Exhibit 10.2

 

LOGO [g791029graphic_1.jpg]

CREDIT AGREEMENT

dated as of

October 31, 2014

among

SAGENT PHARMACEUTICALS

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

J.P. MORGAN SECURITIES LLC,

as Sole Bookrunner and Sole Lead Arranger

 

 

 

CHASE BUSINESS CREDIT

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

    1   

SECTION 1.01

   DEFINED TERMS     1   

SECTION 1.02

   CLASSIFICATION OF LOANS AND BORROWINGS     32   

SECTION 1.03

   TERMS GENERALLY     33   

SECTION 1.04

   ACCOUNTING TERMS; GAAP     33   

SECTION 1.05

   PRO FORMA ADJUSTMENTS FOR ACQUISITIONS AND DISPOSITIONS     33   

SECTION 1.06

   TIMING OF PAYMENT OR PERFORMANCE     34   

ARTICLE II THE CREDITS

    34   

SECTION 2.01

   COMMITMENTS     34   

SECTION 2.02

   LOANS AND BORROWINGS     34   

SECTION 2.03

   REQUESTS FOR REVOLVING BORROWINGS     35   

SECTION 2.04

   PROTECTIVE ADVANCES     36   

SECTION 2.05

   SWINGLINE LOANS AND OVERADVANCES     36   

SECTION 2.06

   LETTERS OF CREDIT     37   

SECTION 2.07

   FUNDING OF BORROWINGS     41   

SECTION 2.08

   INTEREST ELECTIONS     42   

SECTION 2.09

   TERMINATION AND REDUCTION OF COMMITMENTS; INCREASE IN REVOLVING COMMITMENTS  
  43   

SECTION 2.10

   REPAYMENT AND AMORTIZATION OF LOANS; EVIDENCE OF DEBT     44   

SECTION 2.11

   PREPAYMENT OF LOANS     45   

SECTION 2.12

   FEES     46   

SECTION 2.13

   INTEREST     47   

SECTION 2.14

   ALTERNATE RATE OF INTEREST     47   

SECTION 2.15

   INCREASED COSTS     48   

SECTION 2.16

   BREAK FUNDING PAYMENTS     49   

SECTION 2.17

   WITHHOLDING OF TAXES; GROSS-UP     50   

SECTION 2.18

   PAYMENTS GENERALLY; ALLOCATION OF PROCEEDS; SHARING OF SET-OFFS     53   

SECTION 2.19

   MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS     56   

SECTION 2.20

   DEFAULTING LENDERS     56   

SECTION 2.21

   RETURNED PAYMENTS     58   

SECTION 2.22

   BANKING SERVICES AND SWAP AGREEMENTS     58   

ARTICLE III REPRESENTATIONS AND WARRANTIES

    58   

SECTION 3.01

   ORGANIZATION; POWERS     58   

SECTION 3.02

   AUTHORIZATION; ENFORCEABILITY     59   

SECTION 3.03

   GOVERNMENTAL APPROVALS; NO CONFLICTS     59   

SECTION 3.04

   FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE     59   

SECTION 3.05

   PROPERTIES     59   

SECTION 3.06

   LITIGATION AND ENVIRONMENTAL MATTERS     60   

SECTION 3.07

   COMPLIANCE WITH LAWS AND AGREEMENTS; NO DEFAULT     60   

SECTION 3.08

   INVESTMENT COMPANY STATUS     60   

SECTION 3.09

   TAXES     60   

SECTION 3.10

   ERISA     60   

SECTION 3.11

   DISCLOSURE     60   

SECTION 3.12

   MATERIAL AGREEMENTS     61   

SECTION 3.13

   SOLVENCY     61   

SECTION 3.14

   INSURANCE     61   

SECTION 3.15

   CAPITALIZATION AND SUBSIDIARIES     62   

SECTION 3.16

   SECURITY INTEREST IN COLLATERAL     62   

SECTION 3.17

   EMPLOYMENT MATTERS     62   

 

i

--------------------------------------------------------------------------------

SECTION 3.18

   FEDERAL RESERVE REGULATIONS     62   

SECTION 3.19

   USE OF PROCEEDS     62   

SECTION 3.20

   NO BURDENSOME RESTRICTIONS     62   

SECTION 3.21

   ANTI-CORRUPTION LAWS AND SANCTIONS     62   

SECTION 3.22

   COMMON ENTERPRISE     63   

ARTICLE IV CONDITIONS

    63   

SECTION 4.01

   EFFECTIVE DATE     63   

SECTION 4.02

   EACH CREDIT EVENT     65   

ARTICLE V AFFIRMATIVE COVENANTS

    66   

SECTION 5.01

   FINANCIAL STATEMENTS; BORROWING BASE AND OTHER INFORMATION     66   

SECTION 5.02

   NOTICES OF MATERIAL EVENTS     68   

SECTION 5.03

   EXISTENCE; CONDUCT OF BUSINESS     70   

SECTION 5.04

   PAYMENT OF OBLIGATIONS     70   

SECTION 5.05

   MAINTENANCE OF PROPERTIES     70   

SECTION 5.06

   BOOKS AND RECORDS; INSPECTION RIGHTS     70   

SECTION 5.07

   COMPLIANCE WITH LAWS AND MATERIAL CONTRACTUAL OBLIGATIONS     70   

SECTION 5.08

   USE OF PROCEEDS     71   

SECTION 5.09

   ACCURACY OF INFORMATION     71   

SECTION 5.10

   INSURANCE     71   

SECTION 5.11

   APPRAISALS     71   

SECTION 5.12

   DEPOSITORY BANKS     72   

SECTION 5.13

   FIELD EXAMINATIONS     72   

SECTION 5.14

   DESIGNATION OF SUBSIDIARIES     72   

SECTION 5.15

   ADDITIONAL COLLATERAL; FURTHER ASSURANCES     73   

SECTION 5.16

   CHINA GUARANTY CASH COLLATERAL     73   

SECTION 5.17

   POST-CLOSING OBLIGATIONS     74   

ARTICLE VI NEGATIVE COVENANTS

    74   

SECTION 6.01

   INDEBTEDNESS     74   

SECTION 6.02

   LIENS     76   

SECTION 6.03

   FUNDAMENTAL CHANGES     78   

SECTION 6.04

   INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS     78   

SECTION 6.05

   ASSET SALES     80   

SECTION 6.06

   SALE AND LEASEBACK TRANSACTIONS     80   

SECTION 6.07

   SWAP AGREEMENTS     81   

SECTION 6.08

   RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS     81   

SECTION 6.09

   TRANSACTIONS WITH AFFILIATES     81   

SECTION 6.10

   RESTRICTIVE AGREEMENTS     82   

SECTION 6.11

   AMENDMENT OF MATERIAL DOCUMENTS     82   

SECTION 6.12

   FINANCIAL COVENANT – FIXED CHARGE COVERAGE RATIO     82   

ARTICLE VII EVENTS OF DEFAULT

    83   

ARTICLE VIII THE ADMINISTRATIVE AGENT

    85   

SECTION 8.01

   APPOINTMENT     85   

SECTION 8.02

   RIGHTS AS A LENDER     86   

SECTION 8.03

   DUTIES AND OBLIGATIONS     86   

SECTION 8.04

   RELIANCE     86   

SECTION 8.05

   ACTIONS THROUGH SUB-AGENTS     86   

SECTION 8.06

   RESIGNATION     87   

SECTION 8.07

   NON-RELIANCE     88   

SECTION 8.08

   NOT PARTNERS OR CO-VENTURERS; ADMINISTRATIVE AGENT AS REPRESENTATIVE OF THE
SECURED PARTIES     88   

SECTION 8.09

   FLOOD LAWS     89   

 

ii

--------------------------------------------------------------------------------

ARTICLE IX MISCELLANEOUS

    89   

SECTION 9.01

   NOTICES     89   

SECTION 9.02

   WAIVERS; AMENDMENTS     91   

SECTION 9.03

   EXPENSES; INDEMNITY; DAMAGE WAIVER     93   

SECTION 9.04

   SUCCESSORS AND ASSIGNS     95   

SECTION 9.05

   SURVIVAL     98   

SECTION 9.06

   COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION     99   

SECTION 9.07

   SEVERABILITY     99   

SECTION 9.08

   RIGHT OF SETOFF     99   

SECTION 9.09

   GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS     100   

SECTION 9.10

   WAIVER OF JURY TRIAL     100   

SECTION 9.11

   HEADINGS     100   

SECTION 9.12

   CONFIDENTIALITY     100   

SECTION 9.13

   SEVERAL OBLIGATIONS; NONRELIANCE; VIOLATION OF LAW     101   

SECTION 9.14

   USA PATRIOT ACT     102   

SECTION 9.15

   DISCLOSURE     102   

SECTION 9.16

   APPOINTMENT FOR PERFECTION     102   

SECTION 9.17

   INTEREST RATE LIMITATION     102   

SECTION 9.18

   NO ADVISORY OR FIDUCIARY RESPONSIBILITY     102   

ARTICLE X LOAN GUARANTY

    103   

SECTION 10.01

   GUARANTY     103   

SECTION 10.02

   GUARANTY OF PAYMENT     103   

SECTION 10.03

   NO DISCHARGE OR DIMINISHMENT OF LOAN GUARANTY     103   

SECTION 10.04

   DEFENSES WAIVED     104   

SECTION 10.05

   RIGHTS OF SUBROGATION     104   

SECTION 10.06

   REINSTATEMENT; STAY OF ACCELERATION     104   

SECTION 10.07

   INFORMATION     105   

SECTION 10.08

   TERMINATION     105   

SECTION 10.09

   TAXES     105   

SECTION 10.10

   MAXIMUM LIABILITY     105   

SECTION 10.11

   CONTRIBUTION     105   

SECTION 10.12

   LIABILITY CUMULATIVE     106   

SECTION 10.13

   KEEPWELL     106   

ARTICLE XI THE BORROWER REPRESENTATIVE

    107   

SECTION 11.01

   APPOINTMENT; NATURE OF RELATIONSHIP     107   

SECTION 11.02

   POWERS     107   

SECTION 11.03

   EMPLOYMENT OF AGENTS     107   

SECTION 11.04

   NOTICES     107   

SECTION 11.05

   SUCCESSOR BORROWER REPRESENTATIVE     107   

SECTION 11.06

   EXECUTION OF LOAN DOCUMENTS; BORROWING BASE CERTIFICATE     107   

SECTION 11.07

   REPORTING     108   

 

iii

--------------------------------------------------------------------------------

SCHEDULES:

 

Commitment Schedule

Schedule 2.01

     –         SCP Loan Facility Borrowings

Schedule 3.05

     –         Properties

Schedule 3.06

     –         Disclosed Matters

Schedule 3.12

     –         Material Agreements

Schedule 3.14

     –         Insurance

Schedule 3.15

     –         Capitalization and Subsidiaries

Schedule 6.01

     –         Existing Indebtedness

Schedule 6.02

     –         Existing Liens

Schedule 6.04

     –         Existing Investments

Schedule 6.10

     –         Existing Restrictions

EXHIBITS:

 

Exhibit A

     –         Form of Assignment and Assumption

Exhibit B

     –         Form of Borrowing Base Certificate

Exhibit C

     –         Form of Compliance Certificate

Exhibit D

     –         Joinder Agreement

Exhibit E-1

     –         U.S. Tax Certificate (For Foreign Lenders that are not
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit E-2

     –         U.S. Tax Certificate (For Foreign Participants that are not
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit E-3

     –         U.S. Tax Certificate (For Foreign Participants that are
Partnerships for U.S. Federal Income Tax Purposes)

Exhibit E-4

     –         U.S. Tax Certificate (For Foreign that are Partnerships for U.S.
Federal Income Tax Purposes)

 

iv

--------------------------------------------------------------------------------

CREDIT AGREEMENT dated as of October 31, 2014 (as it may be amended or modified
from time to time, this “Agreement”) among SAGENT PHARMACEUTICALS, a Wyoming
corporation, and the other borrowers from time to time party hereto, as
Borrowers, SAGENT PHARMACEUTICALS, INC., a Delaware corporation, as a Guarantor,
the other Loan Parties party hereto, the Lenders party hereto, and JPMORGAN
CHASE BANK, N.A., as Administrative Agent.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, bear interest at a rate determined
by reference to the Alternate Base Rate.

“Account” has the meaning assigned to such term in the Security Agreement.

“Account Debtor” means any Person obligated on an Account.

“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the Effective Date, by which any Loan Party (a) acquires
any business or all or substantially all of the assets of any Person, whether
through purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the Equity Interests
of a Person which has ordinary voting power for the election of directors or
other similar management personnel of a Person (other than Equity Interests
having such power only by reason of the happening of a contingency) or a
majority of the outstanding Equity Interests of a Person.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period or for any ABR Borrowing, an interest rate per annum equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.

“Adjusted One Month LIBOR Rate” means, for any day, an interest rate per annum
equal to the Adjusted LIBO Rate for a one month interest period on such day (or
if such day is not a Business Day, the immediately preceding Business Day);
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day
shall be based on the rate appearing on Reuters Screen LIBOR01 Page (or on any
successor or substitute page) at approximately 11:00 a.m. London time on such
day (without any rounding).

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder and its successors and permitted
assigns in such capacity.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the specified Person.

 

1

--------------------------------------------------------------------------------

“Agency Site” means the Intralinks or another electronic platform site
established by the Administrative Agent to administer this Agreement.

“Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of
all the Lenders at such time.

“Aggregate Revolving Exposure” means, at any time, the aggregate Revolving
Exposure of all the Lenders at such time.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus  1⁄2 of 1% and (c) the Adjusted LIBO Rate for a
one month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, for the avoidance of
doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing
on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day (without any rounding). Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base
Rate is being used as an alternate rate of interest pursuant to Section 2.14
hereof, then the Alternate Base Rate shall be the greater of clause (a) and
(b) above and shall be determined without reference to clause (c) above.

“ANDA” means any Abbreviated New Drug Application which has been filed and is
under review by the FDA.

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to any Borrower or its Subsidiaries from time to time
concerning or relating to bribery or corruption.

“Applicable Percentage” means, with respect to any Lender, (a) with respect to
Revolving Loans, LC Exposure, Overadvances or Swingline Loans, a percentage
equal to a fraction the numerator of which is such Lender’s Revolving Commitment
and the denominator of which is the aggregate Revolving Commitments provided
that, if the Revolving Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon such Lender’s share of the Aggregate
Revolving Exposures at that time), and (b) with respect to Protective Advances
or with respect to the Aggregate Credit Exposure, a percentage based upon its
share of the Aggregate Credit Exposure and the unused Commitments; provided
that, in accordance with Section 2.20, so long as any Lender shall be a
Defaulting Lender, such Defaulting Lender’s Commitment shall be disregarded in
the calculations under clauses (a) and (b) above.

“Applicable Rate” means, for any day, with respect to any Loan, or with respect
to the commitment fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “Revolver ABR Spread”,
“Revolver Eurodollar Spread or “Commitment Fee Rate”, as the case may be, as
follows:

 

Revolver

ABR

Spread

  Revolver
Eurodollar
Spread   Commitment
Fee Rate 1.00%   2.00%   0.25%

“Approved Fund” has the meaning assigned to such term in Section 9.04.

 

2

--------------------------------------------------------------------------------

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

“Availability” means, at any time, an amount equal to (a) the lesser of (i) the
aggregate Revolving Commitments minus Reserves and (ii) the Borrowing Base minus
(b) the Aggregate Revolving Exposure (calculated, with respect to any Defaulting
Lender, as if such Defaulting Lender had funded its Applicable Percentage of all
outstanding Borrowings).

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

“Available Revolving Commitment” means, at any time, the aggregate Revolving
Commitments minus the Aggregate Revolving Exposure (calculated, with respect to
any Defaulting Lender, as if such Defaulting Lender had funded its Applicable
Percentage of all outstanding Borrowings).

“Banking Services” means each and any of the following bank services provided to
any Loan Party by any Lender or any of its Affiliates: (a) credit cards for
commercial customers (including, without limitation, “commercial credit cards”
and purchasing cards), (b) stored value cards, (c) merchant processing services,
and (d) treasury management services (including, without limitation, controlled
disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services).

“Banking Services Obligations” means any and all obligations of the Loan
Parties, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

“Banking Services Reserves” means all Reserves which the Administrative Agent
from time to time establishes in its Permitted Discretion for Banking Services
then provided or outstanding.

“Bankruptcy Event” means, with respect to any Person, when such Person becomes
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business, appointed for it, provided that a Bankruptcy Event shall not
result solely by virtue of any ownership interest, or the acquisition of any
ownership interest, in such Person by a Governmental Authority or
instrumentality thereof, unless such ownership interest results in or provides
such Person with immunity from the jurisdiction of courts within the United
States or from the enforcement of judgments or writs of attachment on its assets
or permits such Person (or such Governmental Authority or instrumentality), to
reject, repudiate, disavow or disaffirm any contracts or agreements made by such
Person.

“Beneficial Owner” means, with respect to any U.S. Federal withholding Tax, the
beneficial owner, for U.S. Federal income tax purposes, to whom such Tax
relates.

“Billing Statement” has the meaning assigned to such term in Section 2.18(g).

“Board” means the Board of Governors of the Federal Reserve System of the U.S.

 

3

--------------------------------------------------------------------------------

“Borrower” or “Borrowers” means, individually or collectively, the Company and
any other parties that become a party hereto as a “Borrower” after the date
hereof pursuant to the terms of this Agreement.

“Borrower Representative” has the meaning assigned to such term in
Section 11.01.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, (b) a Swingline Loan, (c) a Protective
Advance and (d) an Overadvance.

“Borrowing Base” means the sum of (a) 100% of the Borrowers’ cash maintained
either (i) in a blocked deposit or securities account at Chase under the Control
(as defined in the Security Agreement) of the Administrative Agent or (ii) in
blocked accounts subject to a Deposit Account Control Agreement in favor of the
Administrative Agent in form and substance reasonably satisfactory to the
Administrative Agent, plus (b) 95% of the Borrowers’ cash in a blocked money
market Deposit Account at Chase under the Control (as defined in the Security
Agreement) of the Administrative Agent, plus (c) 95% of the Borrowers’ Eligible
Commercial Paper, plus (d) 85% of the Borrowers’ Eligible Bonds, plus (e) 85% of
the Borrowers’ Eligible Accounts, plus (f) the lesser of (i) 75% of the
Borrowers’ Eligible Inventory, at such time, valued at the lower of cost or
market value, determined on a first-in-first-out basis, and (ii) the product of
85% multiplied by the Net Orderly Liquidation Value percentage identified in the
most recent inventory appraisal ordered by the Administrative Agent multiplied
by the Borrowers’ Eligible Inventory, valued at the lower of cost or market
value, determined on a first-in-first-out basis, minus (g) Reserves. The
Administrative Agent may, in its Permitted Discretion, establish and adjust
Reserves.

“Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Borrower Representative, in
substantially the form of Exhibit B or another form which is acceptable to the
Administrative Agent in its sole discretion.

“Borrowing Request” means a request by the Borrower Representative for a
Revolving Borrowing in accordance with Section 2.03.

“Burdensome Restrictions” means any consensual encumbrance or restriction of the
type described in clause (a) or (b) of Section 6.10.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for general business in London.

“Capital Expenditures” means, without duplication, any expenditure or commitment
to expend money for any purchase or other acquisition of any asset which would
be classified as a fixed or capital asset on a consolidated balance sheet of
Holdings, the Borrowers and the other Loan Parties prepared in accordance with
GAAP.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

“Cash Dominion Period” means any period beginning on any date that either (a) a
Default has occurred and is continuing or (b) Availability is less than the Cash
Dominion Threshold Amount and

 

4

--------------------------------------------------------------------------------

continuing until the first day after such date that (i) no Default has occurred
and is continuing and (ii) Availability is greater than or equal to the Cash
Dominion Threshold Amount for forty-five (45) consecutive days.

“Cash Dominion Threshold Amount” means the greater of (i) 15.0% of the aggregate
Revolving Commitments and (ii) $12,000,000.

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or Group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), of Equity Interests representing
more than 35% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of Holdings; (b) occupation of a majority of
the seats (other than vacant seats) on the board of directors of Holdings by
Persons who were neither (i) nominated by the board of directors of Holdings nor
(ii) appointed by directors so nominated; (c) Holdings shall cease to own, free
and clear of all Liens or other encumbrances, 100% of the outstanding voting
Equity Interests of the Company on a fully diluted basis; or (d) the Company
shall cease to own, free and clear of all Liens or other encumbrances, 100% of
the outstanding voting Equity Interests of any of its subsidiary Loan Parties on
a fully diluted basis (except as permitted pursuant to Sections 6.03, 6.04 and
6.05).

“Change in Law” means the occurrence after the date of this Agreement (or, with
respect to any Lender, such later date on which such Lender becomes a party to
this Agreement) of any of the following: (a) the adoption or taking effect of
any law, rule, regulation or treaty; (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation or application thereof by any
Governmental Authority; or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline, requirement or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement;
provided that notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements or directives thereunder or issued in connection
therewith or in the implementation thereof, and (y) all requests, rules,
guidelines, requirements or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted, issued or implemented, except to
the extent required to be complied with on the date hereof.

“Charges” has the meaning assigned to such term in Section 9.17.

“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.

“China Guaranty” means the guaranty by Holdings and the Company of the
obligations of SCP under the SCP Loan Facility as amended, restated,
supplemented, or otherwise modified from time to time.

“China Guaranty Cash Collateral Period” means any period beginning on any date
that either (a) a Specified Default has occurred and is continuing or
(b) Availability is less than the China Guaranty Cash Collateral Threshold
Amount and continuing until the first day after such date that (i) no Default
has occurred and is continuing and (ii) Availability is greater than or equal to
the China Guaranty Cash Collateral Threshold Amount for thirty (30) consecutive
days; provided that notwithstanding the occurrence of the conditions in clauses
(i) or (ii) above, a China Guaranty Cash Collateral Period shall not terminate
more than two times in any twelve month period.

 

5

--------------------------------------------------------------------------------

“China Guaranty Cash Collateral Threshold Amount” means the greater of (i) 10.0%
of the aggregate Revolving Commitments and (ii) $8,000,000.

“China Guaranty Reserve” has the meaning assigned to such term in
Section 2.01(b).

“China Guaranty Obligations” means all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), obligations and liabilities of Holdings and the
Company to Chase, any Affiliate of Chase party to the SCP Loan Facility, any of
the Lenders, the Administrative Agent or any indemnified party, individually or
collectively, existing on the Effective Date or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under the China Guaranty.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Revolving Loans, Swingline
Loans or Protective Advances or Overadvances.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” has the meaning assigned to such term in the Security Agreement.

“Collateral Access Agreement” has the meaning assigned to such term in the
Security Agreement.

“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages and any other agreements, instruments and documents executed pursuant
to this Agreement or any other Loan Document that creates a Lien in favor of the
Administrative Agent to secure the Secured Obligations.

“Collection Account” has the meaning assigned to such term in the Security
Agreement.

“Commitment” means, with respect to each Lender, such Lender’s Revolving
Commitment, together with the commitment of such Lender to acquire
participations in Protective Advances hereunder. The initial amount of each
Lender’s Commitment is set forth on the Commitment Schedule, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable.

“Commitment Schedule” means the Schedule attached hereto identified as such.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

“Communications” has the meaning assigned to such term in Section 9.01(d).

“Company” means Sagent Pharmaceuticals, a Wyoming corporation.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

 

6

--------------------------------------------------------------------------------

“Covenant Testing Period” means any period beginning on any date that either
(a) a Default has occurred and is continuing or (b) Availability is less than
the Covenant Testing Threshold Amount and continuing until the first day after
such date that (i) no Default has occurred and is continuing and
(ii) Availability is greater than or equal to the Covenant Testing Threshold
Amount for thirty (30) consecutive days.

“Covenant Testing Threshold Amount” means the greater of (i) 10.0% of the
aggregate Revolving Commitments and (ii) $8,000,000.

“Credit Exposure” means, as to any Lender at any time, the sum of (a) such
Lender’s Revolving Exposure, plus (b) an amount equal to its Applicable
Percentage, if any, of the aggregate principal amount of Protective Advances
outstanding.

“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline
Lender or any other Lender.

“DDN” means Dohmen Life Science Services (DLSS), f/k/a DDN/Obergfel, LLC.

“DDN Reserve” means a Reserve in respect of amounts owing to DDN equal to (i) at
any time that Availability is greater than or equal to the Cash Dominion
Threshold Amount, the amount of due and accrued payables owing to DDN in excess
of $5,000,000 and (ii) at any time that Availability is less than the Cash
Dominion Threshold Amount, the full amount of all due and accrued payables owing
to DDN.

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or
Swingline Loans or (iii) pay over to any Credit Party any other amount required
to be paid by it hereunder or any other Loan Document, unless, in the case of
clause (i) above, such Lender notifies the Administrative Agent in writing that
such failure is the result of such Lender’s good faith determination that a
condition precedent to funding (specifically identified and including the
particular Default, if any) has not been satisfied; (b) has notified any
Borrower or any Credit Party in writing, or has made a public statement, to the
effect that it does not intend or expect to comply with any of its funding
obligations under this Agreement or any other Loan Document (unless such writing
or public statement indicates that such position is based on such Lender’s good
faith determination that a condition precedent (specifically identified and
including the particular Default, if any) to funding a Loan under this Agreement
cannot be satisfied) or generally under other agreements in which it commits to
extend credit, (c) has failed, within three Business Days after request by a
Credit Party, acting in good faith, to provide a certification in writing from
an authorized officer of such Lender that it will comply with its obligations
(and is financially able to meet such obligations) to fund prospective Loans and
participations in then outstanding Letters of Credit and Swingline Loans under
this Agreement, provided that such Lender shall cease to be a Defaulting Lender
pursuant to this clause (c) upon such Credit Party’s receipt of such
certification in form and substance satisfactory to it and the Administrative
Agent, or (d) has become the subject of a Bankruptcy Event.

“Deposit Account” has the meaning assigned to such term in the Security
Agreement.

“Deposit Account Control Agreement” has the meaning assigned to such term in the
Security Agreement.

 

7

--------------------------------------------------------------------------------

“Disclosed Matters” means the actions, suits, proceedings and environmental
matters disclosed in Schedule 3.06.

“Disqualified Equity Interest” means, with respect to any Person, any Equity
Interest in such Person that by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable, either mandatorily or
at the option of the holder thereof), or upon the happening of any event or
condition: (a) matures or is mandatorily redeemable (other than solely for
Equity Interests in such Person that do not constitute Disqualified Equity
Interests and cash in lieu of fractional shares of such Equity Interests),
whether pursuant to a sinking fund obligation or otherwise; (b) is convertible
or exchangeable at the option of the holder thereof for Indebtedness or Equity
Interests (other than solely for Equity Interests in such Person that do not
constitute Disqualified Equity Interests and cash in lieu of fractional shares
of such Equity Interests); or (c) is or may be redeemable (other than solely for
Equity Interests in such Person that do not constitute Disqualified Equity
Interests and cash in lieu of fractional shares of such Equity Interests) or is
or may be required to be repurchased by such Person or any of its Affiliates, in
whole or in part, at the option of the holder thereof, in each case, on or prior
to the date that occurs 91 days after the latest Maturity Date.

“Disqualified Institution” means (a) Persons that are reasonably determined by
the Borrower Representative to be competitors of the Borrowers or their
Subsidiaries and which have been specifically identified by the Borrower
Representative to the Administrative Agent in writing prior to the date hereof
(“Disqualified Competitors”) and (b) any of such Disqualified Competitors’
Affiliates to the extent such Affiliates (x) are clearly identifiable as
affiliates of Disqualified Competitors on the basis of such Affiliates’ names
and (y) are not bona fide debt investment funds that are Affiliates of
Disqualified Competitors; provided that, solely with respect to the foregoing
clause (a), the Borrower Representative, upon reasonable notice to the
Administrative Agent after the date hereof, shall be permitted to supplement in
writing by name the list of Persons that are Disqualified Competitors to the
extent such supplemented Person is a competitor (or Affiliate thereof, other
than a bona fide debt investment fund) of the Borrower Representative or their
Subsidiaries, which supplement shall become effective two (2) days after
delivery to the Administrative Agent and the Lenders, but which shall not apply
retroactively to disqualify any parties that have previously acquired an
assignment or participation interest in the Loans (but solely with respect to
such Loans).

“Document” has the meaning assigned to such term in the Security Agreement.

“dollars” or “$” refers to lawful money of the U.S.

“Domestic Subsidiary” means a Subsidiary organized under the laws of a
jurisdiction located in the U.S.

“Drug Product Candidates” means any and all drug product candidates or other
potential drugs being investigated, evaluated and/or tested by or on behalf of
Borrowers or the other Loan Parties (including any drug products subject to an
ANDA), or any of them, at any time, whether pursuant to a license or other
agreement with a third party or otherwise, irrespective of the proposed or
anticipated indications or uses of the same (or whether such indications or uses
may expand or contract).

“Drugs” means any and all drugs owned, manufactured, licensed, marketed, sold
and/or distributed by Borrowers or the other Loan Parties, or any of them, at
any time, whether pursuant to a license with a third party or otherwise,
irrespective of the proposed or anticipated indications or uses of the same (or
whether such indications or uses may expand or contract).

“EBITDA” means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (i) Interest Expense for such

 

8

--------------------------------------------------------------------------------

period, (ii) income tax expense for such period, (iii) all amounts attributable
to depreciation and amortization expense for such period, (iv) any extraordinary
non-cash charges for such period and (v) any other non-cash charges for such
period (but excluding any non-cash charge in respect of an item that was
included in Net Income in a prior period and any non-cash charge that relates to
the write-down or write-off of inventory, (vi) in each case to the extent
calculated in good faith and factually supportable pursuant to documentation and
analysis delivered to Administrative Agent, the amount of any restructuring
charge, reserve, integration cost or other business optimization expense or cost
(including charges directly related to implementation of cost-savings
initiatives) that is deducted (and not added back) in such period in computing
Net Income including, without limitation, those related to severance, retention,
signing bonuses, relocation, recruiting and other employee related costs,
provided, that the aggregate amount added back to Net Income pursuant to this
clause (vi) shall not exceed 10% of EBITDA, (vii) in each case to the extent
incurred after the Effective Date and without duplication of clause (ix) below,
the amount of other customary and reasonable accruals, payments and expenses
(including legal, tax, structuring and other costs and expenses) incurred during
such period in connection with any Acquisition, Investment, Restricted Payment,
issuance of Equity Interests or other incurrence of Indebtedness or disposition
permitted hereunder (whether or not any such transaction undertaken was
completed), (viii) the amount of any expenses, charges or losses for such period
that are covered by indemnification or other reimbursement provisions in
connection with any Acquisition, Investment, Restricted Payment, issuance of
Equity Interests or other incurrence of Indebtedness or disposition permitted
hereunder, to the extent actually reimbursed, or, so long as the Borrowers have
made a determination that a reasonable basis exists for indemnification or
reimbursement and only to the extent that such amount is in fact indemnified or
reimbursed within 365 days of such determination, and (ix) any non-recurring
fees, cash charges and other cash expenses (including severance costs) made or
incurred in connection with the initial Transactions that are paid or otherwise
accounted for within 180 days of consummation of the initial Transactions in an
amount not to exceed $500,000, minus (b) without duplication and to the extent
included in Net Income, (i) any cash payments made during such period in respect
of non-cash charges described in clause (a)(v) taken in a prior period and
(ii) any extraordinary gains and any non-cash items of income for such period,
all calculated for Holdings, the Borrowers and the other Loan Parties on a
consolidated basis in accordance with GAAP.

“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of
the Commodity Exchange Act or any regulations promulgated thereunder and the
applicable rules issued by the Commodity Futures Trading Commission and/or the
SEC.

“EDGAR” means SEC’s Electronic Data Gathering, Analysis and Retrieval System
(EDGAR).

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02), which
date is October 31, 2014.

“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a Person with
the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax,
Intralinks®, ClearPar® and any other Internet or extranet-based site, whether
such electronic system is owned, operated or hosted by the Administrative Agent
and the Issuing Bank and any of its respective Related Parties or any other
Person, providing for access to data protected by passcodes or other security
system.

 

9

--------------------------------------------------------------------------------

“Eligible Accounts” means, at any time, the Accounts of a Borrower which are not
excluded as ineligible by virtue of one or more of the criteria set forth below.
Without limiting the Administrative Agent’s discretion provided herein, Eligible
Accounts shall not include any Account:

(a) which is not subject to a first priority perfected security interest (other
than Permitted Encumbrances of the type set forth in clause (a) or (e) of the
definition thereof having priority by operation of law, in each case to the
extent that the Administrative Agent has established a Reserve in respect of
such Permitted Encumbrance as determined by the Administrative Agent in its
Permitted Discretion) in favor of the Administrative Agent;

(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent (other than
Permitted Encumbrances of the type set forth in clause (a) or (e) of the
definition thereof having priority by operation of law, in each case to the
extent that the Administrative Agent has established a Reserve in respect of
such Permitted Encumbrance as determined by the Administrative Agent in its
Permitted Discretion);

(c) (i) with respect to which the scheduled due date is more than 90 days after
the date of the original invoice therefor, (ii) which is unpaid more than 90
days after the date of the original invoice therefor or more than 60 days after
the original due date therefor or (iii) which has been written off the books of
such Borrower or otherwise designated as uncollectible (in, determining the
aggregate amount from the same Account Debtor that is unpaid hereunder there
shall be excluded the amount of any net credit balances relating to Accounts due
from such Account Debtor which are unpaid more than 90 days after the date of
the original invoice therefor or more than 60 days after the original due date
therefor);

(d) which is owing by an Account Debtor for which more than 50% of the Accounts
owing from such Account Debtor and its Affiliates are ineligible under clause
(c) above;

(e) which is owing by (i) an Account Debtor (other than Amerisource Bergen
Corp., Cardinal Health Inc. and McKesson Corp.) to the extent the aggregate
amount of Accounts owing from such Account Debtor and its Affiliates to all
Borrowers exceeds 20% of the aggregate amount of Eligible Accounts of all
Borrowers or (ii) either Amerisource Bergen Corp., Cardinal Health Inc. and
McKesson Corp. to the extent the aggregate amount of Accounts owing from each
such Account Debtor to the Borrowers exceeds as of any date of determination (on
an individual basis for such Account Debtor 50% (or such higher percentage as
the Administrative Agent may establish for such Account Debtor from time to time
in its Permitted Discretion);

(f) with respect to which any covenant, representation or warranty contained in
this Agreement or in the Security Agreement has been breached or is not true;

(g) which (i) does not arise from the sale of goods or performance of services
in the ordinary course of business, (ii) is not evidenced by an invoice or other
documentation satisfactory to the Administrative Agent in its Permitted
Discretion which has been sent to the Account Debtor, (iii) represents a
progress billing, (iv) is contingent upon such Borrower’s completion of any
further performance, (v) represents a sale on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment, cash-on-delivery or any other
repurchase or return basis or (vi) relates to payments of interest;

(h) for which the goods giving rise to such Account have not been shipped to the
Account Debtor or for which the services giving rise to such Account have not
been performed by such Borrower or if such Account was invoiced more than once
(only to the extent the original due-date therefor is modified);

(i) with respect to which any check or other instrument of payment has been
returned uncollected for any reason;

 

10

--------------------------------------------------------------------------------

(j) which is owed by an Account Debtor which has (i) applied for, suffered, or
consented to the appointment of any receiver, custodian, trustee, or liquidator
of its assets, (ii) had possession of all or a material part of its property
taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had
filed against it, any request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or
voluntary or involuntary case under any state or federal bankruptcy laws (other
than post-petition accounts payable of an Account Debtor that is a
debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the
Administrative Agent), (iv) admitted in writing its inability, or is generally
unable to, pay its debts as they become due, (v) become insolvent, or
(vi) ceased operation of its business;

(k) which is owed by any Account Debtor which has sold all or substantially all
of its assets;

(l) which is owed by an Account Debtor which (i) does not maintain its chief
executive office in the U.S., Puerto Rico or Canada or (ii) is not organized
under applicable law of the U.S., any state of the U.S., or the District of
Columbia, Puerto Rico, Canada, or any province of Canada unless, in any such
case, such Account is backed by a letter of credit reasonably acceptable to the
Administrative Agent;

(m) which is owed in any currency other than U.S. dollars;

(n) which is owed by (i) any Governmental Authority of any country other than
the U.S. unless such Account is backed by a letter of credit reasonably
acceptable to the Administrative Agent, or (ii) any Governmental Authority of
the U.S., or any department, agency, public corporation, or instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other steps necessary
to perfect the Lien of the Administrative Agent in such Account have been
complied with to the Administrative Agent’s satisfaction;

(o) which is owed by any Affiliate of any Loan Party or any employee, officer,
director, agent or stockholder of any Loan Party or any of its Affiliates;

(p) accruals for (i) chargebacks, (ii) credits, (iii) cash discounts and
(iv) rebates;

(q) which is owed by an Account Debtor or any Affiliate of such Account Debtor
to which any Loan Party is indebted, but only to the extent of such
indebtedness, or is subject to any security, deposit, progress payment,
retainage or other similar advance made by or for the benefit of an Account
Debtor, in each case to the extent thereof;

(r) which is subject to any counterclaim, deduction, defense, setoff or dispute
but only to the extent of any such counterclaim, deduction, defense, setoff or
dispute, accruals for chargebacks, accruals for credits, accruals for cash
discounts and accruals for rebates;

(s) which is evidenced by any promissory note, chattel paper or instrument;

(t) with respect to which such Borrower has made any agreement with the Account
Debtor for any reduction thereof, other than discounts and adjustments given in
the ordinary course of business but only to the extent of any such reduction, or
any Account which was partially paid and such Borrower created a new receivable
for the unpaid portion of such Account;

 

11

--------------------------------------------------------------------------------

(u) which does not comply in all material respects with the requirements of all
applicable laws and regulations, whether Federal, state or local, including
without limitation the Federal Consumer Credit Protection Act, the Federal Truth
in Lending Act and Regulation Z of the Board;

(v) which is for goods that have been sold under a purchase order or pursuant to
the terms of a contract or other agreement or understanding (written or oral)
that indicates or purports that any Person other than such Borrower has or has
had an ownership interest in such goods, or which indicates any party other than
such Borrower as payee or remittance party;

(w) which was created on cash on delivery terms; or

(x) which the Administrative Agent determines in its Permitted Discretion may
not be paid by reason of the Account Debtor’s inability to pay or which the
Administrative Agent otherwise determines in its Permitted Discretion is
unacceptable with any such changes to be effective three (3) days after delivery
of notice thereof to the Borrower Representative and the Lenders.

In the event that an Account of a Borrower which was previously an Eligible
Account ceases to be an Eligible Account hereunder, such Borrower or the
Borrower Representative shall notify the Administrative Agent thereof on and at
the time of submission to the Administrative Agent of the next Borrowing Base
Certificate. In determining the amount of an Eligible Account of a Borrower, the
face amount of an Account may, in the Administrative Agent’s Permitted
Discretion, be reduced by, without duplication of any other Reserve or
eligibility criteria, to the extent not reflected in such face amount, (i) the
amount of all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that such Borrower may be obligated to rebate
to an Account Debtor pursuant to the terms of any agreement or understanding
(written or oral)) and (ii) the aggregate amount of all cash received in respect
of such Account but not yet applied by such Borrower to reduce the amount of
such Account.

“Eligible Bonds” means corporate bonds having, at such date of acquisition, a
credit rating of at least A from S&P or A from Moody’s, held in a blocked
securities account at Chase under the Control (as defined in the Security
Agreement) of the Administrative Agent or held in an account at another
financial institution subject to an account control agreement in favor the
Administrative Agent reasonably satisfactory to the Administrative Agent.

“Eligible Commercial Paper” means investments in commercial paper set forth in
clause (b) of the definition of Permitted Investments that are (a) held in a
blocked securities account at Chase under the Control (as defined in the
Security Agreement) of the Administrative Agent or held in an account at another
financial institution subject to an account control agreement in favor the
Administrative Agent reasonably satisfactory to the Administrative Agent and
(b) issued by Persons organized under the laws of any state in the United
States.

“Eligible Inventory” means, at any time, the Inventory of a Borrower which is
not excluded as ineligible by virtue of one or more of the criteria set forth
below. Without limiting the Administrative Agent’s discretion provided herein,
Eligible Inventory of a Borrower shall not include any Inventory:

(a) which is not subject to a first priority perfected Lien in favor of the
Administrative Agent;

(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;

 

12

--------------------------------------------------------------------------------

(c) which is, in the Administrative Agent’s Permitted Discretion, slow moving,
obsolete, unmerchantable, defective, used, unfit for sale, not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity or for which
a lower of cost or market reserve has been taken, but only to the extent of such
reserve;

(d) with respect to which any covenant, representation or warranty contained in
this Agreement or in the Security Agreement has been breached or is not true
and, without duplication to the extent reserved therefor, which does not conform
to all standards imposed by any Governmental Authority;

(e) in which any Person other than such Borrower shall (i) have any direct or
indirect ownership, interest or title or (ii) be indicated on any purchase order
or invoice with respect to such Inventory as having or purporting to have an
interest therein;

(f) which is not finished goods or which constitutes work-in-process, raw
materials, spare or replacement parts, subassemblies, packaging and shipping
material, manufacturing supplies, samples, prototypes, displays or display
items, bill-and-hold or ship-in-place goods, goods that are returned or marked
for return, repossessed goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business;

(g) which is not located in the U.S. or is in transit with a common carrier from
vendors and suppliers, provided that, Inventory in transit not to exceed
$12,000,000 (or such greater amount as the Administrative Agent may agree in its
sole discretion) at any time from vendors and suppliers may be included as
Eligible Inventory despite the foregoing provision of this clause (g) so long as
(x) Availability is greater than or equal to $25,000,000 and no Event of Default
has occurred and is continuing or (y) if Availability is less than $25,000,000
or an Event of Default has occurred and is continuing,

(i) the Administrative Agent (or customs broker acting as an agent for the
Administrative Agent) shall have received (1) a true and correct copy of the
bill of lading and other shipping documents for such Inventory and (2) evidence
of reasonably satisfactory casualty insurance naming the Administrative Agent as
lender loss payee and otherwise covering such risks as the Administrative Agent
may reasonably request,

(ii) if the bill of lading is non-negotiable, the Administrative Agent shall be
named as consignee in the bill of lading and the Administrative Agent shall have
received a duly executed In Transit Inventory Agreement, in form and substance
satisfactory to the Administrative Agent, from the applicable customs broker,
freight forwarder or carrier for such Inventory,

(iii) if the bill of lading is negotiable, the Administrative Agent shall have
received (1) confirmation that the bill is issued in the name of such Borrower
and consigned to the order of the Administrative Agent, and an acceptable
agreement has been executed with such Borrower’s customs broker, in which the
customs broker agrees that it holds the negotiable bill as agent for the
Administrative Agent and has granted the Administrative Agent access to the
Inventory, (2) confirmation that such Borrower has paid for the goods, and
(3) an estimate from such Borrower of the customs duties and customs fees
associated with the Inventory in order to establish an appropriate Reserve,

 

13

--------------------------------------------------------------------------------

(iv) the common carrier is not an Affiliate of the applicable vendor or
supplier, and

(v) the customs broker is not an Affiliate of any Borrower;

(h) which is located in any location leased by such Borrower unless (i) the
lessor has delivered to the Administrative Agent a Collateral Access Agreement
or (ii) a Reserve for rent, charges and other amounts due or to become due with
respect to such facility has been established by the Administrative Agent in its
Permitted Discretion;

(i) which is located in any third party warehouse or is in the possession of a
bailee (other than a third party processor) and is not evidenced by a Document
(other than bills of lading to the extent permitted pursuant to clause
(g) above), unless (i) such warehouseman or bailee has delivered to the
Administrative Agent a Collateral Access Agreement and such other documentation
as the Administrative Agent may require or (ii) an appropriate Reserve has been
established by the Administrative Agent in its Permitted Discretion;

(j) which is being processed offsite at a third party location or outside
processor, or is in-transit to or from such third party location or outside
processor;

(k) which is a discontinued product or component thereof;

(l) which is the subject of a consignment by such Borrower as consignor;

(m) which is within six (6) months of its scheduled expiration date;

(n) which contains or bears any intellectual property rights licensed to such
Borrower from a third party which agreement (i) restricts the Administrative
Agent’s ability to sell or otherwise dispose of such Inventory or (ii) would
result in the Administrative Agent incurring any liability with respect to
payment of royalties in excess of royalties applicable to such Borrower;

(o) which is not reflected in a current perpetual inventory report of such
Borrower (unless such Inventory is reflected in a report to the Administrative
Agent as “in transit” Inventory);

(p) for which reclamation rights have been asserted by the seller; or

(q) which the Administrative Agent otherwise determines in its Permitted
Discretion is unacceptable with any such changes to be effective three (3) days
after delivery of notice thereof to the Borrower Representative and the Lenders.

In the event that Inventory of a Borrower which was previously Eligible
Inventory ceases to be Eligible Inventory hereunder, such Borrower or the
Borrower Representative shall notify the Administrative Agent thereof on and at
the time of submission to the Administrative Agent of the next Borrowing Base
Certificate.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health
and safety matters.

 

14

--------------------------------------------------------------------------------

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower or any Domestic Subsidiary directly
or indirectly resulting from or based upon (a) any violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) any exposure to any
Hazardous Materials, (d) the Release or threatened Release of any Hazardous
Materials into the environment or (e) any written contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

“Equipment” has the meaning assigned to such term in the Security Agreement.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any of the
foregoing.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with a Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the failure to
satisfy the “minimum funding standard” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(c) of the Code or Section 302(c) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by any Borrower or any ERISA Affiliate of any liability under
Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
by any Borrower or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (f) the incurrence by any Borrower or any
ERISA Affiliate of any liability with respect to the withdrawal or partial
withdrawal of any Borrower or any ERISA Affiliate from any Plan or Multiemployer
Plan; or (g) the receipt by any Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from any Borrower or any ERISA
Affiliate of any notice, concerning the imposition upon any Borrower or any
ERISA Affiliate of Withdrawal Liability or a determination that a Multiemployer
Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, bear interest at a rate
determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Examination Threshold Amount” means Availability shall be lesser than the
greater of (a) 30% of the aggregate Revolving Commitments and (b) $22,500,000.

“Excluded Account” means (i) petty cash accounts for which the aggregate balance
does not exceed $200,000, (ii) tax, escrow and trust accounts, and
(iii) payroll, workers compensation, fiduciary and other employee wage and
benefit accounts.

 

15

--------------------------------------------------------------------------------

“Excluded Assets” means (a) all leasehold interests (except that the Loan
Parties shall be required to deliver landlord waivers, estoppels and Collateral
Access Agreements to the extent (if any) the delivery thereof shall be required
for assets at any applicable locations to constitute “Eligible Inventory” to the
extent the Loan Parties elect (in their sole discretion) to include such assets
in the Borrowing Base), (b) governmental licenses or state or local franchises,
charters and authorizations to the extent a security interest thereon is
prohibited or restricted by applicable law, (c) pledges and security interests
prohibited or restricted by applicable law (with no requirement to obtain the
consent of any Governmental Authority or third party, including, without
limitation, no requirement to comply with the Federal Assignment of Claims Act
or any similar statute to the extent that the applicable Loan Party has not
complied with the applicable law in order to eliminate such prohibition or
restriction), (d) any lease, license, permit or agreement or any property
subject to such lease, license, permit or agreement to the extent that a grant
of a security interest therein would violate or invalidate such lease, license,
permit or agreement or create a right of termination in favor of any other party
thereto or otherwise require consent thereunder (after giving effect to the
applicable anti-assignment provisions of the UCC or other applicable law), other
than proceeds thereof, the assignment of which is expressly deemed effective
under the UCC or other applicable law notwithstanding such prohibition, (e) any
assets to the extent a security interest in such assets could result in adverse
tax consequences or adverse regulatory consequences, in each case, as reasonably
determined by Borrower Representative in consultation with the Administrative
Agent, (f) any intent-to-use trademark application prior to the filing of a
“Statement of Use” or “Amendment to Allege Use” with respect thereto,
(g) interests in joint ventures and non-wholly owned Subsidiaries which cannot
be pledged without the consent of third parties, (h) any property subject to a
purchase money financing permitted to be incurred pursuant to the Loan
Documents, to the extent that a grant of a security interest in such property
would violate or invalidate such financing, (i) assets where the cost of
obtaining a security interest therein exceeds the practical benefit to the
Lenders afforded thereby, in each case, as reasonably determined by the
Administrative Agent, (j) margin stock, (k) voting Equity Interests of any CFC
or FSHCO in excess of 65% of any such class of Equity Interests (or such greater
percentage that, due to a change in applicable law after the date hereof,
(1) could not reasonably be expected to cause the undistributed earnings of such
CFC or FSHCO for U.S. Federal income tax purposes to be treated as a deemed
dividend to such foreign Subsidiary’s U.S. parent and (2) could not reasonably
be expected to cause any adverse tax consequences in the reasonable opinion of
the Borrower Representative in consultation with the Administrative Agent),
(l) any fee interest in owned real property with a fair market value of less
than $1,000,000, (m) Excluded Accounts, (n) all vehicles or other assets subject
to certificates of title and (o) except as may be required under the Loan
Documents with respect to assets included in the Borrowing Base, any assets
located outside the United States or assets that require action under the laws
of any jurisdiction other than the United States to create or perfect a security
interest in such assets, including any intellectual property registered in any
jurisdiction other than the United States.

“Excluded Subsidiary” means (a) any Subsidiary to the extent the provision of a
Guarantee hereunder by such Subsidiary could result in adverse tax consequences
as reasonably determined by a Borrower Representative in consultation with the
Administrative Agent, (b) any Subsidiary to the extent a Guarantee hereunder by
such Subsidiary is prohibited or restricted by contracts or applicable law
(including any requirement to obtain Governmental Authority or regulatory
authority or third party consent, approval, license or authorization) on the
Closing Date or on the date of Acquisition of such Subsidiary (so long as such
prohibition or restriction is not created or entered into in contemplation of or
in connection with such Person becoming a Subsidiary) (including Sagent Strides,
Sagent Canada and SCP), (c) any Domestic Subsidiary that has no material
liabilities and owns no material assets other than Equity Interests, of one or
more Foreign Subsidiaries that is a “controlled foreign corporation” (in each
case, a “CFC”) as defined in Section 957 of the Code and assets incidental or
related thereto such as intercompany debt of any CFC (each a “FSHCO”) and
(d) any other Subsidiary to the extent the Borrowers and the Administrative
Agent determine that the cost and/or burden of obtaining a Guarantee of the
Obligations by such Subsidiary outweighs the benefits provided thereby.

 

16

--------------------------------------------------------------------------------

“Excluded Swap Obligation” means, with respect to any Loan Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Loan Guarantor of, or the grant by such Loan Guarantor of a security interest to
secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal or
unlawful under the Commodity Exchange Act or any rule, regulation or order of
the Commodity Futures Trading Commission or the SEC (or the application or
official interpretation of any thereof) by virtue of such Loan Guarantor’s
failure for any reason to constitute an ECP at the time the Guarantee of such
Loan Guarantor or the grant of such security interest becomes or would become
effective with respect to such Swap Obligation. If a Swap Obligation arises
under a master agreement governing more than one swap, such exclusion shall
apply only to the portion of such Swap Obligation that is attributable to swaps
for which such Guarantee or security interest is or becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient: (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof),
(ii) that are Other Connection Taxes or (iii) that are branch profits Taxes
imposed by the United States; (b) in the case of a Lender, U.S. Federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan, Letter of Credit or
Commitment pursuant to the applicable law in effect on the date on which
(i) such Lender or a Beneficial Owner with respect thereto acquires such
interest in the Loan, Letter of Credit or Commitment (other than pursuant to an
assignment request by the Borrowers under Section 2.19(b)) or (ii) such Lender
or Beneficial Owner changes its lending office (other than a change made at the
request of any Loan Party), except in each case to the extent that, pursuant to
Section 2.17, amounts with respect to such Taxes were payable either to such
Lender’s assignor immediately before such Lender acquired the applicable
interest in a Loan or Commitment or to such Lender immediately before it changed
its lending office; (c) U.S. Federal withholding Taxes attributable to such
Recipient’s failure to comply with Section 2.17(f); and (d) any U.S. Federal
withholding Taxes imposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any intergovernmental
agreements entered into with respect thereto and any agreement entered into
pursuant to Section 1471(b)(1) of the Code.

“FDA” means the United States Food and Drug Administration.

“FDA Laws” means all laws, statutes, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, letters, notices or binding agreements
issued, promulgated or entered into, relating in any way to the contemplated or
actual sale, distribution, manufacture, commercialization, testing, evaluation
or other use of drugs (whether prescription or non-prescription and whether for
investigational or any other use), drug candidates, foods, medical devices,
cosmetics, biologics, dietary supplements, or any other substances regulated by
a Federal, State, or local Governmental Authority used, or intended to be used,
in the treatment, diagnosis, or cure of any disease, sickness, or condition or
to improve or foster human health and welfare. FDA Laws includes, but is not
limited to, all laws, statutes, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, letters, notices or binding agreements issued,
promulgated or entered into, relating in any way to the contemplated or actual
sale, distribution, manufacture, commercialization, testing, evaluation or other
use of Drugs and/or Drug Product Candidates, as those terms are defined herein.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of

 

17

--------------------------------------------------------------------------------

the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.

“Financial Officer” means the chief executive officer, chief financial officer,
principal accounting officer, treasurer or controller of a Borrower.

“Fixed Charge Coverage Ratio” means, at any date, the ratio as determined for
Holdings, the Borrowers and the other Loan Parties of (a) EBITDA minus the
unfinanced portion of Capital Expenditures minus expenses for taxes paid in cash
minus dividends or distributions paid in cash minus Capital Lease Obligation
Payments to (b) Fixed Charges, all calculated for the period of four consecutive
fiscal quarters ended on such date (or, if such date is not the last day of a
fiscal quarter, ended on the last day of the fiscal quarter most recently ended
prior to such date). For purposes of this Agreement, the unfinanced portion of
Capital Expenditures shall not include (i) any additions to property, plant and
equipment and other capital expenditures made with (A) the proceeds of any
equity securities issued or capital contributions received by Holdings (and
concurrently contributed to the applicable Loan Party) in connection with such
capital expenditures, (B) the proceeds from any casualty insurance or
condemnation or eminent domain, to the extent that the proceeds therefrom are
utilized for capital expenditures within twelve months of the receipt of such
proceeds, (C) the proceeds or consideration received from any sale, trade in or
other disposition of any Loan Party’s assets (other than assets constituting
Collateral consisting of Inventory and Accounts), to the extent that the
proceeds and/or consideration therefrom are utilized for capital expenditures
within twelve months of the receipt of such proceeds (or committed to be
reinvested within twelve (12) months of receipt of such proceeds and actually
reinvested within eighteen (18) months of such receipt), (ii) any such
expenditures which constitute a Permitted Acquisition, or (iii) any expenditures
which are contractually required to be, and are, reimbursed to the Loan Parties
in cash by a third party (including landlords) during such period of
calculation.

“Fixed Charges” means, for any period, without duplication, cash Interest
Expense, plus scheduled principal payments on Indebtedness actually made, all
calculated for Holdings, the Borrowers and the other Loan Parties on a
consolidated basis in accordance with GAAP.

“Flood Laws” has the meaning assigned to such term in Section 8.10.

“Foreign Lender” means (a) if a Borrower is a U.S. Person, a Lender, with
respect to such Borrower, that is not a U.S. Person, and (b) if a Borrower is
not a U.S. Person, a Lender, with respect to such Borrower, that is resident or
organized under the laws of a jurisdiction other than that in which such
Borrower is resident for tax purposes.

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“FSHCO” has the meaning assigned to such term in the definition of “Excluded
Subsidiary”.

“Funding Accounts” has the meaning assigned to such term in Section 4.01(h).

“GAAP” means generally accepted accounting principles in the U.S.

“Governmental Authority” means the government of the U.S., any other nation or
any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

18

--------------------------------------------------------------------------------

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

“Guarantors” means all Loan Guarantors and all non-Loan Parties who have
delivered an Obligation Guaranty, and the term “Guarantor” means each or any one
of them individually.

“Hazardous Materials” means: (a) any substance, material, or waste that is
included within the definitions of “hazardous substances,” “hazardous
materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic
waste,” or words of similar import in any Environmental Law; (b) those
substances listed as hazardous substances by the United States Department of
Transportation (or any successor agency) (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) (40
C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or
waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos
or asbestos-containing material, polychlorinated biphenyls, flammable,
explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any
other agricultural chemical, in each case that is regulated under Environmental
Law.

“Holdings” means Sagent Pharmaceuticals, Inc., a Delaware corporation.

“Impacted Interest Period” has the meaning assigned to such term in the
definition of “LIBO Rate”.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) obligations
under any liquidated earn-out, (l) any other Off-Balance Sheet Liability and
(m) obligations, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Swap
Agreements, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership

 

19

--------------------------------------------------------------------------------

in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. Notwithstanding
the foregoing, Indebtedness shall not include trade payables and accrued
expenses incurred in the ordinary course of business or obligations of such
Person for earnouts, deferred purchase price consideration and similar payment
obligations (unless such earnouts, deferred purchase price consideration or
similar payment obligations are required to be recorded as liabilities on a
balance sheet of such Person in accordance with GAAP, in which case such
obligations shall constitute Indebtedness under this Agreement in all cases),
purchase price adjustments and profit sharing arrangements until such time as
the amount of any such payments are reasonably determined and not contested in
good faith. The amount of Indebtedness of any Person in which recourse is
limited to an identified asset shall be equal to the lesser of (i) the unpaid
amount of such obligation and (ii) the fair market value of the property
encumbered thereby as determined by such Person in good faith.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by, or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
subsection (a), Other Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

“Ineligible Institution” has the meaning assigned to such term in
Section 9.04(b).

“Information” has the meaning assigned to such term in Section 9.12.

“Interest Election Request” means a request by the Borrower Representative to
convert or continue a Revolving Borrowing in accordance with Section 2.08.

“Interest Expense” means, for any period, total interest expense (including that
attributable to Capital Lease Obligations) of Holdings, the Borrowers and the
other Loan Parties for such period with respect to all outstanding Indebtedness
of Holdings, the Borrowers and the other Loan Parties (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptances and net costs under Swap Agreements in
respect of interest rates to the extent such net costs are allocable to such
period in accordance with GAAP), calculated on a consolidated basis for
Holdings, the Borrowers and the other Loan Parties for such period in accordance
with GAAP.

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan), the first day of each calendar month and the Maturity Date, and
(b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part (and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period)
and the Maturity Date.

“Interest Period” means, with respect to any Eurodollar Borrowing, the period
commencing on the date of such Eurodollar Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower Representative may elect; provided, that
(i) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and, in the case of a Revolving Borrowing, thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.

 

20

--------------------------------------------------------------------------------

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded upward to four decimal places) determined by the Administrative
Agent (which determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from interpolating on a linear basis
between: (a) the LIBO Screen Rate for the longest period (for which the LIBO
Screen Rate is available) that is shorter than the Impacted Interest Period and
(b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate
is available) that exceeds the Impacted Interest Period, in each case, at such
time.

“Inventory” has the meaning assigned to such term in the Security Agreement.

“Investment Policy” means the investment policy of Holdings and its Subsidiaries
that was delivered to the Administrative Agent prior to the Effective Date, as
amended from time to time, provided that the Company delivers any such
amendments after the Effective Date to the Administrative Agent, which
investment policy (as amended) shall be reasonably satisfactory to the
Administrative Agent.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means (a) Chase, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by its Affiliates, in which case the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate (it being agreed that such Issuing Bank shall,
or shall cause such Affiliate to, comply with the requirements of Section 2.06
with respect to such Letters of Credit).

“Joinder Agreement” means a Joinder Agreement in substantially the form of
Exhibit D.

“LC Collateral Account” has the meaning assigned to such term in
Section 2.06(j).

“LC Disbursement” means any payment made by an Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of the Commercial LC Exposure and the
Standby LC Exposure. The LC Exposure of any Revolving Lender at any time shall
be its Applicable Percentage of the aggregate LC Exposure.

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a Lender hereunder pursuant to Section 2.09 or an
Assignment and Assumption, other than any such Person that ceases to be a Lender
hereunder pursuant to an Assignment and Assumption. Unless the context otherwise
requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.

“Letters of Credit” means the letters of credit issued pursuant to this
Agreement, and the term “Letter of Credit” means any one of them or each of them
singularly, as the context may require.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable
Interest Period, the London interbank offered rate administered by the British
Bankers Association (or any other Person that takes over the administration of
such rate for Dollars) for a period equal in length to such Interest Period as
displayed on pages LIBOR01 or LIBOR02 of the Reuters screen or, in the event
such rate does not appear on a Reuters page or screen, on any successor or
substitute page on such screen that displays such rate, or on the appropriate
page of such other information service that publishes such rate as shall be
selected by the Administrative Agent from time to time in its reasonable
discretion (the “LIBO Screen

 

21

--------------------------------------------------------------------------------

Rate”) at approximately 11:00 a.m., London time, two (2) Business Days prior to
the commencement of such Interest Period; provided that, (x) if any LIBO Screen
Rate shall be less than zero, such rate shall be deemed to be zero for purposes
of this Agreement and (y) if the LIBO Screen Rate shall not be available at such
time for a period equal in length to such Interest Period (an “Impacted Interest
Period”), then the LIBO Rate shall be the Interpolated Rate at such time,
subject to Section 2.14 in the event that the Administrative Agent shall
conclude that it shall not be possible to determine such Interpolated Rate
(which conclusion shall be conclusive and binding absent manifest error);
provided, that, if any Interpolated Rate shall be less than zero, such rate
shall be deemed to be zero for purposes of this Agreement. Notwithstanding the
above, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in
connection with an ABR Borrowing, such rate shall be determined as modified by
the definition of Alternate Base Rate.

“LIBO Screen Rate” has the meaning assigned to such term in the definition of
“LIBO Rate”.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

“Loan Documents” means, collectively, this Agreement, any promissory notes
issued pursuant to this Agreement, any Letter of Credit applications, the
Collateral Documents, the Loan Guaranty, any Obligation Guaranty, the China
Guaranty and all other agreements or instruments executed and delivered to, or
in favor of, the Administrative Agent or any Lender in connection with this
Agreement. Any reference in this Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to this Agreement or such Loan Document as the same may be in effect at
any and all times such reference becomes operative.

“Loan Guarantor” means each Loan Party, other than Excluded Subsidiaries.

“Loan Guaranty” means Article X of this Agreement and each separate Guarantee,
in form and substance satisfactory to the Administrative Agent, delivered by
each Loan Guarantor that is a Foreign Subsidiary (which Guarantee shall be
governed by the laws of the country in which such Foreign Subsidiary is
located), as it may be amended or modified and in effect from time to time.

“Loan Parties” means, collectively, the Borrowers, the Loan Guarantors and any
other Person who becomes a party to this Agreement pursuant to a Joinder
Agreement and their successors and assigns, and the term “Loan Party” shall mean
any one of them or all of them individually, as the context may require.

“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including Swingline Loans, Overadvances and Protective Advances.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations or financial condition, of Holdings, the Borrowers and the other Loan
Parties taken as a whole, (b) the ability of any Loan Party to perform any of
its obligations under the Loan Documents to which it is a party, (c) the
Collateral, or the Administrative Agent’s Liens (on behalf of itself and other
Secured Parties) on the Collateral or the priority of such Liens, or (d) the
rights of or benefits available to the Administrative Agent, the Issuing Bank or
the Lenders under any of the Loan Documents.

 

22

--------------------------------------------------------------------------------

“Material Indebtedness” means any Indebtedness (other than the Loans, Letters of
Credit and Indebtedness incurred under the SCP Loan Facility), or obligations in
respect of one or more Swap Agreements, of any one or more of Holdings and its
Domestic Subsidiaries in an aggregate principal amount exceeding $10,000,000.
For purposes of determining Material Indebtedness, the “principal amount” of the
obligations of Holdings or any Domestic Subsidiary in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that Holdings or such Domestic Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.

“Maturity Date” means the earliest of (a) October 31, 2019, (b) in the event
that any Indebtedness is incurred under Section 6.01(l) with a scheduled
maturity date on or prior to the date set forth in clause (a) above, the date
that is 180 days before the scheduled maturity date of any such Indebtedness
incurred under Section 6.01(l), or (c) any earlier date on which the Commitments
are reduced to zero or otherwise terminated pursuant to the terms hereof.

“Maximum Rate” has the meaning assigned to such term in Section 9.17.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means any mortgage, deed of trust or other agreement which conveys or
evidences a Lien in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the other Secured Parties, on real property of a Loan
Party, including any amendment, restatement, modification or supplement thereto.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“Net Income” means, for any period, the consolidated net income (or loss) of
Holdings, the Borrowers and the other Loan Parties, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a Loan
Party or is merged into or consolidated with Holdings or any other Loan Party,
(b) the income (or deficit) of any Person (other than a Loan Party) in which
Holdings or any other Loan Party has an ownership interest, except to the extent
that any such income is actually received by the Company or such Loan Party in
the form of dividends or similar distributions and (c) the undistributed
earnings of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation (other than under any Loan
Document) or Requirement of Law applicable to such Loan Party.

“Net Orderly Liquidation Value” means, with respect to Inventory of any Person,
the orderly liquidation value thereof as determined in a manner acceptable to
the Administrative Agent in its Permitted Discretion by an appraiser acceptable
to the Administrative Agent in its Permitted Discretion, net of all costs of
liquidation thereof.

“Non-Consenting Lender” has the meaning assigned to such term in
Section 9.02(d).

“Non-U.S. Lender” means a Lender that is not a U.S. Person.

“Obligated Party” has the meaning assigned to such term in Section 10.02.

“Obligation Guaranty” means any Guarantee of all or any portion of the Secured
Obligations executed and delivered to the Administrative Agent for the benefit
of the Secured Parties by a guarantor who is not a Loan Party.

 

23

--------------------------------------------------------------------------------

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), obligations and liabilities of any of the
Borrowers and the other Loan Parties to any of the Lenders, the Administrative
Agent, the Issuing Bank or any indemnified party, individually or collectively,
existing on the Effective Date or arising thereafter, direct or indirect, joint
or several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, arising or incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Loans made or reimbursement or other
obligations incurred or any of the Letters of Credit or other instruments at any
time evidencing any thereof.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person (other than operating leases).

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than a connection arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to, or enforced, any
Loan Document, or sold or assigned an interest in any Loan, Letter of Credit or
any Loan Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 2.19).

“Overadvance” has the meaning assigned to such term in Section 2.05(b).

“Parent” means, with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a subsidiary.

“Participant” has the meaning assigned to such term in Section 9.04(c).

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“Payment Condition” means, with respect to any proposed action on any date, a
condition that is satisfied if either (a) after giving effect to such proposed
action as if it occurred on the first day of the Pro Forma Period, the pro forma
Availability shall be greater than 25.0% of the aggregate Revolving Commitments
at all times during the Pro Forma Period or (b) after giving effect to such
proposed action as if it occurred on the first day of the Pro Forma Period, both
(i) the pro forma Availability shall be greater than 17.5% of the aggregate
Revolving Commitments at all times during the Pro Forma Period and (ii) the
Fixed Charge Coverage Ratio, computed on a pro forma basis after giving effect
to the proposed action, for the period of four consecutive fiscal quarters
ending on the most recent fiscal quarter of the Borrower for which financial
statements have been delivered pursuant to Section 5.01, shall be greater than
1.10 to 1.00.

 

24

--------------------------------------------------------------------------------

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means any Acquisition by any Loan Party in a transaction
that satisfies each of the following requirements:

(a) such Acquisition is not a hostile or contested acquisition;

(b) immediately after giving effect to the Acquisition, the Loan Parties shall
be in compliance with Section 6.03(b);

(c) both before and after giving effect to such Acquisition and the Loans (if
any) requested to be made in connection therewith, no Default or Event of
Default exists or would result therefrom;

(d) as soon as available, but not less than (i) ten (10) days prior to such
Acquisition, the Borrower Representative has provided the Administrative Agent
(A) notice of such Acquisition and (B) if the aggregate consideration for such
purchase or acquisition is greater than $5,000,000, a copy of all business and
financial information reasonably requested by the Administrative Agent including
pro forma financial statements, statements of cash flow, and Availability
projections and (ii) five (5) Business Days prior to such Acquisition, the
Borrower Representative has provided the Administrative Agent a near-final draft
of the purchase agreement for such Acquisition;

(e) if such Acquisition is an acquisition of the Equity Interests of a Person,
such Acquisition is structured so that the acquired Person shall become a
Wholly-Owned Subsidiary of a Borrower and a Loan Party pursuant to the terms of
this Agreement;

(f) if such Acquisition is an acquisition of assets, such Acquisition is
structured so that a Borrower or another Loan Party shall acquire such assets;

(g) if such Acquisition is an acquisition of Equity Interests, such Acquisition
will not result in any violation of Regulation U;

(h) (i) if such Acquisition involves a merger or a consolidation involving a
Borrower, either (A) such Borrower shall be the surviving entity or (B) the
surviving entity shall become a Borrower, or (ii) if such Acquisition involves a
merger or a consolidation involving a Loan Party that is not a Borrower, either
(A) such Loan Party shall be the surviving entity or (B) the surviving entity
shall become a Loan Party;

(i) the Borrower Representative shall certify to the Administrative Agent and
the Lenders (and, for Acquisitions for which the aggregate consideration for
such purchase or acquisition is greater than $5,000,000, provide the
Administrative Agent and the Lenders with a pro forma calculation in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders)
that, after giving effect to the completion of such Acquisition, the Payment
Condition shall be satisfied with respect to such Acquisition;

(j) all actions required to be taken with respect to any newly acquired or
formed Wholly-Owned Subsidiary of a Borrower or a Loan Party, as applicable,
required under Section 5.15 shall have been taken or, within the times specified
therein, will be taken; and

 

25

--------------------------------------------------------------------------------

(k) the Borrower Representative shall have delivered to the Administrative Agent
the final executed material documentation relating to such Acquisition promptly,
upon the request therefor from the Administrative Agent following the
consummation of such Acquisition.

Notwithstanding the foregoing, it is agreed and understood that the Accounts and
Inventory acquired in connection with a Permitted Acquisition shall not be
included in the determination of the Borrowing Base until the Administrative
Agent shall have conducted an audit and field examination of such Accounts and
Inventory, the results of which shall be satisfactory to the Administrative
Agent in its Permitted Discretion.

“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment. With respect to adjusting or establishing additional
Reserves, such Permitted Discretion will be as appropriate (a) to reflect the
impediments to the Administrative Agent’s ability to realize upon the Collateral
included in the Borrowing Base, (b) to reflect claims and liabilities that the
Administrative Agent determines will need to be satisfied in connection with the
realization upon the Collateral or (c) to reflect criteria, events, conditions,
contingencies or risks which adversely affect the Borrowing Base and the
aggregate value of the Collateral or the validity or enforceability of the Loan
Documents or the material rights and remedies of the Secured Parties.

“Permitted Earnouts” of a Person means any earnout payment or similar
obligations of such Person incurred in connection with an Acquisition.

“Permitted Encumbrances” means:

(a) Liens imposed by law for Taxes that are not yet due or are being contested
in compliance with Section 5.04;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlord’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than thirty
(30) days or are being contested in compliance with Section 5.04;

(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations;

(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

(e) judgment Liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of any Borrower or any Domestic Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness, except with respect to clause (e) above.

 

26

--------------------------------------------------------------------------------

“Permitted Investments” means:

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the U.S. (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the U.S.), in
each case maturing within two years from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, credit rating
obtainable of at least A+ from S&P, A1 from Moody’s or P1 from Moody’s;

(c) investments in certificates of deposit, bankers’ acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the U.S. or any State thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above;

(e) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, and
(ii) are rated AAA by S&P and Aaa by Moody’s;

(f) investments consisting of cash; and

(g) other similar short-term Investments permitted by the Investment Policy.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by Chase as its prime rate in effect at its principal offices in New
York City. Each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.

“Pro Forma Period” means the period commencing with the last full month for
which financials are available prior to the date of any proposed action and
ending on the date of such proposed action

“Projections” has the meaning assigned to such term in Section 5.01(e).

“Protective Advance” has the meaning assigned to such term in Section 2.04.

“Public-Sider” means any representative of a Lender that does not want to
receive material non-public information within the meaning of federal and state
securities laws.

 

27

--------------------------------------------------------------------------------

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan
Party that has total assets exceeding $10,000,000 at the time the relevant Loan
Guaranty or grant of the relevant security interest becomes or would become
effective with respect to such Swap Obligation or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
or any regulations promulgated thereunder and can cause another person to
qualify as an “eligible contract participant” at such time by entering into a
keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Qualified Equity Interest” means any Equity Interest that is not a Disqualified
Equity Interest.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
and (c) the Issuing Bank, or any combination thereof (as the context requires).

“Refinance Indebtedness” has the meaning assigned to such term in
Section 6.01(f).

“Register” has the meaning assigned to such term in Section 9.04.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, partners, members, trustees,
employees, agents, administrators, managers, representatives and advisors of
such Person and such Person’s Affiliates.

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, disposing or
dumping of any substance into the environment.

“Report” means reports prepared by the Administrative Agent or another Person
showing the results of appraisals, field examinations or audits pertaining to
the assets of the Loan Parties from information furnished by or on behalf of the
Borrowers, after the Administrative Agent has exercised its rights of inspection
pursuant to this Agreement, which Reports may be distributed to the Lenders by
the Administrative Agent.

“Required Lenders” means, at any time, Lenders (other than Defaulting Lenders)
having Credit Exposures and unused Commitments representing more than 50% of the
sum of the Aggregate Credit Exposure and unused Commitments at such time.

“Requirement of Law” means, with respect to any Person, (a) the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person and (b) any statute, law
(including common law), treaty, rule, regulation, code, ordinance, order,
decree, writ, judgment, injunction or determination of any arbitrator or court
or other Governmental Authority (including Environmental Laws), in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

“Reserves” means any and all reserves which the Administrative Agent deems
necessary, in its Permitted Discretion, without duplication, to maintain
(including, without limitation, the China Guaranty Reserve, reserves for accrued
and unpaid interest on the Secured Obligations, Banking Services Reserves,
reserves for rent (not in excess of the amount of rent required under relevant
state law) at locations leased by any Loan Party and for consignee’s,
warehousemen’s and bailee’s charges (including, without limitation, the DDN
Reserve), reserves for dilution of Accounts, reserves for Inventory shrinkage,
reserves for customs charges and shipping charges related to any Inventory in
transit, reserves for Swap Agreement Obligations, reserves for contingent
liabilities of any Loan Party, reserves for uninsured losses of any Loan Party,
reserves for uninsured, underinsured, un-indemnified or under-indemnified
liabilities or potential liabilities with respect to any litigation and reserves
for taxes, fees, assessments, and other governmental charges) with respect to
the Collateral or any Loan Party.

 

28

--------------------------------------------------------------------------------

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in Holdings
or any Domestic Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in Holdings or any option, warrant or other right to
acquire any such Equity Interests in Holdings.

“Restricted Subsidiary” means any Subsidiary of a Borrower other than an
Unrestricted Subsidiary.

“Revolving Commitment” means, with respect to each Lender, the commitment, if
any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit, Overadvances and Swingline Loans hereunder, expressed as an
amount representing the maximum aggregate permitted amount of such Lender’s
Revolving Exposure hereunder, as such commitment may be reduced or increased
from time to time pursuant to (a) Section 2.09 and (b) assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender’s Revolving
Commitment is set forth on the Commitment Schedule, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable. The initial aggregate amount of the Lenders’
Revolving Commitments is $80,000,000.

“Revolving Exposure” means, with respect to any Lender at any time, the sum of
(a) the outstanding principal amount of such Lender’s Revolving Loans, LC
Exposure and Swingline Exposure at such time, plus (b) an amount equal to its
Applicable Percentage of the aggregate principal amount of Overadvances
outstanding at such time.

“Revolving Lender” means, as of any date of determination, a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.

“Revolving Loan” means a Loan made pursuant to Section 2.01(a).

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

“Sagent Canada” means, collectively, Sagent Acquisition Corp., a company
organized under the laws of British Columbia, and its Subsidiaries.

“Sagent Strides” means Sagent Agila, LLC, a Wyoming limited liability company.

“Sale and Leaseback Transaction” has the meaning assigned to such term in
Section 6.06.

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, or the U.S. Department of
State or by the United Nations Security Council, the European Union or any EU
member state (including Her Majesty’s Treasury of the United Kingdom), (b) any
Person operating, organized or resident in a Sanctioned Country or (c) any
Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

 

29

--------------------------------------------------------------------------------

“SCP” means Sagent (China) Pharmaceuticals Co. Ltd.

“SCP Loan Facility” means one or more separate loan facilities provided to SCP
by JPMorgan Chase Bank (China) Co. Ltd., Shanghai Branch, including all
agreements, documents and instruments related thereto, as such agreements,
documents and instruments are from time to time amended, restated, supplemented
or otherwise modified.

“SEC” means the Securities and Exchange Commission of the U.S.

“Secured Obligations” means all Obligations and China Guaranty Obligations
together with all (i) Banking Services Obligations and (ii) Swap Agreement
Obligations owing to one or more Lenders or their respective Affiliates;
provided, however, that the definition of “Secured Obligations” shall not create
any guarantee by any Loan Guarantor of (or grant of security interest by any
Loan Guarantor to support, as applicable) any Excluded Swap Obligations of such
Loan Guarantor for purposes of determining any obligations of any Guarantor.

“Secured Parties” means (a) the Administrative Agent, (b) the Lenders, (c) the
Issuing Bank, (d) each provider of Banking Services, to the extent the Banking
Services Obligations in respect thereof constitute Secured Obligations, (e) each
counterparty to any Swap Agreement, to the extent the obligations thereunder
constitute Secured Obligations, (f) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document, (g) with
respect to the China Guaranty Obligations, Chase and any of its Affiliates party
to the SCP Loan Facility (including JPMorgan Chase Bank (China) Co. Ltd.), and
(h) the permitted successors and assigns of each of the foregoing.

“Security Agreement” means that certain Pledge and Security Agreement (including
any and all supplements thereto), dated as of the date hereof, among the Loan
Parties and the Administrative Agent, for the benefit of the Administrative
Agent and the other Secured Parties, and any other pledge or security agreement
entered into, after the date of this Agreement by any other Loan Party (as
required by this Agreement or any other Loan Document) or any other Person for
the benefit of the Administrative Agent and the other Secured Parties, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.

“Settlement” has the meaning assigned to such term in Section 2.05(d).

“Settlement Date” has the meaning assigned to such term in Section 2.05(d).

“Specified Default” means an Event of Default under clauses (a), (b), (d) (but
only with respect to a failure to perform the financial covenant set forth in
Section 6.12), (h) or (i) of Article VII.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) established by the Board
to which the Administrative Agent is subject with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D of the Board. Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D of the Board or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

 

30

--------------------------------------------------------------------------------

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the Secured Obligations to
the reasonable satisfaction of the Administrative Agent.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held , or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any direct or indirect subsidiary of Holdings or a Loan
Party, as applicable.

“Supermajority Revolving Lenders” means, at any time, Lenders (other than
Defaulting Lenders) having Revolving Exposures and unused Revolving Commitments
representing more than 66.6% of the sum of the Aggregate Revolving Exposure and
unused Revolving Commitments at such time.

“Swap Agreement” means any agreement with respect to any swap, forward, spot,
future, credit default or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrowers or the Loan Parties shall be a Swap Agreement.

“Swap Agreement Obligations” means any and all obligations of the Loan Parties,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Swap Agreements
permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and
all cancellations, buy backs, reversals, terminations or assignments of any such
Swap Agreement transaction.

“Swap Obligation” means, with respect to any Loan Guarantor, any obligation to
pay or perform under any agreement, contract or transaction that constitutes a
“swap” within the meaning of section 1a(47) of the Commodity Exchange Act or any
rules or regulations promulgated thereunder.

“Swingline Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the aggregate
Swingline Exposure at such time.

“Swingline Lender” means Chase, in its capacity as lender of Swingline Loans
hereunder. Any consent required of the Administrative Agent or the Issuing Bank
shall be deemed to be required of the Swingline Lender and any consent given by
Chase in its capacity as the Administrative Agent or Issuing Bank shall be
deemed given by Chase in its capacity as Swingline Lender.

“Swingline Loan” has the meaning assigned to such term in Section 2.05(a).

 

31

--------------------------------------------------------------------------------

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, withholdings, (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Transactions” means the execution, delivery and performance by the Borrowers of
this Agreement and the other Loan Documents, the borrowing of Loans and other
credit extensions, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Illinois or in any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.

“Unrestricted Subsidiary” means (a) any Subsidiaries of a Borrower designated by
the board of directors of such Borrower as an “Unrestricted Subsidiary” pursuant
to Section 5.13, and (b) any Subsidiary of any of the foregoing.

“U.S.” means the United States of America.

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.17(f)(ii)(B)(3).

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“Weekly Reporting Period” means any period beginning on any date that
Availability is less than the Weekly Reporting Threshold Amount and continuing
until such date that Availability is greater than or equal to the Weekly
Reporting Threshold Amount for thirty (30) consecutive days.

“Weekly Reporting Threshold Amount” means the greater of (i) 15.0% of the
aggregate Revolving Commitments and (ii) $12,000,000.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

32

--------------------------------------------------------------------------------

SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “law”
shall be construed as referring to all statutes, rules, regulations, codes and
other laws (including official rulings and interpretations thereunder having the
force of law or with which affected Persons customarily comply) and all
judgments, orders and decrees of all Governmental Authorities. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified (including by succession of comparable successor laws),
(c) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any restrictions on assignments set
forth herein) and, in the case of any Governmental Authority, any other
Governmental Authority that shall have succeeded to any or all functions
thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (f) any reference in
any definition to the phrase “at any time” or “for any period” shall refer to
the same time or period for all calculations or determinations within such
definition, and (g) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
All references to “knowledge” of any Loan Party means the actual knowledge of
any senior officer of such Loan Party. For purposes of determining compliance
with any Section of Article VI at any time, in the even that any Indebtedness,
Lien, investment, loan, advance, guarantee, acquisition, asset sale or
restricted payment meets the criteria of one or more than one of the categories
of transactions permitted pursuant to any clause of such Sections, such
transaction (or portion thereof) at any time shall be permitted under one or
more of such clauses as reasonably determined, without duplication, by the
Borrowers at such time.

SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if after
the date hereof there occurs any change in GAAP or in the application thereof on
the operation of any provision hereof and the Borrower Representative notifies
the Administrative Agent that the Borrowers request an amendment to any
provision hereof to eliminate the effect of such change in GAAP or in the
application thereof (or if the Administrative Agent notifies the Borrower
Representative that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

SECTION 1.05 Pro Forma Adjustments for Acquisitions and Dispositions. To the
extent any Borrower or any Loan Party makes any acquisition permitted pursuant
to Section 6.04 or disposition of assets outside the ordinary course of business
permitted by Section 6.05 during the period of four fiscal quarters of the
Borrowers most recently ended, Fixed Charge Coverage Ratio shall be calculated
after giving pro forma effect thereto (including pro forma adjustments arising
out of events which are directly

 

33

--------------------------------------------------------------------------------

attributable to the acquisition or the disposition of assets, are factually
supportable and are expected to have a continuing impact, in each case as
determined on a basis consistent with Article 11 of Regulation S-X of the
Securities Act of 1933, as amended, as interpreted by the SEC, and as certified
by a Financial Officer of such Borrower), as if such acquisition or such
disposition (and any related incurrence, repayment or assumption of
Indebtedness) had occurred in the first day of such four-quarter period.

SECTION 1.06 Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on (or before) a day which is not a Business Day,
the date of such payment or performance shall extend to the immediately
succeeding Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

ARTICLE II

The Credits

SECTION 2.01 Commitments.

(a) Subject to the terms and conditions set forth herein, each Lender severally
agrees to make Revolving Loans to the Borrowers from time to time during the
Availability Period in an aggregate principal amount that will not result in
(i) such Lender’s Revolving Exposure exceeding such Lender’s Revolving
Commitment or (ii) the Aggregate Revolving Exposure exceeding the lesser of
(x) the sum of the aggregate Revolving Commitments and (y) the Borrowing Base,
subject to the Administrative Agent’s authority, in its sole discretion, to make
Protective Advances and permit Overadvances pursuant to the terms of
Section 2.04 and 2.05. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans without premium or penalty (subject to the terms hereof,
including Section 2.16).

(b) Subject to the terms and conditions set forth herein, a reserve shall be
established by the Administrative Agent in an amount equal to the amount set
forth on Schedule 2.01 (which Schedule may be updated from time to time by
written notice from Borrower Representative to the Administrative Agent)
reflecting scheduled, anticipated borrowings by SCP under the SCP Loan Facility,
which reserve shall be established 10 days prior to date of any applicable
borrowings under the SCP Facility (such reserve, the “China Guaranty Reserve”);
provided that at any time the outstanding borrowings under the SCP Loan Facility
exceed the then existing China Guaranty Reserve, the China Guaranty Reserve will
be automatically increased to equal the amount of such outstanding borrowings.
At all times during a China Guaranty Cash Collateral Period, so long as
Borrowers are in compliance with Section 5.16, the China Guaranty Reserve will
be reduced to zero, effective automatically when the Borrowers have provided the
Administrative Agent with cash Collateral pursuant to Section 5.16.

SECTION 2.02 Loans and Borrowings.

(a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably in
accordance with their respective Commitments of the applicable Class. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required. Any Protective Advance ,
any Overadvance and any Swingline Loan shall be made in accordance with the
procedures set forth in Sections 2.04 and 2.05.

(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower Representative may
request in accordance herewith, provided

 

34

--------------------------------------------------------------------------------

that all Borrowings made on the Effective Date must be made as ABR Borrowings
but may be converted into Eurodollar Borrowings in accordance with Section 2.08.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan (and in the case of an Affiliate, the provisions of
Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same
extent as to such Lender); provided that any exercise of such option shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000. ABR Revolving Borrowings may be
in any amount. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total of
6 Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower
Representative shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.

SECTION 2.03 Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower Representative shall notify the Administrative Agent of
such request either in writing (delivered by hand or facsimile or email
transmission) in a form approved by the Administrative Agent and signed by the
Borrower Representative or by telephone not later than (a) in the case of a
Eurodollar Borrowing, noon, Chicago time, three (3) Business Days before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing, noon,
Chicago time, on the date of the proposed Borrowing; provided that any such
notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e) may be given not later than
10:00 a.m., Chicago time, on the date of such proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or facsimile or email transmission to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower Representative. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

(i) the name of the applicable Borrower(s);

(ii) the aggregate amount of the requested Revolving Borrowing and a breakdown
of the separate wires comprising such Borrowing;

(iii) the date of such Revolving Borrowing, which shall be a Business Day;

(iv) whether such Revolving Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period.”

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the applicable Borrower(s) shall be deemed to have selected an Interest Period
of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender’s Loan to be made as
part of the requested Borrowing.

 

35

--------------------------------------------------------------------------------

SECTION 2.04 Protective Advances.

(a) Subject to the limitations set forth below, the Administrative Agent is
authorized by the Borrowers and the Lenders, from time to time in the
Administrative Agent’s sole discretion (but shall have absolutely no obligation
to), to make Loans to the Borrowers, on behalf of all Lenders, which the
Administrative Agent, in its Permitted Discretion, deems necessary or desirable
(i) to preserve or protect the Collateral, or any portion thereof, (ii) to
enhance the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (iii) to pay any other amount chargeable to or required to
be paid by the Borrowers pursuant to the terms of this Agreement, including
payments of reimbursable expenses (including costs, fees, and expenses as
described in Section 9.03) and other sums payable under the Loan Documents (any
of such Loans are herein referred to as “Protective Advances”); provided that,
the aggregate amount of Protective Advances outstanding at any time shall not at
any time exceed $4,000,000; provided further that, the aggregate amount of
outstanding Protective Advances plus the Aggregate Revolving Exposure shall not
exceed the aggregate Revolving Commitments. Protective Advances may be made even
if the conditions precedent set forth in Section 4.02 have not been satisfied.
The Protective Advances shall be secured by the Liens in favor of the
Administrative Agent in and to the Collateral and shall constitute Obligations
hereunder. All Protective Advances shall be ABR Borrowings. The Administrative
Agent’s authorization to make Protective Advances may be revoked at any time by
the Required Lenders. Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent’s receipt thereof. At any
time that there is sufficient Availability and the conditions precedent set
forth in Section 4.02 have been satisfied, the Administrative Agent may request
the Revolving Lenders to make a Revolving Loan to repay a Protective Advance. At
any other time the Administrative Agent may require the Lenders to fund their
risk participations described in Section 2.04(b).

(b) Upon the making of a Protective Advance by the Administrative Agent (whether
before or after the occurrence of a Default), each Lender shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Administrative Agent, without recourse or
warranty, an undivided interest and participation in such Protective Advance in
proportion to its Applicable Percentage. From and after the date, if any, on
which any Lender is required to fund its participation in any Protective Advance
purchased hereunder, the Administrative Agent shall promptly distribute to such
Lender, such Lender’s Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral received by the Administrative Agent in
respect of such Protective Advance.

SECTION 2.05 Swingline Loans and Overadvances.

(a) the Administrative Agent, the Swingline Lender and the Revolving Lenders
agree that in order to facilitate the administration of this Agreement and the
other Loan Documents, promptly after the Borrower Representative requests an ABR
Borrowing, the Swingline Lender may elect to have the terms of this
Section 2.05(a) apply to such Borrowing Request by advancing, on behalf of the
Revolving Lenders and in the amount requested, same day funds to the Borrowers,
on the date of the applicable Borrowing to the Funding Account(s) (each such
Loan made solely by the Swingline Lender pursuant to this Section 2.05(a) is
referred to in this Agreement as a “Swingline Loan”), with settlement among them
as to the Swingline Loans to take place on a periodic basis as set forth in
Section 2.05(d). Each Swingline Loan shall be subject to all the terms and
conditions applicable to other ABR Loans funded by the Revolving Lenders, except
that all payments thereon shall be payable to the Swingline Lender solely for
its own account. The aggregate amount of Swingline Loans outstanding at any time
shall not exceed $4,000,000. The Swingline Lender shall not make any Swingline
Loan if the requested Swingline Loan exceeds Availability (before or after
giving effect to such Swingline Loan). All Swingline Loans shall be ABR
Borrowings.

 

36

--------------------------------------------------------------------------------

(b) Any provision of this Agreement to the contrary notwithstanding, at the
request of the Borrower Representative, the Administrative Agent may in its sole
discretion (but with absolutely no obligation), make Revolving Loans to the
Borrowers, on behalf of the Revolving Lenders, in amounts that exceed
Availability (any such excess Revolving Loans are herein referred to
collectively as “Overadvances”); provided that, no Overadvance shall result in a
Default due to Borrowers’ request therefor or any failure to comply with
Section 2.01 or for any failure to repay such Overadvance for so long as such
Overadvance remains outstanding in accordance with the terms of this paragraph,
but solely with respect to the amount of such Overadvance. In addition,
Overadvances may be made even if the condition precedent set forth in
Section 4.02(c) has not been satisfied. All Overadvances shall constitute ABR
Borrowings. The authority of the Administrative Agent to make Overadvances is
limited to an aggregate amount not to exceed $4,000,000 at any time, no
Overadvance may remain outstanding for more than thirty days and no Overadvance
shall cause any Revolving Lender’s Revolving Exposure to exceed its Revolving
Commitment; provided that, the Required Lenders may at any time revoke the
Administrative Agent’s authorization to make Overadvances. Any such revocation
must be in writing and shall become effective prospectively upon the
Administrative Agent’s receipt thereof.

(c) Upon the making of a Swingline Loan or an Overadvance (whether before or
after the occurrence of a Default and regardless of whether a Settlement has
been requested with respect to such Swingline Loan or Overadvance), each
Revolving Lender shall be deemed, without further action by any party hereto, to
have unconditionally and irrevocably purchased from the Swingline Lender or the
Administrative Agent, as the case may be, without recourse or warranty, an
undivided interest and participation in such Swingline Loan or Overadvance in
proportion to its Applicable Percentage of the Revolving Commitment. The
Swingline Lender or the Administrative Agent may, at any time, require the
Revolving Lenders to fund their participations. From and after the date, if any,
on which any Revolving Lender is required to fund its participation in any
Swingline Loan or Overadvance purchased hereunder, the Administrative Agent
shall promptly distribute to such Lender, such Lender’s Applicable Percentage of
all payments of principal and interest and all proceeds of Collateral received
by the Administrative Agent in respect of such Loan.

(d) the Administrative Agent, on behalf of the Swingline Lender, shall request
settlement (a “Settlement”) with the Revolving Lenders on at least a weekly
basis or on any date that the Administrative Agent elects, by notifying the
Revolving Lenders of such requested Settlement by facsimile, telephone, or
e-mail no later than 12:00 noon Chicago time on the date of such requested
Settlement (the “Settlement Date”). Each Revolving Lender (other than the
Swingline Lender, in the case of the Swingline Loans) shall transfer the amount
of such Revolving Lender’s Applicable Percentage of the outstanding principal
amount of the applicable Loan with respect to which Settlement is requested to
the Administrative Agent, to such account of the Administrative Agent as the
Administrative Agent may designate, not later than 2:00 p.m., Chicago time, on
such Settlement Date. Settlements may occur during the existence of a Default
and whether or not the applicable conditions precedent set forth in Section 4.02
have then been satisfied. Such amounts transferred to the Administrative Agent
shall be applied against the amounts of the Swingline Lender’s Swingline Loans
and, together with Swingline Lender’s Applicable Percentage of such Swingline
Loan, shall constitute Revolving Loans of such Revolving Lenders, respectively.
If any such amount is not transferred to the Administrative Agent by any
Revolving Lender on such Settlement Date, the Swingline Lender shall be entitled
to recover from such Lender on demand such amount, together with interest
thereon, as specified in Section 2.07.

SECTION 2.06 Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrower
Representative may request the issuance of Letters of Credit for its own account
or for the account of another Borrower denominated in dollars as the applicant
thereof for the support of its or the other Loan Parties’ obligations, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at

 

37

--------------------------------------------------------------------------------

any time and from time to time during the Availability Period. In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrowers to, or entered into by the Borrowers with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control. Each Borrower unconditionally and irrevocably
agrees that, in connection with any Letter of Credit issued for the support of
any Loan Party’s obligations as provided in the first sentence of this
paragraph, such Borrower will be fully responsible for the reimbursement of LC
Disbursements in accordance with the terms hereof, the payment of interest
thereon and the payment of fees due under Section 2.12(b) to the same extent as
if it were the sole account party in respect of such Letter of Credit (such
Borrower hereby irrevocably waiving any defenses that might otherwise be
available to it as a guarantor or surety of the obligations of such Loan Party
that is an account party in respect of any such Letter of Credit).

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower Representative shall
deliver by hand or facsimile (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (prior to 9:00 am Chicago time at least
(3) Business Days (or such shorter period acceptable to the Issuing Bank) prior
to the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the applicable Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrowers shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $10,000,000, and (ii) the Aggregate Revolving Exposure
shall not exceed the lesser of the aggregate Revolving Commitments minus any
Reserves and the Borrowing Base.

(c) Expiration Date. Each Letter of Credit shall expire (or be subject to
termination or non-renewal by notice from the Issuing Bank to the beneficiary
thereof) at or prior to the close of business on the earlier of (i) the date one
year after the date of the issuance of such Letter of Credit (or, in the case of
any renewal or extension thereof, including, without limitation, any automatic
renewal provision, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender’s Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
the Borrowers for any reason. Each Revolving Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

 

38

--------------------------------------------------------------------------------

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrowers shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement
(i) not later than noon, Chicago time, on the date that such LC Disbursement is
made, if the Borrower Representative shall have received notice of such LC
Disbursement prior to 9:00 a.m., Chicago time, on such date, or, (ii) if such
notice has not been received by the Borrower Representative prior to such time
on such date, then not later than noon, Chicago time, on (A) the Business Day
that the Borrower Representative receives such notice, if such notice is
received prior to 10:00 a.m., Chicago time, on the day of receipt, or (B) the
Business Day immediately following the day that the Borrower Representative
receives such notice, if such notice is not received prior to such time on the
day of receipt; provided that the Borrowers may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.03 or 2.05 that
such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrowers’ obligation to
make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan. If the Borrowers fail to make such
payment when due, the Administrative Agent shall notify each Revolving Lender of
the applicable LC Disbursement, the payment then due from the Borrowers in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrowers, in the same manner as provided in Section 2.07 with respect to Loans
made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the
payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrowers pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrowers’ joint and several obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) any payment by the Issuing Bank under
a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever (other than payment or performance), whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers’ obligations hereunder. None of the Administrative
Agent, the Revolving Lenders, the Issuing Bank or any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrowers to the extent of any direct damages (as opposed
to special, indirect, consequential or

 

39

--------------------------------------------------------------------------------

punitive damages, claims in respect of which are hereby waived by the Borrowers
to the extent permitted by applicable law) suffered by any Borrower that are
caused by the Issuing Bank’s failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the applicable Borrower by telephone (confirmed by
facsimile) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrowers shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrowers reimburse such LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans and such interest shall be
payable on the date when such reimbursement is due; provided that, if the
Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.13(d) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower Representative, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Revolving Lenders of any such replacement
of the Issuing Bank. At the time any such replacement shall become effective,
the Borrowers shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit then outstanding and issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower Representative receives
written notice from the Administrative Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure
representing greater than 50% of the aggregate LC Exposure) demanding the
deposit of cash collateral pursuant to this paragraph, the Borrowers shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Revolving Lenders (the “LC

 

40

--------------------------------------------------------------------------------

Collateral Account”), an amount in cash equal to 105% of the amount of the LC
Exposure as of such date plus accrued and unpaid interest thereon; provided that
the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to any Borrower described in clause (h) or (i) of Article VII. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the Secured Obligations. The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over the LC Collateral Account and the Borrowers hereby grant the Administrative
Agent a security interest in the LC Collateral Account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Borrowers’
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in the LC Collateral Account. Moneys
in the LC Collateral Account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrowers for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Lenders with LC Exposure representing greater than 50% of
the aggregate LC Exposure), be applied to satisfy other Secured Obligations. If
the Borrowers are required to provide an amount of cash collateral hereunder as
a result of the occurrence of an Event of Default, such amount (to the extent
not applied as aforesaid) shall be returned to the Borrowers within three
(3) Business Days after all such Events of Default have been cured or waived as
confirmed in writing by the Administrative Agent.

(k) LC Exposure Determination. For all purposes of this Agreement, the amount of
a Letter of Credit that, by its terms or the terms of any document related
thereto, provides for one or more automatic increases in the stated amount
thereof shall be deemed to be the maximum stated amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum stated
amount is in effect at the time of determination.

SECTION 2.07 Funding of Borrowings.

(a) Each Lender shall make each Loan to be made by such Lender hereunder on the
proposed date thereof by wire transfer of immediately available funds by 1:00
p.m., Chicago time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders in an amount equal to
such Lender’s Applicable Percentage; provided that, Swingline Loans shall be
made as provided in Section 2.05. The Administrative Agent will make such Loans
available to the Borrower Representative by promptly crediting the amounts so
received, in like funds, to the Funding Account; provided that ABR Revolving
Loans made to finance the reimbursement of (i) an LC Disbursement as provided in
Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing
Bank and (ii) a Protective Advance or an Overadvance shall be retained by the
Administrative Agent.

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the applicable Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
applicable Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrowers, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.

 

41

--------------------------------------------------------------------------------

SECTION 2.08 Interest Elections.

(a) Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower Representative may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower
Representative may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings, Overadvances or Protective
Advances, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Borrower Representative
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrowers
were requesting a Borrowing of the Type resulting from such election to be made
on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile or email transmission to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower Representative.

(c) Each telephonic, email and written Interest Election Request shall specify
the following information in compliance with Section 2.02:

(i) the name of the applicable Borrower and the Borrowing to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified pursuant
to clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

(e) If the Borrower Representative fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default

 

42

--------------------------------------------------------------------------------

has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower Representative, then, so long as
an Event of Default is continuing (i) no outstanding Borrowing may be converted
to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.

SECTION 2.09 Termination and Reduction of Commitments; Increase in Revolving
Commitments.

(a) Unless previously terminated, the Revolving Commitments shall terminate on
the Maturity Date.

(b) The Borrowers may at any time terminate the Commitments upon (i) the payment
in full of all outstanding Loans, together with accrued and unpaid interest
thereon and on any Letters of Credit, (ii) the cancellation and return of all
outstanding Letters of Credit (or alternatively, with respect to each such
Letter of Credit, the furnishing to the Administrative Agent of a cash deposit
(or at the discretion of the Administrative Agent a backup standby letter of
credit satisfactory to the Administrative Agent and the Issuing Bank) in an
amount equal to 105% of the LC Exposure as of such date), (iii) the payment in
full of the accrued and unpaid fees, and (iv) the payment in full of all
reimbursable expenses and other Obligations, together with accrued and unpaid
interest thereon.

(c) The Borrowers may from time to time reduce the Revolving Commitments;
provided that (i) each reduction of the Revolving Commitments shall be in an
amount that is an integral multiple of $5,000,000 and not less than $10,000,000
and (ii) the Borrowers shall not terminate or reduce the Revolving Commitments
if, after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.10, the Aggregate Revolving Exposure would exceed the
lesser of the aggregate Revolving Commitments minus Reserves and the Borrowing
Base.

(d) The Borrower Representative shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) or (c) of
this Section at least three (3) Business Days (or such shorter period acceptable
to the Administrative Agent in its sole discretion) prior to the effective date
of such termination or reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower Representative pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by the Borrower
Representative may state that such notice is conditioned upon the effectiveness
of other credit facilities or other specified contingencies, in which case such
notice may be revoked by the Borrower Representative (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition or other specified contingency is not satisfied. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.

(e) The Borrowers shall have the right to increase the Revolving Commitments by
obtaining additional Revolving Commitments, either from one or more of the
Lenders or another lending institution provided that (i) any such request for an
increase shall be in a minimum amount of $5,000,000, (ii) the Borrower
Representative, on behalf of the Borrowers, may make a maximum of three (3) such
requests, (iii) after giving effect thereto, the sum of the total of the
additional Commitments does not exceed $25,000,000, (iv) the Administrative
Agent and the Issuing Bank have approved the identity of any such new Lender,
such approvals not to be unreasonably withheld, (v) any such new Lender assumes
all of the rights and obligations of a “Lender” hereunder, and (vi) the
procedure described in Section 2.09(f) have been satisfied. Nothing contained in
this Section 2.09 shall constitute, or otherwise be deemed to be, a commitment
on the part of any Lender to increase its Commitment hereunder at any time.

 

43

--------------------------------------------------------------------------------

(f) Any amendment hereto for such an increase or addition shall be in form and
substance satisfactory to the Administrative Agent and shall only require the
written signatures of the Administrative Agent, the Borrower Representative and
each Lender being added or increasing its Commitment. As a condition precedent
to such an increase or addition, the Borrowers shall deliver to the
Administrative Agent (i) a certificate of each Loan Party signed by an
authorized officer of such Loan Party (A) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such increase,
and (B) in the case of the Borrowers, certifying that, before and after giving
effect to such increase or addition, (1) the representations and warranties
contained in Article III and the other Loan Documents are true and correct,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they are true and correct as of such earlier
date, (2) no Default exists and (3) the Borrowers are in compliance (on a pro
forma basis) with the covenants contained in Section 6.12 (whether or not a
Covenant Testing Period is in effect) and (ii) legal opinions and customary
documents, to the extent reasonably requested by the Administrative Agent.

(g) On the effective date of any such increase or addition, (i) any Lender
increasing (or, in the case of any newly added Lender, extending) its Revolving
Commitment shall make available to the Administrative Agent such amounts in
immediately available funds as the Administrative Agent shall determine, for the
benefit of the other Lenders, as being required in order to cause, after giving
effect to such increase or addition and the use of such amounts to make payments
to such other Lenders, each Lender’s portion of the outstanding Revolving Loans
of all the Lenders to equal its revised Applicable Percentage of such
outstanding Revolving Loans, and the Administrative Agent shall make such other
adjustments among the Lenders with respect to the Revolving Loans then
outstanding and amounts of principal, interest, commitment fees and other
amounts paid or payable with respect thereto as shall be necessary, in the
opinion of the Administrative Agent, in order to effect such reallocation and
(ii) the Borrowers shall be deemed to have repaid and reborrowed all outstanding
Revolving Loans as of the date of any increase (or addition) in the Revolving
Commitments (with such reborrowing to consist of the Types of Revolving Loans,
with related Interest Periods if applicable, specified in a notice delivered by
the Borrower Representative, in accordance with the requirements of
Section 2.03). The deemed payments made pursuant to clause (ii) of the
immediately preceding sentence shall be accompanied by payment of all accrued
interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be
subject to indemnification by the Borrowers pursuant to the provisions of
Section 2.16 if the deemed payment occurs other than on the last day of the
related Interest Periods. Within a reasonable time after the effective date of
any increase or addition, the Administrative Agent shall, and is hereby
authorized and directed to, revise the Commitment Schedule to reflect such
increase or addition and shall distribute such revised Commitment Schedule to
each of the Lenders and the Borrower Representative, whereupon such revised
Commitment Schedule shall replace the old Commitment Schedule and become part of
this Agreement.

SECTION 2.10 Repayment and Amortization of Loans; Evidence of Debt.

(a) The Borrowers hereby unconditionally promise to pay (i) to the
Administrative Agent for the account of each Revolving Lender the then unpaid
principal amount of each Revolving Loan on the Maturity Date, (ii) to the
Administrative Agent the then unpaid amount of each Protective Advance on the
earlier of the Maturity Date and demand by the Administrative Agent, and
(iii) to the Administrative Agent the then unpaid principal amount of each
Overadvance on the earlier of the Maturity Date and demand by the Administrative
Agent.

(b) At all times during a Cash Dominion Period, on each Business Day, the
Administrative Agent shall apply all funds credited to the Collection Account on
such Business Day or the immediately preceding Business Day (at the discretion
of the Administrative Agent, whether or not immediately available) first to
prepay any Protective Advances and Overadvances that may be outstanding, pro
rata, and second to prepay the Revolving Loans (including Swingline Loans) and
to cash collateralize outstanding LC Exposure.

 

44

--------------------------------------------------------------------------------

(c) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the Indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

(d) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

(e) The entries made in the accounts maintained pursuant to paragraph (c) or
(d) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

(f) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrowers shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.11 Prepayment of Loans.

(a) The Borrowers shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part without premium or penalty (subject to
the terms hereof, including, if applicable, payment of any break funding
expenses under Section 2.16), subject to prior notice in accordance with
paragraph (c) of this Section.

(b) Except for Overadvances permitted under Section 2.05, in the event and on
such occasion that the Aggregate Revolving Exposure exceeds the lesser of
(A) the aggregate Revolving Commitments and (B) the Borrowing Base, the
Borrowers shall prepay the Revolving Loans, LC Exposure and/or Swingline Loans
or backstop (in a manner reasonably satisfactory to Administrative Agent) or
cash collateralize LC Exposure in an account with the Administrative Agent
pursuant to Section 2.06(j), as applicable, in an aggregate amount equal to such
excess.

(c) The Borrower Representative shall notify the Administrative Agent (and, in
the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by facsimile or email transmission) of any prepayment hereunder not
later than noon, Chicago time, (A) in the case of prepayment of a Eurodollar
Revolving Borrowing, three (3) Business Days before the date of prepayment, or
(B) in the case of prepayment of an ABR Revolving Borrowing, one (1) Business
Day before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.09, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.09. Promptly
following receipt of any such notice

 

45

--------------------------------------------------------------------------------

relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied first to ABR Revolving
Borrowings and second to Eurodollar Revolving Borrowings and otherwise ratably
to the Revolving Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by (i) accrued interest to the extent required by Section 2.13 and
(ii) break funding payments pursuant to Section 2.16.

SECTION 2.12 Fees.

(a) The Borrowers agree to pay to the Administrative Agent for the account of
each Lender a commitment fee, which shall accrue at the Applicable Rate on the
average daily amount of the Available Revolving Commitment of such Lender during
the period from and including the Effective Date to but excluding the date on
which the Revolving Commitments terminate. Accrued commitment fees shall be
payable in arrears on the first day of each calendar month and on the date on
which the Revolving Commitments terminate, commencing on the first such date to
occur after the date hereof. All commitment fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed, (including the first day but excluding the last day).

(b) The Borrowers agree to pay (i) to the Administrative Agent for the account
of each Revolving Lender a participation fee with respect to its participations
in Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Revolving Loans on the
average daily amount of such Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender’s Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee,
which shall accrue at the rate of 0.125% per annum on the average daily amount
of the LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) attributable to Letters of Credit issued by the Issuing Bank
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard
fees and commissions with respect to the issuance, amendment, cancellation,
negotiation, transfer, presentment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of each calendar month shall be
payable monthly in arrears on the first day of each calendar month following
such last day, commencing on the first such date to occur after the Effective
Date; provided that all such fees shall be payable on the date on which the
Revolving Commitments terminate and any such fees accruing after the date on
which the Revolving Commitments terminate shall be payable on written demand.
Any other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within ten (10) days after written demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

(c) The Borrowers agree to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrowers and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.

 

46

--------------------------------------------------------------------------------

SECTION 2.13 Interest.

(a) The Loans comprising each ABR Borrowing (including each Swingline Loan)
shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

(c) Each Protective Advance and each Overadvance shall bear interest at the
Alternate Base Rate plus the Applicable Rate for Revolving Loans plus 2%.

(d) Notwithstanding the foregoing, during the occurrence and continuance of an
Event of Default, the Administrative Agent or the Required Lenders may, at their
option, by notice to the Borrower Representative (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of Section 9.02
requiring the consent of “each Lender affected thereby” for reductions in
interest rates), declare that (i) all Loans shall bear interest at 2% plus the
rate otherwise applicable to such Loans as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount outstanding hereunder,
such amount shall accrue at 2% plus the rate applicable to such fee or other
obligation as provided hereunder.

(e) Accrued interest on each Loan (for ABR Loans, accrued through the last day
of the prior calendar month) shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (d) of this Section shall be
payable on written demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of
the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Loan prior to the end of
the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.

(f) All interest hereunder shall be computed on the basis of a year of 360 days
except that interest computed by reference to the Alternate Base Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive
and binding absent manifest error) that adequate and reasonable means do not
exist for ascertaining, (including, without limitation, by means of an
Interpolated Rate) the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for the applicable Interest
Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans included in such Borrowing for such
Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower
Representative and the Lenders by electronic communication as provided in
Section 9.01 as promptly as practicable thereafter and, until

 

47

--------------------------------------------------------------------------------

the Administrative Agent notifies the Borrower Representative and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and any such Eurodollar Borrowing shall be repaid on the last day of the then
current Interest Period applicable thereto, and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

SECTION 2.15 Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or
similar requirement (including any compulsory loan requirement, insurance charge
or other assessment) against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank;

(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition, cost or expense (other than Taxes) affecting this Agreement or
Loans made by such Lender or any Letter of Credit or participation therein; or

(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes or
(B) Excluded Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making, continuing, converting into or
maintaining any Loan (or of maintaining its obligation to make any such Loan) or
to increase the cost to such Lender, the Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender, the Issuing Bank or
such other Recipient hereunder (whether of principal, interest or otherwise),
then the Borrowers will pay to such Lender, the Issuing Bank or such other
Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, the Issuing Bank or such other Recipient, as the case
may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on
the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement, the Commitment of, or the Loans made by, or
participations in Letters of Credit or Swingline Loans held by, such Lender, or
the Letters of Credit issued by the Issuing Bank, to a level below that which
such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Bank’s policies and the policies of
such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy and liquidity), then from time to time the Borrowers will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender’s or
the Issuing Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth in reasonable
detail the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower Representative and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.

 

48

--------------------------------------------------------------------------------

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower Representative of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.

SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.11), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.09 (d) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower Representative pursuant to Section 2.19 or 9.02(d),
then, in any such event, the Borrowers shall compensate each Lender for the
loss, cost and expense attributable to such event (other than lost profits). In
the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Eurodollar Loan had such event not occurred, at the Adjusted LIBO Rate
that would have been applicable to such Eurodollar Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Eurodollar Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower Representative and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
the amount shown as due on any such certificate within ten (10) days after
receipt thereof.

 

49

--------------------------------------------------------------------------------

SECTION 2.17 Withholding of Taxes; Gross-Up.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of any Loan Party under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. If
any applicable law (as determined in the good faith discretion of an applicable
withholding agent) requires the deduction or withholding of any Tax from any
such payment by a withholding agent, then the applicable withholding agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the applicable Loan Party shall be increased as necessary so that after such
deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section 2.17) the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

(b) Payment of Other Taxes. The Loan Parties shall timely pay to the relevant
Governmental Authority in accordance with applicable law, or at the option of
the Administrative Agent timely reimburse it for, Other Taxes.

(c) Evidence of Payment. As soon as practicable after any payment of Taxes by
any Loan Party to a Governmental Authority pursuant to this Section 2.17, such
Loan Party shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.

(d) Indemnification by the Loan Parties. The Loan Parties shall jointly and
severally indemnify each Recipient, within ten (10) days after written demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section) payable or paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided, that the Loan Parties shall not be required to indemnify a Recipient
with respect to any such Taxes incurred 180 days or more prior to the delivery
to the Loan Parties of the certificate described in the following sentence,
provided, further that (i) such 180-day period shall not commence until such
time as the Recipient has received written notice from a Governmental Authority
that such Tax is or was due, and (ii) if the event giving rise to the occurrence
of such Tax has retroactive effect, such period shall be extended to include
such retroactive period. A certificate as to the amount of such payment or
liability delivered to any Loan Party by a Lender (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within ten (10) days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Loan Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Loan Parties to do
so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 9.04(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to such Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

 

50

--------------------------------------------------------------------------------

(f) Status of Recipients.

(i) Any Recipient that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Borrower Representative and, in the case of a Lender, the
Administrative Agent, at the time or times reasonably requested by the Borrower
Representative or the Administrative Agent, such properly completed and executed
documentation reasonably requested by the Borrower Representative or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Recipient, if reasonably
requested by the Borrower Representative or the Administrative Agent, shall
deliver such other documentation prescribed by applicable law or reasonably
requested by the Borrower Representative or the Administrative Agent as will
enable the Borrowers or the Administrative Agent to determine whether or not
such Recipient is subject to any applicable withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two
sentences, the completion, execution and submission of such documentation (other
than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B), (ii)(C),
(ii)(D) and (iii) below) shall not be required if in the Lender’s reasonable
judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the
legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that any
Borrower is a U.S. Person,

(A) any Recipient that is a U.S. Person shall deliver to the Borrower
Representative and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower Representative or the
Administrative Agent), executed originals of IRS Form W-9 certifying that such
Lender is exempt from U.S. Federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower Representative and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower
Representative or the Administrative Agent), whichever of the following is
applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS
Form W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal
withholding Tax pursuant to the “interest” article of such tax treaty and
(y) with respect to any other applicable payments under any Loan Document, IRS
Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction
of, U.S. Federal withholding Tax pursuant to the “business profits” or “other
income” article of such tax treaty;

 

51

--------------------------------------------------------------------------------

(2) in the case of a Foreign Lender claiming that its extension of credit will
generate U.S. effectively connected income, executed originals of IRS Form
W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit E-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of
the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Lender is not the Beneficial Owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN,
IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and/or other certification
documents from each Beneficial Owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit E-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower Representative and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower
Representative or the Administrative Agent), executed originals of any other
form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. Federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrowers or the Administrative Agent to determine the withholding or deduction
required to be made; and

(D) if a payment made to a Recipient under any Loan Document would be subject to
U.S. Federal withholding Tax imposed by FATCA if such Recipient were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Recipient shall deliver to the Borrower Representative and the Administrative
Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower Representative or the Administrative Agent
such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower Representative or the Administrative Agent
as may be necessary for the Borrower Representative and the Administrative Agent
to comply with their obligations under FATCA and to determine that such
Recipient has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment. Solely for
purposes of this clause (D), “FATCA” shall include any amendments made to FATCA
after the date of this Agreement.

 

52

--------------------------------------------------------------------------------

(iii) Each Recipient agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower Representative
and the Administrative Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
(or credit in lieu thereof) as to which it has been indemnified pursuant to this
Section 2.17 (including by the payment of additional amounts pursuant to this
Section 2.17), it shall pay to the indemnifying party an amount equal to such
refund or credit (but only to the extent of indemnity payments made under this
Section 2.17 with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over
pursuant to this paragraph (g) (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) in the event that such
indemnified party is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this paragraph (g), in no
event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (g) the payment of which would
place the indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts giving rise to such
refund had never been paid. This paragraph (g) shall not be construed to require
any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

(h) Survival. Each party’s obligations under this Section 2.17 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

(i) Defined Terms. For purposes of this Section 2.17, the term “Lender” includes
any Issuing Bank and the term “applicable law” includes FATCA.

SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

(a) The Borrowers shall make each payment required to be made by them hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 2:00
p.m., Chicago time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 10 South Dearborn Street, 22nd Floor, Chicago, Illinois, except
payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.15,
2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

 

53

--------------------------------------------------------------------------------

(b) Any proceeds of Collateral received by the Administrative Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or other
sum payable under the Loan Documents (which shall be applied as specified by the
Borrowers), (B) a mandatory prepayment (which shall be applied in accordance
with Section 2.11) or (C) amounts to be applied from the Collection Account when
full cash dominion is in effect (which shall be applied in accordance with
Section 2.10(b)) or (ii) after an Event of Default has occurred and is
continuing and the Administrative Agent so elects or the Required Lenders so
direct, shall be applied ratably first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Administrative Agent and the
Issuing Bank from the Borrowers (other than in connection with Banking Services
Obligations or Swap Agreement Obligations), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrowers (other than in
connection with Banking Services Obligations or Swap Agreement Obligations),
third, to pay interest due in respect of the Overadvances and Protective
Advances, fourth, to pay the principal of the Overadvances and Protective
Advances, fifth, to pay interest then due and payable on the Loans (other than
the Overadvances and Protective Advances) ratably, sixth, to prepay principal on
the Loans (other than the Overadvances and Protective Advances) and unreimbursed
LC Disbursements, to pay an amount to the Administrative Agent equal to one
hundred five percent (105%) of the aggregate LC Exposure, to be held as cash
collateral for such Obligations and to pay any amounts owing with respect to
Swap Agreement Obligations up to and including the amount most recently provided
to the Administrative Agent pursuant to Section 2.22, for which Reserves have
been established, ratably, seventh, to payment of any amounts owing with respect
to Banking Services Obligations and Swap Agreement Obligations up to and
including the amount most recently provided to the Administrative Agent pursuant
to Section 2.22, and to the extent not paid pursuant to clause sixth above, and
eighth, to the payment of any other Secured Obligation due to the Administrative
Agent or any Lender by the Loan Parties. Notwithstanding the foregoing amounts
received from any Loan Party shall not be applied to any Excluded Swap
Obligation of such Loan Party. Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the Borrower Representative,
or unless a Default is in existence, neither the Administrative Agent nor any
Lender shall apply any payment which it receives to any Eurodollar Loan of a
Class, except (a) on the expiration date of the Interest Period applicable
thereto or (b) in the event, and only to the extent, that there are no
outstanding ABR Loans of the same Class and, in any such event, the Borrowers
shall pay the break funding payment required in accordance with Section 2.16.
The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Secured Obligations.

(c) At the election of the Administrative Agent, all payments of principal,
interest, LC Disbursements, fees, premiums, reimbursable expenses (including,
without limitation, all reimbursement for fees, costs and expenses pursuant to
Section 9.03), and other sums payable under the Loan Documents, may be paid from
the proceeds of Borrowings made hereunder whether made following a request by
the Borrower Representative pursuant to Section 2.03 or a deemed request as
provided in this Section or may be deducted from any deposit account of any
Borrower maintained with the Administrative Agent. The Borrowers hereby
irrevocably authorize (i) the Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents and agrees that all
such amounts charged shall constitute Loans (including Swingline Loans and
Overadvances, but such a Borrowing may only constitute a Protective Advance if
it is to reimburse costs, fees and expenses as described in Section 9.03) and
that all such Borrowings shall be deemed to have been requested pursuant to
Section 2.03, 2.04 or 2.05, as applicable, and (ii) the Administrative Agent to
charge any deposit account of any Borrower maintained with the Administrative
Agent for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.

 

54

--------------------------------------------------------------------------------

(d) If, except as otherwise expressly provided herein, any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other similarly situated Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements and Swingline
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by all such Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements and Swingline Loans; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements or Swingline Loans to any assignee or
participant, other than to the Borrowers or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). Each Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.

(e) Unless the Administrative Agent shall have received notice from the Borrower
Representative prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it
hereunder, then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender for the benefit of the
Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such
Lender’s obligations under such Sections until all such unsatisfied obligations
are fully paid and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and application to, any future funding obligations of such
Lender hereunder. Application of amounts pursuant to (i) and (ii) above shall be
made in any order determined by the Administrative Agent in its discretion.

(g) The Administrative Agent may from time to time provide the Borrowers with
billing statements or invoices with respect to any of the Secured Obligations
(the “Billing Statements”). The Administrative Agent is under no duty or
obligation to provide Billing Statements, which, if provided, will be solely for
the Borrowers’ convenience. The Billing Statements may contain estimates of the
amounts owed during the relevant billing period, whether of principal, interest,
fees or other Secured Obligations. If the Borrowers pay the full amount
indicated on a Billing Statement on or before the due date indicated on such
Billing Statement, the Borrowers shall not be in default; provided, that
acceptance by the Administrative Agent, on behalf of the Lenders, of any payment
that is less than the payment due at that time shall not constitute a waiver of
the Administrative Agent’s or the Lenders’ right to receive payment in full at
another time.

 

55

--------------------------------------------------------------------------------

SECTION 2.19 Mitigation Obligations; Replacement of Lenders.

(a) If any Lender requests compensation under Section 2.15, or if the Borrowers
are required to pay any Indemnified Taxes or additional amounts to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.17, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if the Borrowers
are required to pay any Indemnified Taxes or additional amounts to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.17, or if any Lender becomes a Defaulting Lender, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights (other than its existing rights to
payments pursuant to Section 2.15 or 2.17) and obligations under this Agreement
and other Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrowers shall have received the prior written consent of
the Administrative Agent (and in circumstances where its consent would be
required under Section 9.04, the Issuing Bank and the Swingline Lender), which
consent shall not unreasonably be withheld, conditioned or delayed, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and funded participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

SECTION 2.20 Defaulting Lenders . Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

(a) fees shall cease to accrue on the unfunded portion of the Revolving
Commitment of such Defaulting Lender pursuant to Section 2.12(a);

(b) such Defaulting Lender shall not have the right to vote on any issue on
which voting is required (other than to the extent expressly provided in
Section 9.02(b)) and the Commitment and Revolving Exposure of such Defaulting
Lender shall not be included in determining whether the Required Lenders or the
Supermajority Lenders have taken or may take any action hereunder (including any
consent to any amendment, waiver or other modification pursuant to Section 9.02)
or under any other Loan Document; provided, that, except as otherwise provided
in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting
Lender in the case of an amendment, waiver or other modification requiring the
consent of such Lender or each Lender directly affected thereby;

 

56

--------------------------------------------------------------------------------

(c) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes
a Defaulting Lender then:

(i) all or any part of the Swingline Exposure and LC Exposure of such Defaulting
Lender shall be reallocated among the non-Defaulting Lenders in accordance with
their respective Applicable Percentages but only to the extent that (x) the
conditions set forth in Section 4.02 are satisfied at the time of such
reallocation (and, unless the Borrower Representative shall have otherwise
notified the Administrative Agent at such time, the Borrowers shall be deemed to
have represented and warranted that such conditions are satisfied at such time)
and (y) the sum of all non-Defaulting Lenders’ Revolving Exposures plus such
Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total
of all non-Defaulting Lenders’ Revolving Commitments;

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrowers shall within one (1) Business Day
following notice by the Administrative Agent (x) first, prepay such Swingline
Exposure and (y) second, cash collateralize, for the benefit of the Issuing
Bank, the Borrowers’ obligations corresponding to such Defaulting Lender’s LC
Exposure (after giving effect to any partial reallocation pursuant to clause
(i) above) in accordance with the procedures set forth in Section 2.06(j) for so
long as such LC Exposure is outstanding;

(iii) if the Borrowers cash collateralize any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) above, the Borrowers shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
clause (i) above, then the fees payable to the Lenders pursuant to Sections
2.12(a) and 2.12(b) shall be adjusted in accordance with such non-Defaulting
Lenders’ Applicable Percentages; and

(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither
reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then,
without prejudice to any rights or remedies of the Issuing Bank or any other
Lender hereunder, all letter of credit fees payable under Section 2.12(b) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until and to the extent that such LC Exposure is reallocated and/or cash
collateralized; and

(d) so long as such Lender is a Defaulting Lender, the Swingline Lender shall
not be required to fund any Swingline Loan and the Issuing Bank shall not be
required to issue, amend, renew, extend or increase any Letter of Credit, unless
it is satisfied that the related exposure and such Defaulting Lender’s then
outstanding LC Exposure will be 100% covered by the Commitments of the
non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers
in accordance with Section 2.20(c), and participating interests in any such
newly made Swingline Loan or newly issued or increased Letter of Credit shall be
allocated among non-Defaulting Lenders in a manner consistent with
Section 2.20(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event with respect to the Parent of any Lender shall occur
following the date hereof and for so long as such event shall continue or
(ii) the Swingline Lender or the Issuing Bank has a good faith belief that any
Lender has defaulted in fulfilling its obligations under one or more other

 

57

--------------------------------------------------------------------------------

agreements in which such Lender commits to extend credit, the Swingline Lender
shall not be required to fund any Swingline Loan and the Issuing Bank shall not
be required to issue, amend or increase any Letter of Credit, unless the
Swingline Lender or the Issuing Bank, as the case may be, shall have entered
into arrangements with the Borrowers or such Lender, satisfactory to the
Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to
it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the Borrowers, the Issuing
Bank and the Swingline Lender agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect
the inclusion of such Lender’s Revolving Commitment and on the date of such
readjustment such Lender shall purchase at par such of the Loans of the other
Lenders (other than Swingline Loans) as the Administrative Agent shall determine
may be necessary in order for such Lender to hold such Loans in accordance with
its Applicable Percentage.

SECTION 2.21 Returned Payments. If after receipt of any payment which is applied
to the payment of all or any part of the Obligations (including a payment
effected through exercise of a right of setoff), the Administrative Agent or any
Lender is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion), then the Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall continue
in full force as if such payment or proceeds had not been received by the
Administrative Agent or such Lender. The provisions of this Section 2.21 shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Administrative Agent or any Lender in reliance upon such payment or
application of proceeds. The provisions of this Section 2.21 shall survive the
termination of this Agreement.

SECTION 2.22 Banking Services and Swap Agreements. Each Lender or Affiliate
thereof (other than the Administrative Agent) providing Banking Services for, or
having Swap Agreements with, any Loan Party shall deliver to the Administrative
Agent, promptly after entering into such Banking Services or Swap Agreements,
written notice setting forth the aggregate amount of all Banking Services
Obligations and Swap Agreement Obligations of such Loan Party to such Lender or
Affiliate (whether matured or unmatured, absolute or contingent). In addition,
each such Lender or Affiliate thereof shall deliver to the Administrative Agent,
following the end of each calendar month, a summary of the amounts due or to
become due in respect of such Banking Services Obligations and Swap Agreement
Obligations. The most recent information provided to the Administrative Agent
shall be used in determining the amounts with respect to such Lender or
Affiliate to be applied in respect of such Banking Services Obligations and/or
Swap Agreement Obligations pursuant to Section 2.18(b) and which tier of the
waterfall, contained in Section 2.18(b), such Banking Services Obligations
and/or Swap Agreement Obligations will be placed.

ARTICLE III

Representations and Warranties.

Each Loan Party represents and warrants to the Lenders that:

SECTION 3.01 Organization; Powers. Each Loan Party and each Domestic Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and is qualified to do business, and is in good
standing, in every jurisdiction where such qualification is required, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

58

--------------------------------------------------------------------------------

SECTION 3.02 Authorization; Enforceability. The Transactions are within each
Loan Party’s organizational powers and have been duly authorized by all
necessary organizational actions and, if required, actions by equity holders.
Each Loan Document to which each Loan Party is a party has been duly executed
and delivered by such Loan Party and constitutes a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except (i) such as have been obtained or
made and are in full force and effect, (ii) filings necessary to perfect Liens
created pursuant to the Loan Documents and (iii) the failure of which to obtain
or make could not reasonably be expected to result in a Material Adverse Effect,
(b) will not violate any Requirement of Law applicable to any Loan Party or any
Domestic Subsidiary, except as could not reasonably be expected to result in a
Material Adverse Effect, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or any
Domestic Subsidiary or the assets of any Loan Party or any Domestic Subsidiary,
or give rise to a right thereunder to require any payment to be made by any Loan
Party or any of its Domestic Subsidiaries in any material respect, and (d) will
not result in the creation or imposition of any Lien on any asset of any Loan
Party or any Domestic Subsidiary, except Liens created pursuant to the Loan
Documents or otherwise permitted hereunder.

SECTION 3.04 Financial Condition; No Material Adverse Change.

(a) The Company has heretofore furnished to the Lenders the consolidated balance
sheet and statements of income, stockholders equity and cash flows of Holdings
and its consolidated Subsidiaries (i) as of and for the fiscal year ended
December 31, 2013, reported on by Ernst & Young, independent public accountants,
and (ii) as of and for the fiscal month and the portion of the fiscal year ended
September 30, 2014, certified by its Financial Officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of Holdings and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.

(b) No event, change or condition has occurred that has had, or could reasonably
be expected to have, a Material Adverse Effect, since December 31, 2013.

SECTION 3.05 Properties.

(a) As of the date of this Agreement, Schedule 3.05 sets forth the address of
each parcel of real property that is owned or leased by any Loan Party and, to
the Loan Party’s knowledge, each of the material leases and subleases is valid
and enforceable in accordance with its terms and is in full force and effect,
and no default by any Loan Party or, to the knowledge of any Loan Party, any
other party to any such lease or sublease exists. Each of the Loan Parties and
each of its Domestic Subsidiaries has good and indefeasible title to, or valid
leasehold interests in, all of its real and personal property that is material
to the businesses of the Loan Parties, free of all Liens other than those
permitted by Section 6.02.

(b) Each Loan Party and each Domestic Subsidiary owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business as currently conducted, and, to the knowledge of the
Loan Parties, the use thereof by each Loan Party and each Domestic Subsidiary
does not infringe in any material respect upon the rights of any other Person.

 

59

--------------------------------------------------------------------------------

SECTION 3.06 Litigation and Environmental Matters.

(a) There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or to the knowledge of any Loan Party,
threatened against any Loan Party or its Domestic Subsidiaries on the Effective
Date other than the Disclosed Matters. No actions, suits or proceedings by or
before any arbitrator or Governmental Authority are pending or, to the knowledge
of any Loan Party, threatened against or affecting any Loan Party or any
Domestic Subsidiary (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (ii) that involve any Loan Document or the Transactions.

(b) (i) No Loan Party or any Domestic Subsidiary has received notice of any
material claim with respect to any material Environmental Liability that is
outstanding or unresolved or knows of any basis for any material Environmental
Liability and (ii) no Loan Party or any Domestic Subsidiary has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, in each case,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.

(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in,
or could reasonably be expected to result in, a Material Adverse Effect.

SECTION 3.07 Compliance with Laws and Agreements; No Default. Except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, each Loan Party and each
Domestic Subsidiary is in compliance with (i) all Requirement of Law applicable
to it or its property and (ii) all indentures, agreements and other instruments
binding upon it or its property. No Default has occurred and is continuing.

SECTION 3.08 Investment Company Status. No Loan Party or any Domestic Subsidiary
is required to be registered as an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

SECTION 3.09 Taxes. Each Loan Party and each Domestic Subsidiary has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Domestic Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not be expected to result in a Material Adverse
Effect. No Tax liens have been filed and no claims in an amount in excess of
$250,000 are being asserted with respect to any such taxes, except where (i) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) such Loan Party or Domestic Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.

SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.

SECTION 3.11 Disclosure. The Loan Parties have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any Loan
Party or any Domestic Subsidiary is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be

 

60

--------------------------------------------------------------------------------

expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other written information (other than budgets,
estimates, projections or general economic industry data) furnished by or on
behalf of any Loan Party or any Domestic Subsidiary to the Administrative Agent
or any Lender in connection with the negotiation of this Agreement or any other
Loan Document (as modified or supplemented by other written information (other
than budgets, estimates, projections or general economic industry data) so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading; provided
that, with respect to projected financial information, the Loan Parties
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time delivered and, if such
projected financial information was delivered prior to the Effective Date, as of
the Effective Date (it being understood that projections are subject to
uncertainties and contingencies, and that actual results during any period or
periods covered by such projections may differ from projected results and that
such differences may be material).

SECTION 3.12 Material Agreements. All material agreements and contracts to which
any Loan Party or any Domestic Subsidiary is a party or is bound as of the date
of this Agreement and with which the failure to comply could reasonably be
expected to result in a Material Adverse Effect are listed on Schedule 3.12. No
Loan Party or any Domestic Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party (x) as of the Effective
Date, other than with respect to a default that could not reasonably be expected
to result in a liability to the Loan Party in excess of $250,000 and (y) after
the Effective Date, other than with respect to a default which could not
reasonably be expected to result in a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Material Indebtedness.

SECTION 3.13 Solvency.

(a) Immediately after the consummation of the Transactions to occur on the
Effective Date, (i) the fair value of the assets (on a going concern basis) of
the Company (individually) and the Loan Parties (taken as a whole), at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or
otherwise; (ii) the present fair saleable value of the property (on a going
concern basis) of the Company (individually) and the Loan Parties (taken as a
whole) will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(iii) the Company (individually) and the Loan Parties (taken as a whole) will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) the Company
(individually) and the Loan Parties (taken as a whole) will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted after
the Effective Date.

(b) No Loan Party intends to, nor will permit any Domestic Subsidiary to, and no
Loan Party believes that it or any Domestic Subsidiary will, incur debts beyond
its ability to pay such debts as they mature, taking into account the timing of
and amounts of cash to be received by it or any such Domestic Subsidiary and the
timing of the amounts of cash to be payable on or in respect of its Indebtedness
or the Indebtedness of any such Domestic Subsidiary.

SECTION 3.14 Insurance. Schedule 3.14 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties and their Domestic Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid. Each Borrower maintains, and has caused each
Domestic Subsidiary to maintain, with financially sound and reputable insurance
companies, insurance on all their real and personal property in such amounts,
subject to such deductibles and self-insurance retentions and covering such
properties and risks as are adequate and customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations.

 

61

--------------------------------------------------------------------------------

SECTION 3.15 Capitalization and Subsidiaries. Schedule 3.15 sets forth as of the
Effective Date (a) a correct and complete list of the name and relationship to
Holdings of each and all of Holdings’ Subsidiaries, (b) a true and complete
listing of each class of each Borrower’s authorized Equity Interests, all of
which issued Equity Interests are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 3.15, and (c) the type of entity of Holdings and each of its
Subsidiaries. All of the issued and outstanding Equity Interests owned by any
Loan Party have been (to the extent such concepts are relevant with respect to
such ownership interests) duly authorized and issued and are fully paid and
non-assessable. There are no outstanding commitments or other obligations of any
Loan Party to issue, and no options, warrants or other rights of any Person to
acquire, any shares of any class of capital stock or other equity interests of
any Loan Party.

SECTION 3.16 Security Interest in Collateral. The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all of the
Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties, and such Liens constitute perfected and continuing Liens on the
Collateral (in each case to the extent perfection may be achieved by (i) filing
Uniform Commercial Code financing statements and (ii) taking the other steps
required pursuant to the Collateral Documents), securing the Secured
Obligations, enforceable against the applicable Loan Party and all third parties
(subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of a proceeding in equity or at law), and
having priority over all other Liens on the Collateral except in the case of
(a) Permitted Encumbrances, to the extent any such Permitted Encumbrances would
have priority over the Liens in favor of the Administrative Agent pursuant to
any applicable law or agreement and (b) Liens perfected only by possession
(including possession of any certificate of title) to the extent the
Administrative Agent has not obtained or does not maintain possession of such
Collateral.

SECTION 3.17 Employment Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Domestic Subsidiary pending
or, to the knowledge of any Loan Party, threatened. The hours worked by and
payments made to employees of the Loan Parties and their Domestic Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters other
than such violations that could not reasonably be expected to result in a
Material Adverse Effect. All payments due from any Loan Party or any Domestic
Subsidiary, or for which any material claim may be made against any Loan Party
or any Domestic Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of such Loan Party or Domestic Subsidiary.

SECTION 3.18 Federal Reserve Regulations. No part of the proceeds of any Loan or
Letter of Credit has been used or will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

SECTION 3.19 Use of Proceeds. The proceeds of the Loans have been used and will
be used as set forth in Section 5.08.

SECTION 3.20 No Burdensome Restrictions. No Loan party is subject to any
Burdensome Restrictions except Burdensome Restrictions permitted under
Section 6.10.

SECTION 3.21 Anti-Corruption Laws and Sanctions. Each Loan Party has implemented
and maintains in effect policies and procedures designed to ensure compliance by
such Loan Party, its Domestic Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions, and such Loan Party, its Domestic Subsidiaries and their respective

 

62

--------------------------------------------------------------------------------

officers and employees and, to the knowledge of such Loan Party, its directors
and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions
in all material respects. None of (a) any Loan Party, any Domestic Subsidiary or
any of their respective directors, officers or employees, or (b) to the
knowledge of any such Loan Party or Domestic Subsidiary, any agent of such Loan
Party or any Domestic Subsidiary that will act in any capacity in connection
with or benefit from the credit facility established hereby, is a Sanctioned
Person. All Borrowings and Letters of Credit, direct use of proceeds,
Transactions or other transactions contemplated by this Agreement or the other
Loan Documents will comply with Anti-Corruption Laws and applicable Sanctions in
all material respects.

SECTION 3.22 Common Enterprise. The successful operation and condition of each
of the Loan Parties is dependent on the continued successful performance of the
functions of the group of the Loan Parties as a whole. Each Loan Party expects
to derive benefit (and its board of directors or other governing body has
determined that it may reasonably be expected to derive benefit), directly and
indirectly, from (i) successful operations of each of the other Loan Parties and
(ii) the credit extended by the Lenders to the Borrowers hereunder, both in
their separate capacities and as members of the group of companies. Each Loan
Party has determined that execution, delivery, and performance of this Agreement
and any other Loan Documents to be executed by such Loan Party is within its
purpose, in furtherance of its direct and/or indirect business interests, will
be of direct and/or indirect benefit to such Loan Party, and is in its best
interest.

ARTICLE IV

Conditions

SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 9.02):

(a) Credit Agreement and Other Loan Documents. The Administrative Agent (or its
counsel) shall have received (i) from each party hereto either (A) a counterpart
of this Agreement signed on behalf of such party or (B) written evidence
reasonably satisfactory to the Administrative Agent (which may include facsimile
or other electronic transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement, (ii) either (A) a
counterpart of each other Loan Document signed on behalf of each party thereto
or (B) written evidence reasonably satisfactory to the Administrative Agent
(which may include facsimile or other electronic transmission of a signed
signature page thereof) that each such party has signed a counterpart of such
Loan Document and (iii) such other certificates, documents, instruments and
agreements as the Administrative Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including any promissory notes requested by a Lender pursuant to
Section 2.10 payable to the order of each such requesting Lender and a written
opinion of the Loan Parties’ counsel, addressed to the Administrative Agent, the
Issuing Bank and the Lenders, all in form and substance reasonably satisfactory
to the Administrative Agent and its counsel.

(b) Financial Statements and Projections. The Lenders shall have received
(i) audited consolidated financial statements of Holdings for the December 31,
2013 fiscal year, (ii) unaudited interim consolidated financial statements of
Holdings for each fiscal month and quarter ended after the date of the latest
applicable financial statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Administrative
Agent, reflect any material adverse change in the consolidated financial
condition of Holdings, as reflected in the audited, consolidated financial
statements described in clause (i) of this paragraph and (iii) satisfactory
projections through 2015.

 

63

--------------------------------------------------------------------------------

(c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of
each Loan Party, dated the Effective Date and executed by its Secretary or
Assistant Secretary or other officer reasonably acceptable to the Administrative
Agent, which shall (A) certify the resolutions of its Board of Directors,
members or other body authorizing the execution, delivery and performance of the
Loan Documents to which it is a party, (B) identify by name and title and bear
the signatures of the Financial Officers and any other officers of such Loan
Party authorized to sign the Loan Documents to which it is a party, and
(C) contain appropriate attachments, including the certificate or articles of
incorporation or organization of each Loan Party certified by the relevant
authority of the jurisdiction of organization of such Loan Party and a true and
correct copy of its by-laws or operating, management or partnership agreement,
and (ii) a good standing certificate for each Loan Party from its jurisdiction
of organization or the substantive equivalent available in the jurisdiction of
organization for each Loan Party from the appropriate governmental officer in
such jurisdiction.

(d) No Default Certificate. The Administrative Agent shall have received a
certificate, signed by a Financial Officer of each Borrower, dated as of the
Effective Date (i) stating that no Default has occurred and is continuing,
(ii) stating that the representations and warranties contained in Article III
are true and correct as of such date, and (iii) certifying as to the
Availability on the Effective Date.

(e) Fees. The Lenders and the Administrative Agent shall have received all fees
required to be paid, and all expenses required to be reimbursed for which
invoices have been presented (including the reasonable fees and expenses of
legal counsel), on or before the Effective Date (it being agreed and understood
that such fees and expenses are set forth on the closing statement provided by
the Administrative Agent to the Borrowers on the Effective Date).

(f) Lien Searches. The Administrative Agent shall have received the results of a
recent lien search in each jurisdiction where the Loan Parties are organized and
where the assets of the Loan Parties are located, and such search shall reveal
no Liens on any of the assets of the Loan Parties except for Liens permitted by
Section 6.02 or discharged on or prior to the Effective Date pursuant to a
pay-off letter or other documentation reasonably satisfactory to the
Administrative Agent.

(g) Pay-Off Letter. The Administrative Agent shall have received reasonably
satisfactory pay-off letters for the Indebtedness under the credit facility
among the Company and Silicon Valley Bank and any other Indebtedness to be
repaid from the proceeds of the initial Borrowing, confirming that all Liens
upon any of the property of the Loan Parties constituting Collateral will be
terminated concurrently with such payment and all letters of credit issued or
guaranteed as part of such Indebtedness shall have been cash collateralized or
supported by a Letter of Credit.

(h) Funding Accounts. The Administrative Agent shall have received a notice
setting forth the deposit account(s) of the Borrowers (the “Funding Accounts”)
to which the Administrative Agent is authorized by the Borrowers to transfer the
proceeds of any Borrowings requested or authorized pursuant to this Agreement.

(i) Solvency. The Administrative Agent shall have received a solvency
certificate from a Financial Officer of the Company.

(j) Borrowing Base Certificate. The Administrative Agent shall have received a
Borrowing Base Certificate which calculates the Borrowing Base as of
September 30, 2014.

(k) Closing Availability. After giving effect to all Borrowings to be made on
the Effective Date, the issuance of any Letters of Credit on the Effective Date
and the payment of all fees and expenses due hereunder, and with all of the Loan
Parties’ indebtedness, liabilities, and obligations current, the Availability
shall not be less than $15,000,000.

 

64

--------------------------------------------------------------------------------

(l) Pledged Equity Interests; Stock Powers; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the Equity Interests
pledged pursuant to the Security Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of the
pledgor thereof and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Security Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.

(m) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Collateral Documents or
under law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of itself, the Lenders and the other Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.02), shall be in proper form for filing, registration or recordation.

(n) Insurance. The Administrative Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Administrative Agent and otherwise in compliance with the terms of Section 5.10
hereof and Section 4.12 of the Security Agreement.

(o) Letter of Credit Application. If a Letter of Credit is requested to be
issued on the Effective Date, the Administrative Agent shall have received a
properly completed letter of credit application (whether standalone or pursuant
to a master agreement, as applicable). The Borrowers shall have executed the
Issuing Bank’s master agreement for the issuance of commercial Letters of
Credit.

(p) Tax Withholding. The Administrative Agent shall have received a properly
completed and signed IRS Form W-8BEN-E or W-9, as applicable, for each Loan
Party.

(q) Legal and Regulatory Matters. All legal (including tax implications) and
regulatory matters shall be reasonably satisfactory to the Administrative Agent
and Lenders, including but not limited to compliance with all applicable
requirements of Regulations U, T and X of the Board.

(r) Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent, the Issuing Bank, any Lender or their
respective counsel may have reasonably requested.

The Administrative Agent shall notify the Borrowers, the Lenders and the Issuing
Bank of the Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Loan Parties set forth in the Loan
Documents shall be true and correct in all material respects with the same
effect as though made on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable (it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date, and that
any representation or warranty which is subject to any materiality qualifier
shall be required to be true and correct in all respects).

 

65

--------------------------------------------------------------------------------

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, (i) no Default shall have occurred and be continuing and (ii) no
Protective Advance shall be outstanding.

(c) After giving effect to any Borrowing or the issuance, amendment, renewal or
extension of any Letter of Credit, Availability shall not be less than zero.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.

Notwithstanding the failure to satisfy the conditions precedent set forth in
paragraphs (a) or (b) of this Section, unless otherwise directed by the Required
Lenders, the Administrative Agent may, but shall have no obligation to, continue
to make Loans and an Issuing Bank may, but shall have no obligation to, issue,
amend, renew or extend, or cause to be issued, amended, renewed or extended, any
Letter of Credit for the ratable account and risk of Lenders from time to time
if the Administrative Agent believes that making such Loans or issuing,
amending, renewing or extending, or causing the issuance, amendment, renewal or
extension of, any such Letter of Credit is in the best interests of the Lenders.

ARTICLE V

Affirmative Covenants

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full (other than contingent obligations for which no claim has been asserted)
and all Letters of Credit shall have expired or terminated (or been backstopped
in a manner reasonably satisfactory to the Administrative Agent or cash
collateralized) in each case without any pending draw, and all LC Disbursements
shall have been reimbursed, each Loan Party executing this Agreement covenants
and agrees, jointly and severally with all of the other Loan Parties, with the
Lenders that:

SECTION 5.01 Financial Statements; Borrowing Base and Other Information. The
Borrowers will furnish to the Administrative Agent (for the Administrative
Agent’s distribution of each item in clauses (a), (b), (c), (d), (f) and
(g) below to each Lender through any Agent Site):

(a) within ninety (90) days after the end of each fiscal year of Holdings, its
audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by independent public accountants of recognized national
standing or otherwise reasonably acceptable to the Administrative Agent (without
a “going concern” or like qualification, commentary or exception (other than a
going concern or like qualification, commentary or exception due solely to the
fact that the Maturity Date is then scheduled to occur in less than twelve
months) and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;

(b) within forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, its unaudited consolidated balance
sheet and related statements of operations and cash flows as of the end of and
for such fiscal quarter and the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by a Financial

 

66

--------------------------------------------------------------------------------

Officer of the Borrower Representative as presenting fairly in all material
respects the financial condition and results of operations of Holdings and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

(c) within thirty (30) days after the end of each fiscal month of Holdings, its
consolidated and consolidating (with respect to Holdings, the Borrowers and the
other Loan Parties) balance sheet and related statements of operations and cash
flows as of the end of and for such fiscal month and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as
of the end of) the previous fiscal year, all certified by a Financial Officer of
the Borrower Representative as presenting fairly in all material respects the
financial condition and results of operations of Holdings and its Subsidiaries
on a consolidated and consolidating (with respect to Holdings, the Borrowers and
the other Loan Parties) basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;

(d) concurrently with any delivery of financial statements under clause
(c) above, a certificate of a Financial Officer of the Borrower Representative
in substantially the form of Exhibit C (i) certifying as presenting fairly in
all material respects the financial condition and results of operations of
Holdings, the Borrowers and the other Loan Parties on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(iii) setting forth reasonably detailed calculations with respect to
Section 6.12 (whether or not a Compliance Period is in effect) and (iv) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

(e) as soon as available but in any event no later than sixty (60) days after to
the end of, each fiscal year of the Company, a copy of the plan and forecast
(including a projected consolidated balance sheet, statement of operations and
cash flow statement) of Holdings for each month of the upcoming fiscal year (the
“Projections”) in form reasonably satisfactory to the Administrative Agent;

(f) as soon as available but in any event within thirty (30) days of the end of
each calendar month (or within three (3) Business Days of each Friday during any
Weekly Reporting Period), and at such other times as may be necessary to
re-determine Availability or as may be requested by the Administrative Agent in
its Permitted Discretion, as of the period then ended, a Borrowing Base
Certificate and supporting information in connection therewith, together with
any additional reports with respect to the Borrowing Base as the Administrative
Agent may reasonably request;

(g) as soon as available but in any event within thirty (30) days of the end of
each calendar month and at such other times as may be requested by the
Administrative Agent, as of the period then ended, all delivered electronically
in a text formatted file acceptable to the Administrative Agent;

(i) a detailed aging of the Borrowers’ Accounts, including all invoices aged by
invoice date and due date (with an explanation of the terms offered), prepared
in a manner reasonably acceptable to the Administrative Agent, together with a
summary specifying the name, address, and balance due for each Account Debtor;

(ii) a schedule detailing the Borrowers’ Inventory, in form reasonably
satisfactory to the Administrative Agent, by location (showing Inventory in
transit, any Inventory located with a third party under any consignment, bailee
arrangement, or warehouse agreement), by class (raw material, work-in-process
and finished goods), by

 

67

--------------------------------------------------------------------------------

product type, and by volume on hand, which Inventory shall be valued at the
lower of cost (determined on a first-in, first-out basis) or market and adjusted
for Reserves as the Administrative Agent has previously indicated to the
Borrower Representative are deemed by the Administrative Agent to be appropriate
in its Permitted Discretion;

(iii) a worksheet of calculations prepared by the Borrowers to determine
Eligible Accounts and Eligible Inventory, such worksheets detailing the Accounts
and Inventory excluded from Eligible Accounts and Eligible Inventory and the
reason for such exclusion; and

(iv) a reconciliation of the Borrowers’ Accounts and Inventory between (A) the
amounts shown in the Borrowers’ general ledger and financial statements and the
reports delivered pursuant to clauses (i) and (ii) above and (B) the amounts and
dates shown in the reports delivered pursuant to clauses (i) and (ii) above and
the Borrowing Base Certificate delivered pursuant to clause (g) above as of such
date;

(h) as soon as available but in any event within thirty (30) days of the end of
each calendar month and at such other times as may be requested by the
Administrative Agent, as of the month then ended, a schedule and aging of the
Borrowers’ accounts payable, delivered electronically in an excel file or other
format reasonably acceptable to the Administrative Agent;

(i) promptly upon Administrative Agent’s reasonable request, an updated customer
list for each Borrower, which list shall state the customer’s name, mailing
address and phone number, delivered electronically in a text formatted file
reasonably acceptable to the Administrative Agent and certified as true and
correct in all material respects by a Financial Officer of the Borrower
Representatives; and

(j) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of any Loan Party or
any Subsidiary, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request; provided, that
notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, no Loan Party or any Subsidiary shall be required to
deliver any information to the extent it (i) is subject to third party
confidentiality agreements with Persons that are not Affiliates of the Loan
Party or Subsidiary or attorney/client privilege, (ii) constitutes non-financial
trade secrets or non-financial proprietary information or (iii) in respect of
which disclosure to the Administrative Agent or any Lender (or their respective
representatives or contractors) is prohibited by applicable law).

Financial information required to be delivered pursuant to Sections 5.01(a) or
(b) (in each case, solely to the extent such financial information is included
in materials filed with the SEC or posted on the relevant website, as the case
may be) shall be deemed to have been delivered to the Administrative Agent on
the date on which such information has been posted on such Loan Party or
Subsidiary’s behalf on an Agency Site (or another relevant website identified by
the Borrower to the Administrative Agent and reasonably acceptable to the
Administrative Agent) or is available via the EDGAR system of the SEC; provided
that in each case the Loan Party shall (i) notify the Administrative Agent of
the posting of any such information and (ii) promptly deliver paper copies of
any such documents to the Administrative Agent if the Administrative Agent so
requests.

SECTION 5.02 Notices of Material Events. The Borrowers will furnish to the
Administrative Agent (for distribution to each Lender through an Agency Site)
prompt (but in any event within any time period that may be specified below)
written notice of the following:

(a) the occurrence of any Default;

 

68

--------------------------------------------------------------------------------

(b) receipt of any written notice of any investigation by a Governmental
Authority or any litigation or proceeding commenced or threatened in writing
against any Loan Party or any Domestic Subsidiary that (i) seeks damages in
excess of $1,000,000, (ii) seeks injunctive relief which could reasonably be
expected to result in a Material Adverse Effect, (iii) is asserted or instituted
against any Plan, its fiduciaries or its assets, in each case which could
reasonably be expected to result in a Material Adverse Effect, (iv) alleges
criminal misconduct by any Loan Party or any Domestic Subsidiary which could
reasonably be expected to result in a Material Adverse Effect, (v) alleges the
violation of, or seeks to impose remedies under, any Environmental Law or
related Requirement of Law, or seeks to impose Environmental Liability, in each
case which could reasonably be expected to result in a Material Adverse Effect,
(vi) asserts liability on the part of any Loan Party or any Domestic Subsidiary
in excess of $1,000,000 in respect of any tax, fee, assessment, or other
governmental charge, or (vii) involves any product recall which could reasonably
be expected to result in a liability in excess of $1,000,000;

(c) any Lien (other than Permitted Encumbrances) or claim made or asserted
against any of the Collateral;

(d) any loss, damage, or destruction to the Collateral in the amount of
$1,000,000 or more, whether or not covered by insurance;

(e) within three (3) Business Days of receipt thereof, any and all default
notices received under or with respect to any leased location or public
warehouse where Inventory constituting Collateral with a value in excess of
$1,000,000 is located;

(f) solely to the extent the Borrowers would be required to make a Form 8-K
disclosure in respect thereof, all material amendments to material agreements;

(g) within two (2) Business Days after the occurrence thereof, any Loan Party
entering into a Swap Agreement with a notional amount of $1,000,000 or more or
an amendment thereto, together with copies of all agreements evidencing such
Swap Agreement or amendment;

(h) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect;

(i) at least ten (10) Business Days prior to the proposed date of any borrowing
by SCP under the SCP Loan Facility (including the amount of such borrowing); and

(j) any other development that results, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower Representative
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto. Information
required to be delivered pursuant to clause (b), (e), (f) and (g) of this
Section shall be deemed to have been delivered if such information, or one or
more annual or quarterly or other periodic reports containing such information,
is (i) filed for public availability on the SEC’s Electronic Data Gathering and
Retrieval System, or (ii) posted on the Borrowers’ behalf on an Internet or
intranet website, if any, to which the Administrative Agent and the Lenders have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that, the Borrower Representative shall notify
(which may be by telecopy or electronic mail) the Administrative Agent of the
filing of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.

 

69

--------------------------------------------------------------------------------

SECTION 5.03 Existence; Conduct of Business. Each Loan Party will, and will
cause each Domestic Subsidiary to, (a) do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and commercially reasonable to preserve, renew and keep in full force
the rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits necessary to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except as
could not reasonably be expected to result in a Material Adverse Effect,
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03 or dispositions, sales,
transfers or leases permitted under Section 6.05, and (b) except as permitted by
Section 6.03, carry on and conduct its business in substantially the same manner
and in substantially the same fields of enterprise as it is presently conducted.

SECTION 5.04 Payment of Obligations. Each Loan Party will, and will cause each
Domestic Subsidiary to, pay or discharge all Material Indebtedness and all other
material liabilities and obligations, including Taxes, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) such Loan Party
or Domestic Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect;
provided, however, that each Loan Party will, and will cause each Domestic
Subsidiary to, remit withholding taxes and other payroll taxes to appropriate
Governmental Authorities as and when claimed to be due, notwithstanding the
foregoing exceptions.

SECTION 5.05 Maintenance of Properties. Each Loan Party will, and will cause
each Domestic Subsidiary to, keep and maintain all property necessary to the
conduct of its business in good working order and condition, casualty,
condemnation and ordinary wear and tear excepted.

SECTION 5.06 Books and Records; Inspection Rights. Each Loan Party will, and
will cause each Domestic Subsidiary to, (a) keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities and (b) subject to
Sections 5.11 and 5.13, permit any representatives designated by the
Administrative Agent or any Lender (including employees of the Administrative
Agent, any Lender or any consultants, accountants, lawyers, agents and
appraisers retained by the Administrative Agent), upon reasonable prior notice,
to visit and inspect its properties, to conduct at such Loan Party’s premises
field examinations of such Loan Party’s assets, liabilities, books and records,
including examining and making extracts from its books and records,
environmental assessment reports and Phase I or Phase II studies, and to discuss
its affairs, finances and condition with its officers and independent
accountants (and so long as no Event of Default has occurred and is continuing,
a Financial Officer of the Loan Parties shall be entitled to, but not required
to, participate in such discussions with the independent accountants), all at
such reasonable times and as often as reasonably requested. Each Loan Party
acknowledges that the Administrative Agent, after exercising its rights of
inspection, may prepare and distribute to the Lenders certain Reports pertaining
to each Loan Party’s assets for internal use by the Administrative Agent and the
Lenders. Only one (1) such inspection per calendar year shall be at the sole
expense of the Borrowers; provided that (i) two (2) such inspections per
calendar year shall be at the sole expense of the Borrowers if the Availability
is less than the Examination Threshold Amount at the time such inspection is
initiated, and (ii) after the occurrence and during the continuance of an Event
of Default, there shall be no limitation on the number or frequency of
inspections that shall be at the sole expense of the Borrowers.

SECTION 5.07 Compliance with Laws and Material Contractual Obligations. Each
Loan Party will, and will cause each Domestic Subsidiary to, (i) comply with all
Requirement of Law applicable to it or its property (including without
limitation Environmental Laws and material Requirements of Law concerning FDA
Law), and (ii) perform its obligations under material agreements to which it is
a party, except, in each case, where the failure to do so, individually or in
the aggregate,

 

70

--------------------------------------------------------------------------------

could not reasonably be expected to result in a Material Adverse Effect. Each
Loan Party will maintain in effect and enforce policies and procedures designed
to ensure compliance in all material respects by such Loan Party, its Domestic
Subsidiaries and their respective directors, officers, employees and agents with
Anti-Corruption Laws and applicable Sanctions.

SECTION 5.08 Use of Proceeds.

(a) The proceeds of the Loans and the Letters of Credit will be used only for
the working capital needs and for general corporate purposes of the Borrowers
and their Domestic Subsidiaries in the ordinary course of business and to repay
certain Indebtedness on the Closing Date. No part of the proceeds of any Loan
and no Letter of Credit will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

(b) No Borrower will request any Borrowing or Letter of Credit, and no Borrower
shall use, and each Borrower shall procure that its Domestic Subsidiaries and
its and their respective directors, officers, and, to the Borrower’s knowledge,
employees and agents, shall not use, the proceeds of any Borrowing or Letter of
Credit (a) in furtherance of an offer, payment, promise to pay, or authorization
of the payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would
result in the violation of any Sanctions applicable to any party hereto.

SECTION 5.09 Accuracy of Information. The Loan Parties will ensure that any
written information, including financial statements or other documents,
furnished to the Administrative Agent or the Lenders in connection with this
Agreement or any other Loan Document or any amendment or modification hereof or
thereof or waiver hereunder or thereunder when taken as a whole after giving
effect to any supplements (and excluding any projections, budgets, and
information of a general or industry nature) contains no material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
materially misleading, and the furnishing of such information shall be deemed to
be a representation and warranty by the Borrowers on the date thereof as to the
matters specified in this Section 5.09; provided that, with respect to projected
financial information, the Loan Parties will only ensure that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time (it being understood that projections are subject to contingencies and
uncertainties and that actual results may differ and that such differences may
be material).

SECTION 5.10 Insurance. Each Loan Party will, and will cause each Domestic
Subsidiary to, maintain with financially sound and reputable carriers having a
financial strength rating of at least A- by A.M. Best Company (a) insurance in
such amounts (with no greater risk retention) and against such risks (including,
without limitation: loss or damage by fire and loss in transit; theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; business
interruption; and general liability) and such other hazards, as is customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all insurance
required pursuant to the Collateral Documents. The Borrowers will furnish to the
Lenders, upon request of the Administrative Agent, information in reasonable
detail as to the insurance so maintained.

SECTION 5.11 Appraisals. At any time that the Administrative Agent requests,
each Loan Party will provide the Administrative Agent with appraisals or updates
thereof of its Inventory, from an appraiser selected and engaged by the
Administrative Agent, and prepared on a basis reasonably satisfactory to the
Administrative Agent, such appraisals and updates to be performed during normal
business hours and to include, without limitation, information required by any
applicable Requirement of Law. Only one (1) such Inventory appraisal per
calendar year shall be at the sole expense of the

 

71

--------------------------------------------------------------------------------

Borrowers; provided that (i) two (2) such Inventory appraisals per calendar year
shall be at the sole expense of the Borrowers if the Availability is less than
the Examination Threshold Amount at the time such Inventory appraisal is
initiated, and (ii) after the occurrence and during the continuance of an Event
of Default, there shall be no limitation on the number or frequency of
appraisals that shall be at the sole expense of the Borrowers (and it is
understood and agreed that any Lender may, at its own cost and expense,
participate in any such Inventory appraisals).

SECTION 5.12 Depository Banks. Within three hundred sixty-five (365) days of the
Effective Date, each Borrower and each Domestic Subsidiary that is a Loan Party
will maintain the Administrative Agent as its principal depository bank,
including for the maintenance of operating, administrative, cash management,
collection activity and other deposit accounts for the conduct of its business.

SECTION 5.13 Field Examinations. At any time that the Administrative Agent
requests, the Loan Parties will permit, upon reasonable notice and during normal
business hours, the Administrative Agent to conduct a field examination to
ensure the adequacy of Collateral included in the Borrowing Base and related
reporting and control systems. Only one (1) such field examination per calendar
year shall be at the sole expense of the Borrowers; provided that (i) two
(2) such field examinations per calendar year shall be at the sole expense of
the Borrowers if the Availability is less than the Examination Threshold Amount
at the time such field examination is initiated, and (ii) after the occurrence
and during the continuance of an Event of Default, there shall be no limitation
on the number or frequency of field examinations that shall be at the sole
expense of the Borrowers (and it is understood and agreed that any Lender may,
at its own cost and expense, participate in any such examinations). For purposes
of this Section 5.13, it is understood and agreed that a single field
examination may be conducted at multiple relevant sites and involve one or more
relevant Loan Parties and their assets. For the avoidance of doubt, any
limitations on field examinations, including with respect to the frequency
thereof, set forth in this Section 5.13 shall not limit or otherwise modify the
Borrowers’ obligations pursuant to Section 5.06.

SECTION 5.14 Designation of Subsidiaries. Each Borrower may, at any time from
and after the Closing Date, designate any Restricted Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted
Subsidiary; provided that (i) immediately before and after such designation, no
Default or Event of Default shall have occurred and be continuing,
(ii) immediately after giving effect to such designation, such Borrower shall be
in compliance with the covenant set forth in Section 6.12 on a pro forma basis
(and as a condition precedent to the effectiveness of any such designation, the
Borrower Representative shall deliver to the Administrative Agent a certificate
setting forth in reasonable detail the calculations demonstrating such
compliance), (iii) no Restricted Subsidiary may be designated as an Unrestricted
Subsidiary if it was previously designated as an Unrestricted Subsidiary
pursuant to this Section 5.14 and (iv) if a Restricted Subsidiary is being
designated as an Unrestricted Subsidiary hereunder, such Restricted Subsidiary,
together with all other Unrestricted Subsidiaries as of such date of designation
(the “Designation Date”), must not have contributed greater than five percent
(5%) of such Borrower’s EBITDA (calculated inclusive of all Unrestricted
Subsidiaries), as of the most recently ended fiscal quarter of such Borrower,
for the period of four consecutive fiscal quarters then ended, for which
financial statements have been delivered pursuant to Section 5.01. The
designation of any Restricted Subsidiary as an Unrestricted Subsidiary after the
Closing Date shall constitute an investment by the applicable Loan Party therein
at the date of designation in an amount equal to the fair market value of the
applicable Loan Party’s investment therein. The designation of any Unrestricted
Subsidiary as a Restricted Subsidiary after the Closing Date shall constitute
(i) the incurrence at the time of designation of any investment, Indebtedness or
Liens of such Subsidiary existing at such time and (ii) a return on any
investment by the applicable Loan Party in Unrestricted Subsidiaries pursuant to
the preceding sentence in an amount equal to the fair market value at the date
of such designation of such Loan Party’s investment in such Subsidiary.
Notwithstanding the foregoing, no Borrower shall be permitted to be an
Unrestricted Subsidiary.

 

72

--------------------------------------------------------------------------------

SECTION 5.15 Additional Collateral; Further Assurances.

(a) Subject to applicable Requirement of Law, each Loan Party will cause each
Domestic Subsidiary (other than any FSHCO) formed or acquired after the date of
this Agreement to promptly become a Loan Party by executing a Joinder Agreement.
Upon execution and delivery thereof, each such Person (i) shall automatically
become a Loan Guarantor hereunder and thereupon shall have all of the rights,
benefits, duties and obligations in such capacity under the Loan Documents and
(ii) will grant Liens to the Administrative Agent, for the benefit of the
Administrative Agent and the other Secured Parties, in any property of such Loan
Party which constitutes Collateral, including any parcel of real property
located in the U.S. owned by any Loan Party (other than Excluded Assets).

(b) Each Loan Party will cause 100% of the issued and outstanding Equity
Interests of each of its Domestic Subsidiaries (other than Excluded Subsidiaries
and any FSHCO) and (ii) 65% (or such greater percentage that, due to a change in
applicable law after the date hereof, (1) could not reasonably be expected to
cause the undistributed earnings of such foreign Subsidiary as determined for
U.S. Federal income tax purposes to be treated as a deemed dividend to such
foreign Subsidiary’s U.S. parent and (2) could not reasonably be expected to
cause any adverse tax consequences in the reasonable opinion of the Borrower
Representative) of the issued and outstanding Equity Interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Equity Interests not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2) in each Foreign Subsidiary and each FSHCO
directly owned by such Borrower or any Domestic Subsidiary (excluding any FSHCO)
to be subject at all times to a first priority, perfected Lien in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the other
Secured Parties, pursuant to the terms and conditions of the Loan Documents or
other security documents as the Administrative Agent shall reasonably request.

(c) Without limiting the foregoing, each Loan Party will, and will cause each
Subsidiary (other than Excluded Subsidiaries) to, execute and deliver, or cause
to be executed and delivered, to the Administrative Agent such documents,
agreements and instruments, and will take or cause to be taken such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents and such other actions or
deliveries of the type required by Section 4.01, as applicable), which may be
required by any Requirement of Law or which the Administrative Agent may, from
time to time, reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents and to ensure perfection and priority (in
each case subject to the qualifications, if any, set forth in the Loan
Documents) of the Liens created or intended to be created by the Collateral
Documents, all in form and substance reasonably satisfactory to the
Administrative Agent and all at the expense of the Loan Parties.

(d) If any material assets constituting Collateral (including any real property
or improvements thereto or any interest therein, but excluding Excluded Assets)
are acquired by any Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien under the Security Agreement upon acquisition thereof), the Borrower
Representative will (i) notify the Administrative Agent and the Lenders thereof
and, if requested by the Administrative Agent or the Required Lenders, cause
such assets to be subjected to a Lien securing the Secured Obligations and
(ii) take, and cause each applicable Loan Party to take, such actions as shall
be necessary or reasonably requested by the Administrative Agent to grant and
perfect (in each case subject to the qualifications, if any, set forth in the
Loan Documents) such Liens, including actions described in paragraph (c) of this
Section, all at the expense of the Loan Parties.

SECTION 5.16 China Guaranty Cash Collateral. At all times during a China
Guaranty Cash Collateral Period, the Borrowers shall cash collateralize, for the
benefit of Chase and any of its Affiliates party to the SCP Loan Facility, the
Company’s obligations under the China Guaranty in an amount equal to the
Company’s total outstanding borrowings and requested borrowings under the SCP
Loan Facility. Such cash collateral shall be held in a blocked deposit account
at Chase under the Control (as defined in the Security Agreement) of Chase.

 

73

--------------------------------------------------------------------------------

SECTION 5.17 Post-Closing Obligations.

(a) Within thirty (30) days following the Effective Date (or such later date
agreed to by the Administrative Agent), the Borrowers shall deliver Collateral
Access Agreements executed by the applicable landlord or bailee with respect to
the following locations of the Borrowers: (i) 1901 N. Roselle Road, Suite 700,
Schaumburg, Illinois and (ii) 4580 S. Mendenhall Road, Memphis, Tennessee.

(b) Within thirty (30) days following the Effective Date (or such later date
agreed to by the Administrative Agent), the Borrowers shall deliver an executed
account control agreement in favor of the Administrative Agent reasonably
satisfactory to the Administrative Agent with respect to the Loan Parties
accounts maintained with UBS Financial Services Inc.

(c) Within sixty (60) days following the Effective Date (or such later date
agreed to by the Administrative Agent), the Borrowers shall deliver (Deposit
Account Control Agreements executed by the applicable financial institution to
the extent required to be provided pursuant to Section 4.14 of the Security
Agreement.

ARTICLE VI

Negative Covenants

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable under
any Loan Document shall have been paid in full (other than contingent
obligations for which no claim has been asserted) and all Letters of Credit
shall have expired or terminated (or been backstopped in a manner reasonably
satisfactory to the Administrative Agent or cash collateralized), in each case
without any pending draw, and all LC Disbursements shall have been reimbursed,
each Loan Party executing this Agreement covenants and agrees, jointly and
severally with all of the other Loan Parties, with the Lenders that:

SECTION 6.01 Indebtedness. No Loan Party will, nor will it permit any Domestic
Subsidiary to, create, incur, assume or suffer to exist any Indebtedness,
except:

(a) the Secured Obligations;

(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
extensions, renewals, refinancings and replacements of any such Indebtedness in
accordance with clause (g) hereof;

(c) Indebtedness of Holdings or any Borrower or Loan Party to any Subsidiary or
other Borrower, Holdings or Loan Party and of any Subsidiary to any Borrower,
Holdings, Loan Party or any other Subsidiary, provided that (i) Indebtedness of
any Subsidiary that is not a Loan Party to any Borrower or any other Loan Party
shall be subject to Section 6.04 and (ii) Indebtedness of any Loan Party to any
Subsidiary that is not a Loan Party shall be subordinated to the Secured
Obligations on terms reasonably satisfactory to the Administrative Agent;

(d) the China Guaranty;

(e) Guarantees by Holdings, any Borrower or other Loan Party of Indebtedness of
any Subsidiary or other Borrower, Holdings or Loan Party and by any Subsidiary
of Indebtedness of any Borrower, Holdings, Loan Party or any other Subsidiary,
provided that (i) the Indebtedness so Guaranteed

 

74

--------------------------------------------------------------------------------

is permitted by this Section 6.01, (ii) Guarantees by any Borrower or any other
Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be
subject to Section 6.04 and (iii) Guarantees permitted under this clause (e)
shall be subordinated to the Secured Obligations on the same terms as the
Indebtedness so Guaranteed is subordinated to the Secured Obligations;

(f) Indebtedness of any Borrower or any Domestic Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital assets
(whether or not constituting purchase money Indebtedness), including Capital
Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness in accordance with clause (f) below; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (f) shall not exceed
$10,000,000 at any time outstanding;

(g) Indebtedness which represents extensions, renewals, refinancing or
replacements (such Indebtedness being so extended, renewed, refinanced or
replaced being referred to herein as the “Refinance Indebtedness”) of any of the
Indebtedness described in clauses (b), (e) and (k) hereof (such Indebtedness
being referred to herein as the “Original Indebtedness”); provided that (i) such
Refinance Indebtedness does not increase the principal amount or interest rate
(other than the then-prevailing customary interest rate for Indebtedness of such
type of Refinance Indebtedness) of the Original Indebtedness, (ii) any Liens
securing such Refinance Indebtedness are not extended to any additional property
of any Loan Party or any Subsidiary, (iii) no Loan Party or any Subsidiary that
is not originally obligated with respect to repayment of such Original
Indebtedness is required to become obligated with respect to such Refinance
Indebtedness, (iv) such Refinance Indebtedness does not result in a shortening
of the average weighted maturity of such Original Indebtedness, (v) the terms of
such Refinance Indebtedness (other than fees and interests) are not materially
less favorable to the obligor thereunder than the original terms of such
Original Indebtedness taken as a whole in light of then current market
conditions and (vi) if such Original Indebtedness was subordinated in right of
payment to any of the Secured Obligations, then the terms and conditions of such
Refinance Indebtedness must include subordination terms and conditions that are
at least as favorable to the Administrative Agent and the Lenders as those that
were applicable to such Original Indebtedness;

(h) Indebtedness owed to any Person providing workers’ compensation, health,
disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business;

(i) Indebtedness of any Loan Party in respect of performance bonds, bid bonds,
appeal bonds, surety bonds and similar obligations, in each case provided in the
ordinary course of business;

(j) Subordinated Indebtedness;

(k) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that (i) such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary and (ii) the Payment Condition shall be satisfied
at the time such Person becomes a Subsidiary;

(l) other unsecured Indebtedness so long as (i) the Payment Condition shall be
satisfied at the time such Indebtedness is incurred, (ii) such Indebtedness is
not guaranteed by any Restricted Subsidiary of the Borrower other than the Loan
Guarantors (which guarantees, if such Indebtedness is subordinated, shall be
expressly subordinated to the Secured Obligations on terms not less favorable to
the Lenders than the subordination terms of such Subordinated Indebtedness) and
(iii) such Indebtedness is issued on then-market terms and restrictions
customary for Indebtedness of such type and the

 

75

--------------------------------------------------------------------------------

restrictions imposed thereby will not adversely affect in any material respect
the obligation or ability of the Borrower or any other Loan Party to make any
payments required hereunder or otherwise satisfy the Obligations, in each case
as determined in the good faith judgment of the Borrower;

(m) Indebtedness incurred in the ordinary course of business in connection with
the financings of insurance premiums;

(n) Indebtedness in respect of netting services, overdraft protection or other
cash management arrangements incurred in the ordinary course of business;

(o) Indebtedness in respect of taxes, assessments or governmental charges which
are permitted to be outstanding in accordance with Section 5.04;

(p) Indebtedness consisting of judgments not otherwise constituting an Event of
Default;

(q) Indebtedness under Swap Agreements entered into from time to time in
accordance with Section 6.07;

(r) Indebtedness consisting of deferred purchase price or notes issued to
officers, directors and employees to purchase or redeem Equity Interests of
Holdings in an amount not to exceed $1,000,000 at any time outstanding;

(s) Indebtedness constituting of (i) the obligation to make Permitted Earnouts
so long as (A) the Payment Condition shall be satisfied at the time such
Indebtedness is incurred, (B) such Indebtedness is not guaranteed by any
Restricted Subsidiary of the Borrower other than the Loan Guarantors (which
guarantees, if such Indebtedness is subordinated, shall be expressly
subordinated to the Secured Obligations on terms not less favorable to the
Lenders than the subordination terms of such Subordinated Indebtedness) and
(C) such Indebtedness is incurred on then-market terms and restrictions
customary for Indebtedness of such type and the restrictions imposed thereby
will not adversely affect in any material respect the obligation or ability of
the Borrower or any other Loan Party to make any payments required hereunder or
otherwise satisfy the Obligations, in each case as determined in the good faith
judgment of the Borrower, or (ii) other purchase price adjustments and
indemnities in connection with Permitted Acquisitions, or dispositions permitted
under Sections 6.05 or 6.06; and

(t) Indebtedness arising out of the endorsement of checks and other negotiable
instruments for deposit or collection in the ordinary course of business.

SECTION 6.02 Liens. No Loan Party will, nor will it permit any Domestic
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including Accounts) or rights in respect of any thereof, except:

(a) Liens created pursuant to any Loan Document;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of any Borrower or any Domestic Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of such Borrower or
Domestic Subsidiary or any other Borrower or Domestic Subsidiary and (ii) such
Lien shall secure only those obligations which it secures on the date hereof,
and extensions, renewals, refinancings and replacements thereof that do not
increase the outstanding principal amount thereof;

 

76

--------------------------------------------------------------------------------

(d) Liens on fixed or capital assets acquired, constructed or improved by any
Borrower or any Domestic Subsidiary; provided that (i) such Liens secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such Liens and the
Indebtedness secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such Liens shall
not apply to any other property or assets of such Borrower or Domestic
Subsidiary or any other Borrower or Domestic Subsidiary;

(e) any Lien existing on any property or asset (other than Accounts and
Inventory) prior to the acquisition thereof by any Borrower or any Domestic
Subsidiary or existing on any property or asset (other than Accounts and
Inventory) of any Person that becomes a Loan Party after the date hereof prior
to the time such Person becomes a Loan Party; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Loan Party, as the case may be, (ii) such Lien shall not apply
to any other property or assets of the Loan Party and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Loan Party, as the case may be, and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

(f) Liens of a collecting bank arising in the ordinary course of business under
Section 4-208 of the UCC in effect in the relevant jurisdiction covering only
the items being collected upon;

(g) Liens arising out of Sale and Leaseback Transactions permitted by
Section 6.06;

(h) Liens in favor of any Borrower or another Loan Party in respect of
Indebtedness permitted under Section 6.01(c);

(i) Liens on insurance premiums securing Indebtedness permitted under
Section 6.01(m);

(j) Liens securing obligations in an aggregate amount not to exceed $500,000 at
any time outstanding;

(k) Customary rights of setoff, revocation, refund or chargeback under deposit
agreements or under the UCC of banks or other financial institutions where any
Loan Party or any Subsidiary maintains deposits in the ordinary course of
business permitted by this Agreement;

(l) Non-exclusive licenses or sublicenses of intellectual property granted by
any Loan Party in the ordinary course of business;

(m) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the ordinary course of business of any Borrower and any Subsidiary;

(n) Financing statements with respect to a lessor’s rights in and to personal
property leased to such Person in the ordinary course of such Person’s business
other than a Capital Lease Obligation;

(o) Liens in the nature of the right of setoff in favor of counterparties to
contractual agreements with the Loan Parties in the ordinary course of business;
and

(p) assignments and sales permitted by Section 6.05.

 

77

--------------------------------------------------------------------------------

SECTION 6.03 Fundamental Changes.

(a) No Loan Party will, nor will it permit any Domestic Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Domestic Subsidiary of any
Borrower may merge into a Borrower in a transaction in which such Borrower is
the surviving corporation, (ii) any Loan Party (other than a Borrower) may merge
into any other Loan Party in a transaction in which the surviving entity is a
Loan Party, and (iii) any Borrower may merge into another Borrower; provided
that any such merger involving a Person that is not a wholly owned Domestic
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.

(b) No Loan Party will, nor will it permit any Domestic Subsidiary to, engage to
any material extent in any business other than businesses of the type conducted
by the Borrowers and their Domestic Subsidiaries on the date hereof and
businesses reasonably related, substantially similar or complementary thereto.

(c) No Loan Party will, nor will it permit any Domestic Subsidiary to, change
its fiscal year from the basis in effect on the Effective Date without the
consent of the Administrative Agent.

SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. No Loan
Party will, nor will it permit any Domestic Subsidiary to, form any subsidiary
after the Effective Date, or purchase, hold or acquire (including pursuant to
any merger with any Person that was not a Loan Party and a wholly owned Domestic
Subsidiary prior to such merger) any evidences of Indebtedness or Equity
Interests or other securities (including any option, warrant or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances
to, Guarantee any obligations of, or make or permit to exist any investment or
any other interest in, any other Person, or purchase or otherwise acquire (in
one transaction or a series of transactions) any assets of any other Person
constituting a business unit, division, product line (including rights in
respect of any drug or other pharmaceutical product) or line of business of such
Person (whether through purchase of assets, merger or otherwise), or acquire an
exclusive long term license of rights to a drug or other product line of any
Person, except:

(a) Permitted Investments;

(b) investments in existence on the date hereof and described in Schedule 6.04;

(c) investments by Holdings and the Borrowers and their Domestic Subsidiaries in
Equity Interests in their respective Subsidiaries, provided that (A) any such
Equity Interests held by a Loan Party shall be pledged pursuant to the Security
Agreement (subject to the limitations applicable to Equity Interests of a
Foreign Subsidiary referred to in Section 5.15), (B) the aggregate amount of
investments by Loan Parties in Equity Interests of Subsidiaries that are not
Loan Parties, other than SCP, (together with outstanding intercompany loans
permitted under clause (B) to the proviso to Section 6.04(d) and outstanding
Guarantees permitted under the proviso to Section 6.04(e)), shall not exceed
$5,000,000 at any time outstanding (in each case determined without regard to
any write-downs or write-offs) and (C) the aggregate amount of investments by
Loan Parties in the Equity Interests of SCP shall not exceed $5,000,000 at any
time outstanding (in each case determined without regard to any write-downs or
write-offs);

(d) loans or advances made by any Loan Party to any Subsidiary and made by any
Domestic Subsidiary to a Loan Party or any other Subsidiary, provided that
(A) any such loans and advances made by a Loan Party shall be evidenced by a
promissory note pledged pursuant to the Security Agreement and (B) the amount of
such loans and advances made by Loan Parties to Subsidiaries that are not Loan
Parties

 

78

--------------------------------------------------------------------------------

(together with outstanding investments permitted under clause (B) to the proviso
to Section 6.04(c) and outstanding Guarantees permitted under the proviso to
Section 6.04(e)) shall not exceed $5,000,000 at any time outstanding (in each
case determined without regard to any write-downs or write-offs);

(e) Guarantees constituting Indebtedness permitted by Section 6.01, provided
that the aggregate principal amount of Indebtedness of Subsidiaries that are not
Loan Parties that is Guaranteed by any Loan Party (together with outstanding
investments permitted under clause (B) to the proviso to Section 6.04(c) and
outstanding intercompany loans permitted under clause (B) to the proviso to
Section 6.04(d), but excluding the China Guaranty Obligations) shall not exceed
$5,000,000 at any time outstanding (in each case determined without regard to
any write-downs or write-offs);

(f) loans or advances made by a Loan Party to its employees on an arms-length
basis in the ordinary course of business consistent with past practices for
travel and entertainment expenses, relocation costs and similar purposes up to a
maximum of $250,000 to any employee and up to a maximum of $1,000,000 in the
aggregate at any one time outstanding;

(g) notes payable, or stock or other securities issued by Account Debtors to a
Loan Party pursuant to negotiated agreements with respect to settlement of such
Account Debtor’s Accounts in the ordinary course of business, consistent with
past practices;

(h) investments in the form of Swap Agreements permitted by Section 6.07;

(i) investments of any Person existing at the time such Person becomes a
Domestic Subsidiary of a Borrower or consolidates or merges with a Borrower or
any of the Domestic Subsidiaries (including in connection with a permitted
acquisition) so long as such investments were not made in contemplation of such
Person becoming a Subsidiary or of such merger;

(j) investments received in connection with the disposition of assets permitted
by Section 6.05; and

(k) investments constituting deposits described in clauses (c) and (d) of the
definition of the term “Permitted Encumbrances” or made to a landlord in the
ordinary course of business to secure or support obligations of a Loan Party
under a lease of real property;

(l) investments consisting of notes receivable of, or prepaid royalties and
other credit extensions to, customers and suppliers in the ordinary course of
business;

(m) other investments, loans and advances not to exceed $1,000,000;

(n) non-cash Investments consisting of loans to officers, directors and
employees, all of the proceeds of which are used by such Persons to purchase
simultaneously equity interests issued by Holdings, to the extent otherwise
permitted under this Agreement and not exceeding $1,000,000 in the aggregate at
any time outstanding;

(o) Investments (i) taken in connection with the settlement of accounts or the
bankruptcy or restructuring of Account Debtors of the Loan Parties or their
Domestic Subsidiaries and (ii) deposits, prepayments and other credits to
suppliers, in each case with respect to the foregoing clauses (i) and (ii) made
in the ordinary course of business and consistent with past practice;

(p) Permitted Acquisitions; and

 

79

--------------------------------------------------------------------------------

(q) other investments, loans or advances; provided that, (i) both before and
after giving pro forma effect to any such investment, loan or advance pursuant
to this clause (q), no Default or Event of Default shall have occurred and be
continuing and the Payment Condition shall be satisfied with respect to such
investment, loan or advance and (ii) any Acquisition made pursuant to this
clause (q) must constitute a Permitted Acquisition.

SECTION 6.05 Asset Sales. No Loan Party will, nor will it permit any Domestic
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will any Borrower permit any
Domestic Subsidiary to issue any additional Equity Interest in such Domestic
Subsidiary (other than to another Borrower or another Domestic Subsidiary in
compliance with Section 6.04), except:

(a) sales, transfers and dispositions of (i) Inventory in the ordinary course of
business and (ii) used, obsolete, worn out or surplus Equipment or property in
the ordinary course of business;

(b) sales, transfers and dispositions of assets to any Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;

(c) sales, transfers and dispositions of Accounts in connection with the
compromise, settlement or collection thereof;

(d) sales, transfers and dispositions of Permitted Investments and other
investments permitted by clauses (i) and (k) of Section 6.04;

(e) Sale and Leaseback Transactions permitted by Section 6.06;

(f) dispositions resulting from any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of any Borrower or any Subsidiary;

(g) granting of Liens to the extent permitted under Section 6.02;

(h) transfer, abandonment or allowance to lapse of intellectual property that is
immaterial or no longer used in or necessary for the conduct of the business;
and

(i) sales, transfers and other dispositions of assets (other than Equity
Interests in a Subsidiary unless all Equity Interests in such Subsidiary are
sold) that are not permitted by any other clause of this Section, provided that
with respect to any assets sold, transferred or otherwise disposed of in
reliance upon this paragraph (h), the Payment Condition shall be satisfied after
giving effect to any such sale, transfer or other disposition.

SECTION 6.06 Sale and Leaseback Transactions. No Loan Party will, nor will it
permit any Domestic Subsidiary to, enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred (a “Sale and Leaseback Transaction”), except for any such sale of
any fixed or capital assets by any Borrower or any Domestic Subsidiary that is
made for cash consideration in an amount not less than the fair value of such
fixed or capital asset and is consummated within 90 days after such Borrower or
such Domestic Subsidiary acquires or completes the construction of such fixed or
capital asset.

 

80

--------------------------------------------------------------------------------

SECTION 6.07 Swap Agreements. No Loan Party will, nor will it permit any
Domestic Subsidiary to, enter into any Swap Agreement, except Swap Agreements
entered into for non-speculative purposes.

SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness.

(a) No Loan Party will, nor will it permit any Domestic Subsidiary to, declare
or make, or agree to declare or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except
(i) each of the Loan Parties may declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock, and, with
respect to its preferred stock, payable solely in additional shares of such
preferred stock or in shares of its common stock, (ii) Subsidiaries may declare
and pay dividends ratably with respect to their Equity Interests, and (iii) the
Borrowers may make Restricted Payments, not exceeding $2,500,000 during any
fiscal year of Holdings, pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrowers and their
Subsidiaries, (iv) the Loan Parties may make distributions to any direct or
indirect parent entity of any consolidated, affiliated or unitary group of which
any such Loan Party is a member in an amount sufficient to pay any Taxes imposed
on such parent under applicable law to the extent attributable to the income or
operations of the Loan Parties, and (v) each Loan Party may declare or make, or
agree to pay or make, directly or indirectly, any other Restricted Payments so
long as, both before and after giving pro forma effect to such Restricted
Payment (A) no Default or Event of Default shall have occurred and be continuing
and (B) the Payment Condition shall be satisfied with respect to such Restricted
Payment.

(b) No Loan Party will, nor will it permit any Domestic Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Indebtedness, except:

(i) payment of Indebtedness created under the Loan Documents;

(ii) payment of regularly scheduled interest and principal payments as and when
due in respect of any Indebtedness permitted under Section 6.01 (other than
Subordinated Indebtedness);

(iii) payment of regularly scheduled interest and principal payments as and when
due in respect of any Subordinated Indebtedness permitted under Section 6.01 so
long as, both before and after giving pro forma effect to such payment (A) no
Default or Event of Default shall have occurred and be continuing and (B) the
Payment Condition shall be satisfied with respect to such payment;

(iv) refinancings of Indebtedness to the extent permitted by Section 6.01; and

(v) payment of secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness
to the extent such sale or transfer is permitted by the terms of Section 6.05.

SECTION 6.09 Transactions with Affiliates. No Loan Party will, nor will it
permit any Domestic Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions that (i) are in the ordinary course of
business and (ii) are at prices and

 

81

--------------------------------------------------------------------------------

on terms and conditions not less favorable to the Borrowers or such Subsidiary
than could be obtained on an arm’s-length basis from unrelated third parties,
(b) transactions between or among the Loan Parties not involving any other
Affiliate, (c) any investment permitted by Sections 6.04(c), 6.04(d), 6.04(e) or
6.04(q), (d) any Indebtedness permitted under Section 6.01(c), 6.01(d) or
6.01(e), (e) any Restricted Payment permitted by Section 6.08, (f) loans or
advances to employees permitted under Section 6.04, (g) the payment of
reasonable fees to directors of any Borrower or any other Loan Party who are not
employees of such Borrower or Loan Party, and compensation and employee benefit
arrangements paid to, and indemnities provided for the benefit of, directors,
officers or employees of the Borrowers or the other Loan Parties in the ordinary
course of business and (h) any issuances of securities or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the funding of,
employment agreements, stock options and stock ownership plans approved by a
Borrower’s board of directors.

SECTION 6.10 Restrictive Agreements. No Loan Party will, nor will it permit any
Domestic Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of such Loan Party or any Domestic Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Domestic Subsidiary to pay dividends or other
distributions with respect to any of its Equity Interests or to make or repay
loans or advances to any Borrower or any other Domestic Subsidiary or to
Guarantee Indebtedness of any Borrower or any other Domestic Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by any Requirement of Law or by any Loan Document, (ii) the foregoing
shall not apply to restrictions and conditions existing on the date hereof
identified on Schedule 6.10 (but shall apply to any extension or renewal of, or
any amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Domestic Subsidiary
pending such sale, provided such restrictions and conditions apply only to the
Domestic Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness, (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof, (vi) the foregoing shall not apply to customary restrictions
and conditions arising in connection with any sale, transfer, lease or
disposition permitted by Section 6.05, (vii) the foregoing shall not apply to
restrictions or conditions with respect to cash collateral so long as the Lien
in respect of such cash collateral is permitted under Section 6.02, (viii) the
foregoing shall not apply to restrictions or conditions contained in any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby and proceeds thereto), and
(ix) the foregoing shall not apply to customary provisions in joint venture
agreements, limited liability company operating agreements, partnership
agreements, stockholders agreements and other similar agreements.

SECTION 6.11 Amendment of Material Documents. No Loan Party will, nor will it
permit any Domestic Subsidiary to, amend, modify or waive any of its rights
under (a) any agreement relating to any Subordinated Indebtedness (except as
permitted by the applicable subordination agreements), (b) its certificate or
articles of incorporation or organization, by-laws, operating, management or
partnership agreement or other organizational documents, in each case to the
extent any such amendment, modification or waiver would be materially adverse to
the Lenders.

SECTION 6.12 Financial Covenant – Fixed Charge Coverage Ratio. During each
Covenant Testing Period the Borrowers will not permit the Fixed Charge Coverage
Ratio, determined for any period of four consecutive fiscal quarters ending on
the last day of each fiscal quarter, to be less than 1.00 to 1.0, to be measured
(a) on the initial date of such Covenant Testing Period for the most recent
fiscal quarter then ended for which financial statements have been delivered
pursuant to Section 5.01, and (b) thereafter, as of the last day of each fiscal
quarter ending during such Covenant Testing Period for which financial
statements have been delivered pursuant to Section 5.01.

 

82

--------------------------------------------------------------------------------

ARTICLE VII

Events of Default.

If any of the following events (“Events of Default”) shall occur:

(a) the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

(b) the Borrowers shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three (3) Business Days;

(c) any representation or warranty made or deemed made by or on behalf of any
Loan Party or any Subsidiary in, or in connection with, this Agreement or any
other Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any
other Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder, shall prove to have been materially incorrect when made
or deemed made;

(d) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained (i) in Section 5.02(a), 5.03 (with respect to a Loan Party’s
existence) or 5.08 or in Article VI of this Agreement or (ii) in Article IV or
Article VII of the Security Agreement;

(e) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement or any other Loan Document (other than
those which constitute a default under another Section of this Article), and
such failure shall continue unremedied for a period of (i) 5 days after the
earlier of any Loan Party’s knowledge of such breach or notice thereof from the
Administrative Agent (which notice will be given at the request of any Lender)
if such breach relates to terms or provisions of Section 5.01, 5.02 (other than
Section 5.02(a)), 5.03 through 5.07, 5.10, 5.11, 5.13 or 5.16 of this Agreement
or (ii) 30 days after the earlier of any Loan Party’s knowledge of such breach
or notice thereof from the Administrative Agent (which notice will be given at
the request of any Lender) if such breach relates to terms or provisions of any
other Section of this Agreement or other Loan Documents;

(f) any Loan Party or Domestic Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable (after
giving effect to the expiration of all grace and notice periods applicable
thereto);

(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (after
giving effect to the expiration of all grace and notice periods applicable
thereto) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness to the extent such
sale or transfer is permitted by Section 6.05;

 

83

--------------------------------------------------------------------------------

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of a Loan Party or Domestic Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Loan Party or Domestic Subsidiary or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for sixty (60) days or an order or decree approving or ordering any
of the foregoing shall be entered;

(i) any Loan Party or Domestic Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for such Loan Party or Domestic Subsidiary or for a substantial
part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;

(j) any Loan Party or Domestic Subsidiary shall become unable, admit in writing
its inability, or publicly declare its intention not to, or fail generally to
pay its debts as they become due;

(k) (i) one or more judgments for the payment of money in an aggregate amount in
excess of $10,000,000 (after giving effect to third-party insurance from a
creditworthy insurer that has not denied coverage) shall be rendered against any
Loan Party, any Domestic Subsidiary or any combination thereof and the same
shall remain undischarged for a period of forty-five (45) consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of any
Loan Party or Domestic Subsidiary to enforce any such judgment; or (ii) any Loan
Party or Domestic Subsidiary shall fail within forty-five (45) days to discharge
one or more non-monetary judgments or orders which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, which
judgments or orders, in any such case, are not stayed on appeal or otherwise
being appropriately contested in good faith by proper proceedings diligently
pursued;

(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

(m) a Change in Control shall occur;

(n) the Loan Guaranty or any Obligation Guaranty shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of the Loan Guaranty or any Obligation Guaranty,
or any Loan Guarantor shall fail to comply with any of the terms or provisions
of the Loan Guaranty or any Obligation Guaranty to which it is a party, or any
Loan Guarantor shall deny that it has any further liability under the Loan
Guaranty or any Obligation Guaranty to which it is a party, or shall give notice
to such effect, including, but not limited to notice of termination delivered
pursuant to Section 10.08 or any notice of termination delivered pursuant to the
terms of any Obligation Guaranty;

(o) except as permitted by the terms hereof or of any Collateral Document,
(i) any Collateral Document shall for any reason fail to create a valid security
interest in any Collateral purported to be

 

84

--------------------------------------------------------------------------------

covered thereby, or (ii) other than as a result of the failure of the
Administrative Agent to take any action within its control to maintain
perfection of the Liens created in favor of the Administrative Agent for the
benefit of the Secured Parties pursuant to the Loan Documents (excluding any
action based on facts or circumstances for which the Administrative Agent has
not been notified in accordance with the provisions of the Loan Documents), any
Lien securing any Secured Obligation shall cease to be a perfected, first
priority Lien;

(p) any Collateral Document shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document; or

(q) any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Loan Party
shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction that evidences its assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms);

then, and in every such event (other than an event with respect to the Borrowers
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by written notice to the Borrower
Representative, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, whereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, but ratably as among the Classes of Loans and the
Loans of each Class at the time outstanding, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, in each case without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers; and in the case of
any event with respect to the Borrowers described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, in each case without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers to the
extent not prohibited by Applicable Law. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may, and at the
request of the Required Lenders shall, increase the rate of interest applicable
to the Loans and other Obligations as set forth in this Agreement and exercise
any rights and remedies provided to the Administrative Agent under the Loan
Documents or at law or equity, including all remedies provided under the UCC.

ARTICLE VIII

The Administrative Agent.

SECTION 8.01 Appointment. Each of the Lenders, on behalf of itself and any of
its Affiliates that are Secured Parties, and the Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto. In addition, to the extent required under
the laws of any jurisdiction other than the U.S., each of the Lenders and the
Issuing Bank hereby grants to the Administrative Agent any required powers of
attorney to execute any Collateral Document governed by the laws of such
jurisdiction on such Lender’s or Issuing Bank’s behalf. The provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders
(including the Swingline Lender and the Issuing Bank), and the

 

85

--------------------------------------------------------------------------------

Loan Parties shall not have rights as a third party beneficiary of any of such
provisions. It is understood and agreed that the use of the term “agent” as used
herein or in any other Loan Documents (or any similar term) with reference to
the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.

SECTION 8.02 Rights as a Lender. The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Loan Party
or any Subsidiary or any Affiliate thereof as if it were not the Administrative
Agent hereunder.

SECTION 8.03 Duties and Obligations. The Administrative Agent shall not have any
duties or obligations except those expressly set forth in the Loan Documents.
Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Administrative Agent is required to
exercise as directed in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and, (c) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to any
Loan Party or any Subsidiary that is communicated to or obtained by the bank
serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct as determined by a final nonappealable judgment
of a court of competent jurisdiction. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower Representative or a Lender,
and the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection with any Loan
Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, (v) the creation, perfection or
priority of Liens on the Collateral or the existence of the Collateral, or
(vi) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

SECTION 8.04 Reliance. The Administrative Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

SECTION 8.05 Actions through Sub-Agents. The Administrative Agent may perform
any and all of its duties and exercise its rights and powers by or through any
one or more sub-agents

 

86

--------------------------------------------------------------------------------

appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as the Administrative
Agent.

SECTION 8.06 Resignation. Subject to the appointment and acceptance of a
successor Administrative Agent as provided in this paragraph, the Administrative
Agent may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower Representative. Upon any such resignation, the Required Lenders shall
have the right (with the consent of the Borrower Representative; provided that
such consent shall not to be unreasonably withheld or delayed and no consent of
the Borrower Representative shall be required if an Event of Default has
occurred and is continuing but in any event will not be a Disqualified
Institution) to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent gives notice of
its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by its successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
The fees payable by the Borrowers to a successor Administrative Agent shall be
the same as those payable to its predecessor, unless otherwise agreed by the
Borrowers and such successor. Notwithstanding the foregoing, in the event no
successor Administrative Agent shall have been so appointed and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its intent to resign, the retiring
Administrative Agent may give notice of the effectiveness of its resignation to
the Lenders, the Issuing Bank and the Borrowers, whereupon, on the date of
effectiveness of such resignation stated in such notice, (a) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents, provided that, solely for purposes
of maintaining any security interest granted to the Administrative Agent under
any Collateral Document for the benefit of the Secured Parties, the retiring
Administrative Agent shall continue to be vested with such security interest as
collateral agent for the benefit of the Secured Parties and, in the case of any
Collateral in the possession of the Administrative Agent, shall continue to hold
such Collateral, in each case until such time as a successor Administrative
Agent is appointed and accepts such appointment in accordance with this
paragraph (it being understood and agreed that the retiring Administrative Agent
shall have no duly or obligation to take any further action under any Collateral
Document, including any action required to maintain the perfection of any such
security interest), and (b) the Required Lenders shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, provided that (i) all payments required to be made
hereunder or under any other Loan Document to the Administrative Agent for the
account of any Person other than the Administrative Agent shall be made directly
to such Person and (ii) all notices and other communications required or
contemplated to be given or made to the Administrative Agent shall also directly
be given or made to each Lender and the Issuing Bank. Following the
effectiveness of the Administrative Agent’s resignation from its capacity as
such, the provisions of this Article, Section 2.17(d) and Section 9.03, as well
as any exculpatory, reimbursement and indemnification provisions set forth in
any other Loan Document, shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent and in respect of the matters
referred to in the proviso under clause (a) above.

 

87

--------------------------------------------------------------------------------

SECTION 8.07 Non-Reliance.

(a) Each Lender acknowledges and agrees that the extensions of credit made
hereunder are commercial loans and letters of credit and not investments in a
business enterprise or securities. Each Lender further represents that it is
engaged in making, acquiring or holding commercial loans in the ordinary course
of its business and has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement as a Lender, and to make, acquire or hold
Loans hereunder. Each Lender shall, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information (which may contain material, non-public information within the
meaning of the United States securities laws concerning the Borrowers and their
Affiliates) as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder or thereunder and in deciding whether or to the extent to which it
will continue as a Lender or assign or otherwise transfer its rights, interests
and obligations hereunder.

(b) Each Lender hereby agrees that (i) it has requested a copy of each Report
prepared by or on behalf of the Administrative Agent; (ii) the Administrative
Agent (A) makes no representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(B) shall not be liable for any information contained in any Report; (iii) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties’
books and records, as well as on representations of the Loan Parties’ personnel
and that the Administrative Agent undertakes no obligation to update, correct or
supplement the Reports; (iv) it will keep all Reports confidential and strictly
for its internal use, not share the Report with any Loan Party or any other
Person except as otherwise permitted pursuant to this Agreement; and (v) without
limiting the generality of any other indemnification provision contained in this
Agreement, (A) it will hold the Administrative Agent and any such other Person
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any extension of credit that the indemnifying Lender has made or
may make to the Borrower, or the indemnifying Lender’s participation in, or the
indemnifying Lender’s purchase of, a Loan or Loans; and (B) it will pay and
protect, and indemnify, defend, and hold the Administrative Agent and any such
other Person preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including reasonable
attorneys’ fees) incurred by the Administrative Agent or any such other Person
as the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.

SECTION 8.08 Not Partners or Co-Venturers; Administrative Agent as
Representative of the Secured Parties.

(a) The Lenders are not partners or co-venturers, and no Lender shall be liable
for the acts or omissions of, or (except as otherwise set forth herein in case
of the Administrative Agent) authorized to act for, any other Lender. The
Administrative Agent shall have the exclusive right on behalf of the Lenders to
enforce the payment of the principal of and interest on any Loan after the date
such principal or interest has become due and payable pursuant to the terms of
this Agreement.

(b) In its capacity, the Administrative Agent is a “representative” of the
Secured Parties within the meaning of the term “secured party” as defined in the
New York Uniform Commercial Code. Each Lender authorizes the Administrative
Agent to enter into each of the Collateral Documents to which it is a party and
to take all action contemplated by such documents. Each Lender agrees that no
Secured

 

88

--------------------------------------------------------------------------------

Party (other than the Administrative Agent) shall have the right individually to
seek to realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised solely by
the Administrative Agent for the benefit of the Secured Parties upon the terms
of the Collateral Documents. In the event that any Collateral is hereafter
pledged by any Person as collateral security for the Secured Obligations, the
Administrative Agent is hereby authorized, and hereby granted a power of
attorney, to execute and deliver on behalf of the Secured Parties any Loan
Documents necessary or appropriate to grant and perfect a Lien on such
Collateral in favor of the Administrative Agent on behalf of the Secured
Parties.

SECTION 8.09 Flood Laws. JPMorgan Chase Bank, N.A. has adopted internal policies
and procedures that address requirements placed on federally regulated lenders
under the National Flood Insurance Reform Act of 1994 and related legislation
(the “Flood Laws”). JPMorgan Chase Bank, N.A., as administrative agent or
collateral agent on a syndicated facility, will post on the applicable
electronic platform (or otherwise distribute to each Lender in the syndicate)
documents that it receives in connection with the Flood Laws. However, JPMorgan
Chase Bank, N.A. reminds each Lender and Participant in the facility that,
pursuant to the Flood Laws, each federally regulated Lender (whether acting as a
Lender or Participant in the facility) is responsible for assuring its own
compliance with the flood insurance requirements.

ARTICLE IX

Miscellaneous.

SECTION 9.01 Notices.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone or Electronic Systems (and subject in each case to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile or email
transmission, as follows:

(i) if to any Loan Party, to the Borrower Representative at:

Sagent Pharmaceuticals, Inc.

1901 North Roselle Road, Suite 700

Schaumburg, Illinois 60195

Attention: Jonathon Singer, EVP and CFO

Facsimile No: (847) 908-6999

Email: jsinger@Sagentpharma.com

(ii) if to the Administrative Agent, the Issuing Bank or the Swingline Lender,
to JPMorgan Chase Bank, N.A. at:

Chase Business Credit

10 South Dearborn Street, 22nd Floor

Chicago, Illinois 60603

Attention: Kelli Lattanzio, Account Executive—Sagent

Facsimile No: (312) 732-7599

Email: kelli.s.lattanzio@chase.com

(iii) if to any other Lender, to it at its address or facsimile number set forth
in its Administrative Questionnaire.

 

89

--------------------------------------------------------------------------------

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received, (ii) sent by facsimile or email transmission shall be
deemed to have been given when sent, provided that if not given during normal
business hours of the recipient, such notice or communication shall be deemed to
have been given at the opening of business on the next Business Day of the
recipient, or (iii) delivered through Electronic Systems to the extent provided
in paragraph (b) below shall be effective as provided in such paragraph.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by Electronic Systems pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II or to compliance certificates delivered pursuant to
Section 5.01(d) unless otherwise agreed by the Administrative Agent and the
applicable Lender. Each of the Administrative Agent and the Borrower
Representative (on behalf of the Loan Parties) may, in its discretion, agree to
accept notices and other communications to it hereunder by Electronic Systems
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Unless the
Administrative Agent otherwise proscribes, all such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal business
hours of the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient, and (ii) posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient, at its e-mail address as described in the foregoing
clause (i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses
(i) and (ii) above, if such notice, e-mail or other communication is not sent
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next
Business Day of the recipient.

(c) Any party hereto may change its address, facsimile number or e-mail address
for notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

(d) Electronic Systems.

(i) Each Loan Party agrees that the Administrative Agent may, but shall not be
obligated to, make Communications (as defined below) available to the Issuing
Bank and the other Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

(ii) Any Electronic System used by the Administrative Agent is provided “as is”
and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of such Electronic Systems and expressly disclaim liability for errors
or omissions in the Communications. No warranty of any kind, express, implied or
statutory, including any warranty of merchantability, fitness for a particular
purpose, non-infringement of third-party rights or freedom from viruses or other
code defects, is made by any Agent Party in connection with the Communications
or any Electronic System. In no event shall the Administrative Agent or any of
its Related Parties (collectively, the “Agent Parties”) have any liability to
the Borrowers or the other Loan Parties, any Lender, the Issuing Bank or any
other Person or entity for damages of any kind, including direct or indirect,
special, incidental or consequential damages, losses or expenses (whether in
tort, contract or otherwise) arising out of any Borrower’s, any Loan Party’s or
the Administrative Agent’s transmission of communications through an Electronic
System. “Communications”

 

90

--------------------------------------------------------------------------------

means, collectively, any notice, demand, communication, information, document or
other material provided by or on behalf of any Loan Party pursuant to any Loan
Document or the transactions contemplated therein which is distributed by the
Administrative Agent, any Lender or the Issuing Bank by means of electronic
communications pursuant to this Section, including through an Electronic System.

SECTION 9.02 Waivers; Amendments.

(a) No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Issuing Bank and the Lenders hereunder and under
any other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

(b) Except as provided in the first sentence of Section 2.09(f) (with respect to
any commitment increase), neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except (x) in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower Representative and the Required Lenders or (y) in
the case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Administrative Agent and the Loan Party or Loan
Parties that are parties thereto, with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender (including any such Lender that is a
Defaulting Lender), (ii) reduce or forgive the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce or forgive any
interest or fees payable hereunder, without the written consent of each Lender
(including any such Lender that is a Defaulting Lender) directly affected
thereby (provided that waiver of any default interest or waiver of any Default
or Event of Default shall not be limited hereby), (iii) postpone any scheduled
date of payment of the principal amount of any Loan or LC Disbursement, or any
date for the payment of any interest, fees or other Obligations payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender (including any such Lender that is a Defaulting Lender)
directly affected thereby, (iv) change Section 2.18(b) or (d) in a manner that
would alter the manner in which payments are shared, without the written consent
of each Lender (other than any Defaulting Lender), (v) increase the advance
rates set forth in the definition of Borrowing Base or add new categories of
eligible assets, without the written consent of the Supermajority Revolving
Lenders, (vi) change any of the provisions of this Section or the definition of
“Required Lenders” or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (other than any
Defaulting Lender) directly affected thereby, (vii) change Section 2.20, without
the consent of each Lender (other than any Defaulting Lender), (viii) release
any Guarantor from its obligation under its Loan Guaranty (except as otherwise
permitted herein or in the other Loan Documents), without the written consent of
each Lender (other than any Defaulting Lender), or (ix) except as provided in
clause (c) of this Section or in any Collateral Document, release all or
substantially all of the Collateral, without the written consent of each Lender
(other than any Defaulting Lender); provided further that no such agreement
shall amend, modify

 

91

--------------------------------------------------------------------------------

or otherwise affect the rights or duties of the Administrative Agent, the
Issuing Bank or the Swingline Lender hereunder without the prior written consent
of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the
case may be (it being understood that any amendment to Section 2.20 shall
require the consent of the Administrative Agent, the Issuing Bank and the
Swingline Lender). The Administrative Agent may also amend the Commitment
Schedule to reflect assignments entered into pursuant to Section 9.04. Any
amendment, waiver or other modification of this Agreement or any other Loan
Document that by its terms affects the rights or duties under this Agreement of
the Lenders of one or more Classes (but not the Lenders of any other Class), may
be effected by an agreement or agreements in writing entered into by the
Borrowers and the requisite number or percentage in interest of each affected
Class of Lenders that would be required to consent thereto under this Section if
such Class of Lenders were the only Class of Lenders hereunder at the time.

(c) The Lenders and the Issuing Bank hereby irrevocably authorize the
Administrative Agent, at its option and in its sole discretion, to release any
Liens granted to the Administrative Agent by the Loan Parties on any Collateral
(i) upon the termination of all the Commitments, payment and satisfaction in
full in cash of all Secured Obligations (other than Unliquidated Obligations),
and the cash collateralization of all Unliquidated Obligations in a manner
satisfactory to each affected Lender, (ii) constituting property being sold or
disposed of if the Loan Party disposing of such property certifies to the
Administrative Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Administrative Agent may rely conclusively on
any such certificate, without further inquiry), and to the extent that the
property being sold or disposed of constitutes 100% of the Equity Interests of a
Loan Party, the Administrative Agent is authorized to release any Loan Guaranty
or Obligation Guaranty provided by such Loan Party, (iii) constituting property
leased to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement, or (iv) as required to effect any
sale or other disposition of such Collateral in connection with any exercise of
remedies of the Administrative Agent and the Lenders pursuant to Article VII.
Except as provided in the preceding sentence, the Administrative Agent will not
release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the Administrative Agent may in its discretion,
release its Liens on Collateral valued in the aggregate not in excess of
$4,000,000 during any calendar year without the prior written authorization of
the Required Lenders (it being agreed that the Administrative Agent may rely
conclusively on one or more certificates of the Borrowers as to the value of any
Collateral to be so released, without further inquiry). The Administrative Agent
and the Lenders agree that the Administrative Agent shall execute and deliver
all documents reasonably requested by any Loan Party to effect or otherwise
evidence such release permitted hereunder. Any such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of the Loan Parties in
respect of) all interests retained by the Loan Parties, including the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
Any execution and delivery by the Administrative Agent of documents in
connection with any such release shall be without recourse to or warranty by the
Administrative Agent.

(d) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender affected thereby,” the consent of
the Required Lenders is obtained, but the consent of other necessary Lenders is
not obtained (any such Lender whose consent is necessary but has not been
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrowers may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Borrowers, the
Administrative Agent and the Issuing Bank shall agree, as of such date, to
purchase for cash the Loans and other Obligations due to the Non-Consenting
Lender pursuant to an Assignment and Assumption and to become a Lender for all
purposes under this Agreement and to assume all obligations of the
Non-Consenting Lender to be terminated as of such date and to comply with the
requirements of clause (b) of Section 9.04, and (ii) the Borrowers shall pay to
such Non-Consenting Lender in same day funds on the day of such replacement
(1) all interest, fees and other amounts then accrued but unpaid to

 

92

--------------------------------------------------------------------------------

such Non-Consenting Lender by the Borrowers hereunder to and including the date
of termination, including without limitation payments due to such Non-Consenting
Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender.

(e) Notwithstanding anything to the contrary herein the Administrative Agent
may, with the consent of the Borrower Representative only, amend, modify or
supplement this Agreement or any of the other Loan Documents to cure any
ambiguity, omission, mistake, defect or inconsistency.

SECTION 9.03 Expenses; Indemnity; Damage Waiver.

(a) The Loan Parties shall, jointly and severally, pay promptly following
written demand (including documentation supporting such request), (i) all
reasonable and documented out of pocket expenses incurred by the Administrative
Agent and its Affiliates (including J.P. Morgan Securities LLC, as Arranger),
including the reasonable and documented fees, charges and disbursements of one
outside general counsel (plus, if necessary, one local counsel in any relevant
jurisdiction and one counsel with respect any specialized matters) for the
Administrative Agent and J.P. Morgan Securities LLC, as Arranger, in connection
with the syndication and distribution (including, without limitation, via the
internet or through an Electronic System of the credit facilities provided for
herein, the preparation and administration of the Loan Documents and any
amendments, modifications or waivers of the provisions of the Loan Documents
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable and documented out-of-pocket expenses incurred
by the Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder and
(iii) all reasonable and documented out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of a single counsel for the Administrative Agent, the
Issuing Bank or any Lender taken as a whole, plus one additional local counsel
and one additional specialist counsel in each other jurisdiction and with
respect to each specialty (and, in light of actual or perceived conflicts of
interest or the availability of different claims or defenses, one additional
counsel for each similarly affected group of Lenders (taken as a whole) and, if
necessary, one additional local counsel and one additional specialist counsel in
each relevant jurisdiction and with respect to each specialty for such affected
group of Lenders), in connection with the enforcement, collection or protection
of its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit. Expenses being reimbursed by the Loan Parties under this Section
include, without limiting the generality of the foregoing, fees, costs and
expenses incurred in connection with:

(i) appraisals (subject to limitation set forth in Section 5.11) and insurance
reviews;

(ii) subject to the limitation set forth in Section 5.13, field examinations and
the preparation of Reports based on the fees charged by a third party retained
by the Administrative Agent or the internally allocated fees for each Person
employed by the Administrative Agent (currently $125 per hour per examiner
employed by the Administrative Agent, plus out of pocket expenses) with respect
to each field examination;

(iii) background checks regarding senior management and/or key investors, as
deemed necessary or appropriate in the sole discretion of the Administrative
Agent;

 

93

--------------------------------------------------------------------------------

(iv) Taxes, fees and other charges for (A) lien and title searches and title
insurance and (B) recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Administrative Agent’s Liens;

(v) sums paid or incurred to take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; and

(vi) forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the accounts and lock boxes, and costs and expenses
of preserving and protecting the Collateral.

All of the foregoing fees, costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, all as described in
Section 2.18(c).

(b) The Loan Parties shall, jointly and severally, indemnify the Administrative
Agent, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
penalties, incremental taxes, liabilities and related expenses, including the
reasonable fees, charges and disbursements of one outside general counsel (plus,
if necessary, one local counsel in any relevant jurisdiction and one counsel
with respect any specialized matters) for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated thereby, the performance by the parties hereto of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by a Loan Party or
a Domestic Subsidiary, or any Environmental Liability related in any way to a
Loan Party or a Domestic Subsidiary, (iv) the failure of a Loan Party to deliver
to the Administrative Agent the required receipts or other required documentary
evidence with respect to a payment made by a Loan Party for Taxes pursuant to
Section 2.17, or (v) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, penalties, liabilities or related
expenses (1) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from (A) the gross negligence, bad faith
or willful misconduct of such Indemnitee, or (B) a claim made by the Borrowers
alleging that such losses, claim, damages, penalties, liabilities or expenses
arose from material breach of the Loan Documents by such Indemnitee or (2) arise
from any disputes solely among Indemnitees (other than any claims against an
Indemnitee in its capacity or in fulfilling its role as the Administrative
Agent, Arranger or similar role under the Loan Documents). This Section 9.03(b)
shall not apply with respect to Taxes other than any Taxes that represent losses
or damages arising from any non-Tax claim.

(c) To the extent that any Loan Party fails to pay any amount required to be
paid by it to the Administrative Agent (or any sub-agent thereof), the Swingline
Lender or the Issuing Bank (or any Related Party of any of the foregoing) under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Swingline Lender or the Issuing Bank (or any Related
Party of any of the foregoing), as the case may be, such Lender’s Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount (it being understood that
the Loan Parties’ failure to pay any such amount shall not relieve any Loan
Party of any default in the payment thereof); provided that the unreimbursed
expense or indemnified loss, claim, damage, penalty, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Swingline Lender or the Issuing Bank in its capacity
as such.

 

94

--------------------------------------------------------------------------------

(d) To the extent permitted by applicable law, no Loan Party shall assert, and
each Loan Party hereby waives, any claim against any Indemnitee (i) for any
damages arising from the use by others of information or other materials
obtained through telecommunications, electronic or other information
transmission systems (including the Internet) or (ii) on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof; provided that, nothing in this paragraph
(d) shall relieve any Loan Party of any obligation it may have to indemnify an
Indemnitee against special, indirect, consequential or punitive damages asserted
against such Indemnitee by a third party.

(e) All amounts due under this Section shall be payable promptly after written
demand therefor.

SECTION 9.04 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) no Borrower may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by any Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Persons (other than an Ineligible Institution)
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld,
conditioned or delayed) of:

(A) the Borrower Representative, provided that the Borrower Representative shall
be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within ten (10) Business
Days after having received notice thereof, and provided further that no consent
of the Borrower Representative shall be required for an assignment to a Lender,
an Affiliate of a Lender, an Approved Fund or, if an Event of Default has
occurred and is continuing, any other assignee;

(B) the Administrative Agent

(C) the Issuing Bank

(D) the Swingline Lender.

 

95

--------------------------------------------------------------------------------

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower Representative and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower
Representative shall be required if an Event of Default has occurred and is
continuing;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about Holdings, the other
Loan Parties and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.

For the purposes of this Section 9.04(b), the terms “Approved Fund” and
“Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means a (a) natural person, (b) a Defaulting Lender,
(c) Disqualified Institution, or (d) holding company, investment vehicle or
trust for, or owned and operated for the primary benefit of, a natural person or
relative(s) thereof; provided that, such holding company, investment vehicle or
trust shall not constitute an Ineligible Institution if it (x) has not been
established for the primary purpose of acquiring any Loans or Commitments,
(y) is managed by a professional advisor, who is not such natural person or a
relative thereof, having significant experience in the business of making or
purchasing commercial loans, and (z) has assets greater than $25,000,000 and a
significant part of its activities consist of making or purchasing commercial
loans and similar extensions of credit in the ordinary course of its business or
(d) a Loan Party or a Subsidiary or other Affiliate of a Loan Party.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption, the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of

 

96

--------------------------------------------------------------------------------

a Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 9.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

(iv) the Administrative Agent, acting for this purpose as a non-fiduciary agent
of the Borrowers, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive (absent manifest error), and the Borrowers, the Administrative Agent,
the Issuing Bank and the Lenders shall treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrowers, the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. It is the intention of the parties to this Agreement that the credit
obligations of the Loan Parties hereunder at all times be maintained in
“registered form” within the meaning of Treasury Regulation Section 5f.103-1(c),
and the provisions regarding the assignment or participation of interests
hereunder shall be interpreted in a manner consistent with such intent.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.05, 2.06(d) or (e),
2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no obligation
to accept such Assignment and Assumption and record the information therein in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

(c) Any Lender may, without the consent of the Borrowers, the Administrative
Agent, the Issuing Bank or the Swingline Lender, sell participations to one or
more banks or other entities (a “Participant”) other than an Ineligible
Institution in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged; (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations; and (C) the Borrowers,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any

 

97

--------------------------------------------------------------------------------

amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
The Borrowers agree that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations
therein, including the requirements under Section 2.17(f) and (g) (it being
understood that the documentation required under Section 2.17(f) shall be
delivered to the participating Lender and the information and documentation
required under Section 2.17(g) will be delivered to the Borrowers and the
Administrative Agent)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this
Section; and (B) shall not be entitled to receive any greater payment under
Section 2.15 or 2.17, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation (to the
extent such participation is made with Borrowers’ prior written consent).

Each Lender that sells a participation agrees, at the Borrowers’ request and
expense, to use reasonable efforts to cooperate with the Borrowers to effectuate
the provisions of Section 2.19(b) with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of the
Borrowers, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under this Agreement or
any other Loan Document (the “Participant Register”); provided that no Lender
shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating
to a Participant’s interest in any Commitments, Loans, Letters of Credit or its
other obligations under this Agreement) to any Person except to the extent that
such disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

SECTION 9.05 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long

 

98

--------------------------------------------------------------------------------

as the Commitments have not expired or terminated. The provisions of Sections
2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any other
Loan Document or any provision hereof or thereof.

SECTION 9.06 Counterparts; Integration; Effectiveness; Electronic Execution.

(a) This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

(b) Delivery of an executed counterpart of a signature page of this Agreement by
telecopy, emailed pdf. or any other electronic means that reproduces an image of
the actual executed signature page shall be effective as delivery of a manually
executed counterpart of this Agreement. The words “execution,” “signed,”
“signature,” “delivery,” and words of like import in or relating to any document
to be signed in connection with this Agreement and the transactions contemplated
hereby or thereby shall be deemed to include Electronic Signatures, deliveries
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature,
physical delivery thereof or the use of a paper-based recordkeeping system, as
the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar
state laws based on the Uniform Electronic Transactions Act.

SECTION 9.07 Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final), other than Excluded Accounts, at any time held and other obligations
at any time owing by such Lender or Affiliate to or for the credit or the
account of any Loan Party against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be unmatured.
The applicable Lender shall notify the Borrower Representative and the
Administrative Agent of such set-off or application, provided that any failure
to give or any delay in giving such notice shall not affect the validity of any
such set-off or application under this Section. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.

 

99

--------------------------------------------------------------------------------

SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.

(a) The Loan Documents (other than those containing a contrary express choice of
law provision) shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of Illinois
(including, without limitation, 735 ILCS Section 105/5-1 et seq), but giving
effect to federal laws applicable to national banks.

(b) Each Loan Party hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of any U.S. Federal or Illinois
State court sitting in Chicago, Illinois in any action or proceeding arising out
of or relating to any Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such Illinois State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto 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.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against any Loan Party or its properties in the courts of any
jurisdiction.

(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, OTHER AGENT (INCLUDING ANY
ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12 Confidentiality. Each of the Administrative Agent, the Issuing Bank
and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to

 

100

--------------------------------------------------------------------------------

keep such Information confidential), (b) to the extent requested by any
regulatory authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent required by
any Requirement of Law or by any subpoena or similar legal process, provided,
that the Administrative Agent shall, to the extent reasonably practicable and
not otherwise prohibited thereby, (x) give the Borrowers written notice prior to
disclosing the information to the extent permitted by such requirement and
(y) reasonably cooperate, at the cost of the Borrowers, to obtain a protective
order or similar confidential treatment, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies under this
Agreement or any other Loan Document or any suit, action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Loan Parties and their obligations, (g) with the consent of the Borrower
Representative or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis from a source other than the Borrowers. For the purposes
of this Section, “Information” means all information received from the Borrowers
relating to the Borrowers or their business, other than any such information
that is available to the Administrative Agent, the Issuing Bank or any Lender on
a non-confidential basis prior to disclosure by the Borrowers; provided that, in
the case of information received from the Borrowers after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED
TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION
CONCERNING THE COMPANY, AND ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE LOAN PARTIES AND
THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER
REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED
IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS
COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES
LAWS.

SECTION 9.13 Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Each Lender
hereby represents that it is not relying on or looking to any margin stock (as
defined in Regulation U of the Board) for the repayment of the Borrowings
provided for herein. Anything contained in this Agreement to the contrary
notwithstanding, neither the Issuing Bank nor any Lender shall be obligated to
extend credit to the Borrowers in violation of any Requirement of Law.

 

101

--------------------------------------------------------------------------------

SECTION 9.14 USA PATRIOT Act. Each Lender that is subject to the requirements of
the USA PATRIOT Act hereby notifies each Loan Party that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record
information that identifies such Loan Party, which information includes the name
and address of such Loan Party and other information that will allow such Lender
to identify such Loan Party in accordance with the USA PATRIOT Act.

SECTION 9.15 Disclosure. Each Loan Party, each Lender and the Issuing Bank
hereby acknowledges and agrees that the Administrative Agent and/or its
Affiliates from time to time may hold investments in, make other loans to or
have other relationships with any of the Loan Parties and their respective
Affiliates. In addition, each Loan Party and each Lender hereby acknowledges
that an Affiliate of Chase has also made a loan to one or more Subsidiaries of
the Borrowers.

SECTION 9.16 Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the
Administrative Agent and the other Secured Parties, in assets which, in
accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession or control. Should any Lender (other than the
Administrative Agent) obtain possession or control of any such Collateral, such
Lender shall notify the Administrative Agent thereof, and, promptly upon the
Administrative Agent’s request therefor shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with
the Administrative Agent’s instructions.

SECTION 9.17 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.18 No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), each Borrower acknowledges and agrees that: (i) (A) the arranging and
other services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between such Borrower and its Affiliates, on the one
hand, and the Lenders and their Affiliates, on the other hand, (B) such Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) such Borrower is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; (ii) (A) each
of the Lenders and their Affiliates is and has been acting solely as a principal
and, except as expressly agreed in writing by the relevant parties, has not
been, is not, and will not be acting as an advisor, agent or fiduciary for such
Borrower or any of its Affiliates, or any other Person and (B) no Lender or any
of its Affiliates has any obligation to such Borrower or any of its Affiliates
with respect to the transactions contemplated hereby except, in the case of a
Lender, those obligations expressly set forth herein and in the other Loan
Documents; and (iii) each of the Lenders and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ

 

102

--------------------------------------------------------------------------------

from those of such Borrower and its Affiliates, and no Lender or any of its
Affiliates has any obligation to disclose any of such interests to such Borrower
or its Affiliates. To the fullest extent permitted by law, each Borrower hereby
waives and releases any claims that it may have against each of the Lenders and
their Affiliates with respect to any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

ARTICLE X

Loan Guaranty

SECTION 10.01 Guaranty. Each Loan Guarantor (other than those that have
delivered a separate Guaranty) hereby agrees that it is jointly and severally
liable for, and, as a primary obligor and not merely as surety, absolutely and
unconditionally guarantees to the Secured Parties, the prompt payment when due,
whether at stated maturity, upon acceleration or otherwise, and at all times
thereafter, of the Secured Obligations and all costs and expenses, including,
without limitation, all court costs and reasonable attorneys’ and paralegals’
fees (including allocated costs of in-house counsel and paralegals) and expenses
paid or incurred by the Administrative Agent, the Issuing Bank and the Lenders
in endeavoring to collect all or any part of the Secured Obligations from, or in
prosecuting any action against, any Borrower, any Loan Guarantor or any other
guarantor of all or any part of the Secured Obligations (such costs and
expenses, together with the Secured Obligations, collectively the “Guaranteed
Obligations”; provided, however, that the definition of “Guaranteed Obligations”
shall not create any guarantee by any Loan Guarantor of (or grant of security
interest by any Loan Guarantor to support, as applicable) any Excluded Swap
Obligations of such Loan Guarantor for purposes of determining any obligations
of any Loan Guarantor). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Loan Guaranty
apply to and may be enforced by or on behalf of any domestic or foreign branch
or Affiliate of any Lender that extended any portion of the Guaranteed
Obligations.

SECTION 10.02 Guaranty of Payment. This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the
Administrative Agent, the Issuing Bank or any Lender to sue any Borrower, any
Loan Guarantor, any other guarantor of, or any other Person obligated for, all
or any part of the Guaranteed Obligations (each, an “Obligated Party”), or
otherwise to enforce its payment against any collateral securing all or any part
of the Guaranteed Obligations.

SECTION 10.03 No Discharge or Diminishment of Loan Guaranty.

(a) Except as otherwise provided for herein, the obligations of each Loan
Guarantor hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations (other than
contingent obligations for which no claim has been asserted)), including:
(i) any claim of waiver, release, extension, renewal, settlement, surrender,
alteration or compromise of any of the Guaranteed Obligations, by operation of
law or otherwise; (ii) any change in the corporate existence, structure or
ownership of any Borrower or any other Obligated Party liable for any of the
Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any Obligated Party or their assets or any
resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Loan Guarantor
may have at any time against any Obligated Party, the Administrative Agent, the
Issuing Bank, any Lender or any other Person, whether in connection herewith or
in any unrelated transactions.

(b) The obligations of each Loan Guarantor hereunder are not subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or

 

103

--------------------------------------------------------------------------------

unenforceability of any of the Guaranteed Obligations or otherwise, or any
provision of applicable law or regulation purporting to prohibit payment by any
Obligated Party, of the Guaranteed Obligations or any part thereof.

(c) Further, the obligations of any Loan Guarantor hereunder are not discharged
or impaired or otherwise affected by: (i) the failure of the Administrative
Agent, the Issuing Bank or any Lender to assert any claim or demand or to
enforce any remedy with respect to all or any part of the Guaranteed
Obligations; (ii) any waiver or modification of or supplement to any provision
of any agreement relating to the Guaranteed Obligations; (iii) any release,
non-perfection or invalidity of any indirect or direct security for the
obligations of any Borrower for all or any part of the Guaranteed Obligations or
any obligations of any other Obligated Party liable for any of the Guaranteed
Obligations; (iv) any action or failure to act by the Administrative Agent, the
Issuing Bank or any Lender with respect to any collateral securing any part of
the Guaranteed Obligations; or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations,
or any other circumstance, act, omission or delay that might in any manner or to
any extent vary the risk of such Loan Guarantor or that would otherwise operate
as a discharge of any Loan Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of the Guaranteed Obligations (other
than contingent obligations for which no claim has been asserted)).

SECTION 10.04 Defenses Waived. To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of any Borrower or any Loan Guarantor or the unenforceability of all
or any part of the Guaranteed Obligations from any cause, or the cessation from
any cause of the liability of any Borrower, any Loan Guarantor or any other
Obligated Party, other than the indefeasible payment in full in cash of the
Guaranteed Obligations (other than contingent obligations for which no claim has
been asserted). Without limiting the generality of the foregoing, each Loan
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein,
as well as any requirement that at any time any action be taken by any Person
against any Obligated Party or any other Person. Each Loan Guarantor confirms
that it is not a surety under any state law and shall not raise any such law as
a defense to its obligations hereunder. The Administrative Agent may, at its
election, foreclose on any Collateral held by it by one or more judicial or
nonjudicial sales, accept an assignment of any such Collateral in lieu of
foreclosure or otherwise act or fail to act with respect to any collateral
securing all or a part of the Guaranteed Obligations, compromise or adjust any
part of the Guaranteed Obligations, make any other accommodation with any
Obligated Party or exercise any other right or remedy available to it against
any Obligated Party, without affecting or impairing in any way the liability of
such Loan Guarantor under this Loan Guaranty except to the extent the Guaranteed
Obligations (other than contingent obligations for which no claim has been
asserted) have been fully and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, each Loan Guarantor waives any defense arising out
of any such election even though that election may operate, pursuant to
applicable law, to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Loan Guarantor against any Obligated
Party or any security.

SECTION 10.05 Rights of Subrogation. No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification, that it has against any Obligated Party or any
collateral, until the Loan Parties and the Loan Guarantors have fully performed
all their obligations to the Administrative Agent, the Issuing Bank and the
Lenders.

SECTION 10.06 Reinstatement; Stay of Acceleration. If at any time any payment of
any portion of the Guaranteed Obligations (including a payment effected through
exercise of a right of setoff) is rescinded, or must otherwise be restored or
returned upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise (including pursuant to any settlement entered into by a Secured Party
in its discretion), each Loan Guarantor’s obligations under this Loan Guaranty
with respect to that payment shall

 

104

--------------------------------------------------------------------------------

be reinstated at such time as though the payment had not been made and whether
or not the Administrative Agent, the Issuing Bank and the Lenders are in
possession of this Loan Guaranty. If acceleration of the time for payment of any
of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Administrative Agent.

SECTION 10.07 Information. Each Loan Guarantor assumes all responsibility for
being and keeping itself informed of the Borrowers’ financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
none of the Administrative Agent, the Issuing Bank or any Lender shall have any
duty to advise any Loan Guarantor of information known to it regarding those
circumstances or risks.

SECTION 10.08 Termination. Each of the Lenders and the Issuing Bank may continue
to make loans or extend credit to the Borrowers based on this Loan Guaranty
until five (5) days after it receives written notice of termination from any
Loan Guarantor. Notwithstanding receipt of any such notice, each Loan Guarantor
will continue to be liable to the Lenders for any Guaranteed Obligations
created, assumed or committed to prior to the fifth day after receipt of the
notice, and all subsequent renewals, extensions, modifications and amendments
with respect to, or substitutions for, all or any part of such Guaranteed
Obligations. Nothing in this Section 10.08 shall be deemed to constitute a
waiver of, or eliminate, limit, reduce or otherwise impair any rights or
remedies the Administrative Agent or any Lender may have in respect of, any
Default or Event of Default that shall exist under clause (r) of Article VII
hereof as a result of any such notice of termination.

SECTION 10.09 Taxes. Each payment of the Guaranteed Obligations will be made by
each Loan Guarantor without withholding for any Taxes, unless such withholding
is required by law. If any Loan Guarantor determines, in its sole discretion
exercised in good faith, that it is so required to withhold Taxes, then such
Loan Guarantor may so withhold and shall timely pay the full amount of withheld
Taxes to the relevant Governmental Authority in accordance with applicable law.
If such Taxes are Indemnified Taxes, then the amount payable by such Loan
Guarantor shall be increased as necessary so that, net of such withholding
(including such withholding applicable to additional amounts payable under this
Section), the Administrative Agent, Lender or Issuing Bank (as the case may be)
receives the amount it would have received had no such withholding been made.

SECTION 10.10 Maximum Liability. Notwithstanding any other provision of this
Loan Guaranty, the amount guaranteed by each Loan Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations hereunder shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law. In determining the limitations,
if any, on the amount of any Loan Guarantor’s obligations hereunder pursuant to
the preceding sentence, it is the intention of the parties hereto that any
rights of subrogation, indemnification or contribution which such Loan Guarantor
may have under this Loan Guaranty, any other agreement or applicable law shall
be taken into account.

SECTION 10.11 Contribution.

(a) To the extent that any Loan Guarantor shall make a payment under this Loan
Guaranty (a “Guarantor Payment”) which, taking into account all other Guarantor
Payments then previously or concurrently made by any other Loan Guarantor,
exceeds the amount which otherwise would have been paid by or attributable to
such Loan Guarantor if each Loan Guarantor had paid the aggregate Guaranteed
Obligations satisfied by such Guarantor Payment in the same proportion as such
Loan Guarantor’s “Allocable Amount” (as defined below) (as determined
immediately prior to such Guarantor Payment) bore

 

105

--------------------------------------------------------------------------------

to the aggregate Allocable Amounts of each of the Loan Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Guarantor Payment and the Guaranteed
Obligations (other than Unliquidated Obligations that have not yet arisen), and
all Commitments and Letters of Credit have terminated or expired or, in the case
of all Letters of Credit, are fully collateralized on terms reasonably
acceptable to the Administrative Agent and the Issuing Bank, and this Agreement,
the Swap Agreement Obligations and the Banking Services Obligations have
terminated, such Loan Guarantor shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Loan Guarantor
for the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.

(b) As of any date of determination, the “Allocable Amount” of any Loan
Guarantor shall be equal to the excess of the fair saleable value of the
property of such Loan Guarantor over the total liabilities of such Loan
Guarantor (including the maximum amount reasonably expected to become due in
respect of contingent liabilities, calculated, without duplication, assuming
each other Loan Guarantor that is also liable for such contingent liability pays
its ratable share thereof), giving effect to all payments made by other Loan
Guarantors as of such date in a manner to maximize the amount of such
contributions.

(c) This Section 10.11 is intended only to define the relative rights of the
Loan Guarantors, and nothing set forth in this Section 10.11 is intended to or
shall impair the obligations of the Loan Guarantors, jointly and severally, to
pay any amounts as and when the same shall become due and payable in accordance
with the terms of this Loan Guaranty.

(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Loan Guarantor or Loan
Guarantors to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Loan Guarantors against other Loan Guarantors
under this Section 10.11 shall be exercisable upon the full and indefeasible
payment of the Guaranteed Obligations in cash (other than Unliquidated
Obligations that have not yet arisen) and the termination or expiry (or, in the
case of all Letters of Credit, full cash collateralization), on terms reasonably
acceptable to the Administrative Agent and the Issuing Bank, of the Commitments
and all Letters of Credit issued hereunder and the termination of this
Agreement, the Swap Agreement Obligations and the Banking Services Obligations.

SECTION 10.12 Liability Cumulative. The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all liabilities of each Loan Party to the Administrative Agent, the Issuing Bank
and the Lenders under this Agreement and the other Loan Documents to which such
Loan Party is a party or in respect of any obligations or liabilities of the
other Loan Parties, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.

SECTION 10.13 Keepwell. Each Qualified ECP Guarantor hereby jointly and
severally absolutely, unconditionally and irrevocably undertakes to provide such
funds or other support as may be needed from time to time by each other Loan
Party to honor all of its obligations under this Guarantee in respect of a Swap
Obligation (provided, however, that each Qualified ECP Guarantor shall only be
liable under this Section 10.13 for the maximum amount of such liability that
can be hereby incurred without rendering its obligations under this
Section 10.13 or otherwise under this Loan Guaranty voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount). Except as otherwise provided herein, the obligations of each
Qualified ECP Guarantor under this Section 10.13 shall remain in full force and
effect until the termination of all Swap Obligations. Each Qualified ECP
Guarantor intends that this Section 10.13 constitute, and this Section 10.13
shall be deemed to constitute, a “keepwell, support, or other agreement” for the
benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of
the Commodity Exchange Act.

 

106

--------------------------------------------------------------------------------

ARTICLE XI

The Borrower Representative

SECTION 11.01 Appointment; Nature of Relationship.

The Company is hereby appointed by each of the Borrowers as its contractual
representative (herein referred to as the “Borrower Representative” hereunder
and under each other Loan Document, and each of the Borrowers irrevocably
authorizes the Borrower Representative to act as the contractual representative
of such Borrower with the rights and duties expressly set forth herein and in
the other Loan Documents. The Borrower Representative agrees to act as such
contractual representative upon the express conditions contained in this Article
XI. Additionally, the Borrowers hereby appoint the Borrower Representative as
their agent to receive all of the proceeds of the Loans in the Funding
Account(s), at which time the Borrower Representative shall promptly disburse
such Loans to the appropriate Borrower(s), provided that, in the case of a
Revolving Loan, such amount shall not exceed Availability. The Administrative
Agent and the Lenders, and their respective officers, directors, agents or
employees, shall not be liable to the Borrower Representative or any Borrower
for any action taken or omitted to be taken by the Borrower Representative or
the Borrowers pursuant to this Section 11.01.

SECTION 11.02 Powers. The Borrower Representative shall have and may exercise
such powers under the Loan Documents as are specifically delegated to the
Borrower Representative by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Borrower Representative shall have no
implied duties to the Borrowers, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Borrower Representative.

SECTION 11.03 Employment of Agents. The Borrower Representative may execute any
of its duties as the Borrower Representative hereunder and under any other Loan
Document by or through authorized officers.

SECTION 11.04 Notices. Each Borrower shall immediately notify the Borrower
Representative of the occurrence of any Default or Unmatured Default hereunder
referring to this Agreement describing such Default or Unmatured Default and
stating that such notice is a “notice of default”. In the event that the
Borrower Representative receives such a notice, the Borrower Representative
shall give prompt notice thereof to the Administrative Agent and the Lenders.
Any notice provided to the Borrower Representative hereunder shall constitute
notice to each Borrower on the date received by the Borrower Representative.

SECTION 11.05 Successor Borrower Representative. Upon the prior written consent
of the Administrative Agent, the Borrower Representative may resign at any time,
such resignation to be effective upon the appointment of a successor Borrower
Representative. The Administrative Agent shall give prompt written notice of
such resignation to the Lenders.

SECTION 11.06 Execution of Loan Documents; Borrowing Base Certificate. The
Borrowers hereby empower and authorize the Borrower Representative, on behalf of
the Borrowers, to execute and deliver to the Administrative Agent and the
Lenders the Loan Documents and all related agreements, certificates, documents,
or instruments as shall be necessary or appropriate to effect the purposes of
the Loan Documents, including, without limitation, the Borrowing Base
Certificates and the Compliance Certificates. Each Borrower agrees that any
action taken by the Borrower Representative or the

 

107

--------------------------------------------------------------------------------

Borrowers in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Borrower Representative of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Borrowers.

SECTION 11.07 Reporting. Each Borrower hereby agrees that such Borrower shall
furnish promptly after each fiscal month to the Borrower Representative a copy
of its Borrowing Base Certificate and any other certificate or report required
hereunder or requested by the Borrower Representative on which the Borrower
Representative shall rely to prepare the Borrowing Base Certificates and
Compliance Certificate required pursuant to the provisions of this Agreement.

 

108

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

SAGENT PHARMACEUTICALS, a Wyoming corporation, as a Borrower

By:  

/s/ Jeffrey Greve

Name:  

Jeffrey Greve

Title:  

Vice President, Controller

OTHER LOAN PARTIES:

SAGENT PHARMACEUTICALS, INC.,

a Delaware corporation,

as a Guarantor

By:  

/s/ Jeffrey Greve

Name:  

Jeffrey Greve

Title:  

Vice President, Controller

JPMORGAN CHASE BANK, N.A., individually

and as Administrative Agent, Issuing Bank,

Swingline Lender and as a Lender

By:  

/s/ Kelli Lattanzio

Name:  

Kelli Lattanzio

Title:  

Authorized Officer

 

Signature Page to Credit Agreement