Exhibit 10(ab)
Amendment to Loan Agreement
between the Company and Corestates Bank,
dated June 11, 1998
COMMERCIAL PROMISSORY NOTE
$ 500,000.00 June 11, 1998
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FOR VALUE RECEIVED, each of the undersigned, jointly and severally if more
than one (hereinafter collectively referred to as "Borrower"), promises to
pay to the order of CoreStates Bank, N.A.*, a national banking association
(the "Bank"), at any of its banking offices in Pennsylvania, the principal
amount of
Five Hundred Thousand Dollars 00/100*******************************DOLLARS
in lawful money of the United States, plus interest, to be paid as follows:
Said principal shall be payable on demand, but if no demand is made, then on
December 31, 1998. Interest shall accrue at a per annum rate equal to 1% in
excess of the Prime Rate.
ADDITIONAL TERMS OF THIS NOTE - Each of the following provisions shall apply
to this Note, to any extension or modification hereof and to the indebtedness
evidenced hereby, except as otherwise expressly stated above or in a separate
writing signed by Bank and Borrower.
INTEREST - Interest shall be calculated on the basis of a 360 day year and
shall be charged for the actual number of days elapsed. Accrued interest
shall be payable monthly. Accrued interest shall also be payable when the
entire principal balance of this Note becomes due and payable (whether by
demand, stated maturity or acceleration) or, if earlier, when such principal
balance is actually paid to Bank. If the rate at which interest accrues is
based on the "Prime Rate", that term is defined as the rate of interest for
loans established by Bank from time to time as its prime rate. Said per annum
rate of interest shall change each time Bank's prime rate shall change,
effective on and as of the date of the change. Interest shall accrue on each
disbursement hereunder from the date such disbursement is made by Bank,
provided, however, that to the extent this Note represents a replacement,
substitution, renewal or refinancing of existing indebtedness, interest shall
accrue from the date hereof. Interest shall accrue on the unpaid balance
hereof at the rate provided for in this Note until the entire unpaid balance
has been paid in full, notwithstanding the entry of any judgment against
Borrower.
PREPAYMENT - If this Note bears interest at a floating or variable rate and
no floor or minimum rate is specified, Borrower may prepay all or any portion
of the principal balance of this Note at any time, without premium or
penalty. If not permitted under the preceding sentence, any prepayment of
principal (including any principal repayment as a result of acceleration by
Bank of this Note) shall require immediate payment to Bank of a prepayment
fee equal to the amount, if any, by which the aggregate present value of
scheduled principal and interest payments eliminated by the prepayment
exceeds the principal amount being prepaid. Said present value shall be
calculated by application of a discount rate determined by Bank in its
reasonable judgment to be the yield-to-maturity at the time of prepayment on
U.S. Treasury securities having a maturity which most closely approximates
the final maturity date of the principal balance then outstanding. Whether or
not a prepayment fee is required hereunder, prepayments shall be applied to
scheduled installments of principal in the inverse order of their
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* CoreStates Bank, N.A. also conducts business as Philadelphia National Bank,
as CoresStates First Pennsylvania Bank and as CoreStates Xxxxxxxx Bank
maturity, shall be accompanied by payment of accrued interest on the
principal amount being prepaid and, unless this Note has been accelerated by
Bank, shall not be permitted in an amount less than the scheduled principal
installment immediately prior to final maturity of the outstanding principal
balance.
COLLATERAL - As security for all indebtedness to Bank now or hereafter
incurred by Borrower, under this Note or otherwise, Borrower grants Bank a
lien upon and security interest in any securities, instruments or other
personal property of Borrower now or hereafter in Bank's possession and in
any deposit balances now or hereafter held by Bank for Borrower's account and
in all proceeds of any such personal property or deposit balances. Such liens
and security interests shall be independent of Bank's right of setoff. This
Note and the indebtedness evidenced hereby shall be additionally secured by
any lien or security interest evidenced by a writing (whether now existing or
hereafter executed) which contains a provision to the effect that such lien
or security interest is intended to secure (a) this Note or indebtedness
evidenced hereby or (b) any category of liabilities, obligations or the
indebtedness of Borrower to Bank which includes this Note or the indebtedness
evidenced hereby, and all property subject to any such lien or security
interest shall be collateral for this Note.
EVENTS OF DEFAULT - Each of the following shall be an Event of Default
hereunder: (a) the nonpayment when due of any amount payable under this Note
or under any obligation or indebtedness to Bank of Borrower or any person
liable, either absolutely or contingently, for payment of any indebtedness
evidenced hereby, including endorsers, guarantors and sureties (each such
person is referred to as an "Obligor"); (b) if Borrower or any obligor has
failed to observe or perform any other existing or future agreement with Bank
of any nature whatsoever; (c) if any representation, warranty, certificate,
financial statement or other information made or given by Borrower or any
Obligor to Bank is materially incorrect or misleading; (d) if Borrower or any
Obligor shall become insolvent or make an assignment for the benefit of
creditors of if any petition shall be filed by or against Borrower or any
obligor under any bankruptcy or insolvency law; (e) the entry of any judgment
against Borrower or any Obligor which remains unsatisfied for 15 days or the
issuance of any attachment, tax lien, levy or garnishment against any
property of material value in which Borrower or any Obligor has an interest;
(f) if any attachment, levy, garnishment or similar legal process is served
upon Bank as a result of any claim against Borrower or any Obligor or against
any property of Borrower or any Obligor; (g) the dissolution, merger,
consolidation, or the sale or change in control (as control is defined in
Rule 12b-2 under the Securities Exchange Act of 1934)of any Borrower which is
a corporation or partnership, or transfer of any substantial portion of any
of Borrower's assets, or if any agreement for such dissolution, merger,
consolidation, change in control, sale or transfer is entered into by
Borrower, without the written consent of Bank; (h) the death of any Borrower
or Obligor who is a natural person; (i) if Bank determines reasonably and in
good faith that an event has occurred or a condition exists which has had, or
is likely to have, a material adverse effect on the financial condition or
creditworthiness of Borrower or any Obligor, or on the ability of Borrower or
any Obligor to perform its obligation evidenced by this Note; (j) if Borrower
shall fail to remit promptly when due to the appropriate government agency or
authorized depository, any amount collected or withheld from any employee of
Borrower for payroll taxes, Social Security payments or similar payroll
deductions; (k) if any Obligor shall attempt to terminate or disclaim such
Obligor's liability for the indebtedness evidenced by this Note; (l) if Bank
shall reasonably and in good faith determine and notify Borrower that any
collateral for this Note or for the indebtedness evidenced hereby is
insufficient as to quality or quantity; (m) if Borrower shall fail to pay
when due any material indebtedness for borrowed money other than to Bank; or
(n) if Borrower shall be notified of the failure of Borrower or any Obligor
to provide such financial and other information promptly when reasonably
requested by Bank. If this Note is payable on demand, Bank's right to demand
payment hereof shall not be restricted or impaired by the absence,
non-occurrence or waiver of an Event of Default, and it is understood that if
this Note is payable on demand, Bank may demand payment at any time.
BANK'S REMEDIES - Upon the occurrence of one or more Events of Default
(including, if this Note is payable on demand, any Event of Default resulting
from Borrower's failure to make any payment hereunder when demanded), unless
Bank elects otherwise, the entire unpaid balance of this Note and all accrued
interest shall be immediately due and payable without notice to Borrower or
any Obligor, and Bank may, immediately or at any time thereafter, exercise
any or all of its rights and remedies hereunder or under any agreement or
otherwise under applicable law against Borrower, any Obligor and any
collateral. Bank may exercise its rights and remedies in any order and may,
at its option, delay in or refrain from exercising some or all of its rights
and remedies without prejudice thereto. Upon the occurrence of any such Event
of Default or at any time thereafter, Bank may, at its option, and upon five
days' written notice to Borrower, begin accruing interest on this Note, at a
rate not to exceed five percent (5%) per annum in excess of the greater of
(a) the rate of interest provided for above, or (b) the Prime Rate in effect
from time to time on the unpaid principal balance hereof; provided, however,
that no interest shall accrue hereunder in excess of the maximum rate
permitted by law. All such additional interest shall be payable on demand.
CONFESSION OF JUDGMENT - Borrower irrevocably authorizes and empowers any
attorney or any clerk of any court of record to appear for and confess
judgment against Borrower for such sums as are due and owing on this Note,
with or without declaration, with costs of suit, without stay of execution
and with an amount not to exceed the greater of fifteen percent (15%) of the
principal amount of such judgment or $5,000 added for collection fees. If a
copy of this Note, verified by affidavit by or on behalf of Bank, shall have
been filed in such action, it shall not be necessary to file the original of
this Note. The authority granted hereby shall not be exhausted by the initial
exercise thereof and may be exercised by Bank from time to time. There shall
be excluded from the lien of any judgment obtained solely pursuant to this
paragraph all improved real estate in any area identified under regulations
promulgated under the Flood Disaster Protection Act of 1973, as having
special flood hazards if the community in which such area is located is
participating in the National Flood Insurance Program. Any such exclusion
shall not affect any lien upon property not so excluded.
NOTICE TO BORROWER - Any notice required to be given by Bank under the
provisions of this Note shall be effective as to each Borrower and each
Obligor when addressed to Borrower and deposited in the mail, postage
prepaid, for delivery by first class mail at Borrower's mailing address as it
appears on Bank's records.
DISBURSEMENTS AND PAYMENTS - The proceeds of this Note, or any portion
thereof, may be credited by Bank to the deposit account of Borrower or
disbursed in any other manner requested by Borrower and approved by Bank. If
Borrower so requests, Bank may, at its option, disburse the proceeds of this
Note in more than one disbursement on the same or different dates, but except
as otherwise agreed by Bank in writing, no action taken by Bank in response
to any such request shall be deemed to create or shall imply the existence of
any commitment or obligation to pay or credit the undisbursed portion of this
Note. All payments due under this Note are to be made in immediately
available funds. If Bank accepts payment in any other form, such payment
shall not be deemed to have been made until the funds comprising such payment
have actually been received by or made available to Bank. If Borrower is not
an individual, Borrower authorizes Bank (but Bank shall have no obligation)
to charge any deposit account in Borrower's name for any and all payments of
principal, interest, or any other amounts due under this Note.
PAYMENT OF COSTS - In addition to the principal and interest and other sums
payable hereunder, Borrower agrees to pay Bank on demand, all costs and
expenses (including reasonable attorneys' fees and disbursements) which may
be incurred by Bank in the collection of this Note or the enforcement of
Bank's rights and remedies hereunder.
REPRESENTATIONS BY BORROWER - If Borrower is a corporation or a general or
limited partnership, Borrower represents and warrants that it is validly
existing and in good standing in the jurisdiction under whose laws it was
organized. If Borrower is a corporation, Borrower represents and warrants
that the execution, delivery and performance of this Note are within
Borrower's corporate powers, have been duly authorized by all necessary
action by Borrower's Board of Directors, and are not in contravention of the
terms of Borrower's charter, by-laws, or any resolution of its Board of
Directors. If Borrower is a general or limited partnership, Borrower
represents and warrants that the execution, delivery and performance of this
Note have been duly authorized and are not in conflict with any provision of
Borrower's partnership agreement or certificate of limited partnership.
Borrower further represents and warrants that this Note has been validly
executed and is enforceable in accordance with its terms, that the execution,
delivery and performance by Borrower of this Note are not in contravention of
law and do not conflict with any indenture, agreement or undertaking to which
Borrower is a party or is otherwise bound, and that no consent or approval of
any governmental authority or any third party is required in connection with
the execution, delivery and performance of this Note.
WAIVERS, ETC. - Borrower and each Obligor on this Note waive presentment,
dishonor, notice of dishonor, protest and notice of protest. Neither the
failure nor any delay on the part of Bank to exercise any right, remedy,
power or privilege hereunder shall operate as a waiver or modification
thereof. No consent, waiver or modification of the terms of this Note shall
be effective unless set forth in a writing signed by Bank. All rights and
remedies of Bank are cumulative and concurrent and no single or partial
exercise of any power of privilege shall preclude any other or further
exercise of any right, power or privilege.
MISCELLANEOUS - This Note is the unconditional obligation of Borrower, and
Borrower agrees that Bank shall not be required to exercise any of its rights
or remedies against any collateral in which it holds a lien or security
interest, or against which it has right of setoff, or against any particular
Obligor. All representations, warranties and agreements herein are made
jointly and severally by each Borrower. If any provision of this Note shall
be held invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof. To the extent that this Note
represents a replacement, substitution, renewal or refinancing of a
pre-existing note or other evidence of indebtedness, the indebtedness
represented by such pre-existing note or other instrument shall not be deemed
to have been extinguished hereby. In the event any due date specified or
otherwise provided for in this Note shall fall on a day which Bank is not
open for business, such due date shall be postponed until the next banking
day, and interest and any fees or similar charges shall continue to accrue
during such period of postponement. This Note has been delivered in and shall
be governed by and construed in accordance with the laws of the Commonwealth
of Pennsylvania without regard to the law of conflicts. This Note shall be
binding upon each Borrower and each additional Obligor and upon their
personal representatives, heirs, successors and assigns, and shall benefit
Bank and its successors and assigns.
CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR
THE RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE BANK
MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH
JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH
PROCEEDING IN SUCH COUNTY. EACH UNDERSIGNED PARTY AGREES THAT SERVICE OF
PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY
THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO EACH UNDERSIGNED PARTY.
WAIVER OF JURY TRIAL - EACH UNDERSIGNED PARTY HEREBY WAIVES, AND BANK BY ITS
ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR
THE RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR BANK TO ENTER INTO, ACCEPT OR RELY UPON THIS NOTE.
IN WITNESS WHEREOF, Borrower, intending this to be a sealed instrument and
intending to be legally bound hereby, has executed and delivered this Note as
of the day and year first above written.
Name of Corporation
or Partnership Lannett Company, Inc.
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By: By:
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(Signature of Authorized Signer) (Signature of Authorized Signer)
Xxxxxxx Xxxxxx, Chairman of the Board
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(Print or Type Name and Title (Print or Type Name and Title
of Signer Above) of Signer Above)
INDIVIDUALS SIGN BELOW
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(Signature of Witness) (Signature of Individual Borrower)
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(Print or Type Name of Above Witness) (Print or Type Name of Borrower Signing Above)
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(Signature of Witness) (Signature of Individual Borrower)
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(Print or Type Name of Above Witness) (Print or Type Name of Borrower Signing Above)
