Exhibit 10.1

EXECUTION COPY

 

 

 

CREDIT AGREEMENT

Dated as of June 21, 2012

among

CORNERSTONE THERAPEUTICS INC.,

as the Borrower,

CHIESI FARMACEUTICI S.P.A.,

as Administrative Agent,

and

The Other Lenders Party Hereto

 

 

 

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TABLE OF CONTENTS

 

Section

       Page  

ARTICLE I.

  DEFINITIONS AND ACCOUNTING TERMS      1      

1.01

  Defined Terms      1      

1.02

  Other Interpretive Provisions      17      

1.03

  Accounting Terms      17      

1.04

  Rounding      18      

1.05

  Times of Day      18   

ARTICLE II.

  THE TERM LOANS AND REPAYMENT      18      

2.01

  Term Loans      18      

2.02

  Intentionally Omitted      18      

2.03

  Intentionally Omitted      18      

2.04

  Intentionally Omitted      18      

2.05

  Optional Prepayments      18      

2.06

  Mandatory Prepayments      19      

2.07

  Repayment of Loans      20      

2.08

  Interest      20      

2.09

  Term Loan B Conversion      21      

2.10

  Intentionally Omitted      21      

2.11

  Evidence of Debt      21      

2.12

  Payments Generally      22      

2.13

  Sharing of Payments by Lenders      22      

2.14

  Intentionally Omitted      23      

2.15

  Intentionally Omitted      23      

2.16

  Defaulting Lenders      23   

ARTICLE III.

  TAXES, YIELD PROTECTION AND ILLEGALITY      24      

3.01

  Taxes      24      

3.02

  Increased Costs      27      

3.03

  Survival      28   

ARTICLE IV.

  CONDITIONS PRECEDENT TO LOANS      28      

4.01

  Conditions Precedent to Initial Funding      28   

ARTICLE V.

  REPRESENTATIONS AND WARRANTIES      30      

5.01

  Existence, Qualification and Power      30      

5.02

  Authorization; No Contravention      30      

5.03

  Governmental Authorization; Other Consents      30      

5.04

  Binding Effect      30      

5.05

  Financial Statements; No Material Adverse Effect      30      

5.06

  Litigation      31      

5.07

  No Default      31      

5.08

  Ownership of Property; Liens      31      

5.09

  Environmental Compliance      31   

 

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5.10

  Insurance    31  

5.11

  Taxes    32  

5.12

  ERISA Compliance    32  

5.13

  Subsidiaries; Equity Interests    33  

5.14

  Margin Regulations; Investment Company Act    33  

5.15

  Disclosure    33  

5.16

  Compliance with Laws    33  

5.17

  Taxpayer Identification Number    34  

5.18

  Intellectual Property; Licenses, Etc.    34  

5.19

  Solvency    34  

5.20

  OFAC    34  

5.21

  Security Agreement    34  

5.22

  Acquisition Agreement    35

ARTICLE VI.

  AFFIRMATIVE COVENANTS    35  

6.01

  Financial Statements    35  

6.02

  Certificates; Other Information    36  

6.03

  Notices    36  

6.04

  Payment of Obligations    37  

6.05

  Preservation of Existence, Etc.    37  

6.06

  Maintenance of Properties    37  

6.07

  Maintenance of Insurance    37  

6.08

  Compliance with Laws    37  

6.09

  Books and Records    38  

6.10

  Inspection Rights    38  

6.11

  Use of Proceeds    38  

6.12

  Additional Guarantors    38  

6.13

  Further Assurances    38  

6.14

  Acquisition Agreement    39

ARTICLE VII.

  NEGATIVE COVENANTS    39  

7.01

  Liens    39  

7.02

  Investments    41  

7.03

  Indebtedness    42  

7.04

  Fundamental Changes    44  

7.05

  Dispositions    45  

7.06

  Restricted Payments    46  

7.07

  Change in Nature of Business    46  

7.08

  Transactions with Affiliates    46  

7.09

  Burdensome Agreements    47  

7.10

  Use of Proceeds    47  

7.11

  Accounting Changes    47

ARTICLE VIII.

  EVENTS OF DEFAULT AND REMEDIES    47  

8.01

  Events of Default    47  

8.02

  Remedies Upon Event of Default    49  

8.03

  Application of Funds    50

 

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ARTICLE IX.

   ADMINISTRATIVE AGENT      50     

9.01

   Appointment and Authority      50     

9.02

   Rights as a Lender      50     

9.03

   Exculpatory Provisions      51     

9.04

   Reliance by Administrative Agent      51     

9.05

   Delegation of Duties      52     

9.06

   Resignation of Administrative Agent      52     

9.07

   Non-Reliance on Administrative Agent and Other Lenders      53     

9.08

   Intentionally Omitted      53     

9.09

   Administrative Agent May File Proofs of Claim      53     

9.10

   Release of Collateral and Guarantors      54   

ARTICLE X.

   MISCELLANEOUS      54     

10.01

   Amendments, Etc.      54     

10.02

   Notices; Effectiveness; Electronic Communication      55     

10.03

   No Waiver; Cumulative Remedies; Enforcement      56     

10.04

   Expenses; Indemnity; Damage Waiver      57     

10.05

   Payments Set Aside      59     

10.06

   Successors and Assigns      59     

10.07

   Treatment of Certain Information; Confidentiality      62     

10.08

   Right of Setoff      63     

10.09

   Interest Rate Limitation      64     

10.10

   Counterparts; Integration; Effectiveness      64     

10.11

   Survival of Representations and Warranties      64     

10.12

   Severability      64     

10.13

   Intentionally Omitted      65     

10.14

   Governing Law; Jurisdiction; Etc      65     

10.15

   Waiver of Jury Trial      66     

10.16

   No Advisory or Fiduciary Responsibility      66     

10.17

   Electronic Execution of Assignments and Certain Other Documents      67     

10.18

   USA PATRIOT Act      67     

SIGNATURES

     S-1   

 

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SCHEDULES     1.01   Existing Contingent Obligations   5.13   Subsidiaries;
Other Equity Investments   7.01(b)   Existing Liens   7.03   Existing
Indebtedness   7.05(k)   Certain Dispositions   7.08   Existing Affiliate
Transactions   10.02   Administrative Agent’s Office; Certain Addresses for
Notices EXHIBITS       Form of   A   Security Agreement   B   Compliance
Certificate   C-1   Assignment and Assumption   C-2   Administrative
Questionnaire   D   Guaranty   E   Instrument of Assumption and Joinder

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of June 21, 2012, among
CORNERSTONE THERAPEUTICS INC., a Delaware corporation (the “Borrower”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), and CHIESI FARMACEUTICI S.P.A., an Italian company,
as administrative agent for the Lenders.

The Borrower has requested that the Lenders provide a term loan facility, and
the Lenders are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“Acquisition” means the acquisition by the Borrower of EKR Therapeutics, Inc.
pursuant to that certain Agreement and Plan of Merger, dated as of May 14, 2012,
by and among the Borrower, EKR Holdings, Inc., EKR Therapeutics, Inc. and Stone
Acquisition Sub, Inc., pursuant to which the Borrower will acquire, directly or
indirectly, all of the equity interests of EKR Therapeutics, Inc. (“Acquisition
Agreement”).

“Acquisition Agreement” has the meaning specified in the definition of
“Acquisition”.

“Administrative Agent” means Chiesi Farmaceutici S.p.A. in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify to the Borrower
and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in
substantially the form of Exhibit C-2 or any other form approved by the
Administrative Agent.

“Affiliate” means, with respect to any 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.

“Agreement” means this Credit Agreement.

“Applicable Rate” means seven and one-half percent (7.50%) per annum with
respect to Term Loan A and six and one-half percent (6.50%) per annum with
respect to Term Loan B.

 

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“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.06(b)), and accepted by the Administrative Agent, in substantially
the form of Exhibit C-1.

“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended December 31, 2011,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Borrower’s filings with the SEC” means, each and every filing made by the
Borrower with the SEC prior to the Closing Date.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, New York City.

“Cash Equivalents” shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than twelve (12) months from
the date of acquisition (“Government Obligations”), (b) United States dollar
denominated (or foreign currency fully hedged) time deposits, certificates of
deposit, eurodollar time deposits and eurodollar certificates of deposit of
(i) any domestic commercial bank of recognized standing having capital and
surplus in excess of $250,000,000 or (ii) any bank whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s
is at least P-1 or the equivalent thereof (any such bank being an “Approved
Bank”), in each case with maturities of not more than three hundred sixty-four
(364) days from the date of acquisition, (c) commercial paper and variable or
fixed rate notes issued by any Approved Bank (or by the parent company thereof)
or any variable rate notes issued by, or guaranteed by any domestic corporation
rated A-1 (or equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody’s and maturing within six (6) months of the date of
acquisition, (d) repurchase agreements with a bank or trust company (including
any Lender) or a recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully

 

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guaranteed by the United States, (e) obligations of any state of the United
States or any political subdivision thereof for the payment of the principal and
redemption price of and interest on which there shall have been irrevocably
deposited Government Obligations maturing as to principal and interest at times
and in amounts sufficient to provide such payment, (f) auction preferred stock
rated in the highest short-term credit rating category by S&P or Moody’s, and
(g) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (f) above.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States
regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a “Change in Law”, regardless of the date enacted, adopted or
issued.

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

“Code” means the Internal Revenue Code of 1986 as amended.

“Collateral” has the meaning specified in the Security Agreement.

“Common Stock” has the meaning specified in Section 2.09(a).

“Compliance Certificate” means a certificate substantially in the form of
Exhibit B.

“Consolidated EBITDA” means, for any period, for the Borrower and the other Loan
Parties on a consolidated basis, an amount equal to Consolidated Net Income for
such period plus (a) the following, to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for Federal, state, local and foreign income taxes payable by
the Borrower and the other Loan Parties for such period, (iii) depreciation and
amortization expense, (iv) other non-recurring expenses of the Borrower and the
other Loan Parties reducing such Consolidated Net Income which do not represent
a cash item in such period or any future period, (v) reasonable transaction
costs incurred in connection with any Permitted Acquisition whether or not such
Permitted Acquisition is consummated and (vi) any restructuring charges, cost
savings, operating expense reductions and synergies projected to be achieved
within 12 months of the closing date of any Permitted Acquisition in an
aggregate amount under this clause (a)(vi) not to exceed an amount to be agreed
upon by the Administrative Agent, and minus (b) the following, to the extent
included in calculating such Consolidated Net Income: (i) any extraordinary
gains or losses and gains or losses from sales of assets other than inventory in
the ordinary course of business and other non-recurring extraordinary charges
and (ii) the amount of any gain recognized from the write-off of negative
goodwill.

 

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“Consolidated Excess Cash” shall mean, as of any date of determination, an
amount equal to (a) Consolidated EBITDA for the most recently completed fiscal
year of the Borrower, minus (b) in each case, the sum (without duplication) of:
(i) capital expenditures made in cash and not financed and not paid for with
insurance proceeds during such period and consideration paid in respect of the
Acquisition (including existing contingent obligations of EKR Therapeutics, Inc.
and its Subsidiaries), other permitted acquisitions and existing contingent
obligations set forth on Schedule 1.01, (ii) any Consolidated Interest Charges
for such period, (iii) the aggregate amount of Federal, state, local and foreign
income taxes paid in cash during such period, (iv) the aggregate amount of tax
dividends and distributions paid in cash by the Borrower and permitted under the
Loan Documents, (v) prepayments or repayments of the Loans in cash by Borrower
during such period and (vi) any transaction costs, restructuring charges, cost
savings, operating expense reductions and synergies projected to be achieved
with respect to any Permitted Acquisition solely to the extent included in the
calculation of Consolidated EBITDA.

“Consolidated Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Borrower and
its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, and (b) the
portion of rent expense of the Borrower and its Subsidiaries with respect to
such period under capital leases that is treated as interest in accordance with
GAAP.

“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period.

“Consolidated Senior Leverage Ratio” means, for the Borrower and the other Loan
Parties as of any date of determination, the ratio of (a) secured Indebtedness
of the Loan Parties and the undrawn portion of letters of credit and
unreimbursed amounts drawn under letters of credit for which the Loan Parties
are liable as of such date to (b) Consolidated EBITDA for the most recently
ended twelve-month period for which financial statements are available.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“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.

“Conversion Notice” has the meaning specified in Section 2.09(b).

“Conversion Option” has the meaning specified in Section 2.09(a).

 

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“Conversion Period” has the meaning specified in Section 2.09(a).

“Conversion Price” has the meaning specified in Section 2.09(a).

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

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

“Default Rate” means when used with respect to any Term Loan, an interest rate
equal to (a) the Applicable Rate plus (b) 2% per annum.

“Defaulting Lender” means, subject to Section 2.16(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its
funding obligations hereunder, or (b) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief
Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the
benefit of creditors or similar Person charged with reorganization or
liquidation of its business or a custodian appointed for it, or (iii) taken any
action in furtherance of, or indicated its consent to, approval of or
acquiescence in any such proceeding or appointment; provided that a Lender shall
not be a Defaulting Lender solely by virtue of the ownership or acquisition of
any equity interest in that Lender or any direct or indirect parent company
thereof by a Governmental Authority.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Dollar” and “$” mean lawful money of the United States.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“ECF Percentage” means 50%; provided that if at any time the Consolidated Senior
Leverage Ratio is less than 2:1 (as set forth in an officer’s certificate
delivered pursuant to Section 6.02(a) for the fiscal year then last ended), the
ECF Percentage shall instead be 0%.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Sections 10.06(b)(iii) and (v) (subject to such consents, if any,
as may be required under Section 10.06(b)(iii)).

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

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“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries 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, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

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

“Event of Default” has the meaning specified in Section 8.01.

 

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“Excluded Subsidiary” means Cardiokine Ireland, Limited, a company organized
under the laws of the Republic of Ireland.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the Laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located
or in which the Lender’s principal office or applicable Lending Office is
located, (c) any backup withholding tax that is required by the Code to be
withheld from amounts payable to a Lender that has failed to comply with clause
(A) of Section 3.01(e)(ii), and (d) in the case of a Foreign Lender, any United
States withholding tax that (i) is required to be imposed on amounts payable to
such Foreign Lender pursuant to the Laws in effect at the time such Foreign
Lender becomes a party hereto (or designates a new Lending Office), except to
the extent that an assignor to (or the prior Lending Office of) such Foreign
Lender was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 3.01(a)(ii)(C) or (c), (e) is
attributable to such Foreign Lender’s failure to comply with clause (B) of
Section 3.01(e)(ii) or (f) any U.S. Federal withholding taxes imposed under
FATCA.

“FASB ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretation thereof.

“Foreign Lender” means any Lender that is organized under the Laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

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

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

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“Governmental Authority” means the government of the United States or any other
nation, or of 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 any
supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Guarantors” means, collectively, (a) each of Aristos Pharmaceuticals, Inc., a
Delaware corporation, Cornerstone Biopharma, Inc., a Nevada corporation,
Cornerstone BioPharma Holdings, Inc., a Delaware corporation, Cardiokine, Inc.,
a Delaware corporation, Cardiokine Biopharma, LLC, a Delaware limited liability
company and Stone Acquisition Sub, Inc., a Delaware corporation, and (b) each
other Domestic Subsidiary that executes an Instrument of Assumption and Joinder
pursuant to Section 6.12 or Section 6.14; provided, that in no event shall any
Excluded Subsidiary constitute a Guarantor.

“Guaranty” means the Guaranty made by the Guarantors in favor of the
Administrative Agent and the Lenders, substantially in the form of Exhibit D.

“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.

 

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“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than 120 days after the
date on which such trade account payable was created);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) capital leases and Synthetic Lease Obligations;

(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 10.04(b).

“Information” has the meaning specified in Section 10.07.

 

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“Initial Lender” means, Chiesi Farmaceutici S.p.A.

“Instrument of Assumption and Joinder” means the Instrument of Assumption and
Joinder by each Person that becomes a Domestic Subsidiary substantially in the
form attached hereto as Exhibit E.

“Interest Payment Date” means, the last Business Day of each March, June,
September and December commencing the last Business Day of September 2012 and
the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or Guarantee or assumption of debt of another Person, including any
partnership or joint venture interest in such other Person and any arrangement
pursuant to which the investor Guarantees Indebtedness of such other Person, or
(c) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit. For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

“IP Rights” has the meaning specified in Section 5.18.

“IRS” means the United States Internal Revenue Service.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

“Loans” means Term Loan A and Term Loan B.

 

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“Loan Documents” means this Agreement, the Guaranty, the Security Agreement, any
intercreditor or subordination agreements, and any other documents executed in
connection with the Obligations or the transactions contemplated hereby.

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole; or (b) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

“Maturity Date” means June 25, 2017; provided, however, that if such date is not
a Business Day, the Maturity Date shall be the preceding Business Day.

“Medicaid” means that government-sponsored entitlement program under Title XIX,
P.L. 89-97 of the Social Security Act, which provides federal grants to states
for medical assistance based on specific eligibility criteria, as set forth on
Section 1396, et seq. of Title 42 of the United States Code.

“Medicare” means that government-sponsored insurance program under Title XVIII,
P.L. 89-97, of the Social Security Act, which provides for a health insurance
system for eligible elderly and disabled individuals, as set forth at
Section 1395, et seq. of Title 42 of the United States Code.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including the Borrower or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.

“Net Cash Proceeds” means, for any Person (a) with respect to a sale or other
disposition of assets, the aggregate cash proceeds (including cash proceeds
received by way of deferred payment of principal pursuant to a note, installment
receivable or otherwise, but only as and when received) actually received by
such Person pursuant to such disposition, net of (i) the direct costs relating
to such sale, transfer or other disposition (including sales commissions and
legal, accounting and investment banking fees); (ii) taxes paid or reasonably
estimated by such Person to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing arrangements
and any tax distributions reasonably expected to be made with respect thereto);
(iii) withholding or other tax required to be paid on any distribution by such
Person (other than a Loan Party) to any Loan Party or any of its Subsidiaries;
(iv) amounts required to be applied to the repayment of any Indebtedness secured
by a Permitted Lien; (v) the direct costs relating to or associated with the
relocation of assets; and (vi) any amount required to be provided by such
Person, as a reserve, in accordance with GAAP against any liabilities associated
with such disposition

 

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including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with any such sale or disposition;
provided, however, that the amount of any such reserve, at the time that such
reserve is no longer required in accordance with GAAP and to the extent that
such amount is not actually applied to the liability for which it was reserved,
shall be deemed to be part of the Net Cash Proceeds of such disposition and
remitted in accordance with Section 2.06(c) and (b) with respect to any issuance
of equity by any Loan Party, the aggregate cash proceeds received by such Person
in respect of such event net of (i) the direct costs relating to such event
(including commissions and legal, accounting and investment banking fees);
(ii) taxes paid or reasonably estimated by such Person to be payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements and any tax distributions reasonably expected to be
made with respect thereto); and (iii) withholding or other tax required to be
paid on any distribution by such Person (other than a Loan Party) to any Loan
Party or any of its Subsidiaries.

“Non-Rejecting Lender” has the meaning specified in Section 2.06(d).

“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit C.

“Obligations” means all advances to, and debts, liabilities and obligations of,
any Loan Party arising under any Loan Document or otherwise with respect to any
Loan, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

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

“OFAC Sanctions Programs” means all laws, regulations, and Executive Orders
administered by OFAC, including the Bank Secrecy Act, anti-money laundering laws
(including the Patriot Act)), and all economic and trade sanction programs
administered by OFAC, any and all similar United States federal laws,
regulations or Executive Orders, and any similar laws, regulations or orders
adopted by any State within the United States.

“OFAC SDN List” means the list of the Specially Designated Nationals and Blocked
Persons maintained by OFAC.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

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“Other Taxes” means 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 under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document other than when imposed on or in connection with an
Assignment and Assumption or other transfer made after the date of this
Agreement.

“Participant” has the meaning specified in Section 10.06(d).

“PBGC” means the Pension Benefit Guaranty Corporation.

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

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

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

“Permitted Acquisition” has the meaning specified in Section 7.02.

“Permitted Liens” has the meaning specified in Section 7.01.

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

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

“Properly Reinvested” means, so long as no Default or Event of Default is then
continuing, Net Cash Proceeds that are reinvested in or otherwise used to
replace, repair or restore the applicable properties or assets used in a Loan
Party’s business and so long as: (i) Borrower notifies Administrative Agent in
writing within ten (10) Business Days after such sale, disposition or receipt of
such casualty proceeds stating that such Net Cash Proceeds shall be used to
reinvest in assets of equal or greater fair market value, or otherwise replace,
repair or restore any such properties or assets to be used in a Loan Party’s
business within a period specified in such writing not to exceed 180 days after
the receipt of such proceeds and (ii) such

 

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Net Cash Proceeds are deposited in a deposit account subject to the sole
dominion and control of the Administrative Agent which proceeds shall then be
disbursed by the Administrative Agent to such Loan Party promptly upon
Borrower’s written request therefor stating that such proceeds are being applied
to reinvest in assets, or otherwise replace, repair or restore any such
properties or assets to be used in the Borrower’s or such Subsidiaries’
business; provided, further, that (a) if all or any portion of such Net Cash
Proceeds are not used in accordance with the foregoing proviso within 180 days
of receipt of such Net Cash Proceeds, such amount shall be applied to the Loans
as otherwise set forth in Section 2.06(c) on the last day of such specified
period, (b) if such Loan Party is not permitted to reinvest or utilize such Net
Cash Proceeds as a result of the existence of a Default or if a Default exists
at the time of receipt of such proceeds, Borrower may request, and upon the
written approval of the Administrative Agent, such Net Cash Proceeds shall be
deposited in a deposit account subject to the sole dominion and control of the
Administrative Agent until the earlier of (1) the date on which such Default is
cured or waived in writing in accordance with the terms of this Agreement, in
which case such amounts may be reinvested or utilized in accordance with the
proviso above and (2) the date on which an Event of Default shall occur, in
which case such Net Cash Proceeds shall be applied to the Loans in accordance
with Section 2.06(c) on such date and (c) if such Loan Party is not permitted to
reinvest or utilize such Net Cash Proceeds as a result of a continuing Event of
Default, such Net Cash Proceeds shall be applied to the Loans in accordance with
Section 2.06(c).

“Register” has the meaning specified in Section 10.06(c).

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

“Remaining Mandatory Prepayment Amount” has the meaning specified in
Section 2.06(d).

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

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the Total Outstandings; provided that, the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

“Required Prepayment Date” has the meaning specified in Section 2.06(d).

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Loan Party
and, solely for purposes of the delivery of incumbency certificates pursuant to
Section 4.01, the secretary or any assistant secretary of a Loan Party, and,
solely for purposes of notices given pursuant to Article II, any other officer
of the applicable Loan Party so designated by any of the foregoing officers in a
notice to the Administrative Agent. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Borrower’s stockholders, partners or members (or
the equivalent Person thereof).

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Security Agreement” means the Security Agreement by each Loan Party in favor of
the Administrative Agent substantially in the form attached hereto as Exhibit A.

“Social Security Act” means the Social Security Act of 1965.

“Solvent” means, when used with respect to any Person, that, as at any date of
determination, (a) the amount of the “present fair saleable value” of the assets
of such Person will, as of such date, exceed the amount of all “liabilities of
such Person, contingent or otherwise” as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing),

 

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whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

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

“Term Loan A” has the meaning specified in Section 2.01(a).

“Term Loan A Lender” means any Lender that holds a Term A Loan.

“Term Loan B” has the meaning specified in Section 2.01(b).

“Term Loan B Lender” means any Lender that holds a Term B Loan.

“Term Loan B Conversion” has the meaning specified in Section 2.09.

“Threshold Amount” means $3,000,000.

“Total Outstandings” means the aggregate outstanding principal amount of all
Loans.

“United States” and “U.S.” mean the United States of America.

“Waivable Mandatory Prepayment” has the meaning specified in Section 2.06(d).

 

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1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a) 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,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) 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 or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “hereto,” “herein,”
“hereof” and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) 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.

(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03 Accounting Terms. Generally. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall

 

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provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

1.05 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Eastern time (daylight or standard, as applicable).

ARTICLE II. THE TERM LOANS AND REPAYMENT

2.01 Term Loans.

(a) Term Loan A. Subject to the terms and conditions set forth herein, the
Initial Lender agrees to make a term loan (“Term Loan A”) to the Borrower equal
to $60,000,000.00 (sixty million dollars) on the Closing Date. Amounts borrowed
under this Section 2.01(a), once paid or prepaid, may not be reborrowed. The
Term Loan A shall be subject to the interest rate provided for in Section 2.08.

(b) Term Loan B. Subject to the terms and conditions set forth herein, the
Initial Lender agrees to make a term loan (“Term Loan B”) to the Borrower equal
to $30,000,000.00 (thirty million dollars) on the Closing Date. Amounts borrowed
under this Section 2.01(b), once paid or prepaid, may not be reborrowed. The
Term Loan B shall be subject to the interest rate provided for in Section 2.08.

2.02 Intentionally Omitted.

2.03 Intentionally Omitted.

2.04 Intentionally Omitted.

2.05 Optional Prepayments. The Borrower may, upon notice to the Administrative
Agent, at any time or from time to time voluntarily prepay the Loans in whole or
in part without premium or penalty; provided that (i) such notice must be
received by the Administrative Agent not later than thirty (30) Business Days
prior to any date of prepayment; (ii) such notice is irrevocable; and (iii) any
prepayment shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof, or, if less, the entire principal amount thereof
then outstanding. Each such notice shall specify the date and amount of such
prepayment and the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Any prepayment shall be accompanied by all accrued interest on the amount
prepaid. Each such prepayment shall be applied first, ratably to the remaining
installments of principal of the Term Loan A (excluding the payment due on the
Maturity Date), second, to any remaining amounts outstanding on Term Loan A and
third to the outstanding principal amount of Term Loan B. Subject to
Section 2.16, each Lender shall receive its pro rata share of such repayment.

 

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2.06 Mandatory Prepayments.

(a) Amortization Payments. The Borrower shall repay the principal amount of Term
Loan A, commencing on the fiscal quarter ending December 31, 2014 in equal
quarterly installments of $3,500,000 with the balance, if any, payable on the
Maturity Date.

(b) Excess Cash Flow Payments. Commencing with the fiscal year ending
December 31, 2013, the Borrower shall repay the Term Loan A in an amount equal
to the applicable ECF Percentage multiplied by the Consolidated Excess Cash for
the applicable fiscal year. Amounts prepaid shall be applied first ratably to
the remaining installments of principal of the Term Loan A (excluding the
payment due on the Maturity Date) and second to any remaining amounts
outstanding on the Term Loan A.

(c) Sale of Assets. No later than eleven (11) Business Days after receipt of Net
Cash Proceeds (i) with respect to a sale or other disposition of assets (other
than the issuance of any equity securities of a Loan Party or inventory sold in
the ordinary course of business and obsolete or worn out property or property no
longer useful in the business of the Loan Parties) in excess of $5,000,000 in
the aggregate measured from the date of this Agreement, or (ii) with respect to
the issuance of any equity securities of a Loan Party in excess of $5,000,000 in
a single transaction or series of related transactions, the Net Cash Proceeds
thereof shall be paid by the Borrower to the Administrative Agent pursuant to
this Section 2.06(c), for the ratable benefit of Lenders, as a mandatory
prepayment of the Obligations, as herein provided, to the extent such proceeds
are not Properly Reinvested. Repayments shall be applied first, ratably to
remaining installments of principal of Term Loan A (excluding the payment due on
the Maturity Date), second, to any remaining amounts outstanding on the Term
Loan A and third, to the outstanding principal amount of Term Loan B.

(d) Failure to Consummate the Acquisition. In the event that the Acquisition is
not consummated within thirty (30) days following the Closing Date, the Borrower
shall repay the outstanding principal amount of Loans, together with accrued
interest outstanding on such date.

(e) Anything contained herein to the contrary notwithstanding, in the event the
Borrower is required to make any mandatory prepayment (a “Waivable Mandatory
Prepayment”) of the Term Loan B, not less than five Business Days prior to the
date (the “Required Prepayment Date”) on which the Borrower elects (or is
otherwise required) to make such Waivable Mandatory Prepayment, the Borrower
shall notify the Administrative Agent of the amount of such prepayment, and the
Administrative Agent will promptly notify each Term Loan B Lender holding an
outstanding Term Loan B of the amount of such Term Loan B Lender’s pro rata
share of such Waivable Mandatory Prepayment and such Term Loan B Lender’s option
to refuse such amount. Each such Lender may exercise such option by giving
written notice to the Administrative Agent of its election to do so on or before
the third Business Day prior to the Required Prepayment Date. On the Required
Prepayment Date, the Borrower shall pay to the Administrative Agent such portion
of the Waivable Mandatory Prepayment that is equal to the amount thereof payable
to those Term Loan B Lenders that have not elected to exercise their

 

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option to refuse their pro rata share of such Waivable Mandatory Prepayment
(each such Lender, a “Non-Rejecting Lender”), to prepay the Term Loan B of such
Non-Rejecting Lender. The remaining portions of the Waivable Mandatory
Prepayment (the “Remaining Mandatory Prepayment Amount”) shall first be applied
to prepay the Loans of the Non-Rejecting Lenders and, to the extent the
Non-Rejecting Lenders’ Loans have been paid in full, the Borrower shall be
permitted to retain any portion of the Remaining Mandatory Prepayment Amount.

2.07 Repayment of Loans. The Borrower shall repay to the Lenders on the Maturity
Date the aggregate outstanding principal amount of Loans together with accrued
interest outstanding on such date.

2.08 Interest.

(a) Subject to the provisions of subsection (b) below, each Term Loan A shall
bear interest on the outstanding principal amount thereof at the Applicable
Rate; and (ii) each Term Loan B shall bear interest on the outstanding principal
amount thereof at the Applicable Rate. All interest and fees shall be computed
on the basis of a year of 360 days. Each determination by the Administrative
Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.

(b) (i) If any amount of principal of any Loan is not paid when due (without
regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at the
Default Rate to the fullest extent permitted by applicable Laws.

(ii) If any amount (other than principal of any Loan) payable by the Borrower
under any Loan Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, then
upon the request of the Required Lenders, such amount shall thereafter bear
interest at the Default Rate to the fullest extent permitted by applicable Laws.

(iii) While any Event of Default exists and is continuing, from and after the
Administrative Agent has sent written notice to the Borrower, the Borrower shall
pay interest on the principal amount of all outstanding Obligations hereunder at
the Default Rate to the fullest extent permitted by applicable Laws.

(iv) Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

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2.09 Term Loan B Conversion.

(a) Commencing on the Closing Date and ending on the second anniversary of the
Closing Date (the “Conversion Period”), the Term Loan B Lenders shall have the
option, exercisable in their sole discretion, to convert (the “Conversion
Option”) all or a portion of their Term Loan B into unregistered shares of
common stock, $0.001 par value (the “Common Stock”) of the Borrower, at a
conversion price equal to $7.098 per share (the “Conversion Price”), such exact
numbers of shares calculated by dividing the principal amount by the Conversion
Price. The Conversion Price shall be adjusted downwards for subsequent stock
splits, stock dividends, combinations or similar recapitalization of the
Borrower.

(b) Each Term Loan B Lender shall exercise such Conversion Option by delivering
written notice (the “Conversion Notice”) to the Borrower setting forth the
specific dollar amount of the Term Loan B to be converted which shall not be
less than $5,000,000 or, if less, the remaining principal amount of such Term
Loan B Lender’s Term Loan B. Each Term Loan B Lender may exercise its Conversion
Option one or more times during the Conversion Period.

(c) No fractional shares of the Borrower’s Common Stock will be issued upon
conversion. In lieu of any fractional share to which the Term Loan B Lender
would otherwise be entitled, Borrower will pay to such Lender in cash the amount
of the unconverted principal and interest balance that would otherwise be
converted into such fractional share.

(d) Each conversion of the Term Loan B shall be deemed to occur on the date the
Borrower receives notice of such conversion. Borrower shall, at its sole cost
and expense, as soon as practicable thereafter, but no later than five
(5) Business days of delivery of the Conversion Notice, issue and deliver to
such Term Loan B Lender, a certificate or certificates for the number of shares
to which such Lender is entitled upon such conversion (bearing such legends as
are required by any applicable Governmental Authority) and payment via
irrevocable wire transfer to such Lender for any cash amounts payable as a
result of any fractional shares as described herein.

2.10 Intentionally Omitted.

2.11 Evidence of Debt.

(a) Each Loan made by each Lender may be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Loans made by the Lenders to the Borrower and the interest
and payments thereon. Any failure to so record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower hereunder
to pay any amount owing with respect to the Obligations. In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of
manifest error. Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a note, which shall evidence such Lender’s Loans in
addition to such accounts or records. Each Lender may attach schedules to its
note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

 

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(b) In addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent may maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in the Loans. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

2.12 Payments Generally.

(a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 10:00 a.m.
on the date specified herein. All payments received by the Administrative Agent
after 10:00 a.m. shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue. If any payment to
be made by the Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected in computing interest or fees, as the case may be except
in the case of payment to be made on the Maturity Date, in which case, the
payment shall be made on the immediately preceding Business Day.

(b) Obligations of Lenders Several. The obligations of the Lenders hereunder to
make Loans and to make payments pursuant to Section 10.04(c) are several and not
joint.

(c) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any Loans made by it, or the participations held by
it resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of such Loans or participations and accrued interest thereon greater than
its pro rata share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Loans of the other
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and other amounts owing them, provided that:

(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest; and

 

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(ii) the provisions of this Section shall not be construed to apply to (x) any
payment made by or on behalf of the Borrower pursuant to and in accordance with
the express terms of this Agreement (including the application of funds arising
from the existence of a Defaulting Lender) or (y) any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans to any assignee or participant, other than an assignment to the
Borrower or any Subsidiary thereof (as to which the provisions of this Section
shall apply).

The Borrower, on behalf of itself and each Guarantor, consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower and each such Guarantor rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower or such Guarantor in the amount of such
participation.

2.14 Intentionally Omitted.

2.15 Intentionally Omitted.

2.16 Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

(i) Waivers and Amendments. That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in Section 10.01.

(ii) Reallocation of Payments. Any payment of principal, interest, fees or other
amounts received by the Administrative Agent for the account of that Defaulting
Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or
otherwise, and including any amounts made available to the Administrative Agent
by that Defaulting Lender pursuant to Section 10.08), shall be applied at such
time or times as may be determined by the Administrative Agent as follows:
first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, to the payment of any amounts owing to
the Lenders as a result of any judgment of a court of competent jurisdiction
obtained by any Lender against that Defaulting Lender as a result of that
Defaulting Lender’s breach of its obligations under this Agreement; third, so
long as no Default or Event of Default exists, to the payment of any amounts
owing to the Borrower as a result of any judgment of a court of competent
jurisdiction obtained by the Borrower against that Defaulting Lender as a result
of that Defaulting Lender’s breach of its obligations under this Agreement; and
fourth, to that Defaulting Lender or as otherwise directed by a court of
competent jurisdiction. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender pursuant to this Section 2.16(a)(ii) shall be deemed paid to
and redirected by that Defaulting Lender, and each Lender irrevocably consents
hereto.

 

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(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree
in writing in their sole discretion that a Defaulting Lender should no longer be
deemed to be a Defaulting Lender, the Administrative Agent will so notify the
parties hereto, whereupon as of the effective date specified in such notice and
subject to any conditions set forth therein, that Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of the Borrower while
that Lender was a Defaulting Lender; and provided, further, that except to the
extent otherwise expressly agreed by the affected parties, no change hereunder
from Defaulting Lender to Lender will constitute a waiver or release of any
claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes. (i) Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall to the extent
permitted by applicable Laws be made free and clear of and without reduction or
withholding for any Taxes. If, however, applicable Laws require the Borrower or
the Administrative Agent to withhold or deduct any Tax, such Tax shall be
withheld or deducted in accordance with such Laws as determined by the Borrower
or the Administrative Agent, as the case may be.

(ii) If the Borrower or the Administrative Agent shall be required by the Code
to withhold or deduct any Taxes, including both United States Federal backup
withholding and withholding taxes, from any payment, then (A) the Administrative
Agent shall withhold or make such deductions as are determined by the
Administrative Agent to be required based upon the information and documentation
it has received pursuant to subsection (e) below, (B) the Administrative Agent
shall timely pay the full amount withheld or deducted to the relevant
Governmental Authority in accordance with the Code, and (C) to the extent that
the withholding or deduction is made on account of Indemnified Taxes or Other
Taxes, the sum payable by the Borrower shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender, as the case may be, receives an amount equal
to the sum it would have received had no such withholding or deduction been
made.

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Laws.

(c) Tax Indemnifications. (i) Without limiting the provisions of subsection
(a) or (b) above, the Borrower shall, and does hereby, indemnify the
Administrative Agent and each

 

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Lender, and shall make payment in respect thereof within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) withheld or deducted by the Borrower or the
Administrative Agent or paid by the Administrative Agent or such Lender, as the
case may be, 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. The Borrower shall also, and does hereby, indemnify the
Administrative Agent, and shall make payment in respect thereof within 10 days
after demand therefor, for any amount which a Lender for any reason fails to pay
indefeasibly to the Administrative Agent as required by clause (ii) of this
subsection. A certificate as to the amount of any such payment or liability
delivered to the Borrower by a Lender (with a copy to the Administrative Agent),
or by the Administrative Agent on its own behalf or on behalf of a Lender, shall
be conclusive absent manifest error.

(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender
shall, and does hereby, indemnify the Borrower and the Administrative Agent, and
shall make payment in respect thereof within 10 days after demand therefor,
against any and all Taxes and any and all related losses, claims, liabilities,
penalties, interest and expenses (including the fees, charges and disbursements
of any counsel for the Borrower or the Administrative Agent) incurred by or
asserted against the Borrower or the Administrative Agent by any Governmental
Authority as a result of the failure by such Lender to deliver, or as a result
of the inaccuracy, inadequacy or deficiency of, any documentation required to be
delivered by such Lender to the Borrower or the Administrative Agent pursuant to
subsection (e). Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under this
Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). The agreements in this clause
(ii) shall survive the resignation and/or replacement of the Administrative
Agent, any assignment of rights by, or the replacement of, a Lender and the
repayment, satisfaction or discharge of all other Obligations.

(d) Evidence of Payments. Upon request by the Borrower or the Administrative
Agent, as the case may be, after any payment of Taxes by the Borrower or by the
Administrative Agent to a Governmental Authority as provided in this
Section 3.01, the Borrower shall deliver to the Administrative Agent or the
Administrative Agent shall deliver to the Borrower, as the case may be, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by Laws to report such
payment or other evidence of such payment reasonably satisfactory to the
Borrower or the Administrative Agent, as the case may be.

(e) Status of Lenders; Tax Documentation. (i) Each Lender shall deliver to the
Borrower and to the Administrative Agent, at the time or times prescribed by
applicable Laws or when reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable Laws or by the taxing authorities of any jurisdiction
and such other reasonably requested information as will permit the Borrower or
the Administrative Agent, as the case may be, to determine (A) whether or not
payments made hereunder or under any other Loan Document are subject to Taxes,
(B) if

 

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applicable, the required rate of withholding or deduction, and (C) such Lender’s
entitlement to any available exemption from, or reduction of, applicable Taxes
in respect of all payments to be made to such Lender by the Borrower pursuant to
this Agreement or otherwise to establish such Lender’s status for withholding
tax purposes in the applicable jurisdiction.

(ii) Without limiting the generality of the foregoing, if the Borrower is
resident for tax purposes in the United States,

(A) any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent executed originals of Internal Revenue Service Form W-9 or
such other documentation or information prescribed by applicable Laws or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent, as the case may be, to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements; and

(B) each Foreign Lender that is entitled under the Code or any applicable treaty
to an exemption from or reduction of withholding tax with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:

(I) executed originals of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,

(II) executed originals of Internal Revenue Service Form W-8ECI,

(III) executed originals of Internal Revenue Service Form W-8IMY and all
required supporting documentation,

(IV) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and
(y) executed originals of Internal Revenue Service Form W-8BEN, or

(V) executed originals of any other form prescribed by applicable Laws as a
basis for claiming exemption from or a reduction in United States Federal
withholding tax together with such supplementary

 

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documentation as may be prescribed by applicable Laws to permit the Borrower or
the Administrative Agent to determine the withholding or deduction required to
be made.

(iii) Each Lender shall promptly (A) notify the Borrower and the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction, and (B) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws of any jurisdiction that the
Borrower or the Administrative Agent make any withholding or deduction for taxes
from amounts payable to such Lender.

(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time
shall the Administrative Agent have any obligation to file for or otherwise
pursue on behalf of a Lender, or have any obligation to pay to any Lender, any
refund of Taxes withheld or deducted from funds paid for the account of such
Lender. If the Administrative Agent or any Lender determines, in its sole
discretion, that it has received a refund of or the benefit of a tax credit for
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, it shall pay to the Borrower an amount equal to such refund or the
amount of such benefit (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses incurred by the Administrative Agent or such Lender, as the case may
be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund or credit), provided that the
Borrower, upon the request of the Administrative Agent or such Lender agrees to
repay the amount paid over to the Borrower (plus any penalties not incurred
because of the gross negligence or willful misconduct of the Administrative
Agent or Lender and interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other Person.

3.02 Increased Costs.

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

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender;

(ii) subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or change the basis of taxation of payments to such Lender in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and
the imposition of, or any change in the rate of, any Excluded Tax payable by
such Lender); or

 

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(iii) impose on any Lender any other condition, cost or expense affecting this
Agreement;

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

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

(c) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).

3.03 Survival. All of the Borrower’s obligations under this Article III shall
survive repayment of all other Obligations hereunder, and resignation of the
Administrative Agent.

ARTICLE IV. CONDITIONS PRECEDENT TO LOANS

4.01 Conditions Precedent to Initial Funding. The obligation the Initial Lender
to make the Loans hereunder is subject to satisfaction of the following
conditions precedent:

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent:

(i) executed counterparts of this Agreement and the Guaranty;

(ii) executed counterparts of the Security Agreement together with (A) stock
certificates representing pledged shares and (B) UCC financing statements to be
filed against the Borrower and each Guarantor, as debtor, in favor of the
Administrative Agent, as secured party;

 

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(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Agreement and the other Loan Documents to which such
Loan Party is a party;

(iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed,
and that each of the Borrower and each Guarantor is validly existing and in good
standing in its jurisdiction of organization or formation;

(v) a favorable opinion of Clifford Chance LLP, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender in form and substance
reasonably satisfactory to the Administrative Agent and its counsel addressing
such matters as are customary for transactions of this type;

(vi) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

(vii) a certificate signed by a Responsible Officer of the Borrower certifying
that the conditions specified in this Section 4.01 have been satisfied;

(viii) Borrower shall have paid all fees, charges and disbursements of counsel
to the Administrative Agent (directly to such counsel if requested by the
Administrative Agent) to the extent invoiced prior to or on the Closing Date;

(ix) a certificate signed by the chief financial officer of the Borrower in form
and substance reasonably acceptable to the Administrative Agent certifying that
after the consummation of the Acquisition and the making of the Loans, the
Borrower and its Subsidiaries are Solvent.

(x) such other agreements, instruments, documents, certificates, and opinions as
the Administrative Agent may reasonably request.

(b) The representations and warranties of the Borrower set forth in Sections
5.01(a), 5.01(b)(ii), 5.02(a), 5.02(c), 5.04, 5.19 and to the extent of the
Collateral and/or perfection documentation delivered in accordance with
Section 4.01(a)(ii), 5.21 shall be true and correct in all material respects on
and as of the Closing Date.

Without limiting the generality of the provisions of the last paragraph of
Section 9.03, for purposes of determining compliance with the conditions
specified in this Section 4.01, each Lender that has signed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent
shall have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

 

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ARTICLE V. REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary
thereof (a) is duly organized or formed, validly existing and, as applicable, in
good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business and (ii) execute, deliver and perform
its obligations under the Loan Documents to which it is a party, and (c) is duly
qualified and is licensed and, as applicable, in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (b)(i) or (c), to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any Law.

5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.

5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto 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.

5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (ii) fairly present the financial condition of the
Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein.

 

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(b) The unaudited consolidated balance sheet of the Borrower and its
Subsidiaries dated March 31, 2012 and the related consolidated statements of
income or operations and cash flows for the fiscal quarter ended on that date
(i) were prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of the Borrower and its Subsidiaries
as of the date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the absence of
footnotes and to normal year-end audit adjustments.

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower after due and diligent
investigation, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries or against any of their properties or revenues that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) except as specifically disclosed in the
Borrower’s filings with the SEC, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.

5.08 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The property of the
Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted
by Section 7.01.

5.09 Environmental Compliance. The Borrower and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Borrower has reasonably concluded that, except as
specifically disclosed in the Borrower’s filings with the SEC, such
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Borrower, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable Subsidiary
operates.

 

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5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. To the Borrower’s
knowledge, there is no proposed tax assessment against the Borrower or any
Subsidiary that would, if made, have a Material Adverse Effect. Neither any Loan
Party nor any Subsidiary thereof is party to any tax sharing agreement.

5.12 ERISA Compliance.

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

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

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

 

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(d) Neither the Borrower or any ERISA Affiliate maintains or contributes to, or
has any unsatisfied obligation to contribute to, or liability under, any active
or terminated Pension Plan other than Pension Plans entered into after the
Closing Date and not otherwise prohibited by this Agreement.

5.13 Subsidiaries; Equity Interests. As of the Closing Date, (i) the Borrower
has no Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries
have been validly issued, are fully paid and nonassessable and are owned by a
Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear
of all Liens and (ii) the Borrower has no equity investments in any other
corporation or entity other than those specifically disclosed in Part (b) of
Schedule 5.13.

5.14 Margin Regulations; Investment Company Act.

(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock. Following the application of
the proceeds of the Loans, not more than 25% of the value of the assets (either
of the Borrower only or of the Borrower and its Subsidiaries on a consolidated
basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to
any restriction contained in any agreement or instrument between the Borrower
and any Lender or any Affiliate of any Lender relating to Indebtedness and
within the scope of Section 8.01(e) will be margin stock.

(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary
is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the
Lenders 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. The reports, financial statements, certificates or
other information furnished (whether in writing or orally) by or on behalf of
any Loan Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished), taken together, do not
contain any material misstatement of fact or omit 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.

5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

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5.17 Taxpayer Identification Number. The Borrower’s U.S. taxpayer identification
number is set forth on Schedule 10.02.

5.18 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in the Borrower’s filings with the SEC, no claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of the Borrower, threatened, which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

5.19 Solvency. Before and after giving effect to the Loans and the consummation
of the Acquisition, the Borrower and its Subsidiaries, taken as a whole, are
Solvent.

5.20 OFAC. The Borrower is in compliance with the requirements of all OFAC
Sanctions Programs applicable to it. Each Subsidiary of the Borrower is in
compliance with the requirements of all OFAC Sanctions Programs applicable to
such Subsidiary. To the best of the Borrower’s knowledge, neither the Borrower
nor any of its Affiliates or Subsidiaries is, as of the date hereof, named on
the current OFAC SDN List. No part of the proceeds of the Loans will be used by
the Borrower or any of its Subsidiaries for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977.

5.21 Security Agreement. The Security Agreement and the Security Documents (as
defined therein) are effective to create in favor of Administrative Agent, for
itself and for the benefit of Lenders, a legal, valid, binding, and (upon the
filing of the appropriate UCC financing statements, intellectual property
security agreements and mortgages, in each case in the appropriate governmental
filing office, possession by the Administrative Agent, for itself and for the
benefit of Lenders, of Collateral (as defined in the Security Agreement) which
is perfected by possession only and “control” by the Administrative Agent, for
itself and for the benefit of Lenders, of Collateral which is perfected by
“control” only) enforceable perfected first priority security interest and Lien
in the Collateral described therein as security for the obligations under the
Loan Documents to the extent that a legal, valid, binding, and enforceable
security interest and Lien in such Collateral may be created under applicable
Law including without limitation, the Uniform Commercial Code as in effect in
any applicable jurisdiction and any other applicable Governmental Authority.
Each Loan Party has the power and authority to grant to the Administrative
Agent, for itself and for the benefit of Lenders, a first priority Lien in the
Collateral owned by such Loan Party as security for the Obligations.

 

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5.22 Acquisition Agreement. As of the Closing Date, Borrower has delivered to
Administrative Agent a complete and correct copy of the Acquisition Agreement
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). As of the Closing Date, no Loan Party and to the Borrower’s
knowledge no other Person party thereto is in default in the performance or
compliance with any provisions thereof. The Acquisition Agreement complies in
all material respects with, and the Acquisition when consummated will be
consummated in all material respects in accordance with, all applicable Laws.
The Acquisition Agreement is in full force and effect as of the Closing Date and
has not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities with respect to the transactions contemplated by the
Acquisition Agreement, have been or will be obtained, and no such approvals
impose or will impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreement or to the conduct by any Loan Party or
any of its Subsidiaries of its business thereafter. Each of the representations
and warranties given by any Loan Party (and, to the knowledge of the Loan
Parties, given by any other Person party thereto) in the Acquisition Agreement
is true and correct in all material respects (or is true and correct in all
respects if such representation or warranty contains any materiality qualifier,
including references to “material,” “Material Adverse Effect” or dollar
thresholds).

ARTICLE VI. AFFIRMATIVE COVENANTS

So long as any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrower shall, and shall (except in the case of the covenants
set forth in Sections 6.01, 6.02, and 6.03) cause each other Loan Party to:

6.01 Financial Statements. Deliver to the Administrative Agent with sufficient
copies for each Lender, in form and detail satisfactory to the Administrative
Agent:

(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower (or, if earlier, 1 day after the date required to be
filed with the SEC) (commencing with the fiscal year ended December 31, 2012), a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal year, and the related consolidated statements of income or
operations, changes in shareholders’ equity, and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Administrative Agent, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not
be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; and

(b) as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower (or, if
earlier, 1 day after the date required to be filed with the SEC) (commencing
with the fiscal quarter ended June 30, 2012), a consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal quarter, the
related consolidated statements of income or operations for such fiscal quarter
and for the portion of the Borrower’s fiscal year then ended, and the related
consolidated statements of changes in cash flows for the portion of the
Borrower’s fiscal year then ended, in each case

 

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setting forth in comparative form, as applicable, the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, certified by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes.

6.02 Certificates; Other Information. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent
concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b) (commencing with the delivery of the financial
statements for the fiscal quarter ended June 30, 2012), a duly completed
Compliance Certificate signed by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower (which delivery may, unless the
Administrative Agent, or a Lender requests executed originals, be by electronic
communication including fax or email and shall be deemed to be an original
authentic counterpart thereof for all purposes).

Documents required to be delivered pursuant to Section 6.01(a) or (b) (to the
extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such documents are
posted on the Borrower’s behalf on an Internet or intranet website, if any, to
which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided that: (i) the Borrower shall deliver paper copies of such
documents to the Administrative Agent upon its request to the Borrower to
deliver such paper copies until a written request to cease delivering paper
copies is given by the Administrative Agent and (ii) the Borrower shall notify
the Administrative Agent (by telecopier or electronic mail) of the posting of
any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. The Administrative
Agent shall have no obligation to request the delivery of or to maintain paper
copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request by a
Lender for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

6.03 Notices. Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default;

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Borrower or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
the Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;

 

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(c) of the occurrence of any ERISA Event; and

(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including all tax liabilities,
assessments and other charges which, if unpaid, would by law become a Lien upon
its property unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Loan Party.

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, copyrights, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.

6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; (b) make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities.

6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrower, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons and providing for not less than 30 days’ prior notice to
the Administrative Agent of termination, lapse or cancellation of such
insurance.

6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

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6.09 Books and Records. Maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and
business of such Person.

6.10 Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Borrower and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

6.11 Use of Proceeds. Use the proceeds of the Loans to consummate the
Acquisition and pay the fees and expenses associated therewith not in
contravention of any Law or of any Loan Document.

6.12 Additional Guarantors. Notify the Administrative Agent at the time that any
Person becomes a Domestic Subsidiary, and promptly thereafter (and in any event
within 30 days), cause such Person to (a) become a Loan Party by executing and
delivering to the Administrative Agent an Instrument of Assumption and Joinder
or such other document as the Administrative Agent shall deem appropriate for
such purpose, and (b) deliver to the Administrative Agent documents of the types
referred to in clauses (iii) and (iv) of Section 4.01(a) and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clause (a)), all in form, content and scope reasonably satisfactory to the
Administrative Agent.

6.13 Further Assurances. Each Loan Party shall, and shall cause its Subsidiaries
to, promptly upon request by the Administrative Agent, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments as
Agent may reasonably require from time to time in order to (i) carry out more
effectively the purposes of the Loan Documents, (ii) to the fullest extent
permitted by applicable law, subject any Loan Party’s or any of its
Subsidiaries’ properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Security Documents, (iii) perfect
and maintain the validity, effectiveness and priority of any of the Security
Documents and any of the Liens intended to be created thereunder and
(iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more
effectively unto the Administrative Agent and/or Lenders the rights granted or
now or hereafter intended to be granted to the Administrative Agent and/or
Lenders under any Loan Document or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do
so.

 

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6.14 Acquisition Agreement. Borrower shall deliver to the Administrative Agent
prior to the consummation of the Acquisition complete and correct copies of all
amendments or supplements to the Acquisition Agreement entered into after the
Closing Date and upon consummation of the Acquisition cause EKR Therapeutics,
Inc. and its subsidiaries to execute and deliver an Instrument of Assumption and
Joinder and deliver to the Administrative Agent documents of the types referred
to in Section 4.01(a).

ARTICLE VII. NEGATIVE COVENANTS

So long as any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrower shall not, nor shall it permit any other Loan Party
to, directly or indirectly:

7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following, each a “Permitted Lien”:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01(b) and any
modifications, replacements, renewals or extensions thereof; provided that
(i) the Lien does not extend to any additional property other than
(A) after-acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under Section 7.03,
and (B) proceeds and products thereof, and (ii) the renewal, extension or
refinancing of the obligations secured or benefited by such Liens is permitted
by Section 7.03;

(c) Liens for taxes, assessments or governmental charges which are not yet due
or which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of the applicable Person in accordance with GAAP;

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 30 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

(e) (i) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation other than any Lien imposed by ERISA, (ii) Liens to secure the
performance of tenders, statutory obligations, surety, stay, customs, appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (including those to secure
health, safety and environmental obligations and exclusive of obligations for
Indebtedness) and (iii) Liens in the ordinary course of business securing
liability for reimbursement or indemnification obligations of (including
obligations in respect of letters of credit or bank guarantees for the benefit
of) insurance carriers providing property, casualty or liability insurance to
the Borrower or any Subsidiary;

 

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(f) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

(g) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h);

(h) Liens securing Indebtedness permitted under Section 7.03(e); provided that
(i) the Lien does not extend to any additional property other than
(A) after-acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under Section 7.03(e)
and (B) proceeds and products thereof;

(i) Liens securing Indebtedness permitted under Section 7.03(o);

(j) any licenses of patents, copyrights, trademark and other Intellectual
Property rights granted to or by the Borrower or any other Loan Party entered
into in the ordinary course of business consistent with past practice;

(k) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 7.02(f) to be applied
against the purchase price for such Investment, and (ii) consisting of an
agreement to Dispose of any property in a Disposition permitted under
Section 7.05, in each case, solely to the extent such Investment or Disposition,
as the case may be, (x) would have been permitted on the date of the creation of
such Lien and (y) is entered into in the ordinary course of business consistent
with past practice;

(l) Liens existing on property at the time of its acquisition or existing on the
property of any Person at the time such Person becomes a Loan Party, in each
case after the Closing Date; provided that (i) such Lien was not created in
contemplation of such acquisition or such Person becoming a Loan Party,
(ii) such Lien does not extend to or cover any other assets or property (other
than the proceeds or products thereof and other than after-acquired property),
and (iii) the Indebtedness secured thereby is permitted under Section 7.03;

(m) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by the Borrower or any other
Loan Party in the ordinary course of business consistent with past practice;

(n) Liens that are contractual rights of set-off relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness;

(o) any modification, replacements, renewals of any Liens permitted by clauses
(b) and (h); provided that (i) the Lien does not extend to any additional
property other than (A) after-acquired property that is affixed or incorporated
into the property covered by such Lien or financed by Indebtedness permitted
under Section 7.03, and (B) proceeds and products thereof, and (ii) the renewal,
extension or refinancing of the obligations secured or benefited by such Liens
is permitted by Section 7.03; and

 

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(p) Liens arising from precautionary Uniform Commercial Code financing statement
filings.

7.02 Investments. Make any Investments, except:

(a) Investments held by the Borrower or a Loan Party in the form of cash or Cash
Equivalents;

(b) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $100,000 at any time
outstanding, for reasonable and customary business-related travel,
entertainment, relocation and analogous ordinary business purposes;

(c) (i) Investments of any Loan Party in any Subsidiaries that are Guarantors
and (ii) Investments by any Loan Party in Subsidiaries that are not Guarantors
in an aggregate amount outstanding at any time not to exceed $2,000,000;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors in each case, in
the ordinary course of business and consistent with past practice;

(e) Investments consisting of Liens, Indebtedness, fundamental changes,
Dispositions and Restricted Payments permitted under Sections 7.01, 7.03, 7.04,
7.05 and 7.06, respectively, in each case solely to the extent such Liens,
Indebtedness, fundamental changes, Dispositions or Restricted Payments, as the
case may be, would have been permitted on the date of such creation, incurrence,
change, disposition or declaration;

(f) the purchase or other acquisition of all of the Equity Interests in, or
substantially all of the property and assets or businesses of, any Person or of
assets constituting a business unit, a line of business or division of such
Person that, upon the consummation thereof, will be wholly owned directly by the
Borrower or one of more of its wholly-owned Domestic Subsidiaries (including as
a result of a merger or consolidation); provided that, with respect to each
purchase or other acquisition made pursuant to this Section 7.02(f) (each, a
“Permitted Acquisition”):

(i) any such newly-created or acquired Subsidiary shall comply with the
requirements of Section 6.12;

(ii) the lines of business of the Person to be (or the property of which is to
be) so purchased or otherwise acquired shall be substantially the same or
substantially related or complementary lines of business as one or more of the
principal businesses of the Borrower and its Subsidiaries in the ordinary
course;

(iii) no Event of Default shall have occurred and be continuing immediately
before any such purchase or other acquisition, and no Default shall result
therefrom; and

 

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(iv) the Borrower shall have delivered to the Administrative Agent and each
Lender:

(A) at least 20 days prior to the date on which such purchase or acquisition is
to be consummated, written notice of such proposed purchase or acquisition,
which notice shall (x) confirm the satisfaction of the conditions set forth in
clauses (ii) and (iii) above, and (y) in the case of any purchase or other
acquisition for which the aggregate gross consideration paid by or on behalf of
the Borrower and its Subsidiaries exceeds $20,000,000, be accompanied by
historical financial statements relating to the business of Person to be
acquired and financial projections relating to the Borrower and its Subsidiaries
after giving effect to such acquisition; and

(B) such other information as the Administrative Agent or any Lender may have
reasonably requested.

(g) Investments in the ordinary course of business consisting of endorsements
for collection or deposit and customary trade arrangements with customers
consistent with past practices;

(h) Investments received in connection with the bankruptcy or reorganization of
suppliers and customers or in settlement of delinquent obligations of, or other
disputes with, customers and suppliers arising in the ordinary course of
business or upon the foreclosure with respect to any secured Investment or other
transfer of title with respect to any secured Investment;

(i) advances of payroll payments to employees in the ordinary course of business
consistent with past practice;

(j) Investments held by a Loan Party acquired after the Closing Date or of a
Person merged into the Borrower or merged or consolidated with a Loan Party
after the Closing Date to the extent that such Investments were not made in
contemplation of or in connection with such acquisition, merger or consolidation
and were in existence on the date of such acquisition, merger or consolidation;

(k) Guarantees by a Loan Party in respect of leases (other than capital leases)
or of other obligations that do not constitute Indebtedness, in each case
entered into in the ordinary course of business; and

(l) purchases of inventory, supplies and raw materials and the licensing or
contribution of intellectual property pursuant to joint marketing arrangements
with other Persons, in each case in the ordinary course of business consistent
with past practice.

7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:

(a) Indebtedness under the Loan Documents;

 

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(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that
(i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into
and of any instrument issued in connection therewith, are no less favorable in
any material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate;

(c) Guarantees of the Borrower or any Guarantor in respect of Indebtedness
otherwise permitted hereunder of the Borrower or any other Guarantor;

(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness at any one time outstanding shall not exceed $1,750,000;

(f) Indebtedness of any Loan Party owing to any other Loan Party, provided that
the promissory note evidencing such Indebtedness is pledged to the
Administrative Agent to secure the Obligations;

(g) Indebtedness of any Person that becomes a Loan Party in a Permitted
Acquisition, which Indebtedness is existing at the time such Person becomes a
Subsidiary of a Loan Party (other than Indebtedness incurred solely in
contemplation of such Person becoming a Subsidiary of a Loan Party);

(h) Indebtedness representing deferred compensation to employees of the Loan
Parties incurred in the ordinary course of business consistent with past
practice;

(i) Indebtedness incurred by a Loan Party in a Permitted Acquisition, any other
Investment or any Disposition, in each case to the extent expressly permitted
hereunder and constituting indemnification obligations or obligations in respect
of purchase price of property (including Intellectual Property) or services,
including earn-out obligations, purchase price adjustments, escrow arrangements
or other arrangements representing deferred payments or similar adjustments;

 

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(j) Indebtedness consisting of obligations of a Loan Party under deferred
compensation or other similar arrangements incurred by such Person in connection
with the Transaction and Permitted Acquisitions in the ordinary course of
business consistent with past practice;

(k) Indebtedness consisting of (i) the financing of insurance premiums or
(ii) take-or-pay obligations contained in supply arrangements incurred in the
ordinary course of business consistent with past practice;

(l) Indebtedness incurred by a Loan Party in respect of letters of credit, bank
guarantees, bankers’ acceptances or similar instruments or created in the
ordinary course of business, including in respect of workers compensation
claims, health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation claims incurred in
the ordinary course of business consistent with past practice;

(m) Indebtedness consisting of obligations in respect of performance, bid,
appeal and surety bonds and performance and completion guarantees and similar
obligations provided by a Loan Party or obligations in respect of letters of
credit, bank guarantees or similar instruments related thereto, in each case in
the ordinary course of business consistent with past practice;

(n) unsecured Indebtedness in an aggregate principal amount not to exceed
$10,000,000 at any time outstanding;

(o) secured Indebtedness in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding the proceeds of which will be used for
working capital; provided, that, such Indebtedness (A) shall not be senior to
the Loans, but may be secured pari passu with the Obligations and (B) shall be
subject to an intercreditor agreement reasonably acceptable to the
Administrative Agent; and

(m) all premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in clauses (a) through (o) above.

7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(a) any Loan Party (other than the Borrower) may merge with (i) the Borrower,
provided that the Borrower shall be the continuing or surviving Person, or
(ii) any one or more other Subsidiaries, provided that when any Guarantor is
merging with another Subsidiary, the Guarantor shall be the continuing or
surviving Person; and

 

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(b) any Loan Party may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Loan Party;
provided that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Borrower or a Guarantor.

7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business and Dispositions of
property no longer used or useful in the conduct of the business of the Loan
Parties;

(b) Dispositions of inventory in the ordinary course of business;

(c) Dispositions of IP Rights to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such Disposition are reasonably promptly applied to the
purchase price of such replacement property;

(d) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary, provided that if the transferor of such property is a
Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

(e) Dispositions permitted by Section 7.02, 7.04 and 7.06 and Liens permitted by
Section 7.04;

(f) leases, subleases, licenses or sublicenses (including the licensing of
patents, trademarks, copyrights and other IP Rights), in each case in the
ordinary course of business and consistent with past practice which do not
interfere with the business of the Loan Parties, taken as a whole;

(g) the abandonment, cancellation, non-renewal or discontinuance of use or
maintenance of intellectual property (or rights relating thereto) that the
Borrower determines in good faith is desirable in the conduct of its business
and not materially disadvantageous to the interests of the Lenders;

(h) Dispositions of cash and Cash Equivalents in the ordinary course of business
consistent with past practice;

(i) Dispositions of accounts receivable in connection with the collection or
compromise thereof;

(j) Dispositions of property not otherwise permitted under this Section 7.05;
provided that (i) at the time of such Disposition, no Event of Default shall be
continuing or would result from such Disposition and (ii) the aggregate book
value of all property Disposed of in reliance on this clause (i) shall not
exceed $1,000,000 for any fiscal year;

(k) Dispositions listed on Schedule 7.05(k); and

 

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(l) the unwinding of any Swap Contract pursuant to its terms.

provided, however, that any Disposition pursuant to clauses (a) through
(l) shall be for fair market value.

7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:

(a) each Loan Party may make Restricted Payments to the Borrower, the Guarantors
and any other Person that owns an Equity Interest in such Guarantor, ratably
according to their respective holdings of the type of Equity Interest in respect
of which such Restricted Payment is being made;

(b) a Loan Party may declare and make dividend payments or other distributions
payable solely in the common stock or other common Equity Interests of such
Person;

(c) to the extent constituting Restricted Payments, a Loan Party may enter into
and consummate transactions permitted by any provision of Section 7.02, 7.04 or
7.08 other than Section 7.08(c);

(d) repurchases of Equity Interests in a Loan Party (or any direct or indirect
parent thereof) (i) deemed to occur upon exercise of stock options or warrants
if such Equity Interests represent a portion of the exercise price of such
options or warrants and (ii) arising upon lapse of restrictions on restricted
stock, to the extent necessary to generate proceeds allowing the holder of such
restricted stock to pay tax liabilities of such holder caused by such lapse of
restrictions; and

(e) a Loan Party may pay (or make Restricted Payments to allow any direct or
indirect parent thereof to pay) for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of a Loan Party (or of
any such parent of a Loan Party) by any present or former manager, employee,
director or consultant of such Loan Party (or any direct or indirect parent of
such Loan Party) pursuant to any employee or director equity plan, employee or
director stock option plan or any other employee or director benefit plan or any
agreement (including any stock subscription or shareholder agreement) with any
manager, employee, director or consultant of such Loan Party (or any direct or
indirect parent thereof); provided that the aggregate amount of Restricted
Payments made pursuant to this clause (e) shall not exceed $2,000,000 in any
calendar year.

7.07 Change in Nature of Business. Engage in any line of business substantially
different from those lines of business conducted by the Borrower and its
Subsidiaries on the date hereof or any business reasonably related or incidental
thereto.

7.08 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower, whether or not in the ordinary course of
business, other than (a) transactions among Loan Parties or any Person that
becomes a Loan Party as a result of such transaction, (b) on terms substantially
as favorable to such Loan Party as would be obtainable by

 

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such Loan Party at the time in a comparable arm’s-length transaction with a
Person other than an Affiliate, (c) equity issuances, repurchases, retirements,
or other acquisitions or retirements of Equity Interests by such Loan Party
permitted under Section 7.06(d) loans and other transactions by such Loan Party
to the extent permitted under Article VII, (e) employment and severance
arrangements between such Loan Party and its respective directors, officers and
employees in the ordinary course of business and transactions pursuant to stock
option and employee benefit plans and arrangements, (f) the payment of customary
fees and reasonably out-of-pocket costs to, and indemnities provided on behalf
of, directors, officers and employees of a Loan Party, (g) transactions pursuant
to permitted agreements in existence on the Closing Date and set forth in
Schedule 7.08 or any amendment thereto to the extent such amendment is not
adverse to the Lenders in any respect and (h) Restricted Payments permitted
under Section 7.06.

7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than
this Agreement, any other Loan Document and Indebtedness permitted under
Sections 7.03(d), 7.03(n) and 7.03(o)) that (a) limits the ability (i) of any
Guarantor to make Restricted Payments to the Borrower or any other Guarantor or
to otherwise transfer property to the Borrower or any other Guarantor, (ii) of
any Guarantor to Guarantee the Indebtedness of the Borrower or (iii) of any Loan
Party to create, incur, assume or suffer to exist Liens on property of such
Person; or (b) requires the grant of a Lien to secure an obligation of such
Person if a Lien is granted to secure another obligation of such Person except,
in the case of subclause (b), any such Contractual Obligations arising pursuant
to any Indebtedness or Lien permitted to be incurred hereunder or any other
transaction permitted hereunder.

7.10 Use of Proceeds. Use the proceeds of any Loan, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

7.11 Accounting Changes. Make any change in (i) each of its accounting policies
or reporting practices, except as required by GAAP or (ii) its fiscal year or
fiscal quarters from its present basis.

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan, or
(ii) within three (3) Business Days after the same becomes due, any interest on
any Loan, or (iii) within five (5) Business Days after notice from the
Administrative Agent or any Lender the same becomes due, any other amount
payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05(a),
6.10, 6.11 or 6.12 or Article VII; or

 

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(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document, other than Section 6.04 of this Agreement on its part to
be performed or observed and such failure continues for 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such failure
and (ii) the Borrower receives notice of such failure from the Administrative
Agent (which notice shall be given at the request of any Lender); or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect when made or deemed made (unless such representations
and warranties are qualified by materiality, in which case they shall be true
and correct in all respects); or

(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate outstanding principal amount of more than the Threshold Amount, or
(B) fails to observe or perform any other agreement or condition relating to any
such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, such Indebtedness to be demanded or
to become due or to be repurchased, prepaid, defeased or redeemed (automatically
or otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined
in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by the Borrower or such Subsidiary as a result thereof is greater than the
Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party becomes unable or
admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Person and is not released, vacated or fully bonded within 30 days
after its issue or levy; or

 

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(h) Judgments. There is entered against any Loan Party (i) one or more final
judgments or orders for the payment of money in an aggregate amount (as to all
such judgments or orders) exceeding the Threshold Amount (to the extent not
covered by independent third-party insurance as to which the insurer does not
dispute coverage), or (ii) any one or more non-monetary final judgments that
have, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period
of 10 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or

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

(j) Invalidity of Loan Documents. Any material provision of any Loan Document or
the occurrence of any Event of Default under any other Loan Document, at any
time after its execution and delivery and for any reason other than as expressly
permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document.

8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

(a) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and

(b) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, in
each case without further act of the Administrative Agent or any Lender.

 

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8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due as
set forth in the proviso to Section 8.02), any amounts received on account of
the Obligations shall, subject to the provisions of Sections 2.15 and 2.16, be
applied by the Administrative Agent in the following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts payable to the Lenders (including fees,
out-of-pocket charges and out-of-pocket disbursements of counsel to the
respective Lenders and amounts payable under Article III), ratably among them in
proportion to the respective amounts described in this clause Second payable to
them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and other Obligations, ratably among the Lenders in
proportion to the respective amounts described in this clause Third payable to
them;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them;

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.

ARTICLE IX. ADMINISTRATIVE AGENT

9.01 Appointment and Authority. Each of the Lenders hereby irrevocably appoints
Chiesi Farmaceutici S.p.A. to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative
Agent and the Lenders, and neither the Borrower nor any other Loan Party shall
have rights as a third party beneficiary of any of such provisions.

9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

 

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9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Administrative
Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower or
any Lender.

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

9.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have

 

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been made by the proper Person, and shall not incur any liability for relying
thereon. In determining compliance with any condition hereunder to the making of
a Loan, the Administrative Agent may presume that such condition is satisfactory
to such Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

9.05 Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

9.06 Resignation of Administrative Agent. The Administrative Agent may at any
time give notice of its resignation to the Lenders and the Borrower. Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, with the consent of the Borrower (not to be unreasonably withheld or
delayed), to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders, appoint a successor
Administrative Agent meeting the qualifications set forth above; provided that
if the Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above
in this Section. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 10.04 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.

 

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9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

9.08 Intentionally Omitted.

9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of
any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in
such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender to authorize the Administrative Agent to
vote in respect of the claim of any Lender in any such proceeding.

 

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9.10 Release of Collateral and Guarantors. The Lenders hereby irrevocably
authorize the Administrative Agent, at its option and direction, to release
(i) any Guarantor from its obligations under the Guaranty if such Person ceases
to be a Subsidiary as a result of a transaction permitted hereunder and (ii) any
property of a Loan Party from the Liens created by the Loan Documents if such
property is Disposed of in a transaction permitted hereunder and the
Administrative Agent shall, upon request of the Borrower, deliver such release.

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release any Guarantor
from its obligations under the Guaranty pursuant to this Section 9.10.

ARTICLE X. MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Required Lenders and the Borrower or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

(a) waive any condition set forth in Section 4.01(a) without the written consent
of each Lender;

(b) postpone any date fixed by this Agreement or any other Loan Document for any
payment (excluding mandatory prepayments) of principal, interest (other than
interest at the Default Rate), fees or other amounts due to the Lenders (or any
of them) hereunder or under any other Loan Document without the written consent
of each Lender directly affected thereby;

(c) reduce the principal of, or the rate of interest specified herein on any
Loan or any fees or other amounts payable hereunder or under any other Loan
Document, without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest at the Default Rate;

(d) change any provision of this Section or the definition of “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

(e) release a Guarantor without the written consent of each Lender, except to
the extent the release of such Guarantor is permitted pursuant to Section 9.10
(in which case such release may be made by the Administrative Agent acting
alone); or

(f) release all or any substantial portion of the Collateral granted to or held
by the Administrative Agent under any Loan Document other than (i) upon payment
in full of all Obligations (other than contingent indemnification obligations
for which no claim has been asserted), (ii) to the extent permitted pursuant to
Section 9.10 (in which case such release may be made by the Administrative Agent
acting alone), or (iii) if approved, authorized or ratified in writing by the
Required Lenders in accordance with this Section;

 

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and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder (and any amendment, waiver
or consent which by its terms requires the consent of all Lenders or each
affected Lender may be effected with the consent of the applicable Lenders other
than Defaulting Lenders), except that any waiver, amendment or modification
requiring the consent of all Lenders or each affected Lender that by its terms
affects any Defaulting Lender more adversely than other affected Lenders shall
require the consent of such Defaulting Lender.

10.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (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 telecopier or email as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

(i) if to the Borrower, the Administrative Agent, to the address, telecopier
number, electronic mail address or telephone number specified for such Person on
Schedule 10.02; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire
(including, as appropriate, notices delivered solely to the Person designated by
a Lender on its Administrative Questionnaire then in effect for the delivery of
notices that may contain material non-public information relating to the
Borrower).

Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent. The Administrative Agent 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.

 

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Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) Change of Address, Etc. Each of the Borrower and the Administrative Agent
may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices purportedly given
by or on behalf of the Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. The Borrower shall
indemnify the Administrative Agent, each Lender and the Related Parties of each
of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower. All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan Parties or any of them shall be vested
exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained

 

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exclusively by, the Administrative Agent in accordance with Section 8.02 for the
benefit of all the Lenders; provided, however, that the foregoing shall not
prohibit (a) the Administrative Agent from exercising on its own behalf the
rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents, (b) any
Lender from exercising setoff rights in accordance with Section 10.08 (subject
to the terms of Section 2.13), or (c) any Lender from filing proofs of claim or
appearing and filing pleadings on its own behalf during the pendency of a
proceeding relative to any Loan Party under any Debtor Relief Law; and provided,
further, that if at any time there is no Person acting as Administrative Agent
hereunder and under the other Loan Documents, then (i) the Required Lenders
shall have the rights otherwise ascribed to the Administrative Agent pursuant to
Section 8.02 and (ii) in addition to the matters set forth in clauses (b) and
(c) of the preceding proviso and subject to Section 2.13, any Lender may, with
the consent of the Required Lenders, enforce any rights and remedies available
to it and as authorized by the Required Lenders.

10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable documented
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender
(including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other
Loan Documents, including its rights under this Section, or (B) in connection
with the Loans made, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.

(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), incurred by any
Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party arising out of, in connection with, or as a
result of, a suit, claim, action or other legal proceeding relating to (i) the
execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or, in the case
of the Administrative Agent (and any sub-agent thereof) and its Related Parties
only, the administration of this Agreement and the other Loan Documents
(including administration in respect of any matters addressed in Section 3.01),
(ii) any Loan or the use or proposed use of the proceeds therefrom, (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

 

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any other theory, whether brought by a third party or by the Borrower or any
other Loan Party, 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
(w) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the bad faith, gross negligence,
willful misconduct or fraud of such Indemnitee, (x) result from a claim brought
by the Borrower or any other Loan Party against an Indemnitee for breach in bad
faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Borrower or such other Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction, (y) relate to Excluded Taxes or other amounts expressly
excluded from the Obligations hereunder or (z) arise in relation to a suit,
claim, action or other legal proceeding between or among any of a Lender,
another Lender or an assignee or participant of a Lender (other than claims
against the Administrative Agent in its capacity as Administrative Agent).

(c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof) or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent) or such
Related Party, as the case may be, such Lender’s pro rata portion (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent) in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) in
connection with such capacity. The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.12(d).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Borrower shall not assert, and 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, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

(e) Payments. All amounts due under this Section shall be payable not later than
ten Business Days after demand therefor.

(f) Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent, the replacement of any Lender and the repayment,
satisfaction or discharge of all the other Obligations.

 

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10.05 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The obligations of
the Lenders under clause (b) of the preceding sentence shall survive the payment
in full of the Obligations and the termination of this Agreement.

10.06 Successors and Assigns.

(a) Successors and Assigns Generally. 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, except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this Section
(and any other attempted assignment or transfer by any party hereto 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, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of the Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Loans at the time owing to it, or in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and

 

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(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each
of the Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans assigned;

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall
be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within fifteen
(15) Business Days after having received notice thereof; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that is
not a Lender, an Affiliate of such Lender or an Approved Fund with respect to
such Lender.

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee in the amount of $3,500; provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made (A) to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a
Lender hereunder, would constitute any of the foregoing Persons described in
this clause (B), (C) to a natural person or (D) to any competitor of the Loan
Parties.

 

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(vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent or any Lender
hereunder (and interest accrued thereon) and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under applicable Law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, may maintain at the Administrative Agent’s Office a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the principal amounts
of the Loans, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. In
addition, the Administrative Agent may maintain on the Register information
regarding the designation, and revocation of designation, of any Lender as a
Defaulting Lender. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

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(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person, a Defaulting Lender or the Borrower or any
of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or
a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of the Loans owing to it) in an amount not less than
$10,000,000 (or, if such Lender’s Loan is less than $10,000,000, such lesser
amount); provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(e) as though it were a Lender.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

10.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, trustees, advisors and representatives
solely on a need to know basis (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory

 

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authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any
Eligible Assignee invited to be a Lender pursuant to Section 2.14(c), or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent, any Lender, or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower. For purposes of this Section, “Information” means all information
received from the Borrower or any Subsidiary relating to the Borrower or any
Subsidiary or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

Each of the Administrative Agent and the Lenders acknowledges that (a) the
Information may include material non-public information concerning the Borrower
or a Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
United States Federal and state securities Laws.

10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, and each of their Affiliates is hereby authorized, at
any time and from time to time, to the fullest extent permitted by applicable
Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender or any such
Affiliate to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement or any other Loan Document to such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender different from the
branch or office holding such deposit or obligated on such indebtedness;
provided, that in the event that any Defaulting Lender shall exercise any such
right of setoff, (x) all amounts so set off shall be paid over immediately to
the Administrative Agent for further application in accordance with the
provisions of Section 2.16 and, pending such payment, shall be segregated by
such Defaulting Lender from its other funds and deemed held in trust for the
benefit of the Administrative Agent and the Lenders, and (y) the Defaulting
Lender shall provide promptly to the Administrative Agent a statement describing
in reasonable detail the Obligations owing to such Defaulting Lender as to which
it exercised such right of setoff. The rights of each Lender,

 

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and its Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender or its Affiliates
may have. Each Lender agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
Notwithstanding the provisions of this Section 10.08, if at any time any Lender
or any of its respective Affiliates maintains one or more deposit accounts for
the Borrower or any other Loan Party into which Medicare and/or Medicaid
receivables are deposited, such Person hereby waives on behalf of itself and its
Affiliates, the right of setoff set forth herein.

10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof that, when taken together, bear the signatures
of each of the other parties hereto. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic imaging means
shall be effective as delivery of a manually executed counterpart of this
Agreement.

10.11 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Loan, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.

10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the

 

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remaining provisions of this Agreement and the other Loan Documents shall not be
affected or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the illegal, invalid or unenforceable provisions. The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without limiting the
foregoing provisions of this Section 10.12, if and to the extent that the
enforceability of any provisions in this Agreement relating to Defaulting
Lenders shall be limited by Debtor Relief Laws, as determined in good faith by
the Administrative Agent, then such provisions shall be deemed to be in effect
only to the extent not so limited.

10.13 Intentionally Omitted.

10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT A PARTY MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

(c) WAIVER OF VENUE. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

 

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(d) SERVICE OF PROCESS. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY 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 ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
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 AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
the Borrower acknowledges and agrees that: (i) (A) the arranging and other
services regarding this Agreement provided by the Administrative Agent are
arm’s-length commercial transactions between the Borrower and its Affiliates, on
the one hand, and the Administrative Agent, on the other hand, (B) the Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) the Borrower is capable of evaluating,
and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative
Agent is and has been acting solely as a principal and, except as expressly
agreed in writing by the relevant parties, has not been, is not, and will not be
acting as an advisor, agent or fiduciary for the Borrower or any of its
Affiliates, or any other Person, and (B) the Administrative Agent has no
obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent and
its Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its Affiliates, and the
Administrative Agent does not have any obligation to disclose any of such
interests to the Borrower or its Affiliates. To the fullest extent permitted by
law, the Borrower hereby waives and releases any claims that it may have against
the Administrative Agent with respect to any breach or alleged breach of agency
or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

 

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10.17 Electronic Execution of Assignments and Certain Other Documents. The words
“execution,” “signed,” “signature,” and words of like import in any Assignment
and Assumption or in any amendment or other modification hereof (including
waivers and consents) shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable Law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.

10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter
defined) and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(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 such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Act. The
Borrower shall, promptly following a request by the Administrative Agent or any
Lender, provide all documentation and other information that the Administrative
Agent or such Lender requests in order to comply with its ongoing obligations
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Act.

[Remainder of page intentionally left blank]

 

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

 

CORNERSTONE THERAPEUTICS INC. By:  

/s/ Andrew K.W. Powell

Name:  

A. Powell

Title:  

EVP

CREDIT AGREEMENT

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CHIESI FARMACEUTICI S.P.A. as

Administrative Agent and as Initial Lender

By:  

/s/ Ugo Di Francesco

Name:  

Ugo Di Francesco

Title:  

CEO

CREDIT AGREEMENT

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SCHEDULE 1.01 Existing Contingent Obligations

Contingent Obligations

Under the Agreement and Plan of Merger by and among the Borrower, Cohesion
Merger Sub Inc. and Cardiokine, Inc., a Delaware Corporation, entered into on
December 29, 2011, the Borrower may be obliged to pay contingent consideration
of up to $156 million.

Under various licensing, distribution and development agreements, the Borrower
may be obliged to pay up to $8.4 million in potential future milestone payments.

The Borrower has a contingent liability of $1.1 million related to the Asset
Purchase Agreement entered into March 7, 2012 between the Borrower and Merus
Labs, Inc. relating to the divestiture of Factive.

Contingent Obligations that will be assumed upon closure of the Agreement and
Plan of Merger by and among the Borrower, Stone Acquisition Sub, Inc., EKR
Holdings, Inc. and EKR Therapeutics, Inc.

Under an Agreement and Plan of Merger by and among the Borrower, Stone
Acquisition Sub, Inc., EKR Holdings, Inc. and EKR Therapeutics, Inc., entered
into May 14, 2012, the Borrower may be obliged to pay contingent consideration
of up to $25 million

Under an Asset Purchase Agreement by and between EKR, predecessor to the
Borrower and PDL, Inc. (predecessor to Facet Biotech Corp. which was later
acquired by Abbott Laboratories, Inc.) dated March 7, 2008 and amended
October 19, 2009, EKR assumed certain contractual obligations to pay contingent
consideration to Abbott Laboratories based on a percentage of Cardene I.V. RTU
product sales, until June 30, 2017.

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SCHEDULE 5.13(a) Subsidiaries

The subsidiaries shown on the attached chart have following share structure:

 

Cornerstone Biopharma Holdings (“Holdings”) 1,000 shares    owned by CRTX
Cornerstone Biopharma Inc. 100 shares    owned by Holdings Aristos
Pharmaceuticals 100,000 shares    owned by Holdings Cardiokine, Inc. 100 shares
   owned by Holdings Stone Acquisition Sub (“SAS”) 1,000 shares    owned by CRTX

Upon closure of the Agreement and Plan of Merger by and among the Borrower,
Stone Acquisition Sub, Inc., EKR Holdings, Inc. and EKR Therapeutics, Inc.,
entered into May 14, 2012, the Borrower will acquire all the shares of EKR
Holdings, Inc which will be the surviving entity following a reverse merger with
SAS. EKR Holdings, Inc. owns the single share of EKR Therapeutics, Inc

SCHEDULE 5.13(b)

None

[Corp org chart follows]

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Attachment to Schedule 5.13(a)

Cornerstone Therapeutics Inc. Entity Organizational Chart

 

LOGO [g371552img850.jpg]

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SCHEDULE 7.01(b) Existing Liens

Certain financing leases entered into in the ordinary course of business appear
on the attached list.

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

Attachment to Schedule 7.01(b)

Financing Leases - CRTX

 

Asset    Lessor    Effective Date    Term

Copiers (3)

   CEI    1/1/2009    60 months

EqualLogic SAN storage devices

   Dell    ~10/27/2008    48 months

Compellant SAN storage devices

   Dell    6/1/2012    36 months

Financing Leases - to be assumed on closure of EKR transaction

 

Copiers

   De Lage Landen    May-08    60 months

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SCHEDULE 7.03 Existing Indebtedness

Certain financing leases are identified on Schedule 7.01(b)

Upon closure of the Agreement and Plan of Merger by and among the Borrower,
Stone Acquisition Sub, Inc., EKR Holdings, Inc. and EKR Therapeutics, Inc.,
entered into May 14, 2012, the Borrower will assume the obligation of EKR to
make quarterly payments of $12,500 through the end of 2013 pursuant to a
Co-Promotion Agreement with Ameridose LLC dated January 7, 2011, which
obligation is secured by Irrevocable Standby Letter of Credit 20004285 drawn on
TD Bank N.A. in favor of Ameridose LLC, in the amount of $100,000

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SCHEDULE 7.05(k) Certain Dispositions

Upon closure of the Agreement and Plan of Merger by and among the Borrower,
Stone Acquisition Sub, Inc., EKR Holdings, Inc. and EKR Therapeutics, Inc.,
entered into May 14, 2012, the Borrower will assume and intends to dispose of
the real estate leasehold at

1545 US Highway 206

Bedminster, NJ 07921

and substantially all of the personal property located at such premises.

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SCHEDULE 7.08 Existing Affiliate Transactions

The Administrative Agent under this Credit Agreement is an Affiliate of Borrower

On May 6, 2009, the Borrower entered into a series of agreements with the
Administrative Agent pursuant to which it obtained an exclusive, 10-year license
to the U.S. commercial rights to Chiesi’s CUROSURF product.

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SCHEDULE 10.02 Administrative Agent’s Office; Certain Addresses for Notices

Notices to the Borrower should be directed to:

Vincent T. “Vince” Morgus

EVP, Finance & Chief Financial Officer

Cornerstone Therapeutics, Inc.

1255 Crescent Green Dr.

Suite 250

Cary, NC 27518

(919) 678-6514 (office) (919)

534-6231 (mobile) 888 669

9723 (fax)

vincent.morgus@crtx.com

With a copy to:

Andrew K. W. Powell

Executive Vice President, General Counsel

Cornerstone Therapeutics, Inc

1255 Crescent Green Drive, Suite 250

Cary, NC 27518

919 678 6524 (office) 919

271 6620 (mobile) 888

669 9723 (fax)

andrew.powell@crtx.com

The Borrower’s website, for purposes of posting documents as contemplated in
Section 6.02, is www.crtx.com

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EXHIBIT A

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time
to time, the “Security Agreement”) is entered into as of June 21, 2012 by
CORNERSTONE THERAPEUTICS INC., a Delaware corporation (the “Borrower”), STONE
ACQUISITION SUB, INC., a Delaware corporation, ARISTOS PHARMACEUTICALS, INC., a
Delaware corporation, CORNERSTONE BIOPHARMA, INC., a Nevada corporation,
CORNERSTONE BIOPHARMA HOLDINGS, INC., a Delaware corporation, CARDIOKINE, INC.,
a Delaware corporation, and CARDIOKINE BIOPHARMA, LLC, a Delaware limited
liability company (each a “Grantor”, and collectively, the “Grantors”), and
CHIESI FARMACEUTICI S.P.A., in its capacity as administrative agent (the
“Administrative Agent”) for the lenders party to the Credit Agreement referred
to below.

PRELIMINARY STATEMENT

The Borrower, the Administrative Agent, and the Lenders are entering into a
Credit Agreement dated as of June 21, 2012 (as it may be amended or modified
from time to time, the “Credit Agreement”). Each Grantor is entering into this
Security Agreement in order to induce the Lenders to enter into and extend
credit to the Borrower under the Credit Agreement and to secure the Guaranteed
Obligations (as defined in the Guaranty (as defined below)) (the “Secured
Obligations”) pursuant to Section 2 of the Guaranty (as defined below).

ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the
Lenders, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Terms Defined in Credit Agreement. All capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.

1.2. Terms Defined in UCC. Terms defined in the UCC which are not otherwise
defined in this Security Agreement are used herein as defined in the UCC.

1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the first paragraph hereof and in
the Preliminary Statement, the following terms shall have the following
meanings:

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

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

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

“Collateral” shall have the meaning set forth in Article II.

“Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).

“Collateral Report” means any certificate or report delivered by any Grantor to
the Administrative Agent or any Lender with respect to the Collateral pursuant
to any Loan Document.

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“Collection Account” shall have the meaning set forth in Section 7.1(b).

“Commercial Tort Claims” means the commercial tort claims of the Grantor arising
after the date hereof and described on Schedule I to an Amendment in the form of
Exhibit I to the Security Agreement.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

“Copyrights” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the Administrative Agent, among any Loan Party, a
banking institution holding such Loan Party’s funds, and the Administrative
Agent with respect to collection and control of all deposits and balances held
in a deposit account maintained by any Loan Party with such banking institution.

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

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

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

“Excluded Assets” means Special Assets other than (a) the right to receive any
payment of money (including, without limitation, Accounts and General
Intangibles) or any rights referred to in Sections 9-406(f), 9-407(a), 9-408(a)
or 9-409 of the UCC (or any successor provision or provisions) or any other
applicable Law or principles of equity and (b) any proceeds, substitutions or
replacements of any Special Assets (unless such proceeds, substitutions or
replacements would otherwise constitute Special Assets).

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

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

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

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

“Guaranty” means the Guaranty, dated as of the date hereof, entered into by
Stone Acquisition Sub, Inc., Aristos Pharmaceuticals, Inc,, Cornerstone
Biopharma, Inc., Cornerstone Biopharma Holdings, Inc., Cardiokine, Inc., and
Cardiokine Biopharma, Inc.

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

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

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

 

2

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“Lenders” means the lenders party to the Credit Agreement and their successors
and assigns.

“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the
UCC.

“Licenses” means, with respect to any Person, all of such Person’s right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.

“Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof;
(e) all rights to sue for past, present, and future infringements thereof; and
(f) all rights corresponding to any of the foregoing throughout the world.

“Pledged Collateral” means all Instruments, Securities and other Investment
Property of the Grantors, whether or not physically delivered to the
Administrative Agent pursuant to this Security Agreement.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money which are General
Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.

“Security” shall have the meaning set forth in Article 8 of the UCC.

“Special Assets” means (a) any contract (including relating to any capital lease
obligation), permit, lease or license, letter of credit rights held by a
Pledgor, or the assets of a Pledgor relating thereto or covered thereby, held by
any Pledgor that validly prohibits (i) the creation by such Pledgor of a
security interest therein or thereon or (ii) an assignment thereof without the
consent of a third party, (b) any contract, permit, lease or license, letter of
credit rights held by a Pledgor, or the assets of a Pledgor relating thereto or
covered thereby, held by any Pledgor to the extent that applicable Law prohibits
the creation of a security interest therein or thereon and (c) any intellectual
property Collateral, including without limitation, intent-to-use trademark
applications as further described in Section 4.7 hereof for which the creation
by a Pledgor of a security interest therein is prohibited without the consent of
a third party, by applicable Law, or would otherwise result in the loss by any
Loan Party of any material rights therein; provided, however, that in each case
described in clauses (a), (b) and (c) of this definition, such property shall
constitute “Special Assets” only to the extent and for so long as such permit,
lease, license, contract, letter of credit rights or other agreement or
applicable Law validly prohibits the creation of a Lien on such property or an
assignment thereof without the consent of a third party in favor of the
Administrative Agent and, upon the termination of such prohibition (howsoever
occurring), such property shall cease to constitute “Special Assets”.

“Stock Rights” means all dividends, instruments or other distributions and any
other right or property which the Grantors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Equity Interest constituting Collateral, any right to
receive an Equity Interest and any right to receive earnings, in which the
Grantors now have or hereafter acquire any right, issued by an issuer of such
Equity Interest.

 

3

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

“Trademarks” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or
priority of, or remedies with respect to, Administrative Agent’s or any Lender’s
Lien on any Collateral.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

To secure the prompt and complete payment and performance of the Secured
Obligations, each Grantor hereby pledges, assigns and grants to the
Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a
security interest in all of its right, title and interest in, to and under all
personal property and other assets, whether now owned by or owing to, or
hereafter acquired by or arising in favor of such Grantor (including under any
trade name or derivations thereof), and whether owned or consigned by or to, or
leased from or to, such Grantor, and regardless of where located (all of which
will be collectively referred to as the “Collateral”), including:

 

  (i) all Accounts;

 

  (ii) all Chattel Paper;

 

  (iii) all Copyrights, Patents and Trademarks;

 

  (iv) all Documents;

 

  (v) all Equipment;

 

  (vi) all Fixtures;

 

  (vii) all General Intangibles;

 

  (viii) all Goods;

 

  (ix) all Instruments;

 

4

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  (x) all Inventory;

 

  (xi) all Investment Property;

 

  (xii) all cash or cash equivalents;

 

  (xiii) all letters of credit, Letter-of-Credit Rights and Supporting
Obligations;

 

  (xiv) all Deposit Accounts with any bank or other financial institution;

 

  (xv) all Commercial Tort Claims; and

 

  (xvi) all accessions to, substitutions for and replacements, proceeds
(including Stock Rights), insurance proceeds and products of the foregoing,
together with all books and records, customer lists, credit files, computer
files, programs, printouts and other computer materials and records related
thereto and any General Intangibles at any time evidencing or relating to any of
the foregoing;

but excluding, in each case, any Excluded Assets.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Grantor represents and warrants to the Administrative Agent and the Lenders
that:

3.1. Title, Perfection and Priority. Such Grantor has good and valid rights in
or the power to transfer the Collateral and title to the Collateral with respect
to which it has purported to grant a security interest hereunder, free and clear
of all Liens except for Permitted Liens and has full power and authority to
grant to the Administrative Agent the security interest in the Collateral
pursuant hereto. Upon (i) the filing of financing statements in the appropriate
offices against such Grantor in the locations listed on Exhibit H and (ii) the
filings provided for in Section 3.10, the Administrative Agent will have a fully
perfected first priority security interest in that Collateral of the Grantor in
which a security interest may be perfected by filing.

3.2. Type and Jurisdiction of Organization, Organizational and Identification
Numbers. The type of entity of such Grantor, its state of organization, the
organizational number issued to it by its state of organization and its federal
employer identification number are set forth on Exhibit A.

3.3. Principal Location. Such Grantor’s mailing address and the location of its
place of business (if it has only one) or its chief executive office (if it has
more than one place of business), is disclosed in Exhibit A; such Grantor has no
other places of business except those set forth in Exhibit A.

3.4. Collateral Locations. All of such Grantor’s locations where Collateral is
located are listed on Exhibit A. All of said locations are owned by such Grantor
except for locations (i) which are leased by the Grantor as lessee and disclosed
in Exhibit A and (ii) at which Inventory is held in a public warehouse or is
otherwise held by a bailee or on consignment as disclosed in Exhibit A.

3.5. Deposit Accounts. All of such Grantor’s Deposit Accounts are listed on
Exhibit B.

3.6. Exact Names. Such Grantor’s name in which it has executed this Security
Agreement is the exact name as it appears in such Grantor’s organizational
documents, as amended, as filed with such

 

5

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Grantor’s jurisdiction of organization. Except as set forth in Exhibit A, such
Grantor has not, during the past five years, been known by or used any other
corporate or fictitious name, or been a party to any merger or consolidation, or
been a party to any acquisition.

3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by such
Grantor necessary or desirable to protect and perfect the Administrative Agent’s
Lien on each item listed on Exhibit C (including the delivery of all originals
and the placement of a legend on all Chattel Paper as required hereunder) has
been duly taken. The Administrative Agent will have a fully perfected first
priority security interest in the Collateral listed on Exhibit C.

3.8. Accounts and Chattel Paper. The names of the obligors, amounts owing, due
dates and other information with respect to its Accounts and Chattel Paper are
and will be correctly stated in all records of such Grantor relating thereto and
in all invoices and Collateral Reports with respect thereto furnished to the
Administrative Agent by such Grantor from time to time.

3.9. Inventory. With respect to any of its Inventory that is scheduled or listed
on the most recent Collateral Report, (a) such Inventory (other than Inventory
in transit) is located at one of such Grantor’s locations set forth on
Exhibit A, (b) no such Inventory (other than Inventory in transit) is now, or
shall at any time or times hereafter be stored at any other location except as
permitted by Section 4.1(c), (c) such Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the security
interest granted to the Administrative Agent hereunder for the benefit of the
Administrative Agent and Lenders, and Permitted Liens, (d) subject to Article
II, such Inventory is not subject to any licensing, patent, royalty, trademark,
trade name or copyright agreements with any third parties which would require
any consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party upon such sale or other disposition and
(e) subject to Article II, the completion of manufacture, sale or other
disposition of such Inventory by the Administrative Agent following an Event of
Default shall not require the consent of any Person and shall not constitute a
breach or default under any contract or agreement to which such Grantor is a
party or to which such property is subject.

3.10. Intellectual Property. Such Grantor does not have any interest in, or
title to, any Patent, Trademark or Copyright except as set forth in Exhibit D.
Subject to Article II, this Security Agreement is effective to create a valid
and continuing Lien and, upon filing of appropriate financing statements in the
offices listed on Exhibit H and this Security Agreement with the United States
Copyright Office and the United States Patent and Trademark Office, fully
perfected first priority security interests in favor of the Administrative Agent
on such Grantor’s Patents, Trademarks and Copyrights, such perfected security
interests are enforceable as such as against any and all creditors of and
purchasers from such Grantor; and all action necessary to protect and perfect
the Administrative Agent’s Lien on such Grantor’s Patents, Trademarks or
Copyrights shall have been duly taken.

3.11. Filing Requirements. None of its Equipment is covered by any certificate
of title, except for the vehicles and other Equipment described in Exhibit E.
None of the Collateral owned by it is of a type for which security interests or
liens may be perfected by filing under any federal statute except for (a) the
vehicles and other Equipment described in Exhibit E and (b) Patents, Trademarks
and Copyrights and held by such Grantor and described in Exhibit D. The legal
description, county and street address of each property on which any Fixtures
are located is set forth in Exhibit F together with the name and address of the
record owner of each such property.

3.12. No Financing Statements, Security Agreements. No financing statement or
security agreement describing all or any portion of the Collateral which has not
lapsed or been terminated naming

 

6

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such Grantor as debtor has been filed or is of record in any jurisdiction except
for financing statements or security agreements (a) naming the Administrative
Agent on behalf of the Lenders as the secured party and (b) in respect to other
Permitted Liens.

3.13. Pledged Collateral.

(a) Exhibit G sets forth a complete and accurate list of all Pledged Collateral
owned by such Grantor. Such Grantor is the direct, sole beneficial owner and
sole holder of record of the Pledged Collateral listed on Exhibit G as being
owned by it, free and clear of any Liens, except for the security interest
granted to the Administrative Agent for the benefit of the Lenders hereunder and
Permitted Liens. Such Grantor further represents and warrants that (i) all
Pledged Collateral owned by it constituting an Equity Interest has been (to the
extent such concepts are relevant with respect to such Pledged Collateral) duly
authorized, validly issued, are fully paid and non-assessable, (ii) with respect
to any certificates delivered to the Administrative Agent representing an Equity
Interest, either such certificates are Securities as defined in Article 8 of the
UCC as a result of actions by the issuer or otherwise, or, if such certificates
are not Securities, such Grantor has so informed the Administrative Agent so
that the Administrative Agent may take steps to perfect its security interest
therein as a General Intangible, (iii) all such Pledged Collateral held by a
securities intermediary is covered by a control agreement among such Grantor,
the securities intermediary and the Administrative Agent pursuant to which the
Administrative Agent has Control and (iv) all Pledged Collateral which
represents Indebtedness owed to such Grantor has been duly authorized,
authenticated or issued and delivered by the issuer of such Indebtedness, is the
legal, valid and binding obligation of such issuer and such issuer is not in
default thereunder.

(b) In addition, (i) none of the Pledged Collateral owned by it has been issued
or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or
transfer may be subject, (ii) no options, warrants, calls or commitments of any
character whatsoever (A) exist relating to such Pledged Collateral or
(B) obligate the issuer of any Equity Interest included in the Pledged
Collateral to issue additional Equity Interests, and (iii) no consent, approval,
authorization, or other action by, and no giving of notice, filing with, any
governmental authority or any other Person is required for the pledge by such
Grantor of such Pledged Collateral pursuant to this Security Agreement or for
the execution, delivery and performance of this Security Agreement by such
Grantor, or for the exercise by the Administrative Agent of the voting or other
rights provided for in this Security Agreement or for the remedies in respect of
the Pledged Collateral pursuant to this Security Agreement, except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally.

(c) Except as set forth in Exhibit G, such Grantor owns 100% of the issued and
outstanding Equity Interests which constitute Pledged Collateral owned by it and
none of the Pledged Collateral which represents Indebtedness owed to such
Grantor is subordinated in right of payment to other Indebtedness or subject to
the terms of an indenture.

 

7

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ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security
Agreement is terminated, each Grantor agrees that:

4.1. General.

(a) Collateral Records. Such Grantor will maintain complete and accurate books
and records with respect to the Collateral owned by it, and furnish to the
Administrative Agent such reports relating to such Collateral as the
Administrative Agent shall from time to time request.

(b) Authorization to File Financing Statements; Ratification. Such Grantor
hereby authorizes the Administrative Agent to file, and if requested will
deliver to the Administrative Agent, all financing statements and other
documents and take such other actions as may from time to time be reasonably
requested by the Administrative Agent in order to maintain a first perfected
security interest in and, if applicable, Control of, the Collateral owned by
such Grantor. Any financing statement filed by the Administrative Agent may be
filed in any filing office in any UCC jurisdiction and may (i) indicate such
Grantor’s Collateral (1) as all assets of the Grantor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC or such jurisdiction, or (2) by
any other description which reasonably approximates the description contained in
this Security Agreement, and (ii) contain any other information required by
part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance
of any financing statement or amendment, including (A) whether such Grantor is
an organization, the type of organization and any organization identification
number issued to such Grantor, and (B) in the case of a financing statement
filed as a fixture filing or indicating such Grantor’s Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Such Grantor also agrees to furnish
any such information described in the foregoing sentence to the Administrative
Agent promptly upon request. Such Grantor also ratifies its authorization for
the Administrative Agent to have filed in any UCC jurisdiction any initial
financing statements or amendments thereto if filed prior to the date hereof.

(c) Additional Filings. Such Grantor hereby authorizes the Administrative Agent
to file a carbon, photographic or other reproduction of this Security Agreement
or any financing statement with respect to the Collateral as a financing
statement and to file any other financing statement or amendment of a financing
statement (which does not add new collateral or add a debtor) in such offices as
the Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Administrative
Agent’s security interest in the Collateral.

(d) Further Assurances. Such Grantor will furnish to the Administrative Agent,
statements and schedules further identifying and describing the Collateral owned
by it and such other reports and information in connection with its Collateral
as the Administrative Agent may reasonably request, all in such detail as the
Administrative Agent may reasonably specify. Such Grantor also agrees to take
any and all actions necessary to defend title to the Collateral against all
persons and to defend the security interest of the Administrative Agent in its
Collateral and the priority thereof against any Lien not expressly permitted
hereunder.

(d) Disposition of Collateral. Such Grantor will not sell, lease or otherwise
dispose of the Collateral except for Dispositions permitted under the Credit
Agreement.

(e) Liens. Such Grantor will not create, incur, or suffer to exist any Lien on
the Collateral owned by it except (i) the security interest created by this
Security Agreement, and (ii) other Permitted Liens.

(f) Other Financing Statements. Such Grantor will not authorize the filing of
any financing statement naming it as debtor covering all or any portion of the
Collateral owned by it, except for financing statements (i) naming the
Administrative Agent on behalf of the Lenders as the secured party, and (ii) in
respect to other Permitted Liens. Such Grantor acknowledges that, other than
with

 

8

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respect to Permitted Liens, it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
without the prior written consent of the Administrative Agent, subject to such
Grantor’s rights under Section 9-509(d)(2) of the UCC.

(g) Locations. Such Grantor will not (i) maintain any Collateral owned by it at
any location other than those locations listed on Exhibit A, (ii) otherwise
change, or add to, such locations or (iii) change its principal place of
business or chief executive office from the location identified on Exhibit A,
other than as permitted by the Credit Agreement.

4.2. [Reserved.]

4.3.

Delivery of Instruments, Securities, Chattel Paper and Documents. Such Grantor
will (a) deliver to the Administrative Agent immediately upon execution of this
Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral owned by it (if any then exist), (b) hold in
trust for the Administrative Agent upon receipt and immediately thereafter
deliver to the Administrative Agent any such Chattel Paper, Securities and
Instruments constituting Collateral, (c) upon the Administrative Agent’s
request, deliver to the Administrative Agent (and thereafter hold in trust for
the Administrative Agent upon receipt and immediately deliver to the
Administrative Agent) any Document evidencing or constituting Collateral and
(d) promptly upon the Administrative Agent’s request, deliver to the
Administrative Agent a duly executed amendment to this Security Agreement, in
the form of Exhibit I hereto (the “Amendment”), pursuant to which such Grantor
will pledge such additional Collateral. Such Grantor hereby authorizes the
Administrative Agent to attach each Amendment to this Security Agreement and
agrees that all additional Collateral owned by it set forth in such Amendments
shall be considered to be part of the Collateral.

4.4. Uncertificated Pledged Collateral. Such Grantor will permit the
Administrative Agent from time to time to cause the appropriate issuers (and, if
held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of Pledged Collateral owned by it not
represented by certificates to mark their books and records with the numbers and
face amounts of all such uncertificated securities or other types of Pledged
Collateral not represented by certificates and all rollovers and replacements
therefor to reflect the Lien of the Administrative Agent granted pursuant to
this Security Agreement. With respect to any Pledged Collateral owned by it,
such Grantor will take any actions necessary to cause (a) the issuers of
uncertificated securities which are Pledged Collateral and (b) any securities
intermediary which is the holder of any Pledged Collateral, to cause the
Administrative Agent to have and retain Control over such Pledged Collateral.
Without limiting the foregoing, such Grantor will, with respect to any Pledged
Collateral held with a securities intermediary, cause such securities
intermediary to enter into a control agreement with the Administrative Agent, in
form and substance satisfactory to the Administrative Agent, giving the
Administrative Agent Control.

4.5. Exercise of Rights in Pledged Collateral. Such Grantor will permit the
Administrative Agent or its nominee at any time after the occurrence of an Event
of Default, without notice, to exercise all voting rights or other rights
relating to the Pledged Collateral owned by it, including, without limitation,
exchange, subscription or any other rights, privileges, or options pertaining to
any Equity Interest or Investment Property constituting such Pledged Collateral
as if it were the absolute owner thereof.

4.6. Intellectual Property. No later than ten (10) days after filing an
application for the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency give notice to the Administrative

 

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Agent of the filing thereof, and, upon request of the Administrative Agent, such
Grantor shall execute and deliver any and all security agreements as the
Administrative Agent may request to evidence the Administrative Agent’s first
priority security interest on such Patent, Trademark or Copyright, and the
General Intangibles of such Grantor relating thereto or represented thereby.

4.7. Commercial Tort Claims. Such Grantor shall promptly notify the
Administrative Agent of any commercial tort claim (as defined in the UCC)
acquired by it in excess of $100,000 and, unless the Administrative Agent
otherwise consents, such Grantor shall enter into an amendment to this Security
Agreement, in the form of Exhibit I hereto, granting to Administrative Agent a
first priority security interest in such commercial tort claim.

4.8. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary of a
letter of credit in excess of $100,000 or supports an obligation longer than one
year, it shall promptly, and in any event within two Business Days after
becoming a beneficiary, notify the Administrative Agent thereof and cause the
issuer and/or confirmation bank to (i) consent to the assignment of any
Letter-of-Credit Rights to the Administrative Agent and (ii) agree to direct all
payments thereunder to a Deposit Account at the Administrative Agent or subject
to a Deposit Account Control Agreement for application to the Secured
Obligations, in accordance with Section 2.06 of the Credit Agreement, all in
form and substance reasonably satisfactory to the Administrative Agent.

4.9. Federal, State or Municipal Claims. Such Grantor will promptly notify the
Administrative Agent of any Collateral which constitutes a claim against the
United States government or any state or local government or any instrumentality
or agency thereof, the assignment of which claim is restricted by federal, state
or municipal law.

4.10. No Interference. Such Grantor agrees that it will not interfere with any
right, power and remedy of the Administrative Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the
Administrative Agent of any one or more of such rights, powers or remedies.

4.12. Insurance.

(a) All insurance policies required hereunder and under Section 5.10 of the
Credit Agreement shall name the Administrative Agent (for the benefit of the
Administrative Agent and the Lenders) as an additional insured or as loss payee,
as applicable, and shall contain loss payable clauses or mortgagee clauses,
through endorsements in form and substance satisfactory to the Administrative
Agent, which provide that: (i) all proceeds thereunder with respect to any
Collateral shall be payable to the Administrative Agent; (ii) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy; and (iii) such policy and loss payable or mortgagee
clauses may be canceled, amended, or terminated only upon at least thirty days
prior written notice given to the Administrative Agent.

(b) All premiums on any such insurance shall be paid when due by such Grantor,
and copies of the policies delivered to the Administrative Agent. If such
Grantor fails to obtain any insurance as required by this Section, the
Administrative Agent may obtain such insurance at the Borrowers’ expense. By
purchasing such insurance, the Administrative Agent shall not be deemed to have
waived any Default arising from the Grantor’s failure to maintain such insurance
or pay any premiums therefor.

4.13. Deposit Account Control Agreements. Such Grantor will provide to the
Administrative Agent upon the Administrative Agent’s request, a Deposit Account
Control Agreement duly executed on behalf of each financial institution holding
a deposit account of such Grantor as set forth in this Security Agreement.

 

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4.14. Change of Name or Location. Such Grantor shall not (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 this Security Agreement, (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 Administrative
Agent shall have received at least thirty days prior written notice of such
change and the Administrative Agent shall have acknowledged in writing that
either (1) such change will not adversely affect the validity, perfection or
priority of the Administrative Agent’s security interest in the Collateral, or
(2) any reasonable action requested by the Administrative Agent in connection
therewith has been completed or taken (including any action to continue the
perfection of any Liens in favor of the Administrative Agent, on behalf of
Lenders, in any Collateral), provided that, any new location shall be in the
continental U.S.

ARTICLE V

REMEDIES

5.1. [Reserved.]

5.2. Remedies.

(a) If an Event of Default occurs and is continuing, the Administrative Agent
may, with the concurrence or at the direction of the Required Lenders, exercise
any or all of the following rights and remedies:

(i) those rights and remedies provided in this Security Agreement, the Credit
Agreement, or any other Loan Document; provided that, this Section 5.2(a) shall
not be understood to limit any rights or remedies available to the
Administrative Agent and the Lenders prior to an Event of Default;

(ii) those rights and remedies available to a secured party under the UCC
(whether or not the UCC applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the exercise of
a bank’s right of setoff or bankers’ lien) when a debtor is in default under a
security agreement;

(iii) give notice of sole control or any other instruction under any Deposit
Account Control Agreement or and other control agreement with any securities
intermediary and take any action therein with respect to such Collateral;

(iv) without notice (except as specifically provided in Section 8.1 or elsewhere
herein), demand or advertisement of any kind to any Grantor or any other Person,
enter the premises of any Grantor where any Collateral is located (through
self-help and without judicial process) to collect, receive, assemble, process,
appropriate, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of, deliver, or realize upon, the Collateral or any part
thereof in one or more parcels at public or private sale or sales (which sales
may be adjourned or continued from time to time with or without notice and may
take place at any Grantor’s premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other terms
as the Administrative Agent may deem commercially reasonable; and

 

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(v) concurrently with written notice to the applicable Grantor, transfer and
register in its name or in the name of its nominee the whole or any part of the
Pledged Collateral, to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations, exercise the voting and all other rights as a holder with
respect thereto, to collect and receive all cash dividends, interest, principal
and other distributions made thereon and to otherwise act with respect to the
Pledged Collateral as though the Administrative Agent was the outright owner
thereof.

(b) The Administrative Agent, on behalf of the Lenders, may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.

(c) The Administrative Agent shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of the Administrative Agent and the Lenders, the
whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly releases.

(d) Until the Administrative Agent is able to effect a sale, lease, or other
disposition of Collateral, the Administrative Agent shall have the right to hold
or use Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving Collateral or its value or for any other purpose
deemed appropriate by the Administrative Agent. The Administrative Agent may, if
it so elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of the Administrative Agent’s remedies (for the
benefit of the Administrative Agent and Lenders), with respect to such
appointment without prior notice or hearing as to such appointment.

(e) If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Swap Obligations outstanding,
the Required Lenders may exercise the remedies provided in this Section 5.2 upon
the occurrence of any event which would allow or require the termination or
acceleration of any Swap Obligations pursuant to the terms of the Swap
Agreement.

(f) Notwithstanding the foregoing, neither the Administrative Agent nor the
Lenders shall be required to (i) make any demand upon, or pursue or exhaust any
of its rights or remedies against, any Grantor, any other obligor, guarantor,
pledgor or any other Person with respect to the payment of the Secured
Obligations or to pursue or exhaust any of its rights or remedies with respect
to any Collateral therefor or any direct or indirect guarantee thereof,
(ii) marshal the Collateral or any guarantee of the Secured Obligations or to
resort to the Collateral or any such guarantee in any particular order, or
(iii) effect a public sale of any Collateral.

(g) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Collateral and may be compelled
to resort to one or more private sales thereof in accordance with clause (a)
above. Each Grantor also acknowledges that any private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. The Administrative Agent shall be
under no obligation to delay a sale of any of the Pledged Collateral for the
period of time necessary to permit any Grantor or the issuer of the Pledged
Collateral to register such securities for public sale under the Securities Act
of 1933, as amended, or under applicable state securities laws, even if the
applicable Grantor and the issuer would agree to do so.

 

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5.3. Grantor’s Obligations Upon Default. Upon the request of the Administrative
Agent after the occurrence of a Default, each Grantor will:

(a) assemble and make available to the Administrative Agent the Collateral and
all books and records relating thereto at any place or places specified by the
Administrative Agent, whether at a Grantor’s premises or elsewhere; and

(b) permit the Administrative Agent, by the Administrative Agent’s
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral or the
books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct
sales of the Collateral, without any obligation to pay the Grantor for such use
and occupancy.

5.4. Grant of Intellectual Property License. For the purpose of enabling the
Administrative Agent to exercise the rights and remedies under this Article V at
such time as the Administrative Agent shall be lawfully entitled to exercise
such rights and remedies, each Grantor hereby (a) grants to the Administrative
Agent, for the benefit of the Administrative Agent and the Lenders, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, license or sublicense any
intellectual property rights now owned or hereafter acquired by such Grantor,
and wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout thereof
and (b) irrevocably agrees that the Administrative Agent may sell any of such
Grantor’s Inventory directly to any person, including without limitation persons
who have previously purchased the Grantor’s Inventory from such Grantor and in
connection with any such sale or other enforcement of the Administrative Agent’s
rights under this Security Agreement, may sell Inventory which bears any
Trademark owned by or licensed to such Grantor and any such Inventory that is
covered by any Copyright owned by or licensed to such Grantor and the
Administrative Agent may finish any work in process and affix any Trademark
owned by or licensed to such Grantor and sell such Inventory as provided herein.
The use of such license by the Administrative Agent shall be exercised, at the
Administrative Agent’s option, only upon the occurrence and during the
continuation of an Event of Default.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1. Account Verification. The Administrative Agent may at any time, upon
reasonable advance notice and during normal business hours, in the
Administrative Agent’s own name, in the name of a nominee of the Administrative
Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile
or otherwise) with the account debtors of any such Grantor, parties to contracts
with any such Grantor and obligors in respect of Instruments of any such Grantor
to verify with such Persons, to the Administrative Agent’s reasonable
satisfaction, the existence, amount, terms of, and any other matter relating to,
Accounts, Instruments, Chattel Paper, payment intangibles and/or other
Receivables.

6.2. Authorization for Administrative Agent to Take Certain Action.

(a) Each Grantor irrevocably authorizes the Administrative Agent at any time and
from time to time in the sole discretion of the Administrative Agent and
appoints the Administrative

 

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Agent as its attorney in fact (i) to endorse and collect any cash proceeds of
the Collateral, (ii) to apply the proceeds of any Collateral received by the
Administrative Agent to the Secured Obligations as provided in Section 7.3,
(iii) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens that are Permitted Liens), (iv) to contact
account debtors for any reason, (v) to demand payment or enforce payment of the
Receivables in the name of the Administrative Agent or such Grantor and to
endorse any and all checks, drafts, and other instruments for the payment of
money relating to the Receivables, (vi) to sign such Grantor’s name on any
invoice or bill of lading relating to the Receivables, drafts against any
account debtor of the Grantor, assignments and verifications of Receivables,
(vii) to exercise all of such Grantor’s rights and remedies with respect to the
collection of the Receivables and any other Collateral, (viii) to settle,
adjust, compromise, extend or renew the Receivables, (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables, (x) to prepare,
file and sign such Grantor’s name on a proof of claim in bankruptcy or similar
document against any account debtor of such Grantor, (xi) to prepare, file and
sign such Grantor’s name on any notice of Lien, assignment or satisfaction of
Lien or similar document in connection with the Receivables, (xii) to change the
address for delivery of mail addressed to such Grantor to such address as the
Administrative Agent may designate and to receive, open and dispose of all mail
addressed to such Grantor and (xiii) to do all other acts and things necessary
to carry out this Security Agreement; and such Grantor agrees to reimburse the
Administrative Agent on demand for any payment made or any expense incurred by
the Administrative Agent in connection with any of the foregoing; provided that,
this authorization shall not relieve such Grantor of any of its obligations
under this Security Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee are hereby ratified and approved. The
powers conferred on the Administrative Agent, for the benefit of the
Administrative Agent and Lenders, under this Section 6.2 are solely to protect
the Administrative Agent’s interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any such powers.
The Administrative Agent agrees that it shall not exercise any power or
authority granted to it under this Section 6.2 unless and until an Event of
Default has occurred and is continuing.

6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE
ADMINISTRATIVE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN
SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT
TO VOTE ANY OF THE PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO.
IN ADDITION TO THE RIGHT TO VOTE ANY OF THE PLEDGED COLLATERAL, THE APPOINTMENT
OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE
RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A
HOLDER OF ANY OF THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR
WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF
SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE,
AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF
ANY OF THE PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY
PERSON (INCLUDING THE ISSUER OF THE PLEDGED COLLATERAL OR ANY OFFICER OR AGENT
THEREOF), UPON THE OCCURRENCE AND CONTINUATION OF AN EVENT DEFAULT.

6.5. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF THE
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE

 

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AGENT, NOR ANY LENDER, NOR ANY OF THEIR AFFILIATES, NOR ANY OF THEIR OR THEIR
AFFILIATES’ RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES
SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR
OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO
SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE
SOLELY TO ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED
BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE
LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII

COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

7.1. Collection of Receivables.

(a) On or before the Closing Date, each Grantor shall execute and deliver to the
Administrative Agent Deposit Account Control Agreements for each Deposit Account
maintained by such Grantor into which all cash, checks or other similar payments
relating to or constituting payments made in respect of Receivables will be
deposited (each, a “Collateral Deposit Account”), which Collateral Deposit
Accounts are identified as such on Exhibit B. After the Closing Date, each
Grantor will comply with the terms of Section 7.2.

(b) At no time shall any Grantor remove any item from a Collateral Deposit
Account without the Administrative Agent’s prior written consent. If
notwithstanding the foregoing instructions, any Grantor receives any proceeds of
any Receivables constituting Collateral, such Grantor shall receive such
payments as the Administrative Agent’s trustee, and shall immediately deposit
all cash, checks or other similar payments related to or constituting payments
made in respect of such Receivables received by it to a Collateral Deposit
Account. All funds deposited into a Collateral Deposit Account will be swept on
a daily basis into a collection account maintained by the Borrowers with the
Administrative Agent (the “Collection Account”). The Administrative Agent shall
hold and apply funds received into the Collection Account as provided by the
terms of Section 7.3.

7.2. Covenant Regarding New Deposit Accounts. Before opening or replacing any
Collateral Deposit Account or other Deposit Account, each Grantor shall
(a) obtain the Administrative Agent’s consent in writing to the opening of such
Collateral Deposit Account or other Deposit Account, and (b) cause each bank or
financial institution in which it seeks to open a Collateral Deposit Account or
other Deposit Account, to enter into a Deposit Account Control Agreement with
the Administrative Agent in order to give the Administrative Agent Control of
such Collateral Deposit Account or other Deposit Account.

7.3. Application of Proceeds; Deficiency. All amounts deposited in the
Collection Account shall be deemed received by the Administrative Agent in
accordance with Section 2.12 of the Credit Agreement and shall, after having
been credited to the Collection Account, be applied (and allocated) by
Administrative Agent in accordance with Section 2.07 of the Credit Agreement.
The Administrative Agent shall require all other cash proceeds of the
Collateral, which are not required to be applied to the Obligations pursuant to
Sections 2.06 of the Credit Agreement, to be deposited in a special non-interest
bearing cash collateral account and held there as security for the Secured
Obligations. No Grantor shall have any control whatsoever over said cash
collateral account. Any such proceeds of the Collateral shall be applied in the
order set forth in Section 2.06 of the Credit Agreement unless a court of
competent jurisdiction shall otherwise direct. The balance, if any, after all of
the Secured Obligations have been satisfied, shall be deposited by the
Administrative Agent into the Borrowers’ general operating account.

 

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The Grantors shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all Secured
Obligations, including any reasonable attorneys’ fees and other expenses
incurred by Administrative Agent or any Lender to collect such deficiency.

ARTICLE VIII

GENERAL PROVISIONS

8.1. Waivers. Each Grantor hereby waives notice of the time and place of any
public sale or the time after which any private sale or other disposition of all
or any part of the Collateral may be made. To the extent such notice may not be
waived under applicable law, any notice made shall be deemed reasonable if sent
to the Grantors, addressed as set forth in Article IX, at least ten days prior
to (i) the date of any such public sale or (ii) the time after which any such
private sale or other disposition may be made. To the maximum extent permitted
by applicable law, each Grantor waives all claims, damages, and demands against
the Administrative Agent or any Lender arising out of the repossession,
retention or sale of the Collateral, except such as arise solely out of the
gross negligence or willful misconduct of the Administrative Agent or such
Lender as finally determined by a court of competent jurisdiction. To the extent
it may lawfully do so, each Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Administrative Agent or any Lender, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise. Except as otherwise
specifically provided herein, each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.

8.2. Limitation on Administrative Agent’s and Lenders’ Duty with Respect to the
Collateral. The Administrative Agent shall have no obligation to clean-up or
otherwise prepare the Collateral for sale. The Administrative Agent and each
Lender shall use reasonable care with respect to the Collateral in its
possession or under its control. Neither the Administrative Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Administrative Agent
or such Lender, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. To the extent that
applicable law imposes duties on the Administrative Agent to exercise remedies
in a commercially reasonable manner, each Grantor acknowledges and agrees that
it is commercially reasonable for the Administrative Agent (i) to fail to incur
expenses deemed significant by the Administrative Agent to prepare Collateral
for disposition or otherwise to transform raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against account
debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
account debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as such Grantor, for
expressions of interest in acquiring all or any portion of the Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet

 

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enjoyment, (xi) to purchase insurance or credit enhancements to insure the
Administrative Agent against risks of loss, collection or disposition of
Collateral or to provide to the Administrative Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Administrative Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the
Administrative Agent in the collection or disposition of any of the Collateral.
Each Grantor acknowledges that the purpose of this Section 8.2 is to provide
non-exhaustive indications of what actions or omissions by the Administrative
Agent would be commercially reasonable in the Administrative Agent’s exercise of
remedies against the Collateral and that other actions or omissions by the
Administrative Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section 8.2. Without limitation upon the
foregoing, nothing contained in this Section 8.2 shall be construed to grant any
rights to any Grantor or to impose any duties on the Administrative Agent that
would not have been granted or imposed by this Security Agreement or by
applicable law in the absence of this Section 8.2.

8.3. Compromises and Collection of Collateral. The Grantors and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Grantor agrees that
the Administrative Agent may at any time and from time to time, if an Event of
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as the
Administrative Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Administrative Agent shall be
commercially reasonable so long as the Administrative Agent acts in good faith
based on information known to it at the time it takes any such action.

8.4. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Administrative Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Security Agreement and
the Grantors shall reimburse the Administrative Agent for any amounts paid by
the Administrative Agent pursuant to this Section 8.4. The Grantors’ obligation
to reimburse the Administrative Agent pursuant to the preceding sentence shall
be a Secured Obligation payable on demand.

8.5. No Waiver; Amendments; Cumulative Remedies. No delay or omission of the
Administrative Agent or any Lender to exercise any right or remedy granted under
this Security Agreement shall impair such right or remedy or be construed to be
a waiver of any Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude any other or further
exercise thereof or the exercise of any other right or remedy. No waiver,
amendment or other variation of the terms, conditions or provisions of this
Security Agreement whatsoever shall be valid unless in writing signed by the
Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 10.01 of the Credit Agreement and the Borrower (to the
extent required) and then only to the extent in such writing specifically set
forth. All rights and remedies contained in this Security Agreement or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Lenders until the Secured Obligations have been paid in full.

8.6. Limitation by Law; Severability of Provisions. All rights, remedies and
powers provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be limited
to the extent necessary so that they shall not render this Security Agreement
invalid, unenforceable or not entitled to be recorded or registered, in whole or
in part. Any provision in any this Security Agreement

 

17

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

that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Security Agreement are
declared to be severable.

8.7. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor’s assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

8.8. Benefit of Agreement. The terms and provisions of this Security Agreement
shall be binding upon and inure to the benefit of the Grantors, the
Administrative Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that no Grantor shall have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Administrative Agent. No sales of participations,
assignments, transfers, or other dispositions of any agreement governing the
Secured Obligations or any portion thereof or interest therein shall in any
manner impair the Lien granted to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, hereunder.

8.9. Survival of Representations. All representations and warranties of the
Grantors contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.

8.10. Taxes and Expenses. Any taxes (including income taxes) payable or ruled
payable by Federal or State authority in respect of this Security Agreement
shall be paid by the Grantors, together with interest and penalties, if any. The
Grantors shall reimburse the Administrative Agent for any and all expenses as
set forth in the Credit Agreement.

8.12. Headings. The title of and section headings in this Security Agreement are
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Security Agreement.

8.13. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full (or with respect to any outstanding
Letters of Credit, a cash deposit or at the discretion of the Administrative
Agent, a back up standby Letter of Credit satisfactory to the Administrative
Agent has been delivered to the Administrative Agent as required by the Credit
Agreement) and no commitments of the Administrative Agent or the Lenders which
would give rise to any Secured Obligations are outstanding.

8.14. Entire Agreement. This Security Agreement and the other Loan Documents
embody the entire agreement and understanding between the Grantors and the
Administrative Agent relating to the Collateral and supersedes all prior
agreements and understandings between the Grantors and the Administrative Agent
relating to the Collateral.

 

18

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

8.15. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF NEW YORK.

8.16. CONSENT TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH PARTY
HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY PARTY HERETO TO
BRING PROCEEDINGS AGAINST ANY OTHER PARTY HERETO IN THE COURTS OF ANY OTHER
JURISDICTION.

8.17. WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

8.18. Indemnity. Each Grantor hereby agrees to indemnify the Administrative
Agent and the Lenders, and their respective successors, assigns, agents and
employees, as set forth in the Credit Agreement.

8.20. Counterparts. This Security Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Security Agreement by signing any
such counterpart. Delivery of an executed counterpart of a signature page of
this Security Agreement by facsimile or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Security
Agreement.

ARTICLE IX

NOTICES

9.1. Sending Notices. Any notice required or permitted to be given under this
Security Agreement shall be sent in accordance with Section 10.02 of the Credit
Agreement; provided that notices to any Grantor shall be sent to such Grantor at
its mailing address set forth in Exhibit A hereto.

9.2. Change in Address for Notices. Each of the Grantors, the Administrative
Agent and the Lenders may change the address for service of notice upon it by a
notice in writing to the other parties.

 

19

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

ARTICLE X

THE ADMINISTRATIVE AGENT

CHIESI FARMACEUTICI S.P.A. has been appointed Administrative Agent for the
Lenders hereunder pursuant to Article IX of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Administrative Agent hereunder is subject to
the terms of the delegation of authority made by the Lenders to the
Administrative Agent pursuant to the Credit Agreement, and that the
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article IX. Any successor Administrative Agent appointed pursuant to Article IX
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Administrative Agent hereunder.

[Remainder of Page Intentionally Left Blank]

 

20

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

IN WITNESS WHEREOF, the Grantors and the Administrative Agent have executed this
Security Agreement as of the date first above written.

 

GRANTORS:     ARISTOS PHARMACEUTICALS, INC.     By:  

 

    Name:  

 

    Title:  

 

    CORNERSTONE THERAPEUTICS INC.     By:  

 

    Name:  

 

    Title:  

 

    CORNERSTONE BIOPHARMA, INC.     By:  

 

    Name:  

 

    Title:  

 

    CORNERSTONE BIOPHARMA HOLDINGS, INC.     By:  

 

    Name:  

 

    Title:  

 

    CARDIOKINE, INC.     By:  

 

    Name:  

 

    Title:  

 

    CARDIOKINE BIOPHARMA, LLC     By:  

 

    Name:  

 

    Title:  

 

PLEDGE AND SECURITY AGREEMENT

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

    STONE ACQUISITION SUB, INC.     By:  

 

    Name:  

 

    Title:  

 

ADMINISTRATIVE AGENT:    

CHIESI FARMACEUTICI S.P.A.

as Administrative Agent

    By:  

 

    Name:  

 

    Title:  

 

PLEDGE AND SECURITY AGREEMENT

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

EXHIBIT A

(See Sections 3.2, 3.3, 3.4, 3.9 and 9.1 of Security Agreement)

NOTICE ADDRESS FOR ALL GRANTORS

INFORMATION AND COLLATERAL LOCATIONS OF ARISTOS PHARMACEUTICALS, INC.

INFORMATION AND COLLATERAL LOCATIONS OF CORNERSTONE THERAPEUTICS INC.

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

INFORMATION AND COLLATERAL LOCATIONS OF CORNERSTONE BIOPHARMA, INC.

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

INFORMATION AND COLLATERAL LOCATIONS OF

CORNERSTONE BIOPHARMA HOLDINGS INC.

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

INFORMATION AND COLLATERAL LOCATIONS OF CARDIOKINE, INC.

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

INFORMATION AND COLLATERAL LOCATIONS OF

CARDIOKINE BIOPHARMA, LLC

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

EXHIBIT B

(See Sections 3.5 and 7.1 of Security Agreement)

DEPOSIT ACCOUNTS

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

EXHIBIT C

(See Section 3.7 of Security Agreement)

LETTER OF CREDIT RIGHTS

CHATTEL PAPER

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

EXHIBIT D

(See Section 3.10 and 3.11 of Security Agreement)

INTELLECTUAL PROPERTY RIGHTS

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

EXHIBIT E

(See Section 3.11 of Security Agreement)

TITLE DOCUMENTS

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

EXHIBIT F

(See Section 3.11 of Security Agreement)

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

EXHIBIT G

(See Section 3.13 of Security Agreement and Definition of “Pledged Collateral”)

LIST OF PLEDGED COLLATERAL, SECURITIES AND OTHER INVESTMENT PROPERTY

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

EXHIBIT H

(See Section 3.1 of Security Agreement)

OFFICES IN WHICH FINANCING STATEMENTS ARE TO BE FILED

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

EXHIBIT I

(See Section 4.4 and 4.8 of Security Agreement)

AMENDMENT

This Amendment, dated             ,     is delivered pursuant to Section 4.4 of
the Security Agreement referred to below. All defined terms herein shall have
the meanings ascribed thereto or incorporated by reference in the Security
Agreement. The undersigned hereby certifies that the representations and
warranties in Article III of the Security Agreement are and continue to be true
and correct. The undersigned further agrees that this Amendment may be attached
to that certain Pledge and Security Agreement, dated                  ,     ,
between the undersigned, as the Grantors, and CHIESI FARMACEUTICI S.P.A., as the
Administrative Agent (as amended or modified from time to time prior to the date
hereof, the “Security Agreement”) and that the Collateral listed on Schedule I
to this Amendment shall be and become a part of the Collateral referred to in
said Security Agreement and shall secure all Secured Obligations referred to in
the Security Agreement.

 

 

By:   Name:  

 

Title:  

 

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

SCHEDULE I TO AMENDMENT

STOCKS

 

Name of

Grantor

 

Issuer

 

Certificate

Number(s)

 

Number of

Shares

 

Class of Stock

 

Percentage of

Outstanding

Shares

                             

BONDS

 

Name of

Grantor

 

Issuer

 

Number

 

Face Amount

 

Coupon Rate

 

Maturity

                             

GOVERNMENT SECURITIES

 

Name of

Grantor

 

Issuer

 

Number

 

Type

 

Face

Amount

 

Coupon

Rate

 

Maturity

                                   

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED)

 

Name of Grantor

 

Issuer

 

Description of

Collateral

 

Percentage Ownership

Interest

                 

[Add description of custody accounts or arrangements with securities
intermediary, if applicable]

COMMERCIAL TORT CLAIMS

 

Name of Grantor

 

Description of Claim

 

Parties

 

Case Number; Name of

Court where Case was

Filed

                 

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

EXHIBIT B

COMPLIANCE CERTIFICATE

 

To: The Lenders parties to the

   Credit Agreement Described Below

This Compliance Certificate (this “Certificate”) is furnished pursuant to that
certain Credit Agreement dated as of June     , 2012 (as amended, modified,
renewed or extended from time to time, the “Agreement”) among CORNERSTONE
THERAPEUTICS INC., a Delaware corporation (the “Borrower”), the Lenders party
thereto and CHIESI FARMACEUTICI S.P.A., as Administrative Agent for the Lenders.
Unless otherwise defined herein, capitalized terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES, ON ITS BEHALF AND ON BEHALF OF THE BORROWER,
THAT:

1. I am the duly elected                     of the Borrower;

2. I have reviewed the terms of the Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements [for quarterly or monthly financial
statements add: and such 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, subject to normal year-end audit adjustments and the
absence of footnotes];

3. Except as set forth below, the examinations described in paragraph 2 did not
disclose and I have no knowledge of (i) the existence of any condition or event
which constitutes a Default as of the date of this Certificate or (ii) any
change in GAAP or in the application thereof that has occurred since the date of
the audited financial statements referred to in Section 5.05 of the Agreement;

[4. [Add for the year-end financial statements delivered pursuant to
Section 6.01(a) of the Agreement commencing with the Fiscal Year ending
December 31, 2013.] The amount required to be prepaid pursuant to
Section 2.06(b) of the Agreement is [$         ];] and

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the (i) nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event or (i) the change in GAAP or
the application thereof and the effect of such change on the attached financial
statements:

 

 

 

 

 

 

The foregoing certifications are made and delivered this      day of         ,
        .

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPLIANCE CERTIFICATE

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

CORNERSTONE THERAPEUTICS INC.,

as Borrower

By:  

 

Name:  

 

Title:  

 

COMPLIANCE CERTIFICATE

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

EXHIBIT C-1

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any guarantees included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and other rights of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

 

1. Assignor:                                                      

 

2.

Assignee:                                                       [and is an
Affiliate/Approved Fund of [identify Lender]1]

 

3. Borrower:                                                     

 

4. Administrative Agent:                             , as the administrative
agent under the Credit Agreement

 

5. Credit Agreement: [The [amount] Credit Agreement dated as of             
among [name of Borrower], the Lenders parties thereto, [name of Administrative
Agent], as Administrative Agent, and the other agents parties thereto]

 

6. Assigned Interest:

 

Facility

Assigned

  

Aggregate Amount of

Commitment/Loans for all

Lenders

  

Amount of

Commitment/Loans

Assigned

               Percentage Assigned  of            
Commitment/Loans2      $    $        %     $    $        %     $    $        % 

 

1 

Select as applicable.

2 

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

Exhibit C-1-1

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

Effective Date:         , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The Assignee agrees to deliver to the Administrative Agent a completed
Administrative Questionnaire in which the Assignee designates one or more Credit
Contacts to whom all syndicate-level information (which may contain material
non-public information about the Loan Parties and their Related Parties or their
respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and
applicable laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

Title:   ASSIGNEE [NAME OF ASSIGNEE] By:  

 

Title:  

 

Exhibit C-1-2

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

[Consented to and]3 Accepted: [NAME OF ADMINISTRATIVE AGENT], as Administrative
Agent By  

 

Title:   [Consented to:]4 [NAME OF RELEVANT PARTY] By  

 

Title:   ANNEX 1

 

3 

To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

4 

To be added only if the consent of the Borrower and/or other parties is required
by the terms of the Credit Agreement.

 

Exhibit C-1-3

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

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, the Guarantors, any of their Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, the Guarantors any of their Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Non-U.S. Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
facsimile shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

Exhibit C-1-4

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

EXHIBIT C-2

ADMINISTRATIVE QUESTIONNAIRE

CONFIDENTIAL

 

FAX ALONG WITH COMMITMENT LETTER TO: [•]

                                                                   
                      FAX # [•]

I. Borrower Name: CORNERSTONE THERAPEUTICS, INC.

                             $90,000,000.00         Type of Credit Facility TERM
FACILITY

II. Legal Name of Lender of Record for Signature Page:

 

 

 

•      Signing Credit Agreement

              YES               NO   

•      Coming in via Assignment

              YES               NO   

III. Type of Lender:                                          
                                         
                                         
                                                  

(Bank, Asset Manager, Broker/Dealer, CLO/CDO, Finance Company, Hedge Fund,
Insurance, Mutual Fund, Pension Fund, Other Regulated Investment Fund, Special
Purpose Vehicle, Other – please specify)

 

IV. Domestic Address:       V. Eurodollar Address:

 

     

 

 

     

 

 

     

 

 

     

 

VI. Contact Information:

Syndicate level information (which may contain material non-public information
about the Borrower and its related parties or their respective securities) will
be made available to the Credit Contact(s). The Credit Contacts identified must
be able to receive such information in accordance with his/her institution’s
compliance procedures and applicable laws, including Federal and State
securities laws.

 

    

Credit Contact

       

Primary

Operations Contact

       

Secondary

Operations Contact

     Name:   

 

     

 

     

 

   Title:   

 

     

 

     

 

   Address:   

 

     

 

     

 

     

 

     

 

     

 

   Telephone:   

 

     

 

     

 

   Facsimile:   

 

     

 

     

 

   E Mail Address:   

 

     

 

     

 

   IntraLinks E Mail Address:   

 

     

 

     

 

  

Does Secondary Operations Contact need copy of notices?          YES          NO

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

EXHIBIT C-2

ADMINISTRATIVE QUESTIONNAIRE

CONFIDENTIAL

 

 

     

Letter of Credit

Contact

       

Draft Documentation

Contact

       

Legal Counsel

     Name:   

 

     

 

     

 

   Title:   

 

     

 

     

 

   Address:   

 

     

 

     

 

   Telephone:   

 

     

 

     

 

   Facsimile:   

 

     

 

     

 

   E Mail Address:   

 

     

 

     

 

  

VII. Lender’s Standby Letter of Credit, Commercial Letter of Credit, and
Bankers’ Acceptance Fed Wire Payment Instructions (if applicable):

 

Pay to:         

 

      (Bank Name)      

 

      (ABA #)      

 

      (Account #)      

 

      (Attention)   

VIII. Lender’s Fed Wire Payment Instructions:

 

Pay to:            

 

      (Bank Name)         

 

      (ABA#)    (City/State)      

 

      (Account #)    (Account Name)      

 

      (Attention)      

IX. Organizational Structure and Tax Status

Please refer to the enclosed withholding tax instructions below and then
complete this section accordingly:

Lender Taxpayer Identification Number (TIN):          -                 

Tax Withholding Form Delivered to Chiesi Farmaceutici, S.P.A.

             W-9

             W-8BEN

             W-8ECI

             W-8EXP

             W-8IMY

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

EXHIBIT C-2

ADMINISTRATIVE QUESTIONNAIRE

CONFIDENTIAL

 

 

   Tax Contact    Name:   

 

   Title:   

 

   Address:   

 

   Telephone:   

 

   Facsimile:   

 

   E Mail Address:   

 

  

NON–U.S. LENDER INSTITUTIONS

1. Corporations:

If your institution is incorporated outside of the United States for U.S.
federal income tax purposes, and is the beneficial owner of the interest and
other income it receives, you must complete one of the following three tax
forms, as applicable to your institution: a.) Form W-8BEN (Certificate of
Foreign Status of Beneficial Owner), b.) Form W-8ECI (Income Effectively
Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of
Foreign Government or Governmental Agency).

A U.S. taxpayer identification number is required for any institution submitting
a Form W-8 ECI. It is also required on Form W-8BEN for certain institutions
claiming the benefits of a tax treaty with the U.S. Please refer to the
instructions when completing the form applicable to your institution. In
addition, please be advised that U.S. tax regulations do not permit the
acceptance of faxed forms. An original tax form must be submitted.

2. Flow-Through Entities

If your institution is organized outside the U.S., and is classified for U.S.
federal income tax purposes as either a Partnership, Trust, Qualified or
Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original
Form

W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or
Certain U.S. branches for United States Tax Withholding) must be completed by
the intermediary together with a withholding statement. Flow-through entities
other than Qualified Intermediaries are required to include tax forms for each
of the underlying beneficial owners.

Please refer to the instructions when completing this form. In addition, please
be advised that U.S. tax regulations do not permit the acceptance of faxed
forms. Original tax form(s) must be submitted.

U.S. LENDER INSTITUTIONS:

If your institution is incorporated or organized within the United States, you
must complete and return Form W-9 (Request for Taxpayer Identification Number
and Certification). Please be advised that we require an original form W-9.

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EXHIBIT C-2

ADMINISTRATIVE QUESTIONNAIRE

CONFIDENTIAL

 

 

Pursuant to the language contained in the tax section of the Credit Agreement,
the applicable tax form for your institution must be completed and returned on
or prior to the date on which your institution becomes a lender under this
Credit Agreement. Failure to provide the proper tax form when requested will
subject your institution to U.S. tax withholding.

X. Payment Instructions:

Pay to: [•]

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EXHIBIT D

GUARANTY

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in
consideration of credit and/or financial accommodation heretofore or hereafter
from time to time made or granted to CORNERSTONE THERAPEUTICS INC., a Delaware
corporation (the “Borrower”) by (a) CHIESI FARMACEUTICI S.P.A, as administrative
agent (the “Administrative Agent”), for itself and the other lenders (the
“Lenders”) from time to time party to that certain Credit Agreement, dated as of
June 21, 2012 (as amended, restated, modified and otherwise in effect from time
to time, the “Credit Agreement”), by and among the Borrower, the Lenders and the
Administrative Agent, and (b) the Lenders and the other Indemnitees (each of the
parties listed in the above clauses (a) and (b), collectively, the “Guaranteed
Parties”), each of the undersigned Guarantors (collectively, the “Guarantor”,
jointly and severally) hereby furnishes its guaranty of the Guaranteed
Obligations (as hereinafter defined) as follows:

1. Definitions. The term “Obligations” and all other capitalized terms used
herein but not otherwise defined shall have the respective meanings given to
such terms in the Credit Agreement.

2. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as
a guaranty of payment and performance and not merely as a guaranty of
collection, prompt payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all times thereafter,
of the Obligations (including all renewals, extensions, amendments, refinancings
and other modifications thereof and all costs, attorneys’ fees and expenses
incurred by the Administrative Agent or any other Guaranteed Party in connection
with the collection or enforcement thereof), and whether recovery upon such
indebtedness and liabilities may be or hereafter become unenforceable or shall
be an allowed or disallowed claim under any proceeding or case commenced by or
against the Guarantor or the Borrower under the Bankruptcy Code (Title 11,
United States Code), any successor statute or any other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally
(collectively, “Debtor Relief Laws”), and including interest that accrues after
the commencement by or against the Borrower of any proceeding under any Debtor
Relief Laws (collectively, the “Guaranteed Obligations”). The Administrative
Agent’s and the other Guaranteed Parties’ books and records showing the amount
of the Guaranteed Obligations shall be admissible in evidence in any action or
proceeding, and shall be binding upon the Guarantor and conclusive for the
purpose of establishing the amount of the Guaranteed Obligations. This Guaranty
shall not be affected by the genuineness, validity, regularity or enforceability
of the Guaranteed Obligations or any instrument or agreement evidencing any
Guaranteed Obligations, or by the existence, validity, enforceability,
perfection, non-perfection or extent of any collateral therefor, or by any fact
or circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to the obligations of the Guarantor under this Guaranty,
and the Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to any or all of the foregoing. Anything
contained herein to the contrary notwithstanding, the obligations of the
Guarantor hereunder at any time shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of the
Bankruptcy Code (Title 11, United States Code) or any comparable provisions of
any similar federal or state law.

3. No Setoff or Deductions; Taxes; Payments. To the extent the Borrower is
required to do so under the terms of the Credit Agreement, the Guarantor shall
make all payments hereunder without setoff or counterclaim and free and clear of
and without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other

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authority therein unless the Guarantor is compelled by law to make such
deduction or withholding. If any such obligation (other than one arising with
respect to taxes based on or measured by the income or profits of any Guaranteed
Party) is imposed upon the Guarantor with respect to any amount payable by it
hereunder, the Guarantor will pay to the Administrative Agent, for the benefit
of the related Guaranteed Parties, on the date on which such amount is due and
payable hereunder, such additional amount in U.S. dollars as shall be necessary
to enable the related Guaranteed Parties to receive the same net amount which
such Guaranteed Parties would have received on such due date had no such
obligation been imposed upon the Guarantor. The obligations of the Guarantor
under this paragraph shall survive the payment in full of the Guaranteed
Obligations and termination of this Guaranty.

4. Rights of Administrative Agent and other Guaranteed Parties. The Guarantor
consents and agrees that the Administrative Agent and the other Guaranteed
Parties may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or continuing effectiveness hereof:
(a) amend, extend, renew, compromise, discharge, accelerate or otherwise change
the time for payment or the terms of the Guaranteed Obligations or any part
thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect,
sell, or otherwise dispose of any security for the payment of this Guaranty or
any Guaranteed Obligations; (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent in its sole discretion may
determine; and (d) release or substitute one or more of any endorsers or other
guarantors of any of the Guaranteed Obligations. Without limiting the generality
of the foregoing, the Guarantor consents to the taking of, or failure to take,
any action which might in any manner or to any extent vary the risks of the
Guarantor under this Guaranty or which, but for this provision, might operate as
a discharge of the Guarantor.

5. Certain Waivers. The Guarantor waives (a) any defense arising by reason of
any disability or other defense of the Borrower or any other guarantor, or the
cessation from any cause whatsoever (including any act or omission of any
Guaranteed Party) of the liability of the Borrower; (b) any defense based on any
claim that the Guarantor’s obligations exceed or are more burdensome than those
of the Borrower; (c) the benefit of any statute of limitations affecting the
Guarantor’s liability hereunder; (d) any right to require any Guaranteed Party
to proceed against the Borrower, proceed against or exhaust any security for the
Guaranteed Obligations, or pursue any other remedy in such Guaranteed Party’s
power whatsoever; (e) any benefit of and any right to participate in any
security now or hereafter held by the Guaranteed Parties; and (f) to the fullest
extent permitted by law, any and all other defenses or benefits that may be
derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties. The Guarantor expressly waives all setoffs
and counterclaims and all presentments, demands for payment or performance,
notices of nonpayment or nonperformance, protests, notices of protest, notices
of dishonor and all other notices or demands of any kind or nature whatsoever
with respect to the Guaranteed Obligations, and all notices of acceptance of
this Guaranty or of the existence, creation or incurrence of new or additional
Guaranteed Obligations.

6. Obligations Independent. The obligations of the Guarantor hereunder are those
of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.

7. Subrogation. The Guarantor shall not exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty have been indefeasibly paid and
performed in full and any commitments of the Lenders or facilities provided by
the Lenders with respect to the Guaranteed Obligations are terminated. If any
amounts are paid to the Guarantor in violation of the foregoing limitation, then
such amounts shall be held in trust for the benefit of the Guaranteed Parties
and shall forthwith be paid to the Administrative Agent for the benefit of the
Guaranteed Parties to reduce the amount of the Guaranteed Obligations, whether
matured or unmatured.

 

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8. Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are indefeasibly paid in full in cash and
any commitments of the Lenders or facilities provided by the Lenders with
respect to the Guaranteed Obligations are terminated. Notwithstanding the
foregoing, this Guaranty shall continue in full force and effect or be revived,
as the case may be, if any payment by or on behalf of the Borrower or the
Guarantor is made, or any Guaranteed Party exercises its right of setoff, in
respect of the Guaranteed Obligations and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Guaranteed Party in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with any proceeding
under any Debtor Relief Laws or otherwise, all as if such payment had not been
made or such setoff had not occurred and whether or not the Administrative Agent
is in possession of or has released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction. The obligations of the
Guarantor under this paragraph shall survive termination of this Guaranty.

9. Subordination. The Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to the Guarantor, whether now
existing or hereafter arising, including but not limited to any obligation of
the Borrower to the Guarantor as subrogee of any Guaranteed Party or resulting
from the Guarantor’s performance under this Guaranty, to the indefeasible
payment in full in cash of all Guaranteed Obligations. If the Administrative
Agent so requests, any such obligation or indebtedness of the Borrower to the
Guarantor shall be enforced and performance received by the Guarantor as trustee
for the Guaranteed Parties and the proceeds thereof shall be paid over to the
Administrative Agent for the benefit of the Guaranteed Parties on account of the
Guaranteed Obligations, but without reducing or affecting in any manner the
liability of the Guarantor under this Guaranty.

10. Stay of Acceleration. In the event that acceleration of the time for payment
of any of the Guaranteed Obligations is stayed, in connection with any case
commenced by or against the Guarantor or the Borrower under any Debtor Relief
Laws, or otherwise, all such amounts shall nonetheless be payable by the
Guarantor immediately upon demand by the Administrative Agent.

11. Expenses. The Guarantor shall pay on demand all out-of-pocket expenses
(including attorneys’ fees and expenses) in any way relating to the enforcement
or protection of the Administrative Agent’s and the other Guaranteed Parties’
rights under this Guaranty or in respect of the Guaranteed Obligations,
including any incurred during any “workout” or restructuring in respect of the
Guaranteed Obligations and any incurred in the preservation, protection or
enforcement of any rights of any Guaranteed Party in any proceeding any Debtor
Relief Laws. The obligations of the Guarantor under this paragraph shall survive
the payment in full of the Guaranteed Obligations and termination of this
Guaranty.

12. Miscellaneous. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by the
Administrative Agent and the Guarantor. No failure by the Administrative Agent
or any other Guaranteed Party to exercise, and no delay in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy or power hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law or in equity. The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other provision herein.

 

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Unless otherwise agreed by the Administrative Agent and the Guarantor in
writing, this Guaranty is not intended to supersede or otherwise affect any
other guaranty now or hereafter given by the Guarantor for the benefit of the
Administrative Agent or any other Guaranteed Party or any term or provision
thereof.

13. Condition of Borrower. The Guarantor acknowledges and agrees that it has the
sole responsibility for, and has adequate means of, obtaining from the Borrower
and any other guarantor such information concerning the financial condition,
business and operations of the Borrower and any such other guarantor as the
Guarantor requires, and that no Guaranteed Party has any duty, and the Guarantor
is not relying on the Guaranteed Parties at any time, to disclose to the
Guarantor any information relating to the business, operations or financial
condition of the Borrower or any other guarantor (the guarantor waiving any duty
on the part of the Guaranteed Parties to disclose such information and any
defense relating to the failure to provide the same).

14. Setoff. If and to the extent any payment is not made when due hereunder, the
Administrative Agent or any other Guaranteed Party may setoff and charge from
time to time any amount so due against any or all of the Guarantor’s accounts or
deposits with the Administrative Agent or such Guaranteed Party, respectively.

15. Representations and Warranties. The Guarantor represents and warrants that
(a) it is duly organized and in good standing under the laws of the jurisdiction
of its organization and has full capacity and right to make and perform this
Guaranty, and all necessary authority has been obtained; (b) this Guaranty
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms; (c) the making and performance of this Guaranty does not and
will not violate the provisions of any applicable law, regulation or order, and
does not and will not result in the breach of, or constitute a default or
require any consent under, any material agreement, instrument, or document to
which it is a party or by which it or any of its property may be bound or
affected; and (d) all consents, approvals, licenses and authorizations of, and
filings and registrations with, any governmental authority required under
applicable law and regulations for the making and performance of this Guaranty
have been obtained or made and are in full force and effect.

16. Indemnification and Survival. Without limitation on any other obligations of
the Guarantor or remedies of the Guaranteed Parties under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Administrative Agent and the other Guaranteed Parties
as set forth in the Credit Agreement. The obligations of the Guarantor under
this paragraph shall survive the payment in full of the Guaranteed Obligations
and termination of this Guaranty.

17. GOVERNING LAW; Assignment; Jurisdiction; Notices. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT
WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER
STATE). This Guaranty shall (a) bind the Guarantor and its successors and
assigns, provided that the Guarantor may not assign its rights or obligations
under this Guaranty without the prior written consent of the Administrative
Agent (and any attempted assignment without such consent shall be void), and
(b) inure to the benefit of the Administrative Agent and the other Guaranteed
Parties and their respective successors and assigns. The Guarantor hereby
irrevocably (i) submits to the non-exclusive jurisdiction of any United States
Federal or State court sitting in the City of New York, New York in any action
or proceeding arising out of or relating to this Guaranty, and (ii) waives to
the fullest extent permitted by law any defense asserting an inconvenient forum
in connection therewith. Service of process by the Administrative Agent or any
other Guaranteed Party in connection with such action or proceeding shall be
binding on the Guarantor if sent

 

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to the Guarantor by registered or certified mail at its address specified below
or such other address as from time to time notified by the Guarantor. The
Guarantor agrees that the Administrative Agent and the other Guaranteed Parties
may disclose to any assignee of or participant in, or any prospective assignee
of or participant in, any of their respective rights or obligations of all or
part of the Guaranteed Obligations any and all information in such Guaranteed
Party’s possession concerning the Guarantor, this Guaranty and any security for
this Guaranty. All notices and other communications under this Guaranty shall be
made in the manner set forth in Section 10.02 of the Credit Agreement and, in
the case of each Guarantor, to such Guarantor in care of the Borrower.

18. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE
LAW, THE GUARANTOR AND THE LENDER EACH IRREVOCABLY WAIVES TRIAL BY JURY WITH
RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON, ARISING OUT OF OR RELATING
TO THIS GUARANTY OR THE GUARANTEED OBLIGATIONS. THIS GUARANTY REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

19. Additional Guarantors. Subsidiaries of the Borrower (each, an “Additional
Guarantor”) may hereafter become parties to this Guaranty by executing and
delivering to the Administrative Agent , for the benefit of the Guaranteed
Parties, a supplement or joinder to this Guaranty (each a “Guaranty Supplement”)
as provided in Section 6.12 of the Credit Agreement, in each case, in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.
Upon such execution and delivery by any Additional Guarantor, such Additional
Guarantor shall be bound by all of the terms, covenants and conditions hereof to
the same extent as if such Additional Guarantor had executed this Guaranty as of
the Closing Date, and the Administrative Agent, for itself and for the benefit
of the other Guaranteed Parties, shall be entitled to all of the benefits of
such Additional Guarantor’s obligations hereunder. The Guarantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition of an Additional Guarantor or the release of another
Guarantor hereunder, nor by any election of the Administrative Agent not to
cause any Person to become an Additional Guarantor.

[Remainder of page intentionally left blank]

 

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Executed this     day of June, 2012

 

ARISTOS PHARMACEUTICALS, INC.

as Guarantor

By:  

 

Name:  

 

Title:  

 

CORNERSTONE BIOPHARMA, INC.

as Guarantor

By:  

 

Name:  

 

Title:  

 

CORNERSTONE BIOPHARMA HOLDINGS, INC.

as Guarantor

By:  

 

Name:  

 

Title:  

 

CARDIOKINE, INC.

as Guarantor

By:  

 

Name:  

 

Title:  

 

CARDIOKINE BIOPHARMA, LLC

as Guarantor

By:  

 

Name:  

 

Title:  

 

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STONE ACQUISITION SUB, INC.

as Guarantor

By:  

 

Name:  

 

Title:  

 

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EXHIBIT E

FORM OF INSTRUMENT OF

ASSUMPTION AND JOINDER

THIS ASSUMPTION AND JOINDER AGREEMENT dated as of                      (this
“Assumption Agreement”) made by [Insert Name of New Loan Party], a [Insert State
of Organization] [corporation] [limited liability company] [partnership] (the
“Company”) in favor of the lenders (the “Lenders”) referred to in that certain
Credit Agreement dated as of June 21, 2012 (as the same may be further amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
“Credit Agreement”; capitalized terms used but not defined herein shall have the
meanings given to such terms in the Credit Agreement) among Cornerstone
Therapeutics Inc. (the “Borrower”), the lenders referred to therein (the
“Lenders”) and Chiesi Farmaceutici S.p.A., as administrative agent (the
“Administrative Agent”).

W I T N E S S E T H

The Company is a [Insert State of Organization] [corporation] [limited liability
company] [partnership], and is a Subsidiary of [Insert name of applicable Loan
Party]. Pursuant to Sections 6.12 and 6.14 of the Credit Agreement, the Company
is required to execute this document as a newly formed or acquired Subsidiary of
[Insert name of Loan Party].

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company hereby
agrees as follows:

1. Assumption and Joinder.

(a) The Company hereby expressly confirms that it has assumed, and hereby agrees
to perform and observe, each and every one of the covenants, rights, promises,
agreements, terms, conditions, obligations, appointments, duties and liabilities
of a Guarantor under the Guaranty, a Grantor under the Security Agreement and a
Loan Party under all other Loan Documents applicable to it and agrees to,
concurrently with its execution and delivery of this Assumption Agreement, enter
into and deliver [Insert any other documents to which such Guarantor is required
to be a party to under the Credit Agreement, e.g. IP Security Agreement or items
required to be delivered, e.g. pledged stock of its subsidiaries]. By virtue of
the foregoing, the Company hereby accepts and assumes any liability of (x) a
Guarantor related to each representation or warranty, covenant or obligation
made by such Guarantor and/or such Loan Party to the extent provided in the Loan
Documents to which it is or becomes a party and hereby expressly affirms as to
itself only, as of the date hereof, each of such representations, warranties
(except to the extent that such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties were true
and correct in all respects as of such earlier date), covenants and obligations,
(y) a Grantor (as defined in the Security Agreement) related to each covenant or
obligation made by a Grantor in the Security Agreement and hereby expressly
affirms, as of the date hereof, each of such covenants and obligations and (z) a
Grantor (as defined in the Intellectual Property Security Agreement) related to
each covenant or obligation made by a Grantor in the Intellectual Property
Security Agreement and hereby expressly affirms, as of the date hereof, each of
such covenants and

 

EXHIBIT E TO CREDIT AGREEMENT

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obligations. Further, the Company hereby acknowledges that it has received
executed copies (together with any amendments thereto) of the Credit Agreement,
the Security Agreement, the Guaranty and each of the other Loan Documents to
which the Company is joining pursuant to this Assumption Agreement.

(b) All references to the terms “Guarantor” or “Loan Party”, in the Credit
Agreement, Guaranty or any other Loan Document, or in any document or instrument
executed and delivered or furnished, or to be executed and delivered or
furnished, in connection therewith shall be deemed to be references to, and
shall include, the Company.

(c) All references to the term “Grantor” in the Security Agreement, or in any
document or instrument executed and delivered or furnished, or to be executed
and delivered or furnished, in connection therewith shall be deemed to be
references to, and shall include, the Company.

2. Representations and Warranties. The Company hereby represents and warrants to
the Administrative Agent and the Lenders as follows:

(a) The Company has the requisite [corporate] power and authority to enter into
this Assumption Agreement and to perform its obligations hereunder and under the
Credit Agreement, the Security Agreement, the Guaranty and the other Loan
Documents to which it is a party. The execution, delivery and performance of
this Assumption Agreement by the Company and the performance of its obligations
hereunder and under the Credit Agreement, the Security Agreement, the Guaranty
and the other Loan Documents to which it is a party have been duly authorized by
the Board of Directors (or equivalent body) of the Company and no other
[corporate] proceedings on the part of the Company are necessary to authorize
the execution, delivery or performance of this Assumption Agreement, the
transactions contemplated hereby or the performance of its obligations under the
Credit Agreement, the Security Agreement, the Guaranty or any other Loan
Document to which it is a party. This Assumption Agreement has been duly
executed and delivered by the Company. This Assumption Agreement, the Credit
Agreement, the Security Agreement, the Guaranty and the other Loan Documents to
which it is a party each constitutes a legal, valid and binding obligation of
the Company enforceable against it in accordance with its respective 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 such enforceability is considered a
proceeding in equity or at law.

(b) The representations and warranties set forth in Article V of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof (except to the extent that such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
were true in all material respects as of such earlier date) with the same effect
as if made on and as of the date hereof.

(c) The authorized capitalization of the Company, the number of [shares] of its
capital stock outstanding on the date hereof, and the ownership of the
outstanding [shares] of its capital stock is set forth on Schedule 1 hereto.

 

EXHIBIT E TO CREDIT AGREEMENT

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(d) As of the date hereof, the Company has not done business, is not doing
business and does not intend to do business other than under its full corporate
name, including, without limitation, under any trade name or other doing
business name and is in good standing in all jurisdictions where the nature of
its properties or business so requires except jurisdictions where the failure to
be in good standing could not reasonably be expected to result in a Material
Adverse Effect.

(e) The chief executive office of the Company is located at
[                    ]. Such office is the place where the Company keeps the
records concerning the Collateral attributable to it, if any, on the date
hereof. The only places at which the Company regularly keeps any goods included
in the Collateral attributable to it, if any, on the date hereof are the places
listed on Schedule 2 hereto. The Company’s taxpayer identification number,
jurisdiction of organization and organizational identification number are listed
on Schedule 2 hereto.

(f) Attached hereto as Exhibit A is a certificate of the Secretary, Assistant
Secretary or other appropriate officer of the Company, dated as of the date
hereof and certifying (i) that attached thereto are true and complete copies of
(A) the certificate of formation, articles or certificate of incorporation or
certificate of limited partnership (or equivalent document) of the Company,
certified on a recent date by the Secretary of State or other relevant office of
the Company’s jurisdiction of incorporation or organization, as the case may be,
which certificate lists (if available) the charter documents on file in the
office of such Secretary of State; (B) the by-laws, limited liability company
agreement, partnership agreement or equivalent document of the Company in effect
on the date of such certification; (C) the resolutions adopted by the Board of
Directors (or equivalent body) of the Company authorizing the execution,
delivery and performance in accordance with their respective terms of the Loan
Documents joined by the Company pursuant to this Assumption Agreement, as
applicable, and any other documents required or contemplated hereunder or
thereunder, including the grant of the security interests in the Collateral
attributable to the Company, if any, and that such resolutions have not been
amended, rescinded or supplemented and are currently in effect; (ii) that the
certificate of formation, articles or certificate of incorporation or
certificate of limited partnership (or equivalent document) of the Company has
not been amended since the date of the last amendment thereto indicated on the
certificates of the Secretary of State or other appropriate office furnished
pursuant to clause (i) above; and (iii) as to the incumbency and specimen
signature of each officer of such the Company executing this Assumption
Agreement and any other Loan Document (such certificate to contain a
certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(f)).

3. Further Assurances. At any time and from time to time, upon the
Administrative Agent’s reasonable request and at the sole expense of the
Company, the Company will promptly and duly execute and deliver any and all
further instruments and documents and take such further action as the
Administrative Agent reasonably deems necessary to effect the purposes of this
Assumption Agreement.

4. Binding Effect. This Assumption Agreement shall be binding upon the Company
and shall inure to the benefit of the Administrative Agent and the Lenders and
their respective successors and assigns.

 

EXHIBIT E TO CREDIT AGREEMENT

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5. Delivery. Delivery of an executed signature page of this Assumption Agreement
by facsimile or e-mail in a Tagged Image Format File (“TIFF”), Portable Document
Format (“PDF”) or other electronic format sent by e-mail shall be effective as
delivery of a manually executed counterpart of this Assumption Agreement. If the
Company executes this Assumption Agreement by facsimile or by e-mail, it shall
also deliver a manually executed signature page to this Agreement, but failure
to do so shall not affect the validity, enforceability or binding effect of this
Assumption Agreement, and the Company hereby waives any right it may have to
object to said treatment.

6. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL IN ALL RESPECTS BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.

 

EXHIBIT E TO CREDIT AGREEMENT

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IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered by its duly authorized officer as of the date first
above written.

 

[NAME OF COMPANY] By  

 

Name:   Title:  

Signature Page to Instrument of Assumption and Joinder

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SCHEDULE 1

[Capital Stock] of [Name Of Company]

Authorized capitalization:

Number of [shares of capital stock]

      outstanding:

Ownership of the outstanding

      [capital stock]:

 

EXHIBIT E TO CREDIT AGREEMENT

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SCHEDULE 2

Location of Goods Included in the Collateral

Identifying Information

 

Taxpayer Identification Number:  

 

  Jurisdiction of Organization:  

 

  Organizational Number:  

 

 

 

EXHIBIT E TO CREDIT AGREEMENT

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EXHIBIT A

SECRETARY’S CERTIFICATE

 

EXHIBIT E TO CREDIT AGREEMENT