CREDIT AND SECURITY AGREEMENT

 

by and among

 

ALBANY MOLECULAR RESEARCH, INC.,

 

AMRI RENSSELAER, INC.,

 

AMRI BURLINGTON, INC.

 

and

 

AMRI BOTHELL RESEARCH CENTER, INC.,

 

as Borrowers,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Lender

 

Dated as of April 11, 2012

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    PAGE 1. DEFINITIONS AND CONSTRUCTION. 1   1.1 Definitions, Code Terms,
Accounting Terms and Construction 1         2. LOANS AND TERMS OF PAYMENT. 1  
2.1 Revolving Loan Advances. 1   2.2 Term Loan 1   2.3 Borrowing Procedures. 1  
2.4 Payments; Prepayments. 2   2.5 Clearance Charge 3   2.6 Interest Rates:
Rates, Payments, and Calculations. 3   2.7 Designated Account 4   2.8
Maintenance of Loan Account; Statements of Obligations 4   2.9 Maturity
Termination Dates 5   2.10 Effect of Maturity 5   2.11 Termination or Reduction
by Borrowers. 5   2.12 Fees 5   2.13 Letters of Credit. 6   2.14 Illegality;
Impracticability; Increased Costs 7   2.15 Capital Requirements 7   2.16 Extent
of Each Borrower’s Liability, Contribution. 8   2.17 AMRI as Agent for Borrowers
9         3. SECURITY INTEREST. 9   3.1 Grant of Security Interest 9   3.2
Borrowers Remain Liable 9   3.3 Financing Statements 10         4. CONDITIONS.
10   4.1 Conditions Precedent to the Initial Extension of Credit 10   4.2
Conditions Precedent to all Extensions of Credit 10         5. REPRESENTATIONS
AND WARRANTIES. 10       6. AFFIRMATIVE COVENANTS. 10   6.1 Financial
Statements, Reports, Certificates 11   6.2 Collateral Reporting 11   6.3
Existence 11   6.4 Maintenance of Properties 11   6.5 Taxes. 11   6.6 Insurance
11   6.7 Inspection 12   6.8 Account Verification 12   6.9 Compliance with Laws
12   6.10 Environmental. 12   6.11 Disclosure Updates. 13   6.12 Collateral
Covenants. 13   6.13 Material Contracts 16   6.14 Location of Inventory and
Equipment 16   6.15 Formation of Subsidiaries 17   6.16 Further Assurances. 17  
      7. NEGATIVE COVENANTS. 18   7.1 Indebtedness 18   7.2 Liens 18   7.3
Restrictions on Fundamental Changes. 18   7.4 Disposal of Assets 18   7.5 Change
Name 18   7.6 Nature of Business 18

 

  

 

 

  7.7 Prepayments and Amendments. 19   7.8 Change of Control 19   7.9 Restricted
Junior Payments 19   7.10 Accounting Methods 19   7.11 Investments; Controlled
Investments. 19   7.12 Transactions with Affiliates 20   7.13 Use of Proceeds 20
  7.14 Limitation on Issuance of Stock 20   7.15 Consignments 20   7.16
Inventory and Equipment with Bailees 20         8. FINANCIAL COVENANTS. 21      
9. EVENTS OF DEFAULT. 22       10. RIGHTS AND REMEDIES. 24   10.1 Rights and
Remedies 24   10.2 Additional Rights and Remedies 25   10.3 Lender Appointed
Attorney in Fact 25   10.4 Remedies Cumulative 26   10.5 Crediting of Payments
and Proceeds 26   10.6 Marshaling 26   10.7 License 26   10.8 Disposition of
Pledged Interests by Lender 27   10.9 Voting and Other Rights in Respect of
Pledged Interests. 27         11. WAIVERS; INDEMNIFICATION.   11.1 Demand;
Protest; etc 27   11.2 Lender’s Liability for Collateral 27   11.3
Indemnification 27         12. NOTICES. 28       13. CHOICE OF LAW AND VENUE;
JURY TRIAL WAIVER. 29       14. ASSIGNMENTS; SUCCESSORS 29       15. AMENDMENTS;
WAIVERS 30       16. TAXES. 30       17. GENERAL PROVISIONS. 30   17.1
Effectiveness 30   17.2 Section Headings 30   17.3 Interpretation 30   17.4
Severability of Provisions 30   17.5 Debtor-Creditor Relationship 31   17.6
Counterparts; Electronic Execution 31   17.7 Revival and Reinstatement of
Obligations 31   17.8 Confidentiality. 31   17.9 Lender Expenses 32   17.10
Setoff 32   17.11 Survival 32   17.12 Patriot Act 32   17.13 Integration 32  
17.14 Bank Product Providers 32

 

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EXHIBITS AND SCHEDULES

 

Schedule 1.1 Definitions Schedule 2.12 Fees Schedule 6.1 Financial Statement,
Reports, Certificates Schedule 6.2 Collateral Reporting     Exhibit A Form of
Compliance Certificate Exhibit B Conditions Precedent Exhibit C Pledged
Interests Addendum Exhibit D Representations and Warranties Exhibit E
Information Certificate     Schedule A-1 Collection Account Schedule A-2
Authorized Person Schedule A-3 Sanofi-Aventis Receivables Account Schedule D-1
Designated Account Schedule P-1 Permitted Investments Schedule P-2 Permitted
Liens Schedule P-3 Pledged Interests Schedule R-1 Real Property Collateral

 

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CREDIT AND SECURITY AGREEMENT

 

THIS CREDIT AND SECURITY AGREEMENT (this “Agreement”), is entered into as of
April 11, 2012, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”),
Albany Molecular Research, Inc., a Delaware corporation (“AMRI” or the
“Administrative Borrower”), AMRI Rensselaer, Inc., a Delaware corporation (“AMRI
Rensselaer”), AMRI Burlington, Inc., a Massachusetts corporation (“AMRI
Burlington”), and AMRI Bothell Research Center, Inc., a Delaware corporation
(“AMRI Bothell” and together with AMRI, AMRI Rensselaer and AMRI Burlington,
each a “Borrower” and collectively, the “Borrowers”).

 

The parties agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

 

1.1 Definitions, Code Terms, Accounting Terms and Construction. Capitalized
terms used in this Agreement shall have the meanings specified therefor on
Schedule 1.1. Additionally, matters of (i) interpretation of terms defined in
the Code, (ii) interpretation of accounting terms and (iii) construction are set
forth in Schedule 1.1.

 

2. LOANS AND TERMS OF PAYMENT.

 

2.1 Revolving Loan Advances.

 

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, Lender agrees to make revolving loans (“Advances”) to
Borrowers in an amount at any one time outstanding not to exceed the lesser of:

 

(i) the Maximum Revolver Amount less the Letter of Credit Usage at such time,
and

 

(ii) the Borrowing Base at such time less the Letter of Credit Usage at such
time.

 

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Advances,
together with interest accrued and unpaid thereon, shall be due and payable on
the Termination Date. Lender has no obligation to make an Advance at any time
following the occurrence and during the continuance of a Default or an Event of
Default.

 

(c) Anything to the contrary in this Section 2.1 notwithstanding, Lender shall
have the right in its Permitted Discretion (but not the obligation) to
establish, increase, reduce, eliminate, or otherwise adjust Reserves from time
to time against the Borrowing Base in such amounts, and with respect to such
matters, as Lender shall deem necessary or appropriate, including with respect
to amounts that may be payable by any Borrower to third parties.

 

2.2 Term Loan. Subject to the terms and conditions of this Agreement, on the
Closing Date Lender agrees to make a term loan (the “Term Loan”) to Borrowers in
an amount equal to the Term Loan Amount. The principal of the Term Loan shall be
repaid in monthly installments of $59,523.81, commencing on May 1, 2013 and on
the first calendar day of each succeeding month; provided that the outstanding
unpaid principal balance and all accrued and unpaid interest on the Term Loan
shall be due and payable on the Termination Date. Any principal amount of the
Term Loan that is repaid or prepaid may not be reborrowed.

 

2.3 Borrowing Procedures.

 

(a) Procedure for Borrowing. Provided Lender has not separately agreed that
Borrowers may use the Loan Management Service, each Borrowing shall be made by a
written request by an Authorized Person delivered to Lender. Such written
request must be received by Lender no later than 12:00 noon (Eastern time) on
the Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, (ii) the requested Funding Date, which shall be a Business Day
and (iii) the applicable Designated Account. At Lender’s election, in lieu of
delivering the above-described written request, any Authorized Person may give
Lender telephonic notice of such request by the required time. Lender is
authorized to make the Advances, and to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person. Notwithstanding the foregoing or anything
herein to the contrary, Borrowers shall provide not less than 10 Business Days’
advance written notice of their request for the initial Advance.

 

   

 

 

(b) Making of Loans. Promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Lender shall make the proceeds thereof available to
Borrowers on the applicable Funding Date by transferring immediately available
funds equal to such amount to the applicable Designated Account; provided,
however, that, Lender shall not have the obligation to make any Advance if (i)
one (1) or more of the applicable conditions precedent set forth in Section 4
will not be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived by Lender, or (ii) the requested Borrowing
would exceed the Availability on such Funding Date.

 

(c) Loan Management Service. If Lender has separately agreed that Borrowers may
use the Loan Management Service, Borrowers shall not request and Lender shall no
longer honor a request for an Advance made in accordance with Section 2.3(a) and
all Advances will instead be initiated by Lender and credited to the Designated
Account as Advances as of the end of each Business Day in an amount sufficient
to maintain an agreed upon ledger balance in the Designated Account, subject
only to Availability as provided in Section 2.1. If Lender terminates Borrowers’
access to the Loan Management Service, Borrowers may continue to request
Advances as provided in Section 2.3(a), subject to the other terms and
conditions of this Agreement. Lender shall have no obligation to make an Advance
through the Loan Management Service after the occurrence and during the
continuance of a Default or an Event of Default, or in an amount in excess of
Availability, and may terminate the Loan Management Service at any time in its
sole discretion.

 

(d) Protective Advances. Lender may make an Advance for any reason at any time
in its Permitted Discretion, without Borrowers’ compliance with any of the
conditions of this Agreement, and (i) disburse the proceeds directly to third
Persons in order to protect Lender’s interest in the Collateral or to perform
any obligation of Borrowers under this Agreement or otherwise to enhance the
likelihood of repayment of the Obligations, or (ii) apply the proceeds to
outstanding Obligations then due and payable to Lender (such Advance, a
“Protective Advance”).

 

2.4 Payments; Prepayments.

 

(a) Payments by Borrowers. Except as otherwise expressly provided herein, all
payments by Borrowers shall be made as directed by Lender or as otherwise
specified in the applicable Cash Management Documents.

 

(b) Payments by Account Debtors.

 

(i) Aventis Pharmaceuticals. Borrowers shall instruct Aventis Pharmaceuticals,
Inc. or any successor pursuant to the Sanofi-Aventis License Agreement to make
payments directly to the Sanofi-Aventis Receivables Account for direct
application to reduce the outstanding Advances. If any Borrower receives a
payment pursuant to the Sanofi-Aventis License Agreement directly, such Borrower
will promptly deposit such payment into the Sanofi-Aventis Receivables Account.
Until so deposited, such Borrower will hold all such payments in trust for
Lender without commingling with other funds or property.

 

(ii) Other Account Debtors. Borrowers shall instruct all other Account Debtors
to make payments directly to the Collection Account. After the occurrence of a
Triggering Event, all amounts on deposit in the Collection Account shall be
applied to reduce the outstanding Advances. If any Borrower receives a payment
of the Proceeds of Collateral directly, such Borrower will promptly deposit the
payment or Proceeds into the Collection Account with the use of a check scanner.
Until so deposited, such Borrower will hold all such payments and Proceeds in
trust for Lender without commingling with other funds or property.

 

(c) Crediting Payments. For purposes of calculating Availability and the accrual
of interest on outstanding Obligations, unless otherwise provided in the
applicable Cash Management Documents, each payment shall be applied to the
Obligations on the next Business Day following the Business Day of receipt of
funds by Lender; provided such payment is received in accordance with Lender’s
usual and customary practices within sufficient time to credit the Loan Account
on such day, and if not, the next Business Day. Any payment received by Lender
that is not a transfer of immediately available funds shall be considered
provisional until the item or items representing such payment have been finally
paid under applicable law. Should any payment item not be honored when presented
for payment, then Borrowers shall be deemed not to have made such payment, and
that portion of Borrowers’ outstanding Obligations corresponding to the amount
of such dishonored payment item shall be deemed to bear interest as if the
dishonored payment item had never been received by Lender. Each reduction in
outstanding Advances resulting from the application of such payment to the
outstanding Advances shall be accompanied by an equal reduction in the amount of
outstanding Accounts.

 

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(d) Application of Payments. All Collections and all Proceeds of Collateral
received by Lender (subject to Sections 2.4(f) and (g)), shall be applied, so
long as no Event of Default has occurred and is continuing, to reduce the
outstanding Advances. After payment in full in cash of all outstanding Advances,
any remaining balance shall be transferred to the Designated Account or
otherwise to such other Person entitled thereto under applicable law.

 

(e) Optional Prepayments of Term Loan. Borrowers may, upon at least 1 Business
Day’s prior written notice to Lender, prepay the principal of the Term Loan, in
whole or in part. Each prepayment of principal made pursuant to this Section
2.4(e) shall be accompanied by the payment of accrued interest to the date of
such payment on the amount prepaid and the prepayment fee described in Section
2.12 and any other applicable fees described in Section 2.12, if any. So long as
no Default or Event of Default shall have occurred and is continuing, each such
prepayment shall be applied pro rata against the remaining installments of
principal due on the Term Loan (for the avoidance of doubt, any amount that is
due and payable on the Maturity Date shall constitute an installment).

 

(f) Mandatory Prepayments.

 

(i) Borrowing Base. If, at any time, the Revolver Usage exceeds (A) the
Borrowing Base or (B) the Maximum Revolver Amount (such excess amount being
referred to as the “Overadvance Amount”), then Borrowers shall promptly, but in
any event, within 3 Business Days, prepay the Obligations in an aggregate amount
equal to the Overadvance Amount. If payment in full of the outstanding revolving
loans is insufficient to eliminate the Overadvance Amount and Letter of Credit
Usage continues to exceed the Borrowing Base, Borrowers shall maintain Letter of
Credit Collateralization of the outstanding Letter of Credit Usage. Lender shall
not be obligated to provide any Advances during any period that an Overadvance
Amount is outstanding.

 

(ii) Term Loan.

 

(A) If Lender obtains an appraisal of the Eligible Real Property Collateral at
any time as permitted under this Agreement, and such appraisal shows the
aggregate unpaid principal amount of the Term Loan to exceed 55% of the then
current appraised “as-is” market value of the Real Property Collateral, then
Lender may require Borrowers to immediately prepay the unpaid principal of the
Term Loan in the amount of such excess.

 

(B) Within 1 Business Day of the receipt by any Loan Party or any of their
Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or
disposition of any Eligible Real Property Collateral, Borrowers shall prepay the
outstanding principal amount of the Term Loan in an amount equal to 100% of such
Net Cash Proceeds (including condemnation awards and payments in lieu thereof.
Nothing contained in this Section 2.4(f)(ii) shall permit any Loan Party or any
of their Subsidiaries to sell or otherwise dispose of any assets other than in
accordance with Section 7.4.

 

(g) Application of Mandatory Prepayments.

 

(i) Each prepayment pursuant to Section 2.4(f)(i) shall, (A) so long as no Event
of Default shall have occurred and be continuing, be applied, first, to the
outstanding principal amount of the Advances until paid in full, second, to cash
collateralize the Letters of Credit in an amount equal to 110% of the then
outstanding Letter of Credit Usage, and third, to the outstanding principal
amount of the Term Loan until paid in full, and (B) if an Event of Default shall
have occurred and be continuing, be applied in the manner set forth in
Section 10.5. Each such prepayment of the Term Loan shall be applied against the
remaining installments of principal of the Term Loan in the inverse order of
maturity (for the avoidance of doubt, any amount that is due and payable on the
Maturity Date shall constitute an installment).

 

(ii) Each prepayment pursuant to Section 2.4(f)(ii) shall be applied against the
remaining installments of principal of the Term Loan in the inverse order of
maturity (for the avoidance of doubt, any amount that is due and payable on the
Maturity Date shall constitute an installment).

 

2.5 Clearance Charge. Collections received by Lender shall be applied as
provided in Sections 2.4, but the Obligations paid with such Collections shall
continue to accrue interest at the rate then applicable to Advances as provided
under Section 2.6 through the end of the first Business Day following the
Business Day that such Collections were applied to reduce such Obligations. This
one Business Day clearance charge on all Collections is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers. The parties acknowledge and agree that the economic benefit of the
foregoing provisions of this Section 2.5 shall accrue exclusively to Lender.

 

2.6 Interest Rates: Rates, Payments, and Calculations.

 

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(a) Interest Rates. Except as provided in Section 2.6(b), the principal amount
of all Obligations (except for undrawn Letters of Credit and Bank Products) that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to the Interest
Rate plus the Interest Rate Margin.

 

(b) Default Rate. Upon the occurrence and during the continuation of an Event of
Default and at any time following the Termination Date,

 

(i) the principal amount of all Obligations (except for Obligations in respect
of undrawn Letters of Credit and Bank Products) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 3 percentage points above the per
annum rate otherwise applicable thereunder, and

 

(ii) the Letter of Credit fee provided for in Section 2.12 shall be increased by
3 percentage points above the per annum rate otherwise applicable hereunder.

 

(c) Payment. Except to the extent provided to the contrary in Section 2.12, all
interest, all Letter of Credit fees, all other fees payable hereunder or under
any of the other Loan Documents, all costs and expenses payable hereunder or
under any of the other Loan Documents, and all Lender Expenses shall be due and
payable, in arrears, on the first day of each month. Each Borrower hereby
authorizes Lender, from time to time without prior notice to Borrowers, to
charge all interest, Letter of Credit fees, and all other fees payable hereunder
or under any of the other Loan Documents (in each case, as and when due and
payable), all costs and expenses payable hereunder or under any of the other
Loan Documents (in each case, as and when accrued or incurred), all Lender
Expenses (as and when accrued or incurred), and all fees and costs provided for
in Section 2.12 (as and when accrued or incurred), and all other payment
obligations as and when due and payable under any Loan Document or any Bank
Product Agreement (including any amounts due and payable to any Bank Product
Provider in respect of Bank Products) to the Loan Account, which amounts shall
thereupon constitute Advances hereunder and, shall accrue interest at the rate
then applicable to Advances. Any interest, fees, costs, expenses, Lender
Expenses, or other amounts payable hereunder or under any other Loan Document or
under any Bank Product Agreement that are charged to the Loan Account shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances.

 

(d) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue. In the
event the Interest Rate is changed from time to time hereafter, the rates of
interest hereunder based upon the Interest Rate automatically and immediately
shall be increased or decreased by an amount equal to such change in the
Interest Rate.

 

(e) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and Lender, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, as of the date of this
Agreement, Borrowers are and shall be liable only for the payment of such
maximum amount as is allowed by law, and payment received from Borrowers in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

 

2.7 Designated Account. Borrowers agree to establish and maintain one or more
Designated Accounts, each in the name of a single Borrower, for the purpose of
receiving the proceeds of the Advances requested by Borrowers and made by Lender
hereunder and the proceeds of the Term Loan. Unless otherwise agreed by Lender
and Borrowers, any Advance requested by Borrowers and made by Lender hereunder
shall be made to the applicable Designated Account.

 

2.8 Maintenance of Loan Account; Statements of Obligations. Lender shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
in which will be recorded the Term Loan, all Advances made by Lender to
Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by
Lender for Borrowers’ account, and all other payment Obligations hereunder or
under the other Loan Documents, including accrued interest, fees and expenses,
and Lender Expenses. In accordance with Section 2.4 and Section 2.5, the Loan
Account will be credited with all payments received by Lender from Borrowers or
for Borrowers’ account. All monthly statements delivered by Lender to
Administrative Borrower regarding the Loan Account, including with respect to
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Expenses owing, shall be subject to subsequent
adjustment by Lender but shall, absent manifest error, be conclusively presumed
to be correct and accurate and constitute an account stated between Borrowers
and Lender unless, within 30 days after receipt thereof by Borrowers, Borrowers
shall deliver to Lender written objection thereto describing the error or errors
contained in any such statements.

 

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2.9 Maturity Termination Dates. Lender’s obligations under this Agreement shall
continue in full force and effect for a term ending on the earliest of (a) April
11, 2016 (the “Maturity Date”) or (b) the date Borrowers terminate the Revolving
Credit Facility, or (c) the date the Revolving Credit Facility terminates
pursuant to Section 10.2 following the occurrence and during the continuance of
an Event of Default (the earliest of these dates, the “Termination Date”). The
foregoing notwithstanding, Lender shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default. Each Borrower
jointly and severally promises to pay the Obligations (including principal,
interest, fees, costs, and expenses, including Lender Expenses) in full on the
Termination Date (other than the Hedge Obligations, which shall be paid in
accordance with the applicable Hedge Agreement and inchoate indemnification
claims for which no claim has been asserted).

 

2.10 Effect of Maturity. On the Termination Date, all obligations of Lender to
provide additional credit hereunder shall automatically be terminated and all of
the Obligations (other than Hedge Obligations which shall be terminated in
accordance with the applicable Hedge Agreement) shall immediately become due and
payable without notice or demand and Borrowers shall immediately repay all of
the Obligations in full. No termination of the obligations of Lender (other than
cash payment in full of the Obligations and termination of the obligations of
Lender to provide additional credit hereunder) shall relieve or discharge any
Loan Party of its duties, obligations, or covenants hereunder or under any other
Loan Document and Lender’s Liens in the Collateral shall continue to secure the
Obligations and shall remain in effect until all Obligations (other than
inchoate indemnification obligations for which no claim has been asserted) have
been paid in full in cash and Lender’s obligations to provide additional credit
hereunder shall have been terminated. Provided that there are no suits, actions,
proceedings or claims pending or threatened against any Indemnified Person under
this Agreement with respect to any Indemnified Liabilities, Lender shall, at
Borrowers’ expense, release or terminate any filings or other agreements that
perfect the Security Interest, upon Lender’s receipt of each of the following,
in form and content satisfactory to Lender: (a) cash payment in full of all
Obligations (other than inchoate indemnification obligations for which no claim
has been asserted) and completed performance by Borrowers with respect to their
other obligations under this Agreement (including Letter of Credit
Collateralization with respect to all outstanding Letter of Credit Usage), (b)
evidence that any obligation of Lender to make Advances to any Borrower or
provide any further credit to any Borrower has been terminated, (c) a general
release of all claims against Lender and its Affiliates by each Borrower and
each Loan Party relating to Lender’s performance and obligations under the Loan
Documents, and (d) an agreement by each Borrower, each Guarantor, and any new
lender to Borrowers to indemnify Lender and its Affiliates for any payments
received by Lender or its Affiliates that are applied to the Obligations as a
final payoff that may subsequently be returned or otherwise not paid for any
reason. With respect to any outstanding Hedge Obligations which are not so paid
in full, the Bank Product Provider may require Borrowers to cash collateralize
the then existing Hedge Obligations in an amount acceptable to Lender prior to
releasing or terminating any filings or other agreements that perfect the
Security Interest.

 

2.11 Termination or Reduction by Borrowers.

 

(a) Borrowers may terminate the Credit Facility or reduce the Maximum Revolver
Amount or prepay the Term Loan at any time prior to the Maturity Date, if they
(i) deliver a notice to Lender of their intentions at least 30 days prior to the
proposed action, (ii) pay to Lender the applicable termination fee, reduction
fee or prepayment fee set forth in Schedule 2.12, and (iii) pay the Obligations
(other than the outstanding Hedge Obligations, which shall be paid in accordance
with the applicable Hedge Agreement) in full or down to the reduced Maximum
Revolver Amount or to the reduced amount of the Term Loan, as applicable. Any
reduction in the Maximum Revolver Amount or Term Loan shall be in multiples of
$100,000, with a minimum reduction of at least $500,000. Each such termination,
reduction or prepayment shall be irrevocable. Once reduced, the Maximum Revolver
Amount may not be increased. Proceeds of Advances shall not be used by Borrowers
to make a prepayment of the Term Loan.

 

(b) The applicable termination fee, reduction fee and prepayment fee set forth
in Schedule 2.12 shall be presumed to be the amount of damages sustained by
Lender as a result of an early termination, reduction or prepayment, as
applicable and each Borrower agrees that it is reasonable under the
circumstances currently existing (including, but not limited to, the borrowings
that are reasonably expected by Borrowers hereunder and the interest, fees and
other charges that are reasonably expected to be received by Lender hereunder).
In addition, Lender shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 9.4 and 9.5 hereof,
even if Lender does not exercise its right to terminate this Agreement, but
elects, at its option, to provide financing to Borrowers or permit the use of
cash collateral during an Insolvency Proceeding. The early termination fee,
reduction fee and prepayment fee, as applicable, provided for in Schedule 2.12
shall be deemed included in the Obligations.

 

2.12 Fees. Borrowers shall pay to Lender the fees set forth on Schedule 2.12
attached hereto.

 

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2.13 Letters of Credit.

 

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrowers made in accordance with this Section 2.13, Lender agrees to issue a
requested Letter of Credit. Borrowers may request that Lender issue, amend or
extend a Letter of Credit by delivering to Lender the applicable Letter of
Credit Agreements, completed to the satisfaction of Lender, and such other
certificates, documents and information as Lender may request. Each such request
shall be in form and substance reasonably satisfactory to Lender and shall
specify (i) the amount of such Letter of Credit, (ii) the date of issuance,
amendment, or extension of such Letter of Credit, (iii) the expiration date of
such Letter of Credit, (iv) the name and address of the beneficiary of the
Letter of Credit, and (v) such other information (including, in the case of an
amendment, or extension, identification of the Letter of Credit to be so amended
or extended) as shall be necessary to prepare, issue, amend or extend such
Letter of Credit. Upon receipt of any Letter of Credit Agreements, Lender shall
process such Letter of Credit Agreements and the certificates, documents and
information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to this Section 2.13, issue the Letter
of Credit requested thereby (but in no event shall Lender be required to issue
any Letter of Credit earlier than 3 Business Days after its receipt of the
Letter of Credit Agreements therefor and all such other certificates, documents
and information relating thereto) by issuing the original of such Letter of
Credit (or amendment or extension) to the beneficiary thereof or as otherwise
may be agreed by Lender and Borrowers. Each request for the issuance of a Letter
of Credit, or the amendment or extension of any outstanding Letter of Credit,
shall be made in writing by an Authorized Person and delivered to Lender via
hand delivery, facsimile, or other electronic method of transmission reasonably
in advance of the requested date of issuance, amendment or extension. Each
Letter of Credit shall (i) be a standby letter of credit or commercial letter of
credit issued to support obligations of a Borrower or any of its Subsidiaries,
contingent or otherwise, incurred in the ordinary course of business,
(ii) expire on a date no more than 12 months after the date of issuance or last
renewal of such Letter of Credit, which date shall be no later than the Maturity
Date, and (iii) be subject to the Uniform Customs and/or ISP98, as set forth in
the Letter of Credit Agreements or as determined by Lender and, to the extent
not inconsistent therewith, the laws of the State which governs this Agreement.

 

(b) Lender shall have no obligation to issue, amend or extend a Letter of Credit
if after giving effect to the requested issuance, amendment or extension the
Letter of Credit Usage would exceed either:

 

(i) (A) the Borrowing Base less the outstanding amount of Advances, or (B) the
Maximum Revolver Amount less the outstanding amount of Advances, or

 

(ii) $10,000,000.

 

(c) If Lender makes a payment under a Letter of Credit Borrowers shall pay to
Lender an amount equal to the applicable Letter of Credit Disbursement on the
date such Letter of Credit Disbursement is made and, in the absence of such
payment, the amount of the Letter of Credit Disbursement immediately and
automatically shall be deemed to be an Advance hereunder (notwithstanding any
failure to satisfy any condition precedent set forth in Section 4 or this
Section). If a Letter of Credit Disbursement is deemed to be an Advance
hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit
Disbursement to Lender shall be automatically converted into an obligation to
pay the resulting Advance in accordance with the terms of this Agreement.

 

(d) Borrowers’ obligations under this Section 2.13 (including Borrowers’
reimbursement obligation) shall be absolute and unconditional under any and all
circumstances and irrespective of any set off, counterclaim or defense to
payment which any Borrower may have or have had against Lender or any
beneficiary of a Letter of Credit or any other Person. Each Borrower also agrees
that Lender shall not be responsible for, and the Borrowers’ reimbursement
obligation hereunder shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among any Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of any Borrower against any beneficiary of such Letter of
Credit or any such transferee. Lender shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by Lender’s gross negligence or willful
misconduct, as determined by a court of competent jurisdiction by final
non-appealable judgment. Borrowers agree that any action taken or omitted by
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct
shall be binding on each Borrower and shall not result in any liability of
Lender to any Borrower. The responsibility of Lender to Borrowers in connection
with any draft presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit.

 

(e) Each Borrower hereby agrees to indemnify, save, defend, and hold Lender
harmless from any damage, loss, cost, expense, or liability, and reasonable
documented attorneys' fees incurred by Lender arising out of or in connection
with any Letter of Credit; provided, however, that no Borrower shall be
obligated hereunder to indemnify for any damage, loss, cost, expense, or
liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of Lender. Each
Borrower understands and agrees that Lender shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following any
Borrower’s instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower hereby
acknowledges and agrees that Lender shall not be responsible for delays, errors,
or omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.

 

6

 

 

(f) If by reason of (i) any change after the date hereof in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by Lender with any
direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including, Regulation D
of the Federal Reserve Board as from time to time in effect (and any successor
thereto):

 

(A) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued or caused to be issued
hereunder or hereby, or

 

(B) there shall be imposed on Lender any other condition regarding any Letter of
Credit,

 

and the result of either of the foregoing is to increase, directly or
indirectly, the cost to Lender of issuing, making, guaranteeing, or maintaining
any Letter of Credit or to reduce the amount receivable in respect thereof,
then, and in any such case, Lender may, at any time within a reasonable period
after the additional cost is incurred or the amount received is reduced, notify
Borrowers, and Borrowers shall pay within 30 days after demand therefor, such
amounts as Lender may specify to be necessary to compensate Lender for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Advances hereunder; provided, however, that Borrowers shall not be
required to provide any compensation pursuant to this Section 2.13(f) for any
such amounts incurred more than 180 days prior to the date on which the demand
for payment of such amounts is first made to Borrowers; provided further,
however, that if an event or circumstance giving rise to such amounts is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof. The determination by Lender of
any amount due pursuant to this Section 2.13(f), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.

 

(g) To the extent that any provision of any Letter of Credit Agreement related
to any Letter of Credit is inconsistent with the provisions of this Section
2.13, the provisions of this Section 2.13 shall apply.

 

2.14 Illegality; Impracticability; Increased Costs. In the event that (a) any
change in market conditions or any law, regulation, treaty, or directive, or any
change therein or in the interpretation or application thereof (other than with
respect to Taxes, which shall be governed by Section 16) make it unlawful or
impractical for Lender to fund or maintain extensions of credit with interest
based upon Daily Three Month LIBOR or to continue such funding or maintaining,
or to determine or charge interest rates based upon Daily Three Month LIBOR, (b)
Lender determines that by reasons affecting the London interbank Eurodollar
market, adequate and reasonable means do not exist for ascertaining Daily Three
Month LIBOR, or (c) Lender determines that the interest rate based on the Daily
Three Month LIBOR will not adequately and fairly reflect the cost to Lender of
maintaining or funding Advances or the Term Loan at the interest rate based upon
Daily Three Month LIBOR, Lender shall give notice of such changed circumstances
to Borrowers and (i) interest on the principal amount of such extensions of
credit thereafter shall accrue interest at a rate equal to the Prime Rate plus
the Interest Rate Margin, and (ii) Borrowers shall not be entitled to elect
Daily Three Month LIBOR until Lender determines that it would no longer be
unlawful or impractical to do so or that such increased costs would no longer be
applicable.

 

2.15 Capital Requirements. If, after the date hereof, Lender determines that (a)
the adoption of or change in any law, rule, regulation or guideline regarding
capital or reserve requirements for banks or bank holding companies, or any
change in the interpretation, implementation, or application thereof by any
Governmental Authority charged with the administration thereof, including those
changes resulting from the enactment of the Dodd-Frank Wall Street Reform and
Consumer Protection Act and Basel III, regardless of the date enacted, adopted
or issued, or (b) compliance by Lender or its parent bank holding company with
any guideline, request or directive of any such entity regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on Lender’s or such holding company’s capital as a consequence of
Lender’s loan commitments hereunder to a level below that which such Lender or
such holding company could have achieved but for such adoption, change, or
compliance (taking into consideration such Lender’s or such holding company’s
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity’s capital) by any amount deemed by Lender to be
material, then Lender may notify Borrowers thereof. Following receipt of such
notice, Borrowers agree to pay Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 30
days after presentation by Lender of a statement in the amount and setting forth
in reasonable detail Lender’s calculation thereof and the assumptions upon which
such calculation was based (which statement shall be deemed true and correct
absent manifest error). In determining such amount, Lender may use any
reasonable averaging and attribution methods. Failure or delay on the part of
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of Lender’s right to demand such compensation; provided that Borrowers
shall not be required to compensate Lender pursuant to this Section for any
reductions in return incurred more than 180 days prior to the date that Lender
notifies Borrowers of such law, rule, regulation or guideline giving rise to
such reductions and of Lender’s intention to claim compensation therefor;
provided further that if such claim arises by reason of the adoption of or
change in any law, rule, regulation or guideline that is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

7

 

 

2.16 Extent of Each Borrower’s Liability, Contribution.

 

(a) Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Lender
the prompt payment and performance of, all Obligations under this Agreement and
all agreements under the Loan Documents. Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection, that such obligations shall not be discharged until cash payment in
full of the Obligations, and that such obligations are absolute and
unconditional, irrespective of (a) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to
which any Borrower is or may become a party or be bound; (b) the absence of any
action to enforce this Agreement (including this Section) or any other Loan
Document, or any waiver, consent or indulgence of any kind by Lender with
respect thereto; (c) the existence, value or condition of, or failure to perfect
any of Lender’s Liens or to preserve rights against, any security or guaranty
for the Obligations or any action, or the absence of any action, by Lender in
respect thereof (including the release of any security or guaranty); (d) the
insolvency of any Borrower; (e) any election by Lender in an Insolvency
Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f)
any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of
any claims of Lender against any Borrower for the repayment of any Obligations
under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action
or circumstances that might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, except cash payment in full of all
Obligations.

 

(b) Notwithstanding anything herein to the contrary, each Borrower’s liability
under this Section 2.16 shall be limited to the greater of (i) all amounts for
which such Borrower is primarily liable, as described below, and (ii) such
Borrower’s Allocable Amount.

 

(c) If any Borrower makes a payment under this Section 2.16 of any Obligations
(other than amounts for which such Borrower is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Borrower’s
Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment. The “Allocable Amount” for any
Borrower shall be the maximum amount that could then be recovered from such
Borrower under this Section 2.16 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.

 

(d) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Lender with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations (other
than inchoate indemnification obligations for which no claim has been asserted)
have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to Lender hereunder or under any
of the Bank Product Agreements are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations (other than inchoate indemnification obligations for which no claim
has been asserted) and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.

 

(e) Nothing contained in this Section 2.16 shall limit the liability of any
Borrower to pay extensions of credit made directly or indirectly to that
Borrower (including revolving loans advanced to any other Borrower and then
re-loaned or otherwise transferred to, or for the benefit of, such Borrower),
Obligations relating to Letters of Credit issued to support such Borrower’s
business, and all accrued interest, fees, expenses and other related Obligations
with respect thereto, for which such Borrower shall be primarily liable for all
purposes hereunder. Lender shall have the right, at any time in its discretion,
to condition an extension of credit hereunder upon a separate calculation of
borrowing availability for each Borrower and to restrict the disbursement and
use of such extensions of credit to such Borrower.

 

8

 

 

2.17 AMRI as Agent for Borrowers. Each Borrower hereby irrevocably appoints AMRI
as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Lender shall have received prior written notice signed
by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (a) to provide
Lender with all notices with respect to Advances, Letters of Credit and other
extensions of credit obtained for the benefit of any Borrower and all other
notices and instructions under this Agreement, and (b) to take such action as
the Administrative Borrower deems appropriate on its behalf to obtain Advances,
Letters of Credit and other extensions of credit and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loan Account and Collateral
in a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender shall not incur liability to any Borrower as a result hereof.
Each Borrower expects to derive benefit, directly or indirectly, from the
handling of the Loan Account and the Collateral in a combined fashion since the
successful operation of each Borrower is dependent on the continued successful
performance of the integrated group. To induce Lender to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify Lender and hold Lender harmless against any and all liability,
expense, loss or claim of damage or injury, made against Lender by any Borrower
or by any third party whosoever, arising from or incurred by reason of (a) the
handling of the Loan Account and Collateral of Borrowers as herein provided, or
(b) Lender’s relying on any instructions of the Administrative Borrower, except
that Borrowers will have no liability to Lender under this Section 2.17 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of Lender.

 

3. SECURITY INTEREST.

 

3.1 Grant of Security Interest. Each Loan Party hereby unconditionally grants,
assigns, and pledges to Lender for the benefit of Lender and each Bank Product
Provider, to secure payment and performance of the Obligations, a continuing
security interest (hereinafter referred to as the “Security Interest”) in all of
such Loan Party’s right, title, and interest in and to the Collateral, as
security for the payment and performance of all Obligations. Following request
by Lender, each Loan Party shall grant Lender a Lien and security interest in
all Commercial Tort Claims that it may have against any Person. The Security
Interest created hereby secures the payment and performance of the Obligations,
whether now existing or arising hereafter. Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Obligations and would be owed by any Loan Party to Lender
or any other Bank Product Provider, but for the fact that they are unenforceable
or not allowable (in whole or in part) as a claim in an Insolvency Proceeding
involving any Loan Party due to the existence of such Insolvency Proceeding.
Notwithstanding anything contained in this Agreement to the contrary, the term
“Collateral” shall not include: (i) voting Stock of any CFC, solely to the
extent that (y) such Stock represents more than 65% of the outstanding voting
Stock of such CFC, and (z) pledging or hypothecating more than 65% of the total
outstanding voting Stock of such CFC would result in material adverse tax
consequences; (ii) any rights or interest in any contract, lease, permit,
license, or license agreement covering real or personal property of any Loan
Party if under the terms of such contract, lease, permit, license, or license
agreement, or applicable law with respect thereto, the grant of a security
interest or lien therein is prohibited as a matter of law or under the terms of
such contract, lease, permit, license, or license agreement and such prohibition
or restriction has not been waived or the consent of the other party to such
contract, lease, permit, license, or license agreement has not been obtained
(provided, that, (A) the foregoing exclusions of this clause (ii) shall in no
way be construed (1) to apply to the extent that any described prohibition or
restriction is unenforceable under Section 9-406, 9-407, 9-408, or 9-409 of the
Code or other applicable law, or (2) to apply to the extent that any consent or
waiver has been obtained that would permit Lender’s security interest or lien
notwithstanding the prohibition or restriction on the pledge of such contract,
lease, permit, license, or license agreement and (B) the foregoing exclusions of
clauses (i) and (ii) shall in no way be construed to limit, impair, or otherwise
affect any of Lender’s continuing security interests in and liens upon any
rights or interests of any Loan Party in or to (1) monies due or to become due
under or in connection with any described contract, lease, permit, license,
license agreement, or Stock (including any Accounts or Stock), or (2) any
proceeds from the sale, license, lease, or other dispositions of any such
contract, lease, permit, license, license agreement, or Stock); (iii) any United
States intent-to-use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law, provided that upon submission and
acceptance by the PTO of an amendment to allege use pursuant to 15 U.S.C.
Section 1060(a) (or any successor provision), such intent-to-use trademark
application shall be considered Collateral; (iv) Stock of AMRI Netherlands B.V.
so long as (A) no Event of Default shall have occurred and is continuing and (B)
AMRI Netherlands B.V. does not own assets in excess of $200,000 at any time
after the date that is six months after the Closing Date; or (v) cash collateral
in Bank of America, N.A. account number 1499062260, pledged to Bank of America,
N.A. in the amount of $1,464,715.20 on the Closing Date, pursuant to the Cash
Collateral Agreement between Administrative Borrower and Bank of America, N.A.
dated the Closing Date.

 

3.2 Borrowers Remain Liable. Anything herein to the contrary notwithstanding,
(a) each Loan Party shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Lender of any of the rights hereunder shall not release any Loan
Party from any of its duties or obligations under such contracts and agreements
included in the Collateral, and (c) Lender shall not have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Lender be obligated to perform any of the
obligations or duties of any Loan Party thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder. Until an Event of
Default shall occur, except as otherwise provided in this Agreement or any other
Loan Document, the Loan Parties shall have the right to possession and enjoyment
of the Collateral for the purpose of conducting the ordinary course of their
respective businesses, subject to and upon the terms hereof and of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including all voting, consensual, dividend,
and distribution rights, shall remain in the Loan Parties until (i) the
occurrence and continuance of an Event of Default and (ii) Lender has notified
Loan Parties of Lender’s election to exercise such rights with respect to the
Pledged Interests pursuant to Section 10.9.

 

9

 

 

3.3 Financing Statements. Each Borrower and each other Loan Party authorizes
Lender to file financing statements describing Collateral to perfect Lender’s
and each Bank Product Provider’s Security Interest in the Collateral, and Lender
may describe the Collateral as “all personal property” or “all assets” or
describe specific items of Collateral including without limitation any
Commercial Tort Claims. All financing statements filed before the date of this
Agreement to perfect the Security Interest were authorized by each Borrower and
are hereby ratified.

 

4. CONDITIONS.

 

4.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
Lender to make the initial extension of credit provided for hereunder is subject
to the fulfillment, to the satisfaction of Lender, of each of the conditions
precedent set forth on Exhibit B.

 

4.2 Conditions Precedent to all Extensions of Credit. The obligation of Lender
to make any Advances hereunder (or to extend any other credit hereunder) at any
time shall be subject to the following conditions precedent:

 

(a) the representations and warranties of each Loan Party and its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall continue to be
true and correct as of such earlier date); and

 

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof.

 

Any request for an extension of credit shall be deemed to be a representation by
each Loan Party that the statements set forth in this Section 4.2 are correct as
of the time of such request and if such extension of credit is a request for an
Advance or a Letter of Credit, sufficient Availability exists for such Advance
or Letter of Credit pursuant to Section 2.1(a) and Section 2.13.

 

5. REPRESENTATIONS AND WARRANTIES.

 

In order to induce Lender to enter into this Agreement, each Borrower, on behalf
of itself and the other Loan Parties, makes the representations and warranties
to Lender set forth on Exhibit D. Each of such representations and warranties
shall be true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof), as of the date of the making of
each Advance or other extension of credit made thereafter, as though made on and
as of the date of such Advance or other extension of credit (except to the
extent that such representations and warranties relate solely to an earlier date
in which case such representations and warranties shall continue to be true and
correct as of such earlier date) and such representations and warranties shall
survive the execution and delivery of this Agreement.

 

6. AFFIRMATIVE COVENANTS.

 

Each Loan Party covenants and agrees that, until termination of this Agreement
and payment in full of the Obligations, each Loan Party shall and shall cause
their respective Subsidiaries to comply with each of the following:

 

10

 

 

6.1 Financial Statements, Reports, Certificates. Deliver to Lender copies of
each of the financial statements, reports, and other items set forth on Schedule
6.1 no later than the times specified therein. In addition, each Loan Party
agrees that no Subsidiary of a Borrower will have a fiscal year different from
that of Borrowers. Each Loan Party agrees to maintain a system of accounting
that enables such Loan Party to produce financial statements in accordance with
GAAP. Each Loan Party shall also (a) keep a reporting system that shows all
additions, sales, claims, returns, and allowances with respect to its and its
Subsidiaries’ sales, and (b) maintain its billing systems/practices
substantially as in effect as of the Closing Date and shall only make material
modifications following prior notice to Lender.

 

6.2 Collateral Reporting. Provide Lender with each of the reports set forth on
Schedule 6.2 at the times specified therein. In addition, each Borrower agrees
to use commercially reasonable efforts in cooperation with Lender to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth on such Schedule.

 

6.3 Existence. Except as otherwise permitted under Section 7.3 or Section 7.4,
at all times maintain and preserve in full force and effect (a) its existence
(including being in good standing in its jurisdiction of organization) and (b)
all rights and franchises, licenses and permits material to its business;
provided, however, that no Loan Party nor any of its Subsidiaries shall be
required to preserve any such right or franchise, licenses or permits if such
Person’s board of directors (or similar governing body) shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such Person, and that the loss thereof is not disadvantageous in any material
respect to such Person or to Lender; provided that Borrowers deliver at least
ten (10) days prior written notice to Lender of such Loan Party’s election not
to preserve any such right or franchise, license or permit.

 

6.4 Maintenance of Properties. Maintain and preserve all of its assets that are
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear, tear and casualty excepted and Permitted
Dispositions excepted (and except where the failure to so maintain and preserve
such assets could not reasonably be expected to result in a Material Adverse
Change), and comply with the material provisions of all material leases to which
it is a party as lessee, so as to prevent the loss or forfeiture thereof, unless
such provisions are the subject of a Permitted Protest.

 

6.5 Taxes.

 

(a) Cause all assessments and taxes imposed, levied, or assessed against any
Loan Party or its Subsidiaries, or any of their respective assets or in respect
of any of its income, businesses, or franchises to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest and so long as, in the case of an assessment or tax that has
or may become a Lien against any of the Collateral, (i) such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such assessment or tax, and (ii) any such other Lien is at all times
subordinate to Lender’s Liens.

 

(b) Make timely payment or deposit of all tax payments and withholding taxes
required of it and them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof reasonably satisfactory
to Lender indicating that such Loan Party and its Subsidiaries have made such
payments or deposits.

 

6.6 Insurance. At Borrowers’ expense, maintain insurance respecting each of the
Loan Parties’ and their Subsidiaries’ assets wherever located, covering loss or
damage by fire, theft, explosion, and all other hazards and risks as ordinarily
are insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain (with respect to each of the Loan Parties and
their Subsidiaries) business interruption, general liability, flood insurance,
for Collateral located in a flood plain, product liability insurance, director’s
and officer’s liability insurance, fiduciary liability insurance, and employment
practices liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation. All such policies of insurance
shall be with responsible and reputable insurance companies acceptable to Lender
and in such amounts as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated and located and
in any event in amount, adequacy and scope reasonably satisfactory to Lender.
All property insurance policies covering the Collateral are to be made payable
to Lender for the benefit of Lender, as its interests may appear, in case of
loss, pursuant to a lender loss payable endorsement reasonably acceptable to
Lender and are to contain such other provisions as Lender may reasonably require
to fully protect Lender’s interest in the Collateral and to any payments to be
made under such policies. All certificates of property, general liability,
products liability and umbrella liability insurance are to be delivered to
Lender, with the lender loss payable (but only in respect of Collateral) and
additional insured endorsements (with respect to general liability coverage) in
favor of Lender and shall provide for not less than 30 days (10 days in the case
of non-payment) prior written notice to Lender of the exercise of any right of
cancellation. Notwithstanding the foregoing, (a) so long as no Event of Default
has occurred and is continuing, Borrowers shall have the option of applying the
proceeds of any property policy up to $500,000 in the aggregate for all losses
under all property policies in any one year toward the replacement or repair of
destroyed or damaged property; provided that any such replaced or repaired
property (i) shall be of equal or like value as the replaced or repaired
Collateral and (ii) shall be deemed Collateral in which Lender has been granted
a first priority security interest (subject only to Permitted Liens), and (b)
after the occurrence and during the continuance of an Event of Default, all
proceeds payable under such property policy shall, at the option of Lender, be
payable to Lender on account of the Obligations. If Borrowers fail to maintain
such insurance, Lender may arrange for such insurance, but at Borrowers’ expense
and without any responsibility on Lender’s part for obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims. Borrowers shall give Lender prompt notice of any loss
exceeding $200,000 covered by their casualty or business interruption insurance.
Upon the occurrence of an Event of Default, as between Borrowers and Lender and,
to the extent permitted under the applicable insurance policy, as between
Borrowers, Lender and the applicable insurer, Lender shall have the sole right
to file claims under any property and general liability insurance policies in
respect of the Collateral, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

 

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6.7 Inspection. Permit Lender and each of Lender’s duly authorized
representatives, at Borrowers’ sole cost and expense (for no more than one such
visit and inspection in any year, so long as no Default or Event of Default
exists), to visit any of its properties and inspect any of its assets or books
and records, to conduct appraisals, valuations, inspections, exams, audits, to
examine and make copies of its books and records, and to discuss its affairs,
finances, and accounts with, and to be advised as to the same by, its officers
and employees at such reasonable times and intervals as Lender may designate
and, so long as no Default or Event of Default exists, with reasonable prior
notice to Borrowers.

 

6.8 Account Verification.

 

(a) Aventis Pharmaceuticals. Permit Lender, in its Permitted Discretion, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account pursuant to which Aventis
Pharmaceuticals, Inc. (or any successor thereof) is the Account Debtor, by mail,
telephone, facsimile transmission or otherwise. Further, at the request of
Lender, Borrowers shall send requests for verification of such Accounts or send
notices of assignment of Accounts to Aventis Pharmaceuticals, Inc. (or its
successors and assigns).

 

(b) Other Account Debtors. After the occurrence and during the continuance of an
Event of Default, permit Lender, in Lender's name or in the name of a nominee of
Lender, to verify the validity, amount or any other matter relating to any other
Account, by mail, telephone, facsimile transmission or otherwise. Further, at
the request of Lender after the occurrence and during the continuance of an
Event of Default, Borrowers shall send requests for verification of such
Accounts or send notices of assignment of Accounts to such Account Debtors and
other obligors.

 

6.9 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change.

 

6.10 Environmental.

 

(a) Keep any property either owned or operated by any Loan Party and their
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances satisfactory to Lender and in an amount sufficient to satisfy the
obligations or liability evidenced by such Environmental Liens;

 

(b) Comply, in all material respects, with Environmental Laws and provide to
Lender documentation of such compliance which Lender reasonably requests;

 

(c) Promptly notify Lender of any release of which any Loan Party has knowledge
of a Hazardous Material in any reportable quantity from or onto property owned
or operated by any Loan Party or its Subsidiaries and take any Remedial Actions
required to abate said release or otherwise to come into compliance, in all
material respects, with applicable Environmental Law; and

 

(d) Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Lender with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of any Loan Party or its Subsidiaries, (ii) commencement of any material
Environmental Action or written notice that a material Environmental Action will
be filed against any Borrower Loan Party or its Subsidiaries, and (iii) written
notice of a material violation, citation, or other administrative order from a
Governmental Authority.

 

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6.11 Disclosure Updates.

 

(a) Promptly and in no event later than 5 Business Days after obtaining
knowledge thereof or after the occurrence thereof, whichever is earlier, notify
Lender:

 

(i) if any written information, exhibit, or report furnished to Lender
contained, at the time it was furnished, any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made. Any
notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or
modifying this Agreement or any of the Schedules hereto;

 

(ii) of all actions, suits, or proceedings brought by or against any Loan Party
or any of its Subsidiaries before any court or Governmental Authority which
reasonably could be expected to result in a Material Adverse Change, provided
that, in any event, such notification shall not be later than 5 days after
service of process with respect thereto on any Loan Party;

 

(iii) of any disputes or claims by Aventis Pharmaceuticals, Inc. (or its
successors or assigns) exceeding $100,000 at any time;

 

(iv) of any material loss or damage to any Collateral or any substantial adverse
change in the Collateral;

 

(v) of the occurrence of any ERISA Event;

 

(vi) of a violation of any law, rule or regulation, the non-compliance with
which reasonably could be expected to result in a Material Adverse Change;

 

(vii) of the receipt by any Loan Party or any of their Subsidiaries of (A) any
so called “Warning Letter” or similar notification, (B) any notification of a
mandated or requested recall affecting the products manufactured or distributed
by any Loan Party or such Subsidiary or (C) any other notification or
communications that could adversely impact the Loan Parties’ or their
Subsidiaries’ operations, in each case, from the FDA (or analogous foreign,
state or local Governmental Authority); and

 

(viii) of any intent by a Loan Party or any of their Subsidiaries to initiate a
voluntary product recall affecting the products manufactured or distributed by
any Loan Party or any of their Subsidiaries.

 

(b) Immediately upon obtaining knowledge thereof or after the occurrence
thereof, notify Lender of any event or condition which constitutes a Default or
an Event of Default and provide a statement of the action that such Borrower
proposes to take with respect to such Default or Event of Default.

 

Upon request of Lender, each Loan Party shall deliver to Lender any other
materials, reports, records or information reasonably requested relating to the
operations, business affairs, financial condition of any Loan Party or its
Subsidiaries or the Collateral.

 

6.12 Collateral Covenants.

 

(a) Possession of Collateral. In the event that any Collateral, including
Proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Related Property, or Chattel Paper, in each case, having an aggregate value or
face amount of $500,000 or more for all such Negotiable Collateral, Investment
Related Property, or Chattel Paper (or of any aggregate value if a Default or an
Event of Default then exists), the Loan Parties shall promptly (and in any event
within 5 Business Days after receipt thereof), notify Lender thereof, and if and
to the extent that perfection or priority of Lender’s Security Interest is
dependent on or enhanced by possession, the applicable Loan Party, promptly (and
in any event within 2 Business Days) after request by Lender, shall execute such
other documents and instruments as shall be requested by Lender or, if
applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to Lender, together
with such undated powers (or other relevant document of assignment or transfer
acceptable to Lender) endorsed in blank as shall be requested by Lender, and
shall do such other acts or things deemed necessary or desirable by Lender to
enhance, perfect and protect Lender’s Security Interest therein.

 

(b) Chattel Paper.

 

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(i) Promptly (and in any event within 5 Business Days) after request by Lender,
each Loan Party shall take all steps reasonably necessary to grant Lender
control of all electronic Chattel Paper of any Loan Party in accordance with the
Code and all “transferable records” as that term is defined in Section 16 of the
Uniform Electronic Transaction Act and Section 201 of the federal Electronic
Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction, at any time that a Default or Event of Default then exists, and at
any other time to the extent that the individual or aggregate value or face
amount of such electronic Chattel Paper equals or exceeds $500,000.

 

(ii) If any Loan Party retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby),
promptly upon the request of Lender, such Chattel Paper and instruments shall be
marked with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of Wells Fargo Bank,
National Association, as Lender”.

 

(c) Control Agreements.

 

(i) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall obtain a Control Agreement, from each bank (other than Lender) maintaining
a Deposit Account for such Loan Party.

 

(ii) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall obtain a Control Agreement, from each issuer of uncertificated securities,
securities intermediary, or commodities intermediary issuing or holding any
financial assets or commodities to or for any Loan Party.

 

(iii) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall cause Lender to obtain “control”, as such term is defined in the Code,
with respect to all of such Loan Party’s investment property.

 

(iv) Except as provided below with respect to Control Agreements governing the
Sanofi-Aventis Receivables Account and Borrowing Base Eligible Cash Account,
each Control Agreement shall provide, among other things, that (A) the bank or
securities intermediary (as applicable) will comply with any instructions
originated by Lender directing the disposition of the funds in such account
without further consent by the applicable Loan Party, and (B) the bank or
securities intermediary (as applicable) will forward, by daily sweep, all
amounts in the applicable account to Lender upon the instruction of Lender (an
"Activation Instruction"). Lender agrees not to issue an Activation Instruction
unless a Triggering Event has occurred.

 

(v) The Sanofi-Aventis Receivables Account and the Borrowing Base Eligible Cash
Account shall be under the sole dominion and control of Lender at all times.

 

(d) Letter-of-Credit Rights. If the Loan Parties (or any of them) are or become
the beneficiary of letters of credit, then the applicable Loan Party or Loan
Parties shall promptly (and in any event within 5 Business Days after becoming a
beneficiary), notify Lender thereof and, promptly (and in any event within 2
Business Days) after request by Lender, enter into a tri-party agreement with
Lender and the issuer or confirming bank with respect to letter-of-credit rights
assigning such letter-of-credit rights to Lender and directing all payments
thereunder to the Collection Account unless otherwise directed by Lender, all in
form and substance satisfactory to Lender.

 

(e) Commercial Tort Claims. If the Loan Parties (or any of them) obtain
Commercial Tort Claims having a value, or involving an asserted claim, in the
amount of $500,000 (or of any value or involving any asserted claim if a Default
or an Event of Default then exists) or more in the aggregate for all Commercial
Tort Claims, then the applicable Loan Party or Loan Parties shall promptly (and
in any event within 5 Business Days of obtaining such Commercial Tort Claim),
notify Lender upon incurring or otherwise obtaining such Commercial Tort Claims
and, promptly (and in any event within 2 Business Days) after request by Lender,
amend Schedule 5.6(d) to the Information Certificate to describe such Commercial
Tort Claims in a manner that reasonably identifies such Commercial Tort Claims
and which is otherwise reasonably satisfactory to Lender, and hereby authorizes
the filing of additional financing statements or amendments to existing
financing statements describing such Commercial Tort Claims, and agrees to do
such other acts or things deemed necessary or desirable by Lender to give Lender
a first priority, perfected security interest in any such Commercial Tort Claim,
which Commercial Tort Claim shall not be subject to any other Liens.

 

(f) Government Contracts. Other than Accounts and Chattel Paper the aggregate
value of which does not at any one time exceed $5,000,000 (or of any aggregate
value if a Default or Event of Default then exists), if any Account or Chattel
Paper of any Loan Party arises out of a contract or contracts with the United
States of America or any State or any department, agency, or instrumentality
thereof, Loan Parties shall promptly (and in any event within 5 Business Days of
the creation thereof) notify Lender thereof and, promptly (and in any event
within 2 Business Days) after request by Lender, execute any instruments or take
any steps reasonably required by Lender in order that all moneys due or to
become due under such contract or contracts shall be assigned to Lender, for the
benefit of Lender, and shall provide written notice thereof under the Assignment
of Claims Act or other applicable law.

 

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(g) Intellectual Property.

 

(i) Upon the reasonable request of Lender, in order to facilitate filings with
the PTO and the United States Copyright Office, each Loan Party shall execute
and deliver to Lender one or more Copyright Security Agreements or Patent and
Trademark Security Agreements to further evidence Lender’s Lien on such Loan
Party’s Patents, Trademarks, or Copyrights, and the General Intangibles of such
Loan Party relating thereto or represented thereby.

 

(ii) Each Loan Party shall have the duty, with respect to Intellectual Property
that is material to the conduct of such Loan Party’s business, to protect and
diligently enforce and defend at such Loan Party’s expense its Intellectual
Property, including (A) to diligently enforce and defend, including promptly
suing for material infringement, misappropriation, or dilution and to recover
any and all material damages for such infringement, misappropriation, or
dilution, and filing for opposition, interference, and cancellation against
material conflicting Intellectual Property rights of any Person, (B) to
prosecute diligently any material trademark application or service mark
application that is part of the Trademarks pending as of the date hereof or
hereafter until the termination of this Agreement, (C) to prosecute diligently
any material patent application that is part of the Patents pending as of the
date hereof or hereafter until the termination of this Agreement, (D) to take
all reasonable and necessary action to preserve and maintain all of such Loan
Party’s material Trademarks, Patents, Copyrights, Intellectual Property
Licenses, and its rights therein, including paying all maintenance fees and
filing of applications for renewal, affidavits of use, and affidavits of
noncontestability, and (E) to require all employees, consultants, and
contractors of each Loan Party who were involved in the creation or development
of such Intellectual Property to sign agreements containing assignment to such
Loan Party of material Intellectual Property rights created or developed and
obligations of confidentiality. No Loan Party shall abandon any Intellectual
Property or Intellectual Property License that is material to the conduct of
such Loan Party’s business. Each Loan Party shall take the steps described in
this Section 6.12(g)(ii) with respect to all new or acquired Intellectual
Property to which it or any of its Subsidiaries is now or later becomes entitled
that is material to the conduct of such Loan Party’s business.

 

(iii) Each Loan Party acknowledges and agrees that Lender shall have no duties
with respect to any Intellectual Property or Intellectual Property Licenses of
any Loan Party. Without limiting the generality of this Section 6.12(g)(iii),
each Loan Party acknowledges and agrees that Lender shall not be under any
obligation to take any steps necessary to preserve rights in the Collateral
consisting of Intellectual Property or Intellectual Property Licenses against
any other Person, but Lender may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of Borrowers
and shall be chargeable to the Loan Account.

 

(iv) Each Loan Party shall promptly file an application with the United States
Copyright Office for any Copyright that has not been registered with the United
States Copyright Office if such Copyright is material to the conduct of such
Loan Party’s business. Any expenses incurred in connection with the foregoing
shall be borne by the Loan Parties.

 

(v) No Loan Party shall enter into any Intellectual Property License to receive
any license or rights in any Intellectual Property of any other Person unless
such Loan Party has used commercially reasonable efforts to permit the
collateral assignment of or grant of a security interest in such Intellectual
Property License (and all rights of such Loan Party thereunder) to Lender (and
any transferees of Lender).

 

(h) Investment Related Property.

 

(i) Upon the occurrence and during the continuance of an Event of Default,
following the request of Lender, all sums of money and property paid or
distributed in respect of the Investment Related Property that are received by
any Loan Party shall be held by the Loan Parties in trust for the benefit of
Lender segregated from such Loan Party’s other property, and such Loan Party
shall deliver it promptly to Lender in the exact form received.

 

(ii) Each Loan Party shall cooperate with Lender in obtaining all necessary
approvals and making all necessary filings under federal, state, local, or
foreign law to effect the perfection of the Security Interest on the Investment
Related Property or to effect any sale or transfer thereof.

 

(i) Pledged Notes. Loan Parties (i) without the prior written consent of Lender,
will not (A) waive or release any obligation of any Person that is obligated
under any of the Pledged Notes, (B) take or omit to take any action or knowingly
suffer or permit any action to be omitted or taken, the taking or omission of
which would result in any right of offset against sums payable under the Pledged
Notes, or (C) other than Permitted Dispositions, assign or surrender their
rights and interests under any of the Pledged Notes or terminate, cancel,
modify, change, supplement or amend the Pledged Notes, and (ii) shall provide to
Lender copies of all material written notices (including notices of default)
given or received with respect to the Pledged Notes promptly after giving or
receiving such notice.

 

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(j) Real Property; Fixtures. Upon the acquisition by any Loan Party of any fee
interest in Real Property with a fair market value in excess of $1,000,000 (or
of any fair market value if a Default or Event of Default then exists), such
Loan Party will promptly (and in any event within 5 Business Days of
acquisition) notify Lender of the acquisition of such Real Property and will
grant to Lender a first priority Mortgage on each fee interest in Real Property
now or hereafter owned by such Loan Party, which Real Property shall not be
subject to any other Liens except Permitted Liens, and shall deliver such other
documentation and opinions, in form and substance satisfactory to Lender, in
connection with the grant of such Mortgage as Lender shall request in its
Permitted Discretion, including appraisals, title insurance policies and
endorsements, surveys, financing statements, fixture filings, flood insurance,
flood insurance certifications and environmental audits and such Loan Party
shall pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys' fees and expenses) incurred in connection
therewith. All such appraisals, title insurance policies and endorsements,
environmental audits and surveys shall be prepared or issued by parties
reasonably acceptable to Lender. To the extent permitted by applicable law, all
of the Collateral shall remain personal property regardless of the manner of its
attachment or affixation to real property.

 

(k) Cash Management.

 

(i) Except to the extent otherwise provided by Section 7.11, on and after the
Closing Date, each Loan Party shall establish and maintain at Lender all Cash
Management Services, including all deposit accounts. Such Cash Management
Services maintained by each Loan Party shall be of a type and on terms
reasonably satisfactory to Lender.

 

(ii) Borrowers shall maintain at least $5,000,000 in the Borrowing Base Eligible
Cash Account at all times.

 

(l) Pledged Interests.

 

(i) If any Loan Party shall acquire, obtain, receive or become entitled to
receive any Pledged Interests after the Closing Date, it shall promptly (and in
any event within five (5) Business Days of acquiring or obtaining such
Collateral) deliver to Lender a duly executed Pledged Interests Addendum
identifying such Pledged Interests.

 

(ii) Each Loan Party shall promptly deliver to Lender a copy of each material
notice or other material communication received by it in respect of any Pledged
Interests.

 

(iii) No Loan Party shall make or consent to any amendment or other modification
or waiver with respect to any Pledged Interests, Pledged Operating Agreement, or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests if the same is prohibited
pursuant to the Loan Documents.

 

(iv) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Loan
Party hereby covenants that the Pledged Interests issued pursuant to such
agreement (A) are not and shall not be dealt in or traded on securities
exchanges or in securities markets, (B) do not and will not constitute
investment company securities, and (C) are not and will not be held by such Loan
Party in a securities account. In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provide or shall provide that such
Pledged Interests are securities governed by Section 8 of the Uniform Commercial
Code as in effect in any relevant jurisdiction.

 

6.13 Material Contracts. Contemporaneously with the delivery of each Compliance
Certificate pursuant to Section 6.1, provide Lender with copies of (a) each
Material Contract entered into since the delivery of the previous Compliance
Certificate or to the extent that any such Material Contract has been filed with
the SEC, a schedule listing such Material Contract and containing a hyperlink
to, or internet address of, the applicable SEC filing containing such Material
Contract, (b) each material amendment or modification of any Material Contract
entered into since the delivery of the previous Compliance Certificate, and (c)
at the request of Lender, “no-offset” letters in form and substance reasonably
acceptable to Lender from each of the parties to any Material Contracts with the
Loan Parties’ customers. The Loan Parties shall maintain all Material Contracts
in full force and effect and shall not default in the payment or performance of
its obligations thereunder.

 

6.14 Location of Inventory and Equipment. Keep each Loan Party’s and its
Subsidiaries’ Inventory and Equipment (other than vehicles, Equipment out for
repair, and mobile Equipment such as laptop computers in the possession of such
Loan Parties’ employees or agents) only at the locations identified on
Schedule 5.29 to the Information Certificate and keep their chief executive
offices only at the locations identified on Schedule 5.6(b) to the Information
Certificate; provided, however, that Borrowers may amend Schedule 5.29 to the
Information Certificate so long as such amendment occurs by written notice to
Lender not less than 10 days prior to the date on which such Inventory or
Equipment is moved to such new location, and so long as, at the time of such
written notification, the applicable Loan Party provides Lender a Collateral
Access Agreement with respect thereto if such location is not owned by such Loan
Party.

 

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6.15 Formation of Subsidiaries. At the time that any Loan Party forms any direct
or indirect Subsidiary or acquires any direct or indirect Subsidiary after the
Closing Date, such Loan Party shall (a) within 10 days of such formation or
acquisition (or such later date as permitted by Lender in its sole discretion)
cause any such new Subsidiary to provide to Lender a joinder to this Agreement
or a Guaranty, as Lender may reasonably determine, together with such other
security documents (including mortgages with respect to any Real Property with a
fair market value in excess of $1,000,000 (or of any fair market value if a
Default or Event of Default then exists) owned in fee of such new Subsidiary, as
well as appropriate financing statements (and with respect to all property
subject to a mortgage, fixture filings), all in form and substance reasonably
satisfactory to Lender (including being sufficient to grant Lender a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary); provided that such Guaranty and such other
security documents shall not be required to be provided to Lender with respect
to any Subsidiary of Borrower that is a CFC if providing such documents would
result in adverse tax consequences or the costs to the Loan Parties of providing
such Guaranty, executing any security documents or perfecting the security
interests created thereby are unreasonably excessive (as determined by Lender in
its Permitted Discretion) in relation to the benefits of Lender of the security
or guarantee afforded thereby, (b) within 10 days of such formation or
acquisition (or such later date as permitted by Lender in its sole discretion)
provide to Lender a pledge agreement and appropriate certificates and powers or
financing statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary reasonably satisfactory to Lender; provided that
only 65% of the total outstanding voting Stock of any first tier Subsidiary of a
Borrower that is a CFC (and none of the Stock of any Subsidiary of such CFC)
shall be required to be pledged if pledging a greater amount would result in
adverse tax consequences or the costs to the Loan Parties of providing such
pledge or perfecting the security interests created thereby are unreasonably
excessive (as determined by Lender in consultation with Borrowers) in relation
to the benefits of Lender of the security or guarantee afforded thereby (which
pledge, if reasonably requested by Lender, shall be governed by the laws of the
jurisdiction of such Subsidiary), and (c) within 10 days of such formation or
acquisition (or such later date as permitted by Lender in its sole discretion)
provide to Lender all other documentation, including one or more opinions of
counsel reasonably satisfactory to Lender, which in its opinion is appropriate
with respect to the execution and delivery of the applicable documentation
referred to above (including policies of title insurance or other documentation
with respect to all Real Property owned in fee and subject to a mortgage). Any
document, agreement, or instrument executed or issued pursuant to this Section
6.(15) shall be a Loan Document.

 

6.16 Further Assurances.

 

(a) At any time upon the reasonable request of Lender, execute or deliver to
Lender any and all financing statements, fixture filings, security agreements,
pledges, assignments, endorsements of certificates of title, mortgages, deeds of
trust, opinions of counsel, and all other documents (the “Additional Documents”)
that Lender may reasonably request and in form and substance reasonably
satisfactory to Lender, to create, perfect, and continue perfection or to better
perfect Lender’s Liens in all of the assets of each Loan Party (whether now
owned or hereafter arising or acquired, tangible or intangible, real or
personal), to create and perfect Liens in favor of Lender in any Real Property
acquired by any Loan Party after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents; provided that the foregoing shall not apply to any Loan Party that is
a CFC if providing such documents would result in adverse tax consequences or
the costs to the Loan Parties of providing such documents are unreasonably
excessive (as determined by Lender in consultation with such Loan Party) in
relation to the benefits to Lender afforded thereby (it being agreed that Lender
may require the Loan Parties and their Subsidiaries to provide Additional
Documents governed by applicable foreign law after the occurrence of an Event of
Default). To the maximum extent permitted by applicable law, if any Loan Party
refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time, not to exceed 30 days following
the request to do so, such Loan Party hereby authorizes Lender to execute any
such Additional Documents in the applicable Loan Party’s name, as applicable,
and authorizes Lender to file such executed Additional Documents in any
appropriate filing office. In furtherance and not in limitation of the
foregoing, each Loan Party shall take such actions as Lender may reasonably
request from time to time to ensure that the Obligations are guaranteed by the
Guarantors (if any) and are secured by substantially all of the assets of each
Loan Party and all of the outstanding capital Stock of each Loan Party (subject
to exceptions and limitations contained in the Loan Documents with respect to
CFCs).

 

(b) Each Borrower and each other Loan Party authorizes the filing by Lender of
financing or continuation statements, or amendments thereto, and such Loan Party
will execute and deliver to Lender such other instruments or notices, as Lender
may reasonably request, in order to perfect and preserve the Security Interest
granted or purported to be granted hereby.

 

17

 

 

(c) Each Borrower and each other Loan Party authorizes Lender at any time and
from time to time to file, transmit, or communicate, as applicable, financing
statements and amendments (i) describing the Collateral as “all personal
property of debtor” or “all assets of debtor” or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by Part 5 of Article 9 of
the Code for the sufficiency or filing office acceptance of such financing
statement. Each Borrower and each other Loan Party also hereby ratifies any and
all financing statements or amendments previously filed by Lender in any
jurisdiction.

 

(d) Each Borrower and each other Loan Party acknowledges that no Loan Party is
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement filed in connection with this Agreement
without the prior written consent of Lender, subject to such Loan Party’s rights
under Section 9-509(d)(2) of the Code.

 

7. NEGATIVE COVENANTS.

 

Each Loan Party covenants and agrees that, until termination of all of the
commitments of Lender hereunder to provide any further extensions of credit and
payment in full of the Obligations, the Loan Parties will not and will not
permit any of their Subsidiaries to do any of the following:

 

7.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.

 

7.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

 

7.3 Restrictions on Fundamental Changes.

 

(a) Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock, except for (i) any merger between Loan Parties,
provided that a Borrower must be the surviving entity of any such merger to
which it is a party, and (ii) any merger between Subsidiaries of a Borrower that
are not Loan Parties;

 

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of any Borrower with nominal assets and nominal liabilities, (ii)
the liquidation or dissolution of a Loan Party (other than a Borrower) or any of
its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Stock) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of a
Borrower that is not a Loan Party (other than any such Subsidiary the Stock of
which (or any portion thereof) is subject to a Lien in favor of Lender) so long
as all of the assets of such liquidating or dissolving Subsidiary are
transferred to a Subsidiary of a Borrower that is not liquidating or dissolving;

 

(c) Suspend or cease operation of a substantial portion of its or their
business, except as permitted pursuant to clauses 7.3(a) or (b) above or in
connection with the transactions permitted pursuant to Section 7.4; or

 

(d) Form or acquire any direct or indirect Subsidiary.

 

7.4 Disposal of Assets. Other than Permitted Dispositions or transactions
expressly permitted by Sections 7.3 or 7.12, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to, any
of the Collateral or any other asset except as expressly permitted by this
Agreement. Lender shall not be deemed to have consented to any sale or other
disposition of any of the Collateral or any other asset except as expressly
permitted in this Agreement or the other Loan Documents.

 

7.5 Change Name. Change any Borrower’s or any other Loan Party’s organizational
identification number, state of organization, organizational identity or
“location” for purposes of Section 9-307 of the Code.

 

7.6 Nature of Business. Make any change in the nature of its or their business
as conducted on the date of this Agreement or acquire any properties or assets
that are not reasonably related to the conduct of such business activities;
provided, however, that the foregoing shall not prevent any Loan Party or any of
its Subsidiaries from engaging in any business that is reasonably related or
ancillary to its or their business.

 

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7.7 Prepayments and Amendments.

 

(a) Except in connection with Refinancing Indebtedness permitted by Section 7.1,

 

(i) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Loan Party or any of its Subsidiaries, other than (A) the
Obligations in accordance with this Agreement, and (B) Permitted Intercompany
Advances; or

 

(ii) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the Obligations if such payment is not
permitted at such time under the subordination terms and conditions, or

 

(b) Directly or indirectly, amend, modify, or change in any material respect any
of the terms or provisions of

 

(i) any agreement, instrument, document, indenture, or other writing evidencing
or concerning Permitted Indebtedness other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Advances, and (C)
Indebtedness permitted under clauses (c), (e) and (f) of the definition of
Permitted Indebtedness;

 

(ii) any Material Contract except to the extent that such amendment,
modification, or change could not, individually or in the aggregate, reasonably
be expected to be materially adverse to the interests of Lender; or

 

(iii) the Governing Documents of any Loan Party or any of its Subsidiaries if
the effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of Lender.

 

7.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.

 

7.9 Restricted Junior Payments. Make any Restricted Junior Payment, except

 

(a) any Loan Party may make distributions and declare and pay dividends to
another Loan Party,

 

(b) any Subsidiary of a Loan Party that is not a Loan Party may make
distributions to and declare and pay dividends to a Loan Party or another
Subsidiary of a Loan Party that is not a Loan party,

 

(c) any Loan Party may issue Stock to, or acquire, redeem, or retire any of the
Stock of, any other Loan Party, of any class, whether now or hereafter
outstanding,

 

(d) any Subsidiary of a Loan Party that is not a Loan Party may issue Stock to,
or acquire, redeem, or retire any of the Stock of, any other Subsidiary of a
Loan Party that is not a Loan Party, of any class, whether now or hereafter
outstanding; and

 

(e) Loan Parties and their Subsidiaries may make distributions to former
employees, officers, or directors of Borrowers (or any spouses, ex-spouses, or
estates of any of the foregoing), in the form of (i) forgiveness of Indebtedness
of such Persons owing to Borrowers on account of repurchases of the Stock of
Borrowers held by such Persons; provided that such Indebtedness was incurred by
such Persons solely to acquire Stock of Borrowers, or (ii) so long as no Default
or Event of Default then exists or would be occasioned thereby, cash payments
not to exceed $200,000 in the aggregate in any year.

 

7.10 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP).

 

7.11 Investments; Controlled Investments.

 

(a) Except for Permitted Investments, directly or indirectly, make or acquire
any Investment or incur any liabilities (including contingent obligations) for
or in connection with any Investment.

 

(b) Other than (i) an aggregate amount of not more than $750,000 at any one
time, in the case of each Borrower, each other Loan Party and its Subsidiaries
(other than Subsidiaries that are CFCs), (ii) an aggregate average monthly
amount of not more than $3,000,000 (calculated at current exchange rates and
tested as of the close of business of the last Business Day of each month) in
the case of any Loan Party’s Subsidiaries that are CFC’s); provided that solely
for the months ending March 31, 2012 and April 30, 2012, such amount shall not
include cash pledged by a Borrower or its Subsidiaries to secure leasehold
obligations in Singapore in an aggregate amount not to exceed $500,000 and (iii)
amounts deposited into Deposit Accounts identified on Schedule 5.15 to the
Information Certificate which are specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for each Loan
Party’s or their Subsidiaries’ employees, make, acquire, or permit to exist
Permitted Investments consisting of cash, Cash Equivalents, or amounts credited
to Deposit Accounts or Securities Accounts unless such Borrower and such other
Loan Party or its Subsidiaries, as applicable, and the applicable bank (as
permitted solely pursuant to Section 6.12(k) or securities intermediary have
entered into Control Agreements with Lender governing such Permitted Investments
in order to perfect (and further establish) Lender’s Liens in such Permitted
Investments. Except as provided in Section 7.11(b)(i), (ii), and (iii),
Borrowers and such Loan Parties shall not and shall not permit their
Subsidiaries to establish or maintain any domestic Deposit Account or Securities
Account with a banking institution other than Lender.

 

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7.12 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of any Borrower, any Loan Party or
any of their Subsidiaries except for:

 

(a) transactions between a Loan Party or their Subsidiaries, on the one hand,
and any Affiliate of a Loan Party or their Subsidiaries, on the other hand, so
long as such transactions (i) are fully disclosed to Lender prior to the
consummation thereof (including any documentation reasonably requested by Lender
in connection therewith), if they involve one or more payments by a Borrower or
a Loan Party or its Subsidiaries in excess of $500,000 for any single
transaction or series of related transactions, and (ii) are no less favorable,
taken as a whole, to Borrowers or the other Loan Parties or their Subsidiaries,
as applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate;

 

(b) so long as it has been approved by a Loan Party’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, any indemnity provided for the benefit of directors (or
comparable managers) of such Loan Party or its applicable Subsidiary;

 

(c) so long as it has been approved by a Loan Party’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, the payment of reasonable compensation, severance, or
employee benefit arrangements to employees, officers, and outside directors of a
Loan Party and its Subsidiaries in the ordinary course of business and
consistent with industry practice; and

 

(d) transactions permitted by Section 7.3 or Section 7.11 or any Permitted
Intercompany Advance.

 

7.13 Use of Proceeds. Use the proceeds of any loan made hereunder for any
purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing
under or in connection with Borrowers’ existing credit facility with Existing
Lender, (ii) for the issuance of Letters of Credit and (iii) to pay fees, costs,
and expenses, including Lender Expenses, incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, general corporate and working capital purposes for their lawful and
permitted purposes (including that no part of the proceeds of the loans made to
Borrowers will be used to purchase or carry any such Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any such Margin Stock
or for any purpose that violates the provisions of Regulation T, U or X of the
Board of Governors of the Federal Reserve System).

 

7.14 Limitation on Issuance of Stock. Except for the issuance or sale of common
stock or Permitted Preferred Stock by Borrowers or the other Loan Parties, issue
or sell or enter into any agreement or arrangement for the issuance and sale of
any of their Stock.

 

7.15 Consignments. Consign any of its or their Inventory or sell any of its or
their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale, except as set forth on Schedule 7.15 to the
Information Certificate.

 

7.16 Inventory and Equipment with Bailees. Store (a) the Inventory of any Loan
Party or its Subsidiaries with an aggregate fair market value in excess of
$500,000 or (b) the Equipment of any Loan Party or its Subsidiaries with an
aggregate fair market value in excess of $250,000, in each case, at any time now
or hereafter with a bailee, warehouseman, or similar party, except as set forth
on Schedule 7.16 to the Information Certificate.

 

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8. FINANCIAL COVENANTS.

 

Each Loan Party covenants and agrees that, until termination of all obligations
of Lender to provide extensions of credit hereunder and payment in full of the
Obligations, Loan Parties and their Subsidiaries will comply with each of the
following financial covenants:

 

(a) Net Cash Flow. Have Net Cash Flow, measured on a quarter-end basis, of at
least the required amount set forth in the following table for the applicable
period set forth opposite thereto (and to the extent the table below reflects a
Net Cash Flow requirement of less than $0.00, such negative amount shall not be
exceeded):

 

Net Cash Flow Applicable Period $(3,500,00) For the 3 month period
ending March 31, 2012 $(4,500,000) For the 6 month period ending June 30, 2012
$(3,000,000) For the 9 month period ending September 30, 2012 $(500,000) For the
12 month period ending December 31, 2012

  

(b) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio, measured on
a quarter-end basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:

 

Applicable Ratio Applicable Period 1.0:1.0 For the 12 month period
ending March 31, 2013 1.25:1.00 For the 12 month period ending June 30, 2013
1.25:1.00 For the 12 month period ending September 30, 2013 1.50:1.00 For the 12
month period ending December 31, 2013 and each quarter thereafter

 

(c) Capital Expenditures. Make Capital Expenditures in any period set forth
below in an amount less than or equal to the amount set forth in the following
table for the applicable period:

 

Maximum Capital Expenditures Applicable Period $6,000,000 For the 3 month period
ending March 31 in any fiscal year $9,000,000 For the 6 month period ending June
30 in any fiscal year $12,000,000 For the 9 month period ending September 30 in
any fiscal year $15,000,000 For the 12 month period ending December 31 in any
fiscal year

 

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(d) Minimum Liquidity. The Borrowers shall maintain Qualified Cash in at least
the amounts set forth in the table below as of the applicable date set forth in
the table below. For purposes of this Section, Qualified Cash shall exclude the
outstanding principal amount of all Advances.

 

Minimum Qualified Cash Applicable Date $5,000,000 July 31, 2012 $5,000,000
August 31, 2012 $5,000,000 September 30, 2012 $5,000,000 October 30, 2012
$5,000,000 November 30, 2012 $15,000,000 December 31, 2012 $15,000,000 January
31, 2013 $15,000,000 February 28, 2013 $15,000,000 March 31, 2013 $15,000,000
April 30, 2013 $15,000,000 May 31, 2013 $15,000,000 June 30, 2013 $15,000,000
July 31, 2013 $15,000,000 August 31, 2013 $15,000,000 September 30, 2013
$15,000,000 October 30, 2013 $15,000,000 November 30, 2013 $25,000,000 December
31, 2013 and the last date of each month thereafter

 

(e) Cash on Hand at Foreign Subsidiaries. The Borrowers shall not permit their
foreign Subsidiaries to hold Cash or Cash Equivalents in excess of an aggregate
average monthly amount of $3,000,000 (calculated at current exchange rates and
tested as of the close of business of the last Business Day of month); provided
that solely for the months ending March 31, 2012 and April 30, 2012, such amount
shall not include cash pledged by a Borrower or its Subsidiaries to secure
leasehold obligations in Singapore in an aggregate amount not to exceed
$500,000.

  

9. EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

 

9.1 If any Borrower or any Loan Party fails to pay (i) when due and payable
hereunder, or when declared due and payable hereunder, all or any portion of the
Obligations consisting of principal or interest hereunder (including any portion
thereof that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), or (ii) within three (3) Business Days of when due
and payable hereunder, or when declared due and payable hereunder, all or any
portion of the Obligations consisting of, fees, charges or other amounts due
Lender or any Bank Product Provider, reimbursement of Lender Expenses, or other
amounts constituting Obligations (including any portion thereof that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding);

 

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9.2 If any Loan Party or any of its Subsidiaries:

 

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 6.1, 6.2, 6.3 (solely if any Loan Party is not in good standing
in its jurisdiction of organization), 6.5(b), 6.6, 6.7 (solely if any Loan Party
refuses to allow Lender or its representatives or agents to visit such Loan
Party’s properties, inspect its assets or books or records, examine and make
copies of its books and records, or discuss such Loan Party’s affairs, finances,
and accounts with officers and employees of such Loan Party), 6.8, 6.11, 6.12;
or 6.14 of this Agreement, (ii) Section 7 of this Agreement, or (iii) Section 8
of this Agreement;

 

(b) fails to perform or observe any covenant or other agreement contained in any
of Sections 6.3 (other than if a Loan Party is not in good standing in its
jurisdiction of organization), 6.4, 6.5(a) (other than F.I.C.A., F.U.T.A.,
federal income taxes and any other taxes or assessments the non-payment of which
may result in a lien having priority over Lender’s Liens), 6.9, 6.10, 6.15 or
6.16 of this Agreement and such failure continues for a period of 15 days after
the earlier of (i) the date on which such failure shall first become known to or
should have been known by any officer of such Loan Party or (ii) the date on
which written notice thereof is given to such Loan Party by Lender; or

 

(c) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is unable to be cured or is the subject of
another provision of this Section 9 (in which event such other provision of this
Section 9 shall govern), and such failure continues for a period of 30 days
after the earlier of (i) the date on which such failure shall first become known
to or should have been known by any officer of such Loan Party or (ii) the date
on which written notice thereof is given to such Loan Party by Lender;

 

9.3 If one or more judgments, orders, or awards for the payment of money
involving an aggregate amount of $1,000,000, or more (except to the extent fully
covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive days at
any time after the entry of any such judgment, order, or award during which (1)
the same is not discharged, satisfied, vacated, or bonded pending appeal, or (2)
a stay of enforcement thereof is not in effect, or (b) enforcement proceedings
are commenced upon such judgment, order, or award;

 

9.4 If an Insolvency Proceeding is commenced by a Loan Party or any of its
Subsidiaries;

 

9.5 If an Insolvency Proceeding is commenced against a Loan Party or any of its
Subsidiaries and any of the following events occur: (a) such Loan Party or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein; provided that Lender shall
have no obligation to provide any extension of credit to Borrowers during such
60 calendar day period;

 

9.6 If any Loan Party or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of the business affairs of such Loan Party and its Subsidiaries, taken as a
whole;

 

9.7 If there is (a) a default in one or more agreements to which a Loan Party or
any of its Subsidiaries is a party with one or more third Persons relative to a
Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate
amount of $1,000,000 or more, and such default (i) occurs at the final maturity
of the obligations thereunder, or (ii) results in a right by such third Person,
irrespective of whether exercised, to accelerate the maturity of such Loan
Party’s or its Subsidiary’s obligations thereunder, or (b) a default in or an
involuntary early termination of one or more Hedge Agreements to which a Loan
Party or any of its Subsidiaries is a party involving an aggregate amount of
$1,000,000 or more;

 

9.8 If any warranty, representation, certificate, statement, or Record made
herein or in any other Loan Document or delivered in writing to Lender in
connection with this Agreement or any other Loan Document proves to be untrue in
any material respect (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) as of the date of issuance or
making or deemed making thereof;

 

9.9 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor (other than in accordance
with the terms of this Agreement), or if any Guarantor fails to perform any
obligation under the Guaranty, or repudiates or revokes or purports to repudiate
or revoke any obligation under the Guaranty, or any individual Guarantor dies or
becomes incapacitated, or any other Guarantor ceases to exist for any reason;

 

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9.10 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent of Permitted Liens which are permitted purchase money Liens
or the interests of lessors under Capital Leases, first priority Lien on the
Collateral covered thereby;

 

9.11 If there occurs any Material Adverse Change in the business or financial
condition of any Loan Party;

 

9.12 If Lender determines in its Permitted Discretion exercised in good faith
that any Loan Party has engaged in fraudulent activity with respect to the
Collateral or other matters;

 

9.13 Any director or senior officer a Loan Party is indicted for a felony
offense involving corporate malfeasance under state or federal law, or a Loan
Party hires a senior officer or appoints a director who has been convicted of
any such felony offense, and such director or senior officer is not replaced or
removed (consistent with applicable law) to Lender’s reasonable satisfaction
within thirty (30) days after any Loan Party first becomes aware of such
conviction or indictment; provided, however, during such thirty (30) day period,
the Loan Parties may request that such director or senior officer remain in
their position, subject to Lender’s prior written consent, which consent may be
given or denied in the sole discretion of Lender;

 

9.14 (a) An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability
of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of $500,000, or (b) any Loan
Party or any ERISA Affiliate fails to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $500,000; or

 

9.15 The validity or enforceability of any Loan Document shall at any time for
any reason be declared to be null and void, or a proceeding shall be commenced
by a Loan Party or its Subsidiaries, or by any Governmental Authority having
jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the
invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries
shall deny that such Loan Party or its Subsidiaries has any liability or
obligation purported to be created under any Loan Document.

 

10. RIGHTS AND REMEDIES.

 

10.1 Rights and Remedies. Upon the occurrence and during the continuation of an
Event of Default, Lender may (in each case under clauses (a) or (b) by written
notice to Borrowers; provided that no such notice shall be required with respect
to Events of Default under Section 9.4 or Section 9.5), in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by
applicable law, do any one or more of the following in accordance with the terms
and conditions of this Agreement, the other Loan Documents, and/or applicable
law;

 

(a) declare the Obligations (other than the Hedge Obligations, which may be
accelerated in accordance with the terms of the applicable Hedge Agreement),
whether evidenced by this Agreement or by any of the other Loan Documents
immediately due and payable, whereupon the same shall become and be immediately
due and payable and Borrowers shall be obligated to repay all of such
Obligations in full, without presentment, demand, protest, or further notice or
other requirements of any kind, all of which are hereby expressly waived by each
Borrower and each Loan Party;

 

(b) declare the funding obligations of Lender under this Agreement terminated,
whereupon such funding obligations shall immediately be terminated together with
any obligation of Lender hereunder to make Advances or issue Letters of Credit;

 

(c) give notice to an Account Debtor or other Person obligated to pay an
Account, a General Intangible, Negotiable Collateral, or other amount due,
notice that the Account, General Intangible, Negotiable Collateral or other
amount due has been assigned to Lender for security and must be paid directly to
Lender and Lender may collect the Accounts, General Intangible and Negotiable
Collateral of each Borrower and each other Loan Party directly, and any
collection costs and expenses shall constitute part of the Obligations under the
Loan Documents;

 

(d) in Lender’s name or in Borrowers’ name, as Borrowers’ agent and
attorney-in-fact, notify the United States Postal Service to change the address
for delivery of Borrowers’ mail to any address designated by Lender, otherwise
intercept Borrowers’ mail, and receive, open and dispose of Borrowers’ mail,
applying all Collateral as permitted under this Agreement and holding all other
mail for Borrowers’ account or forwarding such mail to Borrowers’ last known
address;

 

(e) without notice to or consent from any Borrower, and without any obligation
to pay rent or other compensation, take exclusive possession of all locations
where Borrowers conduct their business or have any rights of possession and use
the locations to store, process, manufacture, sell, use, and liquidate or
otherwise dispose of items that are Collateral, and for any other incidental
purposes deemed appropriate by Lender in good faith; and

 

24

 

 

(f) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, in the other Loan Documents, or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code or any other applicable law.

 

10.2 Additional Rights and Remedies. Without limiting the generality of the
foregoing, each Borrower expressly agrees that, upon the occurrence and during
the continuation of an Event of Default:

 

(a) Lender, without demand of performance or other demand, advertisement or
notice of any kind (except a notice specified below of time and place of public
or private sale) to or upon any Borrower, any Loan Party or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law),
may take immediate possession of all or any portion of the Collateral and (i)
require Loan Parties to, and each Borrower and each other Loan Party hereby
agrees that it will at its own expense and upon request of Lender forthwith,
assemble all or part of the Collateral as directed by Lender and make it
available to Lender at one or more locations designated by Lender where such
Borrower or Loan Party conducts business, and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Lender’s or Loan Party’s offices or
elsewhere, for cash, on credit, and upon such other terms as Lender may deem
commercially reasonable. Each Borrower and each other Loan Party agrees that, to
the extent notice of sale shall be required by law, at least 10 days’ notice to
such Borrower or such other Loan Party of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification and such notice shall constitute a reasonable
“authenticated notification of disposition” within the meaning of Section 9-611
of the Code. Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Lender may adjourn any public or
private sale from time to time, and such sale may be made at the time and place
to which it was so adjourned. Each Borrower and each other Loan Party agrees
that the internet shall constitute a “place” for purposes of Section 9-610(b) of
the Code. Each Borrower and each other Loan Party agrees that any sale of
Collateral to a licensor pursuant to the terms of a license agreement between
such licensor and such Borrower or such Loan Party is sufficient to constitute a
commercially reasonable sale (including as to method, terms, manner, and time)
within the meaning of Section 9-610 of the Code;

 

(b) Lender may, in addition to other rights and remedies provided for herein, in
the other Loan Documents, or otherwise available to it under applicable law and
without the requirement of notice to or upon any Loan Party or any other Person
(which notice is hereby expressly waived to the maximum extent permitted by the
Code or any other applicable law), (i) with respect to any Loan Party’s Deposit
Accounts in which Lender’s Liens are perfected by control under Section 9-104 of
the Code, instruct the bank maintaining such Deposit Account for the applicable
Loan Party to pay the balance of such Deposit Account to or for the benefit of
Lender, and (ii) with respect to any Loan Party’s Securities Accounts in which
Lender’s Liens are perfected by control under Section 9-106 of the Code,
instruct the securities intermediary maintaining such Securities Account for the
applicable Loan Party to (A) transfer any cash in such Securities Account to or
for the benefit of Lender, or (B) liquidate any financial assets in such
Securities Account that are customarily sold on a recognized market and transfer
the cash proceeds thereof to or for the benefit of Lender; and

 

(c) any cash held by Lender as Collateral and all cash proceeds received by
Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied against the Obligations (other
than inchoate indemnification obligations for which no claim has been asserted)
in the order set forth in Section 10.5 of this Agreement. In the event the
proceeds of Collateral are insufficient to satisfy all of the Obligations in
full, each Borrower and each other Loan Party shall remain jointly and severally
liable for any such deficiency.

 

Notwithstanding the foregoing or anything to the contrary contained in Section
10.1, upon the occurrence of any Default or Event of Default described in
Section 9.4 or Section 9.5, in addition to the remedies set forth above, without
any notice to any Borrower or any other Person or any act by Lender, all
obligations of Lender to provide any further extensions of credit hereunder
shall automatically terminate and the Obligations (other than the Hedge
Obligations), inclusive of all accrued and unpaid interest thereon and all fees
and all other amounts owing under this Agreement or under any of the other Loan
Documents, shall automatically and immediately become due and payable and each
Borrower shall be obligated to repay all of such Obligations in full, without
presentment, demand, protest, or notice of any kind, all of which are expressly
waived by each Borrower.

 

10.3 Lender Appointed Attorney in Fact. Each Borrower and each other Loan Party
hereby irrevocably appoints Lender its attorney-in-fact, with full authority in
the place and stead of such Borrower and such Loan Party and in the name of such
Borrower or such Loan Party or otherwise, at such time as an Event of Default
has occurred and is continuing, to take any action and to execute any instrument
which Lender may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:

 

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(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Borrower or such other Loan
Party;

 

(b) to receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

 

(c) to file any claims or take any action or institute any proceedings which
Lender may deem necessary or desirable for the collection of any of the
Collateral of such Borrower or such other Loan Party or otherwise to enforce the
rights of Lender with respect to any of the Collateral;

 

(d) to repair, alter, or supply Goods, if any, necessary to fulfill in whole or
in part the purchase order of any Person obligated to Borrower in respect of any
Account of such Borrower;

 

(e) to use any Intellectual Property or Intellectual Property Licenses of such
Borrower or such other Loan Party including but not limited to any labels,
Patents, Trademarks, trade names, URLs, domain names, industrial designs,
Copyrights, or advertising matter, in preparing for sale, advertising for sale,
or selling Inventory or other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Borrower or such other Loan
Party;

 

(f) to take exclusive possession of all locations where each Borrower or other
Loan Party conducts its business or has rights of possession, without notice to
or consent of any Borrower or any Loan Party and to use such locations to store,
process, manufacture, sell, use, and liquidate or otherwise dispose of items
that are Collateral, without obligation to pay rent or other compensation for
the possession or use of any location;

 

(g) Lender shall have the right, but shall not be obligated, to bring suit in
its own name or in the applicable Loan Party’s name, to enforce the Intellectual
Property and Intellectual Property Licenses and, if Lender shall commence any
such suit, the appropriate Borrower or such other Loan Party shall, at the
request of Lender, do any and all lawful acts and execute any and all proper
documents reasonably required by Lender in aid of such enforcement; and

 

(h) to the extent permitted by law, such Borrower and each other Loan Party
hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable until this Agreement is terminated and all Obligations have
been paid in full in cash.

 

10.4 Remedies Cumulative. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.

 

10.5 Crediting of Payments and Proceeds. In the event that the Obligations
(other than the Hedge Obligations, which may be accelerated in accordance with
the terms of the applicable Hedge Agreement) have been accelerated pursuant to
Section 10.1 or Lender has exercised any remedy set forth in this Agreement or
any other Loan Document, all payments received by Lender upon the Obligations
and all net proceeds from the enforcement of the Obligations shall be applied in
such manner as Lender shall determine in its discretion and, thereafter, to
Borrowers (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.

 

10.6 Marshaling. Lender shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, Borrower and each other Loan Party hereby agrees that it will
not invoke any law relating to the marshaling of collateral which might cause
delay in or impede the enforcement of Lender’s rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Borrower hereby irrevocably waives the
benefits of all such laws.

 

10.7 License. Each Borrower and each other Loan Party hereby grants to Lender a
non-exclusive, worldwide and royalty-free license to use or otherwise exploit
all Intellectual Property rights of such Borrower and such Loan Party for the
purpose of: (a) completing the manufacture of any in-process materials following
the occurrence and during the continuance of any Event of Default so that such
materials become saleable Inventory, all in accordance with the same quality
standards previously adopted by such Borrower or such other Loan Party for its
own manufacturing; and (b) selling, leasing or otherwise disposing of any or all
Collateral following the occurrence and during the continuance of any Event of
Default.

 

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10.8 Disposition of Pledged Interests by Lender. None of the Pledged Interests
existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or
qualified under the various federal or state securities laws of the United
States and disposition thereof after an Event of Default may be restricted to
one or more private (instead of public) sales in view of the lack of such
registration. Each Loan Party understands that in connection with such
disposition, Lender may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Pledged Interests than if the Pledged Interests were
registered and qualified pursuant to federal and state securities laws and sold
on the open market. Each Loan Party, therefore, agrees that: (a) if Lender
shall, pursuant to the terms of this Agreement, sell or cause the Pledged
Interests or any portion thereof to be sold at a private sale, Lender shall have
the right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice and
the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the
Pledged Interest or any portion thereof for sale and as to the best price
reasonably obtainable at the private sale thereof; and (b) such reliance shall
be conclusive evidence that Lender has handled the disposition in a commercially
reasonable manner.

 

10.9 Voting and Other Rights in Respect of Pledged Interests.

 

(a) Upon the occurrence and during the continuation of an Event of Default, (i)
Lender may, at its option, and with two (2) Business Days prior notice to such
Borrower or such other Loan Party, and in addition to all rights and remedies
available to Lender under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, or any other ownership or consensual rights
(including any dividend or distribution rights) in respect of the Pledged
Interests owned by any Borrower or any other Loan Party, but under no
circumstances is Lender obligated by the terms of this Agreement to exercise
such rights, and (ii) if Lender duly exercises its right to vote any of such
Pledged Interests, each Borrower and each other Loan Party hereby appoints
Lender, such Borrower’s and such Loan Party’s true and lawful attorney-in-fact
and irrecovable proxy to vote such Pledged Interests in any manner Lender deems
advisable for or against all matters submitted or which may be submitted to a
vote of shareholders, partners or members, as the case may be. The
power-of-attorney and proxy granted hereby is coupled with an interest and shall
be irrevocable.

 

(b) For so long as such Borrower or such other Loan Party shall have the right
to vote the Pledged Interests owned by it, such Borrower and such other Loan
Party covenants and agrees that it will not, without the prior written consent
of Lender, vote or take any consensual action with respect to such Pledged
Interests which would materially adversely affect the rights of Lender or the
value of the Pledged Interests.

 

11. WAIVERS; INDEMNIFICATION.

 

11.1 Demand; Protest; etc. Each Borrower and each other Loan Party waives
demand, protest, notice of protest, notice of default or dishonor, notice of
payment and nonpayment, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of documents, instruments, chattel paper, and guarantees
at any time held by Lender on which such Loan Party may in any way be liable.

 

11.2 Lender’s Liability for Collateral. Each Borrower and each other Loan Party
hereby agrees that: (a) so long as Lender complies with its obligations, if any,
under the Code, Lender shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by each Borrower
and such Loan Parties.

 

11.3 Indemnification. Each Borrower and each other Loan Party shall pay,
indemnify, defend, and hold the Lender-Related Persons (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings,
liabilities, fines, costs, penalties, and damages, and all reasonable fees and
disbursements of attorneys, experts, or consultants and all other costs and
expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution and delivery, enforcement, performance, or
administration (including any restructuring, forbearance or workout with respect
hereto) of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of each Borrower and each other
Loan Party’s and its respective Subsidiaries’ compliance with the terms of the
Loan Documents, (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified Person
is a party thereto), or any act, omission, event, or circumstance in any manner
related thereto, (c) in connection with the custody, preservation, use or
operation of, or, upon an Event of Default, the sale of, collection from, or
other realization upon, any of the Collateral in accordance with this Agreement
and the other Loan Documents, (d) with respect to the failure by any Borrower or
any other Loan Party to perform or observe any of the provisions hereof or any
other Loan Document, (e) in connection with the exercise or enforcement of any
of the rights of Lender hereunder or under any other Loan Document, and (f) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
Borrower or any other Loan Party or any of its Subsidiaries or any Environmental
Actions, Environmental Liabilities or Remedial Actions related in any way to any
such assets or properties of such Loan Party or any of its Subsidiaries (each
and all of the foregoing, the “Indemnified Liabilities”). The foregoing to the
contrary notwithstanding, no Borrower or any other Loan Party shall have any
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person or its officers, directors, employees, or attorneys or with
respect to Excluded Taxes or Taxes (which are governed by Section 16). This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which a
Borrower or any other Loan Party was required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by such Borrower or Loan Party with
respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN
PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

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12. NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
certified mail (postage prepaid, return receipt requested), overnight courier,
electronic mail (at such email addresses as a party may designate in accordance
herewith), or telefacsimile. In the case of notices or demands to Borrowers, any
other Loan Party or Lender, as the case may be, they shall be sent to the
respective address set forth below:

 

If to any Loan Party: c/o Albany Molecular Research, Inc.   26 Corporate Circle
  Albany, New York 12212   Attn: Lori Henderson and Mark Frost   Fax No. (518)
512-2075 (Lori Henderson) & (518) 464-0289 (Mark Frost) with a courtesy copy to
  (which shall not constitute   Notice for purposes of this   Section 12):
Goodwin Procter LLP   53 State Street   Boston, Massachusetts 02109   Attn: 
Mark D. Smith   Fax No.:  617-670-1231     If to Lender: WELLS FARGO BANK,
NATIONAL ASSOCIATION   One Boston Place, 20th Floor   Boston, Massachusetts
02108   Attn: Peter Yelle   Fax No.:  855-203-8549     with a courtesy copy to  
(which shall not constitute   Notice for purposes of this   Section 12): Riemer
& Braunstein LLP   Seven Times Square, Suite 2506   New York, New York 10036  
Attn:  Donald E. Rothman   Fax No.:  617-692-3556

 

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 12, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received, (b)
notices by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient) and (c) notices by electronic mail shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return email or other
written acknowledgment). Any notice given by Lender to any Borrower as provided
in this Section 12 shall be deemed sufficient notice as to all Borrowers,
regardless of whether each Borrower is sent a separate copy of such notice or
whether each Borrower is specifically identified in such notice.

 

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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO AS WELL
AS ALL CLAIMS, CONTROVERSIES OR DISPUTES ARISING UNDER OR RELATED TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND LITIGATED IN THE
STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
BORROWER, EACH OTHER LOAN PARTY AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).

 

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER, EACH OTHER
LOAN PARTY AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH BORROWER, EACH OTHER LOAN PARTY AND LENDER REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

 

14. ASSIGNMENTS; SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that no Borrower or any other Loan Party may assign this Agreement or
any rights or duties hereunder without Lender’s prior written consent and any
prohibited assignment shall be absolutely void ab initio. No consent to
assignment by Lender shall release any Borrower or any other Loan Party from its
Obligations. Lender may assign this Agreement and the other Loan Documents in
whole or in part and its rights and duties hereunder or grant participations in
the Obligations hereunder and thereunder and no consent or approval by any
Borrower or any other Loan Party is required in connection with any such
assignment or participation. Notwithstanding the foregoing, a participant shall
not be entitled to receive any greater amount under Section 16 than the
applicable Lender would have been entitled to receive. Lender shall establish
and maintain at its address (a) a record of ownership (the “Register”) in which
it shall register the interests (including any rights to receive payment
hereunder) of Lender in the Loans, and any assignment of any such Loans and (b)
accounts in the Register in which it shall record (i) the name and address of
Lender, (ii) the amount of each Loan, (iii) the amount of any principal or
interest due and payable or paid, (iv) any other payment received by Lender from
the Borrowers and (v) any assignment with respect thereto. Notwithstanding
anything to the contrary contained in this Agreement, the Loans are registered
obligations. The entries in the Register shall be conclusive and each Person
whose name is recorded in the Register shall be treated as the owner of such
Loan for all purposes of this Agreement, notwithstanding any notice to the
contrary. This Section shall be construed so that the Loans are at all times
maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2)
and 881(c)(2) of the IRC and any related regulations (and any successor
provisions).

 

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15. AMENDMENTS; WAIVERS

 

. No failure by Lender to exercise any right, remedy, or option under this
Agreement or any other Loan Document, or delay by Lender in exercising the same,
will operate as a waiver thereof. No waiver by Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Lender on any occasion shall affect or diminish Lender’s rights thereafter to
require strict performance by Borrowers or any other Loan Party of any provision
of this Agreement. Lender’s rights under this Agreement and the other Loan
Documents will be cumulative and not exclusive of any other right or remedy that
Lender may have.

 

16. TAXES.

 

(a) All payments made by any Borrower or any other Loan Party hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense. In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Taxes unless
required by applicable law, and in the event any deduction or withholding of
Taxes is required, each Borrower shall comply with the next sentence of this
Section 16(a). If any Taxes are so levied or imposed, each Borrower agrees to
pay the full amount of such Taxes to the taxing authority and, other than with
respect to an Excluded Tax, to pay to Lender such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement, any
note, or Loan Document, including any amount paid pursuant to this Section 16(a)
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Borrowers shall not
be required to increase any such amounts if the increase in such amount payable
results from Lender’s or such Lender’s own willful misconduct or gross
negligence (as finally determined by a court of competent jurisdiction). Each
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Tax is due pursuant to applicable law, certified copies of tax
receipts evidencing such payment by such Borrower.

 

(b) Each Borrower agrees to pay any present or future stamp, value added or
documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

 

(c) If any Non-U.S. Lender is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which a Borrower is
resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments under any Loan shall deliver to such Borrower, at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, the
Lender or any Non-U.S. Lender shall deliver such other documentation prescribed
by applicable law as will enable such Borrower to determine whether or not the
Lender or any Non-U.S. Lender is subject to backup withholding or information
reporting requirements.

 

(d) If Lender determines, in its sole discretion exercised in good faith, that
it has received a refund of any Taxes, it shall pay over such refund to such
Borrower (but only to the extent of payments made, or additional amounts paid,
by such Borrower under this Section 16 with respect to Taxes giving rise to such
a refund), net of all out-of-pocket expenses of Lender and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such a refund); provided that such Borrower, upon the request of
Lender, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges, imposed by the relevant Governmental
Authority, other than such penalties, interest or other charges imposed as a
result of the willful misconduct or gross negligence) to Lender in the event
Lender is required to repay such refund to such Governmental Authority.
Notwithstanding anything in this Agreement to the contrary, this Section 16(d)
shall not be construed to require Lender to make available its tax returns (or
any other information which it deems confidential) to the Borrowers or any other
Person.

 

17. GENERAL PROVISIONS.

 

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by each Borrower, each Loan Party and Lender.

 

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

 

17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against Lender or any Loan Party, whether under any
rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.

 

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

 

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17.5 Debtor-Creditor Relationship. The relationship between Lender, on the one
hand, and the Loan Parties, on the other hand, is solely that of creditor and
debtor. Lender shall not have (and shall not be deemed to have) any fiduciary
relationship or duty to any Loan Party arising out of or in connection with the
Loan Documents or the transactions contemplated thereby, and there is no agency
or joint venture relationship between Lender, on the one hand, and the Loan
Parties, on the other hand, by virtue of any Loan Document or any transaction
contemplated therein.

 

17.6 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

 

17.7 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Borrower or any Guarantor or the transfer to Lender of
any property should for any reason subsequently be asserted, or declared, to be
void or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”), and if Lender is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys' fees of Lender
related thereto, the liability of such Borrower or Guarantor automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made and all of Lender’s Liens in the Collateral shall
be automatically reinstated without further action.

 

17.8 Confidentiality.

 

(a) Lender agrees that information provided to Lender in connection with this
Agreement and the other Loan Documents constitutes material, non-public
information regarding the Loan Parties and their Subsidiaries, their operations,
assets, and existing and contemplated business plans (“Confidential
Information”) shall be treated by Lender in a confidential manner, and shall not
be disclosed by Lender to Persons who are not parties to this Agreement, except:
(i) to attorneys for and other advisors, accountants, auditors, and consultants
to Lender and to employees, directors and officers of Lender (the Persons in
this clause (i), “Lender Representatives”) on a “need to know” basis in
connection with this Agreement and the transactions contemplated hereby and on a
confidential basis, (ii) to Subsidiaries and Affiliates of Lender, provided that
any such Subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 17.8, (iii) as may be required by
regulatory authorities, (iv) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation; provided that (x) prior
to any disclosure under this clause (iv), the disclosing party agrees to provide
Borrowers with prior notice thereof, to the extent that it is practicable to do
so and to the extent that the disclosing party is permitted to provide such
prior notice to Borrowers pursuant to the terms of the applicable statute,
decision, or judicial or administrative order, rule, or regulation and (y) any
disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance in writing by Borrowers, (vi) as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process,
provided, that, (x) prior to any disclosure under this clause (vi) the
disclosing party agrees to provide Borrowers with prior written notice thereof,
to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior written notice to Borrowers
pursuant to the terms of the subpoena or other legal process and (y) any
disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Lender or Lender Representatives), (viii)
in connection with any assignment, participation or pledge of any Lender’s
interest under this Agreement, provided that prior to receipt of Confidential
Information any such assignee, participant, or pledgee shall have agreed in
writing to receive such Confidential Information hereunder subject to the terms
of this Section, (ix) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; (x) to equity owners of each Loan
Party and (xi) in connection with, and to the extent reasonably necessary for,
the exercise of any secured creditor remedy under this Agreement or under any
other Loan Document.

 

(b) Anything in this Agreement to the contrary notwithstanding, Lender may use
the name, logos, and other insignia of the Loan Parties and the Maximum Credit
provided hereunder in any “tombstone” or comparable advertising, on its website
or in other marketing materials of Lender.

 

31

 

 

17.9 Lender Expenses. Each Borrower and each other Loan Party agrees to pay
Lender Expenses on the earlier of (a) the first day of the month following the
date on which such Lender Expenses were first incurred, or (b) the date on which
demand therefor is made by Lender and each Borrower and each other Loan Party
agrees that its obligations contained in this Section 17.9 shall survive payment
or satisfaction in full of all other Obligations.

 

17.10 Setoff. Lender may at any time, in its sole discretion and without demand
or notice to anyone, setoff any liability owed to any Borrower or any Guarantor
by Lender against any of the Obligations then due.

 

17.11 Survival. All 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 Lender
may have had notice or knowledge of any Default or Event of 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 as the obligation of Lender to provide extensions of credit hereunder
has not expired or been terminated.

 

17.12 Patriot Act. Lender hereby notifies the Loan Parties that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies each Loan Party, which information includes the name
and address of each Loan Party and other information that will allow such Lender
to identify each Loan Party in accordance with the Patriot Act. In addition, if
Lender is required by law or regulation or internal policies to do so, it shall
have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP
searches, and customary individual background checks for the Loan Parties, and
(b) OFAC/PEP searches and customary individual background checks of the Loan
Parties’ senior management and key principals, and each Borrower and each other
Loan Party agrees to cooperate in respect of the conduct of such searches and
further agrees that the reasonable costs and charges for such searches shall
constitute Lender Expenses hereunder and be for the account of Borrowers.

 

17.13 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof. The foregoing to
the contrary notwithstanding, all Bank Product Agreements, if any, are
independent agreements governed by the written provisions of such Bank Product
Agreements, which will remain in full force and effect, unaffected by any
repayment, prepayments, acceleration, reduction, increase, or change in the
terms of any credit extended hereunder, except as otherwise expressly provided
in such Bank Product Agreement.

 

17.14 Bank Product Providers. Each Bank Product Provider shall be deemed a third
party beneficiary hereof and of the provisions of the other Loan Documents for
purposes of any reference in a Loan Document to the parties for whom Lender is
acting. Lender hereby agrees to act as agent for such Bank Product Providers
and, by virtue of entering into a Bank Product Agreement, the applicable Bank
Product Provider shall be automatically deemed to have appointed Lender as its
agent and to have accepted the benefits of the Loan Documents; it being
understood and agreed that the rights and benefits of each Bank Product Provider
under the Loan Documents consist exclusively of such Bank Product Provider’s
being a beneficiary of the Liens and security interests (and, if applicable,
guarantees) granted to Lender and the right to share in payments and collections
of the Collateral as more fully set forth herein and in the other Loan
Documents. In addition, each Bank Product Provider, by virtue of entering into a
Bank Product Agreement, shall be automatically deemed to have agreed that Lender
shall have the right, but shall have no obligation, to establish, maintain,
relax, or release Reserves in respect of the Bank Product Obligations and that
if Reserves are established there is no obligation on the part of Lender to
determine or ensure whether the amount of any such reserve is appropriate or
not. Notwithstanding anything to the contrary in this Agreement or any other
Loan Document, no provider or holder of any Bank Product shall have any voting
or approval rights hereunder solely by virtue of its status as the provider or
holder of such agreements or products or the Obligations owing thereunder, nor
shall the consent of any such provider or holder be required for any matter
hereunder or under any of the other Loan Documents, including as to any matter
relating to the Collateral or the release of Collateral or any other Loan
Party. 

 

[Signature pages to follow]

 

32

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered under seal as of the date first above written.

 

  BORROWERS:             ALBANY MOLECULAR RESEARCH, INC.             By:   /s/
Lori Henderson     Name: Lori Henderson     Title: Secretary             AMRI
RENSSELAER, INC.             By:   /s/ Lori Henderson     Name: Lori Henderson  
  Title: Secretary             AMRI BURLINGTON, INC.             By:   /s/ Lori
Henderson     Name: Lori Henderson     Title: Secretary             AMRI BOTHELL
RESEARCH CENTER, INC.             By:   /s/ Lori Henderson     Name: Lori
Henderson     Title: Secretary

 

33

 

 

  LENDER:       WELLS FARGO BANK, NATIONAL ASSOCIATION           By: /s/ Richard
Mahtani   Name: Richard Mahtani   Title: Authorized Signatory

  

34

 

Schedule 1.1

 

a. Definitions. As used in this Agreement, the following terms shall have the
following definitions:

 

“Account” means an account (as that term is defined in Article 9 of the Code),
including, without limitation, payments owing to the Borrowers pursuant to the
Sanofi-Aventis License Agreement.

 

“Account Debtor” means an account debtor (as that term is defined in the Code).

 

“Activation Instruction” has the meaning specified therefor in Section 6.12(c)
of this Agreement.

 

“Additional Documents” has the meaning specified therefor in Section 6.16 of
this Agreement.

 

“Administrative Borrower” shall mean AMRI in its capacity as Administrative
Borrower on behalf of itself and the other Borrowers pursuant to Section 2.17)
hereof and its successors and assigns in such capacity.

 

“Advances” has the meaning specified therefor in Section 2.1(a) of this
Agreement.

 

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of Section 7.12 of this Agreement: (a) any
Person which owns directly or indirectly 10% or more of the Stock having
ordinary voting power for the election of the board of directors or equivalent
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed an Affiliate of such Person, (b) each director (or comparable manager) of
a Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership in which a Person is a general partner shall be deemed an Affiliate
of such Person.

 

“Agreement” means the Credit and Security Agreement to which this Schedule 1.1
is attached.

 

“Allocable Amount” has the meaning specified therefor in Section 2.16.

 

“Authorized Person” means any one of the individuals identified on Schedule A-2,
as such schedule is updated from time to time by written notice from Borrowers
to Lender.

 

“Availability” means, as of any date of determination, the amount that Borrowers
are entitled to borrow as Advances under Section 2.1 of this Agreement (after
giving effect to all then outstanding Obligations).

 

“Bank Product” means any one or more of the following financial products or
accommodations extended to a Borrower or its Subsidiaries by a Bank Product
Provider: (a) commercial credit cards, (b) commercial credit card processing
services, (c) debit cards, (d) stored value cards, (e) purchase cards (including
so-called “procurement cards” or “P-cards”), (f) Cash Management Services, or
(g) transactions under Hedge Agreements.

 

“Bank Product Agreements” means those agreements entered into from time to time
by a Borrower or its Subsidiaries with a Bank Product Provider in connection
with the obtaining of any of the Bank Products, including, without limitation,
all Cash Management Documents.

 

“Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Lender) to be held by Lender for the
benefit of the Bank Product Provider in an amount determined by Lender as
sufficient to satisfy the reasonably estimated credit exposure with respect to
the then existing Bank Product Obligations (other than Hedge Obligations).

 

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by a Loan Party or its Subsidiaries to
Lender or another Bank Product Provider pursuant to or evidenced by a Bank
Product Agreement and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and (b) all Hedge Obligations.

 

“Bank Product Provider” means Lender or any of its Affiliates that provide Bank
Products to a Loan Party.

 

35

 

 

“Bank Product Reserve Amount” means, as of any date of determination, the Dollar
amount of Reserves that Lender has determined it is necessary or appropriate to
establish (based upon Lender’s reasonable determination of their credit and
operating risk exposure to Borrowers and their Subsidiaries in respect of Bank
Product Obligations) in respect of Bank Products then provided or outstanding.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which any Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

 

“Board of Directors” means the board of directors (or comparable managers) of a
Borrower or any other Loan Party or any committee thereof duly authorized to act
on behalf of the board of directors (or comparable managers).

 

“Bond Letter of Credit” means the Letter of Credit (as defined in the
Reimbursement Agreement).

 

“Books” means books and records (including a Borrower’s or any other Loan
Party’s Records indicating, summarizing, or evidencing such Borrower’s or such
other Loan Party’s assets (including the Collateral) or liabilities, such
Borrower’s or such other Loan Party’s Records relating to such Borrower’s or
such other Loan Party’s business operations or financial condition, or such
Borrower’s or such other Loan Party’s Goods or General Intangibles related to
such information).

 

“Borrowers” has the meaning specified in the preamble of this Agreement.

 

“Borrowing” means a borrowing consisting of Advances (i) requested by Borrowers,
(ii) made automatically pursuant to Section 2.3(c) without the request of
Borrowers, (iii) made by Lender pursuant to Section 2.6(c), or (iv) a Protective
Advance.

 

“Borrowing Base” means, as of any date of determination, the result of:

 

(a) the lesser of (i) $6,000,000 (or such lesser amount as Lender may reasonably
determine in its Permitted Discretion) and (ii) 85% of the Eligible Royalties
Receivable accrued on the Borrowers’ books and records in accordance with GAAP
(less the amount, if any, of the Dilution Reserve, if applicable), plus

 

(b) the lesser of (i) the M&E Sublimit and (ii) 75% of the Net Orderly
Liquidation Value of the Eligible Equipment as set forth on the most recent
appraisal conducted by Lender, plus

 

(c) the lesser of (i) $5,000,000 and (ii) the amount of Borrowing Base Eligible
Cash, minus

 

(d) the aggregate amount of Reserves, if any, established by Lender.

 

“Borrowing Base Certificate” means a form of borrowing base certificate in form
and substance acceptable to Lender.

 

“Borrowing Base Eligible Cash” means cash, in an amount of not less than
$5,000,000, maintained in the Borrowing Base Eligible Cash Account and not
subject to withdrawal during the term of this Agreement.

 

“Borrowing Base Eligible Cash Account” means a fully blocked and segregated
deposit account of a Borrower subject to a Control Agreement, providing for sole
and exclusive dominion by Lender, into which Borrowing Base Eligible Cash shall
be deposited.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close pursuant to the rules and
regulations of the Federal Reserve System.

 

“Capital Expenditures” means the aggregate of all expenditures by the Loan
Parties and their Subsidiaries, on a consolidated basis, during such period that
are capital expenditures as determined in accordance with GAAP, whether such
expenditures are paid in cash or financed.

 

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

 

36

 

 

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and having
one of the two highest ratings obtainable from either Standard & Poor’s Rating
Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial
paper maturing no more than 270 days from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at least
P-1 from Moody’s, (d) certificates of deposit, time deposits, overnight bank
deposits or bankers’ acceptances maturing within 1 year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof or the District of Columbia or any United States
branch of a foreign bank having combined capital and surplus of not less than
$250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies
the criteria described in clause (d) above, or (ii) any other bank organized
under the laws of the United States or any state thereof so long as the full
amount maintained with any such other bank is insured by the Federal Deposit
Insurance Corporation, (f) repurchase obligations of any commercial bank
satisfying the requirements of clause (d) of this definition or recognized
securities dealer having combined capital and surplus of not less than
$250,000,000, having a term of not more than seven days, with respect to
securities satisfying the criteria in clauses (a) or (d) above, (g) debt
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
criteria described in clause (d) above, and (h) Investments in money market
funds substantially all of whose assets are invested in the types of assets
described in clauses (a) through (g) above.

 

“Cash Management Documents” means the agreements governing each of the Cash
Management Services of Lender utilized by a Borrower, which agreements shall
currently include the Master Agreement for Treasury Management Services or other
applicable treasury management services agreement, the “Acceptance of Services”,
the “Service Description” governing each such treasury management service used
by a Borrower, and all replacement or successor agreements which govern such
Cash Management Services of Lender.

 

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant stored value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

 

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

 

“Change of Control” means that any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 35%,
or more, of the Stock of a Borrower having the right to vote for the election of
members of the Board of Directors, (c) a majority of the members of the Board of
Directors do not constitute Continuing Directors, or (d) Borrowers fail to own
and control, directly or indirectly, 100% of the Stock of each other Loan Party
and their Subsidiaries.

 

“Chattel Paper” means chattel paper (as that term is defined in the Code), and
includes tangible chattel paper and electronic chattel paper.

 

“Closing Date” means the date of the making of the initial Advance (or other
extension of credit) under this Agreement.

 

“Code” means the New York Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies. To the extent that defined terms set forth herein shall have different
meanings under different Articles under the Uniform Commercial Code, the meaning
assigned to such defined term under Article 9 of the Uniform Commercial Code
shall control.

 

“Collateral” means all of each Loan Party’s:

 

(a) Accounts;

 

37

 

 

(b) Books;

 

(c) Chattel Paper;

 

(d) Deposit Accounts (including, without limitation, the Borrowing Base Eligible
Cash Account and the Sanofi-Aventis Receivables Account);

 

(e) Goods, including Equipment and Fixtures;

 

(f) General Intangibles;

 

(g) Inventory;

 

(h) Investment Related Property;

 

(i) Negotiable Collateral;

 

(j) Supporting Obligations;

 

(k) Commercial Tort Claims;

 

(l) money, Cash Equivalents, or other assets of such Loan Party that now or
hereafter come into the possession, custody, or control of Lender (or its agent
or designee), including, without limitation, any Borrowing Base Eligible Cash;
and

 

(m) all of the proceeds (as such term is defined in the Code) and products,
whether tangible or intangible, of any of the foregoing, including proceeds of
insurance or Commercial Tort Claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, Fixtures, General Intangibles, Inventory, Investment Related
Property, Negotiable Collateral, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease, license,
exchange, collection, or other disposition of any of the foregoing, the proceeds
of any award in condemnation with respect to any of the foregoing, any rebates
or refunds, whether for taxes or otherwise, and all proceeds of any such
proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above, whether
insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing (the “Proceeds”). Without
limiting the generality of the foregoing, the term “Proceeds” includes whatever
is receivable or received when Investment Related Property or proceeds are sold,
exchanged, collected, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes proceeds of any indemnity or guaranty
payable to such Loan Party or Lender from time to time with respect to any of
the Investment Related Property.

 

All Real Property Collateral and proceeds thereof shall be deemed to be included
as part of the Collateral. Those items identified in Section 3.1 clauses (i),
(ii), and (iii) shall be deemed to be excluded from the Collateral to the
extent, and in accordance with the terms and conditions thereof.

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in a Loan Party’s or its Subsidiaries’ Books, Equipment, Accounts or Inventory,
in each case, in favor of Lender with respect to the Collateral at such premises
or otherwise in the custody, control or possession of such lessor, consignee or
other Person and in form and substance reasonably satisfactory to Lender.

 

Collection Account” means the Deposit Account identified on Schedule A-1.

 

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance Proceeds, cash Proceeds of asset sales, rental
Proceeds, and tax refunds).

 

“Commercial Tort Claims” means commercial tort claims (as that term is defined
in the Code), and includes those commercial tort claims listed on Schedule
5.6(d) to the Information Certificate.

 

38

 

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit A delivered by the chief financial officer of Borrowers to Lender.

 

“Confidential Information” has the meaning specified therefor in Section 17.8 of
this Agreement.

 

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of AMRI on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was approved, appointed or nominated for election to the
Board of Directors by either the Permitted Holders or a majority of the
Continuing Directors, but excluding any such individual originally proposed for
election in opposition to the Board of Directors in office at the Closing Date
in an actual or threatened election contest relating to the election of the
directors (or comparable managers) of any Borrower and whose initial assumption
of office resulted from such contest or the settlement thereof.

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Lender, executed and delivered by each Borrower, each Loan Party
or one of their Subsidiaries, Lender, and the applicable securities intermediary
(with respect to a Securities Account) or bank (with respect to a Deposit
Account) or issuer, (with respect to uncertificated securities).

 

“Copyrights” means any and all rights in any works of authorship, including (i)
copyrights and moral rights, (ii) copyright registrations and recordings thereof
and all applications in connection therewith including those listed on Schedule
5.26(b) to the Information Certificate, (iii) income, license fees, royalties,
damages, and payments now and hereafter due or payable under and with respect
thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past, present, or future infringements
thereof, (iv) the right to sue for past, present, and future infringements
thereof, and (v) all of each Borrower’s and each Loan Party’s rights
corresponding thereto throughout the world.

 

“Copyright Security Agreement” means each Copyright Security Agreement executed
and delivered by a Borrower or another Loan Party and Lender, in form and
substance acceptable to Lender.

 

“Credit Facility” means the Revolving Credit Facility and the Term Loan.

 

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

 

“Daily Three Month LIBOR” means, for any day, the rate per annum equal to LIBOR
then in effect for delivery for a 3 month period. When interest is determined in
relation to Daily Three Month LIBOR, each change in the interest rate shall
become effective each Business Day that Lender determines that Daily Three Month
LIBOR has changed.

 

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

 

“Deposit Account” means any deposit account (as that term is defined in the
Code).

 

“Designated Account” means the operating Deposit Accounts of Borrowers at Lender
identified on Schedule D-1 and in each request for an Advance pursuant to
Section 2.3 of this Agreement.

 

“Dilution” means, as of any date of determination, a percentage that is the
result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, deductions, or other dilutive items as
determined by Lender with respect to Borrowers’ royalty stream in respect of the
Sanofi-Aventis License Agreement, by (b) Borrowers’ accruals of such royalty
stream on its books and records.

 

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against the Borrowers’ royalty receivables in respect
of the Sanofi-Aventis License Agreement by 1 percentage point for each
percentage point by which Dilution is in excess of 5%.

 

“Dollars” or “$” means United States dollars.

 

“EBITDA” means with respect to any fiscal period, on a consolidated basis for
Borrowers’ and their Subsidiaries, in each case, determined on a consolidated
basis in accordance with GAAP:

 

39

 

 

(a) net income (or loss),

 

(b) plus each of the following:

 

(i) interest expense,

 

(ii) income taxes,

 

(iii) depreciation, amortization, and non-cash items reducing net income
(including, without limitation, restructuring charges, impairment of goodwill,
and stock-based compensation), and

 

(iv) pension expense,

 

(c) minus each of the following:

 

(i) extraordinary gains,

 

(ii) cash expenses incurred during such period that relate to an amount accrued
as of the Borrowers’ fiscal year ending December 31, 2011 (including, without
limitation, severance and other winding-up costs in connection with the
termination of the Borrowers’ and its Subsidiaries’ operations in Hungary), and

 

(iii) non-cash items increasing net income, including, without limitation,
income attributed to deferred royalties receivables from the Sanofi-Aventis
License Agreement and non-cash income related to the Borregaard arbitration
settlement.

 

“Eligible Equipment” means Equipment of each Borrower designated by Lender as
eligible from time to time in its Permitted Discretion, but excluding Equipment
having any of the following characteristics:

 

(a) Equipment that is subject to any Lien other than in favor of Lender or
Permitted Liens;

 

(b) Equipment that has not been delivered to and installed at such Borrower’s
premises;

 

(c) Equipment in which Lender does not hold a first priority security interest;

 

(d) Equipment that is obsolete or not currently saleable or has been removed
from service;

 

(e) Equipment that is not covered by standard “all risk” hazard insurance for an
amount equal to its replacement cost;

 

(f) Equipment that requires proprietary software in order to operate in the
manner in which it is intended when such software is not freely assignable to
Lender or any potential purchaser of such Equipment;

 

(g) Equipment consisting of computer hardware, software, tooling, or molds;

 

(h) Equipment that is located on any property that is not owned by such
Borrower, unless Lender has received a Collateral Access Agreement in respect
thereof; or

 

(i) Equipment otherwise deemed unacceptable by Lender in its Permitted
Discretion.

 

Any Equipment which is not Eligible Equipment shall nonetheless constitute
Collateral.

 

“Eligible Real Property Collateral” means the Real Property Collateral located
at (a) 26 Corporate Circle, Albany, NY 12203 and (b) 24 Corporate Circle,
Albany, NY 12203.

 

“Eligible Royalties Receivables” means the royalties receivables from the
Sanofi-Aventis License Agreement that are not excluded as ineligible by one or
more of the excluding criteria set forth below; provided, however, that such
criteria may be revised from time to time by Lender in Lender’s Permitted
Discretion. Eligible Royalties Receivables shall not include the following:

 

40

 

 

(a) royalty receivables from the Sanofi-Aventis License Agreement received by a
Borrower more than 55 days after the end of each fiscal quarter;

 

(b) at Lender’s option, all or any portion of the royalty receivables from the
Sanofi-Aventis License Agreement if 10% or more of the aggregate amount of
royalty receivables payable thereunder and due after the end of any fiscal
quarter are deemed ineligible under clause (a) above;

 

(c) all of the royalty receivables from the Sanofi-Aventis License Agreement if
Aventis Pharmaceuticals, Inc. (or its successors or assigns) is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
a Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Person; or

 

(d) all of the royalty receivables from the Sanofi-Aventis License Agreement,
the collection of which, Lender, in its Permitted Discretion, believes to be
doubtful by reason of Aventis Pharmaceuticals, Inc.’s (or its successors or
assigns) financial condition.

 

Any royalty receivables from the Sanofi-Aventis License Agreement which are not
Eligible Royalties Receivables shall nonetheless constitute Collateral.

 

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Loan Party, any Subsidiary of a Loan Party, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Loan Party, any Subsidiary of a Loan Party, or any of their predecessors in
interest.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Loan Party or any of its Subsidiaries, relating to the environment, the effect
of the environment on employee health, or Hazardous Materials, in each case as
amended from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

 

“Equipment” means equipment (as that term is defined in the Code).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

 

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Loan Party or
its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Loan Party or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Loan Party or any of its Subsidiaries is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 and
430 of the IRC, any Person subject to ERISA that is a party to an arrangement
with any Loan Party or any of its Subsidiaries and whose employees are
aggregated with the employees of a Loan Party or its Subsidiaries under IRC
Section 414(o).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b)
the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041 or
4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (g) the determination that any Pension Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the IRC or Sections 303, 304 and 305 of
ERISA; or (h) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
any Loan Party or any ERISA Affiliate.

 

41

 

 

“Event of Default” has the meaning specified therefor in Section 9 of this
Agreement.

 

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables and
other obligations each Borrower and its Subsidiaries aged in excess of 90 days
past their invoice date as of the end of the immediately preceding month, and
all book overdrafts and fees of each Borrower and its Subsidiaries, in each case
as determined by Lender in its Permitted Discretion.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

“Excluded Taxes” means (a) any Tax imposed on the net income or net profits of
Lender (including any branch profits taxes), in each case imposed by the
jurisdiction (or by any political subdivision or taxing authority thereof in
which Lender is organized or the jurisdiction (or by any political subdivision
or taxing authority thereof) in which Lender’s principal office is located in
each case as a result of a present or former connection between Lender and the
jurisdiction or taxing authority imposing the tax (other than any such
connection arising solely from Lender having executed, delivered or performed
its obligations or received payment under, or enforced its rights or remedies
under this Agreement or any other Loan Document), (b) in the case of any
successor or assign of Lender that is not a “United States Person” as defined in
Section 7701(a)(30) of the Code (a “Non-U.S. Lender”), any U.S. withholding
taxes to the extent that the obligation to withhold amounts existed on the date
that such Person became a successor or assign of Lender under this Agreement or
designates a new lending office, except in each case to the extent such Person
is a direct or indirect assignee of Lender that was entitled, at the time the
assignment to such Person became effective, to receive additional amounts under
this Section 16, (c) backup withholding or other withholding taxes that are
directly attributable to the failure by Lender to deliver the documentation
required to be delivered pursuant to Section 16, and (d) in the case of a
Non-U.S. Lender, any United States federal withholding taxes imposed on amounts
payable to such Non-U.S. Lender as a result of such Non-U.S. Lender’s failure to
comply with the applicable requirements set forth in FATCA after December 31,
2012

 

“Existing Lender” means Bank of America, N.A., as agent for itself and certain
other lenders.

 

“FDA” means the United States Food and Drug Administration (or analogous
foreign, state or local Governmental Authority.

 

“Fixed Charges” means, with respect to any fiscal period and with respect to the
Borrowers and their Subsidiaries determined on a consolidated basis in
accordance with GAAP, the sum, without duplication, of (a) cash Interest Expense
paid during such period (other than interest paid-in-kind, amortization of
financing fees, and other non-cash Interest Expense), (b) principal payments
paid in cash in respect of Indebtedness paid during such period, including cash
payments with respect to Capital Leases, but excluding principal payments made
with respect to the Revolving Credit Facility, (c) cash payments to fund their
pension plans and (d) all Restricted Junior Payments and other distributions
paid in cash during such period.

 

“Fixed Charge Coverage Ratio” means, with respect to the Borrowers and their
Subsidiaries for any period on a consolidated basis, the ratio of (i) EBITDA for
such period, minus (a) Non-Financed Capital Expenditures made (to the extent not
already incurred in a prior period) or incurred during such period, and (b) cash
taxes paid during such period, to the extent greater than zero to (ii) Fixed
Charges for such period.

 

“Fixtures” means fixtures (as that term is defined in the Code).

 

“Funding Date” means the date on which a Borrowing occurs.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

 

“General Intangibles” means general intangibles (as that term is defined in the
Code), and includes payment intangibles, contract rights, rights to payment,
rights under Hedge Agreements (including the right to receive payment on account
of the termination (voluntarily or involuntarily) of any such Hedge Agreements),
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, Intellectual Property, Intellectual Property Licenses,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
pension plan refunds, pension plan refund claims, insurance premium rebates, tax
refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, and any
other personal property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, Deposit Accounts, Goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction.

 

42

 

 

“Goods” means goods (as that term is defined in the Code).

 

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

 

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

 

“Guarantor Payment” has the meaning specified therefor in Section 2.16.

 

“Guarantors” means each other Person that becomes a guarantor after the Closing
Date pursuant to Section 6.15 of this Agreement, and “Guarantor” means any one
of them.

 

“Guaranty” means a general continuing guaranty executed and delivered by each
Guarantor in favor of Lender in form and substance reasonably satisfactory to
Lender.

 

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in Section
101(53B)(A) of the Bankruptcy Code.

 

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of any Loan Party or its Subsidiaries arising under, owing pursuant to, or
existing in respect of Hedge Agreements entered into with Lender or another Bank
Product Provider.

 

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Prohibited Preferred
Stock of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above. For
purposes of this definition, (i) the amount of any Indebtedness represented by a
guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for
which the guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness
described in clause (d) above shall be the lower of the amount of the obligation
and the fair market value of the assets of such Person securing such obligation.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 11.3 of
this Agreement.

 

43

 

  

“Indemnified Person” has the meaning specified therefor in Section 11.3 of this
Agreement.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors,
receiverships, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.

 

“Intellectual Property” means any and all Patents, Copyrights, Trademarks, trade
secrets, know-how, inventions (whether or not patentable), algorithms, software
programs (including source code and object code), processes, product designs,
industrial designs, blueprints, drawings, data, customer lists, URLs and domain
names, specifications, documentations, reports, catalogs, literature, and any
other forms of technology or proprietary information of any kind, including all
rights therein and all applications for registration or registrations thereof.

 

“Intellectual Property Licenses” means, with respect to any Person (the
“Specified Party”), (i) any licenses or other similar rights provided to the
Specified Party in or with respect to Intellectual Property owned or controlled
by any other Person, and (ii) any licenses or other similar rights provided to
any other Person in or with respect to Intellectual Property owned or controlled
by the Specified Party, in each case, including (A) any software license
agreements (other than license agreements for commercially available
off-the-shelf software that is generally available to the public which have been
licensed to a Loan Party pursuant to end-user licenses), (B) the license
agreements listed on Schedule 5.26(b) to the Information Certificate, and (C)
the right to use any of the licenses or other similar rights described in this
definition in connection with the enforcement of Lender’s rights under the Loan
Documents.

 

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, dated as of even date with this Agreement, executed and delivered by
the Loan Parties, each of their Subsidiaries, and Lender, the form and substance
of which is reasonably satisfactory to Lender.

 

“Interest Expense” means, for any period, the aggregate of the interest expense
of each Borrower for such period, determined on a consolidated basis in
accordance with GAAP.

 

“Interest Rate” means an interest rate equal to Daily Three Month LIBOR, which
interest rate shall change whenever Daily Three Month LIBOR changes.

 

“Interest Rate Margin” means (a) with respect to the Term Loan, 3.25% and (b)
with respect to the Advances, 2.75%.

 

“Inventory” means inventory (as that term is defined in the Code).

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business not to exceed $50,000 in the aggregate during any fiscal year of
Borrowers, and (b) bona fide Accounts arising in the ordinary course of
business), or acquisitions of Indebtedness, Stock, or all or substantially all
of the assets of such other Person (or of any division or business line of such
other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.

 

“Investment Related Property” means (a) any and all investment property (as that
term is defined in the Code), and (b) any and all of the following (regardless
of whether classified as investment property under the Code): all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

 

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

 

“ISP98” means the International Standby Practices (1998 Revision, effective
January 1, 1999), International Chamber of Commerce Publication No. 590.

 

“Lender” has the meaning specified therefor in the preamble to this Agreement
and its successors and assigns.

 

“Lender-Related Persons” means Lender, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

 

44

 

 

“Lender’s Liens” mean the Liens granted by the Loan Parties to Lender under the
Loan Documents.

 

“Lender Expenses” means all (a) reasonable costs or expenses (including taxes,
and insurance premiums) required to be paid by any Loan Party or any of its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by Lender, (b) reasonable out-of-pocket fees or charges paid or
incurred by Lender in connection with Lender’s transactions with any Loan Party
or any of its Subsidiaries under any of the Loan Documents, including, fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, judgment lien,
litigation, bankruptcy and Code searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation contained in this Agreement),
real estate surveys, real estate title insurance policies and endorsements, and
environmental audits, (c) Lender’s customary fees and charges (as adjusted from
time to time) with respect to the disbursement of funds (or the receipt of
funds) to or for the account of Borrowers (whether by wire transfer or
otherwise), together with any out of pocket costs and expenses incurred in
connection therewith, (d) out-of-pocket charges paid or incurred by Lender
resulting from the dishonor of checks payable by or to any Loan Party, (e)
reasonable out-of-pocket costs and expenses paid or incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or during
the continuance of an Event of Default, in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) reasonable out-of-pocket examination fees and
expenses (including reasonable travel, meals, and lodging) of Lender related to
any inspections or examinations to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable
out-of-pocket costs and expenses of third party claims or any other suit paid or
incurred by Lender in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or Lender’s
relationship with any Loan Party or any of its Subsidiaries, (h) Lender’s
reasonable costs and expenses (including reasonable documented attorneys’ fees)
incurred in advising, structuring, drafting, reviewing, administering (including
reasonable travel, meals, and lodging), or amending the Loan Documents, (i)
Lender’s reasonable costs and expenses (including reasonable documented
attorneys, accountants, consultants, and other advisors fees and expenses)
incurred in terminating, enforcing (including reasonable documented attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning any Loan Party or any of its Subsidiaries or in exercising rights or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral, and (j) usage charges, charges, fees, costs and
expenses for amendments, renewals, extensions, transfers, or drawings from time
to time imposed by Lender in respect of Letters of Credit and out-of-pocket
charges, fees, costs and expenses paid or incurred by Lender in connection with
the issuance, amendment, renewal, extension, or transfer of, or drawing under,
any Letter of Credit or any demand for payment thereunder.

 

“Lender Representatives” has the meaning specified therefor in Section 17.8(a)
of this Agreement.

 

“Lender-Related Person” means, Lender, together with Lender’s Affiliates,
officers, directors, employees, attorneys, and agents.

 

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Lender, including, without limitation, the Bond Letter of Credit
(as defined in the Reimbursement Agreement).

 

“Letter of Credit Agreements” means a Letter of Credit Application, together
with any and all related letter of credit agreements pursuant to which Lender
agrees to issue, amend, or extend a Letter of Credit, or pursuant to which
Borrowers agree to reimburse Lender for all Letter of Credit Disbursements, each
such application and related agreement to be in the form specified by Lender
from time to time.

 

“Letter of Credit Application” means an application requesting Lender to issue,
amend, or extend a Letter of Credit, each such application to be in the form
specified by Lender from time to time.

 

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Lender, including
provisions that specify that the Letter of Credit fee and all usage charges set
forth in this Agreement and the Letter of Credit Agreements will continue to
accrue while the Letters of Credit are outstanding) to be held by Lender for the
benefit of Lender in an amount equal to 110% of the then existing Letter of
Credit Usage, (b) delivering to Lender the original of each Letter of Credit,
together with documentation executed by all beneficiaries under each Letter of
Credit in form and substance acceptable to Lender terminating all of such
beneficiaries’ rights under such Letters of Credit, or (c) providing Lender with
a standby letter of credit, in form and substance reasonably satisfactory to
Lender, from a commercial bank reasonably acceptable to Lender (in its sole
discretion) in an amount equal to 110% of the then existing Letter of Credit
Usage (it being understood that the Letter of Credit fee and all usage charges
set forth in this Agreement will continue to accrue while the Letters of Credit
are outstanding and that any such fees that accrue must be an amount that can be
drawn under any such standby letter of credit).

 

45

 

 

“Letter of Credit Disbursement” means a payment made by Lender pursuant to a
Letter of Credit.

 

“Letter of Credit Usage” means, as of any date of determination, the sum of (a)
the aggregate undrawn amount of all outstanding Letters of Credit, and (b) the
aggregate amount of outstanding reimbursement obligations with respect to
Letters of Credit which remain unreimbursed or which have not been paid through
an Advance under the Revolving Credit Facility.

 

“LIBOR” means the Wells Fargo LIBOR rate (which is a rate chosen by Lender that
tracks, but does not mirror, the rate set forth in the Wall Street Journal under
the heading Money Rates and described as the “London Interbank Offered Rates”)
for the applicable interest period (rounded up to the nearest one-eighth of one
percent, as adjusted to satisfy Federal Reserve System requirements.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

 

“Loan Account” has the meaning specified therefor in Section 2.8 of this
Agreement.

 

“Loan Documents” means this Agreement, any Borrowing Base Certificate, the
Control Agreements, the Cash Management Documents, the Copyright Security
Agreement, any Guaranty, the Intercompany Subordination Agreement, the Letters
of Credit, the Reimbursement Agreement, the Mortgages, the Patent and Trademark
Security Agreement, any note or notes executed by any Borrower in connection
with this Agreement and payable to Lender, any Letter of Credit Applications and
other Letter of Credit Agreements entered into by any Borrower in connection
with this Agreement, and any other instrument or agreement entered into, now or
in the future, by any Loan Party or any of its Subsidiaries and Lender in
connection with this Agreement, but specifically excluding all Hedge Agreements.

 

“Loan Management Service” means Lender’s proprietary automated loan management
program currently known as “Loan Manager” and any successor service or product
of Lender which performs similar services.

 

“Loan Party” means any Borrower and any Guarantor. As of the Closing Date, there
are no Guarantors.

 

“M&E Sublimit” means $5,000,000, which shall reduce by $83,333.33 on the first
Business Day of each month after the Closing Date.

 

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

 

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Loan Parties and their Subsidiaries taken as a
whole, (b) a material impairment of any Loan Party’s or any Subsidiary’s ability
to perform their obligations as required under the Loan Documents to which it is
a party or of Lender’s ability to enforce the Obligations or realize upon the
Collateral, (c) a material impairment of the enforceability or priority of
Lender’s Liens with respect to the Collateral as a result of an action or
failure to act on the part of any Loan Party or their Subsidiaries, or (d) any
claim against any Loan party or their Subsidiaries or threat of litigation which
if determined adversely to any Loan Party or any of its Subsidiaries, would
result in the occurrence of an event described in clauses (a), (b) or (c) above.

 

“Material Contract” means, with respect to any Person, (a) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$5,000,000 or more in any calendar year (other than purchase orders in the
ordinary course of the business of such Person or such Subsidiary), and, and (b)
all other contracts or agreements, the loss of which could reasonably be
expected to result in a Material Adverse Change, including, without limitation,
the Sanofi-Aventis License Agreement.

 

“Maturity Date” has the meaning specified therefor in Section 2.9 of this
Agreement.

 

“Maximum Credit” means $20,000,000.

 

“Maximum Revolver Amount” means $15,000,000, decreased by permanent reductions
in such amount made in accordance with Section 2.11 of this Agreement.

 

46

 

 

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

 

“Mortgage Policy” has the meaning specified therefor in Exhibit B to this
Agreement.

 

“Mortgages” means, individually and collectively, one or more mortgages
(including, without limitation, leasehold mortgages), deeds of trust, or deeds
to secure debt, executed and delivered by a Loan Party or its Subsidiaries in
favor of Lender, in form and substance reasonably satisfactory to Lender, that
encumber the Real Property Collateral.

 

“Multiemployer Plan” means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any Loan Party or any of its Subsidiaries or any
ERISA Affiliate contributes or is obligated to contribute.

 

“Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts and documents (as each such term is
defined in the Code).

 

“Net Cash Flow” means, with respect to the Borrowers and their Subsidiaries for
any period on a consolidated basis, (a) EBITDA for such period, minus (b)
Non-Financed Capital Expenditures made (to the extent not already incurred in a
prior period) or incurred during such period, minus (c) cash taxes paid during
such period, to the extent greater than zero, minus Fixed Charges for such
period.

 

“Net Cash Proceeds” means with respect to any sale or disposition by any Loan
Party or any of their Subsidiaries of assets, the amount of cash proceeds
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
such Loan Party or such Subsidiary, in connection therewith after deducting
therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien
on any asset (other than (A) Indebtedness owing to Lender under this Agreement
or the other Loan Documents and (B) Indebtedness assumed by the purchaser of
such asset) which is required to be, and is, repaid in connection with such sale
or disposition, (ii) reasonable fees, commissions, and expenses related thereto
and required to be paid by such Loan Party or such Subsidiary in connection with
such sale or disposition (other than those reasonable fees, commissions and
expenses owing to an Affiliate of such Loan Party) and (iii) sales taxes paid or
payable to any taxing authorities by such Loan Party or such Subsidiary in
connection with such sale or disposition, in each case to the extent, but only
to the extent, that the amounts so deducted are, at the time of receipt of such
cash, actually paid or payable to a Person that is not an Affiliate of such Loan
Party or any of its Subsidiaries, and are properly attributable to such
transaction.

 

“Net Orderly Liquidation Value” means a professional opinion of an appraiser
selected or approved by Lender of the probable Net Cash Proceeds that could be
realized at a properly advertised and professionally conducted liquidation sale,
conducted under orderly sale conditions for an extended period of time (as
determined by such appraiser and approved by Lender), under the economic trends
currently existing at the time of the appraisal, which appraisal shall be in
form, scope and methodology acceptable to Lender

 

“Non-Financed Capital Expenditures” means Capital Expenditures not financed by
the seller of the capital asset, by a third party lender or by means of any
extension of credit by Lender other than by means of an Advance under the
Revolving Credit Facility;

 

“Obligations” means (a) all loans (including the Term Loan and the Advances),
debts, principal, interest (including any interest that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
reimbursement or indemnification obligations with respect to Letters of Credit
(irrespective of whether contingent), premiums, liabilities (including all
amounts charged to the Loan Account pursuant to this Agreement), obligations
(including indemnification obligations), fees, Lender Expenses (including any
fees or expenses that accrue after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), guaranties, and all covenants and duties of any
other kind and description owing by any Loan Party pursuant to or evidenced by
this Agreement or any of the other Loan Documents (including, without
limitation, the Reimbursement Agreement) and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all interest not
paid when due and all other expenses or other amounts that any Borrower or any
Loan Party is required to pay or reimburse by the Loan Documents or by law or
otherwise in connection with the Loan Documents, and (b) all Bank Product
Obligations. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

 

“Overadvance Amount” has the meaning specified therefor in Section 2.4(f) of
this Agreement

 

47

 

 

“Patents” means patents and patent applications, including (i) the patents and
patent applications listed on Schedule 5.26(b) to the Information Certificate,
(ii) all continuations, divisionals, continuations-in-part, re-examinations,
reissues, and renewals thereof and improvements thereon, (iii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past, present, or future
infringements thereof, (iv) the right to sue for past, present, and future
infringements thereof, and (v) all of each Loan Party’s rights corresponding
thereto throughout the world.

 

“Patent and Trademark Security Agreement” means each Patent and Trademark
Security Agreement executed and delivered by the applicable Loan Party, in form
and substance acceptable to Lender.

 

“Patriot Act” has the meaning specified therefor in Section 5.18 of this
Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the IRC and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the IRC and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the IRC and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by any Loan Party and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
IRC

 

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment (it being agreed
that Lender shall use commercially reasonable efforts consistent with Lender’s
normal business practice to provide notice to Administrative Borrower prior to
exercising Permitted Discretion, but the failure to provide such notice shall
not limit Lender’s ability to exercise Permitted Discretion).

 

“Permitted Dispositions” means:

 

(a) sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, obsolete, or surplus to the Loan Parties’ and their Subsidiaries’
needs in the ordinary course of business;

 

(b) sales of Inventory to buyers in the ordinary course of business;

 

(c) the granting of Permitted Liens;

 

(d) the making of a Restricted Junior Payment that is expressly permitted to be
made pursuant to this Agreement;

 

(e) the making of a Permitted Investment;

 

(f) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents;

 

(g) the sale or discount, in each case without recourse, of Accounts arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof;

 

(h) any involuntary loss, damage or destruction of property;

 

(i) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property;

 

(j) the sale or issuance of common stock to the extent permitted by Section 7.14
of this Agreement;

 

48

 

(k) the sale, transfer, or disposition of the equity or assets of the
Administrative Borrower’s Hungarian Subsidiary; and

 

(l) the sale, transfer, or disposition of assets with an aggregate value not
exceeding $500,000 in any year; provided that prior to any such sale, transfer,
or disposition, Administrative Borrower shall have provided written notice to
Lender describing the nature of the transaction, the assets subject to the
transaction, and the terms and conditions of the transaction.

 

All proceeds of Permitted Dispositions shall be delivered to Lender and applied
in accordance with the terms and conditions of Section 2.4.

 

“Permitted Indebtedness” means:

 

(a) Indebtedness evidenced by this Agreement or the other Loan Documents;

 

(b) Indebtedness set forth on Schedule 5.19 to the Information Certificate and
any Refinancing Indebtedness in respect of such Indebtedness;

 

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness;

 

(d) endorsement of instruments or other payment items for deposit;

 

(e) the incurrence by any Borrower or its Subsidiaries of Indebtedness under
Hedge Agreements that are incurred for the bona fide purpose of hedging the
interest rate, commodity, or foreign currency risks associated with such
Borrower’s and its Subsidiaries’ operations and not for speculative purposes;

 

(f) Indebtedness incurred in respect of Bank Products other than pursuant to
Hedge Agreements;

 

(g) Indebtedness composing Permitted Investments; and

 

(h) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, completion guarantee and similar obligations; (ii)
unsecured guarantees arising with respect to customary indemnification
obligations to purchasers in connection with Permitted Dispositions; and (iii)
unsecured guarantees with respect to Indebtedness of any Loan Party or one of
its Subsidiaries, to the extent that the Person that is obligated under such
guaranty could have incurred such underlying Indebtedness.

 

“Permitted Intercompany Advances” means loans made by (a) a Loan Party to
another Loan Party, (b) a Subsidiary of a Loan Party which is not a Loan Party
to another Subsidiary of a Loan Party which is not a Loan Party, (c) a
Subsidiary of a Loan Party which is not a Loan Party to a Loan Party, so long as
the parties thereto are party to the Intercompany Subordination Agreement, or
(d) by a Loan Party to its Subsidiaries as permitted by Section 7.11(b).

 

“Permitted Investments” means:

 

(a) Investments in cash and Cash Equivalents;

 

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business;

 

(c) advances made in connection with purchases of Goods or services in the
ordinary course of business;

 

(d) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-1;

 

(e) Permitted Intercompany Advances;

 

49

 

(f) Investments resulting from entering into (i) Bank Product Agreements, or
(ii) agreements relative to Indebtedness that is permitted under clause (g) of
the definition of Permitted Indebtedness;

 

(g) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries;

 

(h) non-cash loans to employees, officers, and directors of any Borrower or any
of its Subsidiaries for the purpose of purchasing Stock in any Borrower so long
as the proceeds of such loans are used in their entirety to purchase such stock
in any Borrower; and

 

(i) guarantees permitted under the definition of Permitted Indebtedness.

 

“Permitted Liens” means

 

(a) Liens granted to, or for the benefit of, Lender to secure the Obligations;

 

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Lender’s Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests;

 

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 9.3
of the Agreement;

 

(d) Liens set forth on Schedule P-2; provided, however, that to qualify as a
Permitted Lien, any such Lien described on Schedule P-2 shall only secure the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof;

 

(e) the interests of (i) lessors under operating leases, (ii) non-exclusive
licensors under license agreements and (iii) exclusive licensors under
Intellectual Property license agreements in the ordinary course of business and
substantially consistent with past practice;

 

(f) purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as (i) such Lien attaches only to the asset purchased or acquired
and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that
was incurred to acquire the asset purchased or acquired or any Refinancing
Indebtedness in respect thereof;

 

(g) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of permitted Refinancing Indebtedness and
so long as the replacement Liens only encumber those assets that secured the
original Indebtedness;

 

(h) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests;

 

(i) Liens on amounts deposited to secure Loan Parties’ and their Subsidiaries’
obligations in connection with worker’s compensation or other unemployment
insurance;

 

(j) Liens on amounts deposited to secure Loan Parties’ and their Subsidiaries’
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money;

 

(k) Liens on amounts deposited to secure Loan Parties’ and their Subsidiaries’
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business;

 

(l) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof;

 

50

 

(m) rights of setoff or bankers’ liens upon deposits of cash in favor of banks
or other depository institutions, solely to the extent incurred in connection
with the maintenance of such deposit accounts in the ordinary course of
business; and

 

(n) 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.

 

“Permitted Preferred Stock” means and refers to any Preferred Stock issued by a
Borrower (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

 

“Permitted Protest” means the right of any Borrower or any other Loan Party or
any of their respective Subsidiaries to protest any Lien (other than any Lien
that secures the Obligations), taxes (other than payroll taxes or taxes that are
the subject of a United States federal tax lien), or rental payment, provided
that (a) a reserve with respect to such obligation is established on such
Borrower’s or its Subsidiaries’ books and records in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by such Borrower or its Subsidiary or Loan Party, as applicable, in
good faith, and (c) Lender is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of Lender’s Liens.

 

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
principal amount outstanding at any one time not in excess of $5,000,000.

 

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of any Loan Party or
any ERISA Affiliate or any such Plan to which any Loan Party or any ERISA
Affiliate is required to contribute on behalf of any of its employees

 

“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any
class or classes (however designated) that is preferred with respect to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Stock of
any other class of such Person.

 

“Pledged Companies” means each Person listed on P-3 to this Agreement, together
with each other Person, all or a portion of whose Stock is acquired or otherwise
owned by a Loan Party after the Closing Date.

 

“Pledged Interests” means all of each Loan Parties’ right, title and interest in
and to all of the Stock now owned or hereafter acquired by such Borrower,
regardless of class or designation, including in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any certificates representing
the Stock, the right to receive any certificates representing any of the Stock,
all warrants, options, share appreciation rights and other rights, contractual
or otherwise, in respect thereof and the right to receive all dividends,
distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and all cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of, on
account of, or in exchange for any or all of the foregoing, but shall include
only 65% of the total outstanding voting Stock of any first tier Subsidiary of a
Borrower that is a CFC (and none of the Stock of any Subsidiary of such CFC) if
pledging a greater amount would result in adverse tax consequences or the costs
to the Loan Parties of providing such pledge or perfecting the security
interests created thereby are unreasonably excessive (as determined by Lender in
consultation with Borrowers) in relation to the benefits of Lender of the
security afforded thereby.

 

“Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit C to this Agreement.

 

“Pledged Notes” has the meaning specified therefor in Section 5.26 of Exhibit D
to this Agreement.

 

“Pledged Operating Agreements” means all of each Loan Parties’ rights, powers,
and remedies under the limited liability Borrower operating agreements of each
of the Pledged Companies that are limited liability companies.

 

“Pledged Partnership Agreements” means all of each Loan Parties’ rights, powers,
and remedies under the partnership agreements of each of the Pledged Companies
that are partnerships

 

51

 

“Prime Rate” means at any time the rate of interest most recently announced by
Lender at its principal office as its Prime Rate, with the understanding that
the Prime Rate is one of Lender’s base rates, and serves as the basis upon which
effective rates of interest are calculated for those loans making reference to
it, and is evidenced by its recording in such internal publication or
publications as Lender may designate. Each change in the rate of interest shall
become effective on the date each Prime Rate change is announced by Lender.

 

“Proceeds” has the meaning specified therefor in Schedule 1.1, definition of
“Collateral”.

 

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

 

“Projections” means Borrowers’ forecasted (a) consolidated and consolidating
balance sheets, (b)consolidated and consolidating profit and loss statements,
(c) Availability projections, and (d) consolidated cash flow statements, all
prepared on a basis consistent with Borrowers’ historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.

 

“Protective Advance” has the meaning specified therefor in Section 2.3(d).

 

“PTO” means the United States Patent and Trademark Office.

 

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

 

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of each Borrower that is in Deposit
Accounts or in Securities Accounts, or any combination thereof, and which such
Deposit Account or Securities Account is the subject of a Control Agreement and
is maintained by a branch office of the bank or securities intermediary located
within the United States; provided however, that Borrowing Base Eligible Cash
shall not constitute Qualified Cash.

 

“Real Property” means any estates or interests (including leasehold interests)
in real property now owned or hereafter acquired by a Loan Party and the
improvements thereto.

 

“Real Property Collateral” means the Real Property owned by a Loan Party
identified on Schedule R-1 and any Real Property hereafter acquired by any Loan
Party.

 

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

 

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

 

(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of Lender,

 

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to Lender as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and

 

52

 

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

 

“Reimbursement Agreement” means the Reimbursement Agreement, dated as of even
date with this Agreement, by and among Lender and the Loan Parties with respect
to the Bond Letter of Credit, the form and substance of which is reasonably
satisfactory to Lender.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Reserves” means, as of any date of determination, the sum of (a) an amount or
percent of a specified item or category of items that Lender establishes from
time to time in its Permitted Discretion to reduce Availability under the
Borrowing Base to reflect (i) such matters, events, conditions, contingencies or
risks which affect or which may reasonably be expected to affect the assets or
business of the Loan Parties and their Subsidiaries taken as a whole or the
Collateral or its value or the enforceability, perfection, or priority of
Lender’s security interest in the Collateral, or (ii) Lender’s judgment that any
collateral report or financial information relating to a Borrower or any other
Loan Party delivered to Lender is incomplete, inaccurate, or misleading in any
material respect, plus (b) the Dilution Reserve and the Bank Product Reserve
Amount.

 

“Restricted Junior Payment” means (a) declaration or payment of any dividend or
the making any other payment or distribution on account of Stock issued by any
Loan Party (including any payment in connection with any merger or consolidation
involving any Loan Party) or to the direct or indirect holders of Stock issued
by any Loan Party in their capacity as such (other than dividends or
distributions payable in Stock (other than Prohibited Preferred Stock) issued by
any Loan Party, or (b) any purchase, redemption, or other acquisition or
retirement for value (including in connection with any merger or consolidation
involving any Loan Party) of any Stock issued by any Loan Party.

 

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.

 

“Revolving Credit Facility” means the $15,000,000 revolving line of credit
facility described in Section 2.1 pursuant to which Lender provides Advances to
Borrowers and issues Letters of Credit for the account of Borrowers.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“Sanofi-Aventis License Agreement” means the License Agreement (Terfenadine Acid
Matabolite), dated as of March 15, 1995 (as amended prior to the Closing Date
and as amended after the Closing Date in accordance with the terms hereof), by
and between AMRI and Aventis Pharmaceuticals, Inc. (successor to Marion Merrell
Dow, Inc.)

 

“Sanofi-Aventis Receivables Account” mean the Deposit Account of the Borrowers
set forth on Schedule A-3 to this Agreement.

 

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

“Securities Account” means a securities account (as that term is defined in the
Code).

 

53

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Security Interest” has the meaning specified therefor in Section 3.1 of this
Agreement.

 

“Solvent” means, with respect to any Person on a particular date, that, (i) at
fair valuations, the sum of such Person’s assets (and including as assets for
this purpose all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) is greater than all of such
Person’s debts and including subordinated and contingent liabilities computed at
the amount which, such person has a reasonable basis to believe, represents an
amount which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any guarantee
the face amount of such liability as reduced to reflect the probability of it
becoming a matured liability); and (ii) such Person is able to pay its debts as
they mature and has (and has a reasonable basis to believe it will continue to
have) sufficient capital (and not unreasonably small capital) to carry on its
business consistent with its practices as of the date hereof.

 

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

 

“Supporting Obligations” means supporting obligations (as such term is defined
in the Code), and includes letters of credit and guaranties issued in support of
Accounts, Chattel Paper, documents, General Intangibles, instruments or
Investment Related Property.

 

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect to
such payments and all interest, penalties or similar liabilities with respect
thereto.

 

“Termination Date” has the meaning specified therefor in Section 2.9 of this
Agreement

 

“Term Loan” has the meaning specified therefor in Section 2.2 of this Agreement.

 

“Term Loan Amount” means $5,000,000.

 

“Trademarks” means any and all trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark
applications, including (i) the trade names, registered trademarks, trademark
applications, registered service marks and service mark applications listed on
Schedule 5.26(b) to the Information Certificate, (ii) all renewals thereof,
(iii) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and
future infringements and dilutions thereof, (v) the goodwill of each Loan
Party’s business symbolized by the foregoing or connected therewith, and (vi)
all of each Loan Party’s rights corresponding thereto throughout the world.

 

“Triggering Event” means either (a) the occurrence and continuance of any Event
of Default, (b) the failure of the Borrowers to maintain Excess Availability
plus Qualified Cash of at least $5,000,000 at any time or (c) Borrowers provide
Lender notice of a request for the initial Advance.

 

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits
(2007 Revision), effective July, 2007 International Chamber of Commerce
Publication No. 600.

 

“United States” means the United States of America.

 

“URL” means “uniform resource locator,” an internet web address.

 

“Voidable Transfer” has the meaning specified therefor in Section 17.7 of this
Agreement.

 

54

 

b. Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, however, that if any Borrower
notifies Lender that such Borrower requests an amendment to any provision hereof
to eliminate the effect of any change in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions) (an
“Accounting Change”) occurring after the Closing Date, or in the application
thereof (or if Lender notifies any Borrower that Lender requests an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Lender and Borrowers agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of Lender and each
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the provisions in this Agreement shall be
calculated as if no such Accounting Change had occurred. Whenever used herein,
the term “financial statements” shall include the footnotes and schedules
thereto. Whenever the term “Borrower” is used in respect of a financial covenant
or a related definition, it shall be understood to mean Borrowers and their
respective Subsidiaries on a consolidated basis, unless the context clearly
requires otherwise.

 

c. Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.

 

d. Construction. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms “includes” and
“including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). 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. Any reference herein or in any other Loan
Document to the satisfaction, repayment, or payment in full of the Obligations
shall mean the repayment in full in cash or immediately available funds (or, (a)
in the case of contingent reimbursement obligations with respect to Letters of
Credit, providing Letter of Credit Collateralization, and (b) in the case of
obligations with respect to Bank Products (other than Hedge Obligations),
providing Bank Product Collateralization) of all of the Obligations (including
the payment of any Lender Expenses that have accrued irrespective of whether
demand has been made therefor and the payment of any termination amount then
applicable (or which would or could become applicable as a result of the
repayment of the other Obligations) under Hedge Agreements) other than
unasserted contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record. The conditioning of any term herein
to the “occurrence and continuance of a Default or Event of Default” hereunder,
or words of similar import, shall not mean that there is (a) any express or
implied right to cure or (b) the ability to cure any Default or Event of
Default, it being acknowledged that certain Defaults and Events of Default are
incapable of being cured. Further, no such cure, if it occurs, shall be
effective unless and until it has been confirmed in writing by Lender.

 

e. Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

 

55

 

Schedule 2.12

 

TO CREDIT AND SECURITY AGREEMENT

 

Borrowers shall pay to Lender each of the following fees:

 

On the Closing Date:

 

 

 

Origination Fee. A one-time origination fee of $150,000 which shall be fully
earned and payable upon the execution of this Agreement and shall not be subject
to refund or rebate under any circumstances.

 

Monthly:

 

 

 

(a) Unused Fee. An unused line fee of three eighths of one percent (0.375%) per
annum of the daily average of the Maximum Revolver Amount reduced by Revolver
Usage, from the date of this Agreement to and including the Termination Date,
which unused line fee shall be payable monthly in arrears on the first day of
each month and on the Termination Date.

 

(c) Cash Management Fees. Service fees to Lender for Cash Management Services
provided pursuant to the Cash Management Documents, Bank Product Agreements or
any other agreement entered into by the parties, in the amount prescribed in
Lender’s current service fee schedule.

 

(d) Letter of Credit Fees. A Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.13(e)) which shall accrue at
a rate equal to 1.75% per annum times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit. Such Letter of credit fee shall be payable
monthly in arrears on the first day of each month and on the Termination Date.
All fees upon the occurrence of any other activity with respect to any Letter of
Credit (including, without limitation, the issuance, transfer, amendment,
extension or cancellation of any Letter of Credit and honoring of draws under
any Letter of Credit) determined in accordance with Lender’s standard fees and
charges then in effect for such activity.

 

 

 

Other:

 

 

 

(a) Collateral Exam Reimbursement. Lender’s costs and expenses in connection
with any collateral exams, audits or inspections conducted by or on behalf of
Lender at the current rates established from time to time by Lender as its fee
for collateral exams, audits or inspections (which fees are currently $125.00
per hour per collateral examiner), together with all actual out-of-pocket costs
and expenses incurred in conducting any collateral exam, audit, or inspection.

 

(b) Termination, Reduction and Prepayment Fees. If (i) Lender terminates the
Revolving Credit Facility after the occurrence and during the continuance of an
Event of Default, or (ii) Borrowers terminate the Revolving Credit Facility on a
date prior to the Maturity Date, or (iii) Borrowers reduce the Maximum Revolver
Amount or if Borrowers and Lender agree to reduce the Maximum Revolver Amount,
or (iv) Borrowers prepay all or any portion of the Term Loan, then Borrowers
shall pay Lender as liquidated damages a termination, reduction, or prepayment
fee in an amount equal to a percentage of the Maximum Credit in the case of a
termination of the Revolving Credit Facility, a percentage of the amount of
reduction of the Maximum Revolver Amount in the case of a reduction in the
Maximum Revolver Amount or a percentage of the amount of prepayment of the Term
Loan, as the case may be) calculated as follows: (A) one percent (1.0%) if the
termination, reduction, or prepayment occurs on or before the first anniversary
of the Closing Date; (B) one half of one percent (0.5%) if the termination,
reduction, or prepayment occurs after the first anniversary of the Closing Date,
but on or before the second anniversary of the first Closing Date; and (C) zero
percent (0.00%) if the termination, reduction or prepayment occurs after the
second anniversary of the Closing Date. If Borrowers refinance the Credit
Facility in full with another Subsidiary or operating division of Lender from
and after the Business Day which is eighteen (18) months after the Closing Date,
such refinance shall not be deemed a termination, reduction or prepayment
resulting in the payment of termination, reduction or prepayment fees provided
for herein.

 

(d) ACH Fees. Borrowers agree to pay to Lender all fees charged to Lender by ACH
in connection with the transfer of funds to or from Lender that bypass a
Designated Account. Such fees are currently in the amount of Twenty-Five
($25.00) Dollars per month.

 

(e) Wire Transfer Fees. Borrowers hereby agrees to pay Lender a fee in the
amount of Twenty-Five ($25.00) Dollars for each wire transfer initiated by or
for the account of a Borrower or any Loan Party that bypass a Designated
Account.

 

 

56

 

Schedule 6.1

 

TO CREDIT AND SECURITY AGREEMENT

 

Deliver to Lender, each of the financial statements, reports, or other items set
forth below at the following times in form satisfactory to Lender:

 

as soon as available, but in any event within 30 days after the end of each
month (it being agreed that in the event the end of a month coincides with the
end of one of Borrowers’ fiscal quarters, Borrowers shall deliver preliminary
financial statements as soon as available, but in any event within 30 days after
the end of such month, and a final report as soon as available, but in any event
within 45 days after the end of such month)

(a) an unaudited consolidated and consolidating balance sheet and income
statement, and consolidated statement of cash flow covering the Loan Parties’
and their Subsidiaries’ operations during such period and compared to the prior
period and plan; and

 

(b) a Compliance Certificate along with the underlying calculations, including
the calculations to arrive at compliance with the financial covenants set forth
in this Agreement.

 

as soon as available, but in any event within 120 days after the end of each
fiscal year

(a) consolidated financial statements of Administrative Borrower and its
Subsidiaries for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Lender and certified, without any
qualifications (including any (A) “going concern” or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or (C)
qualification which relates to the treatment or classification of any item and
which, as a condition to the removal of such qualification, would require an
adjustment to such item), by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, statement of cash flow, and statement of shareholder’s
equity and, if prepared, such accountants’ letter to management);

 

(b) unaudited consolidating financial statements of each Loan Party and their
Subsidiaries for each such fiscal year (such unaudited financial statements to
include a balance sheet, income statement, and statement of shareholder’s
equity); and

 

(c) a Compliance Certificate along with the underlying calculations, including
the calculations to arrive at compliance with the financial covenants set forth
in this Agreement.

 

as soon as available, but in any event within 45 days after the start of each of
Borrowers’ fiscal years, (a)          copies of Borrowers’ Projections, in form
and substance (including as to scope and underlying assumptions) satisfactory to
Lender, in its Permitted Discretion, for the forthcoming fiscal year, on a
monthly basis, certified by the chief financial officer of each such Borrower as
being such officer’s good faith estimate of the financial performance of such
Borrower during the period covered thereby. if and when filed by  any Borrower,

(a) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports;

 

(b) any other filings made by any Borrower with the SEC; and

 

(c) any other information that is provided by any Borrower to its shareholders
generally.

 

 

57

 

Schedule 6.2

 

TO CREDIT AND SECURITY AGREEMENT

 

Provide Lender with each of the documents set forth below at the following times
in form and substance satisfactory to Lender:

 

Monthly on the 10th Business Day of each month or more frequently if Lender
requests

(a) a Borrowing Base Certificate, including a calculation of Eligible Royalty
Receivables; and

 

(b) a general ledger trial balance detailing the accrued royalty receivables due
from Aventis Pharmaceuticals, Inc..

 

Monthly (no later than the 15th Business Day of each month) or more frequently
if Lender requests

(a) a detailed aging of each Borrower’s Accounts

 

(b) a detailed Inventory system/perpetual report of each Borrower;

 

(c) a summary aging, by vendor, of each Borrower’s accounts payable; and

 

(d) a report regarding each Borrower’s and their Subsidiaries’ cash and Cash
Equivalents, including an indication of which amounts constitute Qualified Cash
of Borrowers and cash and Cash Equivalents at Borrowers’ foreign subsidiaries.

 

Upon request by Lender

(a) annual tax returns of each Loan Party; and

 

(b) such other reports as to the Collateral or the financial condition of each
Borrower and its Subsidiaries, as Lender may reasonably request.

 

 

58

 

 

Exhibit B

 

TO CREDIT AND SECURITY AGREEMENT

 

CONDITIONS PRECEDENT

 

 

The obligation of Lender to make its initial extension of credit provided for in
thIS Agreement is subject to the fulfillment, to the satisfaction of Lender, of
each of the following conditions precedent:

 

(a) Lender shall have received each of the following documents, in form and
substance satisfactory to Lender, duly executed, and each such document shall be
in full force and effect:

 

(i) this Agreement and the other Loan Documents;

 

(ii) the Cash Management Documents,

 

(iii) the Control Agreements,

 

(iv) a disbursement letter executed and delivered by each Borrower to Lender
regarding the extensions of credit to be made on the Closing Date, the form and
substance of which is satisfactory to Lender,

 

(v) the Intercompany Subordination Agreement,

 

(vi) the Mortgages on 24 and 26 Corporate Circle, Albany, New York, and 7001
Performance Drive, Syracuse, New York,

 

(vii) the Copyright Security Agreement,

 

(viii) the Patent and Trademark Security Agreement,

 

(ix) the Reimbursement Agreement, and

 

(x) letters, in form and substance satisfactory to Lender, from the Existing
Lender respecting the amount necessary to repay in full all of the obligations
of Borrowers and their Subsidiaries owing to Existing Lender pursuant to the (A)
Amended and Restated Credit Agreement, dated as of June 3, 2011 (as amended), by
and among the Loan Parties and the Existing Lender, and (B) that certain Credit
and Reimbursement Agreement, dated as of April 1, 2011, by and among AMRI and
the Borrower, and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the assets of Loan Parties and their Subsidiaries,
together with termination statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the properties and assets
of the Loan Parties and their Subsidiaries;

 

(b) Lender shall have received a certificate from the Secretary of each Loan
Party (i) attesting to the resolutions of such Loan Party’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Loan Party is a party, (ii) authorizing
specific officers of such Loan Party to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of such Loan Party;

 

(c) Lender shall have received copies of such Loan Party’s Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified as true,
correct and complete by the Secretary of such Loan Party;

 

(d) Lender shall have received a certificate of status with respect to each Loan
Party, dated within 10 days of the Closing Date, such certificate to be issued
by the appropriate officer of the jurisdiction of organization of each Loan
Party, which certificate shall indicate that such Loan Party is in good standing
in such jurisdiction;

 

(e) Lender shall have received certificates of status with respect to each Loan
Party, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Loan Party) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Loan Party is in good standing in such
jurisdictions;

 

59

 

(f) Lender shall have received certificates of insurance, together with the
endorsements thereto, as are required by Section 6.6, the form and substance of
which shall be satisfactory to Lender;

 

(g) Lender shall have received Collateral Access Agreements with respect to each
location where a Borrower maintains Eligible Equipment;

 

(h) Lender shall have received an opinion of each Loan Party’s counsel in form
and substance satisfactory to Lender;

 

(i) Borrowers shall have Qualified Cash plus Excess Availability of at least
$12,5000,000 after giving effect to (i) the initial extensions of credit
hereunder and (ii) the payment of all fees and expenses required to be paid by
Borrowers on the Closing Date under this Agreement or the other Loan Documents,
including with respect to any payments to the Existing Lender;

 

(j) Lender shall have completed its business, legal, and collateral due
diligence, including (i) a collateral examination and review of each Borrower’s
and its Subsidiaries' Books and verification of each Loan Party’s
representations and warranties to Lender, the results of which must be
satisfactory to Lender, and (ii) an inspection of each of the locations where
each Loan Party’s and its Subsidiaries’ Eligible Equipment is located, the
results of which must be satisfactory to Lender;

 

(k) Borrowers shall have deposited at least $5,000,000 of Borrowing Base
Eligible Cash into the Borrowing Base Eligible Cash Account;

 

(l) Lender shall have received and an appraisal of each Borrower’s and its
Subsidiaries’ Equipment and Inventory, the results of which must be satisfactory
to Lender;

 

(m) Lender shall have received a set of Projections of each Borrower for fiscal
year 2012, approved by AMRI’s Board of Directors, in form and substance
(including as to scope and underlying assumptions) satisfactory to Lender;

 

(n) Borrowers shall have paid all Lender Expenses incurred in connection with
the transactions evidenced by this Agreement;

 

(o) Lender shall have received (i) appraisals of the Real Property Collateral in
form and substance satisfactory to Lender which Lender may rely upon and
performed by an appraiser acceptable to Lender, and (ii) mortgagee title
insurance policies (or marked commitments to issue the same) for the Real
Property Collateral issued by a title insurance company satisfactory to Lender
(each a “Mortgage Policy” and, collectively, the “Mortgage Policies”) in amounts
satisfactory to Lender assuring Lender that the Mortgages on such Real Property
Collateral are valid and enforceable first priority mortgage Liens on such Real
Property Collateral free and clear of all defects and encumbrances except
Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance satisfactory to Lender;

 

(p) Lender shall have received a phase-I environmental report with respect to
each parcel composing the Real Property Collateral and a real estate survey with
respect to each parcel composing the Eligible Real Property Collateral which
Lender may rely upon; the environmental consultants and surveyors retained for
such reports or surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Lender;

 

(q) Lender shall have received an Estoppel and Intercreditor Agreement, duly
executed by Administrative Borrower and the owner of each of the premises
subject to a Mortgage hereunder;

 

(r) Lender shall have received two (2) duly executed original Tax Law Section
255 affidavits signed by an officer of the Administrative Borrower for the
recordation of each of the Mortgages without the imposition of New York State
mortgage recording taxes;

 

(s) Lender shall have received opinions of counsel to the Onondaga County
Industrial Development Agency and the City of Albany Industrial Development
Agency with respect to each of the Mortgages, in each case, in form and
substance satisfactory to Lender;

 

(t) Lender shall have received a completed Standard Flood Hazard Determination
Form issued by the Department of Homeland Security Federal Emergency Management
Agency with respect to each parcel of Real Property Collateral indicating
whether or not such parcel is located in a special flood hazard zone, together
with an acceptable flood insurance policy, if required;

 

60

 

(u) Each Loan Party and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by such Loan Party or
its Subsidiaries of the Loan Documents or with the consummation of the
transactions contemplated thereby;

 

(v) Lender shall be satisfied that all of the conditions precedent set forth in
Section 3.1 of the Reimbursement Agreement have been satisfied;

 

(w) Lender shall have received results of customer and trade references from
Borrowers’ customers and other business partners, the results of which shall
satisfactory to Lender;

 

(x) No Material Adverse Change shall have occurred since December 31, 2011;

 

(y) Lender shall have received copies of all so called “Warning Letters”, or
similar notifications, that either (x) have been received by a Loan Party or any
of its Subsidiaries from the FDA (or analogous foreign, state or local
Governmental Authority) within the twelve-month period prior to the Closing Date
or (y) have not been satisfied; and

 

(z) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Lender.

 

61

 

 

EXHIBIT D

 

TO CREDIT AND SECURITY AGREEMENT

 

 

REPRESENTATIONS AND WARRANTIES

 

5.1 Due Organization and Qualification; Subsidiaries.

 

(a) Each Loan Party (i) is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is qualified to do
business in any state where the failure to be so qualified could reasonably be
expected to result in a Material Adverse Change, and (iii) has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.

 

(b) Set forth on Schedule 5.1(b) to the Information Certificate is a complete
and accurate description of the authorized capital Stock of each Loan Party, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
Schedule 5.1(b) to the Information Certificate, there are no subscriptions,
options, warrants, or calls relating to any shares of any Loan Party’s capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. No Loan Party is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.

 

(c) Set forth on Schedule 5.1(c) to the Information Certificate (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement), is a complete and accurate list of
the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of
shares of each class of common and preferred Stock authorized for each of such
Subsidiaries, and (ii) the number and the percentage of the outstanding shares
of each such class owned directly or indirectly by each Loan Party. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.

 

(d) Except as set forth on Schedule 5.1(c) to the Information Certificate, there
are no subscriptions, options, warrants, or calls relating to any shares of any
Loan Party’s or any Loan Party’s Subsidiaries’ capital Stock, including any
right of conversion or exchange under any outstanding security or other
instrument. No Loan Party nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of such Loan Party’s Subsidiaries’ capital Stock or any
security convertible into or exchangeable for any such capital Stock.

 

5.2 Due Authorization; No Conflict.

 

(a) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

 

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not (i)
violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of any Loan Party
or its Subsidiaries except to the extent that any such conflict, breach or
default could not individually or in the aggregate reasonably be expected to
cause a Material Adverse Change, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any assets of any Loan
Party, other than Permitted Liens, or (iv) require any approval of any Loan
Party’s interest holders or any approval or consent of any Person under any
Material Contract of any Loan Party, other than consents or approvals that have
been obtained and that are still in force and effect and except, in the case of
Material Contracts, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Change.

 

5.3 Governmental Consents. No consent, approval, authorization, or other order
or other action by, and no notice to or filing with, any Governmental Authority
or any other Person is required by any Loan Party (i) for the grant of a
Security Interest by such Loan Party in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by
such Loan Party, or (ii) for the exercise by Lender of the voting or other
rights provided for in this Agreement with respect to the Investment Related
Property or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition of
Investment Related Property by laws affecting the offering and sale of
securities generally. No Intellectual Property License of any Loan Party that is
material to the conduct of such Loan Party’s business requires any consent of
any other Person in order for such Loan Party to grant the security interest
granted hereunder in such Loan Party’s right, title or interest in or to such
Intellectual Property License.

 

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5.4 Binding Obligations. Each Loan Document has been duly executed and delivered
by each Loan Party that is a party thereto and is the legally valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally.

 

5.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 6.1 and most recent collateral reports delivered pursuant to Section
6.2, in each case except for assets disposed of since the date of such financial
statements to the extent permitted hereby. All of such assets are free and clear
of Liens except for Permitted Liens.

 

5.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

 

(a) The exact legal name of (within the meaning of Section 9-503 of the Code)
and jurisdiction of organization of each Loan Party and each of its Subsidiaries
is set forth on Schedule 5.6(a) to the Information Certificate (as such Schedule
may be updated from time to time to reflect changes resulting from transactions
permitted under this Agreement).

 

(b) The chief executive office of each Loan Party and each of its Subsidiaries
is located at the address indicated on Schedule 5.6(b) to the Information
Certificate (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement).

 

(c) Each Loan Party’s and each of its Subsidiaries’ tax identification numbers
and organizational identification numbers, if any, are identified on Schedule
5.6(c) to the Information Certificate (as such Schedule may be updated from time
to time to reflect changes resulting from transactions permitted under this
Agreement).

 

(d) As of the Closing Date, no Loan Party and no Subsidiary of a Loan Party
holds any Commercial Tort Claims that exceed $250,000 in amount, except as set
forth on Schedule 5.6(d) to the Information Certificate.

 

5.7 Litigation.

 

(a) There are no actions, suits, or proceedings pending or, to the knowledge of
any Loan Party, after due inquiry, threatened in writing against a Loan Party or
any of its Subsidiaries that either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Change.

 

(b) Schedule 5.7(b) to the Information Certificate sets forth a complete and
accurate description, with respect to each of the actions, suits, or proceedings
that, as of the Closing Date, is pending or, to the knowledge of any Loan Party,
after due inquiry, threatened against a Loan Party or any of its Subsidiaries,
of (i) the parties to such actions, suits, or proceedings, (ii) the nature of
the dispute that is the subject of such actions, suits, or proceedings, (iii)
the status, as of the Closing Date, with respect to such actions, suits, or
proceedings, and (iv) whether any liability of the Loan Parties’ and their
Subsidiaries in connection with such actions, suits, or proceedings is covered
by insurance.

 

5.8 Compliance with Laws.

 

(a) No Loan Party nor any of its Subsidiaries (a) is in violation of any
applicable laws, rules, regulations, executive orders, or codes (including
Environmental Laws) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Change, or (b) is subject to or in
default with respect to any final judgments, writs, injunctions, decrees, rules
or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Change.

 

(b) No circumstance exists and no event has occurred that (with or without
notice or lapse of time) may give rise to any obligation on the part of any Loan
Party to undertake, or to bear all or any portion of the cost of, any remedial
corrective action of any nature with respect to any product developed, produced,
manufactured, tested, packaged, labeled, marketed, sold, and/or distributed by a
Loan Party or any of its Subsidiaries.

 

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(c) Each product that is developed, produced, manufactured, tested, packaged,
labeled, marketed, sold, and/or distributed by a Loan Party or any of its
Subsidiaries that is subject to the Federal Food, Drug and Cosmetic Act (the
“FFDCA”), the FDA regulations promulgated thereunder, or similar law or
regulation, is being developed, produced, tested, packaged, labeled, marketed,
sold, and/or distributed in compliance in all material respects with all
applicable Laws under the FFDCA or similar applicable Laws, including those
relating to import registration and reporting, current good manufacturing
practices (cGMPs), and corresponding facility registration, recall,
recordkeeping, and reporting obligations, and is not adulterated or misbranded
within the meaning of the FFDCA.

 

(d) No Loan Party, no Subsidiary of any Loan Party nor any officer or, to any
Loan Party’s knowledge, employee of any of them currently is, or has been,
convicted of any crime or engaged in any conduct for which debarment is mandated
by 21 U.S.C. § 335a(a) or any similar Law or authorized by 21 U.S.C. § 335a(b)
or have been charged with or convicted under any Law or conduct relating to the
development or approval of products subject to regulation by the FDA (or similar
or analogous foreign, state or local Governmental Authority), or otherwise
relating to the regulation of any product that is developed, produced,
manufactured, tested, packaged, labeled, marketed, sold, and/or distributed by a
Loan Party or any of its Subsidiaries.

 

(e) No product that is developed, produced, manufactured, tested, packaged,
labeled, marketed, sold, and/or distributed by a Loan Party or any of its
Subsidiaries has been recalled directly or indirectly by a Loan Party or any of
its Subsidiaries or any Governmental Authority or involuntarily withdrawn,
suspended, or discontinued. No action, arbitration, audit, hearing,
investigation, litigation, suit (whether civil, criminal, administrative,
investigative, or informal) or claim commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental Authority (whether completed
or pending) seeking the voluntary or other recall, withdrawal, suspension, or
seizure of any such product that is developed, produced, manufactured, tested,
packaged, labeled, marketed, sold, and/or distributed by a Loan Party or any of
its Subsidiaries is or has been pending or, to the Loan Parties’ knowledge,
threatened against any Loan Party or any Subsidiary of a Loan Party.

 

5.9 No Material Adverse Change. All historical financial statements relating to
the Loan Parties and their Subsidiaries that have been delivered by Borrowers to
Lender have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, the
Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the
date thereof and results of operations for the period then ended. Since December
31, 2010, no event, circumstance, or change has occurred that has or could
reasonably be expected to result in a Material Adverse Change with respect to
the Loan Parties and their Subsidiaries, taken as a whole.

 

5.10 Fraudulent Transfer.

 

(a) The Loan Parties and their Subsidiaries, taken as a whole, are Solvent.

 

(b) No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

 

5.11 Employee Benefits.

 

(a) Each Plan (other than a Multiemployer Plan) is in compliance in all material
respects with the applicable provisions of ERISA, the IRC and other Federal or
state laws. Each Pension Plan (other than a Multiemployer Plan) that is intended
to be a qualified plan under Section 401(a) of the IRC has received a favorable
determination letter from the Internal Revenue Service to the effect that the
form of such Plan is qualified under Section 401(a) of the IRC and the trust
related thereto has been determined by the Internal Revenue Service to be exempt
from federal income tax under Section 501(a) of the IRC, or an application for
such a letter is currently being processed by the Internal Revenue Service. To
the best knowledge of the Loan Parties, nothing has occurred that would
reasonably be expected to cause the loss of such tax-qualified status.

 

(b) There are no pending or, to the best knowledge of the Loan Parties,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to result in a
Material Adverse Change. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Change.

 

(c) (i) No ERISA Event has occurred, and neither the Loan Parties nor any ERISA
Affiliate is aware of any fact, event or circumstance that would reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension
Plan; (ii) the Loan Parties and each ERISA Affiliate has met all applicable
requirements under the Pension Funding Rules in respect of each Pension Plan
(other than a Multiemployer Plan), and no waiver of the minimum funding
standards under the Pension Funding Rules has been applied for or obtained;
(iii) as of the most recent valuation date for any Pension Plan (other than a
Multiemployer Plan), the funding target attainment percentage (as defined in
Section 430(d)(2) of the IRC) is 60% or higher and neither the Loan Parties nor
any ERISA Affiliate knows of any facts or circumstances that would reasonably be
expected to cause the funding target attainment percentage for any such plan to
drop below 60% as of the most recent valuation date; (iv) neither the Loan
Parties nor any ERISA Affiliate has incurred any liability to the PBGC other
than for the payment of premiums, and there are no premium payments which have
become due that are unpaid; (v) neither the Loan Parties nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or Section
4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan
administrator thereof nor by the PBGC, and no event or circumstance has occurred
or exists that could reasonably be expected to cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Pension Plan.

 

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5.12 Environmental Condition. Except as set forth on Schedule 5.12 to the
Information Certificate, (a) to each Loan Party’s knowledge, no Loan Party’s nor
any of its Subsidiaries’ properties or assets has ever been used by a Loan
Party, its Subsidiaries, or by previous owners or operators in the disposal of,
or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such disposal, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to each Loan Party’s knowledge, after due
inquiry, no Loan Party’s nor any of its Subsidiaries’ properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of
its Subsidiaries nor any of their respective facilities or operations is subject
to any outstanding written order, consent decree, or settlement agreement with
any Person relating to any Environmental Law or Environmental Liability that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.

 

5.13 Intellectual Property. Each Loan Party and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, and licenses that
are material to the conduct of its business as currently conducted.

 

5.14 Leases. Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and, subject to Permitted Protests,
all of such material leases are valid and subsisting and no material default by
the applicable Loan Party or its Subsidiaries exists under any of them.

 

5.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 5.15 to the
Information Certificate (as updated in accordance with the terms hereof) is a
listing of all of the Loan Parties’ and their Subsidiaries’ Deposit Accounts and
Securities Accounts, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b) the account
numbers of the Deposit Accounts or Securities Accounts maintained with such
Person.

 

5.16 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about each Borrower’s industry)
furnished by or on behalf of the Loan Parties and their Subsidiaries in writing
to Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement or
the other Loan Documents, and all other such factual information taken as a
whole (other than forward-looking information and projections and information of
a general economic nature and general information about such Borrower’s
industry) hereafter furnished by or on behalf of the Loan Parties and their
Subsidiaries in writing to Lender will be, true and accurate, in all material
respects, on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. The Projections
delivered to Lender for the period Borrowers’ 2012 fiscal year represent, and as
of the date on which any other Projections are delivered to Lender, such
additional Projections represent, each Borrower’s good faith estimate, on the
date such Projections are delivered, of the Loan Parties’ and their
Subsidiaries’ future performance for the periods covered thereby based upon
assumptions believed by Borrowers to be reasonable at the time of the delivery
thereof to Lender.

 

5.17 Material Contracts. Set forth on Schedule 5.17 to the Information
Certificate (as such Schedule may be updated from time to time in accordance
herewith) is a reasonably detailed description of the Material Contracts of each
Loan Party and its Subsidiaries as of the most recent date on which Borrowers
provided their Compliance Certificate pursuant to Section 6.1; provided,
however, that any Borrower may amend Schedule 5.17 to the Information
Certificate to add additional Material Contracts so long as such amendment
occurs by written notice to Lender on the date that such Borrower provides its
Compliance Certificate. Except for matters which, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change, each Material Contract (other than those that have expired at the end of
their normal terms) (a) is in full force and effect and is binding upon and
enforceable against the applicable Loan Party or its Subsidiary and, to such
Borrower’s knowledge, after due inquiry, each other Person that is a party
thereto in accordance with its terms, (b) has not been otherwise amended or
modified (other than amendments or modifications permitted by Section 7.7(b)),
and (c) is not in default due to the action or inaction of the applicable Loan
Party or its Subsidiary.

 

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5.18 Patriot Act. To the extent applicable, each Loan Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the
proceeds of the loans made hereunder will be used by any Loan Party or any of
their Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

5.19 Indebtedness. Set forth on Schedule 5.19 to the Information Certificate is
a true and complete list of all Indebtedness of each Loan Party and each of its
Subsidiaries outstanding immediately prior to the Closing Date that is to remain
outstanding immediately after giving effect to the closing hereunder on the
Closing Date and such Schedule accurately sets forth the aggregate principal
amount of such Indebtedness as of the Closing Date.

 

5.20 Payment of Taxes. Except as otherwise permitted under Section 6.5, all tax
returns and reports of each Loan Party and its Subsidiaries required to be filed
by any of them have been timely filed, and all taxes shown on such tax returns
to be due and payable and all assessments, fees and other governmental charges
upon a Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable. No
Borrower knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

 

5.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrowers will be used to purchase or carry
any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve.

 

5.22 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

 

5.23 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or
a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c)
derives revenues from investments in, or transactions with Sanctioned Persons or
Sanctioned Entities. No proceeds of any loan made hereunder will be used to fund
any operations in, finance any investments or activities in, or make any
payments to, a Sanctioned Person or a Sanctioned Entity.

 

5.24 Employee and Labor Matters. There is (i) no unfair labor practice complaint
pending or, to the knowledge of Borrowers, threatened against any Loan Party or
any of its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against any Loan Party or any of
its Subsidiaries which arises out of or under any collective bargaining
agreement and that could reasonably be expected to result in a material
liability, (ii) no strike, labor dispute, slowdown, stoppage or similar action
or grievance pending or threatened in writing against any Loan Party or any of
its Subsidiaries that could reasonably be expected to result in a material
liability, or (iii) to the knowledge of Borrowers, after due inquiry, no union
representation question existing with respect to the employees of any Loan Party
or its Subsidiaries and no union organizing activity taking place with respect
to any of the employees of any Loan Party or its Subsidiaries. No Loan Party or
any of its Subsidiaries has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied. The hours worked and payments made to employees
of Loan Parties and its Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable legal requirements, except to the
extent such violations could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change. All material payments due
from any Loan Party or its Subsidiaries 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, except where the failure to do so
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Change.

 

5.25 Reserved.

  

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5.26 Collateral.

 

(a) Real Property. Schedule 5.26(a) to the Information Certificate sets forth
all Real Property owned by any of the Loan Parties as of the Closing Date.

 

(b) Intellectual Property. As of the Closing Date, Schedule 5.26(b) to the
Information Certificate provides a complete and correct list of: (i) all
registered Copyrights owned by any Loan Party, all applications for registration
of Copyrights owned by any Loan Party, and all other Copyrights owned by any
Loan Party and material to the conduct of the business of any Loan Party; (ii)
all Intellectual Property Licenses entered into by any Loan Party pursuant to
which (A) any Loan Party has provided any license or other rights in
Intellectual Property owned or controlled by such Loan Party to any other Person
or (B) any Person has granted to any Loan Party any license or other rights in
Intellectual Property owned or controlled by such Person that is material to the
business of such Loan Party, including any Intellectual Property that is
incorporated in any Inventory, software, or other product marketed, sold,
licensed, or distributed by such Loan Party; (iii) all Patents owned by any Loan
Party and all applications for Patents owned by any Loan Party; and (iv) all
registered Trademarks owned by any Loan Party, all applications for registration
of Trademarks owned by any Loan Party, and all other Trademarks owned by any
Loan Party and material to the conduct of the business of any Loan Party.

 

(i) all employees and contractors of each Loan Party who were involved in the
creation or development of any Intellectual Property for such Loan Party that is
material to the business of such Loan Party have signed agreements containing
assignment of Intellectual Property rights to such Loan Party and obligations of
confidentiality;

 

(ii) to each Loan Party’s knowledge after reasonable inquiry, no Person has
infringed or misappropriated or is currently infringing or misappropriating any
Intellectual Property rights owned by such Loan Party, in each case, that either
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change;

 

(iii) to each Loan Party’s knowledge after reasonable inquiry, all registered
Copyrights, registered Trademarks, and issued Patents that are owned by such
Loan Party and material to the conduct of its business are valid, subsisting and
enforceable and in compliance with all legal requirements, filings, and payments
and other actions that are required to maintain such Intellectual Property in
full force and effect; and

 

(iv) each Loan Party has taken reasonable steps to maintain the confidentiality
of and otherwise protect and enforce its rights in all trade secrets owned by
such Loan Party that are material to the business of such Loan Party;

 

(c) Valid Security Interest. This Agreement creates a valid security interest in
the Collateral of each Loan Party, to the extent a security interest therein can
be created under the Code, securing the payment of the Obligations. Except to
the extent a security interest in the Collateral cannot be perfected by the
filing of a financing statement under the Code, all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken or will have been taken upon the filing of financing statements
listing each applicable Loan Party, as a debtor, and Lender for itself and as
agent for the Bank Product Providers, as secured party, in the jurisdictions
listed next to such Loan Party’s name on Schedule 5.6(a) to the Information
Certificate. Upon the making of such filings, Lender shall have a first priority
perfected security interest in the Collateral of each Loan Party to the extent
such security interest can be perfected by the filing of a financing statement,
subject to Permitted Liens which are purchase money Liens. Upon filing of the
Copyright Security Agreement with the United States Copyright Office, filing of
the Patent and Trademark Security Agreement with the PTO, and the filing of
appropriate financing statements in the jurisdictions listed on Schedule 5.6(a)
to the Information Certificate, all action necessary or desirable to protect and
perfect the Security Interest in and to on each Loan Party’s Patents,
Trademarks, or Copyrights has been taken and such perfected Security Interest is
enforceable as such as against any and all creditors of and purchasers from any
Loan Party. All action by any Loan Party necessary to protect and perfect such
security interest on each item of Collateral has been duly taken.

 

(d) Pledged Notes. There is no default, breach, violation, or event of
acceleration existing under any promissory note (as defined in the Code)
constituting Collateral and pledged hereunder (each a “Pledged Note”) and no
event has occurred or circumstance exists which, with the passage of time or the
giving of notice, or both, would constitute a default, breach, violation, or
event of acceleration under any Pledged Note. No Loan Party that is an obligee
under a Pledged Note has waived any default, breach, violation, or event of
acceleration under such Pledged Note.

 

(e) Pledged Interests. (i) Except for the Security Interest created hereby, each
Loan Party is and will at all times be the sole holder of record and the legal
and beneficial owner, free and clear of all Liens other than Permitted Liens, of
the Pledged Interests indicated on Schedule P-3 to this Agreement as being owned
by such Loan Party and, when acquired by such Loan Party, any Pledged Interests
acquired after the Closing Date; (ii) all of the Pledged Interests are duly
authorized, validly issued, fully paid and non-assessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies; (iii) such Loan Party has the right
and requisite authority to pledge, the Investment Related Property pledged by
such Loan Party to Lender as provided herein; (iv) all actions necessary or
desirable to perfect and establish the first priority of, or otherwise protect,
Lender’s Liens in the Investment Related Property, and the proceeds thereof,
have been duly taken, upon (A) the execution and delivery of this Agreement; (B)
the taking of possession by Lender (or its Lender or designee) of any
certificates representing the Pledged Interests, together with undated powers
(or other documents of transfer acceptable to Lender) endorsed in blank by the
applicable Loan Party; (C) the filing of financing statements in the applicable
jurisdiction set forth on Schedule 5.6(a) to the Information Certificate for
such Loan Party with respect to the Pledged Interests of such Loan Party that
are not represented by certificates, and (D) with respect to any Securities
Accounts, the delivery of Control Agreements with respect thereto; and (v) each
Loan Party has delivered to and deposited with Lender all certificates
representing the Pledged Interests owned by such Loan Party to the extent such
Pledged Interests are represented by certificates, and undated powers (or other
documents of transfer acceptable to Lender) endorsed in blank with respect to
such certificates. None of the Pledged Interests owned or held by such Loan
Party has been issued or transferred in violation of any securities
registration, securities disclosure, or similar laws of any jurisdiction to
which such issuance or transfer may be subject. As to all limited liability
company or partnership interests, issued under any Pledged Operating Agreement
or Pledged Partnership Agreement, each Loan Party hereby represents and warrants
that the Pledged Interests issued pursuant to such agreement (A) are not dealt
in or traded on securities exchanges or in securities markets, (B) do not
constitute investment company securities, and (C) are not held by such Loan
Party in a securities account. In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provide that such Pledged Interests
are securities governed by Section 8 of the Uniform Commercial Code as in effect
in any relevant jurisdiction

 

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5.27 Warning Letters, Etc. Neither a Loan Party nor any of their Subsidiaries
has received (a) any so called “Warning Letters” from the FDA (or similar or
analogous foreign, state or local Governmental Authority) for which a Loan Party
or such Subsidiary has not provided a response to or which has not otherwise
been satisfied, or (b) received any notification from any Governmental Authority
regarding (i) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Law, or (ii) any actual, alleged, possible, or
potential obligation on the part of any such Person to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature, in each case
of any notification received under this clause (b), which would reasonably be
expected to have a Material Adverse Effect.

 

5.28 Reserved.

 

5.29 Locations of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair, and mobile Equipment such as laptop
computers in the possession of such Loan Parties’ employees or agents) of the
Loan Parties and their Subsidiaries are not stored with a bailee, warehouseman,
or similar party and are located only at, or in-transit between or to, the
locations identified on Schedule 5.29 to the Information Certificate (as such
Schedule may be updated pursuant to Section 6.14).

 

5.30 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries’ Inventory and the book value thereof.

 

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