EXHIBIT 10.26

Execution Copy

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CREDIT AGREEMENT

dated as of

November 17, 2005

among

CARACO PHARMACEUTICAL LABORATORIES, LTD.

and

JPMORGAN CHASE BANK, N.A.

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

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ARTICLE I

Definitions

 

 

 

 

 

SECTION 1.01.

 

Defined Terms

 

1

SECTION 1.02.

 

Classification of Loans and Borrowings

 

17

SECTION 1.03.

 

Terms Generally

 

17

SECTION 1.04.

 

Accounting Terms; GAAP

 

18

 

 

 

 

 

 

 

 

 

 

ARTICLE II

The Credits

 

 

 

 

 

SECTION 2.01.

 

Commitment

 

17

SECTION 2.02.

 

Loans and Borrowings

 

18

SECTION 2.03.

 

Requests for Borrowings

 

18

SECTION 2.04.

 

Evidence of Debt

 

19

SECTION 2.05.

 

Letters of Credit

 

20

SECTION 2.06.

 

Funding of Borrowings

 

21

SECTION 2.07.

 

Interest Elections

 

21

SECTION 2.08.

 

Termination and Reduction of Commitment

 

22

SECTION 2.09.

 

Repayment of Loans

 

23

SECTION 2.10.

 

Prepayment of Loans

 

24

SECTION 2.11.

 

Fees

 

25

SECTION 2.12.

 

Interest

 

25

SECTION 2.13.

 

Alternate Rate of Interest

 

25

SECTION 2.14.

 

Increased Costs

 

26

SECTION 2.15.

 

Break Funding Payments

 

27

SECTION 2.16.

 

Taxes

 

27

SECTION 2.17.

 

Payments Generally

 

28

 

 

 

 

 

ARTICLE III

Representations and Warranties

 

 

 

 

 

SECTION 3.01.

 

Organization; Powers

 

28

SECTION 3.02.

 

Authorization; Enforceability

 

29

SECTION 3.03.

 

Governmental Approvals; No Conflicts

 

29

SECTION 3.04.

 

Financial Condition; No Material Adverse Change

 

29

SECTION 3.05.

 

Properties

 

29

SECTION 3.06.

 

Litigation and Environmental Matters

 

30

SECTION 3.07.

 

Compliance with Laws and Agreements

 

30

SECTION 3.08.

 

Investment and Holding Company Status

 

30

SECTION 3.09.

 

Taxes

 

30

SECTION 3.10.

 

ERISA

 

30

SECTION 3.11.

 

Disclosure

 

31

SECTION 3.12.

 

Employee Matters

 

31

SECTION 3.13.

 

Subsidiaries

 

32

SECTION 3.14.

 

Collateral Documents

 

32

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SECTION 3.15.

 

Solvency

 

32

ARTICLE IV

Conditions

 

 

 

 

 

SECTION 4.01.

 

Effective Date

 

34

SECTION 4.02.

 

Each Credit Event

 

36

 

 

 

 

 

ARTICLE V

Affirmative Covenants

 

 

 

 

 

SECTION 5.01.

 

Financial Statements; Ratings Change and Other Information

 

37

SECTION 5.02.

 

Notices of Material Events

 

38

SECTION 5.03.

 

Existence; Conduct of Business

 

38

SECTION 5.04

 

Payment of Obligations

 

38

SECTION 5.05.

 

Maintenance of Properties; Insurance

 

38

SECTION 5.06.

 

Books and Records; Inspection Rights

 

39

SECTION 5.07.

 

Compliance with Laws

 

39

SECTION 5.08.

 

Use of Proceeds and Letters of Credit

 

39

SECTION 5.09

 

Collateral Security; Further Assurances

 

39

SECTION 5.10

 

Additional Covenants

 

40

 

 

 

 

 

ARTICLE VI

Negative Covenants

 

 

 

 

 

SECTION 6.01.

 

Liens

 

40

SECTION 6.02.

 

Fundamental Changes

 

42

SECTION 6.03.

 

Investments, Loans, Advances, Guarantees and Acquisitions

 

42

SECTION 6.04.

 

Swap Agreements

 

43

SECTION 6.05.

 

Restricted Payments

 

43

SECTION 6.06.

 

Transactions with Affiliates

 

43

SECTION 6.07.

 

Restrictive Agreements

 

43

SECTION 6.08

 

Change of Name or Location; Change of Fiscal Year

 

44

SECTION 6.09

 

Amendments to Agreements

 

44

SECTION 6.10

 

Prepayment of Indebtedness; Subordinated Debt

 

44

SECTION 6.11

 

Depository Banks

 

44

SECTION 6.12

 

Minimum EBITDA

 

44

SECTION 6.13

 

Fixed Charge Coverage Ratio

 

44

 

 

 

 

 

ARTICLE VII

Events of Default

 

 

 

 

 

 

 

Events of Default

 

45

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ARTICLE VIII

Miscellaneous

 

 

 

 

 

SECTION 8.01.

 

Notices

 

47

SECTION 8.02.

 

Waivers; Amendments

 

47

SECTION 8.03.

 

Expenses; Indemnity; Damage Waiver

 

48

SECTION 8.04.

 

Successors and Assigns

 

49

SECTION 8.05.

 

Survival

 

50

SECTION 8.06.

 

Counterparts; Integration; Effectiveness

 

50

SECTION 8.07.

 

Severability

 

50

SECTION 8.08.

 

Right of Setoff

 

50

SECTION 8.09.

 

Governing Law; Jurisdiction; Consent to Service of Process

 

51

SECTION 8.10.

 

WAIVER OF JURY TRIAL

 

51

SECTION 8.11.

 

Headings

 

51

SECTION 8.12.

 

Interest Rate Limitation

 

51

SECTION 8.13.

 

USA PATRIOT Act

 

52

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               CREDIT AGREEMENT dated as of November 17, 2005, among CARACO
PHARMACEUTICAL LABORATORIES, LTD. and JPMORGAN CHASE BANK, N.A.

               The parties hereto agree as follows:

ARTICLE I
DEFINITIONS
Definitions

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

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

               “Accounts” shall have the meaning set forth in Article 9 of the
UCC.

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

               “Adjusted LIBO Rate” means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.

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

               “Alternate Base Rate” means, for any day, a rate per annum equal
to the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

               “Availability Period” means the period from and including the
Effective Date to but excluding the Termination Date.

               “Banking Services” means each and any of the following bank
services provided to the Borrower or any Guarantor by the Lender or any of its
Affiliates: (a) commercial credit cards, (b) stored value cards and (c) treasury
management services (including, without limitation, controlled

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disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services).

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

               “Board” means the Board of Governors of the Federal Reserve
System of the United States of America.

               “Board of Directors” means: (1) with respect to a corporation,
the board of directors of the corporation or such directors or committee serving
a similar function; (2) with respect to a limited liability company, the board
of managers of the company or such managers or committee serving a similar
function; (3) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and (4) with respect to any other Person,
the managers, directors, trustees, board or committee of such Person or its
owners serving a similar function.

               “Borrower” means Caraco Pharmaceutical Laboratories, Ltd., a
Michigan corporation.

               “Borrowing” means Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.

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

               “Business Day” means any day that is not a Saturday, Sunday or
other day on which commercial banks in Chicago or Detroit are authorized or
required by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.

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

               “Change in Control” means (a) the change in occupation of a
majority of the seats (other than vacant seats) on the Board of Directors of the
Borrower, excluding the persons nominated to be directors by Sun Pharmaceutical
or any Affiliate of Sun Pharmaceutical that is Controlled by Sun Pharmaceutical,
or (b) any person or group or persons (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended, but excluding Sun
Pharmaceutical and any Affiliate of Sun Pharmaceutical that is Controlled by Sun
Pharmaceutical) shall obtain ownership or control in one or more series of
transactions of more than 40% of the common Equity Interests or 40% of the
voting power of the Equity Interests of the Borrower entitled to vote in the
election of members of the Board of Directors of the Borrower.

               “Change in Law” means (a) the adoption of any law, rule or
regulation after the date of

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this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by the Lender, by any lending office of
the Lender or by the Lender’s holding company with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.

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

               “Collateral” means, collectively, the “Collateral” under and as
defined in, and any other assets upon which a Lien has been granted by, any of
the Collateral Documents.

               “Collateral Documents” means, collectively, the Security
Agreements, the Subsidiary Guaranties and all other agreements or documents
granting or perfecting a Lien in favor of the Lender or otherwise providing
support for the Secured Obligations at any time, as any of the foregoing may be
amended or modified from time to time.

               “Commitment” means, with respect to the Lender, the commitment of
the Lender to make Loans and issue Letters of Credit hereunder, expressed as an
amount representing the maximum aggregate amount of the Lender’s Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.08 and (b) reduced or increased from time to time
pursuant to assignments by or to the Lender pursuant to Section 8.04. The
initial amount of the Commitment is $10,000,000.

               “Consolidated Capital Expenditures” means, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period.

               “Consolidated EBITDA” means Consolidated Net Income plus, to the
extent deducted from revenues in determining Consolidated Net Income, (a)
Consolidated Interest Expense, (b) expense for taxes paid or accrued net of tax
refunds, (c) depreciation, (d) amortization, (e) non-cash research and
development expense, and (f) extraordinary non-cash losses (as determined in
accordance with GAAP) incurred other than in the ordinary course of business,
minus, to the extent included in Consolidated Net Income, extraordinary gains
(as determined in accordance with GAAP) realized other than in the ordinary
course of business, all calculated for the Borrower and its Subsidiaries on a
consolidated basis.

               “Consolidated Interest Expense” means, with reference to any
period, the interest expense of the Borrower and its Subsidiaries calculated on
a consolidated basis for such period.

               “Consolidated Net Income” means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.

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

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

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               “Disclosed Matters” means any actions, suits and proceedings and
any environmental matters disclosed in the SEC Reports.

               “Disqualified Stock” means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part. Any Equity Interest
solely convertible or redeemable for common Equity Interests (including
Preferred Stock convertible or redeemable into common stock under the Products
Agreement between Sun Pharma Global Inc. and Caraco Pharmaceutical Laboratories
Ltd dated November 20, 2002) shall not be considered Disqualified Stock.

               “Dollars” or “$” refers to lawful money of the United States of
America.

               “Effective Date” means the date on which the conditions specified
in Section 4.01 are satisfied (or waived in accordance with Section 8.02).

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

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

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

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

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

               “ERISA Event” means (a) any “reportable event”, as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an “accumulated funding

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deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

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

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

               “Excluded Taxes” means, with respect to the Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in which its applicable lending office is located.

               “Federal Funds Effective Rate” means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.

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

               “Fiscal Quarter” means any of the quarterly accounting periods of
the Borrower, ending on December 31, March 31, June 30 and September 30 of each
year.

               “Fiscal Year” means any of the annual accounting periods of the
Borrower first ending on March 31 of each year. As an example, reference to the
2005 Fiscal Year shall mean the Fiscal Year ending March 31, 2005.

               “Fixed Charge Coverage Ratio” means, the ratio, determined as of
the end of each of Fiscal Quarter of the Borrower, of (a) Consolidated EBITDA,
minus Consolidated Capital Expenditures which are not financed with permitted
long term debt, minus taxes, and minus Restricted Payments, to (b) Fixed
Charges, all as calculated for the most-recently ended four Fiscal Quarters and
for the Borrower and its Subsidiaries on a consolidated basis.

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               “Fixed Charges” means, for any period, cash Consolidated Interest
Expense, plus the scheduled and any other required principal payments paid or
payable on Indebtedness, all as calculated for such period and for the Borrower
and its Subsidiaries on a consolidated basis.

               “GAAP” means generally accepted accounting principles in the
United States of America.

               “Governmental Authority” means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government, including without limitation the U.S. Food and Drug
Administration and the U.S. Drug Enforcement Administration.

               “Governmental Authorization” means any permit, registration,
license, authorization, plan, directive, consent order or consent decree of or
from any Governmental Authority.

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

               “Guarantor” means each present and future Subsidiary.

               “Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

               “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of

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others, (h) all Capital Lease Obligations of such Person, (h) all Off-Balance
Sheet Liabilities of such Person, (i) all obligations under any Disqualified
Stock of such Person, (j) all obligations, contingent or otherwise, of such
Person as an account party in respect of letters of credit and letters of
guaranty and (k) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

               “Indemnified Taxes” means Taxes other than Excluded Taxes.

               “Interest Election Request” means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.07.

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

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

               “Inventory” shall have the meaning set forth in Article 9 of the
UCC.

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

               “LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time.

               “Lender” means JPMorgan Chase Bank, N.A., a national banking
association, and its successors and assigns.

               “Letter of Credit” means any letter of credit issued pursuant to
this Agreement.

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               “LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Lender from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Lender in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

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

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

               “Loan Documents” means this Agreement, any Note, the Collateral
Documents and any other agreement, instrument or other document executed in
connection therewith.

               “Loan Parties” means the Borrower and the Guarantors.

               “Loans” means the loans made by the Lender to the Borrower
pursuant to this Agreement.

               “Material Adverse Effect” means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of any Loan Party to perform any of its obligations under any Loan
Document or (c) the rights of or benefits available to the Lender under any Loan
Document.

               “Material Indebtedness” means Indebtedness (other than the Loans
and Letters of Credit), or obligations in respect of one or more Swap
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $2,500,000. For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the Borrower
or any Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such Swap Agreement were
terminated at such time.

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

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

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ERISA.

               “Obligations” means all unpaid principal of and accrued and
unpaid interest on the Loans, the LC Exposure, all accrued and unpaid fees and
all expenses, reimbursements, indemnities and other obligations of the Borrower
and of the Guarantors to the Lender or any Related Party arising under the Loan
Documents.

               “Off-Balance Sheet Liability” of a Person means (i) any
obligation under a sale and leaseback transaction which is not a Capital Lease
Obligation, (ii) any so-called “synthetic lease” or “tax ownership operating
lease” transaction entered into by such Person, (iii) the amount of obligations
outstanding under the legal documents entered into as part of any asset
securitization or similar transaction on any date of determination that would be
characterized as principal if such asset securitization or similar transaction
were structured as a secured lending transaction rather than as a purchase or
(iv) any other transaction (excluding operating leases for purposes of this
clause (iv)) which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person; in all of the foregoing cases, calculated based on the aggregate
outstanding amount of obligations outstanding under the legal documents entered
into as part of any such transaction on any date of determination that would be
characterized as principal if such transaction were structured as a secured
lending transaction, whether or not shown as a liability on a consolidated
balance sheet of such Person, in a manner reasonably satisfactory to the Lender.

               “Other Taxes” means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.

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

               “Permitted Encumbrances” means:

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

9

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     interfere with the ordinary conduct of business of the Borrower or any
Subsidiary;

 

 

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

               “Permitted Investments” means:

 

 

 

          (a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

          (e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.

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

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

               “Prime Rate” means the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.

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

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               “Requirements of Law” means, as to any Person, the operating
agreement, certificate of incorporation, by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property to
which such Person or any of its property is subject.

               “Restricted Payment” means (i) any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Borrower or any Subsidiary, or (ii) any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests in the Borrower or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower. It is acknowledged that the conversion of any Equity Interests of the
Borrower into common Equity Interests of the Borrower that are not Disqualified
Stock are not Restricted Payments.

               “Revolving Credit Exposure” means, at any time, the sum of the
outstanding principal amount of the Loans and the LC Exposure at such time.

               “SEC” means the Securities and Exchange Commission or any
Govern­mental Authority succeeding to any or all of the functions of said
Commission.

               “SEC Reports” means the following reports and financial
statements of the Borrower:

               (i) the Borrower’s annual report on Form 10-K for the year ended
March 31, 2005, as filed with the SEC as of the date hereof; and

               (ii) the Borrower’s quarterly reports on Form 10-Q for the
quarter ended June 30, 2005 as filed with the SEC as of the date hereof.

               “Secured Obligations” means, collectively, (i) the Obligations,
(ii) the Banking Services Obligations and (iii) the Swap Agreement Obligations
owing to the Lender or its Affiliates.

               “Security Agreement” means each security agreement, pledge
agreement, pledge and security agreement and similar agreement and any other
agreement from any Loan Party granting a Lien on any of its personal property
(including without limitation any Equity Interests owned by such Loan Party),
each in form and substance acceptable to the Lender, entered into by any Loan
Party at any time for the benefit of the Lender pursuant to this Agreement, as
amended or modified from time to time.

               “S&P” means Standard & Poor’s.

               “Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Lender is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements

11

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without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to the Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

               “Subordinated Debt” of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Lender.

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

                “Subsidiary” means any subsidiary of the Borrower.

               “Subsidiary Guaranty” means each guaranty executed by a
Guarantor, which shall be in form and substance satisfactory to the Lender.

               “Sun Pharmaceutical” means Sun Pharmaceutical Industries Limited,
a corporation organized under the laws of India.

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

               “Swap Agreement Obligations” means any and all obligations of the
Borrower or any of its Subsidiaries, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor) owing
to the Lender or any of its Affiliates under any and all Swap Agreements.

               “Taxes” means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.

               “Termination Date” means the earlier of (a) November 17, 2006 and
(b) the date the Commitment is terminated.

               “Transactions” means the execution, delivery and performance by
the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of

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Credit hereunder and the transactions relating thereto.

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

               “UCC” means the Uniform Commercial Code as in effect from time to
time in the State of Michigan.

               “Wholly-Owned Subsidiary” of a Person means, any Subsidiary all
of the outstanding Equity Interests of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person.

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

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

               SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
mascu­line, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”.
The word “will” shall be construed to have the same meaning and effect as the
word “shall”. Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) 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.

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

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ARTICLE II
THE CREDITS

               SECTION 2.01. Commitment. Subject to the terms and conditions set
forth herein, the Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in the Revolving Credit Exposure exceeding the Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Loans.

               SECTION 2.02. Loans and Borrowings. (a) Subject to Section 2.13,
each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as
the Borrower may request in accordance herewith. The Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of the Lender to make such Loan; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accord­ance with
the terms of this Agreement.

               (b) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $500,000. At the time that each
ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $50,000 and not less than $100,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the applicable Commitment or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of four Eurodollar
Borrowings outstanding.

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

               SECTION 2.03. Requests for Borrowings. To request a Borrowing,
the Borrower shall notify the Lender of such request in writing (a) in the case
of a Eurodollar Borrowing, not later than 11:00 a.m., Detroit time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 2:00 p.m., Detroit time, on the Business Day of
the proposed Borrowing; provided that any such notice of an ABR Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e) may be given not later than noon, Detroit time, on the date of
the proposed Borrowing. Each such written Borrowing Request shall be irrevocable
and shall be by hand delivery, telecopy or electronic communication to the
Lender of a written Borrowing Request in a form approved by the Lender and
signed by the Borrower. Each such written Borrowing Request shall specify the
following information in compliance with Section 2.02:

 

 

 

(i) the aggregate amount of the requested Borrowing;

 

 

 

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

 

 

 

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

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

 

 

 

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration.

               SECTION 2.04. Evidence of Debt. (a) The Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to the Lender resulting from each Loan made by the
Lender, including the amounts of principal and interest payable and paid to the
Lender from time to time hereunder.

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

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

               (d) The Lender may request that Loans made by it be evidenced by
a promissory note. In such event, the Borrower shall prepare, execute and
deliver to the Lender a promissory note payable to the order of the Lender (or,
if requested by the Lender, to the Lender and its registered assigns) and in a
form approved by the Lender. Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 8.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).

               SECTION 2.05. Letters of Credit. (a) General. Subject to the
terms and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Lender, at any time and from time to time during the Availability Period. In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Borrower to, or entered into by the Borrower
with, the Lender relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.

               (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic

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communication, if arrangements for doing so have been approved by the Lender) to
the Lender (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Lender, the Borrower also shall submit a letter
of credit application on the Lender’s standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension the
total Revolving Credit Exposures shall not exceed the Commitment and the LC
Exposure shall not exceed $1,000,000.

               (c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is one year after the Termination Date.

               (d) Reimbursement. If the Lender shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Lender an amount equal to such LC Disbursement not
later than 12:00 noon, Detroit time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement prior
to 10:00 a.m., Detroit time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon, Detroit time, on (i) the Business Day that the Borrower receives
such notice, if such notice is received prior to 10:00 a.m., Detroit time, on
the day of receipt, or (ii) the Business Day immediately following the day that
the Borrower receives such notice, if such notice is not received prior to such
time on the day of receipt; provided that the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with Section
2.03 or 2.05 that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing.

               (e) Obligations Absolute. The Borrower’s obligation to reimburse
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Lender under a Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Lender nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission,

16

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interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Lender; provided that the foregoing shall not be construed to excuse the Lender
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Lender’s failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Lender (as finally
determined by a court of competent jurisdiction), the Lender shall be deemed to
have exercised care in each such determination. In furtherance of the foregoing
and without limiting the generality thereof, the parties agree that, with
respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Lender may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

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

               (g) Interim Interest. If the Lender shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.12(d) shall apply.

               (h) Cash Collateralization. If any Event of Default under clause
(a) or (b) of Article VII shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Lender demanding the deposit of cash
collateral pursuant to this paragraph or automatically without notice or demand
on the Termination Date, the Borrower shall deposit in an account with the
Lender, in the name of the Lender and for the benefit of the Lender, an amount
in cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clause (h) or
(i) of Article VII. Such deposit shall be held by the Lender as collateral for
the payment and performance of the obligations of the Borrower under this
Agreement. The Lender shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Lender and at the Borrower’s risk and expense,
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the

17

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Lender to reimburse the Lender for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived if such date is prior to the
Termination Date.

               SECTION 2.06. Funding of Borrowings. The Lender shall make each
Loan available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Lender and
designated by the Borrower in the applicable Borrowing Request.

               SECTION 2.07. Interest Elections. (a) Each Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such Loans
comprising each such portion shall be considered a separate Borrowing.

               (b) To make an election pursuant to this Section, the Borrower
shall notify the Lender of such election in writing by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such written Interest Election Request shall be
irrevocable and shall be by hand delivery or telecopy to the Lender of a written
Interest Election Request in a form approved by the Lender and signed by the
Borrower.

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest

18

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Period, then the Borrower shall be deemed to have selected an Interest Period of
one month’s duration.

               (d) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

               SECTION 2.08. Termination and Reduction of Commitment. (a) Unless
previously terminated, the Commitment shall termi­nate on the Termination Date.

               (b) The Borrower may at any time terminate, or from time to time
reduce, the Commitment; provided that (i) each reduction of the Commitment shall
be in an amount that is an integral multiple of $100,000 and not less than
$500,000 and (ii) the Borrower shall not terminate or reduce the Commitment if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.10, the Revolving Credit Exposures would exceed the Commitment.

               SECTION 2.09. Repayment of Loans. (a) The Borrower hereby
unconditionally promises to pay to the Lender the then unpaid principal amount
of each Loan on the Termination Date.

               (b) The Borrower shall immediately repay the Revolving Credit
Exposure if at any time the aggregate Revolving Credit Exposure exceeds the
Commitment, to the extent required to eliminate such excess. If any such excess
remains after repayment in full of all outstanding Loans, the Borrower shall
provide cash collateral for the LC Exposure in the manner set forth herein to
the extent required to eliminate such excess.

               SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have
the right at any time and from time to time to prepay any Borrowing in whole or
in part, subject to prior notice in accordance with paragraph (b) of this
Section.

               (b) Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.12.

               SECTION 2.11. Fees. (a) The Borrower agrees to pay a fee to the
Lender with respect to Letters of Credit, which shall accrue at the rate of
0.75% per annum on the average daily amount of the Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
date on which the Lender ceases to have any LC Exposure, as well as the Lender’s
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Such fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,

19

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commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Termination Date
and any such fees accruing after the Termination Date shall be payable on
demand. Any other fees payable to the Lender pursuant to this paragraph shall be
payable within 5 days after demand. All such fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

               (b) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Lender. Fees paid shall not be refundable
under any circumstances.

               SECTION 2.12. Interest. (a) The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate minus 1.0%.

               (b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus 0.75%.

               (c) Notwithstanding the foregoing, upon and during the
continuance of any Event of Default, all Loans and other amounts due hereunder
(other than interest) shall bear interest, after as well as before judgment, at
a rate per annum equal to (i) in the case of overdue principal of any Loan, 2%
plus the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount, 2% plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.

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

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

               SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

 

 

          (a) the Lender determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

 

 

 

          (b) the Lender determines that the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period will not adequately and fairly
reflect the cost to the Lender of making

20

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or maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;

then the Lender shall give notice thereof to the Borrower by telephone or
telecopy as promptly as practicable thereafter and, until the Lender notifies
the Borrower that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing,
such Borrowing shall be made as an ABR Borrowing; provided that if the
circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

               SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

 

 

 

          (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, the Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or

 

 

 

          (ii) impose on the Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by the Lender or any
Letter of Credit;

and the result of any of the foregoing shall be to increase the cost to the
Lender of making or main­taining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to the Lender of
issuing or maintaining any Letter of Credit or to reduce the amount of any sum
received or receivable by the Lender hereunder (whether of principal, interest
or otherwise), then the Borrower will pay to the Lender such additional amount
or amounts as will compensate the Lender for such additional costs incurred or
reduction suffered.

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

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

               (d) Failure or delay on the part of the Lender to demand
compensation pursuant to this Section shall not constitute a waiver of the
Lender’s right to demand such compensation; provided that the Borrower shall not
be required to compensate the Lender pursuant to this Section for any increased
costs or reductions incurred more than 180 days prior to the date that the
Lender notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of the Lender’s intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased

21

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costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.

               SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.10(b) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate the Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to the Lender shall be deemed to
include an amount determined by the Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which the Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certifi­cate of the Lender setting forth any amount or amounts that
the Lender is entitled to receive pursuant to this Section shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay the Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

               SECTION 2.16. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

               (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

               (c) The Borrower shall indemnify the Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Lender on or with respect to any payment by or on account of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by the Lender shall be conclusive absent manifest error.

               (d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Lender the original or a

22

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certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Lender.

               (e) If the Lender or the Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.16 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Lender or the Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the Lender or the
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Lender or the Lender in the event the Lender or the Lender is
required to repay such refund to such Governmental Authority. This Section shall
not be construed to require the Lender or the Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

               SECTION 2.17. Payments Generally; (a) The Borrower shall make
each payment required to be made by it hereunder (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to 3:00 p.m., Detroit time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Lender at its offices designated to the Borrower from time
to time. If any payment hereunder shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments hereunder shall be made
in dollars.

               (b) If at any time insufficient funds are received by and
available to the Lender to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

               In order to induce the Lender to enter into this Agreement, the
Borrower represents and warrants to the Lender, that the following statements
are true, correct and complete (it being understood and agreed that the
representations and warranties made on the Effective Date are deemed to be made
concurrently with, and giving effect to, the consummation of the Transactions):

               SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is

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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every juris­diction where such qualification is required. As of the
Effective Date, the Borrower has no Subsidiaries.

               SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower’s and each Guarantor’s corporate or company, as the case may
be, powers and have been duly authorized by all necessary corporate or company
and, if required, stockholder or member action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

               SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
its Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any of its Subsidiaries, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries, except as created under the Collateral
Documents in favor of the Lender.

               SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The audited balance sheets and statements of income, stockholders equity and
cash flows as of and for the 2004 Fiscal Year for the Borrower and its
subsidiary heretofore furnished to the Lender present fairly, in all material
respects, the financial position and results of operations and cash flows of
such Person as of such dates and for such periods in accordance with GAAP.

               (b) Since March 31, 2005, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.

               SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiar­ies has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.

               (b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

24

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               SECTION 3.06. Litigation and Environmental Matters. (a) There are
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possi­bility of an adverse determination and that, if
adversely deter­mined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

               (b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, neither the Borrower nor any
of its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.

               (c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

               SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all Requirements of Law of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property and has all
Governmental Authorizations required by any Requirement of Law, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

               SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an “investment company” as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
“holding company” as defined in, or subject to regula­tion under, the Public
Utility Holding Company Act of 1935.

               SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.

               SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 the fair market value of
the assets of all such underfunded

25

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Plans.

               SECTION 3.11. Disclosure. The Borrower has disclosed to the
Lender all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Lender or the Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

               SECTION 3.12 Employee Matters. Neither the Borrower nor any of
its Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a Material Adverse Effect. There is (a) no unfair labor
practice complaint pending against the Borrower or any of its Subsidiaries, or
to the knowledge of the Borrower, threatened against any of them and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against the Borrower or any of its
Subsidiaries or to the knowledge of the Borrower, threatened against any of
them, (b) no strike, work stoppage or other labor controversy in existence or
threatened involving the Borrower or any of its Subsidiaries, and (c) no
violation of any laws or regulations, foreign or domestic, with respect to any
employee, union or related matters by the Borrower or any of its Subsidiaries,
except (with respect to any matter specified in clause (a), (b) or (c) above,
either individually or in the aggregate) such as is not reasonably likely to
have a Material Adverse Effect. The Borrower and its Subsidiaries are in
substantial compliance in all material respects with the Fair Labor Standards
Act, as amended, and have paid all minimum and overtime wages required by law to
be paid to their employees.

               SECTION 3.13 Subsidiaries. As of the Effective Date, the Borrower
has no Subsidiaries.

               SECTION 3.14 Collateral Documents. The Security Agreement is
effective to create in favor of the Lender a legal, valid and enforceable
security interest in the Collateral and when financing statements in appropriate
form are filed in the appropriate office in the State of Michigan, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Collateral and the
proceeds thereof, as security for the Secured Obligations, in each case prior
and superior in right to any other Person except Liens permitted by Section
6.01.

               SECTION 3.15 Solvency. (a) the fair value of the assets of each
Loan Party, at a fair valuation, will exceed the debts and liabilities,
subordinated, contingent or otherwise, of each Loan Party; (b) the present fair
saleable value of the assets of each Loan Party will be greater than the amount
that will be required to pay the probable liability of each Loan Party on its
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) each Loan Party
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d)
each Loan Party will not have unreasonably small capital with which to conduct
the businesses in which it is engaged as such businesses are now conducted and
are proposed to be conducted after the date hereof. The

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Borrower does not intend to, or to permit any of its Subsidiaries to, and does
not believe that it or any of its Subsidiaries will, incur debts beyond its
ability to pay such debts as they mature, taking into account the timing of and
amounts of cash to be received by it or any such Subsidiary and the timing of
the amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary.

ARTICLE IV
CONDITIONS

Conditions

               SECTION 4.01. Effective Date. The obligations of the Lender to
make Loans and to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 8.02):

 

 

 

          (a) The Lender (or its counsel) shall have received from each party
thereto either (i) a counterpart of each Loan Document signed on behalf of each
party thereto or (ii) written evidence satisfactory to the Lender (which may
include telecopy transmission of a signed signature page of this Agreement) that
each party thereto has signed a counterpart of this Agreement.

 

 

 

          (b) The Lender shall have received a favorable written opinion of
counsel for the Borrower and the Guarantors, in form and substance acceptable to
the Lender, and covering such other matters relating to the Borrower and the
Guarantors, this Agreement or the Transactions as the Lender shall reasonably
request. The Borrower hereby requests such counsel to deliver such opinion.

 

 

 

          (c) The Lender shall have received such documents and certificates as
the Lender or its counsel may reasonably request relating to the organization,
existence and good standing of the Borrower and the Guarantors, the
authorization of the Transactions and any other legal matters relating to the
Borrower, the Guarantors this Agreement or the Transactions, all in form and
substance satisfactory to the Lender and its counsel.

 

 

 

          (d) The Lender shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer of the
Borrower, confirming compliance with the conditions set forth in paragraphs (a)
and (b) of Section 4.02.

 

 

 

          (e) The Lender shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.

 

 

 

          (f) The Lender shall have received all Lien and other searches that
the Lender deems necessary, the Loan Parties shall have delivered UCC
termination statements or amendments to existing UCC financing statements with
respect to any filings against the Collateral as may be requested by the Lender
and shall have authorized the filing of such termination statements or
amendments, the Lender shall have been authorized to file any UCC financing
statements that the Lender deems necessary to perfect its Liens in the
Collateral and

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Liens creating a first priority security interest in the Collateral in favor of
the Lender shall have been perfected.

 

 

 

          (g) All legal (including tax implications) and regulatory matters,
including, but not limited to compliance with applicable requirements of
Regulations U, T and X of the Board shall be satisfactory to the Lender.

 

 

 

          (h) The Borrower shall have delivered evidence of insurance coverage
in form, scope, and substance reasonably satisfactory to the Lender.

 

 

 

          (i) The Lender shall have received a certificate from a Financial
Officer concerning the solvency and other appropriate factual information with
respect to the Borrower and its Subsidiaries in form and substance satisfactory
to the Lender with respect to solvency.

 

 

 

          (j) The Lender shall have received satisfactory results of due
diligence investigations of the Borrower and its subsidiaries (including without
limitation liabilities and contingent liabilities (e.g., environmental, retiree
medical benefits, ERISA, etc.) and contractual obligations and a review of
financial statements on the Borrower and its subsidiaries satisfactory to the
Lender).

 

 

 

          (k) The Loan Parties shall have delivered such other documents as the
Lender or its counsel may have reasonably requested.

Notwithstanding the foregoing, the obligations of the Lender to make Loans and
to issue Letters of Credit hereunder shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 8.02) at or
prior to 3:00 p.m., Detroit time, on November 17, 2005 (and, in the event such
conditions are not so satisfied or waived, the Commitment shall terminate at
such time).

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

 

 

 

          (a) The representations and warranties of each Loan Party set forth in
this Agreement or in any other Loan Document shall be true and correct on and as
of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

 

 

 

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

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

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ARTICLE V
AFFIRMATIVE COVENANTS
Affirmative Covenants

               Until the Commitment have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lender that:

               SECTION 5.01. Financial Statements; Ratings Change and Other
Information. The Borrower will furnish to the Lender:

 

 

 

          (a) promptly after the Borrower’s annual report on Form 10-K is
publicly filed for each Fiscal Year of the Borrower, written notice of the
filing or delivery thereof to the SEC, provided that if such Form 10-K is not
filed within 90 days after the end of each Fiscal Year of the Borrower, then the
Borrower shall deliver to the Lender within 90 days after the end of each Fiscal
Year its audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all reported on by Rehmann Robson or other independent
public accountants of recognized national standing (without a “going concern” or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;

 

 

 

          (b) promptly after the Borrower’s quarterly report on Form 10-Q is
publicly filed for each fiscal quarter of the Borrower, written notice of the
filing or delivery thereof to the SEC, provided that if such Form 10-Q is not
filed within 60 days after the end of each Fiscal Quarter of the Borrower, then
the Borrower shall deliver to the Lender within 60 days after the end of each
Fiscal Quarter its consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
Fiscal Quarter and the then elapsed portion of the Fiscal Year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
Fiscal Year, all certified by one of its Finan­cial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consis­tently applied, subject to normal year-end
audit adjustments and the absence of footnotes;

 

 

 

          (c) concurrently with any delivery of financial statements under
clause (a) or clause (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.12 and 6.13 and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying

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the effect of such change on the financial statements accompanying such
certificate, and, additionally, concurrently with any delivery of any Form 10-Q
under clause (b) above, a certificate of a Financial Officer of the Borrower
certifying to the Lender such financial statements as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consis­tently applied, subject to normal year-end audit adjustments
and the absence of footnotes;

 

 

 

          (d) within 30 days after the end of each month in which any Loans or
Letters of Credit are outstanding and in any event no less than once in each
consecutive twelve month period, and at such other times as may be requested by
the Lender, as of the period then ended, a listing of Accounts in detail
satisfactory to the Lender and other supporting information requested by the
Lender in connection therewith;

 

 

 

          (e) promptly after the same are publicly filed, written notice of the
filing or delivery of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any Subsidiary with the SEC, or with any
national securities exchange, or distributed by the Borrower to its
share­holders generally, as the case may be;

 

 

 

          (f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidi­ary or Affiliate, or compliance with the terms of this
Agreement, as the Lender or the Lender may reasonably request.

               SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Lender prompt written notice of the following:

 

 

 

          (a) the occurrence of any Default;

 

 

 

          (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

 

 

 

          (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$250,000; and

 

 

 

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

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

               SECTION 5.03. Existence; Conduct of Business. The Borrower will,
and will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises

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material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.02.

               SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obliga­tions, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropri­ate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

               SECTION 5.05. Maintenance of Properties; Insurance. The Borrower
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.

               SECTION 5.06. Books and Records; Inspection Rights. The Borrower
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Lender or the Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
The Borrower shall take such action as may be reasonably requested by the Lender
to allow the Lender to rely on the annual audit of the Borrower and its
Subsidiaries.

               SECTION 5.07. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

               SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds
of the Loans and Letters of Credit will be used only for working capital needs
and general corporate purposes of the Borrower and its Subsidiaries. No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

               SECTION 5.09. Collateral Security; Further Assurances. (a) To
guarantee or secure the payment when due of the Secured Obligations, the
Borrower shall execute and deliver, or cause to be executed and delivered, to
the Lender Collateral Documents granting or providing for the following:

               (i) Subsidiary Guaranties of all present and future Subsidiaries
of the Borrower.

               (ii) Security Agreements granting a first priority, enforceable
Lien and security interest, subject only to Liens permitted by Section 6.01, on
all present and future Accounts, Inventory and all proceeds thereof of the
Borrower and each Guarantor.

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               (iii) All other security and collateral described in the
Collateral Documents.

          (b) The Borrower agrees that it will promptly notify the Lender of the
formation or acquisition of any Subsidiary or other Subsidiary or the
acquisition of any assets on which a Lien is required to be granted and that is
not covered by existing Collateral Documents. The Borrower agrees that it will
promptly execute and deliver, and cause each Subsidiary to execute and deliver,
promptly upon the request of the Lender, such additional Collateral Documents
and other agreements, documents and instruments, each in form and substance
satisfactory to the Lender, sufficient to grant to the Lender the Subsidiary
Guaranties and Liens contemplated by this Agreement and the Collateral
Documents. Additionally, the Borrower shall execute and deliver, and cause each
Subsidiary to execute and deliver, promptly upon the request of the Lender, such
certificates, legal opinions, lien searches, organizational and other charter
documents, resolutions and other documents and agreements as the Lender may
request in connection therewith. The Borrower shall use its best efforts to
cause each lessor of real property to the Borrower or any Guarantor where any
material Collateral is located to execute and deliver to the Lender an agreement
in form and substance reasonably acceptable to the Lender duly executed on
behalf of such lessor waiving any distraint, lien and similar rights with
respect to any property subject to the Collateral Documents and agreeing to
permit the Lender to enter such premises in connection therewith.

          (c) The Borrower represents and warrants to the Lender that the
execution, delivery and performance by the Borrower of each Loan Document to
which it is a party are not in contravention of any applicable law, treaty, rule
or regulation of any Governmental Authority (including without limitation the
Federal Food, Drug and Cosmetic Act, the Public Health Services Act and the
Controlled Substances Act and other laws, treaties, rules and regulations of any
Governmental Authority applicable to corporations engaged in the business of
developing, manufacturing and developing generic pharmaceuticals) and no
consent, approval or authorization of or declara­tion, registration or filing
with any Governmental Authority is required on the part of the Borrower in
connection with the execution, delivery and performance of the Loan Documents or
as a condition to the legality, validity or enforceability of the Loan
Documents. The Borrower agrees to deliver a legal opinion with respect to the
matters described in the foregoing sentence reasonably acceptable to the Lender
within ninety days after the Effective Date.

               SECTION 5.10 Additional Covenants. If at any time the Borrower or
any of its Subsidiaries shall enter into or be a party to any instrument or
agreement, including all such instruments or agreements in existence as of the
date hereof and all such instruments or agreements entered into after the date
hereof, relating to or amending any provisions applicable to any of its
Indebtedness, which includes any covenants, defaults or similar terms not
substantially provided for in this Agreement or more favorable to the lender or
lenders thereunder than those provided for in this Agreement, then the Borrower
shall promptly so advise the Lender. Thereupon, if the Lender shall request,
upon notice to the Borrower, the Lender and the Borrower shall enter into an
amendment to this Agreement or an additional agreement (as the Lender may
request), providing for substantially the same material covenants, defaults and
similar terms as those provided for in such instrument or agreement to the
extent required and as may be selected by the Lender.

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ARTICLE VI
NEGATIVE COVENANTS
Negative Covenants

               Until the Commitment have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lender that:

               SECTION 6.01. Liens. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
Collateral except Permitted Encumbrances and Liens created under the Collateral
Documents securing the Secured Obligations.

               SECTION 6.02. Fundamental Changes. (a) The Borrower will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) any of its assets (in each case, whether now owned or
here­after acquired, but excluding the sale of inventory in the ordinary course
of its business and the sale of obsolete inventory), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing (i) the Borrower and its
Subsidiaries may sell assets in which the sales price is at least the fair
market value of the assets sold and the aggregate amount of such asset sales is
less than $2,500,000 in any Fiscal Year and the consideration received is cash
or cash equivalents, (ii) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (iii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iv) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Borrower or to another Subsidiary, and
(v) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lender; provided that any
such merger involving a Person that is not a Wholly-Owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.03.

               (b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

               SECTION 6.03. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a Wholly-Owned Subsidiary prior to such merger) any Equity
Interests, evidences of indebtedness or other securities (including any option,
warrant or other right to acquire any of the foregoing) of, make or permit to
exist any loans or advances to, Guarantee any obligations of, or make or permit
to exist any investment or any other interest in, any other Person, or make any
Acquisition, except:

 

 

 

          (a) Permitted Investments; and

 

 

 

          (b) other investments not to exceed $2,500,000 in the aggregate during
the term of this Agreement.

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               SECTION 6.04. Swap Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a)
Swap Agreements entered into to hedge or mitigate risks to which the Borrower or
any Subsidiary has actual exposure (other than those in respect of Equity
Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates
(from fixed to floating rates, from one floating rate to another floating rate
or otherwise) with respect to any interest-bearing liability or investment of
the Borrower or any Subsidiary.

               SECTION 6.05. Restricted Payments. The Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) the Borrower
may declare and pay dividends with respect to its Equity Interests payable
solely in additional shares of its common Equity Interests, (b) Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests and (c)
the Borrower may make Restricted Payments with respect to its Equity Interests
so long as no Default exists or would be caused thereby.

               SECTION 6.06. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm’s-length basis from unrelated third parties,
(b) transactions between or among the Borrower and its Wholly-Owned Subsidiaries
not involving any other Affiliate and (c) any transaction involving issuance of
Preferred Stock that is not Disqualified Stock or redemption or conversion
thereof into common stock of the Borrower that is not Disqualified Stock
issuable under the Products Agreement between Sun Pharma Global Inc. and Caraco
Pharmaceutical Laboratories Ltd dated November 20, 2002.

               SECTION 6.07. Change of Name or Location; Change of Fiscal Year.
No Loan Party shall (a) change its name as it appears in official filings in the
state of its incorporation or organization, (b) change its chief executive
office, principal place of business, mailing address, corporate offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral as set forth in the Security
Agreements, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (e) change its state of incorporation or organization,
in each case, unless the Lender shall have received at least fifteen days prior
written notice of such change and the Lender shall have acknowledged in writing
that either (1) such change will not adversely affect the validity, perfection
or priority of the Lender’s security interest in the Collateral, or (2) any
reasonable action requested by the Lender in connection therewith has been
completed or taken (including any action to continue the perfection of any Liens
in favor of the Lender in any Collateral), provided that, any new location shall
be in the continental U.S. No Loan Party shall change its Fiscal Year.

               SECTION 6.08. Amendments to Agreements. No Loan Party will, nor
will any Loan Party permit its Subsidiaries to, amend, supplement or otherwise
modify (a) its articles of incorporation, charter, certificate of formation,
operating agreement, by-laws or other organizational document in any manner
materially adverse to the Lender, or (b) any instrument or agreement evidencing
or relating to any Subordinated Debt.

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               SECTION 6.09. Prepayment of Indebtedness; Subordinated Debt. No
Loan Party shall, directly or indirectly, voluntarily purchase, redeem, defease
or prepay any principal of, premium, if any, interest or other amount payable in
respect of any Indebtedness prior to its scheduled maturity, other than (i) the
Obligations; (ii) Indebtedness secured by a Lien permitted by Section 6.01 if
the asset securing such Indebtedness has been sold or otherwise disposed of in
accordance herewith; and (iii) Indebtedness permitted hereunder upon any
permitted refinancing thereof in accordance therewith. Notwithstanding anything
herein to the contrary, no Loan Party shall directly or indirectly voluntarily
prepay, defease or in substance defease, purchase, redeem, retire or otherwise
acquire, any Subordinated Debt.

               SECTION 6.10. Depository Banks. Each Loan Party shall maintain
the Lender as such Loan Party’s principal depository bank, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business.

               SECTION 6.11 Minimum EBITDA. The Borrower will not permit the net
income (or loss) of the Borrower and its Subsidiaries plus, to the extent
deducted from revenues in determining such net income, (a) the interest expense
of the Borrower and its Subsidiaries, (b) expense for taxes paid or accrued net
of tax refunds, (c) depreciation, (d) amortization, (e) non-cash research and
development expense, and (f) extraordinary non-cash losses (as determined in
accordance with GAAP) incurred other than in the ordinary course of business,
minus, (i) to the extent included in such net income, extraordinary gains (as
determined in accordance with GAAP) realized other than in the ordinary course
of business, (ii) the Capital Expenditures of the Borrower and its Subsidiaries
which are not financed with permitted long term debt, and (iii) Restricted
Payments, all calculated for the Borrower and its Subsidiaries on a consolidated
basis, determined as of the end of each of its Fiscal Quarters for the then
most-recently ended four Fiscal Quarters, to be less than $16,000,000 as of the
end of any Fiscal Quarter.

               SECTION 6.12. Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio, determined as of the end of each of Fiscal Quarter of the
Borrower, of:

                    (a) the net income (or loss) of the Borrower and its
Subsidiaries plus, to the extent deducted from revenues in determining such net
income, (i) the interest expense of the Borrower and its Subsidiaries, (ii)
expense for taxes paid or accrued net of tax refunds, (iii) depreciation, (iv)
amortization, (v) non-cash research and development expense, and (vi)
extraordinary non-cash losses (as determined in accordance with GAAP) incurred
other than in the ordinary course of business, minus, (A) to the extent included
in such net income, extraordinary gains (as determined in accordance with GAAP)
realized other than in the ordinary course of business, (B) Capital Expenditures
of the Borrower and its Subsidiaries which are not financed with permitted long
term debt, (C) taxes, and (D) Restricted Payments, to

                    (b) the cash interest expense of the Borrower and its
Subsidiaries plus the scheduled and any other required principal payments paid
or payable on Indebtedness, all as calculated for the most-recently ended four
Fiscal Quarters and for the Borrower and its Subsidiaries on a consolidated
basis, determined as of the end of each of its Fiscal Quarters for the then
most-recently ended Fiscal Quarter, to be less 1.20 to 1.0 as of the end of any
Fiscal Quarter.

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ARTICLE VII
EVENTS OF DEFAULT

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

          (d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower’s existence) or 5.08 or in Article VI;

 

 

 

          (e) the Borrower or any Guarantor shall fail to observe or perform any
covenant, condition or agree­ment contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article) or any other Loan Document
and such failure shall continue unremedied for a period of 10 days after notice
thereof from the Lender to the Borrower;

 

 

 

          (f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;

 

 

 

          (g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;

 

 

 

          (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the

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Borrower or any Subsidiary or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be entered;

 

 

 

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

 

 

 

          (j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

 

 

 

          (k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment;

 

 

 

          (l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $1,000,000 for all periods;

 

 

 

          (m) Any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document, or any Loan Party shall fail to
comply with any of the terms or provisions of any Collateral Document if the
failure continues beyond any period of grace provided for in the applicable
Collateral Document, or any Collateral Document granting a Lien shall for any
reason fail to create a valid and perfected first priority security interest in
any Collateral purported to be covered thereby or subordination to be created
thereunder, except as permitted by the terms of this Agreement or any Collateral
Document;

 

 

 

          (n) a Change in Control shall occur; or

 

 

 

          (o) the termination, amendment or other modification of any product
agreement or other agreement or arrangement between any Loan Party and Sun
Pharmaceutical or any of its Affiliates, any product recall by any Loan Party or
any enforcement action by any Governmental Authorities against any Loan Party,
in each case which could have a Material Adverse Effect.

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then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Lender may, and at the request of the
Lender shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the Commitment, and
thereupon the Commitment shall terminate immediately, and (ii) declare the Loans
then out­standing to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Commitment shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.

ARTICLE VIII
MISCELLANEOUS

               SECTION 8.01. Notices. (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

 

 

 

          (i) if to the Borrower, to it at 1150 Elijah McCoy Drive, Detroit,
Michigan 48202 Attention of Mr. Jitendra Doshi (Telecopy No. 313-871-8039);

 

 

 

          (ii) if to the Lender, to JPMorgan Chase Bank, N.A. at such address
and other contact information as from time to time supplied to the parties
hereto by the Lender; and

               (b) Notices and other communications to the Lender hereunder may
be delivered or furnished by electronic communications pursuant to procedures
approved by the Lender; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Lender. The Lender or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

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

               SECTION 8.02. Waivers; Amendments. (a) No failure or delay by the
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and are not exclusive of any

38

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rights or remedies that they would otherwise have. No waiver of any provision of
this Agree­ment or consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effec­tive only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Lender may have had notice or knowledge of such Default at the time.

               (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Lender.

               SECTION 8.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Lender and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Lender, in connection with the preparation and
administration of this Agreement or any amendments, modifications or waivers of
the provi­sions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), provided that the amount of legal fees of counsel
for the Lender for which the Borrower shall be liable shall not exceed the
lesser of 50% of such legal fees or $3,750, (ii) all reasonable out-of-pocket
expenses incurred by the Lender in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Lender,
including the fees, charges and disbursements of any counsel for the Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

               (b) The Borrower shall indemnify the Lender and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by the Lender to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are deter­mined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.

               (c) To the extent permitted by applicable law, the Borrower shall
not assert, and

39

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hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

               (d) All amounts due under this Section shall be payable promptly
after written demand therefor.

               SECTION 8.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Lender that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, including any Affiliate of the Lender
that issues any Letter of Credit and, to the extent expressly contemplated
hereby, the Related Parties of the Lender) any legal or equitable right, remedy
or claim under or by reason of this Agreement.

               SECTION 8.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instru­ments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstand­ing and unpaid or any Letter of Credit is outstanding and
so long as the Commitment have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 8.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitment or the termination of this Agreement
or any provision hereof.

               SECTION 8.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the Lender and
amendments or supplements thereof constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Lender and the Borrower.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

               SECTION 8.07. Severability. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability

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of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

               SECTION 8.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by the Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by the Lender, irrespective of whether or not
the Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of the Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
the Lender may have.

               SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of Michigan.

               (b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the courts of
the State of Michigan and of the United States District Court of the Eastern
District of Michigan, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Michigan or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Lender may otherwise have to bring any action or proceeding relating to this
Agreement against the Borrower or its proper­ties in the courts of any
jurisdiction.

               (c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 8.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

               SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREE­MENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

               SECTION 8.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

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               SECTION 8.12. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under appli­cable law (collectively the “Charges”), shall exceed
the maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to the Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by the Lender.

               SECTION 8.13. USA PATRIOT Act. The Lender, per the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), hereby notifies the Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow the Lender to identify the
Borrower in accordance with the Act.

               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.

 

 

 

 

 

CARACO PHARMACEUTICAL LABORATORIES, LTD.

 

 

 

By:

 

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Name:

 

 

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Title:

 

 

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JPMORGAN CHASE BANK, N.A.

 

 

 

By:

 

 

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Name:

 

 

 

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Title:

 

 

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