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Fourth Amendment To Credit Agreement - DESTINATION MATERNITY CORP - 12-18-1996

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Fourth Amendment To Credit Agreement - DESTINATION MATERNITY CORP - 12-18-1996 Powered By Docstoc
					FOURTH AMENDMENT TO CREDIT AGREEMENT dated as of September 30, 1996 by and among Mothers Work, Inc., a Delaware corporation ("MWI") on its own behalf and as successor, by merger, to Motherhood Maternity Shops, Inc., a Delaware corporation ("Motherhood"), Cave Springs, Inc., a Delaware corporation ("Cave"), The Page Boy Company, Inc., a Delaware corporation ("Page Boy") and Mothers Work (R.E.), Inc., a Pennsylvania corporation ("MW-RE") (each, a "Borrower", and collectively, jointly and severally, the "Borrowers"), and CoreStates Bank, N.A., successor to Meridian Bank ("Bank"). BACKGROUND The Borrowers and the Bank are parties to a Credit Agreement dated as of August 1, 1995, as first amended September 1, 1995 as second amended January 25, 1996, and as third amended May 31, 1996 (the "Credit Agreement") pursuant to which the Bank established, in favor of the Borrowers, a credit facility in an aggregate principal amount of $24,094,684.93 subject to the terms and conditions set forth therein. Borrowers have requested the Bank to modify certain of the financial covenants set forth in the Credit Agreement, and to consent to the transfer, from MWI, Motherhood and MW-RE to Cave, of certain trademarks or tradenames held by the transferors, which the Bank is willing to do, all on the terms and conditions set forth herein. Capitalized terms used herein, and not otherwise defined, shall have the meanings ascribed to them in the Credit Agreement. AGREEMENTS The parties hereto, intending to be legally bound, hereby agree: 1. Section 7.07 of the Credit Agreement shall be amended by deleting the language found therein in its entirety, and by substituting therefor the following: "SECTION 7.07. Total Senior Funded Debt to Operating Cash Flow Ratio. Permit, at any time, the ratio of (x) Total Senior Funded Debt of MWI and its Subsidiaries on a Consolidated basis, to (y) Operating Cash Flow of MWI and its Subsidiaries on a Consolidated basis for the four most recent consecutive fiscal quarters ending on or immediately preceding such date of determination to be greater than the respective amounts set forth below for the periods indicated:

Period -----During the Fiscal Quarter ending Sept. 30, 1996 During the Fiscal Quarter ending Dec. 31, 1996 During the Fiscal Quarter ending March 31, 1997 During the Fiscal Quarter ending June 30, 1997 During the Fiscal Quarter ending Sept. 30, 1997 During the Fiscal Quarter ending Dec. 31, 1997, and thereafter;

Ratio -----

4.35:1.00

4.00:1.00

4.00:1.00

3.75:1.00

3.50:1.00

3.30:1.00

provided, however, that for purposes of these calculations, any charges incurred in fiscal year 1996 resulting from the application of FASB 121 (Accounting for the Impairment of Long-Lived Assets, and Long-Lived Assets to be Disposed Of) shall not be included for purposes of determining Net Income. 2. Section 7.08 of the Credit Agreement shall be amended by deleting the language found therein in its entirety,

Period -----During the Fiscal Quarter ending Sept. 30, 1996 During the Fiscal Quarter ending Dec. 31, 1996 During the Fiscal Quarter ending March 31, 1997 During the Fiscal Quarter ending June 30, 1997 During the Fiscal Quarter ending Sept. 30, 1997 During the Fiscal Quarter ending Dec. 31, 1997, and thereafter;

Ratio -----

4.35:1.00

4.00:1.00

4.00:1.00

3.75:1.00

3.50:1.00

3.30:1.00

provided, however, that for purposes of these calculations, any charges incurred in fiscal year 1996 resulting from the application of FASB 121 (Accounting for the Impairment of Long-Lived Assets, and Long-Lived Assets to be Disposed Of) shall not be included for purposes of determining Net Income. 2. Section 7.08 of the Credit Agreement shall be amended by deleting the language found therein in its entirety, and by substituting therefor the following: SECTION 7.08. Interest Coverage Ratio. Permit the Interest Coverage Ratio of MWI and its Subsidiaries on a Consolidated basis at the end of any fiscal quarter to be less than the respective amounts set forth below for the periods indicated.
Period -----Fiscal Quarter ending Sept. 30, 1996 Fiscal Quarter ending Dec. 31, 1996, Fiscal Quarter ending March 31, 1997 Fiscal Quarter ending June 30, 1997 Fiscal Quarter ending Sept. 30, 1997 and thereafter; Ratio ----1.15:1.00 1.25:1.00 1.25:1.00 1.45:1.00 1.65:1.00

provided, however, that for purposes of these calculations, any charges incurred in fiscal year 1996 resulting from the application of FASB 121 (Accounting for the Impairment of Long-

Lived Assets, and Long-Lived Assets to be Disposed Of) shall not be included for purposes of determining EBIT. 3. The Bank acknowledges that, effective this date, Motherhood has merged with and into MWI, and consents, in this instance, to such merger, notwithstanding the fact that the ten day notice, required by Section 7.05 of the Agreement, was not timely given. 4. The Bank hereby consents to the transfer, from MWI, Motherhood and MW-RE to Cave, of the trademarks and tradenames set forth on Schedule 4 attached hereto, subject to the Bank's security interest in such trademarks and tradenames. Within fifteen days of the execution hereof, the Borrowers shall execute and deliver to the Bank such documents or instruments, suitable for filing, as the Bank shall deem necessary or appropriate to

Lived Assets, and Long-Lived Assets to be Disposed Of) shall not be included for purposes of determining EBIT. 3. The Bank acknowledges that, effective this date, Motherhood has merged with and into MWI, and consents, in this instance, to such merger, notwithstanding the fact that the ten day notice, required by Section 7.05 of the Agreement, was not timely given. 4. The Bank hereby consents to the transfer, from MWI, Motherhood and MW-RE to Cave, of the trademarks and tradenames set forth on Schedule 4 attached hereto, subject to the Bank's security interest in such trademarks and tradenames. Within fifteen days of the execution hereof, the Borrowers shall execute and deliver to the Bank such documents or instruments, suitable for filing, as the Bank shall deem necessary or appropriate to continue the secured and perfected position of the Bank with respect to such trademarks and tradenames. 5. As a condition to the execution and delivery of this Fourth Amendment to Credit Agreement, the Borrowers shall deliver to the Bank, in form and content satisfactory to the Bank and its counsel, the following documents, instruments or payments: a. A certified copy of resolutions adopted by the Board of Directors of each of the Borrowers authorizing the execution, delivery and performance of this Agreement, and all of the documents and instruments required by the Bank for the implementation of this Agreement; and b. Such financing statements, or amendments to financing statements as the Bank shall require as a result of the merger of Motherhood with and into MWI. 6. The Borrowers hereby: (a) acknowledge and agree that all of their representations, warranties and covenants contained in the Credit Agreement and/or in the Loan Documents, as amended hereby, are true, accurate and correct on and as of the date hereof as if made on and as of the date hereof, except as set forth on Schedule 6(a) attached to this Fourth Amendment; provided, however, that with respect to the dates set forth in certain representations, such dates shall be updated as follows: (i) in Section 4.05, the referenced date shall be September 30, 1995; (ii) in Section 4.07(a), the referenced date for consolidated balance sheet shall be September 30, 1995; (iii) in Section 4.07(b), the referenced date shall be 1996; and -3-

(iv) in Section 4.07(c), the referenced 1995 Fiscal Year and 1996 Fiscal Year shall be changed to 1996 Fiscal Year and 1997 Fiscal Year, respectively. (b) acknowledge and agree that they have no defense, set-off, counterclaim or challenge against the payment of any sums owing under the Credit Agreement or the Loan Documents or the Obligations, or the enforcement of any of the terms of the Credit Agreement or the Loan Documents, as amended hereby; and (c) represent and warrant that no Event of Default, as defined in the Credit Agreement, exists or will exist upon the delivery of notice, passage of time or both. 7. The Borrowers will pay all of Bank's out-of-pocket costs and expenses incurred in connection with the review, preparation, negotiation, documentation and closing of this Fourth Amendment and the consummation of the transactions contemplated herein, including, without limitation, fees, expenses and disbursements of counsel retained by Bank and all fees related to filings, recording of documents and searches, appraisal costs, whether or not the transactions contemplated hereunder are consummated. 8. All other terms and conditions of the Credit Agreement and of the Loan Documents, not inconsistent with the

(iv) in Section 4.07(c), the referenced 1995 Fiscal Year and 1996 Fiscal Year shall be changed to 1996 Fiscal Year and 1997 Fiscal Year, respectively. (b) acknowledge and agree that they have no defense, set-off, counterclaim or challenge against the payment of any sums owing under the Credit Agreement or the Loan Documents or the Obligations, or the enforcement of any of the terms of the Credit Agreement or the Loan Documents, as amended hereby; and (c) represent and warrant that no Event of Default, as defined in the Credit Agreement, exists or will exist upon the delivery of notice, passage of time or both. 7. The Borrowers will pay all of Bank's out-of-pocket costs and expenses incurred in connection with the review, preparation, negotiation, documentation and closing of this Fourth Amendment and the consummation of the transactions contemplated herein, including, without limitation, fees, expenses and disbursements of counsel retained by Bank and all fees related to filings, recording of documents and searches, appraisal costs, whether or not the transactions contemplated hereunder are consummated. 8. All other terms and conditions of the Credit Agreement and of the Loan Documents, not inconsistent with the terms hereof, shall remain in full force and effect and are hereby ratified and confirmed by the Borrowers. IN WITNESS WHEREOF, the Borrowers and the Bank have caused this Fourth Amendment to Credit Agreement to be executed by their respective authorized officers as of the day and year first above written. MOTHERS WORK, INC.
By: /s/ Thomas Frank -----------------------------Name: Thomas Frank Title: Vice President

CAVE SPRINGS, INC.
By: /s/ Thomas Frank -----------------------------Name: Thomas Frank Title: Vice President

(signatures continued on next page) -4-

(signatures continued from previous page) THE PAGE BOY COMPANY, INC.
By: /s/ Thomas Frank -----------------------------Name: Thomas Frank Title: Vice President

MOTHERS WORK (R.E.), INC.
By: /s/ Thomas Frank ------------------------------Name: Thomas Frank Title: Vice President

(signatures continued from previous page) THE PAGE BOY COMPANY, INC.
By: /s/ Thomas Frank -----------------------------Name: Thomas Frank Title: Vice President

MOTHERS WORK (R.E.), INC.
By: /s/ Thomas Frank ------------------------------Name: Thomas Frank Title: Vice President

CORESTATES BANK, N.A.
By: /s/ Randal D. Southern ------------------------------Name: Randal D. Southern Title: Vice President-Retailer Group

-5-

QUALIFICATIONS, EXCEPTIONS TO REPRESENTATIONS NONE -6-

Marvin Traub Associates, Inc. c/o Financo, Inc. 535 Madison Avenue - 3rd Floor New York, New York 10022 September 11, 1996 Mothers Work, Inc. 456 North 5th Street Philadelphia, PA 19123 Re: Consulting Agreement Gentlemen: This letter confirms the mutual understanding and agreement between Mothers Work, Inc. (the "Company") and Marvin Traub Associates, Inc. ("MTA") with respect to the Company's engagement of MTA to provide consulting and advisory services upon the terms and conditions specified herein. 1. Engagement. The Company hereby retains MTA to perform, and MTA hereby agrees to perform, consulting and advisory services for the Company during the Term (as hereinafter defined) in connection with the growth and strategic development of the Maternity and Episode businesses. MTA will consult with and advise the management on merchandising, marketing and positioning of the various brands in the Company including the new

QUALIFICATIONS, EXCEPTIONS TO REPRESENTATIONS NONE -6-

Marvin Traub Associates, Inc. c/o Financo, Inc. 535 Madison Avenue - 3rd Floor New York, New York 10022 September 11, 1996 Mothers Work, Inc. 456 North 5th Street Philadelphia, PA 19123 Re: Consulting Agreement Gentlemen: This letter confirms the mutual understanding and agreement between Mothers Work, Inc. (the "Company") and Marvin Traub Associates, Inc. ("MTA") with respect to the Company's engagement of MTA to provide consulting and advisory services upon the terms and conditions specified herein. 1. Engagement. The Company hereby retains MTA to perform, and MTA hereby agrees to perform, consulting and advisory services for the Company during the Term (as hereinafter defined) in connection with the growth and strategic development of the Maternity and Episode businesses. MTA will consult with and advise the management on merchandising, marketing and positioning of the various brands in the Company including the new Daniel and Rebecca labels, on the Company's efforts to increase its presence in leased departments in department stores, and on analysis of entry into European and other foreign markets, as well as such other projects as MTA and the Company shall mutually agree. Such consulting and advisory services shall be performed at such times and at such locations as shall be mutually satisfactory to MTA and the Company. MTA is being engaged as an independent contractor and will not be an agent of the Company, and, except as provided in Paragraph 5 hereof, the directors, officers and employees of MTA shall act solely on behalf of MTA and shall not be directors, officers, employees or agents of the Company. The services to be performed by MTA hereunder shall be performed by Marvin S. Traub. 2. Cash Compensation and Expenses. The Company shall pay to MTA $200,000 per annum for its services during the Term payable in twelve (12) equal monthly installments of $16,666.66. The Company will not withhold any wage or employment taxes in

Mothers Work, Inc. Page 2 September 11, 1996 respect of such compensation, but will issue MTA information reports relating thereto, as required by applicable law and regulations. MTA also will be reimbursed by the Company for all reasonable business and travel expenses incurred or paid by MTA during the Term in the course of MTA's performance of services for the Company hereunder, promptly following submission of customary documentation therefor. MTA will obtain the Company's prior approval for

Marvin Traub Associates, Inc. c/o Financo, Inc. 535 Madison Avenue - 3rd Floor New York, New York 10022 September 11, 1996 Mothers Work, Inc. 456 North 5th Street Philadelphia, PA 19123 Re: Consulting Agreement Gentlemen: This letter confirms the mutual understanding and agreement between Mothers Work, Inc. (the "Company") and Marvin Traub Associates, Inc. ("MTA") with respect to the Company's engagement of MTA to provide consulting and advisory services upon the terms and conditions specified herein. 1. Engagement. The Company hereby retains MTA to perform, and MTA hereby agrees to perform, consulting and advisory services for the Company during the Term (as hereinafter defined) in connection with the growth and strategic development of the Maternity and Episode businesses. MTA will consult with and advise the management on merchandising, marketing and positioning of the various brands in the Company including the new Daniel and Rebecca labels, on the Company's efforts to increase its presence in leased departments in department stores, and on analysis of entry into European and other foreign markets, as well as such other projects as MTA and the Company shall mutually agree. Such consulting and advisory services shall be performed at such times and at such locations as shall be mutually satisfactory to MTA and the Company. MTA is being engaged as an independent contractor and will not be an agent of the Company, and, except as provided in Paragraph 5 hereof, the directors, officers and employees of MTA shall act solely on behalf of MTA and shall not be directors, officers, employees or agents of the Company. The services to be performed by MTA hereunder shall be performed by Marvin S. Traub. 2. Cash Compensation and Expenses. The Company shall pay to MTA $200,000 per annum for its services during the Term payable in twelve (12) equal monthly installments of $16,666.66. The Company will not withhold any wage or employment taxes in

Mothers Work, Inc. Page 2 September 11, 1996 respect of such compensation, but will issue MTA information reports relating thereto, as required by applicable law and regulations. MTA also will be reimbursed by the Company for all reasonable business and travel expenses incurred or paid by MTA during the Term in the course of MTA's performance of services for the Company hereunder, promptly following submission of customary documentation therefor. MTA will obtain the Company's prior approval for any such expenses in excess of $1,000 individually or $5,000 in aggregate in any month. 3. Stock Options. As further consideration for MTA's services hereunder during the initial Term, the Company shall grant to MTA on October 1, 1996 options to acquire 16,667 shares of common stock of the Company (the "Initial Options"). If the Term is extended, on each subsequent October 1st during the Term, the Company shall grant to MTA options to acquire 16,666 additional shares of common stock of the Company (the "Subsequent Options"). All such options shall be granted at a per share exercise price equal to the closing price of the shares as reported on the stock exchange or market on which the shares are primarily traded on the day prior to the

Mothers Work, Inc. Page 2 September 11, 1996 respect of such compensation, but will issue MTA information reports relating thereto, as required by applicable law and regulations. MTA also will be reimbursed by the Company for all reasonable business and travel expenses incurred or paid by MTA during the Term in the course of MTA's performance of services for the Company hereunder, promptly following submission of customary documentation therefor. MTA will obtain the Company's prior approval for any such expenses in excess of $1,000 individually or $5,000 in aggregate in any month. 3. Stock Options. As further consideration for MTA's services hereunder during the initial Term, the Company shall grant to MTA on October 1, 1996 options to acquire 16,667 shares of common stock of the Company (the "Initial Options"). If the Term is extended, on each subsequent October 1st during the Term, the Company shall grant to MTA options to acquire 16,666 additional shares of common stock of the Company (the "Subsequent Options"). All such options shall be granted at a per share exercise price equal to the closing price of the shares as reported on the stock exchange or market on which the shares are primarily traded on the day prior to the issuance of the options. The Subsequent Options shall vest, and become exercisable, in eleven monthly installments of 1,389 shares and a twelfth monthly installment of 1,387 shares following the date of grant unless the Term shall have been terminated for any reason other than the death or disability of Marvin S. Traub. Unvested Subsequent Options shall fully vest and become exercisable on the death or disability of Marvin S. Traub. The Initial Options and all vested Subsequent Options shall be exercisable at any time or from time to time from the date of grant until one (1) year after Marvin S. Traub ceases to be a director of the Company. 4. Term. The term of MTA's consultancy hereunder shall commence on October 1, 1996 and shall continue for an initial term of one year through September 30, 1997. Notwithstanding the foregoing, the Term shall terminate on the death or total disability of Marvin S. Traub. The parties shall agree on or before June 30, 1997 whether or not to extend the Term. 5. Directorship. Marvin S. Traub agrees, if elected, to serve as a member of the board of directors of the Company. On the termination of this Agreement, Marvin S. Traub shall resign as a director of the Company, unless otherwise agreed between Marvin S. Traub and the Company.

Mothers Work, Inc. Page 3 September 11, 1996 6. Registration of Option Shares. The Company will use its best efforts to register on Form S-8 under the Securities Act of 1933 the issuance of the shares issuable upon exercise of the Initial Options and, if applicable, the Subsequent Options. 7. Confidential Information. During the Term, MTA shall, and shall cause its directors, officers and employees to, keep secret and retain in strictest confidence, and shall not use for its benefit or the benefit of others, nor permit its directors, officers or employees to use for their benefit or the benefit of others, any and all confidential information relating to the Company disclosed to MTA in the course of its consultancy including, without limitation, trade secrets, customer lists and other secret or confidential aspects of the company's business, and MTA shall not disclose such information, nor permit its directors, officers or employees to disclose such information to anyone outside the Company or any of its affiliates, except in the performance by MTA of its services hereunder or as required by law in connection with any judicial or administrative proceeding or inquiry (provided prior written notice thereof is given by MTA to the Company) or with the Company's prior written

Mothers Work, Inc. Page 3 September 11, 1996 6. Registration of Option Shares. The Company will use its best efforts to register on Form S-8 under the Securities Act of 1933 the issuance of the shares issuable upon exercise of the Initial Options and, if applicable, the Subsequent Options. 7. Confidential Information. During the Term, MTA shall, and shall cause its directors, officers and employees to, keep secret and retain in strictest confidence, and shall not use for its benefit or the benefit of others, nor permit its directors, officers or employees to use for their benefit or the benefit of others, any and all confidential information relating to the Company disclosed to MTA in the course of its consultancy including, without limitation, trade secrets, customer lists and other secret or confidential aspects of the company's business, and MTA shall not disclose such information, nor permit its directors, officers or employees to disclose such information to anyone outside the Company or any of its affiliates, except in the performance by MTA of its services hereunder or as required by law in connection with any judicial or administrative proceeding or inquiry (provided prior written notice thereof is given by MTA to the Company) or with the Company's prior written consent, unless such information is known generally to the public or the trade through sources other than MTA's (or its directors', officers' or employees') unauthorized disclosure. 8. Entire Agreement. This agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other agreements and understandings with respect thereof, oral or otherwise. 9. Amendment. No amendment, modification or waiver of this agreement or any of its provisions shall be binding unless made in writing and signed by both parties hereto, except in the case of a waiver or consent, which shall be signed by the party against which enforcement is sought. 10. Governing Law. This agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state.

Mothers Work, Inc. Page 4 September 11, 1996 If the foregoing accurately reflects the agreement between us, please confirm your approval and acceptance thereof by signing the enclosed copy of this letter and returning it to the undersigned. Very truly yours, MARVIN TRAUB ASSOCIATES, INC.
By: /s/ Marvin S. Traub --------------------------Name: Marvin S. Traub Title: Chairman

AGREED AND ACCEPTED AS OF THE DATE WRITTEN ABOVE: MOTHERS WORK, INC.

Mothers Work, Inc. Page 4 September 11, 1996 If the foregoing accurately reflects the agreement between us, please confirm your approval and acceptance thereof by signing the enclosed copy of this letter and returning it to the undersigned. Very truly yours, MARVIN TRAUB ASSOCIATES, INC.
By: /s/ Marvin S. Traub --------------------------Name: Marvin S. Traub Title: Chairman

AGREED AND ACCEPTED AS OF THE DATE WRITTEN ABOVE: MOTHERS WORK, INC.
By: /s/ Dan W. Matthias ---------------------Name: Dan W. Matthias Title: Chairman

RESIDENTIAL LEASE The Philadelphia Bar Association and the Greater Philadelphia Association of REALTORS(R) approve this lease as an acceptable residential lease form. 1. PARTIES This lease is made on June 28 1996, between the tenant Mother's Work, Inc. and the landlord or agent: Landlord: Dan and Rebecca Mattias Agent: Address: 224 W. Washington, Square Phila., PA 19106 Phone: 215 625 4580 2. PROPERTY The landlord agrees to rent to the tenant the following property: 700 Locust Street Apt. 1A 3. CONDITIONS a. The monthly rent is $1,300

RESIDENTIAL LEASE The Philadelphia Bar Association and the Greater Philadelphia Association of REALTORS(R) approve this lease as an acceptable residential lease form. 1. PARTIES This lease is made on June 28 1996, between the tenant Mother's Work, Inc. and the landlord or agent: Landlord: Dan and Rebecca Mattias Agent: Address: 224 W. Washington, Square Phila., PA 19106 Phone: 215 625 4580 2. PROPERTY The landlord agrees to rent to the tenant the following property: 700 Locust Street Apt. 1A 3. CONDITIONS a. The monthly rent is $1,300 b. The term of this lease is for one month, from 7-1 1996 (the beginning date), to 8-1 1996 (the ending date). c. The total rent for the lease term is _ _ _ _. d. Rent is due in advance on the following day of the month: _1st_ If this lease begins on a different day, the rent for the first month is $_ _ _ _ _ _. e. If rent is more than _ _ _ days late the Tenant must pay a late fee of $_ _ _ _ _ _. f. The security deposit is $ _ _ _0_ _ _. g. This lease will renew unless the landlord or the tenant gives_ _ _days written notice before the ending date of this lease. The landlord or the tenant must give 30 days written notice to end a month to month lease. h. The length of each renewal term of this lease is one month i. If the landlord makes any changes, including a rent increase, when renewing this lease, the landlord must send the changes to the tenant at least _ _ _ days before the end of the lease. j. The tenant may use the property only for_ _ _ _ _ _ _ _ _ _. k. The maximum number of people who can live in the property is _ _ _ _ _ _ _ _ _. 1. Rules are attached: Yes |_| No |_| m. Before this lease begins, the landlord agrees to make the following repairs. replacements or improvements: tenant accepts as-is

n. Tenant will pay rent to: |X| landlord |_| agent for landlord at this at this address: 224 W. Washington Square Phila., PA 19106 o. List of utilities or other charges the landlord or the tenant will pay:
Landlord pays ---|_| |_| |_| |_| |_| |_| |_| |_| Tenant pays ---|_| |X| |_| |_| |_| |_| |_| |_|

Heat Electricity Gas 0il Hot Water Water& Sewer Lawn Care Snow Removal Other: ______________ Other: ______________

|_|

|_|

|_|

|_|

4. COPIES OF SIGNED LEASE The tenant does not have to pay rent until the landlord gives the tenant a copy of the lease signed by the landlord and all tenants. 5. INABILITY TO GIVE POSSESSION If, for any reason not caused by the tenant, the landlord is unable to give the tenant possession of the property on the beginning date of the lease, the tenant can choose to: a. End this lease. The landlord must then return any money the tenant has paid. or b. Delay the beginning of the lease for up to one month until the landlord can give possession. The tenant will not owe rent until the landlord gives possession. If the tenant does not get possession, the landlord must return any money the tenant has paid. The landlord will nor have to pay damages to the tenant if the reason for not giving possession is beyond the landlord's control. 6. DESTRUCTION OR DAMAGE a. The tenant will notify the landlord promptly if the property is destroyed or damaged. If the destruction or damage makes the property partly or completely unlivable, the tenant can choose to: 1) Move out as soon as possible. Within 24 hours after the tenant moves out, the tenant must make a reasonable effort to notify the landlord. This lease will end as of the date or moving out. or

2) Continue to occupy that part of the property still livable, if the law allows occupancy. Until the landlord repairs the damage, the rent is reduced by the percentage of the property that is unlivable. If the law does not allow occupancy, this lease will end. b. If the lease ends, the landlord will return any rent the tenant already paid for the remaining time of the lease plus the security deposit. Section 15 (Security Deposit) of this lease explains the return of the security deposit. c. The landlord and the tenant are each responsible for their own negligence and the negligence of their guests, family or any others they allow on the property. The landlord is not required to make repairs caused by the tenant's negligent conduct or by the willful misconduct of the tenant or a person on the property with the tenant's permission. 7. SALE OF PROPERTY a. If the landlord sells or transfers the property, the landlord will give written notice to the tenant stating: 1) The name of the new landlord; 2) The address and the telephone number of the new landlord and/or agent; 3) Where and to whom to pay rent; and 4) Whether the landlord has transferred the security deposit to the new landlord. If the landlord does not transfer the security deposit, the landlord must return it to the tenant. Section 15 (Security Deposit) of this lease explains the return of the security deposit. b. A landlord who provides the notice describing the new landlord as required in Section 7.a. is not responsible under this lease for events occurring after the sale of the property. If the landlord does not provide the notice, the landlord is responsible for damages the tenant suffers because of no notice or incorrect notice. The landlord agrees to include in any sale or voluntary transfer of the property, a written provision requiring the new landlord to accept all of the obligations of the lease. 8. RULES All rules are in writing and are attached to this lease. The rules must agree with this lease. The tenant must follow the rules. The landlord cannot change the rules unless the tenant agrees in writing. 9. LANDLORD'S ENTRY ONTO PROPERTY a. The landlord can enter the property at reasonable times on 24 hours notice to the tenant to: 1) Inspect the property. 2) Make repairs, alterations or improvements 3) Supply services. 4) Show the properly to prospective buyers, mortgage lenders, contractors or insurers. b. After the tenant or the landlord has given notice to end the lease, the landlord may show the property to future tenants at reasonable times. The landlord can only inspect the property with the tenant present or after the landlord gives the tenant reasonable opportunity to be present. The tenant can refuse entry to any future tenant unless the future tenant enters with a representative of the landlord or has written permission from the landlord. c. In case of emergency, the landlord can enter the property at any time without notice to the tenant. If the tenant is not present at the time of entry, the landlord must notify the tenant within 24 hours of the time, purpose and persons who entered the property. 10. TENANT PROMISES

The tenant and other people the tenant allows on the property promise to: a. Obey all laws that apply to tenants. b. Keep the property clean and safe. c. Use all electrical, plumbing, sanitary, heating, ventilating, air conditioning and other facilities and appliances in a safe and reasonable way. d. Promptly remove all trash, garbage and debris from the property as required by the landlord and local law. e. Not deliberately or negligently destroy, deface, damage, or remove any part of the property or grounds. f. Not unreasonably disturb the peace and quiet of the landlord, other tenants or neighbors. g. Promptly notify the landlord of conditions that need repair. h. Make no major change to the property, such as painting, rebuilding, removing or repairing without the landlord's consent. The tenant can make necessary repairs if the landlord does not make the repairs after reasonable notice from the tenant. Alterations become the property of the landlord, unless the landlord gives written permission to remove them. i. Keep nothing in the property that is highly flammable, dangerous or substantially increases the danger of fire or injury. j. Allow the landlord to put up "sale", "rent" or "information" signs. k. Move out of the property when the lease ends. 11. LANDLORD PROMISES The landlord promises to: a. Operate and keep the properly and common areas in the manner required by law. b. Keep the property in good repair and good working order. This includes the roof, windows, doors, locks, floors, steps, porches, exterior and interior walls, ceilings, foundations and all other structural parts of the property. This also includes electrical, plumbing, sanitary, drainage, heating, water heating and ventilating systems. If the landlord provides air conditioning, elevator and security systems, they are included. c. Continue all services and utilities that the landlord has agreed to provide under Section 3. (Conditions - o. Utilities) of this lease. d. Exterminate to keep the property reasonably free from insects, rodents and other pests. This does not apply to single family properties. e. Pay all utility bills that are the landlord's responsibility under Section 3. (Conditions - o. Utilities) in order to prevent interruption of service because of nonpayment of bills f. Provide emergency access to utilities serving the property. g. If Section 3. (Conditions - o. Utilities) requires the landlord to provide heat, the landlord will provide heat at a minimum temperature of 68 degrees from October 1 to April 30. The landlord must also provide heat during the rest of the year when the outside temperature falls below 60 degrees. This does not apply when the failure to provide heat is beyond the landlord's control. 12. LANDLORD REMEDIES a. Before the landlord can file a lawsuit in court to evict the tenant for failure to pay rent or other charges required

by this lease, the landlord must give the tenant 10 days written notice to leave the property. This lease ends on the eleventh day after the landlord gives notice, if the tenant does not pay. The landlord may then file a lawsuit in court to evict the tenant. b. Before the landlord can file a lawsuit to evict the tenant for failure to comply with any provisions of the lease other than for nonpayment of rent or charges, the landlord must give the tenant written notice. The notice must describe the problem and give the tenant 5 days to correct the problem. 1) If the tenant does not correct the problem or if the problem happens again during the lease term, the landlord can end the lease by giving the tenant a 10 day written notice. 2) This lease ends on the eleventh day after the landlord gives the second notice. The landlord may then file a lawsuit in court to evict the tenant. c. These are not the only remedies the landlord has if the tenant violates or breaks this lease. Besides ending this lease and evicting the tenant, the landlord can sue the tenant for unpaid rent, other damages, losses or injuries. If the landlord gets a judgment for money against the tenant, the landlord can use the court process to take your personal goods, furniture, motor vehicles and money in banks. In this Section the tenant gives up or waives a right to receive longer notice to leave the property for reasons not related to payment of rent. 13. TENANT RIGHTS AND REMEDIES a. Unless the landlord gets the proper court order, the landlord cannot: 1) Lock the tenant out of the property. 2) Stop or reduce utilities or other necessary services. 3) Remove the tenant's belongings from the property. b. If the landlord does any of these things, the tenant can: 1) Go back into the property; 2) Restore the utilities or necessary services; and 3) End this lease and get back the security deposit. Section 15 (Security Deposit) of this lease explains the return of the security deposit. c. The tenant can also sue the landlord to get paid for losses and injuries and to get back the tenant's belongings. 14. LANDLORD RETALIATION PROHIBITED The landlord cannot increase the rent or decrease services or threaten to evict the tenant because the tenant: a. Complains to a government agency or the landlord of a violation of any housing, health, safety or other code requirements at the property. b. Joins or helps organize a tenant organization. c. Uses any legal rights. 15. SECURITY DEPOSIT a. The landlord cannot require the tenant to pay a security deposit that is more than 2 months rent. After the first year, the landlord must reduce the security deposit to no more than one month's rent. After 5 years, the landlord cannot increase the security deposit even if the rent goes up.

b. If the security deposit is more than $100.00, the landlord must deposit it in a bank escrow account. The landlord must notify the tenant in writing of the name and address of the bank. c. After the second year, the landlord must keep the security deposit in an interest paying account. When the landlord uses an interest paying account, the landlord can keep one percent per year of the deposit. The landlord must pay the tenant all other interest once a year. d. The tenant cannot use the security deposit to pay rent without the written approval of the landlord. e. The landlord can use the security deposit for unpaid rent and damages that are the tenant's responsibility beyond normal wear and tear. f. When the tenant moves out, the landlord will prepare a list of charges for damages and any unpaid rent. The landlord can deduct these charges, if any, from the security deposit and will return the balance with any interest due to the tenant within 30 days. The tenant must give the landlord written notice of the tenant's new address or make other arrangements with the landlord for the return of the security deposit. 16. TAKING OF PRIVATE PROPERTY -- CONDEMNATION The taking of private property for a public purpose is called condemnation. The taking happens either by court order or by transferring ownership to the condemning agency. If all or part of the property is taken by this process, the landlord or the tenant can end this lease after giving 30 days written notice. The tenant can receive relocation benefits from the taking agency. 17. TENANT TRANSFER OF LEASE The tenant cannot lease the property to any other person or let any other person take over the tenant's rights and duties under this lease, unless the landlord first gives written approval. The landlord will not unreasonably withhold approval. 18. PRIORITY OF LEASE If this property is sold at a mortgage foreclosure sale, the purchaser can end this lease. In a foreclosure sale, all mortgages that now or in the future affect the property have a priority over this lease. The tenant agrees to sign all papers needed by the mortgage holder to give priority over this lease. In this Section the tenant gives up or waives a right to have the lease continue after some foreclosure sales. 19. DISPUTES The landlord and tenant can agree to use an alternative dispute resolution process, such as mediation or arbitration, to settle disagreements under this lease. 20. ENTIRE AGREEMENT This lease contains the complete agreement between the landlord and the tenant. This lease creates legal duties on the landlord and tenant and anyone who lawfully succeeds to their rights or takes their places. The landlord and tenant can change this lease only by a written agreement signed by both of them. 21. TENANT GIVES UP (WAIVES) RIGHTS By signing this lease, the tenant gives up or waives legal rights that are explained in this section and in Sections 12 (Landlord Remedies) and 18 (Priority of Lease). a. In Section 12 (Landlord Remedies), the tenant agrees that the landlord can give the tenant 10 days notice to leave the property for reasons not related to payment of rent. This means the tenant gives up the right to receive a longer notice.

b. In Section 18 (Priority of Lease), the tenant agrees that a mortgage has a priority over this lease. This means a person who becomes an owner of the property through a mortgage foreclosure can end the tenant's lease. 22. LEAD-BASED PAINT "EVERY LESSEE OF ANY INTEREST IN RESIDENTIAL PROPERTY ON WHICH A RESIDENTIAL DWELLING WAS BUILT PRIOR TO 1978 IS NOTIFIED THAT SUCH PROPERTY MAY PRESENT EXPOSURE TO LEAD FROM LEAD-BASED PAINT THAT MAY PLACE YOUNG CHILDREN AT RISK OF DEVELOPING LEAD POISONING. LEAD POISONING IN YOUNG CHILDREN MAY PRODUCE PERMANENT NEUROLOGICAL DAMAGE, INCLUDING LEARNING DISABILITIES, REDUCED INTELLIGENCE QUOTIENT, BEHAVIOR PROBLEMS AND IMPAIRED MEMORY. LEAD POISONING ALSO POSES A PARTICULAR RISK TO PREGNANT WOMEN, THE LESSOR OF ANY INTEREST IN RESIDENTIAL REAL PROPERTY IS REQUIRED TO DISCLOSE TO THE LESSEE THE PRESENCE OR ABSENCE OF ANY LEAD-BASED PAINT AND/OR LEAD-BASED PAINT HAZARDS. A COMPREHENSIVE LEAD INSPECTION OR RISK ASSESSMENT FOR POSSIBLE PAINT AND/OR LEAD-BASED PAINT HAZARDS IS RECOMMENDED PRIOR TO LEASE." The paragraph above means within ten (10) days from the final signing of this lease, the tenant can pay for a complete lead inspection and risk assessment of the rental property by a certified lead inspector. If the inspection reveals that lead-based paint or lead-based paint hazards are present in the rental property, the tenant has: a. Two (2) business days after receiving the report to end this lease and b. Get back all rents and security deposits paid to the landlord. If the tenant does not end this lease within two (2) days after getting the report, the tenant gives up the right to get an inspection or end this lease. 23. SPECIAL CONDITIONS (The Attorney General has not pre-approved any conditions added by the landlord or tenant for compliance with the Pennsylvania Plain Language Consumer Contract Act.)
/s/ Thomas Frank - ----------------------TENANT /s/ Rebecca Matthias ----------------------LANDLORD or AGENT

- ----------------------TENANT

----------------------LANDLORD or AGENT

The Office of the Attorney General has approved this lease as complying with the Pennsylvania Plain Language Consumer Contract Act. In the opinion of the Office of Attorney General, a preapproved consumer contract meets the test of readability under 73 P.S. Section 2205 of the Plain Language Consumer Contract Act. Preapproval of a consumer contract by the Office of Attorney General only means that simple, understandable and easily readable language is used. It is not an approval of the contents or legality of the contract.

FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT This First Amendment to Asset Purchase Agreement is dated as of May 31, 1996 by and among EPISODE USA, INC., debtor and debtor in possession, a Delaware corporation ("Seller"), MOTHERS WORK, INC., a Delaware corporation ("Mothers Work"), and T3 ACQUISITION, INC. a Delaware corporation and whollyowned subsidiary of Mothers Work ("T3"). BACKGROUND Seller, Mothers Work and T3 are parties to an Asset Purchase Agreement dated as of April 25, 1996 (the "Original Agreement") pursuant to which, subject to Bankruptcy Court approval, Seller agreed to sell to T3, and T3 agreed to buy from Seller, certain assets of Seller related to the operation of Seller's business of selling

FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT This First Amendment to Asset Purchase Agreement is dated as of May 31, 1996 by and among EPISODE USA, INC., debtor and debtor in possession, a Delaware corporation ("Seller"), MOTHERS WORK, INC., a Delaware corporation ("Mothers Work"), and T3 ACQUISITION, INC. a Delaware corporation and whollyowned subsidiary of Mothers Work ("T3"). BACKGROUND Seller, Mothers Work and T3 are parties to an Asset Purchase Agreement dated as of April 25, 1996 (the "Original Agreement") pursuant to which, subject to Bankruptcy Court approval, Seller agreed to sell to T3, and T3 agreed to buy from Seller, certain assets of Seller related to the operation of Seller's business of selling women's clothing under various trademarks, including Episode, Excursion and Episode Studio, in retail stores operated under the name "Episode". The parties now desire to amend the Original Agreement, inter alia, to provide that Seller will sell the Assets to Mothers Work rather than T3 and to include as part of the Inventory which will be sold by Seller to Mothers Work certain inventory located in Seller's warehouse. Capitalized terms used in this Amendment, and not otherwise defined, shall have the meanings ascribed to them in the Original Agreement. AGREEMENTS The parties hereto, intending to be legally bound, hereby agree as follows: 1. Mothers Work as Purchaser. The Original Agreement is hereby amended so that Mothers Work, rather than and in substitution for T3, shall purchase and accept delivery of the Assets from Seller pursuant to the terms of the Original Agreement. In furtherance thereof, wherever the term "Purchaser" is used in the Original Agreement other than in Section 6 thereof, such term shall be deemed from and after the date hereof to reference Mothers Work and not T3. Mothers Work expressly agrees to assume, be bound by and perform all of the obligations of Purchaser under the Original Agreement. 2. Additional Inventory. The parties have agreed that certain inventory which is currently located in Seller's warehouse or Seller's Orlando Florida store (the "Additional

Inventory") shall constitute Inventory and shall be sold by Seller to Mothers Work and acquired by Mothers Work from Seller, which Inventory is more particularly identified on Schedule 2 to this Amendment. Seller represents and warrants that all Additional Inventory constitutes current (spring/summer) season goods. 3. Coordinating Amendments. In conjunction with the designation of Mothers Work as Purchaser, the following amendments to the Original Agreement are hereby made: (a) Schedule 8.5 is hereby amended in its entirety to read as Schedule 3(a) hereto to effect the substitution of Mothers Work for T3 as Licensee under said License Agreement. (b) Section 8.7 relating to Mothers Work's Guarantees is hereby deleted as not required in light of Mothers Work's direct assumption of responsibility for performance and payment of all of the obligations to be guaranteed by the Guarantees, and the Guarantees shall terminate and be null and void effective with the execution of this Amendment. 4. Balance of Original Agreement. All other terms and conditions of the Original Agreement not specifically amended by this Amendment shall remain in full force and effect and are hereby ratified and confirmed by the parties to the Original Agreement. IN WITNESS WHEREOF, Seller, Mothers Work and T3 have caused this First Amendment to Asset Purchase Agreement to be executed by their respective authorized officers effective the day and year first above written. EPISODE USA, INC.

Inventory") shall constitute Inventory and shall be sold by Seller to Mothers Work and acquired by Mothers Work from Seller, which Inventory is more particularly identified on Schedule 2 to this Amendment. Seller represents and warrants that all Additional Inventory constitutes current (spring/summer) season goods. 3. Coordinating Amendments. In conjunction with the designation of Mothers Work as Purchaser, the following amendments to the Original Agreement are hereby made: (a) Schedule 8.5 is hereby amended in its entirety to read as Schedule 3(a) hereto to effect the substitution of Mothers Work for T3 as Licensee under said License Agreement. (b) Section 8.7 relating to Mothers Work's Guarantees is hereby deleted as not required in light of Mothers Work's direct assumption of responsibility for performance and payment of all of the obligations to be guaranteed by the Guarantees, and the Guarantees shall terminate and be null and void effective with the execution of this Amendment. 4. Balance of Original Agreement. All other terms and conditions of the Original Agreement not specifically amended by this Amendment shall remain in full force and effect and are hereby ratified and confirmed by the parties to the Original Agreement. IN WITNESS WHEREOF, Seller, Mothers Work and T3 have caused this First Amendment to Asset Purchase Agreement to be executed by their respective authorized officers effective the day and year first above written. EPISODE USA, INC.
BY: /s/ Lita Chow ---------------------------------MOTHERS WORK, INC.

BY: /s/ Rebecca Matthias ----------------------------------T3 ACQUISITION, INC.

BY: /s/ Rebecca Matthias ------------------------------------

-2-

NOTE Date: February 14, 1996 MOTHERS WORK, INC. 456 North Fifth Street Philadelphia, Pennsylvania to PIDC LOCAL DEVELOPMENT CORPORATION 2600 Centre Square West 1500 Market Street Philadelphia, Pennsylvania 19102

NOTE Date: February 14, 1996 MOTHERS WORK, INC. 456 North Fifth Street Philadelphia, Pennsylvania to PIDC LOCAL DEVELOPMENT CORPORATION 2600 Centre Square West 1500 Market Street Philadelphia, Pennsylvania 19102 FOR VALUE RECEIVED, without defalcation, the undersigned, MOTHERS WORK, INC., a Delaware Corporation, having its principal place of business in Philadelphia County, Pennsylvania, (hereinafter called the "Maker"), does hereby promise to pay to the order of PIDC LOCAL DEVELOPMENT CORPORATION (hereinafter called "Holder"), at the office of said Holder in Philadelphia, Pennsylvania, the sum of Five Hundred Ninety Thousand Dollars and No Cents ($590,000.00) lawful money of the United States of America, together with interest on the unpaid balance at the rates set forth below from the date hereof until fully paid, said principal and interest to be payable as follows: Interest only at the rate of four and one-quarter percent (4-1/4%) per annum on that portion of the Two Hundred Ninety Thousand Dollars and No Cents ($290,000.00) amount of principal actually advanced by the Holder to the Maker pursuant to Program "A" under the Commitment Letter issued by Holder to Maker dated November 28, 1995 (hereinafter referred to as "Commitment Letter") and interest only at the rate of two percent (2%) per annum on that portion of the Three Hundred Thousand Dollars and No Cents ($300,000.00) amount of principal actually advanced by the Holder to the Maker pursuant to Program "B" under the aforesaid Commitment Letter. All of the aforesaid interest payments shall be paid on the first day of the first full calendar month following the initial disbursement hereunder and continuing until either March 1, 1996 or the first day of the first month after all sums have been advanced under the Commitment Letter, whichever shall first occur. Thereafter, commencing on the first day of the second month after all sums have been advanced under the Commitment Letter or the first day of April, 1996, whichever shall first occur, Maker shall pay to Holder the sum of $290,000.00 due under Program "A" together with interest thereon at the rate of 4-1/4% per annum in sixty (60) consecutive equal monthly installments of Five Thousand Three Hundred Seventy Three Dollars and Fifty Seven Cent. ($5,373.57) each. The monthly installment shall be adjusted in the event the entire $290,000.00 is not advanced under Program "A" of the Commitment Letter. Each such installment shall first be applied on account of interest at the aforesaid rate and the balance thereon shall be applied on account of principal. In the event any such installment due under this paragraph is more than fifteen (15) days late, Maker shall pay to Holder a late charge of three percent (3%) of such installment. In addition, commencing on the first day of the second month after all sums have been advanced under the Commitment Letter or the first day of April, 1996, whichever shall first occur, Maker shall pay to Holder the sum of $300,000.00 due under Program "B" together with interest thereon at the rate of 2% per annum in one hundred eighty (180) consecutive equal monthly installments of One

Thousand Nine Hundred Thirty Dollars and Fifty Three Cents ($1,930.53) each. The monthly installment shall be adjusted in the event the entire $300,000.00 is not advanced under Program "B" of the Commitment Letter. Each such installment shall first be applied on account of interest at the aforesaid rate and the balance thereon shall be applied on account of principal. In the event any such installment due under this paragraph is more than fifteen (15) days late, Maker shall pay to Holder a late charge of three percent (3%) of such installment. Maker shall pay to the Philadelphia Industrial Development Corporation, agent for Holder, for services rendered a monthly service charge of Seventy Three Dollars and Four Cents ($73.04) commencing not later than April 1,

Thousand Nine Hundred Thirty Dollars and Fifty Three Cents ($1,930.53) each. The monthly installment shall be adjusted in the event the entire $300,000.00 is not advanced under Program "B" of the Commitment Letter. Each such installment shall first be applied on account of interest at the aforesaid rate and the balance thereon shall be applied on account of principal. In the event any such installment due under this paragraph is more than fifteen (15) days late, Maker shall pay to Holder a late charge of three percent (3%) of such installment. Maker shall pay to the Philadelphia Industrial Development Corporation, agent for Holder, for services rendered a monthly service charge of Seventy Three Dollars and Four Cents ($73.04) commencing not later than April 1, 1996 and continuing for 60 months, and thereafter the monthly service charge shall be reduced to Twenty Five Dollars and No Cents ($25.00) and shall continue throughout the remaining term of this Note. In addition, in the event Maker prepays all or part of the principal due hereunder, Maker shall pay to the Philadelphia Industrial Development Corporation, agent for Holder, at the time of such prepayment, an amount equal to 1/2 of 1% of the total amount prepaid. On or before March 1, 2011, the balance of the principal together with interest accrued and unpaid shall be paid by Maker to Holder. All of the terms, covenants and conditions of the aforesaid Commitment Letter are hereby incorporated by reference herein and any default by Maker under said Commitment Letter shall be an event of default herein. The said payments shall be applied on account of the interest, principal or other sums payable hereunder in such priority as the Holder may determine. In accordance with the provisions of the Commitment Letter, Maker shall issue two separate checks each month to Holder. The payment of this Note is secured by a Security Agreement of even date herewith from Maker to Holder granting Holder a first priority security interest in all of Maker's right title and interest in and to a certain Electra Systems, Inc. High Ply Knife Cutter-Model #VT7000 together with all increases, parts, fittings, accessories and attachments located at 456 North Fifth Street, Philadelphia, Pennsylvania and the proceeds thereof. Upon default hereunder, and after thirty (30) days written notice to Maker and the failure of Maker to cure said default within the aforesaid time period, the Maker does hereby empower any attorney of any Court of Record within the United States or elsewhere to appear for Maker, with or without a declaration filed, and confess judgment or judgments against said Maker in favor of the Holder or any subsequent holder hereof, as of any term, for the entire unpaid principal of this Note, and all arrearages of installment payments, together with costs of suit, attorney's commission of five percent (5%) for collection, and a release of all errors, on which judgment, execution or executions may issue forthwith. The Maker hereby waives the right of inquisition on all property levied upon to collect the indebtedness evidenced hereby and does voluntarily condemn the same and authorizes the Prothonotary to enter such condemnation, and waives and releases all laws, now in force or hereinafter enacted, relating to exemption, appraisement or stay of execution. If this Note is placed in an attorney's hands for collection, or collected by a suit or through a bankruptcy, or probate, or any other court, either before or after maturity, then in any of said events, there shall be paid to the holder of this Note reasonable attorney's fees and all costs and other expenses incurred by said holder in enforcing the terms of this Note.

Failure to pay any part of principal or interest of this Note when due, or failure to carry out any of the terms, covenants or conditions of said Commitment Letter shall authorize the Holder to declare immediately due the whole of the same and exercise any and all the rights and remedies provided by the Uniform Commercial Code as well as other rights and remedies possessed by the Holder. The Maker and endorsers of this Note severally waive demand, presentment, notice of dishonor, diligence in collection, notice of protest, and agree to all extensions. and partial payments before or after maturity without prejudice to the Holder. IN WITNESS WHEREOF, Maker has executed this Note the day and year first above written.

Failure to pay any part of principal or interest of this Note when due, or failure to carry out any of the terms, covenants or conditions of said Commitment Letter shall authorize the Holder to declare immediately due the whole of the same and exercise any and all the rights and remedies provided by the Uniform Commercial Code as well as other rights and remedies possessed by the Holder. The Maker and endorsers of this Note severally waive demand, presentment, notice of dishonor, diligence in collection, notice of protest, and agree to all extensions. and partial payments before or after maturity without prejudice to the Holder. IN WITNESS WHEREOF, Maker has executed this Note the day and year first above written. MOTHERS WORK, INC.
Attest: /s/ Elan M. Hitchner, III ------------------------Assistant Secretary By: /s/ Thomas Frank CFO ------------------------

INSTALLMENT SALE AGREEMENT AGREEMENT made this 4th day of April 1996, by and between PIDC FINANCING CORPORATION, a Pennsylvania Non-Profit Corporation, (hereinafter called "Seller") and MOTHERS WORK, INC., a Delaware Corporation, (hereinafter called "Buyer"): WITNESSETH: 1. Sale and Premises Seller hereby agrees to sell to Buyer, who hereby agrees to purchase certain property located at 456 N. 5th Street, Philadelphia, Pennsylvania, and more fully described in Exhibit "A" attached hereto and hereby made a part hereof, together with the buildings and other improvements erected thereon, and together with all improvements, easements, tenements, appurtenances, hereditaments, fixtures, furnishings, equipment, rights and privileges contained in, belonging to or in any way pertaining or beneficial to the said premises (all of which shall hereinafter be called the "Premises"), whether or not attached or to be attached to the land, buildings or other improvements and whether or not described or referred to in Exhibit "A", and with all faults. 2. Nature and Cost of Project Buyer has agreed to purchase the Premises described in Exhibit "A" for the sum of Four Million Four Hundred Fifty Thousand Dollars and No Cents ($4,450,000.00) and to construct Improvements at a cost of at least Two Million Eight Hundred Ninety Four Thousand Dollars and No Cents ($2,894,000.00) and has incurred miscellaneous fees and expenses in the amount of approximately Five Hundred Thirty Thousand Dollars and No Cents ($530,000.00). Seller has obtained a commitment from PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY ("PIDA"), pursuant to which PIDA has agreed to advance to Seller the sum of Two Million Dollars and No Cents ($2,000,000.00) which loan will be secured by a Second Mortgage on the Premises. Seller shall execute on the date hereof a Second Mortgage and Note in favor of PIDA. 3. Loan Seller will execute and deliver to PIDA on the date hereof Seller's Note in the principal sum of $2,000,000.00 secured by a Second Mortgage ("Mortgage") upon the Premises. The provisions of the

Note and the Mortgage are hereby incorporated herein by reference. Buyer agrees that its interest in the Premises and its rights hereunder will be subordinate to the interests and rights of PIDA as Second Mortgagee, and acknowledges that PIDA has agreed to advance the sum represented by the Note and Mortgage in reliance upon the assignment to PIDA of Seller's rights under this Agreement as collateral security for payment of the Note and Mortgage. 4. Purchase Price and Other Payments by Buyer Buyer will pay to Seller, at the times and in the manner

INSTALLMENT SALE AGREEMENT AGREEMENT made this 4th day of April 1996, by and between PIDC FINANCING CORPORATION, a Pennsylvania Non-Profit Corporation, (hereinafter called "Seller") and MOTHERS WORK, INC., a Delaware Corporation, (hereinafter called "Buyer"): WITNESSETH: 1. Sale and Premises Seller hereby agrees to sell to Buyer, who hereby agrees to purchase certain property located at 456 N. 5th Street, Philadelphia, Pennsylvania, and more fully described in Exhibit "A" attached hereto and hereby made a part hereof, together with the buildings and other improvements erected thereon, and together with all improvements, easements, tenements, appurtenances, hereditaments, fixtures, furnishings, equipment, rights and privileges contained in, belonging to or in any way pertaining or beneficial to the said premises (all of which shall hereinafter be called the "Premises"), whether or not attached or to be attached to the land, buildings or other improvements and whether or not described or referred to in Exhibit "A", and with all faults. 2. Nature and Cost of Project Buyer has agreed to purchase the Premises described in Exhibit "A" for the sum of Four Million Four Hundred Fifty Thousand Dollars and No Cents ($4,450,000.00) and to construct Improvements at a cost of at least Two Million Eight Hundred Ninety Four Thousand Dollars and No Cents ($2,894,000.00) and has incurred miscellaneous fees and expenses in the amount of approximately Five Hundred Thirty Thousand Dollars and No Cents ($530,000.00). Seller has obtained a commitment from PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY ("PIDA"), pursuant to which PIDA has agreed to advance to Seller the sum of Two Million Dollars and No Cents ($2,000,000.00) which loan will be secured by a Second Mortgage on the Premises. Seller shall execute on the date hereof a Second Mortgage and Note in favor of PIDA. 3. Loan Seller will execute and deliver to PIDA on the date hereof Seller's Note in the principal sum of $2,000,000.00 secured by a Second Mortgage ("Mortgage") upon the Premises. The provisions of the

Note and the Mortgage are hereby incorporated herein by reference. Buyer agrees that its interest in the Premises and its rights hereunder will be subordinate to the interests and rights of PIDA as Second Mortgagee, and acknowledges that PIDA has agreed to advance the sum represented by the Note and Mortgage in reliance upon the assignment to PIDA of Seller's rights under this Agreement as collateral security for payment of the Note and Mortgage. 4. Purchase Price and Other Payments by Buyer Buyer will pay to Seller, at the times and in the manner hereinafter set forth, as purchase price for the Premises and interest on the unpaid portions thereof as follows: a. Two Million Dollars and No Cents ($2,000,000.00) together with interest on the unpaid portions thereof shall be repaid in one hundred eighty (180) equal monthly installments including all accrued interest at the rate of three percent (3%) per annum as charged under the Note from Seller to PIDA, and each such installment shall be paid to Seller ten (10) days prior to the date Seller is to pay PIDA and the amount of each installment shall be equal to the amount required to be paid by Seller to PIDA, and each of which installments shall first be applied to accrued interest at the aforesaid rate and the balance on account of purchase price. Notwithstanding the foregoing, Buyer shall pay the foregoing installments directly to PIDA, if requested by PIDA. b. In addition to the amounts specified above, Buyer shall pay to the Philadelphia Industrial Development Corporation, agent for Seller, for services rendered a monthly service charge in the amount of One Hundred Thirty Eight Dollars and Eleven Cents ($138.11) commencing upon the payment of purchase price and interest under the Note from Seller to PIDA, and continuing throughout the term of this Agreement. In the event the monthly payment of purchase price under Paragraph 4(a) is reduced as the result of a prepayment of purchase price, said monthly service charge shall be reduced to one percent (1%) of said new monthly payment. In addition, in the event Buyer prepays all or part of the purchase price under Paragraph 4(a) hereof, Buyer shall pay to

Note and the Mortgage are hereby incorporated herein by reference. Buyer agrees that its interest in the Premises and its rights hereunder will be subordinate to the interests and rights of PIDA as Second Mortgagee, and acknowledges that PIDA has agreed to advance the sum represented by the Note and Mortgage in reliance upon the assignment to PIDA of Seller's rights under this Agreement as collateral security for payment of the Note and Mortgage. 4. Purchase Price and Other Payments by Buyer Buyer will pay to Seller, at the times and in the manner hereinafter set forth, as purchase price for the Premises and interest on the unpaid portions thereof as follows: a. Two Million Dollars and No Cents ($2,000,000.00) together with interest on the unpaid portions thereof shall be repaid in one hundred eighty (180) equal monthly installments including all accrued interest at the rate of three percent (3%) per annum as charged under the Note from Seller to PIDA, and each such installment shall be paid to Seller ten (10) days prior to the date Seller is to pay PIDA and the amount of each installment shall be equal to the amount required to be paid by Seller to PIDA, and each of which installments shall first be applied to accrued interest at the aforesaid rate and the balance on account of purchase price. Notwithstanding the foregoing, Buyer shall pay the foregoing installments directly to PIDA, if requested by PIDA. b. In addition to the amounts specified above, Buyer shall pay to the Philadelphia Industrial Development Corporation, agent for Seller, for services rendered a monthly service charge in the amount of One Hundred Thirty Eight Dollars and Eleven Cents ($138.11) commencing upon the payment of purchase price and interest under the Note from Seller to PIDA, and continuing throughout the term of this Agreement. In the event the monthly payment of purchase price under Paragraph 4(a) is reduced as the result of a prepayment of purchase price, said monthly service charge shall be reduced to one percent (1%) of said new monthly payment. In addition, in the event Buyer prepays all or part of the purchase price under Paragraph 4(a) hereof, Buyer shall pay to

the Philadelphia Industrial Development Corporation, agent for Seller, at the time of such prepayment, an amount equal to 1/2 of 1% of the total amount prepaid. c. The installment payments of the purchase price shall be net to Seller and all costs and expenses payable in connection with the ownership, maintenance and occupancy of the Premises shall be paid or caused to be paid by Buyer. It is the intention of the parties that notwithstanding any other provision of this Agreement, Seller shall timely receive from Buyer funds equal to those funds necessary for Seller to pay PIDA all of Seller's obligations under the aforesaid Note and Mortgage, and Seller agrees that, promptly after Seller receives any such amount, to pay such amount to PIDA on account of the aforesaid Note and Mortgage to be applied in the manner prescribed by this Agreement. d. Buyer shall have the privilege of prepaying the purchase price at the times and subject to the same conditions and premiums as is required for prepayment of the respective Mortgages to which such prepayments will be applied subject to the provisions of Paragraph 4b hereof. 5. Settlement Settlement for the Premises shall take place within thirty (30) days after the date of final payment by Buyer of all amounts to be paid by Buyer under the terms of this Agreement, provided that Buyer is not in default hereunder. In the event Buyer refuses to take and record title to the Premises within the aforesaid thirty (30) day period, Buyer shall pay to Seller, or its agent, a service charge of One Hundred Dollars and No Cents ($100.00) per month until such time as Buyer accepts and records title to the Premises. As a condition of settlement, Buyer shall furnish to Seller reasonable security to indemnify Seller against any claims which are not effectively covered by liability insurance arising out of Seller's ownership of the Premises. At settlement, Seller will convey to Buyer such title to the Premises as Seller presently has, excepting however, any part of the Premises taken by eminent domain during the term of this Agreement or any encumbrance or objection created or permitted by Buyer or Seller with Buyer's consent.

6. Possession Insofar as Seller is concerned, Buyer shall have possession of the Premises upon execution of this

the Philadelphia Industrial Development Corporation, agent for Seller, at the time of such prepayment, an amount equal to 1/2 of 1% of the total amount prepaid. c. The installment payments of the purchase price shall be net to Seller and all costs and expenses payable in connection with the ownership, maintenance and occupancy of the Premises shall be paid or caused to be paid by Buyer. It is the intention of the parties that notwithstanding any other provision of this Agreement, Seller shall timely receive from Buyer funds equal to those funds necessary for Seller to pay PIDA all of Seller's obligations under the aforesaid Note and Mortgage, and Seller agrees that, promptly after Seller receives any such amount, to pay such amount to PIDA on account of the aforesaid Note and Mortgage to be applied in the manner prescribed by this Agreement. d. Buyer shall have the privilege of prepaying the purchase price at the times and subject to the same conditions and premiums as is required for prepayment of the respective Mortgages to which such prepayments will be applied subject to the provisions of Paragraph 4b hereof. 5. Settlement Settlement for the Premises shall take place within thirty (30) days after the date of final payment by Buyer of all amounts to be paid by Buyer under the terms of this Agreement, provided that Buyer is not in default hereunder. In the event Buyer refuses to take and record title to the Premises within the aforesaid thirty (30) day period, Buyer shall pay to Seller, or its agent, a service charge of One Hundred Dollars and No Cents ($100.00) per month until such time as Buyer accepts and records title to the Premises. As a condition of settlement, Buyer shall furnish to Seller reasonable security to indemnify Seller against any claims which are not effectively covered by liability insurance arising out of Seller's ownership of the Premises. At settlement, Seller will convey to Buyer such title to the Premises as Seller presently has, excepting however, any part of the Premises taken by eminent domain during the term of this Agreement or any encumbrance or objection created or permitted by Buyer or Seller with Buyer's consent.

6. Possession Insofar as Seller is concerned, Buyer shall have possession of the Premises upon execution of this Agreement. Buyer agrees that Seller shall in no way and at no time be responsible for the condition of the Premises. 7. Adjustments Buyer agrees to pay all charges and costs (excepting only Seller's counsel fees) which are required and whenever required in connection with the conveyance of the Premises from Seller to Buyer. Buyer agrees that Seller shall not be responsible for any inaccuracies in any settlement sheet in connection with the foregoing. 8. Zoning Seller makes no representations as to the zoning of the Premises. 9. Municipal or State Improvements Buyer agrees to pay for any Improvements to the Premises done or ordered to be done by any municipal or state authorities and to comply at its own cost and expense with all notices received from public authorities from and after the date hereof. 10. Taxes and Assessments Buyer agrees to pay or to cause to be paid, as an addition to the purchase price, before they would become delinquent or as required by the Mortgage, all real estate taxes, including City and School Taxes, assessments, water rents, sewer rents and charges and other governmental charges, general and special, which are assessed or imposed upon or chargeable against the Premises at any time from after the date hereof and thereafter throughout the term hereof. Buyer agrees that it will not use, as a basis for contesting or adjudicating the taxes and assessments upon the Premises, the fact that legal title is held by a body with governmental or quasi-governmental status. The amount so paid by Buyer shall be paid directly to the City of Philadelphia or to Seller, who shall turn said money over to the City of Philadelphia as Seller shall elect in writing. 11. Property Insurance Buyer will keep the entire Premises insured against loss or damage by fire, with extended coverage and against loss from such other hazards as may be required by Seller or PIDA. Buyer shall take out and maintain such boiler insurance and business interruption insurance as may be required by Seller or PIDA.

6. Possession Insofar as Seller is concerned, Buyer shall have possession of the Premises upon execution of this Agreement. Buyer agrees that Seller shall in no way and at no time be responsible for the condition of the Premises. 7. Adjustments Buyer agrees to pay all charges and costs (excepting only Seller's counsel fees) which are required and whenever required in connection with the conveyance of the Premises from Seller to Buyer. Buyer agrees that Seller shall not be responsible for any inaccuracies in any settlement sheet in connection with the foregoing. 8. Zoning Seller makes no representations as to the zoning of the Premises. 9. Municipal or State Improvements Buyer agrees to pay for any Improvements to the Premises done or ordered to be done by any municipal or state authorities and to comply at its own cost and expense with all notices received from public authorities from and after the date hereof. 10. Taxes and Assessments Buyer agrees to pay or to cause to be paid, as an addition to the purchase price, before they would become delinquent or as required by the Mortgage, all real estate taxes, including City and School Taxes, assessments, water rents, sewer rents and charges and other governmental charges, general and special, which are assessed or imposed upon or chargeable against the Premises at any time from after the date hereof and thereafter throughout the term hereof. Buyer agrees that it will not use, as a basis for contesting or adjudicating the taxes and assessments upon the Premises, the fact that legal title is held by a body with governmental or quasi-governmental status. The amount so paid by Buyer shall be paid directly to the City of Philadelphia or to Seller, who shall turn said money over to the City of Philadelphia as Seller shall elect in writing. 11. Property Insurance Buyer will keep the entire Premises insured against loss or damage by fire, with extended coverage and against loss from such other hazards as may be required by Seller or PIDA. Buyer shall take out and maintain such boiler insurance and business interruption insurance as may be required by Seller or PIDA.

All such policies and any additional fire insurance carried by Buyer on the Premises will contain the standard mortgagee clause and the originals thereof will be deposited with PIDA with a copy to Seller. 12. Liability Insurance Buyer shall provide comprehensive general liability insurance, covering at least the hazards of "Premises Operations", "Elevators" (if applicable) and "Independent Contractors", in which Seller shall be named as an insured with minimum limits of liability with respect to bodily injury of Five Hundred Thousand Dollars and No Cents ($500,000.00) for each person and One Million Dollars and No Cents ($1,000,000.00) for each occurrence and One Hundred Thousand Dollars and No Cents ($100,000.00) with respect to property damage for each occurrence. In addition, Buyer shall provide whenever construction or major alteration to the Premises is being performed, policies of contingent public liability insurance protecting Seller and Buyer, in addition to providing certificates of public liability insurance and workmen's compensation insurance, insuring the contractor engaged by Buyer. The above mentioned contingent liability policy shall be in the form of a comprehensive general liability policy, if obtainable, and if not obtainable, shall be a public liability policy covering at least the hazard of all phases of the construction being performed by Buyer or its contractors, the hazard arising from the ownership and possession of the Premises, and the hazard of any operations other than construction being carried on by Buyer on any part of the Premises during the construction period. 13. General Insurance Provisions a. All insurance as to form, amount and insurance company shall be satisfactory to Seller and PIDA. b. All policies will require that no less than ten (10) days written notice of cancellation or material change will be given to Seller and PIDA. c. All cost of insurance shall be borne by Buyer.

All such policies and any additional fire insurance carried by Buyer on the Premises will contain the standard mortgagee clause and the originals thereof will be deposited with PIDA with a copy to Seller. 12. Liability Insurance Buyer shall provide comprehensive general liability insurance, covering at least the hazards of "Premises Operations", "Elevators" (if applicable) and "Independent Contractors", in which Seller shall be named as an insured with minimum limits of liability with respect to bodily injury of Five Hundred Thousand Dollars and No Cents ($500,000.00) for each person and One Million Dollars and No Cents ($1,000,000.00) for each occurrence and One Hundred Thousand Dollars and No Cents ($100,000.00) with respect to property damage for each occurrence. In addition, Buyer shall provide whenever construction or major alteration to the Premises is being performed, policies of contingent public liability insurance protecting Seller and Buyer, in addition to providing certificates of public liability insurance and workmen's compensation insurance, insuring the contractor engaged by Buyer. The above mentioned contingent liability policy shall be in the form of a comprehensive general liability policy, if obtainable, and if not obtainable, shall be a public liability policy covering at least the hazard of all phases of the construction being performed by Buyer or its contractors, the hazard arising from the ownership and possession of the Premises, and the hazard of any operations other than construction being carried on by Buyer on any part of the Premises during the construction period. 13. General Insurance Provisions a. All insurance as to form, amount and insurance company shall be satisfactory to Seller and PIDA. b. All policies will require that no less than ten (10) days written notice of cancellation or material change will be given to Seller and PIDA. c. All cost of insurance shall be borne by Buyer. d. Renewal policies marked "premium paid" by the agent or insuring company shall be deposited at least twenty (20) days before the expiration of the prior

existing policies. e. All insurance is required commencing from the date hereof and is to be continued throughout the term of this Agreement, and Buyer will provide evidence thereof satisfactory to Seller and PIDA. f. All insurance shall name Seller and Buyer as insureds and shall cover the entire Premises, including adjacent sidewalks, walkways and cartways. 14. Compliance with Laws Buyer agrees to comply with all laws, ordinances and regulations affecting the Premises from and after the date hereof. 15. Indemnification of Seller and Waiver of Claims Buyer covenants and agrees to protect, exonerate, defend, indemnify and save Seller harmless from and against any and all costs or liabilities which on or after the date hereof may arise out of Seller's ownership of the Premises, and from and against any and all loss, damage, cost, expense or liability based upon personal injury, death, loss or damage to property suffered or incurred by any person, firm or corporation (including the parties hereto) and arising out of or attributable to the presence, condition, use, operation or maintenance of the Premises, except when due to the willful misconduct of Seller. Seller shall give prompt written notice to Buyer of any claim asserted against Seller (within a reasonable time after such claim becomes known to Seller), provided such claim appears likely to, if sustained, result in liability on Buyer hereunder. However, Seller's failure to give such notice shall not relieve Buyer from its obligation to protect, exonerate, defend, indemnify and save Seller harmless as aforesaid, except to the extent that failure to give such notice results in actual loss or damage to Buyer. Nevertheless, if such claim had been otherwise made known to, or reasonably should have been known by Buyer, then Seller shall be under no duty to advise Buyer of said claim. In any action or proceeding brought against Seller by reason of any such claim, Buyer, upon notice from Seller covenants and agrees to resist or defend such action or proceeding by counsel satisfactory to Seller.

existing policies. e. All insurance is required commencing from the date hereof and is to be continued throughout the term of this Agreement, and Buyer will provide evidence thereof satisfactory to Seller and PIDA. f. All insurance shall name Seller and Buyer as insureds and shall cover the entire Premises, including adjacent sidewalks, walkways and cartways. 14. Compliance with Laws Buyer agrees to comply with all laws, ordinances and regulations affecting the Premises from and after the date hereof. 15. Indemnification of Seller and Waiver of Claims Buyer covenants and agrees to protect, exonerate, defend, indemnify and save Seller harmless from and against any and all costs or liabilities which on or after the date hereof may arise out of Seller's ownership of the Premises, and from and against any and all loss, damage, cost, expense or liability based upon personal injury, death, loss or damage to property suffered or incurred by any person, firm or corporation (including the parties hereto) and arising out of or attributable to the presence, condition, use, operation or maintenance of the Premises, except when due to the willful misconduct of Seller. Seller shall give prompt written notice to Buyer of any claim asserted against Seller (within a reasonable time after such claim becomes known to Seller), provided such claim appears likely to, if sustained, result in liability on Buyer hereunder. However, Seller's failure to give such notice shall not relieve Buyer from its obligation to protect, exonerate, defend, indemnify and save Seller harmless as aforesaid, except to the extent that failure to give such notice results in actual loss or damage to Buyer. Nevertheless, if such claim had been otherwise made known to, or reasonably should have been known by Buyer, then Seller shall be under no duty to advise Buyer of said claim. In any action or proceeding brought against Seller by reason of any such claim, Buyer, upon notice from Seller covenants and agrees to resist or defend such action or proceeding by counsel satisfactory to Seller. However, Seller agrees to cooperate and assist in the defense of any

such action or proceeding, if reasonably requested to do so by Buyer, at Buyer's expense. Buyer will not make any claim against Seller, nor shall Seller be liable for any damage or injury to any property of Buyer or any other person with respect to the Premises or to any part thereof due to any other person with respect to the Premises or to any part thereof due to any cause whatsoever, nor will Buyer resist Seller's claim to indemnification on the ground that the right to such claim is not set forth herein with sufficient particularity. 16. Improvements, Maintenance, Repairs and Alterations Buyer agrees to take good care of the Premises at its own expense from and after the date hereof, to put and keep the Premises in good repair (structural or otherwise), order and condition and pay all other costs and expenses arising out of the occupancy of the Premises, including, but not limited, to all public utility charges and utility connection charges. Buyer will not undertake or permit any demolition or structural alterations, or material additions or Improvements to the Premises which will materially reduce the value of the Premises without the written consent of Seller. All alterations and additions to the Premises undertaken by Buyer shall become part of the Premises. 17. Consent Whenever the consent of the Seller is given pursuant to the terms of this Agreement, such consent shall create no liability or responsibility upon Seller, and whenever required, shall not be unreasonably withheld. Whenever this Agreement has been assigned by Seller, Buyer shall also obtain the consent of the assignee in all cases where it is required to obtain the consent of Seller. No Assignment of this Agreement shall be made by Seller without the approval of Buyer excepting any assignment to PIDA, its successors or assigns. 18. Damage and Condemnation Damage to or destruction of all or any portion of the buildings or improvements on the Premises by fire or any other cause or a taking of all or a portion of the Premises by condemnation shall not terminate this Agreement or cause any abatement or reduction in the payments to be made by Buyer or otherwise affect the respective obligations of Seller and Buyer. The purchase price of

such action or proceeding, if reasonably requested to do so by Buyer, at Buyer's expense. Buyer will not make any claim against Seller, nor shall Seller be liable for any damage or injury to any property of Buyer or any other person with respect to the Premises or to any part thereof due to any other person with respect to the Premises or to any part thereof due to any cause whatsoever, nor will Buyer resist Seller's claim to indemnification on the ground that the right to such claim is not set forth herein with sufficient particularity. 16. Improvements, Maintenance, Repairs and Alterations Buyer agrees to take good care of the Premises at its own expense from and after the date hereof, to put and keep the Premises in good repair (structural or otherwise), order and condition and pay all other costs and expenses arising out of the occupancy of the Premises, including, but not limited, to all public utility charges and utility connection charges. Buyer will not undertake or permit any demolition or structural alterations, or material additions or Improvements to the Premises which will materially reduce the value of the Premises without the written consent of Seller. All alterations and additions to the Premises undertaken by Buyer shall become part of the Premises. 17. Consent Whenever the consent of the Seller is given pursuant to the terms of this Agreement, such consent shall create no liability or responsibility upon Seller, and whenever required, shall not be unreasonably withheld. Whenever this Agreement has been assigned by Seller, Buyer shall also obtain the consent of the assignee in all cases where it is required to obtain the consent of Seller. No Assignment of this Agreement shall be made by Seller without the approval of Buyer excepting any assignment to PIDA, its successors or assigns. 18. Damage and Condemnation Damage to or destruction of all or any portion of the buildings or improvements on the Premises by fire or any other cause or a taking of all or a portion of the Premises by condemnation shall not terminate this Agreement or cause any abatement or reduction in the payments to be made by Buyer or otherwise affect the respective obligations of Seller and Buyer. The purchase price of

the Premises will be reduced by the amount of any reduction in Seller's indebtedness to PIDA under the Notes brought about by the application to such indebtedness of insurance proceeds or amounts paid as a result of condemnation. All proceeds from insurance or condemnation not required to be applied to the mortgage indebtedness shall be paid to and be the property of Buyer. 19. Use and Lease Buyer covenants and agrees that the entire Premises shall be used only for the purpose of industrial activities or activities accessory thereto, and only for such purpose as is lawful under an Act known as the Pennsylvania Industrial Development Authority Act, as amended. Buyer shall not lease or sublease any part of the Premises without the prior written consent of Seller and PIDA, and any lease or sublease without such consent shall be void and of no effect. 20. Assignment of Leases Buyer hereby assigns to Seller, as security for Buyer's obligations hereunder, any present or future leases entered into by Buyer for any part of the Premises. Seller thereby in no way assumes or will assume any of the obligations as lessor under any leases and such assignment shall not release the Buyer from Buyer's obligations as lessor, under said leases. 21. Quiet Enjoyment Seller covenants that Buyer, on performing the covenants and conditions on its part to be performed, shall and may peaceably and quietly have, hold and enjoy the Premises as purchaser in possession, free from molestation, eviction or disturbance by Seller or by any other person or persons lawfully claiming the same, by, through or under the Seller. 22. Assignment by Buyer Any assignment of this Agreement or sale or lease of the Premises by Buyer without the prior written consent of the Seller and PIDA shall be void and of no effect. 23. Inspection and Signs Buyer will at all times provide Seller and any assignee with full and free access to the Premises and all plans, drawings and records thereof for reasonable inspections. At any time when major construction is taking place in connection with the Premises, or at any time during the first six (6) months from the date hereof, Seller shall have the right to place a sign or signs on the Premises, at locations which will not interfere with the operation of

the Premises will be reduced by the amount of any reduction in Seller's indebtedness to PIDA under the Notes brought about by the application to such indebtedness of insurance proceeds or amounts paid as a result of condemnation. All proceeds from insurance or condemnation not required to be applied to the mortgage indebtedness shall be paid to and be the property of Buyer. 19. Use and Lease Buyer covenants and agrees that the entire Premises shall be used only for the purpose of industrial activities or activities accessory thereto, and only for such purpose as is lawful under an Act known as the Pennsylvania Industrial Development Authority Act, as amended. Buyer shall not lease or sublease any part of the Premises without the prior written consent of Seller and PIDA, and any lease or sublease without such consent shall be void and of no effect. 20. Assignment of Leases Buyer hereby assigns to Seller, as security for Buyer's obligations hereunder, any present or future leases entered into by Buyer for any part of the Premises. Seller thereby in no way assumes or will assume any of the obligations as lessor under any leases and such assignment shall not release the Buyer from Buyer's obligations as lessor, under said leases. 21. Quiet Enjoyment Seller covenants that Buyer, on performing the covenants and conditions on its part to be performed, shall and may peaceably and quietly have, hold and enjoy the Premises as purchaser in possession, free from molestation, eviction or disturbance by Seller or by any other person or persons lawfully claiming the same, by, through or under the Seller. 22. Assignment by Buyer Any assignment of this Agreement or sale or lease of the Premises by Buyer without the prior written consent of the Seller and PIDA shall be void and of no effect. 23. Inspection and Signs Buyer will at all times provide Seller and any assignee with full and free access to the Premises and all plans, drawings and records thereof for reasonable inspections. At any time when major construction is taking place in connection with the Premises, or at any time during the first six (6) months from the date hereof, Seller shall have the right to place a sign or signs on the Premises, at locations which will not interfere with the operation of

any business at the Premises, and which sign or signs will advertise Seller's participation in this transaction. 24. Event of Default by Buyer: a. During the term of this Agreement, the following shall constitute Events of Default by Buyer: 1. Failure by Buyer to make payments under this Agreement when the same is due, or failure of Buyer to comply with any other obligations, covenants or conditions imposed upon it by this Agreement at the time set forth herein subject to the same applicable grace periods as set forth in the Note and Mortgage. 2. If Buyer, shall make an assignment for the benefit of creditors or is adjudicated bankrupt or shall file a bill of equity or otherwise initiate proceedings for the appointment of a receiver of its assets, or shall file a petition or otherwise initiate any proceedings in any court for a composition with its creditors for relief in any manner from the payment of its debts when due under any state or federal law; or any proceedings in bankruptcy or for the appointment of a receiver shall be instituted by any creditor of Buyer under any state or federal law and is not dismissed within sixty (60) days. 3. An Event of Default under the Mortgage, Note, or any collateral pledged to secure any of the above. 25. Seller's Remedies In the event of a default by Buyer: a. Seller may perform for the account of Buyer any covenant or obligation in the performance of which Buyer is in default, in which event, Buyer shall immediately pay to Seller any amount paid by Seller together with reasonable counsel fees as well as with interest at the rate of ten percent (10%) per annum from the date of payment by Seller

any business at the Premises, and which sign or signs will advertise Seller's participation in this transaction. 24. Event of Default by Buyer: a. During the term of this Agreement, the following shall constitute Events of Default by Buyer: 1. Failure by Buyer to make payments under this Agreement when the same is due, or failure of Buyer to comply with any other obligations, covenants or conditions imposed upon it by this Agreement at the time set forth herein subject to the same applicable grace periods as set forth in the Note and Mortgage. 2. If Buyer, shall make an assignment for the benefit of creditors or is adjudicated bankrupt or shall file a bill of equity or otherwise initiate proceedings for the appointment of a receiver of its assets, or shall file a petition or otherwise initiate any proceedings in any court for a composition with its creditors for relief in any manner from the payment of its debts when due under any state or federal law; or any proceedings in bankruptcy or for the appointment of a receiver shall be instituted by any creditor of Buyer under any state or federal law and is not dismissed within sixty (60) days. 3. An Event of Default under the Mortgage, Note, or any collateral pledged to secure any of the above. 25. Seller's Remedies In the event of a default by Buyer: a. Seller may perform for the account of Buyer any covenant or obligation in the performance of which Buyer is in default, in which event, Buyer shall immediately pay to Seller any amount paid by Seller together with reasonable counsel fees as well as with interest at the rate of ten percent (10%) per annum from the date of payment by Seller b. Seller may declare all sums which Buyer is obligated to pay to Seller pursuant to this Agreement, together with interest accrued thereon immediately due and payable.

c. Seller may terminate this Agreement and resell the Premises at a private or public sale and Seller will apply the monies collected under such resale, in such order of priority as Seller, in Seller's sole discretion may elect and Buyer shall remain liable for any deficiency after the application of the proceeds. If such proceeds are in excess of the amount required to satisfy the total due from Buyer to Seller under the terms of this Agreement then such excess shall be paid to Buyer. d. Buyer hereby irrevocably authorizes and empowers any attorney of any court of record of Pennsylvania or elsewhere to appear as attorney for Buyer as well as for all persons claiming by, through or under Buyer, and to sign an Agreement for entering in any competent court an amicable action in ejectment against Buyer and all persons claiming by, through or under Buyer and therein confess judgment for recovery by Seller of possession of the Premises for which a true copy of this Agreement shall be his sufficient warrant, whereupon, if Seller so desires a writ of possession may issue forthwith without any prior writ or proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the Premises remain in or be restored by Buyer, Seller shall have the right on account of any subsequent Event of Default to bring one or more further amicable action or actions in ejectment as hereinbefore set forth to recover possession of the Premises and confess judgment for the recovery of possession of the Premises as hereinabove provided. e. After ten (10) days written notice, Seller may take possession of the Premises by the summary procedure set forth in sub-section (d) above or otherwise without terminating this Agreement and Seller may collect rentals and enforce all other remedies of Buyer under any existing leases for any part of the Premises, but without being deemed to have affirmed such leases, and Seller may enter into new leases on such terms as Seller may deem fit for any portion or portions of the Premises, and such leases shall not be terminated or affected if Buyer cures the

Event of Default. Rentals under said leases may be applied by Seller to any repair or maintenance of the Premises

c. Seller may terminate this Agreement and resell the Premises at a private or public sale and Seller will apply the monies collected under such resale, in such order of priority as Seller, in Seller's sole discretion may elect and Buyer shall remain liable for any deficiency after the application of the proceeds. If such proceeds are in excess of the amount required to satisfy the total due from Buyer to Seller under the terms of this Agreement then such excess shall be paid to Buyer. d. Buyer hereby irrevocably authorizes and empowers any attorney of any court of record of Pennsylvania or elsewhere to appear as attorney for Buyer as well as for all persons claiming by, through or under Buyer, and to sign an Agreement for entering in any competent court an amicable action in ejectment against Buyer and all persons claiming by, through or under Buyer and therein confess judgment for recovery by Seller of possession of the Premises for which a true copy of this Agreement shall be his sufficient warrant, whereupon, if Seller so desires a writ of possession may issue forthwith without any prior writ or proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the Premises remain in or be restored by Buyer, Seller shall have the right on account of any subsequent Event of Default to bring one or more further amicable action or actions in ejectment as hereinbefore set forth to recover possession of the Premises and confess judgment for the recovery of possession of the Premises as hereinabove provided. e. After ten (10) days written notice, Seller may take possession of the Premises by the summary procedure set forth in sub-section (d) above or otherwise without terminating this Agreement and Seller may collect rentals and enforce all other remedies of Buyer under any existing leases for any part of the Premises, but without being deemed to have affirmed such leases, and Seller may enter into new leases on such terms as Seller may deem fit for any portion or portions of the Premises, and such leases shall not be terminated or affected if Buyer cures the

Event of Default. Rentals under said leases may be applied by Seller to any repair or maintenance of the Premises as Seller may reasonably deem useful, and the remaining balance shall be applied to Buyer's obligations hereunder in order of priority to be determined by Seller. Any balance of rentals remaining thereafter shall be promptly paid over to Buyer by Seller. f. Buyer hereby irrevocably authorizes and empowers any attorney of any court of record of Pennsylvania or elsewhere to appear for and confess judgment against Buyer for all amounts for which Buyer may be or become liable to Seller or its assignee under this Agreement, as evidenced by an affidavit signed by an officer of Seller or of assignee setting forth the amounts then due plus five percent (5%) thereof, as an attorney's fee, with costs of suit and release of errors. Such authority shall not be exhausted by any one exercise thereof but judgment may be confessed as aforesaid from time to time as often as there is a default hereunder. g. In any amicable action of ejectment brought hereon or any suit or amicable action brought for the purchase price or other sums due hereunder, Seller shall first cause to be filed in such suit, action or actions, an affidavit made by it or someone acting for it, setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be prima facie evidence and if a true copy of this Agreement (and of the truth of said copy such affidavit shall be prima facie evidence) shall be filed in such suit, action or actions, it shall not be necessary to file the original as a warrant of attorney, any rule of court, custom or practice to the contrary notwithstanding. h. The Buyer hereby waives and releases all errors, defects and imperfections whatsoever of a procedural nature in the entering of any judgment or any process or proceedings arising out of this Agreement. Buyer also waives the benefit of any laws which now or hereafter might authorize the stay of any execution to be issued or any judgment recovered hereunder or the exemption of any property from levy or sale thereunder.

i. All interest of Buyer in the premiums or dividends upon any insurance provided for herein, as well as any rebates on taxes or assessments imposed on the Premises are hereby assigned to Seller. 26. Cumulative Rights No right or remedy herein conferred upon or reserved to Seller is intended to be exclusive of any other right or remedy herein or by law provided, but each shall be cumulative and in addition to every

Event of Default. Rentals under said leases may be applied by Seller to any repair or maintenance of the Premises as Seller may reasonably deem useful, and the remaining balance shall be applied to Buyer's obligations hereunder in order of priority to be determined by Seller. Any balance of rentals remaining thereafter shall be promptly paid over to Buyer by Seller. f. Buyer hereby irrevocably authorizes and empowers any attorney of any court of record of Pennsylvania or elsewhere to appear for and confess judgment against Buyer for all amounts for which Buyer may be or become liable to Seller or its assignee under this Agreement, as evidenced by an affidavit signed by an officer of Seller or of assignee setting forth the amounts then due plus five percent (5%) thereof, as an attorney's fee, with costs of suit and release of errors. Such authority shall not be exhausted by any one exercise thereof but judgment may be confessed as aforesaid from time to time as often as there is a default hereunder. g. In any amicable action of ejectment brought hereon or any suit or amicable action brought for the purchase price or other sums due hereunder, Seller shall first cause to be filed in such suit, action or actions, an affidavit made by it or someone acting for it, setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be prima facie evidence and if a true copy of this Agreement (and of the truth of said copy such affidavit shall be prima facie evidence) shall be filed in such suit, action or actions, it shall not be necessary to file the original as a warrant of attorney, any rule of court, custom or practice to the contrary notwithstanding. h. The Buyer hereby waives and releases all errors, defects and imperfections whatsoever of a procedural nature in the entering of any judgment or any process or proceedings arising out of this Agreement. Buyer also waives the benefit of any laws which now or hereafter might authorize the stay of any execution to be issued or any judgment recovered hereunder or the exemption of any property from levy or sale thereunder.

i. All interest of Buyer in the premiums or dividends upon any insurance provided for herein, as well as any rebates on taxes or assessments imposed on the Premises are hereby assigned to Seller. 26. Cumulative Rights No right or remedy herein conferred upon or reserved to Seller is intended to be exclusive of any other right or remedy herein or by law provided, but each shall be cumulative and in addition to every other right or remedy herein given or now or hereafter existing at law or in equity or by statute, and may be pursued singly, successively or together at the sole discretion of Seller and may be exercised as often as the occasion therefor shall occur. 27. Effect of Waiver or Forbearance No waiver by Seller of any breach by Buyer of any of its obligations, agreements or covenants hereunder shall be a waiver of any subsequent breach or of any obligation, agreement or covenant, nor shall any forbearance by Seller to seek a remedy for any breach by Buyer be a waiver by Seller of its rights and remedies with respect to that or any other breach. 28. Default by Seller and Buyer's Remedies Notwithstanding any provision or obligation to the contrary hereinbefore or hereinafter set forth, the liability of Seller, except as to PIDA, shall be limited to its interest in the Premises, the improvements thereon, the rents, issues and profits therefrom, and the lien of any judgment shall be restricted thereto. 29. Notices All notices provided for in this Agreement shall be in writing. Notices to Seller shall be sent by registered or certified mail. Subject to change by notice from the party to be charged with such notice, notices to Seller shall be addressed as follows: PIDC FINANCING CORPORATION c/o Philadelphia Industrial Development Corporation 2600 Centre Square West 1500 Market Street

i. All interest of Buyer in the premiums or dividends upon any insurance provided for herein, as well as any rebates on taxes or assessments imposed on the Premises are hereby assigned to Seller. 26. Cumulative Rights No right or remedy herein conferred upon or reserved to Seller is intended to be exclusive of any other right or remedy herein or by law provided, but each shall be cumulative and in addition to every other right or remedy herein given or now or hereafter existing at law or in equity or by statute, and may be pursued singly, successively or together at the sole discretion of Seller and may be exercised as often as the occasion therefor shall occur. 27. Effect of Waiver or Forbearance No waiver by Seller of any breach by Buyer of any of its obligations, agreements or covenants hereunder shall be a waiver of any subsequent breach or of any obligation, agreement or covenant, nor shall any forbearance by Seller to seek a remedy for any breach by Buyer be a waiver by Seller of its rights and remedies with respect to that or any other breach. 28. Default by Seller and Buyer's Remedies Notwithstanding any provision or obligation to the contrary hereinbefore or hereinafter set forth, the liability of Seller, except as to PIDA, shall be limited to its interest in the Premises, the improvements thereon, the rents, issues and profits therefrom, and the lien of any judgment shall be restricted thereto. 29. Notices All notices provided for in this Agreement shall be in writing. Notices to Seller shall be sent by registered or certified mail. Subject to change by notice from the party to be charged with such notice, notices to Seller shall be addressed as follows: PIDC FINANCING CORPORATION c/o Philadelphia Industrial Development Corporation 2600 Centre Square West 1500 Market Street Philadelphia, Pennsylvania 19102 and notices to Buyer shall be addressed as follows MOTHERS WORK, INC. 456 N. 5th Street Philadelphia, Pennsylvania

30. Survival of Covenants, Conditions and Representations Notwithstanding any presumption to the contrary, all covenants, conditions and representations of Buyer contained in this Agreement which, by nature, impliedly or expressly involve performance in any particular manner after the delivery of the Seller's deed or which cannot be ascertained to have been performed until after the said delivery shall survive said delivery. 31. Anti-Pollution Laws Buyer covenants and agrees that while the PIDA Mortgage is outstanding and unpaid, Buyer will comply with all governmental anti-pollution regulations and standards applicable to the Premises. Buyer further covenants and agrees that it will provide in all leases of the Premises or any part thereof that the lessee covenants and agrees to assume Buyer's obligations under all covenants contained in this paragraph. 32. Nondiscrimination During the term of this contract, Seller/Buyer agree as follows: a. Seller/Buyer shall not discriminate against any employee, applicant for employment, independent Seller/Buyer or any other person because of race, color, religious creed, ancestry, national origin, age or sex. Seller/Buyer shall take affirmative action to insure that applicants are employed, and that employees or agents are treated

30. Survival of Covenants, Conditions and Representations Notwithstanding any presumption to the contrary, all covenants, conditions and representations of Buyer contained in this Agreement which, by nature, impliedly or expressly involve performance in any particular manner after the delivery of the Seller's deed or which cannot be ascertained to have been performed until after the said delivery shall survive said delivery. 31. Anti-Pollution Laws Buyer covenants and agrees that while the PIDA Mortgage is outstanding and unpaid, Buyer will comply with all governmental anti-pollution regulations and standards applicable to the Premises. Buyer further covenants and agrees that it will provide in all leases of the Premises or any part thereof that the lessee covenants and agrees to assume Buyer's obligations under all covenants contained in this paragraph. 32. Nondiscrimination During the term of this contract, Seller/Buyer agree as follows: a. Seller/Buyer shall not discriminate against any employee, applicant for employment, independent Seller/Buyer or any other person because of race, color, religious creed, ancestry, national origin, age or sex. Seller/Buyer shall take affirmative action to insure that applicants are employed, and that employees or agents are treated during employment, without regard to their race, color, religious creed, handicap, ancestry, national origin, age or sex. Such affirmative action shall include, but is not limited to: employment, upgrading, demotion or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation and selection for training. Seller/Buyer shall post in conspicuous places, available to employees, agents, applicants for employment and other persons, a notice to be provided by the contracting agency setting forth the provisions of this nondiscrimination clause. b. Seller/Buyer shall in advertisments or requests for employment placed by it or on its behalf, state that all qualified applicants will receive consideration for employment without

regard to race, color, religious creed, handicap, ancestry, national origin, age or sex. c. Seller/Buyer shall send each labor union or workers representative with which it has a collective bargaining agreement or other contract or understanding, a notice advising said labor union or workers representative of its commitment to this nondiscrimination clause. Similar notice shall be sent to every other source of recruitment regularly utilized by Seller/Buyer. d. It shall be no defense to a finding of noncompliance with this nondiscrimination clause that Seller/Buyer had delegated some of its employment practices to any union, training program or other source of recruitment which prevents it from meeting its obligations. However, if the evidence indicates that the Seller/Buyer was not on notice of the third-party discrimination or made a good faith effort to correct it, such factor shall be considered in mitigation in determining appropriate sanctions. e. Where the practices of a union or of any training program or other source of recruitment will result in the exclusion of minority group persons, so that Seller/Buyer will be unable to meet its obligations under this nondiscrimination clause, Seller/Buyer shall then employ and fill vacancies through other nondiscriminatory employment procedures. f. Seller/Buyer shall comply with all state and federal laws prohibiting discrimination in hiring or employment opportunities. In the event of Seller/Buyer's noncompliance with the nondiscrimination clause of this contract or with any such laws, this contract may be terminated or suspended, in whole or in part, and Seller/Buyer may be declared temporarily ineligible for further Commonwealth contracts and other sanctions may be imposed and remedies invoked. g. Seller/Buyer shall furnish all necessary employment documents and records to, and permit access to its books, records and accounts by the contracting agency for purposes of investigation to ascertain compliance with the provisions of this clause. If Seller/Buyer does not possess documents or records

reflecting the necessary information requested, it shall furnish such information on reporting forms supplied by the

regard to race, color, religious creed, handicap, ancestry, national origin, age or sex. c. Seller/Buyer shall send each labor union or workers representative with which it has a collective bargaining agreement or other contract or understanding, a notice advising said labor union or workers representative of its commitment to this nondiscrimination clause. Similar notice shall be sent to every other source of recruitment regularly utilized by Seller/Buyer. d. It shall be no defense to a finding of noncompliance with this nondiscrimination clause that Seller/Buyer had delegated some of its employment practices to any union, training program or other source of recruitment which prevents it from meeting its obligations. However, if the evidence indicates that the Seller/Buyer was not on notice of the third-party discrimination or made a good faith effort to correct it, such factor shall be considered in mitigation in determining appropriate sanctions. e. Where the practices of a union or of any training program or other source of recruitment will result in the exclusion of minority group persons, so that Seller/Buyer will be unable to meet its obligations under this nondiscrimination clause, Seller/Buyer shall then employ and fill vacancies through other nondiscriminatory employment procedures. f. Seller/Buyer shall comply with all state and federal laws prohibiting discrimination in hiring or employment opportunities. In the event of Seller/Buyer's noncompliance with the nondiscrimination clause of this contract or with any such laws, this contract may be terminated or suspended, in whole or in part, and Seller/Buyer may be declared temporarily ineligible for further Commonwealth contracts and other sanctions may be imposed and remedies invoked. g. Seller/Buyer shall furnish all necessary employment documents and records to, and permit access to its books, records and accounts by the contracting agency for purposes of investigation to ascertain compliance with the provisions of this clause. If Seller/Buyer does not possess documents or records

reflecting the necessary information requested, it shall furnish such information on reporting forms supplied by the contracting agency. h. Seller/Buyer shall actively recruit minority subcontractors and women subcontractors or subcontractors with substantial minority representation among their employees. i. Seller/Buyer shall include the provisions of this nondiscrimination clause in every subcontract, so that such provisions will be binding upon each subcontractor. j. Seller/Buyer obligations under this clause are limited to the Seller/Buyer's facilities within Pennsylvania or, where the contract is for purchase of goods manufactured outside of Pennsylvania, the facilities at which such goods are actually produced. 33. Seller/Buyer Integrity a. Definitions. 1. Confidential Information means information that is not public knowledge, or available to the public on request, disclosure of which would give an unfair, unethical, or illegal advantage to another desiring to contract with the Commonwealth. 2. Consent means written permission signed by a duly authorized officer or employee of the Commonwealth, provided that where the material facts have been disclosed, in writing, by prequalification, bid, proposal, or contractual terms, the Commonwealth shall be deemed to have consented by virtue of execution of this Agreement. 3. Seller/Buyer means the individual or entity that has entered into this Agreement with the Commonwealth, including directors, officers, partners, managers, key employees and owners of more than a 5% interest.

reflecting the necessary information requested, it shall furnish such information on reporting forms supplied by the contracting agency. h. Seller/Buyer shall actively recruit minority subcontractors and women subcontractors or subcontractors with substantial minority representation among their employees. i. Seller/Buyer shall include the provisions of this nondiscrimination clause in every subcontract, so that such provisions will be binding upon each subcontractor. j. Seller/Buyer obligations under this clause are limited to the Seller/Buyer's facilities within Pennsylvania or, where the contract is for purchase of goods manufactured outside of Pennsylvania, the facilities at which such goods are actually produced. 33. Seller/Buyer Integrity a. Definitions. 1. Confidential Information means information that is not public knowledge, or available to the public on request, disclosure of which would give an unfair, unethical, or illegal advantage to another desiring to contract with the Commonwealth. 2. Consent means written permission signed by a duly authorized officer or employee of the Commonwealth, provided that where the material facts have been disclosed, in writing, by prequalification, bid, proposal, or contractual terms, the Commonwealth shall be deemed to have consented by virtue of execution of this Agreement. 3. Seller/Buyer means the individual or entity that has entered into this Agreement with the Commonwealth, including directors, officers, partners, managers, key employees and owners of more than a 5% interest. 4. Financial Interest means: (1) ownership of more than a 5% interest in any business; or

(2) holding a position as an officer, director, trustee, partner, employee or the like, or holding any position of management. 5. Gratuity means any payment of more than nominal monetary value in the form of cash, travel, entertainment, gifts, meals, lodging, loans, subscriptions, advances, deposits of money, services, employment or contracts of any kind. a. The Seller/Buyer shall maintain the highest standards of integrity in the performance of this Agreement and shall take no action in violation of state or federal laws, regulations, or other requirements that govern contracting with the Commonwealth. b. The Seller/Buyer shall not disclose to others any confidential information gained by virtue of this Agreement. c. The Seller/Buyer shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, confer, or agree to confer any pecuniary benefit on anyone as consideration for the decision, opinion, recommendation, vote, other exercise of discretion, or violation of a known legal duty by any officer or employee of the Commonwealth. d. The Seller/Buyer shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, give, or agree or promise to give to anyone any gratuity for the benefit of or at the direction or request of any officer or employee of the Commonwealth. e. Except with the consent of the Commonwealth, neither the Seller/Buyer nor anyone in privity with him shall

(2) holding a position as an officer, director, trustee, partner, employee or the like, or holding any position of management. 5. Gratuity means any payment of more than nominal monetary value in the form of cash, travel, entertainment, gifts, meals, lodging, loans, subscriptions, advances, deposits of money, services, employment or contracts of any kind. a. The Seller/Buyer shall maintain the highest standards of integrity in the performance of this Agreement and shall take no action in violation of state or federal laws, regulations, or other requirements that govern contracting with the Commonwealth. b. The Seller/Buyer shall not disclose to others any confidential information gained by virtue of this Agreement. c. The Seller/Buyer shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, confer, or agree to confer any pecuniary benefit on anyone as consideration for the decision, opinion, recommendation, vote, other exercise of discretion, or violation of a known legal duty by any officer or employee of the Commonwealth. d. The Seller/Buyer shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, give, or agree or promise to give to anyone any gratuity for the benefit of or at the direction or request of any officer or employee of the Commonwealth. e. Except with the consent of the Commonwealth, neither the Seller/Buyer nor anyone in privity with him shall accept or agree to accept from, or give or agree to give to, any person, any gratuity from any person in connection with the performance of work under this Agreement except as provided therein. f. Except with the consent of the Commonwealth, the Seller/Buyer shall not have a financial interest in any other Seller/Buyer, subcontractor, or supplier providing services, labor, or material on this project. g. The Seller/Buyer, upon being informed that any violation of these provisions has occurred or may occur, shall immediately notify the Commonwealth in writing.

h. The Seller/Buyer, by execution of this Agreement and by the submission of any bills or invoices for payment pursuant thereto, certifies and represents that he has not violated any of these provisions. i. The Seller/Buyer, upon the inquiry or request of the Inspector General of the Commonwealth or any of that official's agents or representatives, shall provide, or if appropriate, make promptly available for inspection or copying, any information of any type or form deemed relevant by the Inspector General to the Seller/Buyer's integrity or responsibility, as those terms are defined by the Commonwealth's statutes, regulations, or management directives. Such information may include, but shall not be limited to, the Seller/Buyer's business or financial records, documents or files of any type or form which refer to or concern this agreement. Such information shall be retained by the Seller/Buyer for a period of three years beyond the termination of the contract unless provided by law. j. For violation of any of the above provisions, the Commonwealth may terminate this and any other agreement with the Seller/Buyer, claim liquidated damages in an amount equal to the value of anything received in breach of these provisions, claim damages for all expenses incurred in obtaining another Seller/Buyer to complete performance hereunder, and debar and suspend the Seller/Buyer from doing business with the Commonwealth. These rights and remedies are cumulative, and the use or nonuse of any one shall not preclude the use of all or any other. These rights and remedies are in addition to those the Commonwealth may have under law, statute, regulation or otherwise. 34. Seller/Buyer Responsibility a. Seller/Buyer certifies that it is not currently under suspension or debarment by the Commonwealth, any other state, or the federal government.

h. The Seller/Buyer, by execution of this Agreement and by the submission of any bills or invoices for payment pursuant thereto, certifies and represents that he has not violated any of these provisions. i. The Seller/Buyer, upon the inquiry or request of the Inspector General of the Commonwealth or any of that official's agents or representatives, shall provide, or if appropriate, make promptly available for inspection or copying, any information of any type or form deemed relevant by the Inspector General to the Seller/Buyer's integrity or responsibility, as those terms are defined by the Commonwealth's statutes, regulations, or management directives. Such information may include, but shall not be limited to, the Seller/Buyer's business or financial records, documents or files of any type or form which refer to or concern this agreement. Such information shall be retained by the Seller/Buyer for a period of three years beyond the termination of the contract unless provided by law. j. For violation of any of the above provisions, the Commonwealth may terminate this and any other agreement with the Seller/Buyer, claim liquidated damages in an amount equal to the value of anything received in breach of these provisions, claim damages for all expenses incurred in obtaining another Seller/Buyer to complete performance hereunder, and debar and suspend the Seller/Buyer from doing business with the Commonwealth. These rights and remedies are cumulative, and the use or nonuse of any one shall not preclude the use of all or any other. These rights and remedies are in addition to those the Commonwealth may have under law, statute, regulation or otherwise. 34. Seller/Buyer Responsibility a. Seller/Buyer certifies that it is not currently under suspension or debarment by the Commonwealth, any other state, or the federal government. b. If Seller/Buyer enters into any subcontracts under this contract with subcontractors who are currently suspended or debarred by the Commonwealth or federal government or who become suspended or debarred by the Commonwealth or federal government during the term of

this contract or any extensions or renewals thereof, the Commonwealth shall have the right to require the Seller/Buyer to terminate such subcontracts. c. The Seller/Buyer agrees that it shall be responsible for reimbursing the Commonwealth for all necessary and reasonable costs and expenses incurred by the Office of the Inspector General relating to an investigation of the Seller/Buyer's compliance with the terms of this or any other agreement between the Seller/Buyer and the Commonwealth which results in the suspension or debarment of the Seller/Buyer. 35. Americans with Disabilities Act During the term of this contract, the Seller/Buyer agree as follows: a. Pursuant to federal regulations promulgated under the authority of The Americans With Disabilities Act, 28 C.F.R. Section 35.101 et seq., the Seller/Buyer understands and agrees that no individual with a disability shall, on the basis of the disability, be excluded from participation in this contract or from activities provided for under this contract. As a condition of accepting and executing this contract, the Seller/Buyer agrees to comply with the "General Prohibitions Against Discrimination", 28 C.F.R. Section 35.130, and all other regulations promulgated under Title II of The Americans With Disabilities Act which are applicable to the benefits, services, programs and activities provided by the Commonwealth of Pennsylvania through contracts with outside contractors. b. The Seller/Buyer shall be responsible for and agrees to indemnify and hold harmless the Commonwealth of Pennsylvania from all losses, damages, expenses, claims, demands, suits and actions brought by any party against the Commonwealth of Pennsylvania as a result of the Seller/Buyer's failure to comply with the provisions of Paragraph a above. 36. Descriptive Headings The descriptive headings of this Agreement are inserted for convenience in reference only and do not constitute a part of this Agreement.

this contract or any extensions or renewals thereof, the Commonwealth shall have the right to require the Seller/Buyer to terminate such subcontracts. c. The Seller/Buyer agrees that it shall be responsible for reimbursing the Commonwealth for all necessary and reasonable costs and expenses incurred by the Office of the Inspector General relating to an investigation of the Seller/Buyer's compliance with the terms of this or any other agreement between the Seller/Buyer and the Commonwealth which results in the suspension or debarment of the Seller/Buyer. 35. Americans with Disabilities Act During the term of this contract, the Seller/Buyer agree as follows: a. Pursuant to federal regulations promulgated under the authority of The Americans With Disabilities Act, 28 C.F.R. Section 35.101 et seq., the Seller/Buyer understands and agrees that no individual with a disability shall, on the basis of the disability, be excluded from participation in this contract or from activities provided for under this contract. As a condition of accepting and executing this contract, the Seller/Buyer agrees to comply with the "General Prohibitions Against Discrimination", 28 C.F.R. Section 35.130, and all other regulations promulgated under Title II of The Americans With Disabilities Act which are applicable to the benefits, services, programs and activities provided by the Commonwealth of Pennsylvania through contracts with outside contractors. b. The Seller/Buyer shall be responsible for and agrees to indemnify and hold harmless the Commonwealth of Pennsylvania from all losses, damages, expenses, claims, demands, suits and actions brought by any party against the Commonwealth of Pennsylvania as a result of the Seller/Buyer's failure to comply with the provisions of Paragraph a above. 36. Descriptive Headings The descriptive headings of this Agreement are inserted for convenience in reference only and do not constitute a part of this Agreement.

37. Recording A Memorandum of this Agreement shall be recorded in the Office of the Department of Records in and for Philadelphia County, Pennsylvania. IN WITNESS HEREOF, Seller and Buyer, on behalf of themselves, their executors, administrators, heirs, successors and assigns, have executed this Agreement the day and year first above written. PIDC FINANCING CORPORATION
Attest: /s/ Joseph A. Mee ------------------Assistant Secretary By: /s/ Joseph J. Aylmer ----------------------------Senior Vice President

MOTHERS WORK, INC.
Attest: /s/ Elan M. Hitchner, III ------------------------Assistant Secretary By: /s/ Thomas Frank ---------------------------Vice President Finance

37. Recording A Memorandum of this Agreement shall be recorded in the Office of the Department of Records in and for Philadelphia County, Pennsylvania. IN WITNESS HEREOF, Seller and Buyer, on behalf of themselves, their executors, administrators, heirs, successors and assigns, have executed this Agreement the day and year first above written. PIDC FINANCING CORPORATION
Attest: /s/ Joseph A. Mee ------------------Assistant Secretary By: /s/ Joseph J. Aylmer ----------------------------Senior Vice President

MOTHERS WORK, INC.
Attest: /s/ Elan M. Hitchner, III ------------------------Assistant Secretary By: /s/ Thomas Frank ---------------------------Vice President Finance

OPEN-END MORTGAGE (This Mortgage secures future advances) THIS INDENTURE made this 4th day of April, 1996, effective as of the 4th day of April, 1996, between PIDC FINANCING CORPORATION, a nonprofit corporation organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania (the "Mortgagor"), and THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and politic, organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, having its principal place of business in Harrisburg, Pennsylvania ("PIDA"). WHEREAS, PIDA, under a Loan Agreement bearing even date herewith (the "Loan Agreement"), incorporated herein by reference thereto and made a part hereof, has agreed to lend the Mortgagor the principal sum of Two Million Dollars ($2,000,000) (the "Loan") upon terms and subject to conditions as set forth therein; WHEREAS, the Mortgagor under a Note bearing even date herewith (the "Note"), incorporated herein by reference thereto and made a part hereof, is obligated to pay unto PIDA on or before the first day of May, 2011, the principal sum of Two Million Dollars ($2,000,000), together with interest thereon, lawful money of the United States of America in the manner provided in the Note and in the Loan Agreement, and to perform all of the provisions of the Note and this Mortgage, as therein and herein set forth; and WHEREAS, PlDA's agreement to make the Loan has been made subject to and in reliance upon execution and delivery of the Loan Documents; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that the Mortgagor in consideration of the principal indebtedness, and to secure the payment thereof and all other sums due or to become due under the Loan Documents, including without limitation the Note, the Loan Agreement, this Mortgage and the Assumption Agreement (the "Indebtedness") and the performance of all other provisions of the Loan Documents, intending to be legally bound by these presents, does hereby grant, bargain, sell, convey, release, alien, confirm and assign unto PIDA, its successors and assigns, all that certain parcel of land fully and accurately described on Exhibit A,

OPEN-END MORTGAGE (This Mortgage secures future advances) THIS INDENTURE made this 4th day of April, 1996, effective as of the 4th day of April, 1996, between PIDC FINANCING CORPORATION, a nonprofit corporation organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania (the "Mortgagor"), and THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and politic, organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, having its principal place of business in Harrisburg, Pennsylvania ("PIDA"). WHEREAS, PIDA, under a Loan Agreement bearing even date herewith (the "Loan Agreement"), incorporated herein by reference thereto and made a part hereof, has agreed to lend the Mortgagor the principal sum of Two Million Dollars ($2,000,000) (the "Loan") upon terms and subject to conditions as set forth therein; WHEREAS, the Mortgagor under a Note bearing even date herewith (the "Note"), incorporated herein by reference thereto and made a part hereof, is obligated to pay unto PIDA on or before the first day of May, 2011, the principal sum of Two Million Dollars ($2,000,000), together with interest thereon, lawful money of the United States of America in the manner provided in the Note and in the Loan Agreement, and to perform all of the provisions of the Note and this Mortgage, as therein and herein set forth; and WHEREAS, PlDA's agreement to make the Loan has been made subject to and in reliance upon execution and delivery of the Loan Documents; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that the Mortgagor in consideration of the principal indebtedness, and to secure the payment thereof and all other sums due or to become due under the Loan Documents, including without limitation the Note, the Loan Agreement, this Mortgage and the Assumption Agreement (the "Indebtedness") and the performance of all other provisions of the Loan Documents, intending to be legally bound by these presents, does hereby grant, bargain, sell, convey, release, alien, confirm and assign unto PIDA, its successors and assigns, all that certain parcel of land fully and accurately described on Exhibit A, attached hereto and made a part hereof. TOGETHER with all and singular the buildings and improvements erected or to be erected thereon, streets, alleys, passages, ways, waters, watercourses, rights, liberties, privileges, hereditaments and appurtenances whatsoever, thereunto belonging or in anywise appertaining, and the reversions and remainders and rents, issues and profits thereof, including all income arising therefrom and all insurance proceeds and proceeds of condemnation awards (collectively, the "Premises").

TO HAVE AND TO HOLD the Premises hereby granted or mentioned and intended so to be unto PIDA, its successors and assigns, to and for the only proper use and behoof of PIDA, its successors and assigns forever. PROVIDED, HOWEVER, that if there shall be and is paid PIDA the Indebtedness together with interest thereon and any other sums properly payable under the terms of the Loan Documents, on the date and in the manner provided in the Loan Documents, and all the other covenants and promises herein and therein contained are kept by the particular parties subject thereto, then and from thenceforth this Mortgage and the estate hereby created, granted, transferred and assigned shall be void, but otherwise shall remain in full force and effect. AND THE MORTGAGOR HEREBY FURTHER REPRESENTS, COVENANTS AND AGREES AS FOLLOWS: 1. The Mortgagor has good, valid and marketable title to the Premises. The Mortgagor has the right, full power and lawful authority to grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over and confirm the same to PIDA in the manner and form herein done. The Premises are free and clear of all liens and encumbrances except those of record which have been previously disclosed in writing to PIDA. This Mortgage is and shall be subordinate in lien and in payment only to that certain mortgage in the principal sum of $4,094,684.93

TO HAVE AND TO HOLD the Premises hereby granted or mentioned and intended so to be unto PIDA, its successors and assigns, to and for the only proper use and behoof of PIDA, its successors and assigns forever. PROVIDED, HOWEVER, that if there shall be and is paid PIDA the Indebtedness together with interest thereon and any other sums properly payable under the terms of the Loan Documents, on the date and in the manner provided in the Loan Documents, and all the other covenants and promises herein and therein contained are kept by the particular parties subject thereto, then and from thenceforth this Mortgage and the estate hereby created, granted, transferred and assigned shall be void, but otherwise shall remain in full force and effect. AND THE MORTGAGOR HEREBY FURTHER REPRESENTS, COVENANTS AND AGREES AS FOLLOWS: 1. The Mortgagor has good, valid and marketable title to the Premises. The Mortgagor has the right, full power and lawful authority to grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over and confirm the same to PIDA in the manner and form herein done. The Premises are free and clear of all liens and encumbrances except those of record which have been previously disclosed in writing to PIDA. This Mortgage is and shall be subordinate in lien and in payment only to that certain mortgage in the principal sum of $4,094,684.93 encumbering the Premises given to MERIDIAN BANK, dated September 28, 1995 which principal sum shall be reduced to the sum of $4,000,000 on the same date hereof (the "Bank Mortgage"). The Mortgagor will warrant and defend the rights and title of PIDA to all of the Premises against all claims, except the Bank Mortgage. 2. The proceeds of the Note secured hereby shall be used solely for the purpose of paying a part of the cost of establishing an industrial development project (the "Project") to be purchased by MOTHERS WORK, INC. (the "Industrial Occupant") pursuant to the Premises Agreement. The Mortgagor represents and warrants that no default has occurred under the Premises Agreement on the part of Mortgagor or on the part of Industrial Occupant of which Mortgagor has knowledge. 3. The Mortgagor will perform promptly all the terms, covenants, and conditions required under the Premises Agreement, and the Mortgagor will do or cause to be done all things necessary to preserve unimpaired its rights thereunder and will immediately notify PIDA in writing of any default under the Agreement. 4. The Mortgagor will immediately do or cause to be done from time to time all things necessary to maintain and preserve its corporate existence, rights, franchises and privileges and will duly observe, conform, obey and comply with or will cause due observation, conformance. obedience and compliance with all requirements of any court or governmental authority relative to the Premises. The Mortgagor shall duly and punctually pay, or cause to be paid, the Indebtedness, and at the time and times and in the manner as provided in and by the Loan Documents, and shall perform all other agreements and provisions hereof and thereof, and pay when due all other obligations and debts hereby secured. The Mortgagor shall duly and punctually pay, or cause to be paid, all amounts secured by the Bank Mortgage and shall duly and punctually perform or cause to be performed in accordance with the terms of the Bank Mortgage, the Note secured thereby and any other obligations undertaken in connection therewith. 2

The Mortgagor will duly and promptly pay and discharge, as the same shall become due and payable and before they become delinquent, all taxes, water and sewer rents, assessments and other governmental charges, levied or assessed or imposed upon or against the property mortgaged hereby or upon the rents, issues, income and profits therefrom so as to prevent the same from becoming or being an enforceable lien or claim against the property mortgaged hereby or the interest of the Mortgagor having a priority over the lien of this Mortgage or the obligations of Mortgagor to PIDA under the Note or the Loan Agreement. Upon request, the Mortgagor will furnish, or will cause to be furnished to PIDA, not less than fifteen (15) days prior to the date on which payment of the same would become delinquent, receipts or other evidence satisfactory to PIDA of the payment of all such taxes, rates, assessments and other governmental charges.

The Mortgagor will duly and promptly pay and discharge, as the same shall become due and payable and before they become delinquent, all taxes, water and sewer rents, assessments and other governmental charges, levied or assessed or imposed upon or against the property mortgaged hereby or upon the rents, issues, income and profits therefrom so as to prevent the same from becoming or being an enforceable lien or claim against the property mortgaged hereby or the interest of the Mortgagor having a priority over the lien of this Mortgage or the obligations of Mortgagor to PIDA under the Note or the Loan Agreement. Upon request, the Mortgagor will furnish, or will cause to be furnished to PIDA, not less than fifteen (15) days prior to the date on which payment of the same would become delinquent, receipts or other evidence satisfactory to PIDA of the payment of all such taxes, rates, assessments and other governmental charges. 5. The Mortgagor shall keep all buildings and improvements now or hereafter erected upon the Premises insured for the benefit of PIDA under an all-risk hazard insurance policy covering physical loss or damage including fire and extended coverage, collapse, liquid damage, flood (to the extent required below), earthquake and comprehensive boiler/machinery, written on a replacement cost basis in an amount not less than the full insurable value of the property mortgaged hereby (excluding (on fire and extended coverage only) foundations and other parts below the surface of the lowest floor), as determined, upon request of PIDA, not more than once annually by an appraiser or rating bureau satisfactory to PIDA. In addition, the aforesaid policy shall have attached thereto, or the Mortgagor shall provide or cause to be provided by separate policy, business interruption insurance, insuring all fixed charges of the Industrial Occupant (or any other person or entity that may from time to time be the Mortgagor's lessee or purchaser of the mortgaged premises), including the amount necessary to repay this Mortgage, for a period of not less than one year, such insurance to be acceptable to PIDA. During the period of construction of the Project on the Premises, the Mortgagor shall maintain builder's risk insurance in an amount satisfactory to PIDA and shall require its contractor to maintain worker's compensation insurance. PIDA shall receive copies of all of said policies. PIDA shall receive copies of all of said policies upon the execution of this Mortgage and upon each renewal, expansion or modification thereof, together with a current Acord 27 Evidence of Property Insurance Certificate. Any modification of such insurance policy must be approved by PIDA in writing prior to the effective date of such modification. PIDA may settle all claims under all such policies except workers compensation and may demand, receive and receipt for all moneys becoming payable thereunder. The proceeds under any policy shall be paid by the insurer to Mortgagor and PIDA as their respective interests may appear, and PIDA in its discretion may apply the amount so collected toward the payment of the Indebtedness or toward the alteration, reconstruction, repair or restoration of the damaged portion of the Premises or any portion thereof. The Mortgagor shall prepay the premiums for all such insurance for at least one (1) month in advance and thereafter deliver to PIDA evidence of payment of all premiums due on such insurance together with certificates of such insurance at least thirty (30) days before payment is due. The Mortgagor shall also secure such certificates from public officials as are available for the purpose or otherwise demonstrate to the satisfaction of PIDA that the Premises is not located within an area identified by Federal Emergency Management Agency as having "special flood hazards," as such term is used in the National Flood Insurance Act of 1968, as amended and supplemented by The Flood Disaster Protection Act of 1973, and in regulations, interpretations and rulings thereunder or in a zoned flood 3

plain or flood hazard area as determined by local findings, determinations, ordinances, regulations or rulings, and if located therein, the Mortgagor shall secure the amount of flood insurance required by PIDA in its discretion and demonstrate payment of all premiums due therefor. All insurance policies described in this Section 5 shall be written by insurance companies licensed to do business within the Commonwealth of Pennsylvania and satisfactory to PIDA. While this Mortgage is in effect, the Mortgagor shall also maintain worker's compensation insurance (containing a stop gap endorsement) and public liability on the Premises in amounts satisfactory to PIDA and shall deliver copies of such policies to PIDA. Insurance carried in accordance with this Section 5 shall be endorsed to provide (a) With respect to all liability insurance policies, PIDA is included as additional insured, with the understanding that any obligation imposed upon Mortgagor (including without limitation, the liability to pay premiums) shall be the sole obligation of Mortgagor and not that of PIDA. (b) Property and business interruption insurance policies shall include a standard lender's loss payable endorsement in favor of PIDA. All coverage shall be written with a valid agreed amount endorsement and in a

plain or flood hazard area as determined by local findings, determinations, ordinances, regulations or rulings, and if located therein, the Mortgagor shall secure the amount of flood insurance required by PIDA in its discretion and demonstrate payment of all premiums due therefor. All insurance policies described in this Section 5 shall be written by insurance companies licensed to do business within the Commonwealth of Pennsylvania and satisfactory to PIDA. While this Mortgage is in effect, the Mortgagor shall also maintain worker's compensation insurance (containing a stop gap endorsement) and public liability on the Premises in amounts satisfactory to PIDA and shall deliver copies of such policies to PIDA. Insurance carried in accordance with this Section 5 shall be endorsed to provide (a) With respect to all liability insurance policies, PIDA is included as additional insured, with the understanding that any obligation imposed upon Mortgagor (including without limitation, the liability to pay premiums) shall be the sole obligation of Mortgagor and not that of PIDA. (b) Property and business interruption insurance policies shall include a standard lender's loss payable endorsement in favor of PIDA. All coverage shall be written with a valid agreed amount endorsement and in a sufficient amount to prevent any coinsurance penalty and PIDA as additional named insured with the understanding that any obligation imposed upon Mortgagor (including with limitation, the liability to pay premiums) shall be the sole obligation of Mortgagor and not that of PIDA. In the event of Default, PIDA and other lenders to Mortgagor shall be named as sole loss payees as their interests shall appear. (c) With respect to all insurance maintained pursuant to this Section 5, the interests of PIDA are not invalidated by any action or inaction of Mortgagor or any other natural or artificial person and PIDA is insured regardless of any breach or violation by Mortgagor or any other person of any warranties, declarations or conditions contained in such policies. (d) With respect to all insurance maintained pursuant to this Section 5, such policies shall be endorsed to provide that: (i) the insurers thereunder waive all rights of subrogation against PIDA, any right of set-off and counterclaim and any other right to deduction whether by attachment or otherwise, (ii) such insurance is primary without right of contribution of any other insurance carried by or on behalf of PIDA, (iii) if such insurance is cancelled by the insurer for any reason whatsoever (including without limitation, nonpayment or premium) or any substantial change is made in the coverage that affects the interests of PIDA, such cancellation or substantial change is not to be effective as to PIDA until thirty (30) days after receipt by PIDA of notice sent to PIDA as specified in the Loan Agreement. (e) On each anniversary of the Closing Date, Mortgagor shall furnish PIDA with approved certification of all required insurance. Such certification shall be executed by each insurer or by an authorized representative of each insurer where it is not practical for such insurer to execute the certificate itself. Such certification shall identify underwriters, the type of insurance, the insurance limits and the policy terms, and shall specifically list the special provisions enumerated for such insurance required by this Section 5. Upon request, Mortgagor shall furnish PIDA with copies of all insurance policies, binders and cover notes or other evidence of such insurance. 4

(f) Concurrently with the furnishing of all certifications referred to in paragraph (e) of this Section 5, Mortgagor shall furnish PIDA with an opinion of each insurance broker stating that all premiums then due have been paid and that, in the opinion of such broker, the insurance is then in accordance with the provisions of this Section 5. Furthermore, Mortgagor shall cause each insurer or such broker to advise PIDA promptly in writing of any default in the payment of any premiums or any other act or omission on the part of Mortgagor or any contractor of Mortgagor which might invalidate or render unenforceable, in whole or part, any insurance provided hereunder. PIDA, at its sole option, may obtain such insurance if not provided by Mortgagor, and, in such event, Mortgagor shall reimburse PIDA upon demand for the cost thereof, together with interest from the date of payment of the premiums by PIDA to the date on which Borrower repays such premiums, at the rate provided in Section 14 hereof. (g) Upon the occurrence and continuance of an Event of Default, all proceeds payable from any property and casualty above which are payable to Mortgagor shall be paid to PIDA and other lenders to Mortgagor, as their interests shall appear without the consent of Mortgagor.

(f) Concurrently with the furnishing of all certifications referred to in paragraph (e) of this Section 5, Mortgagor shall furnish PIDA with an opinion of each insurance broker stating that all premiums then due have been paid and that, in the opinion of such broker, the insurance is then in accordance with the provisions of this Section 5. Furthermore, Mortgagor shall cause each insurer or such broker to advise PIDA promptly in writing of any default in the payment of any premiums or any other act or omission on the part of Mortgagor or any contractor of Mortgagor which might invalidate or render unenforceable, in whole or part, any insurance provided hereunder. PIDA, at its sole option, may obtain such insurance if not provided by Mortgagor, and, in such event, Mortgagor shall reimburse PIDA upon demand for the cost thereof, together with interest from the date of payment of the premiums by PIDA to the date on which Borrower repays such premiums, at the rate provided in Section 14 hereof. (g) Upon the occurrence and continuance of an Event of Default, all proceeds payable from any property and casualty above which are payable to Mortgagor shall be paid to PIDA and other lenders to Mortgagor, as their interests shall appear without the consent of Mortgagor. 6. The Mortgagor shall keep the Premises and improvements thereon in good condition and repair and shall not remove, demolish or materially alter in a manner so as to reduce the value thereof the buildings or improvements on the Premises nor commit or suffer waste with respect thereto. The Mortgagor shall maintain the Premises in compliance with all applicable governmental requirements. In the event of damage to the Premises caused by fire or other casualty or condemnation, the Mortgagor shall restore the Premises to the condition it was in prior to the occurrence of such damage, and shall further comply with any additional requirements imposed by law, required by insurance, or otherwise required, applicable to the Premises subsequent to such restoration. The Mortgagor shall permit PlDA's agents at any reasonable time, and from time to time, to enter upon the Premises and the buildings and improvements constructed thereon for the purpose of inspecting and appraising the same. While the Mortgage is outstanding and unpaid, neither the Mortgagor nor its successors shall take or permit any action with respect to the property mortgaged hereby which will in any manner impair PlDA's security under this Mortgage, including but not limited to the creation of any additional debt secured by the Premises, nor shall they, without the prior written approval of PIDA, convey, transfer, encumber, hypothecate, lease or otherwise dispose of the Premises. 7. The Mortgagor will, and hereby does, assign to PIDA as additional security for the repayment of the Indebtedness, all its right, title and interest in, to and under the Premises Agreement, together with all sums due thereunder, and agrees that PIDA may collect and apply the same to the payment of any sum required to be paid by the Mortgagor under the Note or this Mortgage, provided, however, that by reason of such assignment the Mortgagor shall not be relieved of, and PIDA does not assume, the Mortgagor's obligations under the Agreement. 8. If PIDA retains the services of counsel in order to cure any default under this Mortgage or any of the Loan Documents, reasonable attorneys' fees shall be payable by the Mortgagor to PIDA and shall be secured hereby. The Mortgagor shall also pay all costs in connection with the satisfaction of this Mortgage of record. 9. An event of default hereunder (an "Event of Default") shall be any of the following: (i) the occurrence of any Event of Default as defined in the Loan Agreement, (ii) failure to pay any sum required to be paid under any of 5

the Loan Documents within thirty (30) days after the same becomes due and payable, (iii) default in the due and punctual payment of the principal of or interest on any loan or debt instrument secured by the Premises after the same shall become due and payable and any applicable cure period shall have expired, or (iv) default in the due and punctual observance or performance of any of the covenants or agreements contained in any loan or debt instrument secured by the Premises which default shall have created a right of acceleration pursuant to such loan or debt instrument. Upon the occurrence of any such Event of Default, other than an Event of Default declared solely as a result of a breach by the Industrial Occupant of Section 4.03 of the Assumption Agreement, at the option of PIDA: (a) the entire unpaid balance of the Indebtedness shall become due and payable immediately, without further notice to the Mortgagor, and shall be recoverable by PIDA immediately or at any time or times thereafter, without stay of execution or other process; (b) PIDA may take immediate possession of the Premises as provided hereunder; and (c) PIDA may immediately exercise any and all other rights and remedies provided in

the Loan Documents within thirty (30) days after the same becomes due and payable, (iii) default in the due and punctual payment of the principal of or interest on any loan or debt instrument secured by the Premises after the same shall become due and payable and any applicable cure period shall have expired, or (iv) default in the due and punctual observance or performance of any of the covenants or agreements contained in any loan or debt instrument secured by the Premises which default shall have created a right of acceleration pursuant to such loan or debt instrument. Upon the occurrence of any such Event of Default, other than an Event of Default declared solely as a result of a breach by the Industrial Occupant of Section 4.03 of the Assumption Agreement, at the option of PIDA: (a) the entire unpaid balance of the Indebtedness shall become due and payable immediately, without further notice to the Mortgagor, and shall be recoverable by PIDA immediately or at any time or times thereafter, without stay of execution or other process; (b) PIDA may take immediate possession of the Premises as provided hereunder; and (c) PIDA may immediately exercise any and all other rights and remedies provided in this Mortgage and in the Note, or which may be available to PIDA, and all such rights and remedies shall be cumulative and concurrent and may be pursued singly, successively or together in PlDA's sole discretion, and may be exercised from time to time and as often as an occasion, or occasions, therefor shall occur until the Indebtedness hereby secured is paid in full. 10. Subject to the rights of MERIDIAN BANK under the First Mortgage, if PIDA shall take possession of the Premises as provided hereunder, PIDA may in its sole discretion: (a) hold, manage, operate and lease the same to the Mortgagor or any other person or persons, on such terms and for such periods of time as PIDA may deem appropriate and the provisions of any lease made by PIDA pursuant hereto shall be valid and binding upon the Mortgagor notwithstanding the fact that PlDA's right of possession may terminate or this Mortgage may be satisfied of record prior to the expiration of the term of such lease; (b) make such alterations, additions, improvements, renovations, repairs and replacements thereto as PIDA may deem proper; (c) remodel such improvements so as to make the same available in whole or in part for other industrial purposes; and (d) collect the rents, issues and profits arising from the Premises, past due and thereafter becoming due, and apply the same, in such order of priority as PIDA may determine, to the payment of all charges and commissions incidental to the collection of rents and the management of the Premises and all other sums or charges required to be paid by the Mortgagor hereunder. In addition to the payment of such charges and commissions, PIDA shall be entitled to retain not less than fifteen percent (15%) of such rents, issues and profits in payment for the services of PIDA. All moneys advanced by PIDA for the purposes aforesaid and not repaid out of the rents collected shall immediately and without demand be repaid by the Mortgagor to PIDA, together with interest thereon at the rate of fifteen percent (15%) per annum, and shall be added to the principal of the Indebtedness and be secured by this Mortgage. The production of a receipt by PIDA shall be conclusive proof of a payment or advance authorized hereby, and the amount and validity thereof. The taking of possession and collection of rents by PIDA as aforesaid shall not be construed to be an affirmation of any lease of the Premises or any part thereof, and PIDA or any other purchaser at any foreclosure sale may, if otherwise entitled to do so, exercise the right to terminate any such lease as though such taking of possession and collection of rents had not occurred. 6

11. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR, THE MORTGAGOR HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE COUNSEL OF THE MORTGAGOR, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE MORTGAGOR HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA. IN CASE OF ANY EVENT OF DEFAULT HEREUNDER, (OF WHICH AN AFFIDAVIT ON BEHALF OF PIDA SHALL BE SUFFICIENT EVIDENCE), THEN, AND IN ANY SUCH EVENT, ANY ATTORNEY OF ANY COURT OF RECORD OF PENNSYLVANIA OR ELSEWHERE IS HEREBY AUTHORIZED AND EMPOWERED TO APPEAR FOR THE MORTGAGOR, AND ALL PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR, AND AS ATTORNEY FOR THE MORTGAGOR AND ALL PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR, TO SIGN AN AGREEMENT FOR ENTERING AN AMICABLE ACTION OF EJECTMENT FOR POSSESSION OF THE PREMISES OR ANY PART THEREOF AND TO CONFESS JUDGMENT

11. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR, THE MORTGAGOR HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE COUNSEL OF THE MORTGAGOR, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE MORTGAGOR HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA. IN CASE OF ANY EVENT OF DEFAULT HEREUNDER, (OF WHICH AN AFFIDAVIT ON BEHALF OF PIDA SHALL BE SUFFICIENT EVIDENCE), THEN, AND IN ANY SUCH EVENT, ANY ATTORNEY OF ANY COURT OF RECORD OF PENNSYLVANIA OR ELSEWHERE IS HEREBY AUTHORIZED AND EMPOWERED TO APPEAR FOR THE MORTGAGOR, AND ALL PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR, AND AS ATTORNEY FOR THE MORTGAGOR AND ALL PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR, TO SIGN AN AGREEMENT FOR ENTERING AN AMICABLE ACTION OF EJECTMENT FOR POSSESSION OF THE PREMISES OR ANY PART THEREOF AND TO CONFESS JUDGMENT THEREIN AGAINST THE MORTGAGOR, IN FAVOR OF PIDA, WHEREUPON A WRIT FOR POSSESSION MAY IMMEDIATELY ISSUE FOR THE POSSESSION OF THE PREMISES. WITHOUT ANY PRIOR COMPLAINT, WRIT OR PROCEEDING WHATSOEVER; AND FOR SO DOING THIS MORTGAGE. OR A COPY HEREOF VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT WARRANT. THIS POWER MAY BE EXERCISED AS OFTEN AS PIDA SHALL REQUIRE AND SHALL NOT BE EXHAUSTED BY ONE OR MORE OR BY ANY IMPERFECT EXERCISE THEREOF. IF MORTGAGOR WISHES TO CHALLENGE ANY JUDGMENT CONFESSED PURSUANT TO THIS SECTION, IT SHALL DO SO ONLY BY FILING A PETITION TO OPEN THE JUDGMENT PURSUANT TO PENNSYLVANIA RULES OF CIVIL PROCEDURE RULE 2959, AS IN EFFECT FROM TIME TO TIME ("RULE 2959"), AND SHALL NOT OTHERWISE INTERFERE (BY FILING ANY CIVIL ACTION, BILL IN EQUITY, OR OTHERWISE) WITH THE OPERATION OF THE JUDGMENT GRANTED PURSUANT TO THIS SECTION. MORTGAGOR EXPRESSLY ACKNOWLEDGES THAT THE PROCEDURE AVAILABLE TO IT THROUGH RULE 2959 WILL PROVIDE IT WITH A FULL AND FAIR OPPORTUNITY TO BE HEARD AS TO ANY REASON WHY JUDGMENT SHOULD NOT BE ENTERED AGAINST IT. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED THE SAME SHALL BE DISCONTINUED OR POSSESSION OF THE PREMISES SHALL REMAIN IN OR BE RESTORED TO THE MORTGAGOR, PIDA SHALL HAVE THE RIGHT FOR THE SAME DEFAULT OR ANY SUBSEQUENT DEFAULT TO BRING ONE OR MORE FURTHER AMICABLE ACTIONS AS ABOVE PROVIDED TO RECOVER POSSESSION OF THE PREMISES. PIDA MAY BRING SUCH AMICABLE ACTION IN EJECTMENT BEFORE OR AFTER JUDGMENT ON THIS MORTGAGE OR ON THE NOTE, OR AFTER A SALE OF THE PREMISES BY THE SHERIFF. IF AFTER EXECUTION AND RETURN OF THE WRIT OF POSSESSION, THE 7

MORTGAGOR SHALL RE-ENTER INTO POSSESSION OF THE PREMISES, THE PROTHONOTARY, UPON PRAECIPE AND AFFIDAVIT SETTING FORTH THE FACTS FILED WITHIN THREE YEARS AFTER THE RETURN OF THE WRIT UPON WHICH EXECUTION WAS COMPLETED SHALL ISSUE A NEW WRIT OF POSSESSION. THE MORTGAGOR ACKNOWLEDGES THAT IT UNDERSTANDS THE MEANING AND EFFECT OF THE CONFESSION CONTAINED IN THE FOREGOING PARAGRAPH. SPECIFICALLY, THE MORTGAGOR UNDERSTANDS AMONG OTHER THINGS THAT (1) IT IS RELINQUISHING THE RIGHT TO HAVE NOTICE EXCEPT AS PROVIDED HEREIN, AN OPPORTUNITY TO BE HEARD AND THE RIGHT TO HAVE THE BURDEN OF PROOF OF DEFAULT REST ON PIDA PRIOR TO THE ENTRY OF JUDGMENT, (2) THE ENTRY OF JUDGMENT MAY RESULT IN A LIEN ON ITS PROPERTY, (3) IT WILL BEAR

MORTGAGOR SHALL RE-ENTER INTO POSSESSION OF THE PREMISES, THE PROTHONOTARY, UPON PRAECIPE AND AFFIDAVIT SETTING FORTH THE FACTS FILED WITHIN THREE YEARS AFTER THE RETURN OF THE WRIT UPON WHICH EXECUTION WAS COMPLETED SHALL ISSUE A NEW WRIT OF POSSESSION. THE MORTGAGOR ACKNOWLEDGES THAT IT UNDERSTANDS THE MEANING AND EFFECT OF THE CONFESSION CONTAINED IN THE FOREGOING PARAGRAPH. SPECIFICALLY, THE MORTGAGOR UNDERSTANDS AMONG OTHER THINGS THAT (1) IT IS RELINQUISHING THE RIGHT TO HAVE NOTICE EXCEPT AS PROVIDED HEREIN, AN OPPORTUNITY TO BE HEARD AND THE RIGHT TO HAVE THE BURDEN OF PROOF OF DEFAULT REST ON PIDA PRIOR TO THE ENTRY OF JUDGMENT, (2) THE ENTRY OF JUDGMENT MAY RESULT IN A LIEN ON ITS PROPERTY, (3) IT WILL BEAR THE BURDEN AND EXPENSE OF ATTACKING THE JUDGMENT AND CHALLENGING EXECUTION ON THE LIEN AND SALE OF THE PROPERTY COVERED THEREBY, AND (4) ENOUGH OF ITS PROPERTY MAY BE TAKEN TO PAY THE PRINCIPAL AMOUNT, INTEREST, COSTS AND ATTORNEY'S FEES. 12. The Mortgagor waives the right of inquisition on any property levied upon under a judgment obtained in proceedings to collect the Indebtedness hereby secured or in proceedings on this Mortgage, and further waives and releases any and all benefits that may accrue to the Mortgagor by virtue of any law relating to appraisements, stay of execution or exemption of the Premises from levy or sale under execution, now or hereafter in force. A foreclosure sale shall constitute a foreclosure sale of all equity whatsoever of the Mortgagor in the Premises and PIDA shall, if it is the purchaser at the sale, hold the Premises and any part thereof so purchased free of any equity of redemption by reason of any circumstances whatsoever and not as collateral for any obligation. 13. No extension or indulgence granted to the Mortgagor, and no alteration, change or modification of the Note consented or agreed to by PIDA, and no other act or omission of PIDA, including the taking of additional security or the release of any security, or the waiver by PIDA or failure by PIDA to enforce any provision of any of the Loan Documents or to declare a default with respect thereto, shall constitute a release of the lien and obligation of this Mortgage or be interposed as a defense against the enforcement of this Mortgage, or operate as a waiver of any subsequent defaults or otherwise affect the right of PIDA to exercise all rights or remedies stipulated herein and in any of the Loan Documents, except an act of PIDA which constitutes an express, effective, written release and satisfaction of the Note. 14. In the event of any failure to pay or cause to be paid all amounts due under any indebtedness secured by the Premises, or any taxes, water and sewer rents, charges, claims, assessments, assessments for public improvements, liens or encumbrances or to furnish and pay for the insurance required hereunder, or to keep the Premises in good condition and repair, or to pay any other amount required to be paid by any person under any of the Loan Documents, PIDA may, at its option, pay any or all such items together with penalties and interest thereon, and procure and pay for such insurance and repairs; and PIDA may at any time and from time to time advance such additional sum or sums as PIDA in its sole discretion may deem necessary to protect the security of this Mortgage. All such sums so paid or advanced by PIDA shall immediately and without demand be secured hereby and be repaid by the Mortgagor to PIDA, 8

together with interest thereon at the rate of fifteen percent (15%) per annum, and shall be added to the principal of the indebtedness and be secured by this Mortgage. The production of a receipt by PIDA shall be conclusive proof of a payment or advance authorized hereby, and the amount and validity thereof. 15. The Mortgagor covenants and agrees that it shall in the Premises Agreement require of the Industrial Occupant and that it shall further require of any subsequent buyer, lessee or occupant of the Premises, that the Premises shall be used solely for purposes at all times eligible for financing by PIDA under the provisions of the Pennsylvania Industrial Development Authority Act, regulations, statements of policy, guidelines and interpretations of the PIDA Board and staff, each as in effect from time to time, until the Indebtedness shall have been paid in full.

together with interest thereon at the rate of fifteen percent (15%) per annum, and shall be added to the principal of the indebtedness and be secured by this Mortgage. The production of a receipt by PIDA shall be conclusive proof of a payment or advance authorized hereby, and the amount and validity thereof. 15. The Mortgagor covenants and agrees that it shall in the Premises Agreement require of the Industrial Occupant and that it shall further require of any subsequent buyer, lessee or occupant of the Premises, that the Premises shall be used solely for purposes at all times eligible for financing by PIDA under the provisions of the Pennsylvania Industrial Development Authority Act, regulations, statements of policy, guidelines and interpretations of the PIDA Board and staff, each as in effect from time to time, until the Indebtedness shall have been paid in full. 16. All covenants, stipulations and agreements contained in this Mortgage by or on behalf of the Mortgagor shall be binding upon its successors in title or interest and its assigns, whether so expressed or not. 17. This Mortgage may be amended only with the written consent of the Mortgagor, PIDA and the Industrial Occupant. 18. Notice to the Mortgagor under the Note or this Mortgage shall be deemed sufficient if given in accordance with Section 10.14 of the Loan Agreement. 19. The provisions of this Mortgage are severable. In the event of the unenforceability or invalidity of any one or more of the terms, covenants, conditions or provisions of this Mortgage under federal, state or other applicable law, such unenforceability or invalidity shall not render any other of the terms, covenants, conditions or provisions hereof unenforceable or invalid. In the event any waiver by Mortgagor hereunder is prohibited by law, including but not limited to the waiver of exemption from execution, such waiver shall be and be deemed to be deleted herefrom. 20. All capitalized terms not defined herein shall have the meanings ascribed to them in the Loan Agreement. 21. This Mortgage is an open-end mortgage as defined at 42 PA C.S.A. 8143(f) and as such is entitled to all the benefits of 42 PA C.S.A. 8143 et seq., P.L. 525, No. 126, Act 126 of 1990 (the "Act"). The parties to this Mortgage intend that, in addition to any other debt or obligation secured hereby, this Mortgage shall secure unpaid balances of loan advances made after the Mortgage is left for recording, whether such advances are made pursuant to an obligation of PIDA or otherwise. The maximum amount of unpaid loan indebtedness (which shall consist of unpaid advances made either before or after, or both before and after, this Mortgage is left for recording) and which may be outstanding at any time shall be the face amount of the Note, plus accrued and unpaid interest thereon and any additional obligations payable hereunder or thereunder. In addition to the other obligations of the Mortgagor secured hereby, this Mortgage secures unpaid balances of advances made, with respect to the Premises, for the payment of taxes, assessments, maintenance charges, insurance premiums or costs incurred for the protection of the Premises or the lien created by this Mortgage and other expenses, including but not limited to costs and attorney's fees incurred by PIDA by reason of default by Mortgagor under this Mortgage or under any of the Loan Documents. 22. This is a purchase money mortgage. 23. This is a construction mortgage and secures an obligation incurred for the construction of an obligation on land including the acquisition cost of the land. 9

IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage on the day and year first above written.
ATTEST: /s/ J. Joseph A. Mee --------------------Assistant Secretary

IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage on the day and year first above written.
ATTEST: /s/ J. Joseph A. Mee --------------------Assistant Secretary

PIDC FINANCING CORPORATION
By: /s/ Joseph J. Aylmer ----------------------Senior Vice President (CORPORATE SEAL)

10

EXHIBIT "A" THE PREMISES ALL THAT CERTAIN lot or piece of ground with the buildings and improvements thereon erected SITUATE in the Fifth Ward of the City of Philadelphia and described in accordance with a Survey and Plan of Property made February 10, 1995, and revised July 17, 1995 by Lawrence J. Cleary, Surveyor and Regulator of the Third Survey District: BEGINNING at the point formed by the intersection of the Southerly side of Spring Garden Street (120 feet wide) with the Westerly side of Fifth Street (70 feet wide); Thence extending South 13 degrees 37 minutes 25 seconds West, along the said Westerly side of Fifth Street, the distance of 58.984 feet to a point of curve; Thence extending Southwardly, along the said Westerly side of Fifth Street, on the arc of a circle curving to the left, having a radius of 3855.419 feet, the distance of 176.224 feet to a point of tangency; Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, the distance of 357.768 feet to a point on the Northerly side of a certain right-of-way for Public Utility purposes (40 feet wide, lying within the lines of former Noble Street, stricken and vacated from the City Plan by Ordinance approved December 6, 1971); Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, crossing the Easterly end of said right-of-way, the distance of 40.501 feet to a point; Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, the distance of 103.465 feet to a point of cure; Thence extending Southwardly, along the said Westerly side of Fifth Street, on the arc of a circle curving to the left, having a radius of 757.254 feet, the distance of 94.102 feet to a point of tangency; Thence extending South 03 degrees 53 minutes 05 seconds West, along the said Westerly side of Fifth Street, the distance of 44.770 feet to a point of the Northerly side of a certain right-of-way for drainage purposed (10 feet wide, reserved by Ordinance approved December 6, 1971); Thence extending 03 degrees 53 minutes 05 seconds West, along the said Westerly side of Fifth Street crossing the Easterly end of said right-ofway for drainage purposes, the distance of 10.199 feet to a point on the Northerly side of Willow Street (30 feet wide); Thence extending South 82 degrees 33 minutes 12 seconds West, along the said Northerly side of Willow Street, the distance of 180.741 feet to a point; Thence extending North 89 degrees 07 minutes 50 seconds West, along the said Northerly side of Willow Street, the distance of 199.778 feet to a point on the Easterly side of Sixth Street (70 feet wide); Thence extending North 09 degrees 57 minutes 50 seconds East, 11

EXHIBIT A (cont'd) THE PREMISES along the said Easterly side of Sixth Street, crossing the Westerly end of said right-of-way for drainage purposed,

EXHIBIT "A" THE PREMISES ALL THAT CERTAIN lot or piece of ground with the buildings and improvements thereon erected SITUATE in the Fifth Ward of the City of Philadelphia and described in accordance with a Survey and Plan of Property made February 10, 1995, and revised July 17, 1995 by Lawrence J. Cleary, Surveyor and Regulator of the Third Survey District: BEGINNING at the point formed by the intersection of the Southerly side of Spring Garden Street (120 feet wide) with the Westerly side of Fifth Street (70 feet wide); Thence extending South 13 degrees 37 minutes 25 seconds West, along the said Westerly side of Fifth Street, the distance of 58.984 feet to a point of curve; Thence extending Southwardly, along the said Westerly side of Fifth Street, on the arc of a circle curving to the left, having a radius of 3855.419 feet, the distance of 176.224 feet to a point of tangency; Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, the distance of 357.768 feet to a point on the Northerly side of a certain right-of-way for Public Utility purposes (40 feet wide, lying within the lines of former Noble Street, stricken and vacated from the City Plan by Ordinance approved December 6, 1971); Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, crossing the Easterly end of said right-of-way, the distance of 40.501 feet to a point; Thence extending South 11 degrees 00 minutes 17 seconds West, along the said Westerly side of Fifth Street, the distance of 103.465 feet to a point of cure; Thence extending Southwardly, along the said Westerly side of Fifth Street, on the arc of a circle curving to the left, having a radius of 757.254 feet, the distance of 94.102 feet to a point of tangency; Thence extending South 03 degrees 53 minutes 05 seconds West, along the said Westerly side of Fifth Street, the distance of 44.770 feet to a point of the Northerly side of a certain right-of-way for drainage purposed (10 feet wide, reserved by Ordinance approved December 6, 1971); Thence extending 03 degrees 53 minutes 05 seconds West, along the said Westerly side of Fifth Street crossing the Easterly end of said right-ofway for drainage purposes, the distance of 10.199 feet to a point on the Northerly side of Willow Street (30 feet wide); Thence extending South 82 degrees 33 minutes 12 seconds West, along the said Northerly side of Willow Street, the distance of 180.741 feet to a point; Thence extending North 89 degrees 07 minutes 50 seconds West, along the said Northerly side of Willow Street, the distance of 199.778 feet to a point on the Easterly side of Sixth Street (70 feet wide); Thence extending North 09 degrees 57 minutes 50 seconds East, 11

EXHIBIT A (cont'd) THE PREMISES along the said Easterly side of Sixth Street, crossing the Westerly end of said right-of-way for drainage purposed, the distance of 10.127 feet to a point; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, the distance of 292.452 feet to a point on the Southerly side of said right-ofway for Public Utility purposes; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, crossing the Westerly end of said right-of-way for Public Utility purposes, the distance of 40.000 feet to a point; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, the distance of 626.504 feet to a point on the said Southerly side of Spring Garden Street; Thence extending South 80 degrees 18 minutes 06 seconds East, along the said Southerly side of Spring Garden Street, the distance of 379.881 feet to the said Westerly side of Fifth Street, the first mentioned point and place of beginning. BEING known as No. 456 North Fifth Street. CONTAINING IN AREA 342,545.82 sq. feet (7.86377 Acres) BEING the same premises which SmithKline Beecham Corporation by Deed dated 8/2/1995 and recorded 9/29/1995 in Philadelphia County in Deed Book VCS 978 page 573 granted and conveyed unto PIDC Financing Corporation, a Pennsylvania Non-Proft Corporation, in fee.

EXHIBIT A (cont'd) THE PREMISES along the said Easterly side of Sixth Street, crossing the Westerly end of said right-of-way for drainage purposed, the distance of 10.127 feet to a point; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, the distance of 292.452 feet to a point on the Southerly side of said right-ofway for Public Utility purposes; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, crossing the Westerly end of said right-of-way for Public Utility purposes, the distance of 40.000 feet to a point; Thence extending North 09 degrees 57 minutes 50 seconds East, along the said Easterly side of Sixth Street, the distance of 626.504 feet to a point on the said Southerly side of Spring Garden Street; Thence extending South 80 degrees 18 minutes 06 seconds East, along the said Southerly side of Spring Garden Street, the distance of 379.881 feet to the said Westerly side of Fifth Street, the first mentioned point and place of beginning. BEING known as No. 456 North Fifth Street. CONTAINING IN AREA 342,545.82 sq. feet (7.86377 Acres) BEING the same premises which SmithKline Beecham Corporation by Deed dated 8/2/1995 and recorded 9/29/1995 in Philadelphia County in Deed Book VCS 978 page 573 granted and conveyed unto PIDC Financing Corporation, a Pennsylvania Non-Proft Corporation, in fee. Registry No./Parcel No.: 4 N 7 - 292 Brt No. 88-4-028600 Ward No.: 5th

NWA/04-03-96 PIDA #7846 LOAN AGREEMENT THIS LOAN AGREEMENT is made this 4th day of April, 1996, BY AND BETWEEN PIDC FINANCING CORPORATION, a nonprofit corporation organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, with an address at 2600 Centre Square West, 1500 Market Street, Philadelphia, Pennsylvania 19102 (the "Borrower"), and THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY ("PIDA"), a public body corporate and politic, organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, having its principal place of business at Room 480 Forum Building, Harrisburg, Pennsylvania 17120. ARTICLE I Background Section 1.01. The Borrower, to facilitate the financial transactions referred to herein, has acquired or is acquiring as of the date hereof legal title to a tract of land in Philadelphia, Philadelphia County, Pennsylvania (hereinafter called the "Premises") upon which the Borrower proposes to establish an industrial development project as defined in the Pennsylvania Industrial Development Authority Act, as amended, 73 P.S. section 301 et seq. (the "Act") (the "Project") to be purchased or leased, occupied and controlled by MOTHERS WORK, INC. (the "Industrial Occupant"), a corporation organized and existing under the laws of the State of Delaware and qualified to do business in Pennsylvania, pursuant to an Installment Sale Agreement, effective as of April 4, 1996, between the Borrower and the Industrial Occupant (the "Premises Agreement").

NWA/04-03-96 PIDA #7846 LOAN AGREEMENT THIS LOAN AGREEMENT is made this 4th day of April, 1996, BY AND BETWEEN PIDC FINANCING CORPORATION, a nonprofit corporation organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, with an address at 2600 Centre Square West, 1500 Market Street, Philadelphia, Pennsylvania 19102 (the "Borrower"), and THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY ("PIDA"), a public body corporate and politic, organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, having its principal place of business at Room 480 Forum Building, Harrisburg, Pennsylvania 17120. ARTICLE I Background Section 1.01. The Borrower, to facilitate the financial transactions referred to herein, has acquired or is acquiring as of the date hereof legal title to a tract of land in Philadelphia, Philadelphia County, Pennsylvania (hereinafter called the "Premises") upon which the Borrower proposes to establish an industrial development project as defined in the Pennsylvania Industrial Development Authority Act, as amended, 73 P.S. section 301 et seq. (the "Act") (the "Project") to be purchased or leased, occupied and controlled by MOTHERS WORK, INC. (the "Industrial Occupant"), a corporation organized and existing under the laws of the State of Delaware and qualified to do business in Pennsylvania, pursuant to an Installment Sale Agreement, effective as of April 4, 1996, between the Borrower and the Industrial Occupant (the "Premises Agreement"). Section 1.02. The Borrower has filed with PIDA an application for financing for the Project (as amended through the date hereof, the "Application") and accepted from PIDA a commitment letter dated March 13, 1995 (as amended, the "Commitment") for a loan in a principal amount not to exceed $2,000,000 (the "Loan") to be used exclusively to defray a portion not to exceed 40% (such maximum percentage, the "Participation Percentage") of the "cost of establishing an industrial development project" as defined in the Act (the "Cost").

Section 1.03. PIDA is willing to make the Loan upon the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, the parties hereto, in consideration of the mutual promises herein contained, and intending to be legally bound hereby, covenant and agree as follows: ARTICLE II The Loan Section 2.01. The Loan. Subject to the conditions set forth herein, PIDA agrees to make the Loan to the Borrower for the purpose of defraying a portion of the Cost. ARTICLE III The Note Section 3.01. The Note. The Loan shall be evidenced by a note (the "Note") of even date herewith given by Borrower to PIDA in a principal amount equal to the principal amount referred to in Section 1.02 hereof. ARTICLE IV Loan Security

Section 1.03. PIDA is willing to make the Loan upon the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, the parties hereto, in consideration of the mutual promises herein contained, and intending to be legally bound hereby, covenant and agree as follows: ARTICLE II The Loan Section 2.01. The Loan. Subject to the conditions set forth herein, PIDA agrees to make the Loan to the Borrower for the purpose of defraying a portion of the Cost. ARTICLE III The Note Section 3.01. The Note. The Loan shall be evidenced by a note (the "Note") of even date herewith given by Borrower to PIDA in a principal amount equal to the principal amount referred to in Section 1.02 hereof. ARTICLE IV Loan Security Section 4.01. The Mortgage. Payment of the Note and satisfaction of all obligations of the Borrower hereunder and under the Note and of the Industrial Occupant under a Consent, Subordination and Assumption Agreement effective as of even date herewith from the Industrial Occupant to PIDA (the "Assumption Agreement") shall be secured by a mortgage (the "Mortgage") effective as of even date herewith given by Borrower to PIDA. The Mortgage shall constitute not less than a second lien upon the Premises, subordinate only to a $4,094,684.93 mortgage, dated September 28, 1995, on the Premises given to MERIDIAN BANK which principal sum shall be reduced to the sum of $4,000,000 on the same date hereof (the "First Mortgage"). Section 4.02. Additional Security. The following shall constitute additional collateral security for the payment of the Note and satisfaction by the Borrower of all of the Borrower's obligations hereunder and under the Mortgage and/or the obligations of the Industrial Occupant under the Assumption Agreement: (a) the Assumption Agreement given by the Industrial Occupant to PIDA; 2

(b) an Assignment by Borrower to PIDA of Borrower's rights under the Premises Agreement which Assignment is subordinate to a prior Assignment to MERIDIAN BANK (the "Assignment"), agreed to by the Industrial Occupant; and (c) a bank letter of credit in the amount of $1,000,000. This Agreement, the Note, the Mortgage, the Premises Agreement, the Assignment, the Assumption Agreement, the opinions of counsel hereinafter referred to, and all other agreements, instruments and documents to be delivered hereunder shall collectively be termed the "Loan Documents." ARTICLE V Representations and Warranties of Borrower To induce PIDA to enter into this Agreement and to make the Loan, the Borrower represents and warrants that: Section 5.01. Corporate Organization. The Borrower is a nonprofit corporation, duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania.

(b) an Assignment by Borrower to PIDA of Borrower's rights under the Premises Agreement which Assignment is subordinate to a prior Assignment to MERIDIAN BANK (the "Assignment"), agreed to by the Industrial Occupant; and (c) a bank letter of credit in the amount of $1,000,000. This Agreement, the Note, the Mortgage, the Premises Agreement, the Assignment, the Assumption Agreement, the opinions of counsel hereinafter referred to, and all other agreements, instruments and documents to be delivered hereunder shall collectively be termed the "Loan Documents." ARTICLE V Representations and Warranties of Borrower To induce PIDA to enter into this Agreement and to make the Loan, the Borrower represents and warrants that: Section 5.01. Corporate Organization. The Borrower is a nonprofit corporation, duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Section 5.02. Power and Authority. The Borrower has all necessary corporate power and authority to purchase, own, mortgage and sell its properties and to carry on its business as now being conducted, and to carry out the transactions contemplated by the Loan Documents. Section 5.03. Certification as Industrial Development Agency. Borrower is an industrial development agency as that term is defined in the Act certified as such by PIDA. Borrower is not aware of any facts that would make its application to PIDA for certification as an industrial development agency materially incomplete, incorrect or misleading if filed as of the date hereof. Borrower has filed with PIDA all reports and other information required by PIDA. Section 5.04. Loan Documents Consistent with Law and Agreements. The execution and delivery of this Agreement and of each of the Loan Documents to be executed and delivered by Borrower, consummation of the transactions herein contemplated, and compliance with the terms and provisions hereof and of the Loan Documents which Borrower has executed and delivered or to which it is otherwise subject do not (i) contravene any provision of law, statute, rule or regulation to which Borrower is subject or any judgment, decree, franchise, order or permit applicable to the Borrower or (ii) conflict with, or result in, a breach of any of the terms, conditions or provisions of the 3

Articles of Incorporation or Bylaws of the Borrower, or of any material agreement, indenture or other instrument to which the Borrower is a party or by which it is bound or to which it or its property is subject. Section 5.05. Due Authorization. The execution, delivery and performance of this Agreement, the performance of the transactions contemplated by the provisions hereof, and the execution, issuance, delivery and performance of each of the Loan Documents to be executed and delivered by Borrower hereunder have each been duly authorized by all necessary corporate action on the part of the Borrower. Section 5.06. Execution and Delivery. This Agreement and each of the Loan Documents being executed and delivered by Borrower concurrently herewith have been duly and validly executed and delivered by the Borrower and constitute valid and legally binding obligations of the Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other substantially similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. Section 5.07. Litigation. There is no material litigation or governmental proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower other than that which has been previously disclosed to PIDA in writing. If such litigation or proceeding exists, it shall be set forth in an exhibit which shall be attached hereto and

Articles of Incorporation or Bylaws of the Borrower, or of any material agreement, indenture or other instrument to which the Borrower is a party or by which it is bound or to which it or its property is subject. Section 5.05. Due Authorization. The execution, delivery and performance of this Agreement, the performance of the transactions contemplated by the provisions hereof, and the execution, issuance, delivery and performance of each of the Loan Documents to be executed and delivered by Borrower hereunder have each been duly authorized by all necessary corporate action on the part of the Borrower. Section 5.06. Execution and Delivery. This Agreement and each of the Loan Documents being executed and delivered by Borrower concurrently herewith have been duly and validly executed and delivered by the Borrower and constitute valid and legally binding obligations of the Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other substantially similar laws of general application relating to or affecting the enforcement of creditors' rights or by general principles of equity. Section 5.07. Litigation. There is no material litigation or governmental proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower other than that which has been previously disclosed to PIDA in writing. If such litigation or proceeding exists, it shall be set forth in an exhibit which shall be attached hereto and made a part hereof. Section 5.08. Taxes. The Borrower has filed all required federal, state and local tax returns and has paid all taxes shown on such returns as they have become due unless the obligation to file such return or pay such tax is the subject of a pending administrative or judicial appeal or proceeding with respect to which the Borrower has posted or caused to be posted a bond or other security satisfactory to PIDA in an amount which is at least equal to the sum which is the subject of the appeal or proceeding, together with all interest, costs, and charges relating thereto. Section 5.09. Infrastructure Improvements. Adequate street and public infrastructure improvements, including without limitation water and sanitary and surface sewers, in and about the Project (i) have been fully authorized or approved by appropriate ordinance or other required municipal action and (ii) have either (A) been completed, (B) are the subject of contracts being let by the municipality involved, (C) are covered by a bond that the Borrower has posted with the municipality in an amount deemed sufficient by the municipality to secure the completion of such improvements; or (D) are otherwise available at the Premises for the use and benefit, inter alia, of PIDA. All of the representations and warranties of the Borrower set forth herein are expressed as of the date hereof, unless a specific date prior to the date hereof is given as the date as of which such representation or warranty is expressed, and 4

shall survive and continue until the Loan is paid in full and all of the Borrower's obligations hereunder have been satisfied. ARTICLE VI Borrowing Procedures and Agreements The following provisions shall be applicable with respect to all disbursements of the Loan, whether made concurrently with Closing hereunder or subsequent thereto: Section 6.01. General Disbursement Procedures. Disbursement of the Loan will be made in accordance with the Commitment. Disbursements shall be made only to pay for work performed and materials incorporated into the Project and comprising part of the Cost of the Project. Requests for all disbursements under the Loan shall be submitted to PIDA in writing, shall consist of such documentation and contain such information as may be reasonably required by PIDA concerning the Project and

shall survive and continue until the Loan is paid in full and all of the Borrower's obligations hereunder have been satisfied. ARTICLE VI Borrowing Procedures and Agreements The following provisions shall be applicable with respect to all disbursements of the Loan, whether made concurrently with Closing hereunder or subsequent thereto: Section 6.01. General Disbursement Procedures. Disbursement of the Loan will be made in accordance with the Commitment. Disbursements shall be made only to pay for work performed and materials incorporated into the Project and comprising part of the Cost of the Project. Requests for all disbursements under the Loan shall be submitted to PIDA in writing, shall consist of such documentation and contain such information as may be reasonably required by PIDA concerning the Project and the Cost (or the portion thereof theretofore paid or invoiced) and shall be accompanied by such other documentation as may be reasonably required by PIDA or its counsel. Such requests shall be submitted in sufficient time prior to the date upon which the Borrower requests that a disbursement under the Loan be made hereunder to enable PIDA to process such request, but in any event not less than 30 days prior to the proposed date of such disbursement. Section 6.02. Subsequent Disbursements. In the event that the Project is not completed and the entire Loan is not disbursed at the time of the initial disbursement hereunder, subject to compliance by the parties subject thereto with the terms and conditions of this Agreement and each of the other Loan Documents, the Borrower shall be entitled after completion of construction of the Project to borrow the undisbursed balance, if any, of the Loan, provided that the total Cost of the Project multiplied by the Participation Percentage exceeds the amount of the Loan. Section 6.03. Conditions Precedent to All Disbursements. As a condition precedent to each disbursement hereunder, whether made concurrently with Closing or subsequent thereto, the Borrower shall, in addition to satisfying such other requirements as PIDA may reasonably impose, provide PIDA with: (a) evidence satisfactory to PIDA that, at the time of such disbursement (unless with respect to items (i), (ii) and (iii), such items are covered by an acceptable title insurance commitment delivered to PIDA as of the date hereof, and applicable at the time of such disbursement), (i) there are no mechanics' or materialmen's liens or claims filed against the Premises, (ii) no financing statements have been filed under the 5

Uniform Commercial Code as then in effect in the Commonwealth with respect to fixtures or building systems (including, but not limited to, heating, plumbing, electrical, air conditioning, sprinkler, fire alarm and elevator systems) not directly employed in the industrial activities of the Industrial Occupant, which would have priority over the lien in favor of PIDA created by the Mortgage other than those specifically permitted by the Mortgage or hereunder, (iii) there are no liens or encumbrances filed or recorded with respect to the Premises which would have priority over the lien in favor of PIDA created by the Mortgage other than those specifically permitted by the Mortgage or hereunder, (iv) the Industrial Occupant has filed all tax returns and reports required to be filed by it with the Commonwealth through the date hereof and is current in the payment of all monies due to the Commonwealth from it, whether as taxes or otherwise, unless the obligation to file such return or pay such tax is the subject of a pending administrative or judicial appeal or proceeding with respect to which the Industrial Occupant has posted or caused to be posted a bond or other security satisfactory to PIDA in an amount which is at least equal to the sum which is the subject of the appeal or proceeding, together with all interest, costs, and charges relating thereto and (v) the insurance relating to the Project required by the Mortgage is in effect; (b) a certificate of the Borrower executed by its President or Vice President dated as of the disbursement date certifying that all representations and warranties made herein with regard to the Borrower were true and correct

Uniform Commercial Code as then in effect in the Commonwealth with respect to fixtures or building systems (including, but not limited to, heating, plumbing, electrical, air conditioning, sprinkler, fire alarm and elevator systems) not directly employed in the industrial activities of the Industrial Occupant, which would have priority over the lien in favor of PIDA created by the Mortgage other than those specifically permitted by the Mortgage or hereunder, (iii) there are no liens or encumbrances filed or recorded with respect to the Premises which would have priority over the lien in favor of PIDA created by the Mortgage other than those specifically permitted by the Mortgage or hereunder, (iv) the Industrial Occupant has filed all tax returns and reports required to be filed by it with the Commonwealth through the date hereof and is current in the payment of all monies due to the Commonwealth from it, whether as taxes or otherwise, unless the obligation to file such return or pay such tax is the subject of a pending administrative or judicial appeal or proceeding with respect to which the Industrial Occupant has posted or caused to be posted a bond or other security satisfactory to PIDA in an amount which is at least equal to the sum which is the subject of the appeal or proceeding, together with all interest, costs, and charges relating thereto and (v) the insurance relating to the Project required by the Mortgage is in effect; (b) a certificate of the Borrower executed by its President or Vice President dated as of the disbursement date certifying that all representations and warranties made herein with regard to the Borrower were true and correct as of the date hereof and shall remain true and correct as of the date of such certificate, unless some date other than the date hereof is expressly set forth as of the date as of which such representation and warranty is expressed, in which event such representation and warranty was true and correct as of the effective date thereof; and (c) a certificate of the Industrial Occupant executed by an authorized officer dated as of the disbursement date that: (i) all representations and warranties made in the Assumption Agreement were true and correct as of the date hereof and shall remain true and correct as of the date of such certificate, unless some date other than the date hereof is expressly set forth as of the date as of which such representation and warranty is expressed, in which event such representation and warranty was true and correct as of the effective date thereof and (ii) the Premises and the Project are in compliance in all material respects with all environmental, building, subdivision, zoning and all other ordinances and regulations applicable to the Premises and the Project respectively, together with copies of all subdivision, building, zoning, use and other permits required for the Premises and the Project unless PIDA shall permit the omission of such copies. Section 6.04. Suspension of Disbursements. In the event any material environmental, building, subdivision, use, zoning or other permits relating to the Premises or the construction or operation of the Project are revoked, 6

rescinded, suspended or materially adversely affected by any preliminary or final injunction or decision by any court or other body issuing such permit or otherwise having jurisdiction, PIDA may refuse to make further advances under this Agreement until the matter is resolved to PIDA's reasonable satisfaction, whether or not PIDA has declared an Event of Default hereunder or such revocation, rescission, suspension, or material adverse effect would comprise an Event of Default hereunder. ARTICLE VII Covenants of the Borrower Until the Loan has been entirely repaid and all of its obligations to PIDA in connection therewith and herewith have been satisfied, the Borrower hereby covenants that: Section 7.01. Use of Proceeds. The Borrower shall use the proceeds of the Loan solely for the purpose of defraying the Cost. Section 7.02. Preservation of Existence. The Borrower shall preserve its corporate existence, rights, privileges and franchises, and maintain its good standing as a nonprofit corporation under the laws of the Commonwealth of Pennsylvania and its certification by PIDA as an industrial development agency. Section 7.03. Compliance with Law. The Borrower shall comply with all laws, regulations and orders of any

rescinded, suspended or materially adversely affected by any preliminary or final injunction or decision by any court or other body issuing such permit or otherwise having jurisdiction, PIDA may refuse to make further advances under this Agreement until the matter is resolved to PIDA's reasonable satisfaction, whether or not PIDA has declared an Event of Default hereunder or such revocation, rescission, suspension, or material adverse effect would comprise an Event of Default hereunder. ARTICLE VII Covenants of the Borrower Until the Loan has been entirely repaid and all of its obligations to PIDA in connection therewith and herewith have been satisfied, the Borrower hereby covenants that: Section 7.01. Use of Proceeds. The Borrower shall use the proceeds of the Loan solely for the purpose of defraying the Cost. Section 7.02. Preservation of Existence. The Borrower shall preserve its corporate existence, rights, privileges and franchises, and maintain its good standing as a nonprofit corporation under the laws of the Commonwealth of Pennsylvania and its certification by PIDA as an industrial development agency. Section 7.03. Compliance with Law. The Borrower shall comply with all laws, regulations and orders of any court or governmental body having jurisdiction over the Project. To the extent Borrower is required to do so by applicable law or by agreement with the Industrial Occupant, Borrower shall obtain all environmental, zoning, subdivision, building and other permits required for completion of the Project. To the extent that such permits are (i) required for the Project but (ii) pursuant to agreement with the Industrial Occupant and in accordance with applicable law are being obtained by Industrial Occupant or some other person other than Borrower, Borrower shall in its agreements with the Industrial Occupant require the Industrial Occupant to obtain such permits and Borrower shall thereafter exercise reasonable diligence to determine whether such permits are being timely and appropriately obtained, and shall promptly advise PIDA if Borrower believes such permits are not being so obtained. As and when requested by PIDA, Borrower shall deliver to PIDA copies of all permits required for completion of the Project. Section 7.04. Provision of Information. The Borrower shall, not less frequently than annually and at such other times as PIDA may reasonably request, provide financial information and other information in form reasonably satisfactory to PIDA, including at least (i) financial statements of the Borrower for its most recent fiscal year, including its balance sheet and income statement, duly certified by an authorized officer of the Borrower and (ii) a certificate of 7

an authorized officer of the Borrower stating (A) that it has complied with all terms and conditions of each of the Loan Documents to which the Borrower is subject, including, without limitation, the requirements of the Mortgage with respect to insurance on the Premises and (B) that it has complied with its bylaws with respect to the holding of regular and annual meetings and the election of officers. Section 7.05. Compliance with Loan Documents. The Borrower shall comply with all of the terms and conditions of this Agreement and each of the Loan Documents to be executed and delivered by Borrower. Section 7.06. Notice of Defaults. The Borrower shall give immediate notice to PIDA of the occurrence of (i) any breach or Event of Default on the part of Borrower, (ii) any breach or Event of Default on the part of Industrial Occupant of which Borrower becomes aware, under this Agreement or under any Loan Document, or (iii) any material breach or Event of Default by any other person of which Borrower becomes aware, under any other material agreement relating to the Project. Section 7.07. Enforcement of Terms Against Industrial Occupant. The Borrower shall specifically enforce, as and to the extent PIDA shall request, all material provisions of all agreements between the Borrower and the Industrial Occupant relating to the Project and shall not waive any material breach of, or material default under,

an authorized officer of the Borrower stating (A) that it has complied with all terms and conditions of each of the Loan Documents to which the Borrower is subject, including, without limitation, the requirements of the Mortgage with respect to insurance on the Premises and (B) that it has complied with its bylaws with respect to the holding of regular and annual meetings and the election of officers. Section 7.05. Compliance with Loan Documents. The Borrower shall comply with all of the terms and conditions of this Agreement and each of the Loan Documents to be executed and delivered by Borrower. Section 7.06. Notice of Defaults. The Borrower shall give immediate notice to PIDA of the occurrence of (i) any breach or Event of Default on the part of Borrower, (ii) any breach or Event of Default on the part of Industrial Occupant of which Borrower becomes aware, under this Agreement or under any Loan Document, or (iii) any material breach or Event of Default by any other person of which Borrower becomes aware, under any other material agreement relating to the Project. Section 7.07. Enforcement of Terms Against Industrial Occupant. The Borrower shall specifically enforce, as and to the extent PIDA shall request, all material provisions of all agreements between the Borrower and the Industrial Occupant relating to the Project and shall not waive any material breach of, or material default under, any of such agreements of which Borrower becomes aware, without the prior written consent of PIDA. Section 7.08. Mergers, etc. Without the prior written consent of PIDA, the Borrower shall not merge or consolidate with any other corporation or other entity, unless Borrower is the surviving corporation, nor divide into two or more corporations, nor convey, transfer or dispose of all or any material part of its assets. Section 7.09. Debt Secured by Premises. Without the prior written consent of PIDA, the Borrower shall not take any action to cause or permit any mortgage, lien or encumbrance to be placed against the Premises or any interest therein, including without limitation the equitable interest of the Industrial Occupant therein, except such mortgages, liens and encumbrances as may be expressly permitted by the Mortgage. Borrower shall, in its agreements with the Industrial Occupant, prohibit the Industrial Occupant from causing or permitting any mortgage, lien or encumbrance to be placed against the Premises or any interest therein, including without limitation the equitable interest of the Industrial Occupant therein. Section 7.10. Extensions and Prepayments of Premises Debt. Without the prior written consent of PIDA, the Borrower shall not request, consent to, or enter into any agreement providing for, the extension of the time of payment of the First Mortgage. Borrower shall in its agreements with the Industrial Occupant prohibit the Industrial Occupant 8

from requesting, consenting to or entering into any agreement providing for the extension of the time of payment of the First Mortgage without the prior written consent of PIDA and the Borrower. The Borrower may prepay the First Mortgage in whole or in part at any time provided that (i) such prepayment does not materially adversely affect the financial condition of the Borrower or the Industrial Occupant, (ii) prior written notice of such prepayment is given to PIDA and (iii) there is no default or event which with the passage of time or giving of notice would constitute a default under the Mortgage. The Borrower shall not, without the prior written consent of PIDA, prepay any indebtedness secured by a lien on the Premises which is subordinate to the Mortgage. Borrower shall in its agreements with the Industrial Occupant prohibit the Industrial Occupant from requesting, consenting to or entering into any agreement providing for, the prepayment of any indebtedness secured by a lien on the Premises or any interest therein which is subordinate to the Mortgage without the prior written consent of PIDA and the Borrower. Section 7.11. Nondiscrimination. The Borrower hereby accepts and agrees to be bound by the nondiscrimination provisions set forth in Exhibit 7.11 attached hereto. The Borrower shall cause comparable provisions to be included in the Premises Agreement and all other Project contracts to which Borrower is a party and shall, in the agreements to which Borrower is a party with the Industrial Occupant and all other persons relating to the Project (including, without limitation, contractors and professionals), require the insertion of comparable provisions in all Project contracts to which the Industrial Occupant or such other persons are party.

from requesting, consenting to or entering into any agreement providing for the extension of the time of payment of the First Mortgage without the prior written consent of PIDA and the Borrower. The Borrower may prepay the First Mortgage in whole or in part at any time provided that (i) such prepayment does not materially adversely affect the financial condition of the Borrower or the Industrial Occupant, (ii) prior written notice of such prepayment is given to PIDA and (iii) there is no default or event which with the passage of time or giving of notice would constitute a default under the Mortgage. The Borrower shall not, without the prior written consent of PIDA, prepay any indebtedness secured by a lien on the Premises which is subordinate to the Mortgage. Borrower shall in its agreements with the Industrial Occupant prohibit the Industrial Occupant from requesting, consenting to or entering into any agreement providing for, the prepayment of any indebtedness secured by a lien on the Premises or any interest therein which is subordinate to the Mortgage without the prior written consent of PIDA and the Borrower. Section 7.11. Nondiscrimination. The Borrower hereby accepts and agrees to be bound by the nondiscrimination provisions set forth in Exhibit 7.11 attached hereto. The Borrower shall cause comparable provisions to be included in the Premises Agreement and all other Project contracts to which Borrower is a party and shall, in the agreements to which Borrower is a party with the Industrial Occupant and all other persons relating to the Project (including, without limitation, contractors and professionals), require the insertion of comparable provisions in all Project contracts to which the Industrial Occupant or such other persons are party. Section 7.12. Compliance with Governmental Requirements. Borrower shall require, in all Project contracts to which Borrower is a party, (i) that the Project be in compliance with all applicable governmental regulations, including without limitation all anti-pollution regulations and standards, and (ii) that comparable provisions be included in all other Project contracts to which persons, who are parties to Project contracts with the Borrower, are themselves a party. Section 7.13. Recording and Other Costs. The Borrower shall pay all the costs of recording and any other costs that PIDA may incur in connection with closing the Loan, to the extent such costs are not paid by Industrial Occupant. Section 7.14. Inspection. The Borrower shall in its agreements with the Industrial Occupant require the Industrial Occupant to provide proper facilities at all times for inspection of the Project before and after completion thereof by PIDA and PlDA's authorized representatives (including, without limitation, any independent consulting engineer (such engineer, the "PIDA Engineer") or environmental consultant retained by PIDA), and afford full and free access to the Project to such persons as may from time to time be designated by PIDA. 9

Section 7.15. Documentation. The Borrower shall provide, or, by agreement with the Industrial Occupant, require the Industrial Occupant to provide, all documentation requested by the PIDA Engineer for preparation of the final engineering report, including, but not limited to, such things as a breakdown of the final costs with invoices, proofs of payment, and a final affidavit of costs. Section 7.16. Completion of Project. The Borrower shall by agreement with the Industrial Occupant or otherwise require that the Project be constructed on the Premises, in strict accordance with all plans and specifications delivered to PIDA; that all fixtures, equipment and other property constituting a part of the Premises be timely acquired and installed; and that construction proceed diligently, continuously and expeditiously, employing sufficient workmen and supplying sufficient materials to fully finish and complete the same, inside and outside, with the appurtenant areas, paving, grading and curbing, sewers, laterals, water and all public utility connections and all necessary street, footway and other improvements, free and clear and discharged of all liens and municipal claims and the possibility of liens therefor. Section 7.17. Removal of Work Deemed Unsound. The Borrower shall, by its own action or by agreement with the Industrial Occupant, take down and remove from, or require the taking down and removal from, the Premises, within seventy-two (72) hours after receiving notice from PIDA, all portions of the Project and related materials, whether worked or unworked, which, after inspection by the PIDA Engineer, are determined by the PIDA Engineer to be materially not in compliance with the PIDA Engineering Guidelines supplied to the Borrower in connection with the Project, and make good, at no cost to PIDA, all work and materials damaged

Section 7.15. Documentation. The Borrower shall provide, or, by agreement with the Industrial Occupant, require the Industrial Occupant to provide, all documentation requested by the PIDA Engineer for preparation of the final engineering report, including, but not limited to, such things as a breakdown of the final costs with invoices, proofs of payment, and a final affidavit of costs. Section 7.16. Completion of Project. The Borrower shall by agreement with the Industrial Occupant or otherwise require that the Project be constructed on the Premises, in strict accordance with all plans and specifications delivered to PIDA; that all fixtures, equipment and other property constituting a part of the Premises be timely acquired and installed; and that construction proceed diligently, continuously and expeditiously, employing sufficient workmen and supplying sufficient materials to fully finish and complete the same, inside and outside, with the appurtenant areas, paving, grading and curbing, sewers, laterals, water and all public utility connections and all necessary street, footway and other improvements, free and clear and discharged of all liens and municipal claims and the possibility of liens therefor. Section 7.17. Removal of Work Deemed Unsound. The Borrower shall, by its own action or by agreement with the Industrial Occupant, take down and remove from, or require the taking down and removal from, the Premises, within seventy-two (72) hours after receiving notice from PIDA, all portions of the Project and related materials, whether worked or unworked, which, after inspection by the PIDA Engineer, are determined by the PIDA Engineer to be materially not in compliance with the PIDA Engineering Guidelines supplied to the Borrower in connection with the Project, and make good, at no cost to PIDA, all work and materials damaged thereby. ARTICLE VIII Payments Section 8.01. Repayment of Excess Loan Amounts. If, upon final determination by the PIDA Engineer of the Cost of the Project, excluding Costs attributable to any portion of the Project determined by the PIDA Engineer to be materially not in compliance with the PIDA Engineering Guidelines supplied to the Borrower in connection with the Project (which determination shall be conclusive), the amount of the Loan previously disbursed to the Borrower exceeds the Cost (as so determined) multiplied by the Participation Percentage, the entire amount of such excess shall be repaid to PIDA by or on behalf of the Borrower within thirty (30) days of notice thereof to the Borrower and the Industrial Occupant. Section 8.02. Payments of Premises Rentals. Whether or not PIDA consents to such lease or sublease, if any portion of the Premises is leased or subleased to any party not substantially related to the Industrial Occupant, Borrower 10

shall pay or cause to be paid to PIDA, as a prepayment on the Loan, on the first anniversary of the commencement of the lease or sublease and annually thereafter, fifty percent (50%) of (i) the gross annual rentals or subrentals less only (ii) the proportionate amount of taxes, insurance and utilities allocable to the portion of the Premises so leased or subleased. If PIDA shall not have consented in advance to such lease or sublease, acceptance by PIDA of such prepayment shall be without prejudice to any right PIDA may have to declare an Event of Default hereunder. ARTICLE IX Events of Default Section 9.01. Events of Default. The following shall each constitute an event of default hereunder (an "Event of Default"): (a) there shall not have been paid when due any amount payable by any person under any of the Loan Documents (including, without limitation, any installment of principal or interest under the Note or any prepayment under Article VIII hereof), and such failure shall continue for a period of thirty (30) days;

shall pay or cause to be paid to PIDA, as a prepayment on the Loan, on the first anniversary of the commencement of the lease or sublease and annually thereafter, fifty percent (50%) of (i) the gross annual rentals or subrentals less only (ii) the proportionate amount of taxes, insurance and utilities allocable to the portion of the Premises so leased or subleased. If PIDA shall not have consented in advance to such lease or sublease, acceptance by PIDA of such prepayment shall be without prejudice to any right PIDA may have to declare an Event of Default hereunder. ARTICLE IX Events of Default Section 9.01. Events of Default. The following shall each constitute an event of default hereunder (an "Event of Default"): (a) there shall not have been paid when due any amount payable by any person under any of the Loan Documents (including, without limitation, any installment of principal or interest under the Note or any prepayment under Article VIII hereof), and such failure shall continue for a period of thirty (30) days; (b) any representation, warranty or statement made by any person herein or in the Application or in any of the Loan Documents or in any certificate or financial or other statement furnished pursuant to the provisions of any of the Loan Documents or the Application (except for any representation, warranty or statement expressly made effective as of a date prior to the date when made or furnished), shall have been false or misleading in any material respect as of the time made or furnished or as of the date hereof, whichever is later; any representation, warranty or statement expressly made effective as of a date prior to the date when made or furnished shall have been false or misleading in any material respect as of the effective date thereof; (c) the Borrower or the Industrial Occupant shall (i) become insolvent, (ii) admit its inability to pay its debts as they come due, (iii) make an assignment to the benefit of its creditors, (iv) be adjudicated bankrupt or insolvent, (v) voluntarily initiate proceedings under any bankruptcy or reorganization law either now or hereafter in effect, (vi) become the subject of any involuntary proceedings under any bankruptcy or reorganization law either now or hereafter in effect that shall not have been dismissed within ninety (90) days of the initiation thereof, or (vii) seek to take advantage of any moratorium law either now or hereafter in effect; (d) a receiver, liquidator or trustee shall be appointed for either the Borrower or the Industrial Occupant and shall not have been dismissed within ninety (90) days; 11

(e) the Premises or any interest therein are sold, leased, sub-leased, mortgaged, liened, encumbered, or otherwise conveyed without the prior written consent of PIDA, which consent will not unreasonably be withheld, provided that (i) the beneficial owner and occupant of the Premises remain substantially related to each other, (ii) the Project remains in substantial use for a PIDA-Eligible purpose (as defined in the Assumption Agreement), (iii) the beneficial owner and occupant remain financially responsible, and (iv) the security for the Loan is not impaired; (f) any building, subdivision, use, zoning, environmental or other permit material to the construction of the Project or the use thereof as contemplated in the Application shall be effectively revoked, rescinded, suspended or materially adversely affected or the use of the Project as contemplated in the Application shall have been effectively enjoined or prohibited; (g) there shall have occurred and be continuing, after giving effect to any applicable notice and cure periods, an Event of Default as defined in any of the Loan Documents by any party subject thereto; or (h) a material failure to comply by any party subject thereto with any covenant of this Agreement or any of the Loan Documents, including, but not limited to, the failure to provide job information, insurance information, and annual financial statements required by PIDA under those instruments, shall occur and be continuing after written

(e) the Premises or any interest therein are sold, leased, sub-leased, mortgaged, liened, encumbered, or otherwise conveyed without the prior written consent of PIDA, which consent will not unreasonably be withheld, provided that (i) the beneficial owner and occupant of the Premises remain substantially related to each other, (ii) the Project remains in substantial use for a PIDA-Eligible purpose (as defined in the Assumption Agreement), (iii) the beneficial owner and occupant remain financially responsible, and (iv) the security for the Loan is not impaired; (f) any building, subdivision, use, zoning, environmental or other permit material to the construction of the Project or the use thereof as contemplated in the Application shall be effectively revoked, rescinded, suspended or materially adversely affected or the use of the Project as contemplated in the Application shall have been effectively enjoined or prohibited; (g) there shall have occurred and be continuing, after giving effect to any applicable notice and cure periods, an Event of Default as defined in any of the Loan Documents by any party subject thereto; or (h) a material failure to comply by any party subject thereto with any covenant of this Agreement or any of the Loan Documents, including, but not limited to, the failure to provide job information, insurance information, and annual financial statements required by PIDA under those instruments, shall occur and be continuing after written notice of such failure has been given to such party, with a copy to Borrower, for thirty (30) days or, if such failure shall not be capable of being cured within thirty (30) days, and curative action shall have been initiated within such 30 day period and pursued diligently thereafter, for such time period after notice of such failure has been given to such party, with a copy to Borrower, as shall, in the good faith judgment of PIDA, which shall be conclusive, be required for such cure. Section 9.02. Remedies Upon Event of Default. Immediately and without further notice to any person (including, without limitation, the Borrower or the Industrial Occupant), upon the occurrence of an Event of Default hereunder other than (i) an Event of Default arising solely from a breach by the Industrial Occupant of Section 4.03 "Operations and Number of Jobs" of the Assumption Agreement, pertaining to job creation or retention, or (ii) an Event of Default arising solely from the internal operations of the Borrower over which the Industrial Occupant has no control, during which the Industrial Occupant has paid all amounts required to be paid by them and performed all acts required to be performed by them under each of the Loan Documents, PIDA may exercise any one or more of the following remedies: 12

(a) declare the Note and all liabilities of the Borrower thereunder to be immediately due and payable, and the same shall thereupon become and be due and payable; (b) raise the rate of interest on the Loan as provided in the Note; (c) foreclose on the Mortgage; (d) bring an action (which may be by confession of judgment to the extent permitted by the particular instrument) against the Borrower under the Note and/or the Mortgage, against the Industrial Occupant under the Assumption Agreement and/or the Premises Agreement, as assigned to PIDA by the Assignment; (e) bring an action of ejectment to recover possession of the Premises; and/or (f) exercise any other remedy available to it under any of the Loan Documents or applicable law. Except as expressly required by the particular Loan Document pursuant to which such remedies are exercised or by applicable law, PIDA may exercise any of the foregoing remedies without presentment, demand, protest or notice of any kind to any person (including, without limitation, the Borrower or the Industrial Occupant), all of which are hereby expressly and knowingly waived. Subject solely to the limitation that PIDA is limited to one recovery for the aggregate amounts due and owing under the Loan Documents, PlDA's remedies under the Loan Documents are cumulative and concurrent and

(a) declare the Note and all liabilities of the Borrower thereunder to be immediately due and payable, and the same shall thereupon become and be due and payable; (b) raise the rate of interest on the Loan as provided in the Note; (c) foreclose on the Mortgage; (d) bring an action (which may be by confession of judgment to the extent permitted by the particular instrument) against the Borrower under the Note and/or the Mortgage, against the Industrial Occupant under the Assumption Agreement and/or the Premises Agreement, as assigned to PIDA by the Assignment; (e) bring an action of ejectment to recover possession of the Premises; and/or (f) exercise any other remedy available to it under any of the Loan Documents or applicable law. Except as expressly required by the particular Loan Document pursuant to which such remedies are exercised or by applicable law, PIDA may exercise any of the foregoing remedies without presentment, demand, protest or notice of any kind to any person (including, without limitation, the Borrower or the Industrial Occupant), all of which are hereby expressly and knowingly waived. Subject solely to the limitation that PIDA is limited to one recovery for the aggregate amounts due and owing under the Loan Documents, PlDA's remedies under the Loan Documents are cumulative and concurrent and may, in PlDA's sole discretion, be exercised, deferred, compromised, settled or discontinued without affecting any other remedy available to PIDA under any of the Loan Documents or under applicable law. Notwithstanding anything to the contrary herein contained, so long as the Industrial Occupant shall keep and perform all the provisions, covenants and conditions to be assumed or performed by the Industrial Occupant respectively under the Loan Documents, including the payment of all amounts due thereunder and performance of all obligations set forth therein, PIDA shall not terminate, impair or otherwise adversely affect the rights of the Industrial Occupant thereunder. It is further agreed that PIDA shall use its best efforts to supply the Industrial Occupant with a copy of each notice required to be supplied to Borrower hereunder, but failure to so supply copies of such notices shall not adversely affect any right of PIDA hereunder. 13

Section 9.03. Remedies for Event of Default Arising From Internal Operations of Borrower. Upon the occurrence of an Event of Default arising solely from the internal operations of the Borrower over which the Industrial Occupant has no control, during which the Industrial Occupant and any Guarantor have paid all amounts required to be paid by them and performed all acts required to be performed by them under each of the Loan Documents, PIDA may (i) suspend or revoke the certification of the Borrower as an Industrial Development Agency under the Act, or (ii) initiate or participate or intervene in any action or legal proceeding (including, without limitation, any action or proceeding under the U.S. Bankruptcy Code) to (A) compel compliance with the terms of the Loan Documents, (B) to appoint a trustee or receiver for Borrower or to dissolve, reorganize or liquidate Borrower, or (C) otherwise to protect the interests of PIDA and/or the Industrial Occupant. Section 9.04. Remedies for Event of Default Arising From Failure to Create or Preserve Jobs. Upon the occurrence of an Event of Default arising solely from a breach by the Industrial Occupant of Section 4.03 "Operations and Number of Jobs" of the Assumption Agreement, PIDA may, in compliance with such regulations and statements of policy, if any, as are then in effect, raise the rate of interest on the Loan as permitted under the Note. ARTICLE X Miscellaneous Section 10.01. Obligations Unconditional. The obligations to PIDA under this Agreement and each of the Loan

Section 9.03. Remedies for Event of Default Arising From Internal Operations of Borrower. Upon the occurrence of an Event of Default arising solely from the internal operations of the Borrower over which the Industrial Occupant has no control, during which the Industrial Occupant and any Guarantor have paid all amounts required to be paid by them and performed all acts required to be performed by them under each of the Loan Documents, PIDA may (i) suspend or revoke the certification of the Borrower as an Industrial Development Agency under the Act, or (ii) initiate or participate or intervene in any action or legal proceeding (including, without limitation, any action or proceeding under the U.S. Bankruptcy Code) to (A) compel compliance with the terms of the Loan Documents, (B) to appoint a trustee or receiver for Borrower or to dissolve, reorganize or liquidate Borrower, or (C) otherwise to protect the interests of PIDA and/or the Industrial Occupant. Section 9.04. Remedies for Event of Default Arising From Failure to Create or Preserve Jobs. Upon the occurrence of an Event of Default arising solely from a breach by the Industrial Occupant of Section 4.03 "Operations and Number of Jobs" of the Assumption Agreement, PIDA may, in compliance with such regulations and statements of policy, if any, as are then in effect, raise the rate of interest on the Loan as permitted under the Note. ARTICLE X Miscellaneous Section 10.01. Obligations Unconditional. The obligations to PIDA under this Agreement and each of the Loan Documents shall be absolute and unconditional without defense or set-off by reason of any default by the contractors under the contracts relating to the Project or by PIDA under this Agreement, any of the Loan Documents, or under any other agreement between the Borrower or the Industrial Occupant and PIDA, or for any other reason, including without limitation failure to complete the Project, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, or failure of PIDA to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement, it being the intention of the parties that the payments required under each of the Loan Documents will be paid in full when due without any delay or diminution whatsoever. Payments and additional sums required to be paid to PIDA under any of the Loan Documents shall be received by PIDA as net sums and the Borrower agrees to pay or cause to be paid all charges against or which might diminish such net sums. The provisions of this Section shall not impair the ability of the Borrower or any other persons to bring an independent action against PIDA with respect to any cause of action such person may have against PIDA. Section 10.02. Provisions Complementary. The provisions of this Agreement shall be in addition to those of any other Loan Document. All of such provisions shall be construed as complementary to each other. Nothing 14

contained herein shall prevent PIDA from enforcing any and all of such provisions in accordance with their respective terms. Section 10.03. Rights and Remedies. The terms of all Loan Documents shall be liberally construed in favor of PIDA to effectuate the purposes hereof. No delay or failure on the part of PIDA in exercising any right, power or privilege under any of the Loan Documents shall affect such right, power or privilege; nor shall any single or partial exercise thereof or any abandonment, waiver, or discontinuance of steps to enforce such a right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies of PIDA under any of the Loan Documents are cumulative and concurrent and not exclusive of any rights or remedies which PIDA might otherwise have. PIDA shall have the right at all times to enforce the provisions of each of the Loan Documents and all related documentation in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of PIDA in refraining from so doing at any time or times. The failure of PIDA at any time or times to enforce PIDA's rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of such Loan Documents or any such documentation, or as having in any way or manner modified or waived the same.

contained herein shall prevent PIDA from enforcing any and all of such provisions in accordance with their respective terms. Section 10.03. Rights and Remedies. The terms of all Loan Documents shall be liberally construed in favor of PIDA to effectuate the purposes hereof. No delay or failure on the part of PIDA in exercising any right, power or privilege under any of the Loan Documents shall affect such right, power or privilege; nor shall any single or partial exercise thereof or any abandonment, waiver, or discontinuance of steps to enforce such a right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies of PIDA under any of the Loan Documents are cumulative and concurrent and not exclusive of any rights or remedies which PIDA might otherwise have. PIDA shall have the right at all times to enforce the provisions of each of the Loan Documents and all related documentation in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of PIDA in refraining from so doing at any time or times. The failure of PIDA at any time or times to enforce PIDA's rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of such Loan Documents or any such documentation, or as having in any way or manner modified or waived the same. Section 10.04. Writing Required. Any permit, consent or approval of any kind or character on the part of PIDA under any of the Loan Documents, and any waiver of any provision or condition thereof, must be in writing and executed by PIDA and shall be effective only to the extent specifically set forth in such writing. Section 10.05. Duration of Covenants. All covenants and agreements of the Borrower or the Industrial Occupant in any of the Loan Documents, or otherwise made in writing in connection herewith, shall survive and continue until the Loan is entirely paid and all of the Borrower's obligations hereunder have been entirely satisfied, unless a longer term is expressly provided for, in which event such longer term shall apply. Section 10.06. Pennsylvania Law to Govern. Each of the Loan Documents shall be deemed to be contracts made under the laws of the Commonwealth of Pennsylvania and, for all purposes, shall be construed in accordance with the laws of such Commonwealth. Section 10.07. Counterparts. Each of the Loan Documents may be executed in as many counterparts as may be deemed necessary and convenient and each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. All signatures need not appear on the same copy of any Loan Document. 15

Section 10.08. PIDA Project Inspections Solely for PlDA's Benefit. It is understood and agreed that PIDA, its agents, servants, invitees and employees, may inspect the plans and specifications for the Project and enter the Premises and conduct such tests, surveys, examinations and inspections (collectively, "Project Inspections") as it shall, from time to time, deem appropriate. The Borrower hereby acknowledges and agrees (i) that such Project Inspections are solely for the protection and benefit of PIDA; (ii) that PIDA, its agents, servants, invitees and employees including, without limitation, the PIDA Engineer carry no responsibility whatsoever for the design or construction of the Project, its quality or the compliance or lack of compliance with the plans and specifications, (iii) that any engineering report issued by the PIDA Engineer as to the quantity and quality of work is for the benefit of PIDA only and (iv) that the engineering certifications by the PIDA Engineer are not certifications of compliance by the contractor with the building specifications or of the quality of the work, nor are they intended as construction supervision. Section 10.09. Setoff. The Borrower agrees that the Commonwealth of Pennsylvania may set off the amount of any state tax liability or other debt of the Borrower or its respective subsidiaries that is owed to the Commonwealth and not being contested on appeal against any payments due the Borrower under this or any other contract with the Commonwealth. Section 10.10. Borrower Responsibility. Included in and made a part of this Agreement is Exhibit 10.10, a clause pertaining to Borrower Responsibility.

Section 10.08. PIDA Project Inspections Solely for PlDA's Benefit. It is understood and agreed that PIDA, its agents, servants, invitees and employees, may inspect the plans and specifications for the Project and enter the Premises and conduct such tests, surveys, examinations and inspections (collectively, "Project Inspections") as it shall, from time to time, deem appropriate. The Borrower hereby acknowledges and agrees (i) that such Project Inspections are solely for the protection and benefit of PIDA; (ii) that PIDA, its agents, servants, invitees and employees including, without limitation, the PIDA Engineer carry no responsibility whatsoever for the design or construction of the Project, its quality or the compliance or lack of compliance with the plans and specifications, (iii) that any engineering report issued by the PIDA Engineer as to the quantity and quality of work is for the benefit of PIDA only and (iv) that the engineering certifications by the PIDA Engineer are not certifications of compliance by the contractor with the building specifications or of the quality of the work, nor are they intended as construction supervision. Section 10.09. Setoff. The Borrower agrees that the Commonwealth of Pennsylvania may set off the amount of any state tax liability or other debt of the Borrower or its respective subsidiaries that is owed to the Commonwealth and not being contested on appeal against any payments due the Borrower under this or any other contract with the Commonwealth. Section 10.10. Borrower Responsibility. Included in and made a part of this Agreement is Exhibit 10.10, a clause pertaining to Borrower Responsibility. Section 10.11. Borrower Integrity. The Borrower represents, warrants and covenants that it currently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of its obligations hereunder. Included in and made a part of this Agreement is Exhibit 10.11, a clause pertaining to Borrower Integrity. Section 10.12. Americans with Disabilities Act. Included in and made a part of this Agreement is Exhibit 10.12, a clause pertaining to compliance with the Americans with Disabilities Act. Section 10.13. Successors and Assigns. This Agreement and each of the Loan Documents shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of PIDA and the Borrower. Although PIDA has no present intention to convey, pledge or otherwise assign its rights under the Loan Documents, it may nevertheless do so in whole or in part without notice to any person (including, without limitation, the Borrower and the Industrial Occupant). The Borrower has no right to assign any of its rights or obligations hereunder or under any of the Loan Documents without the prior written consent of PIDA, and any such assignment without the prior written consent of PIDA shall be void. 16

The Borrower and PIDA intend that no person (other than Industrial Occupant) shall have any claim or interest under this Agreement or right of action hereunder. Section 10.14. Notices. Notices required hereunder, or any correspondence concerning this Agreement shall be directed to the following addresses and shall be deemed properly given (a) if delivered by hand, (b) if sent by certified mail, return receipt requested, postage prepaid, or by recognized overnight courier service (including, without limitation, Federal Express or United Parcel Service overnight service), charges prepaid; or (c) if sent by facsimile, with a copy sent by first class U.S. Mail, postage prepaid. To PIDA: PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY c/o Department of Commerce 480 Forum Building Harrisburg, Pennsylvania 17120 FAX: (717) 234-4560 Attention: Executive Director To Borrower:

The Borrower and PIDA intend that no person (other than Industrial Occupant) shall have any claim or interest under this Agreement or right of action hereunder. Section 10.14. Notices. Notices required hereunder, or any correspondence concerning this Agreement shall be directed to the following addresses and shall be deemed properly given (a) if delivered by hand, (b) if sent by certified mail, return receipt requested, postage prepaid, or by recognized overnight courier service (including, without limitation, Federal Express or United Parcel Service overnight service), charges prepaid; or (c) if sent by facsimile, with a copy sent by first class U.S. Mail, postage prepaid. To PIDA: PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY c/o Department of Commerce 480 Forum Building Harrisburg, Pennsylvania 17120 FAX: (717) 234-4560 Attention: Executive Director To Borrower: PIDC FINANCING CORPORATION 2600 Centre Square West 1500 Market Street Philadelphia, Pennsylvania 19102 Attention: President and Chief Executive Officer Notices and communications hereunder shall be deemed sufficiently given when dispatched pursuant to the foregoing provisions. Notices and communications delivered by hand shall be effective upon receipt; notices and communications sent by fax, with a copy by first class U.S. Mail, shall be effective upon dispatch; notices and communications sent by recognized overnight courier service shall be effective on the business day following dispatch; and notices sent by certified mail shall be effective on the third business day following dispatch. The parties hereto may, by a notice given hereunder, designate any further or different addresses to which any subsequent notice or communication hereunder shall be sent. Section 10.15. Severability. If any provision hereof or of the Loan Documents is found by a court of competent jurisdiction to be prohibited or unenforceable in any jurisdiction, it shall be ineffective as to such jurisdiction only to the extent of such prohibition or unenforceability, and such prohibition or unenforceability shall not invalidate the balance of such provision as to such jurisdiction to the extent it is not prohibited or unenforceable, nor invalidate such provision in any other jurisdiction, nor invalidate the other provisions of the Loan Documents, all of which shall be liberally construed in favor of PIDA in order to effect the provisions of this Agreement. Notwithstanding anything 17

to the contrary herein contained, the total liability of the Borrower for payment of interest pursuant hereto shall not exceed the maximum amount, if any, of such interest permitted by applicable law to be contracted for, charged or received, and if any payments by the Borrower to PIDA include interest in excess of such a maximum amount, PIDA shall apply such excess to the reduction of the unpaid principal amount due pursuant hereto, or if none is due, such excess shall be refunded to the Borrower; provided that, to the extent permitted by applicable law, in the event the interest is not collected, is applied to principal or is refunded pursuant to this sentence and interest thereafter payable pursuant hereto shall be less than such maximum amount, then such interest thereafter so payable shall be increased up to such maximum amount to the extent necessary to recover the amount of interest, if any, theretofore uncollected, applied to principal or refunded pursuant to this sentence. Any such application or refund shall not cure or waive any Event of Default. In determining whether or not any interest payable under the Loan Documents exceeds the highest rate permitted by law, any nonprincipal payment (except payments specifically stated to be "interest") shall be deemed, to the extent permitted by applicable law, to be an expense, fee, premium or penalty rather than interest.

to the contrary herein contained, the total liability of the Borrower for payment of interest pursuant hereto shall not exceed the maximum amount, if any, of such interest permitted by applicable law to be contracted for, charged or received, and if any payments by the Borrower to PIDA include interest in excess of such a maximum amount, PIDA shall apply such excess to the reduction of the unpaid principal amount due pursuant hereto, or if none is due, such excess shall be refunded to the Borrower; provided that, to the extent permitted by applicable law, in the event the interest is not collected, is applied to principal or is refunded pursuant to this sentence and interest thereafter payable pursuant hereto shall be less than such maximum amount, then such interest thereafter so payable shall be increased up to such maximum amount to the extent necessary to recover the amount of interest, if any, theretofore uncollected, applied to principal or refunded pursuant to this sentence. Any such application or refund shall not cure or waive any Event of Default. In determining whether or not any interest payable under the Loan Documents exceeds the highest rate permitted by law, any nonprincipal payment (except payments specifically stated to be "interest") shall be deemed, to the extent permitted by applicable law, to be an expense, fee, premium or penalty rather than interest. Section 10.16. Consent to Jurisdiction. The Borrower hereby irrevocably (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Agreement or the Loan Documents may be brought in any federal or state court located in or whose district includes Harrisburg, Pennsylvania or the county wherein the Project is located and consents to the jurisdiction of such court in any such suit, action or proceeding, and (b) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Borrower hereby irrevocably consents to the service of any and all process in any such suit, action or proceeding by mailing of copies of such process to the Borrower at its address provided under or pursuant to Section 10.14. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. All mailings under this section shall be by certified or registered mail, return receipt requested. Nothing in this section shall affect the right of PIDA to serve legal process in any other manner permitted by law or affect the right of PIDA to bring any suit, action or proceeding against the Borrower or Borrower's property in the courts of any other jurisdiction. Section 10.17. Defined Terms. In each of the Loan Documents, unless otherwise indicated, (i) defined terms may be used in the singular or the plural and the use of any gender includes all genders, (ii) the words, "hereof', "herein", "hereto", "hereby" and "hereunder" refer to the particular Loan Document in which they occur in such document's entirety, (iii) the term, the "Loan Documents", and the words, "thereof", "therein", "thereto", "thereby" and "thereunder" refer to all the Loan Documents, taken together as a whole, (iv) all references to particular Articles, Sections or Paragraphs are references to the particular Article, Section or Paragraph of the particular Loan Document in which such references occur. 18

Section 10.18. Incorporation by Reference. All exhibits to this Agreement and the terms of all Loan Documents shall be incorporated herein by reference as though expressly set forth herein. Section 10.19. Descriptive Headings. Descriptive headings of the several Articles and Sections of each of the Loan Documents are intended for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 10.20. Further Assurances. The Borrower, from time to time, shall execute such further instruments as PIDA may reasonably request to further confirm and assure the interests and rights created or intended to be created in favor of PIDA hereunder or under the Loan Documents. Section 10.21. Complete Agreement. The Loan Documents constitute the entire agreement between PIDA and the Borrower with respect to the Project and the Loan. The Loan Documents supersede and replace all prior agreements related to the subject matter thereof including, without limitation, the Commitment, except to the extent such prior agreements are expressly incorporated by reference or otherwise referred to. This Agreement, the Premises Agreement, the Assignment, and the Assumption Agreement may be modified or amended only by a written instrument duly executed by PIDA, the Borrower, and the Industrial Occupant. Each of the remaining Loan Documents may be modified only by a written instrument duly executed by PIDA and the remaining parties to the particular Loan Document.

Section 10.18. Incorporation by Reference. All exhibits to this Agreement and the terms of all Loan Documents shall be incorporated herein by reference as though expressly set forth herein. Section 10.19. Descriptive Headings. Descriptive headings of the several Articles and Sections of each of the Loan Documents are intended for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 10.20. Further Assurances. The Borrower, from time to time, shall execute such further instruments as PIDA may reasonably request to further confirm and assure the interests and rights created or intended to be created in favor of PIDA hereunder or under the Loan Documents. Section 10.21. Complete Agreement. The Loan Documents constitute the entire agreement between PIDA and the Borrower with respect to the Project and the Loan. The Loan Documents supersede and replace all prior agreements related to the subject matter thereof including, without limitation, the Commitment, except to the extent such prior agreements are expressly incorporated by reference or otherwise referred to. This Agreement, the Premises Agreement, the Assignment, and the Assumption Agreement may be modified or amended only by a written instrument duly executed by PIDA, the Borrower, and the Industrial Occupant. Each of the remaining Loan Documents may be modified only by a written instrument duly executed by PIDA and the remaining parties to the particular Loan Document. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
ATTEST: /s/ Pascula M. Hunter --------------------Assistant Secretary THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY By: /s/ Marguerite Harris ----------------------------Administrator PIDC FINANCING CORPORATION By: /s/ Joseph J. Aylmer ----------------------------Senior Vice President

(CORPORATE SEAL) ATTEST: /s/ Joseph A. Mee --------------------Assistant Secretary

(CORPORATE SEAL)

19

EXHIBIT 11 MOTHERS WORK, INC. AND SUBSIDIARIES COMPUTATION OF PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Year Ended September 30 ----------------------1994 1995 1996 -----------------------------================================================================================ Average shares outstanding 3,108,886 3,120,535 3,269,290

- -------------------------------------------------------------------------------Net effect of dilutive stock options and warrants

77,999 ---------3,186,885 ==========

-----------3,120,535 ===========

-----------3,269,290 ===========

EXHIBIT 11 MOTHERS WORK, INC. AND SUBSIDIARIES COMPUTATION OF PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Year Ended September 30 ----------------------1994 1995 1996 -----------------------------================================================================================ Average shares outstanding 3,108,886 3,120,535 3,269,290

- -------------------------------------------------------------------------------Net effect of dilutive stock options and warrants

77,999 ---------3,186,885 ==========

-----------3,120,535 ===========

-----------3,269,290 ===========

- -------------------------------------------------------------------------------Net income (loss) $1,845,851 $(6,635,854) $ 903,766

- -------------------------------------------------------------------------------Preferred stock dividends ----------(162,916) ----------(977,500) -----------

- -------------------------------------------------------------------------------Net income (loss) applicable to common stockholders $1,845,851 ========== $(6,798,770) =========== $ (73,734) ===========

- -------------------------------------------------------------------------------Per common share amount: - -------------------------------------------------------------------------------Before extraordinary item $ .58 $ (.83) $ (.02)

- -------------------------------------------------------------------------------Extraordinary item ----------$ .58 ========== (1.35) ----------(2.18) =========== -----------$ (.02) ===========

EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
Name Under Which Subsidiary Does Business ------------Cave Springs A Pea in the Pod Motherhood

Name of Subsidiary - ---------Cave Springs, Inc. Mothers Work (R.E.), Inc. Motherhood Maternity Shops, Inc.

Jurisdiction of Incorporation ------------Delaware Pennsylvania Delaware

EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
Name Under Which Subsidiary Does Business ------------Cave Springs A Pea in the Pod Motherhood Maternite

Name of Subsidiary - ---------Cave Springs, Inc. Mothers Work (R.E.), Inc. Motherhood Maternity Shops, Inc. The Page Boy Company, Inc.

Jurisdiction of Incorporation ------------Delaware Pennsylvania Delaware Delaware

Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statements File Nos. 33-64580, 333-2404, 333-3480 and 333-12321. Arthur Andersen LLP Philadelphia, PA December 16, 1996

ARTICLE 5 The schedule contains summary financial information extracted from the Company's 1996 10-K and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION

12 MOS SEP 30 1996 OCT 01 1995 SEP 30 1996 1,262,435 0 2,288,026 0 57,209,499 66,366,032 58,646,989 (13,195,875) 164,612,738 28,930,889 96,680,722 0 11,500,000 35,593 23,570,921 164,612,738 199,179,984 199,179,984 88,416,648 88,416,648 0 0

Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statements File Nos. 33-64580, 333-2404, 333-3480 and 333-12321. Arthur Andersen LLP Philadelphia, PA December 16, 1996

ARTICLE 5 The schedule contains summary financial information extracted from the Company's 1996 10-K and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS SEP 30 1996 OCT 01 1995 SEP 30 1996 1,262,435 0 2,288,026 0 57,209,499 66,366,032 58,646,989 (13,195,875) 164,612,738 28,930,889 96,680,722 0 11,500,000 35,593 23,570,921 164,612,738 199,179,984 199,179,984 88,416,648 88,416,648 0 0 12,864,351 2,732,338 1,828,572 903,766 0 0 0 903,766 (.02) (.02)

ARTICLE 5 The schedule contains summary financial information extracted from the Company's 1996 10-K and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS SEP 30 1996 OCT 01 1995 SEP 30 1996 1,262,435 0 2,288,026 0 57,209,499 66,366,032 58,646,989 (13,195,875) 164,612,738 28,930,889 96,680,722 0 11,500,000 35,593 23,570,921 164,612,738 199,179,984 199,179,984 88,416,648 88,416,648 0 0 12,864,351 2,732,338 1,828,572 903,766 0 0 0 903,766 (.02) (.02)