Document:

AMENDMENT
      NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT

     

    This
      Amendment
      No. 2 to
      the
      Amended
      and Restated Credit Agreement,
      dated
      as of November 6, 2007 (this “Amendment”),
      among
U.S.
      Concrete, Inc., a
      Delaware corporation (the “Borrower”),
      the
      Lenders, the Issuers and Citicorp
      north america, Inc.,
      as
      agent for the Lenders and the Issuers and as agent for the Secured Parties
      under
      the Collateral Documents (in such capacity, the “Administrative
      Agent”);
      Bank
      of
      America, N.A.,
      in its
      capacity as syndication agent for the Lenders and the Issuers (the “Syndication
      Agent”)
      and
JPMorgan
      Chase Bank,
      in its
      capacity as documentation agent for the Lenders and the Issuers (the
“Documentation
      Agent”).

     

     

    Preliminary
      Statements

     

    Capitalized
      terms defined in the Credit Agreement (as defined below) and not otherwise
      defined in this Amendment are used herein as therein defined.

     

    The
      Borrower, the Lenders, the Issuers, the Administrative Agent, the Syndication
      Agent and the Documentation Agent are parties to that certain Amended and
      Restated Credit Agreement dated as of June 30, 2006 (as the same has been
      amended by Amendment No. 1 dated March 1, 2007 and has been otherwise
      amended, supplemented or modified from time to time until the date hereof,
      the
“Credit
      Agreement”).

     

    The
      Borrower has requested that Section
      1.1 (Defined Terms)
      and
Section
      8.4 (Sale of Assets) of
      the
      Credit Agreement be amended to allow the sale of certain assets for a purchase
      price not exceeding $25,000,000.

     

    The
      parties hereto agree to amend the Credit Agreement upon the terms and subject
      to
      the conditions set forth herein.

     

    SECTION
      1.  Amendments.
      Subject
      to the satisfaction of the conditions precedent set forth in Section 2 hereof,
      the Credit Agreement is hereby amended as follows:

     

    (a)  Section
      1.1 (Defined Terms)
      of the
      Credit Agreement is hereby amended by amending and restating the following
      definition in its entirety as follows:

     

      “Capital
      Expenditures”
means,
      for any Person for any period, the aggregate of amounts that would be reflected
      as additions to property, plant or equipment on a Consolidated statement of
      cash
      flow of such Person and its Subsidiaries, excluding costs and interest
      capitalized during construction; provided
      that
      such
      term shall not include amounts expended (i) during such period as a part of
      the consideration for, or assets acquired in connection with, any Permitted
      Acquisition or obligations assumed in any Permitted Acquisition,
      (ii) during such period to replace or repair assets, equipment or other
      property lost, destroyed, damaged or condemned or otherwise to acquire,
      maintain, develop, construct, improve, upgrade or repair assets in replacement
      of assets, equipment or other property lost, destroyed, damaged or condemned,
      in
      each case, solely (except for any applicable customary deductible retainage,
      co-payment or similar deduction or reduction in reimbursement) to the extent
      of
      the amount of reimbursement (whether pursuant to insurance or indemnity claims)
      that such Person has actually received in respect of such lost, destroyed,
      damaged or condemned assets and (iii) during such period on or after
      October 31, 2007, but on or prior to December 31, 2009, for the design,
      purchase, installation and implementation of software for financial and business
      reporting, retrieval and analysis (and related computer and peripheral
      equipment) in an aggregate amount not to exceed $12,000,000.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  Section
      8.4 (Sale of Assets)
      of the
      Credit Agreement is hereby amended by amending and restating clause (g)
      thereof
      in its entirety as follows: 

     

    (g) as
      long
      as no Default or Event of Default is continuing or would result therefrom,
      any
      other Asset Sale for Fair Market Value, payable in cash upon such sale;
provided,
      however,
      that
      with respect to any such Asset Sale pursuant to this clause
      (g),
      (i) the aggregate consideration received during any Fiscal Year for all
      such Asset Sales shall not exceed $25,000,000 and (ii) an amount equal to
      all Net Cash Proceeds of such Asset Sale are applied to the payment of the
      Obligations as set forth in, and to the extent required by, Section 2.9
      (Mandatory Prepayments);

     

    SECTION
      2.  Conditions
      to Effectiveness.
      This
      Amendment shall become effective on the date when each of the following
      conditions precedent have first been satisfied (the “Effective
      Date”):

     

    (a) Certain
      Documents. The
      Administrative Agent shall have received counterparts of each of the following,
      each dated the Effective Date (unless otherwise agreed by the Administrative
      Agent), in form and substance satisfactory to the Administrative
      Agent:

     

    (i) this
      Amendment executed by the Borrower, the Administrative Agent and the Requisite
      Lenders;

     

    (ii) a
      consent
      and reaffirmation in respect of this Amendment in the form attached hereto,
      executed by each Guarantor; and

     

    (iii) such
      other documents as the Administrative Agent may reasonably request.

     

    (b) Fees
      and Expenses Paid.
      There
      shall have been paid to the Administrative Agent (i) for the account of each
      Lender that executes and delivers this Amendment on or prior to 12:00 p.m.
      Eastern Time on November 9, 2007, an amount equal to 0.05% of the Revolving
      Credit Commitments of such Lender, which the Administrative Agent shall remit
      to
      each relevant Lender upon the Effective Date and (ii) for the account of the
      Administrative Agent, the reasonable out-of-pocket expenses (including
      reasonable fees and expenses of counsel) of the Administrative Agent due and
      payable on or before the Effective Date.

     

    SECTION
      3.  Construction
      with the Loan Documents.

     

    (a)  On
      and
      after the Effective Date, each reference in the Credit Agreement to
“this
      Agreement,”
      “hereunder,”
      “hereof,”
      “herein,”
or
      words of like import, and each reference in the other Loan Documents to the
      Credit Agreement, shall mean and be a reference to the Credit Agreement as
      amended hereby, and this Amendment and the Credit Agreement shall be read
      together and construed as a single instrument. The table of contents, signature
      pages and list of Exhibits and Schedules of the Credit Agreement shall be deemed
      modified to reflect the changes made by this Amendment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  Except
      as
      expressly amended hereby, all of the terms and provisions of the Credit
      Agreement and all other Loan Documents are and shall remain in full force and
      effect and are hereby ratified and confirmed, including the respective
      guarantees and security interests granted pursuant to the respective Loan
      Documents.

     

    (c)  The
      execution, delivery and effectiveness of this Amendment shall not, except as
      expressly provided herein, operate as a waiver of any right, power or remedy
      of
      the Lenders, the Issuers, the Arrangers or the Agents under any of the Loan
      Documents, nor constitute a waiver or amendment of any provision of any of
      the
      Loan Documents or for any purpose except as expressly set forth
      herein.

     

    (d)  This
      Amendment is a Loan Document.

     

    (e)  This
      Amendment shall not extinguish, discharge or release the Lien or priority of
      any
      Loan Document or any other security therefor or any guarantee thereof. The
      Credit Agreement and each of the other Loan Documents shall remain in full
      force
      and effect, except as modified hereby in connection herewith. 

     

    SECTION
      4.  Governing
      Law.
      This
      Amendment is governed by, and shall be construed in accordance with, the law
      of
      the State of New York.

     

    SECTION
      5.  Representations
      And Warranties.
      The
      Borrower hereby represents and warrants that each of the representations and
      warranties made by it in the Credit Agreement, as amended hereby, and the other
      Loan Documents to which it is a party, shall be true and correct in all material
      respects on and as of the date hereof (other than representations and warranties
      in any such Loan Document which expressly speak as of a specific date, which
      shall have been true and correct in all material respects as of such specific
      date) and no Default or Event of Default has occurred and is continuing as
      of
      the date hereof.

     

    SECTION
      6.  Execution
      in Counterparts.
      This
      Amendment may be executed in any number of counterparts and by different parties
      in separate counterparts, each of which when so executed shall be deemed to
      be
      an original and all of which taken together shall constitute one and the same
      agreement. Signature pages may be detached from multiple separate counterparts
      and attached to a single counterpart so that all signature pages are attached
      to
      the same document. Delivery of an executed counterpart by telecopy shall be
      effective as delivery of a manually executed counterpart of this
      Amendment.

     

    

    [Signature
      Pages Follow]

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
      by
      their respective officers thereunto duly authorized, as of the date first above
      written. 

     

    
      	 	 	 
	 	
              U.S.
                CONCRETE, INC.

              as
                Borrower

            
	 
 	 
 	 
 
	 	By:  	/s/ Robert
              D.
              Hardy
	 	
              
Name:
              Robert D. Hardy
	 	Title:
              Executive Vice President and Chief Financial
              Officer

    

    
      

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	Citicorp
              North
              America, Inc.,
	 	as Administrative Agent, Swing
              Loan Lender
              and Lender
	 
 	 
 	 
 
	 	By:  	/s/ Keith
              R.
              Gerding 
	 	
              
Name:
              Keith R. Gerding 
	 	Title:
              Vice President and Director

    

     

    
      	 	 	 
	 	
              Bank
                of
                America, N.A., as
                Syndication Agent and
                Lender

            
	 
 	 
 	 
 
	 	By:  	/s/ Joy
              L.
              Bartholomew
	 	
              
Name:
              Joy L. Bartholomew
	 	Title:
              Senior Vice President

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	 	 
	 	JPMorgan
              Chase
              Bank,
              as
              Documentation Agent and Lender
	 
 	 
 	 
 
	 	By:  	/s/ Courtney
              Jeans
	 	
              
Name:
              Courtney Jeans
	 	Title:
              Vice President

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	 	 
	 	Branch
              Banking and
              Trust Co.,
              as
              Lender
	 
 	 
 	 
 
	 	By:  	/s/ Troy
              R.
              Weaver
	 	
              
Name:
              Troy R. Weaver
	 	Title:
              Senior Vice President

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	 	 
	 	Capital
              One,
              N.A.,
              as
              Lender
	 
 	 
 	 
 
	 	By:  	/s/ Don
              Backer
	 	
              
Name:
              Don Backer
	 	Title:
              Senior Vice President

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	Comerica
              Bank,
              as
              Lender
	 
 	 
 	 
 
	 	By:  	/s/ De
              Von Lang
	 	
              
Name:
              De Von Lang
	 	Title:
              Corporate Banking Officer

    

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	Wells
              Fargo & Company,
              as
              Lender
	 
 	 
 	 
 
	 	By:  	/s/ John
              Kallina
	 	
              
Name:
              John Kallina
	 	Title:
              Vice President

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    CONSENT
      AND REAFFIRMATION OF GUARANTORS

    

    

    Dated
      as
      of November 6, 2007

    

    

    Each
      of
      the undersigned, as a Guarantor under the Guaranty dated as of March 12, 2004
      (the “Guaranty”),
      and
      as a Loan Party under each Collateral Document to which it is a party, hereby
      consents to that certain Amendment No. 2 to Amended and Restated Credit
      Agreement dated as of the date hereof and to which this consent and
      reaffirmation is attached (the “Amendment”)
      and
      hereby confirms and agrees that notwithstanding the effectiveness of the
      Amendment and the Increase thereunder and as defined therein, the Guaranty
      and
      all Liens granted by it pursuant to the Collateral Documents are, and shall
      continue to be, in full force and effect and are hereby ratified and confirmed
      in all respects, except that, on and after the effectiveness of the Amendment,
      each reference in the Guaranty and such Collateral Documents to the
“Credit
      Agreement”,
      “thereunder”,
      “thereof”
or
      words of like import shall mean and be a reference to the Credit Agreement,
      as
      amended by the Amendment.

     

    
      	 	 	 
	 	
              Eastern
                Concrete Materials, Inc.

              Kurtz
                Gravel Company

              Superior
                Holdings, Inc.

              Titan
                Concrete Industries, Inc.

            
	 
 	 
 	 
 
	 	By:  	/s/ Robert
              D.
              Hardy
	 	
              
Name: Robert
              D. Hardy
	 	Title: Vice
              President and Secretary

    
      	 	 	 
	 	Breckenridge
              Ready
              Mix, Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Robert
              D.
              Hardy
	 	
              
Name:
              Robert D. Hardy
	 	Title: Vice
              President 

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	
              Alberta
                Investments, Inc.

              Alliance
                Haulers, Inc.

              American
                Concrete Products, Inc.

              Atlas-Tuck
                Concrete, Inc.

              Beall
                Concrete Enterprises, LLC

              Beall
                Industries, Inc.

              Beall
                Management, Inc.

              Builders’
                Redi-Mix, LLC

              BWB,
                Inc. of Michigan

              Central
                Concrete Corp.

              Central
                Concrete Supply Co., Inc.

              Central
                Precast Concrete, Inc.

              Ingram
                Concrete, LLC

              Ready
                Mix Concrete Company of Knoxville

              Redi-Mix
                Concrete, L.P.

              Redi-Mix
                GP, LLC

              Redi-Mix,
                LLC

              San
                Diego Precast Concrete, Inc.

              Sierra
                Precast, Inc.

              Smith
                Pre-Cast, Inc.

              Superior
                Concrete Materials, Inc.

              U.S.
                Concrete On-Site, Inc.

              USC
                Management Co., LLC

              USC
                Payroll, Inc.

            
	 
 	 
 	 
 
	 	  	 

    
      	 	 	 
	 	By:  	/s/ Curt
              M.
              Lindeman
	 	
              
Name: Curt
              M. Lindeman
	 	Title: Vice
              President and Secretary

    

    
      

      	 	 	 
	 	
              Concrete
                XXXI Acquisition, Inc.

              Concrete
                XXXII Acquisition, Inc.

              Concrete
                XXXIII Acquisition, Inc.

              Concrete
                XXXIV Acquisition, Inc.

              Concrete
                XXXV Acquisition, Inc.

              Concrete
                XXXVI Acquisition, Inc.

            
	 
 	 
 	 
 
	 	By:  	/s/ Curt
              Lindeman
	 	
              
Name: Curt
              Lindeman
	 	Title:
              President

    

    

    

    
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	 	 
	 	USC
              Atlantic,
              Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              W. Harlan
	 	
              
Name: Michael
              W. Harlan
	 	Title: President
              and Secretary

    

    
 

    
      	 	 	 
	 	USC
              Michigan,
              Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              W. Harlan
	 	
              
Name: Michael
              W. Harlan
	 	Title: Vice
              President and Secretary

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 	 	 
	 	Wyoming
              Concrete
              Industries, LLC
	 
 	 
 	 
 
	 	By:  	/s/ Sean
              Gore
	 	
              
Name: Sean
              Gore
	 	Title: Vice
              President and SecretaryExhibit
      4.2

     

    THIS
      INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT BY MAGANLAL
      SUTARIA AND VIMLA SUTARIA IN FAVOR OF WELLS FARGO BANK, NATIONAL ASSOCIATION,
      ACTING
      THROUGH ITS WELLS FARGO BUSINESS
      CREDIT OPERATING
      DIVISION,
      DATED
      NOVEMBER 7, 2007.

    

      
        	
                No.
                  1

              	
                $3,000,000

              
	
                Date:
                  November 7, 2007

              	 

      

    

     

    INTERPHARM
      HOLDINGS INC.

    AND

    INTERPHARM,
      INC.

    JUNIOR
      SUBORDINATED SECURED 12% NOTE DUE 2010

     

    THIS
      NOTE
      is a duly authorized and issued promissory note of INTERPHARM HOLDINGS INC.,
      a
      Delaware corporation (the “Company”),
      and
      INTERPHARM, INC., a New York corporation (“Interpharm”
and
      together with the Company, the “Borrowers”)
      designated as their Junior Subordinated Secured 12% Notes due 2010, in the
      original aggregate principal amount of $3,000,000 (the “Note”).

     

    FOR
      VALUE
      RECEIVED, the Borrowers, jointly and severally, promise to pay to the order
      of
      MAGANLAL AND VIMLA SUTARIA, as joint tenants with right of survivorship, or
      their registered assigns (the “Holder”),
      the
      principal sum of three million ($3,000,000) dollars, on the Maturity Date (as
      defined below), or such earlier date as the Notes are required or permitted
      to
      be repaid as provided hereunder, and to pay interest to the Holder on the then
      outstanding principal amount of this Note in accordance with the provisions
      hereof. Notwithstanding anything to the contrary contained herein, this Note
      shall bear interest on the due and unpaid interest and outstanding principal
      amount hereof from and after the occurrence and during the continuance of an
      Event of Default at the rate (the “Default
      Rate”)
      equal
      to eighteen percent (18%). 

     

    Interest
      payable under this Note shall be computed on the basis of a year of 360 days
      and
      actual days elapsed (including the first day but excluding the last day)
      occurring in the period for which interest is payable. 

     

    Payments
      of principal and interest shall be made in lawful money of the United States
      of
      America to the Holder at its address as provided in Section 12
      or by
      wire transfer to such account specified from time to time by the Holder hereof
      for such purpose as provided in Section 12.
      

     

    1. Definitions.
      In
      addition to those terms defined above and elsewhere in this Note, for the
      purposes of this Note, the following terms shall have the meanings here set
      forth:

     

    “Bankruptcy
      Event”
means
      any
      of
      the following events: (a) any Borrower commences a case or other proceeding
      under any bankruptcy, reorganization, arrangement, adjustment of debt, relief
      of
      debtors, dissolution, insolvency or liquidation or similar law of any
      jurisdiction relating to such Borrower; (b) there is commenced against any
      Borrower any such case or proceeding that is not dismissed within 60 days after
      commencement; (c) any Borrower is adjudicated insolvent or bankrupt or any
      order
      of relief or other order approving any such case or proceeding is entered;
      (d)
      any Borrower suffers any appointment of any custodian or the like for it or
      any
      substantial part of its property that is not discharged or stayed within 60
      days; (e) any Borrower makes a general assignment for the benefit of creditors;
      (f) any Borrower fails to pay, or states that it is unable to pay or is unable
      to pay, its debts generally as they become due; (g) any Borrower calls a meeting
      of its creditors with a view to arranging a composition, adjustment or
      restructuring of its debts; or (h) any Borrower, by any act or failure to act,
      expressly indicates its consent to, approval of or acquiescence in any of the
      foregoing or takes any corporate or other action for the purpose of effecting
      any of the foregoing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the City of New York are authorized or required by law to remain
      closed.

     

    “Change
      of Control”
will
      be
      deemed to exist if (i) there occurs any consolidation, merger or other business
      combination of any Borrower with or into any other corporation or other entity
      or person (whether or not such Borrower is the surviving corporation), or any
      other corporate reorganization or transaction or series of related transactions
      in which in any of such events the voting stockholders of such Borrower prior
      to
      such event cease to own fifty percent (50%) or more of the voting power, or
      corresponding voting equity interests, of the surviving corporation after such
      event (including without limitation: (x) any “going private” transaction under
      Rule 13e-3 promulgated pursuant to the Exchange Act or (y) any tender offer
      by
      the Company under Rule 13e-4 promulgated pursuant to the Exchange Act for twenty
      percent (20%) or more of the Company's Common Stock), (ii) any person (as
      defined in Section 13(d) of the Exchange Act), other than the Sutaria Parties
      (as defined below), together with their affiliates and associates (as such
      terms
      are defined in Rule 405 under the Securities Act), beneficially owns or is
      deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act
      without regard to the 60-day exercise period) in excess of fifty percent (50%)
      of the Company’s voting power, (iii) there is a replacement of more than
      one-half of the members of the Company’s Board of Directors which is not
      approved by those individuals who are members of the Company’s Board of
      Directors on the date thereof, (iv) in one or a series of related transactions,
      there is a sale or transfer of all or substantially all of the assets of the
      Company, determined on a consolidated basis, or (v) any Borrower enters into
      any
      agreement providing for an event set forth in (i), (ii), (iii) or (iv)
      above.

     

    “Collateral
      Agent”
means
      Sutaria Family Realty, LLC, a New York limited liability company, and its
      successors and assigns.

     

    “Common
      Stock”
means
      the common stock, par value $0.01 per share, of the Company. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Lien”
means
      any lien, charge, claim, security interest, encumbrance, right of first refusal
      or other restriction.

     

    “Maturity
      Date” means
      November 7, 2010.

     

    “Original
      Issue Date”
means
      the date of the first issuance of the Note, regardless of the number of
      transfers of the Note.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Security
      Agreement”
means
      the Security Agreement, dated as of the date hereof, made by each of the
      Borrowers in favor of the Collateral Agent, as amended or supplemented from
      time
      to time in accordance with its terms.

     

    “Security
      Documents”
means
      the Security Agreement, and all other security agreements, pledge agreements,
      collateral assignments, mortgages, collateral agency agreements, control
      agreements, deeds of trusts or other grants or transfers for security executed
      by any Borrower creating (or purporting to create) a Lien upon property in
      favor
      of the Collateral Agent, in each case, as amended, modified, renewed, restated
      or replaced, in whole or in part, from time to time, in accordance with its
      terms.

     

    “Senior
      Credit Agreement”
means
      the Credit and Security Agreement, dated as of February 9, 2006, by and between
      Interpharm, Inc. and Wells Fargo Bank, together with the related documents
      thereto (including, without limitation, any guarantee agreements and security
      documents), in each case as such agreement may be amended, restated,
      supplemented, refinanced, replaced, refunded or otherwise modified from time
      to
      time, whether by the same lender or any other lender or group of
      lenders.

     

    “Subsidiary”
means
      any Person in which the Company or Interpharm, directly or indirectly, owns
      capital stock or holds an equity or similar interest.

     

    “Sutaria
      Parties”
means
      P&K Holdings I, LLC, a New York limited liability company, Rajs Holdings I,
      LLC, a New York limited liability company, Rametra Holdings I, LLC, a New York
      limited liability company, Maganlal K. Sutaria, Vilma Sutaria, Perry Sutaria,
      Raj Sutaria and Mona Rametra.

     

    “Trading
      Day”
means
      (a) any day on which the Common Stock is listed or quoted and traded on its
      primary Trading Market, (b) if the Common Stock is not then listed or
      quoted and traded on any Eligible Market, then any day on which trading occurs
      on the NASDAQ Global Market (or any successor thereto), or (c) if trading
      ceases to occur on the NASDAQ Global Market (or any successor thereto), any
      Business Day.

     

    “Trading
      Market”
means
      the American Stock Exchange or any other Eligible Market, or any other national
      securities exchange, market or trading or quotation facility on which the Common
      Stock is then listed or quoted.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Transaction
      Documents”
means
      this Note, the Security Documents and any other agreement, document or
      instrument entered into or delivered, now or in the future, by any of the
      Borrowers in connection with this Note or any of the other Transaction
      Documents.

     

    “Triggering
      Event”
means
      any of the following events: (a) any
      of
the
      Borrowers defaults in the timely performance of any other obligation under
      the
      Transaction Documents and such default continues uncured for a period of 10
      calendar days after the date on which notice of such default is first given
      to
      such Borrower by the Holder (it being understood that no prior notice need
      be
      given in the case of a default that cannot reasonably be cured within such
      10
      days); or (b) the Company has not received an additional $5,000,000 investment
      by November 30, 2007.

     

    2. Payment
      of Principal and Interest.

     

    (a) Interest.
      The
      Company shall pay interest to the Holder on the aggregate then outstanding
      principal amount of this Note at a rate equal to 12% per annum, payable
      quarterly in arrears on each March 31, June 30, September 30 and December 31,
      except if such date is not a Trading Day, in which case such interest shall
      be
      payable on the next succeeding Trading Day (each, an “Interest
      Payment Date”).
      The
      first Interest Payment Date shall be December 31, 2007. 

     

    (b) Principal
      Payment at Maturity.
      The
      Company shall pay the outstanding principal balance of this Note to the Holder
      on the Maturity Date, together with any accrued and unpaid
      interest.

     

    (c) Post-Maturity
      Interest.
      In the
      event the Company can not pay the outstanding principal of this Note due and
      owing to the Holder on the Maturity Date, the Company shall continue to pay
      interest to the Holder on the aggregate then outstanding principal amount of
      this Note pursuant to the terms of Section
      2(a)
      herein
      until such time as the aggregate principal amount has been paid to the Holders.
      

     

    (d) Cash
      or PIK Notes.
      

     

    (i) Subject
      to the conditions and limitations set forth below, from the Original Issue
      Date
      to a date twelve (12) months therefrom, the Company may pay interest on this
      Note, at its option, (x) in cash or (y) by the Borrowers issuing an additional
      Note with a principal amount equal to the interest then due and payable (a
      “PIK
      Note”).
      

     

    (ii) Subject
      to the conditions and limitations set forth below, from the date twelve (12)
      months from the Original Issue Date through the Maturity Date, unless the Holder
      otherwise consents, eight (8%) percent of the interest payment due shall be
      paid
      in cash, with the remaining four (4%) percent of the interest payment due paid
      in (x) PIK Notes and/or (y) in cash, at the Company’s option. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e) Prepayment.
      Upon at
      least thirty (30) days prior written notice to the Holder (which notice shall
      indicate the date on which the prepayment will be made and the amount of such
      prepayment), the Borrowers shall have the right to prepay, in whole or in part,
      the Note, plus, in each case all accrued and unpaid interest (which for such
      purpose shall be payable in cash only), if any, thereon to the date of such
      prepayment, and plus, all other amounts, costs, expenses and liquidated damages
      due hereunder (the “Prepayment
      Price”). 

     

    3. Ranking
      and Covenants.
      

     

    (a) Except
      pursuant to the Senior Credit Agreement and except additional indebtedness
      of
      $5,000,000 in initial principal amount to be funded by November 30, 2007 (the
      “Existing
      Indebtedness”)
      and
      all indebtedness of the Company, now or in the future, which by their terms
      rank
      senior to this Note, no indebtedness of any of the Borrowers is senior to this
      Note in right of payment, whether with respect to interest, damages or upon
      liquidation or dissolution or otherwise. Other than the Existing Indebtedness
      and any renewal, refinancing or replacement thereof that does not exceed the
      aggregate amount of the borrowing availability under the Senior Credit Agreement
      as it exists on the date hereof, the Borrowers will not, and will not permit
      any
      Subsidiary to, directly or indirectly, enter into, create, incur, assume or
      suffer to exist any indebtedness of any kind, that is senior in any respect
      to
      the Borrowers’ obligations under the Notes, and the Borrowers will not, and will
      not permit any Subsidiary to, directly or indirectly, incur any Lien on or
      with
      respect to any of its property or assets now owned or hereafter acquired or
      any
      interest therein or any income or profits therefrom.

     

    4. Registration
      of Notes.
      The
      Borrowers shall register the Notes upon records to be maintained by the
      Borrowers for that purpose (the “Note
      Register”)
      in the
      name of each record holder thereof from time to time. The Borrowers may deem
      and
      treat the registered Holder of this Note as the absolute owner hereof for the
      purpose of any conversion hereof or any payment of interest or principal hereon,
      and for all other purposes, absent actual notice to the contrary.

     

    5. Registration
      of Transfers and Exchanges.
      The
      Borrowers shall register the transfer of any portion of this Note in the Note
      Register upon surrender of this Note to the Borrowers at their address for
      notice set forth herein. Upon any such registration or transfer, a new Note,
      in
      substantially the form of this Note (any such new Note, a “New
      Note”),
      evidencing the portion of this Note so transferred shall be issued to the
      transferee and a New Note evidencing the remaining portion of this Note not
      so
      transferred, if any, shall be issued to the transferring Holder. The acceptance
      of the New Note by the transferee thereof shall be deemed the acceptance by
      such
      transferee of all of the rights and obligations of a holder of a Note. This
      Note
      is exchangeable for an equal aggregate principal amount of Notes of different
      authorized denominations, as requested by the Holder surrendering the same.
      No
      service charge or other fee will be imposed in connection with any such
      registration of transfer or exchange.

     

    6. Intentionally
      Omitted.

     

    7. Intentionally
      Omitted.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    8. Events
      of Default.

     

    (a) “Event
      of Default”
means
      any one of the following events (whatever the reason and whether it shall be
      voluntary or involuntary or effected by operation of law or pursuant to any
      judgment, decree or order of any court, or any order, rule or regulation of
      any
      administrative or governmental body), which remains uncured, to the extent
      curable, for a period of ten (10) days following receipt by the Borrowers of
      written notice from Perry Sutaria:

     

    (i) any
      default in the payment of principal, interest or liquidated damages in respect
      of the Note, as and when the same becomes due and payable (whether on a date
      specified for the payment of interest or the date on which the obligations
      under
      the Note mature or by acceleration, redemption, prepayment or
      otherwise);

     

    (ii) any
      of
      the Borrowers or any Subsidiary defaults in any of its obligations under any
      other note or any mortgage, credit agreement (including the Senior Credit
      Agreement) or other facility, indenture agreement, factoring agreement or other
      instrument under which there may be issued, or by which there may be secured
      or
      evidenced, any indebtedness for borrowed money or money due under any long
      term
      leasing or factoring arrangement of any Borrower or any Subsidiary and such
      default results in an acceleration of indebtedness in an amount exceeding
      $1,000,000, whether such indebtedness now exists or is hereafter created, and
      such default results in such indebtedness becoming or being declared due and
      payable prior to the date on which it would otherwise become due and
      payable;

     

    (iii) a
      material breach by any Borrower of its covenants, representations or warranties
      hereunder, in any Transaction Document;

     

    (iv) any
      material provision hereof or any Transaction Document shall for any reason
      cease
      to be valid, binding and enforceable with respect to any party hereto or thereto
      (other than the Holder) in accordance with its terms, or any such party
      challenges the enforceability hereof or thereof, or shall assert in writing,
      or
      take any action or fail to take any action based on the assertion that any
      provision hereof or any Transaction Document has ceased to be or is otherwise
      not valid, binding or enforceable in accordance with its terms, or any security
      interest provided for therein shall cease to be a valid and perfected security
      interest in any of the collateral purported to be subject thereto;
      or

     

    (v) any
      Borrower revokes or terminates or purports to revoke or terminate or fails
      to
      perform any of the terms, covenants, conditions provisions of any guarantee,
      endorsement or other agreement of such party in favor of Collateral Agent or
      the
      Holder;

     

    (vi) the
      occurrence of a Bankruptcy Event; and

     

    (vii) the
      occurrence of a Triggering Event.

     

    (b) At
      any
      time or times following the occurrence of an Event of Default, in addition
      to
      any other remedy available to the Holder hereunder or available under any
      applicable law, the Holder shall have the option to elect, by notice to the
      Borrowers (an “Event
      Notice”),
      to
      require the Borrowers to repurchase all or any portion of the outstanding
      principal amount of this Note, at a repurchase price equal to 115% of such
      outstanding principal amount, plus all accrued but unpaid interest thereon
      through the date of payment. The aggregate amount payable pursuant to the
      preceding sentence is referred to as the “Event
      Price.”
The
      Borrowers shall pay the Event Price to the Holder no later than the third
      Trading Day following the date of delivery of the Event Notice, and upon receipt
      thereof the Holder shall deliver this Note so repurchased to the
      Borrowers.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) Upon
      the
      occurrence of any Bankruptcy Event, all amounts pursuant to Section
      8(b)
      shall
      immediately become due and payable in full in cash, without any further action
      by the Holder.

     

    (d) In
      connection with any Event of Default, the Holder need not provide and the
      Borrowers hereby waive any presentment, demand, protest or other notice of
      any
      kind, and the Holder may immediately and without expiration of any grace period
      enforce any and all of its rights and remedies hereunder and all other remedies
      available to it under applicable law. Any such declaration may be rescinded
      and
      annulled by the Holder at any time prior to payment hereunder. No such
      rescission or annulment shall affect any subsequent Event of Default or impair
      any right consequent thereto. The remedies under this Note or available under
      applicable law shall be cumulative.

     

    9. Intentionally
      Omitted.
      

     

    10. Intentionally
      Omitted.
      

     

    11. Intentionally
      Omitted.
      

     

    12. Notices.
      Any and
      all notices or other communications or deliveries hereunder shall be in writing
      and shall be deemed given and effective on the earliest of (i) the date of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number specified in this Section 12
      prior to
      6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day
      after
      the date of transmission, if such notice or communication is delivered via
      facsimile at the facsimile number specified in this Section
      12
      on a day
      that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
      Trading Day, (iii) the Trading Day following the date of mailing, if sent by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given. The addresses for such
      communications shall be: (i) if to any of the Borrowers, at 75 Adams Avenue,
      Hauppauge, New York 11788, or (ii) if to the Holder, to the address or facsimile
      number appearing on the Company’s Holders records or such other address or
      facsimile number as the Holder may provide to the Company in accordance with
      this Section 12.

     

    13. Miscellaneous.

     

    (a) This
      Note
      shall be binding on and inure to the benefit of the parties hereto and their
      respective successors and permitted assigns. The Borrowers shall not be
      permitted to assign this Note.

     

    (b) Subject
      to Section
      13(a),
      nothing
      in this Note shall be construed to give to any person or corporation other
      than
      the Borrowers and the Holder any legal or equitable right, remedy or cause
      under
      this Note.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (c) Governing
      Law; Venue; Waiver Of Jury Trial.
      ALL
      QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
      OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH
      THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES
      OF
      CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
      NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
      OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
      OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
      DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
      TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
      IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
      TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING
      IS
      IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
      AND
      CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
      MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
      (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
      TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
      AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
      SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
      PERMITTED BY LAW. THE BORROWERS HEREBY WAIVES ALL RIGHTS TO A TRIAL BY
      JURY.

     

    (d) The
      headings herein are for convenience only, do not constitute a part of this
      Note
      and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    (e) In
      case
      any one or more of the provisions of this Note shall be invalid or unenforceable
      in any respect, the validity and enforceability of the remaining terms and
      provisions of this Note shall not in any way be affected or impaired thereby
      and
      the parties will attempt in good faith to agree upon a valid and enforceable
      provision which shall be a commercially reasonable substitute therefor, and
      upon
      so agreeing, shall incorporate such substitute provision in this
      Note.

     

    (f) No
      provision of this Note may be waived or amended except in a written instrument
      signed, in the case of an amendment, by the Borrowers and the Holder or, or,
      in
      the case of a waiver, by the Holder. No waiver of any default with respect
      to
      any provision, condition or requirement of this Note shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. 

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed by
      a
      duly authorized officer as of the date first above indicated.

    
      	 	 	 
	 	
              INTERPHARM
                HOLDINGS INC.

            
	 
 	 
 	 
 
	
            	By  	
            
	 	
              

              Name:

            
	 	
              Title:

            

    

     

    
      	 	 	 
	 	
              INTERPHARM,
                INC.

            
	 
 	 
 	 
 
	
            	By  	 
	 	
              

              Name:
                

            
	 	
              Title:
                

            

    

     

    
      
        
        

      

      
        9

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