time.




Borrower. The word “Borrower” means Integrated BioSciences, Inc. and includes all co-signers
and co-makers signing the Note and all their successors and assigns.




Collateral. The word “Collateral” means all property and assets granted as collateral security
for a Loan, whether real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,
trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.




Environmental Laws. The words “Environmental Laws” mean any and ail state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”),
the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
federal laws, rules, or regulations adopted pursuant thereto.




Event of Default. The words “Event of Default” mean any of the events of default set forth in
this Agreement in the default section of this Agreement.




GAAP. The word “GAAP” means generally accepted accounting principles.




Grantor. The word “Grantor” means each and all of the persons or entities granting a Security
Interest in any Collateral for the Loan, including without limitation all Borrowers granting
such a Security Interest.




Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or
all of the Loan.




Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without
limitation a guaranty of all or part of the Note.




Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their
quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a
present or potential hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise handled. The words
“Hazardous Substances” are used in their very broadest sense and include without limitation any
and all hazardous or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term “Hazardous Substances” also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.




Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other indebtedness and costs
and expenses for which Borrower is responsible under this Agreement or under any of the Related
Documents.




Lender. The word “Lender” means COMMERCE BANK/HARRISBURG N.A., its successors and assigns.




Loan. The word “Loan” means any and all loans and financial accommodations from Lender to
Borrower whether now or hereafter existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or described on any exhibit or
schedule attached to this Agreement from time to time.


 


 









 






					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No.: 3354188
	 	(Continued)
	 	 






Note. The word “Note” means the Note executed by Integrated BioSciences, Inc. in the principal
amount of $1,080,000.00 dated December 30, 2005, together with ail renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.




Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing
Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (4) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the ordinary course
of business to secure indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and
security interests which, as of the date of this Agreement, have been disclosed to and approved
by the Lender in writing; and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the net value of
Borrower’s assets.




Related Documents. The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the Loan.




Security Agreement. The words “Security Agreement” mean and include without limitation any
agreements, promises, covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing, representing, or creating a
Security Interest.




Security Interest. The words “Security Interest” mean, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien, charge, encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever whether created by law, contract, or
otherwise.



BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER
AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED DECEMBER 30, 2005.



THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE
AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.



	 	 	 	 	 
	BORROWER:	 	 
	 
	 	 	 	 
	INTEGRATED
BIOSCIENCES. INC.

	 	 
	By:

	 	/s/ Edward J. Paukovits,
Jr.

 

Edward J. Paukovits, Jr., President, of Integrated BioSciences, Inc.
	 	(Seal) 
	 

	 		 	 
	LENDER:	 	 
	 
	 	 	 	 
	COMMERCE BANK/HARRISBURG N.A.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael J. Bunn	 	(Seal)
	 

	 	 

Authorized Signer