Exhibit 10.4

Execution Copy

LOGO [g73926g63c39.jpg]

March 22, 2010

Perrigo Company

Senior Term Loan

Commitment Letter

Perrigo Company

515 Eastern Avenue

Allegan, Michigan 49101

Attention: Judy L. Brown,

Executive Vice President

and Chief Financial Officer

Ladies and Gentlemen:

You (the “Borrower”) have requested that J.P. Morgan Securities Inc.
(“JPMorgan”) agree to structure, arrange and syndicate a 364-day senior term
loan in an aggregate amount of up to $350,000,000 (the “Facility”), and that
JPMorgan Chase Bank, National Association (“JPMCB”) commit to provide the entire
amount of the Facility and to serve as administrative agent for the Facility.
The purpose of the Facility is to provide financing to consummate the
acquisition (the “Acquisition”) of PBM Holdings, Inc., a Delaware corporation
(“Holdings”) and PBM Nutritionals, LLC, a Delaware limited liability company
(“Nutritionals,” together with Holdings, the “Targets” and each individually, a
“Target”), each by the merger with an acquisition subsidiary of the Borrower as
contemplated by the Merger Agreement, in the form delivered to JPMCB and
JPMorgan prior to the date hereof, as modified or amended in accordance with the
terms hereof, the “Merger Agreement”), dated as of March 22, 2010 by and among
the Targets, the Borrower, Pine Holdings Merger Sub, Inc., a Delaware
corporation and newly formed direct wholly-owned subsidiary of the Borrower,
Pine Nutritionals Merger Sub, LLC, a Delaware limited liability company and
newly formed direct wholly-owned subsidiary of the Borrower, and PBM
Stakeholders, LLC, a Delaware limited liability company, as the Stakeholders’
Representative.

JPMorgan is pleased to advise you that it is willing to act as the sole lead
arranger and sole bookrunner for the Facility.

Furthermore, JPMCB is pleased to advise you of its commitment to provide the
entire amount of the Facility upon the terms and subject only to the conditions
set forth or referred to in the Conditions Paragraph to this commitment letter
(the “Commitment Letter”). It is agreed that JPMCB will act as the sole and
exclusive administrative agent (in such capacity, the “Administrative Agent”)
for the Facility, and that JPMorgan will act as the sole lead arranger and sole
bookrunner (in such capacities, the “Lead Arranger”) for the Facility. You agree
that no other agents, co-agents or arrangers will be appointed, no other titles
will be awarded and no compensation (other that that expressly contemplated by
the Summary of Terms and Conditions attached hereto as Exhibit A (the “Term
Sheet”) and the Fee Letter referred to below) will be paid in connection with
the Facility unless you and we shall so agree.

 

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We reserve the right to syndicate the Facility to a group of financial
institutions (together with JPMCB, the “Lenders”) identified by us in
consultation with you. If JPMorgan commences syndication, you agree actively to
assist it in completing a syndication satisfactory to it. If requested by
JPMorgan, such assistance shall include (a) your using commercially reasonable
efforts to ensure that the syndication efforts benefit materially from your
existing lending relationships, (b) direct contact between senior management and
advisors of the Borrower and the proposed Lenders, (c) the hosting, with
JPMorgan, of one or more meetings of prospective Lenders and (d) as set forth in
the next paragraph, assistance in the preparation of materials to be used in
connection with the syndication (collectively with the Term Sheet, the
“Information Materials”). The successful syndication of the Facility is not a
condition to the funding of the loans under the Facility.

If JPMorgan commences syndication, you will assist us in preparing Information
Materials, including but not limited to a Confidential Information Memorandum or
lender slides, for distribution to prospective Lenders. If requested, you also
will assist us in preparing an additional version of the Information Materials
(the “Public-Side Version”) to be used by prospective Lenders’ public-side
employees and representatives (“Public-Siders”) who do not wish to receive
material non-public information (within the meaning of United States federal
securities laws) with respect to the Borrower, its affiliates and any of its
securities (“MNPI”) and who may be engaged in investment and other market
related activities with respect to the Borrower’s or its affiliates’ securities
or loans. Before distribution of any Information Materials, you agree to execute
and deliver to us (i) a letter in which you authorize distribution of the
Information Materials to a prospective Lender’s employees willing to receive
MNPI (“Private-Siders”) and (ii) a separate letter in which you authorize
distribution of the Public-Side Version to Public-Siders and represent that no
MNPI is contained therein; it being understood however that nothing in this
letter shall require you to make public any material information other than as
and when required by federal securities laws and SEC rules and regulations
(including without limitation Regulation S-X). You also acknowledge that
JPMorgan Public-Siders consisting of publishing debt analysts may participate in
any meetings or telephone conference calls held pursuant to clause (c) of the
immediately previous paragraph; provided that such analysts shall not publish
any information obtained from such meetings or calls (i) until the syndication
of the Facility has been completed upon the making of allocations by JPMorgan
and JPMorgan freeing the Facility to trade or (ii) in violation of any
confidentiality agreement between you and JPMorgan or JPMCB.

The Borrower agrees that the following documents may be distributed to both
Private-Siders and Public-Siders, unless the Borrower advises JPMorgan in
writing (including by email) within a reasonable time prior to their intended
distribution that such materials should only be distributed to Private-Siders:
(a) administrative materials prepared by JPMorgan for prospective Lenders (such
as a lender meeting invitation, bank allocation, if any, and funding and closing
memoranda), (b) notification of changes in the Facility’s terms and (c) other
materials intended for prospective Lenders after the initial distribution of
Information Materials. If you advise us that any of the foregoing should be
distributed only to Private-Siders, then Public-Siders will not receive such
materials without Borrower’s written permission. The Borrower hereby authorizes
JPMorgan to distribute drafts of definitive documentation with respect to the
Facility to Private-Siders and, unless otherwise instructed by Borrower, to
Public-Siders.

As the Lead Arranger, JPMorgan will manage all aspects of the syndication, if
any, including decisions as to the selection of institutions to be approached
and when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees

 

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among the Lenders, in consultation with the Borrower. In acting as the Lead
Arranger, JPMorgan will have no responsibility other than to arrange the
syndication as set forth herein and shall in no event be subject to any
fiduciary or other implied duties. Additionally, the Borrower acknowledges and
agrees that, as Lead Arranger, JPMorgan is not advising the Borrower as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction.
The Borrower shall consult with its own advisors concerning such matters and
shall be responsible for making its own independent investigation and appraisal
of the transactions contemplated hereby, and JPMorgan shall have no
responsibility or liability to the Borrower with respect thereto. Any review by
JPMorgan of the Borrower, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the benefit of
JPMorgan and JPMCB and shall not be on behalf of the Borrower.

If JPMorgan commences syndication, to assist JPMorgan in its syndication
efforts, you agree promptly to prepare and provide to JPMorgan and JPMCB all
information with respect to the Borrower and the transactions contemplated
hereby, including all financial information and projections (the “Projections”),
as we may reasonably request in connection with the arrangement and syndication
of the Facility. You hereby represent and covenant that (a) all information
other than the Projections (the “Information”) that has been or will be made
available to JPMCB or JPMorgan by you or any of your representatives, taken as a
whole, is or will be, when furnished, complete and correct in all material
respects and does not or will not, when furnished, contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which such statements are made; provided, however, with
respect to Information relating to the Targets, such representations and
covenants in this subsection (a) are qualified by the Borrower’s knowledge; and
(b) the Projections that have been or will be made available to JPMCB or
JPMorgan by you or any of your representatives have been or will be prepared in
good faith based upon assumptions that you believe to be reasonable at the time
made and at the time such Projections are made available to us; it being
recognized by JPMorgan and JPMCB that such Projections are not to be viewed as
facts and that actual results during the period or periods covered by any such
Projections may differ significantly from the projected results, and that no
assurance can be given that the projected results will be realized; provided,
however, with respect to Projections relating to the Targets, such
representations and covenants in this subsection (b) are qualified by the
Borrower’s knowledge. You understand that in arranging and syndicating the
Facility we may use and rely on the Information and Projections without
independent verification thereof.

As consideration for JPMCB’s commitment hereunder and JPMorgan’s agreement to
perform the services described herein, you agree to pay to JPMCB the
nonrefundable fees set forth in Annex I to the Term Sheet and in the Fee Letter
dated the date hereof and delivered herewith (the “Fee Letter”).

Each of JPMCB’s commitment hereunder and JPMorgan’s agreement to perform the
services described herein are subject to each of the following:

(a) except for the matters contemplated by the Merger Agreement or as set forth
in Section 3.8 of the Companies Disclosure Schedule (as defined in the Merger
Agreement), since December 31, 2009, there has not occurred (i) any change,
circumstance, effect or event that has had, or is reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect (as defined
in the Merger Agreement) or (ii) any change by the Companies and their
subsidiaries in accounting principles or methods materially affecting the
combined financial position or results of

 

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operations of the Targets, except (A) insofar as may have been required by a
change in GAAP (as defined in the Merger Agreement) or applicable Law (as
defined in the Merger Agreement) or (B) purchase accounting adjustments by the
Borrower on its financial statements as a result of the Acquisition concurred in
by your auditors that may be required after the Closing Date,

(b) the Borrower would be able to satisfy, as of the Closing Date, all
conditions precedent to obtaining a loan as required under Section 4.02 of the
Credit Agreement dated March 16, 2005 among the Borrower, certain Foreign
Subsidiary Borrowers parties thereto, the lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and Bank Leumi USA, as Syndication
Agent, as amended as of the date hereof, as is if such loan were to be made as
of the Closing Date (and assuming that such Credit Agreement is in effect as of
the Closing Date),

(c) our satisfaction that prior to the Closing Date there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Borrower or any of its subsidiaries that has not been
approved in writing by JPMorgan (and Borrower agrees that there will no such
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of the Borrower or any affiliate thereof that has not
been approved in writing by JPMorgan until after the earlier of the payment in
full of the Facility or the completion a successful syndication of the
Facility),

(d) the negotiation, execution and delivery of definitive financing
documentation with respect to the Facility (the “Credit Documentation”)
consistent with this Commitment Letter (including the exhibits hereto) and the
Existing Term Loan Agreement and otherwise mutually acceptable to the Borrower
and JPMCB and their respective counsels and the consummation of the Acquisition
substantially concurrently with the funding of the loans under the Facility in
accordance with the terms of the Merger Agreement, all after the date 30 days
after the date hereof but on or before July 16, 2010 (the “Outside Date”),
provided that the Outside Date shall be extended to the earlier of December 14,
2010 or the date to which closing is extended under the Merger Agreement if the
failure of the Acquisition to close on or prior to such date is due only to the
failure to receive approval of any Antitrust Authority (as defined in the Merger
Agreement) required in order to satisfy the conditions set forth in Sections
6.1(c) and 6.2(c) of the Merger Agreement, and

(e) the other conditions set forth under the heading “Conditions Precedent” in
the Term Sheet, including those set forth on Exhibit B.

There shall be no conditions to closing and funding not expressly set forth
herein.

You agree (a) to indemnify and hold harmless JPMCB, JPMorgan, and their
respective affiliates and their respective officers, directors, employees,
advisors, and agents (each, an “indemnified person”) from and against any and
all losses, claims, damages and liabilities to which any such indemnified person
may become subject arising out of or in connection with this Commitment Letter,
the Facility, the Acquisition, the use of the proceeds thereof or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any indemnified person is a party
thereto, and to reimburse each indemnified person upon demand for any reasonable
legal or other reasonable expenses incurred in connection with investigating or
defending any of the foregoing, provided that the foregoing

 

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indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities or related expenses to the extent they arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse JPMCB, JPMorgan and their affiliates on demand for all reasonable
out-of-pocket expenses (including reasonable due diligence expenses, syndication
expenses, reasonable consultant’s fees and expenses, travel expenses, and
reasonable fees, charges and disbursements of counsel) incurred in connection
with the Facility and any related documentation (including this Commitment
Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any damages arising from the use by
others of Information or other materials obtained through electronic,
telecommunications or other information transmission systems or for any special,
indirect, consequential or punitive damages in connection with the Facility. No
indemnified person shall be liable for any indirect or consequential damages in
connection with its activities related to the Facility.

This Commitment Letter shall not be assignable by you without the prior written
consent of JPMCB and JPMorgan (and any purported assignment without such consent
shall be null and void), is intended to be solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create any rights in
favor of, any person other than the parties hereto. This Commitment Letter may
not be amended or waived except by an instrument in writing signed by you, JPMCB
and JPMorgan. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile or electronic mail transmission shall be
effective as delivery of manually executed counterpart hereof. This Commitment
Letter and the Fee Letter are the only agreements that have been entered into
among us with respect to the Facility and set forth the entire understanding of
the parties with respect thereto.

We hereby notify you that pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot
Act”), we and the other Lenders may be required to obtain, verify and record
information that identifies the Borrower and the Targets, which information
includes the name, address and tax identification number and other information
regarding them that will allow us or such Lender to identify them in accordance
with the Patriot Act. This notice is given in accordance with the requirements
of the Patriot Act and is effective as to us and the Lenders.

This Commitment Letter shall be governed by, and construed in accordance with,
the law of the State of Michigan; provided that the provision set forth in
clause (a) of the Conditions Paragraph shall be governed by and interpreted and
enforced in accordance with the substantive laws of the state of Delaware,
without giving effect to the conflicts of law principles thereof. The Borrower
consents to the nonexclusive jurisdiction of the state or federal courts located
in the State of Michigan. Each party hereto irrevocably waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
any legal proceeding arising out of or relating to this Commitment Letter, the
Fee Letter or the transactions contemplated hereby or thereby (whether based on
contract, tort or any other theory).

This Commitment Letter is delivered to you on the understanding that neither
this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms
or substance shall be disclosed, directly or indirectly, to any other person
except (a) to your officers, agents and advisors who are directly involved in
the consideration of this matter and for whom you shall be responsible for any
breach by any one of them of this confidentiality undertaking or (b) as may be
compelled in a judicial or administrative proceeding or as otherwise required by
law (in which

 

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case you agree to inform us promptly thereof), provided that this Commitment
Letter, the Term Sheet and the terms or substance hereof and thereof (but not
the Fee Letter or the terms or substance thereof) may be disclosed (A) to the
Targets and their respective officers, directors, employees and shareholders,
and each of their respective attorneys, accountants and advisors, in each case
only in connection with the Acquisition and on a confidential and need-to-know
basis after this Commitment Letter has been accepted by you and (B) in SEC or
other regulatory filings.

You acknowledge that JPMorgan, JPMCB and their affiliates may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. Neither
JPMorgan nor JPMCB will use confidential information obtained from you by virtue
of the transactions contemplated by this letter or their other relationships
with you in connection with the performance by JPMorgan or JPMCB of services for
other companies, and neither JPMorgan nor JPMCB will furnish any such
information to other companies. You also acknowledge that JPMorgan and JPMCB
have no obligation to use in connection with the transactions contemplated by
this letter, or to furnish to you, confidential information obtained from other
companies.

The compensation, reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
JPMCB’s commitment hereunder.

If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter, together
with the amounts agreed upon pursuant to the Fee Letter to be payable upon the
acceptance hereof, not later than 5:00 p.m., Chicago time, on March 23, 2010.
JPMCB’s commitment and JPMorgan’s agreements herein will expire at such time in
the event JPMCB has not received such executed counterparts and such amounts in
accordance with the immediately preceding sentence.

 

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JPMCB and JPMorgan are pleased to have been given the opportunity to assist you
in connection with this important financing.

 

Very truly yours, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION By:  

/S/ Krys Szremski

Name:   Krys Szremski Title:   Vice President J.P. MORGAN SECURITIES INC. By:  

/S/ John H. Fiore

Name:   John H. Fiore Title:   Executive Director

 

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Accepted and agreed to as of

the date first written above by:

 

PERRIGO COMPANY By:  

/s/ Judy L. Brown

Name:   Judy L. Brown Title:   EVP & CFO

 

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Exhibit A

PERRIGO COMPANY TERM LOAN

Summary of Terms and Conditions

March 22, 2010

 

 

 

I.    Parties       Borrower:    Perrigo Company (the “Borrower”).   
Guarantors:    All material domestic subsidiaries of the Borrower will be
guarantors to the same extent as required under the Existing Term Loan
Agreement.    Lead Arranger and Sole Bookrunner:    J.P. Morgan Securities Inc.
(“JPMSI”), as lead arranger and bookrunner (in such capacity, the “Lead
Arranger”).    Administrative Agent:    JPMorgan Chase Bank, N.A. (“JPMCB” and,
in such capacity, the “Administrative Agent”).    Lenders:    JPMCB, and, if
syndication is commenced, a syndicate of banks, financial institutions and other
entities arranged by the Lead Arranger (collectively, the “Lenders”). II.   
Facility       Type and Amount:    364 day senior term loan (the “Term Loan” or
the “Facility”) in the amount of up to $350,000,000 made on the Closing Date.   
Maturity:    364 days after the Closing Date (the “Maturity Date”). The Term
Loan shall be payable in full on the Maturity Date.    Purpose:    The purpose
of the Term Loan is to provide financing to consummate the acquisition (the
“Acquisition”) of the Targets (as defined in the Commitment Letter of even date
herewith (the “Commitment Letter”) among the Borrower, the Lead Arranger and the
Administrative Agent). III.    Collateral    The Facility will be secured by a
pledge of 65% (or such greater amount that may be pledged without a material
adverse tax consequence) of the capital stock of each material foreign
subsidiary to the same extent as

 

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      required under the Borrower’s Term Loan Agreement dated as of April 22,
2008 (the “Existing Term Loan Agreement”), including any other collateral
requirements consistent with the Existing Term Loan Agreement.       All such
collateral will be subject to the Collateral Agency and Intercreditor Agreement
dated as of May 29, 2008 among the secured parties thereto and JPMorgan Chase
Bank, N.A., as collateral agent, under which the collateral will be shared with
the obligations under the Borrower’s Credit Agreement dated as of March 16,
2005, the Existing Term Loan Agreement, the Borrower’s Master Note Purchase
Agreement dated as of May 29, 2008 regarding its 5.97% $75,000,000 Senior Notes,
Series 2008-A, and its 6.37% $125,000,000 Senior Notes, Series 2008-B (such
senior notes, the “2008 Notes”), and the other secured obligations described
therein. IV.    Certain Payment Provisions       Fees and Interest Rates:    As
set forth on Annex I.    Optional Prepayments:    The Term Loan may be prepaid
(subject to interest rate breakage costs, but without any penalty) by the
Borrower in minimum amounts to be agreed upon.    Mandatory Prepayments:    The
Term Loan shall be prepaid by amounts equal to:       (a) 100% of the net cash
proceeds of any sale or other disposition of assets by the Borrower or any of
its subsidiaries (except for the sale of inventory in the ordinary course of
business, subject to materiality thresholds and reinvestment periods, all to be
determined) and of casualty and insurance proceeds (subject to materiality
thresholds and reinvestment periods to be determined).       (b) 100% of the net
cash proceeds from the issuance of any debt or equity (excluding any borrowing
under credit facilities in existence on the date hereof (without giving effect
to any increases in any such credit facilities after the date hereof) and
subject to other exclusions to be determined) after the Closing Date. V.   
Certain Conditions          The funding of the Term Loan shall be conditioned
upon the satisfaction of the conditions set forth in the Commitment Letter and
the conditions set forth on Exhibit B and to requirements relating to prior
written

 

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      notice of borrowing, the accuracy of representations and warranties on the
date upon which all such conditions precedent shall be satisfied and the Term
Loan is funded (the “Closing Date”) and the absence of any default or event of
default on the Closing Date. VI.    Certain Documentation Matters       The
Credit Documentation shall contain representations, warranties, covenants and
events of default customary for financings of this type, consistent with the
Existing Term Loan Agreement and other terms mutually agreed by the Lenders and
the Borrower, including, without limitation:    Representations and Warranties:
   Financial statements; absence of undisclosed liabilities; no material adverse
change; corporate existence; compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict with law or contractual
obligations; no material litigation; no default; ownership of property; liens;
intellectual property; no burdensome restrictions; taxes; Federal Reserve
regulations; ERISA; Investment Borrower Act; subsidiaries; environmental
matters; labor matters; accuracy of disclosure; representations (qualified to
the Borrower’s knowledge) with respect to the Acquisition, and other
representations consistent with the Existing Term Loan Agreement.    Affirmative
Covenants:    Delivery of financial statements, reports, accountants’ letters,
projections, officers’ certificates and other information requested by the
Lenders; payment of other obligations; continuation of business and maintenance
of existence and material rights and privileges; compliance with laws and
material contractual obligations; maintenance of property and insurance;
maintenance of books and records; right of the Lenders to inspect property and
books and records; notices of defaults, litigation and other material events;
compliance with environmental laws; and other affirmative covenants consistent
with the Existing Term Loan Agreement.    Financial Covenants:    Financial
covenants shall be limited to:      

•       The ratio (the “Leverage Ratio”) of (a) Consolidated Indebtedness minus
the amount of the Israeli Acquisition Cash Secured Loan (to the extent it is
secured with cash, provided that any amount thereof that is recourse to the
Borrower or any of its subsidiaries (other than with respect to such cash
deposit) shall be included in Consolidated

 

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Indebtedness, with the amount thereof reasonably determined by the
Administrative Agent) to (b) Consolidated EBITDA, as calculated for the four
consecutive fiscal quarters of Borrower then ending, not to exceed 3.0:1.0

     

•       The ratio (the “Interest Coverage Ratio”) of Consolidated EBIT to
Consolidated Interest Expense, as calculated for the four consecutive fiscal
quarters of the Borrower then ending of not less than 3.0:1.0

      As used herein:       “Consolidated EBIT” means, with reference to any
period, the net income (or loss) of the Borrower and its subsidiaries for such
period, plus, to the extent deducted from revenues in determining such net
income, (i) Consolidated Interest Expense, (ii) expense for income taxes paid or
accrued, (iii) extraordinary non-cash losses incurred other than in the ordinary
course of business, (iv) losses incurred other than in the ordinary course of
business that are non-cash, non-operating and non-recurring, minus, to the
extent included in such net income, (a) extraordinary non-cash gains realized
other than in the ordinary course of business, and (b) gains realized other than
in the ordinary course of business that are non-cash, non-operating and
non-recurring, all as determined in accordance with GAAP and calculated for the
Borrower and its subsidiaries on a consolidated basis.       “Consolidated
EBITDA” means, with reference to any period, Consolidated EBIT for such period,
plus, to the extent deducted from revenues in determining such Consolidated
EBIT, depreciation, and amortization expense, all as determined in accordance
with GAAP and calculated for the Borrower and its subsidiaries on a consolidated
basis.       “Consolidated Indebtedness” means at any time the sum of all of the
following for the Borrower and its subsidiaries calculated on a consolidated
basis: (i) all obligations for borrowed money or similar obligations, (ii) all
obligations evidenced by bonds, debentures, acceptances, notes or similar
instruments, (iii) all obligations upon which interest charges are customarily
paid, (iv) all obligations under conditional sale or other title retention
agreements relating to property acquired, (v) all obligations in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business),

 

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      (vi) all indebtedness of others secured by (or for which the holder 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, (vii) all guaranties by such
person of indebtedness of others, (viii) all capital lease obligations of such
person, (ix) all obligations, contingent or otherwise, as an account party in
respect of letters of credit and letters of guaranty, (x) all obligations,
contingent or otherwise in respect of bankers’ acceptances, (xi) all off-balance
sheet liabilities, and (xii) all obligations under any disqualified stock.      
“Consolidated Interest Expense” means, with reference to any period, the
interest expense of the Borrower and its subsidiaries calculated on a
consolidated basis for such period.       “Israeli Acquisition Cash Secured
Loan” means any loan to an Israeli acquisition subsidiary or its Israeli holding
company formed by the Borrower that is (i) secured by cash deposited by the
Borrower or its subsidiaries in an amount equal to the principal balance of such
loan, (ii) non-recourse to the Borrower or its subsidiaries (other than with
respect to such cash deposit and to the limited extent described in the
documents relating to the Israeli Acquisition Cash Secured Loan delivered to the
Administrative Agent) and (iii) on other terms and conditions reasonably
satisfactory to the Administrative Agent.       All financial covenants will be
calculated on a basis consistent with the Existing Term Loan Agreement.   
Negative Covenants:    Negative covenants with respect to:      

•       Consolidated Indebtedness limited in the same manner as the Existing
Term Loan Agreement.

     

•       Consolidations, mergers and acquisitions will be permitted, provided
that no default exists or would be caused thereby, the Borrower is the surviving
entity with voting control and hostile acquisitions shall be prohibited.

     

•       Sale of assets (other than inventory sold in the ordinary course,
transfers of assets among the Borrower and Guarantors and among Guarantors and
sales of receivables in connection with permitted securitization transactions in
an aggregate outstanding amount not to exceed $150,000,000) shall be limited to
not more than 10% of

 

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consolidated total assets or assets responsible for more than 10% of the
consolidated net sales or net income in any twelve month period (based on the
consolidated financial statements of the Borrower and its subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made).

     

•       Investments (including without limitation pursuant to any merger or
acquisition, but excluding cash equivalent and similar investments in the
ordinary course of business), guarantees, loans and/or advances, other than
existing investments listed on a schedule (without increase) and those in or to
domestic Guarantors, shall not exceed 15% of consolidated total assets, provided
that the aggregate amount of the foregoing to subsidiaries that are not
Guarantors shall not exceed 7.5% of consolidated total assets.

     

•       Dividends, distributions or share repurchases permitted unless a default
exists or would be caused thereby.

     

•       Limitation on liens and encumbrances.

     

•       Transactions with affiliates.

     

•       No more favorable covenant clause with respect to debt agreements in the
aggregate over $20,000,000.

     

•       other negative covenants consistent with the Existing Term Loan
Agreement.

   Events of Default:    Customary events of default (including, without
limitation, failure to make payment in connection with the Facility when due;
breach of representations and warranties in any material respect; default in any
covenant or agreement set forth in the Credit Documents after any applicable
grace period; cross default to occurrence of a default (whether or not resulting
in acceleration) under any other agreement governing indebtedness in excess of
$10,000,000 of the Borrower or any of its subsidiaries or any guarantors; events
of bankruptcy; certain ERISA defaults; the occurrence of one or more material
judgments; any of the Credit Documents shall cease to be in full force and
effect or any party thereto shall so assert; the Acquisition shall be unwound;
or a change in ownership or control as set forth in the Existing Term Loan
Agreement.       The above description of the representations and warranties,
financial covenants, negative covenants and defaults is intended to reflect the
representations and warranties, financial covenants, negative covenants and
defaults in the Existing Term Loan Agreement, and if

 

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          there is any conflict between the representations and warranties,
financial covenants,
negative covenants and defaults described above and those in the Existing Term
Loan
Agreement, the Existing Term Loan Agreement shall control.    Voting:   
Amendments and waivers with respect to the Credit Documentation shall require
the approval of Lenders holding more than 50% of the aggregate amount of the
Facility, except that (a) the consent of each Lender directly affected thereby
shall be required with respect to (i) reductions in the amount or extensions of
the scheduled date of the final maturity of the Term Loan, (ii) reductions in
the rate of interest or any fee or extensions of any due date thereof and (iii)
increases in the amount or extensions of the expiry date of any Lender’s
commitment and (b) the consent of 100% of the Lenders shall be required with
respect to modifications to any of the voting percentages.       The Credit
Documentation shall contain customary provisions for replacing non-consenting
Lenders in connection with amendments and waivers requiring the consent of all
relevant Lenders or of all relevant Lenders directly affected thereby so long as
relevant Lenders holding more than 50% of the aggregate amount of the loans and
commitments under the Credit Documentation have consented thereto.       The
Credit Documentation shall contain customary provisions relating to “defaulting”
Lenders (including provisions relating to the suspension of the voting rights,
rights to receive undrawn commitment fees, and the termination or assignment of
commitments of such Lenders).    Assignments and Participations:    The Lenders
shall be permitted to assign all or a portion of their loans and commitments
with the consent, not to be unreasonably withheld, of (a) the Borrower, unless
(i) the assignee is a Lender, an affiliate of a Lender or an approved fund or
(ii) an Event of Default has occurred and is continuing, and (b) the
Administrative Agent. In the case of partial assignments (other than to another
Lender, to an affiliate of a Lender or an Approved Fund), the minimum assignment
amount shall be $5,000,000 unless otherwise agreed by the Borrower and the
Administrative Agent.       The Lenders shall also be permitted to sell
participations in its Term Loan. Participants shall have the same

 

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      benefits as the Lenders with respect to yield protection and increased
cost provisions. Voting rights of participants shall be limited to those matters
with respect to which the affirmative vote of all of the Lenders would be
required as described under “Voting” above. Pledges of the Term Loan in
accordance with applicable law shall be permitted without restriction.
Promissory notes shall be issued under the Facility only upon request.    Yield
Protection:    The Credit Documentation shall contain customary provisions (a)
protecting the Lenders against increased costs or loss of yield resulting from
changes in law or regulation affecting reserve, tax, capital adequacy and other
requirements of law and from the imposition of new laws or regulations or
changes in withholding or other taxes and (b) indemnifying the Lenders for
“breakage costs” incurred in connection with, among other things, any prepayment
of a Eurocurrency Loan (as defined in Annex I) on a day other than the last day
of an interest period with respect thereto.    Expenses and Indemnification:   
The Borrower shall pay (a) all reasonable out-of-pocket expenses of the
Administrative Agent and the Lead Arranger associated with the syndication of
the Facility and the preparation, execution, delivery and administration of the
Credit Documentation and any amendment or waiver with respect thereto (including
the reasonable fees, disbursements and other charges of counsel) and (b) all
reasonable out-of-pocket expenses of the Administrative Agent and the Lenders
(including the reasonable fees, disbursements and other charges of counsel) in
connection with the enforcement of the Credit Documentation.       The
Administrative Agent, the Lead Arranger and the Lenders (and their affiliates
and their respective officers, directors, employees, advisors and agents) will
have no liability for, and will be indemnified and held harmless against, any
loss, liability, cost or expense incurred in respect of the financing
contemplated hereby or the use or the proposed use of proceeds thereof (except
to the extent resulting from the gross negligence or willful misconduct of the
indemnified party).    Governing Law and Forum:    State of Michigan.

This Summary of Terms and Conditions is intended as an outline only and does not
purport to summarize all the conditions, covenants, representations, warranties
and other provisions which would be contained in definitive legal documentation
for the financing contemplated hereby.

 

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Capitalized terms used but not defined herein have the meanings given in the
Commitment Letter of even date herewith.

 

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Annex I

Interest and Certain Fees

 

Interest Rate Options:    The Borrower may elect that the Term Loan bear
interest at a rate per annum equal to:   

the ABR plus 175 basis points, increasing by 50 basis on each three month
anniversary after the Closing Date; or

  

the Adjusted LIBO Rate plus 275 basis points, increasing by 50 basis on each
three month anniversary after the Closing Date.

   As used herein:    “ABR” means the highest of (i) the rate of interest
publicly announced by JPMCB as its prime rate in effect at its principal office
in Chicago (the “Prime Rate”), (ii) the Adjusted LIBO Rate for a one month
interest period determined each day (or if such day is not a business day, the
immediately preceding business day) plus 1.0 % and (iii) the federal funds
effective rate from time to time plus 0.5%.    “Adjusted LIBO Rate” means the
LIBO Rate, as adjusted for statutory reserve requirements for eurocurrency
liabilities.    “LIBO Rate” means the rate at which deposits in the relevant
permitted currency in the London interbank market for one, three or six months
(or such other periods as the Lenders may agree), as selected by the Borrower,
are quoted on the relevant Reuters screen. Interest Payment Dates:    In the
case of the Term Loan bearing interest based upon the ABR (“ABR Loans”),
quarterly in arrears. In the case of Term Loan bearing interest based upon the
Adjusted LIBO Rate (“Eurocurrency Loans”), on the last day of each relevant
interest period and, in the case of any interest period longer than three
months, on each successive date three months after the first day of such
interest period. Default Rate:    At any time when the Borrower is in default in
the payment of any amount of principal due under the Facility, such amount shall
bear interest at 2% above the rate otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear interest at 2% above the rate
applicable to ABR Loans. Rate and Fee Basis:    All per annum rates shall be
calculated on the basis of a year of 360 days (or 365/366 days, in the case of
ABR Loans the interest rate payable on which is then based on the Prime Rate)
for actual days elapsed.

 

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Exhibit B

Conditions Precedent

The availability of the Term Loan, in addition to the conditions expressly set
forth in the Term Sheet and in the Commitment Letter, shall be subject to the
satisfaction of the following conditions. Capitalized terms used but not defined
herein have the meanings given in the Commitment Letter.

1. The Acquisition shall be consummated substantially concurrently with the
funding of the Term Loan in accordance with the terms of the Merger Agreement
and all applicable laws and regulations.

2. The aggregate amount of the purchase price and other consideration paid or
payable for or in connection with Acquisition under the Merger Agreement or
otherwise shall not be increased or decreased by more than $10,000,000 from such
aggregate amount shown in the Merger Agreement delivered to the Lead Arranger
prior to the date of the Commitment Letter without the Lead Arranger’s prior
consent, not to be unreasonably withheld. Additionally, no other provision or
condition (including without limitation the conditions in Section 6.1 of the
Merger Agreement) of the Merger Agreement shall have been waived, amended,
supplemented or otherwise modified or consented to in any respect (as compared
to the Merger Agreement in the form delivered to the Lead Arranger prior to the
date of the Commitment Letter) that would be materially adverse to the Lead
Arranger or the Lenders without the Lead Arranger’s prior consent.

3. The Lenders, the Administrative Agent and the Lead Arranger shall have
received all fees and invoiced expenses required to be paid on or before the
Closing Date.

4. The Administrative Agent shall have received such legal opinions, corporate
organizational documents, good standing certificates, resolutions and incumbency
certificates as it may reasonably request and evidence of the satisfaction of
such other customary closing conditions reasonably required by the
Administrative Agent, all in form and substance reasonably satisfactory to the
Administrative Agent.

5. All governmental and other approvals (including without limitation all board
of director, shareholder, member and similar approvals) necessary in connection
with the financing contemplated hereby or required pursuant to the Merger
Agreement shall have been obtained and be in full force and effect, and all
other legal and regulatory matters shall be reasonably satisfactory to the
Administrative Agent.

6. Notwithstanding anything in this Exhibit B, the Commitment Letter, the Term
Sheet, the Fee Letter or any other letter agreement or other undertaking
concerning the financing of the Transactions to the contrary, the terms of the
documentation for the Facility shall be such that they do not impair the
availability of the Facility on the Closing Date if the conditions expressly set
forth herein are satisfied (it being understood that to the extent any security
interest in the intended Collateral or any deliverable related to the granting
or perfection of security interests in the intended Collateral is not provided
on the Closing Date after your use of commercially reasonable efforts to do so,
the provision of such security interest(s) or deliverable shall not constitute a
condition precedent to the availability of the Facility on the Closing Date but
shall be required to be delivered after the Closing Date pursuant to
arrangements to be mutually agreed by the Administrative Agent and Borrower (it
being understood that the Borrower may

 

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have up to 45 days after the Closing Date to provide the deliverables related to
the granting or perfection of security interests in the intended Collateral)

7. The Administrated Agent shall have received combined consolidated financial
statements of the Borrower and the Target prior to the Closing Date, provided
that (a) for the Borrower 45 days have lapsed since its last fiscal quarter end
or 90 days have lapsed since its last fiscal year end and (b) for the Target, as
soon as such financial statements are made available to the Borrower, but only
if made available to the Borrower, unaudited financial statements for each
fiscal quarter ended before the Closing Date.

 

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