Exhibit 10.37
LOAN AND SECURITY AGREEMENT
among
MERIDIAN BIOSCIENCE, INC.
MERIDIAN BIOSCIENCE CORPORATION
OMEGA TECHNOLOGIES, INC.
MERIDIAN LIFE SCIENCE, INC.
and
FIFTH THIRD BANK
Dated as of August 1, 2007

 

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     This Loan and Security Agreement (the “Agreement”) is entered into as of
August 1, 2007, by and among Meridian Bioscience, Inc., an Ohio corporation
(“Parent” or “Agent”), Meridian Bioscience Corporation, an Ohio corporation
(“Corp.”), Omega Technologies, Inc., an Ohio corporation (“Omega”), Meridian
Life Science, Inc., a Maine corporation (“MLS”) (collectively, the “Borrowers”
and individually a “Borrower”) and Fifth Third Bank, an Ohio banking corporation
(the “Bank”). Bank and Borrowers hereby agree as follows:
Section 1. Definitions.
     1.1 Specific Definitions. The following definitions shall apply:
          “Account Debtors” means a Borrower’s customers and all other persons
who are obligated or indebted to a Borrower in any manner, whether directly or
indirectly, primarily or secondarily, contingently or otherwise, with respect to
Accounts or General Intangibles.
          “Accounts” means all accounts, accounts receivable, health-care
insurance receivables, credit card receivables, contract rights, instruments,
documents, chattel paper, tax refunds from federal, state or local governments
and all obligations in any form including without limitation those arising out
of the sale or lease of goods or the rendition of services by a Borrower; all
guaranties, letters of credit and other security and support obligations for any
of the above; all merchandise returned to or reclaimed by any Borrower; and all
books and records (including computer programs, tapes and data processing
software) evidencing an interest in or relating to the above; all winnings in a
lottery or other game of chance operated by a governmental unit or person
licensed to operate such game by a governmental unit and all rights to payment
therefrom; and all “Accounts” as same is now or hereinafter defined in the
Uniform Commercial Code.
          “Affiliate” means, as to a Borrower, (a) any person which, directly or
indirectly, is in control of, is controlled by or is under common control with,
such Borrower, or (b) any person who is a director, officer or employee (i) of a
Borrower or (ii) of any person described in the preceding clause (a). For
purposes of this definition, control of a person shall mean (a) the power,
direct or indirect, (i) to vote 15% or more of the securities having ordinary
voting power for the election of directors of such person or (ii) to direct or
cause the direction of the management and policies of such person whether by
contract or otherwise, or (b) the ownership, direct or indirect, of 15% or more
of any class of equity securities of such person.
          “Applicable LIBOR/Euro LIBOR Margin” on any date means the percentage
identified as such in Section 2.3 hereof.
          “Applicable Prime Margin” on any date means -1.0% (minus one percent)
per annum.
          “Bank Affiliate” means the Bank, Fifth Third Leasing Company and any
other entity the majority of the ownership of which is held directly or
indirectly by Fifth Third Bancorp.

 

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          “Borrower Default Rate” means 3% in excess of the otherwise applicable
interest rate.
          “Cash Equivalents” means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within three (3) months from the date of acquisition thereof;
(ii) investments in certificates of deposit or bankers’ acceptance maturing
within three (3) months from the date of acquisition issued by the Lender or any
commercial bank organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at least Two
Hundred Fifty Million Dollars ($250,000,000); (iii) investments in commercial
paper of the Lender or of any other Person which, at the time of issuance, have
a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from
Moody’s Investors Service, Inc. and maturing not more than six (6) months from
the date of acquisition thereof; (iv) obligations of the type described in (i),
(ii) or (iii) above purchased pursuant to a repurchase agreement obligating the
counter party to repurchase such obligations not later than thirty (30) days
after the purchase thereof, secured by a fully perfected security interest in
any such obligation, and having a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase obligation of
the issuing bank; (v) time deposits or Eurodollar time deposits maturing no more
than thirty (30) days from the date of creation with commercial banks having
membership in the Federal Deposit Insurance Corporation in amounts not exceeding
the greater of One Hundred Thousand Dollars ($100,000) or the maximum insurance
applicable to the aggregate amount of such Person’s deposits in such
institution; and (vi) direct-pay letter of credit bond or note issues that are
backed by a letter of credit from a bank with a long term debt rating of “AA” or
“AA-1” or its equivalent by any rating agency at the time of purchase, though
the issue itself does not have to be rated.
          “Collateral” has the meaning set forth in Section 6.1.
          “Current Assets” means all assets which may properly be classified as
current assets in accordance with generally accepted accounting principles,
provided that for the purpose of determining the Current Assets of Borrowers
(i) notes and accounts receivable shall be included only if good and collectible
and payable on demand or within twelve (12) months from the date as of which
Current Assets are to be determined (and if not directly or indirectly renewable
or extendible, at the option of the debtors, by their terms or by the terms of
any instrument or agreement relating thereto, beyond such twelve (12) months)
and shall be taken at their face value less reserves determined to be sufficient
in accordance with generally accepted accounting principles, and (ii) the cash
surrender value of life insurance policies shall be excluded.
          “Current Liabilities” mean all Indebtedness maturing on demand or
within twelve (12) months from the date as of which Current Liabilities are to
be determined (including, without limitation, liabilities, including taxes
accrued as estimated, as may properly be classified as current liabilities in
accordance with generally accepted accounting principles).
          “Default” means any event that, with the giving of notice or the
passage of time, or both, would be an Event of Default.

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          “EBITDA” means income of Borrowers before taxes plus interest
expenses, depreciation expense and amortization expense for the four quarters
ending with the applicable date of measurement on a consolidated basis (on a
rolling four quarters basis). Charges, if any, in future periods for acquired
in-process research and development shall also be excluded form the calculation
of EBITDA, provided such acquisitions are permitted under this Agreement.
          “Election Year” means each one-year period commencing on each
October 1, as further specified in Section 2.3(a) of this Agreement.
          “Environmental Laws” means all applicable federal, state, local and
foreign laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation ambient
air, surface water, ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes, and any and all regulations, codes,
plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.
          “Equipment” means all goods (excluding inventory, farm products or
consumer goods), all machinery, machine tools, equipment, fixtures, office
equipment, furniture, furnishings, motors, motor vehicles, tools, dies, parts,
jigs, goods (including, without limitation, each of the items of equipment set
forth on any schedule which is either now or in the future attached to Bank’s
copy of this Agreement), and all attachments, accessories, accessions,
replacements, substitutions, additions and improvements thereto, all supplies
used or useful in connection therewith, and all “Equipment” as same is now or
hereinafter defined in the Uniform Commercial Code.
          “Euro LIBOR Interest Period” means any 30, 60 or 90 day period
selected by Agent, commencing on any Business Day. If a Euro LIBOR Interest
Period so selected would otherwise end on a date which is not a Business Day,
such Euro LIBOR Interest Period shall instead end on the next Business Day,
provided, however, that if such next Business Day shall fall in a succeeding
month, such Euro LIBOR Interest Period shall instead end on the preceding
Business Day.
          “Euro LIBOR Pricing Option” means the option granted pursuant to
Section 2.2 hereof to have all or a portion of the interest on the principal
amount of the Note computed with reference to a Euro LIBOR Rate.
          “Euro LIBOR Rate” means the rate (adjusted for reserves if Bank is
required to maintain reserves with respect to relevant advances) being asked on
an amount of Euros deposits equal to the amount of the Note on the first day of
a Euro LIBOR Interest Period and which has a maturity corresponding to the
maturity of the Euro LIBOR Interest Period, as reported by the Reuters rate
reporting system (or any successor) as determined by Bank by noon on the first
day

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of the applicable Euro LIBOR Interest Period. Each determination by Bank of the
Euro LIBOR Rate shall be conclusive in the absence of manifest error.
          “Funded Debt” means all Indebtedness (i) in respect of money borrowed
(senior and subordinated) or (ii) evidenced by a note, debenture (senior or
subordinated) or other like written obligation to pay money, or (iii) in respect
of rent or hire of property under leases or lease arrangements which under
Generally Accepted Accounting Principles are required to be capitalized, or
(iv) in respect of obligations under conditional sales or other title retention
agreements; and shall also include all guaranties of any of the foregoing. In no
event shall any of mandatory repayments be counted twice in calculating Funded
Indebtedness.
          “GAAP” or “Generally Accepted Accounting Principles” means generally
accepted accounting principles of the United Stated in effect on the date of
this Agreement, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied or, in the case of
compliance with Section 5.15 through 5.17, consistent with those utilized in
preparing the audited financial statements referred to in Section 3.8.
          “General Intangibles” means all general intangibles, chooses in
action, causes of action, obligations or indebtedness owed to a Borrower from
any source whatsoever, payment intangibles, software and all other intangible
personal property of every kind and nature (other than Accounts) including
without limitation patents, trademarks, trade names, service marks, copyrights
and applications for any of the above, and goodwill, trade secrets, licenses,
franchises, rights under agreements, tax refund claims, and all books and
records including all computer programs, disks, tapes, printouts, customer
lists, credit files and other business and financial records, the equipment
containing any such information, and all “General Intangibles” as same is now or
hereinafter defined in the Uniform Commercial Code.
          “Indebtedness” means (i) all items (except items of capital stock, of
capital surplus, of general contingency reserves or of retained earnings,
deferred income taxes, amounts attributable to minority interest if any, and all
short-term payables incurred in the ordinary course of business) which in
accordance with generally accepted accounting principles would be included in
determining total liabilities on a consolidated basis shown on the liability
side of a balance sheet as at the date as of which Indebtedness is to be
determined, (ii) all indebtedness secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any property or
asset owned or held is subject, whether or not the indebtedness secured thereby
shall have been assumed (excluding non-capitalized leases which may amount to
title retention agreements but including capitalized leases), and (iii) all
indebtedness of others which any Borrower or any Subsidiary has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which any Borrower or any Subsidiary has agreed to apply or
advance funds (whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable.
          “Insolvency Event” means, with respect to a person, any of the
following: a court enters a decree or order for relief in respect to such person
in an involuntary case under any

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applicable bankruptcy, insolvency or other similar law then in effect, or
appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of such person or for any substantial part of its
property, or orders the wind-up or liquidation of its affairs; or a petition
initiating an involuntary case under any such bankruptcy, insolvency or similar
law is filed against such person; or such person commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law in effect, or
makes any general assignment for the benefit of creditors, or fails generally to
pay its debts as such debts become due, or takes corporate action in furtherance
of any of the foregoing.
          “Inventory” means goods, supplies, wares, merchandises and other
tangible personal property, including raw materials, work in process, supplies
and components, and finished goods, whether held for sale or lease, or furnished
or to be furnished under any contract for service, or used or consumed in
business, and also including products of and accessions to inventory, packing
and shipping materials, all documents of title, whether negotiable or
non-negotiable, representing any of the foregoing, and all “Inventory” as same
is now or hereinafter defined in the Uniform Commercial Code.
          “Investment Property” means a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract or
commodity account and all “Investment Property” as same is now or hereafter
defined in the Uniform Commercial Code.
          “LIBOR Interest Period” means any period of time up to and including a
365 day period selected by Agent, commencing on any Business Day. If a LIBOR
Interest Period so selected would otherwise end on a date which is not a
Business Day, such LIBOR Interest Period shall instead end on the next Business
Day, provided, however, that if such next Business Day shall fall in a
succeeding month, such LIBOR Interest Period shall instead end on the preceding
Business Day.
          “LIBOR Pricing Option” means the option granted pursuant to
Section 2.2 hereof to have all or a portion of the interest on the principal
amount of the Note computed with reference to a LIBOR Rate.
          “LIBOR Rate” means, as applied to any LIBOR Interest Period, the rate
(adjusted for LIBOR Reserves if Bank is required to maintain LIBOR Reserves with
respect to the relevant loan) being asked on an amount of Eurodollar deposits
equal to the principal amount of the Note which is to be subject to a LIBOR
Pricing Option, and which has a maturity corresponding to the LIBOR Interest
Period in question, as reported by the TELERATE rate reporting system (or any
successor), as determined by Bank by noon of the date upon which a LIBOR
Interest Period is to commence. Each determination by Bank of the LIBOR Rate
shall be conclusive in the absence of manifest error.
          “LIBOR Reserves” means, for any principal amount which is subject to a
LIBOR Pricing Option for any LIBOR Interest Period therefor, the daily average
maximum rate (expressed as a decimal) at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D established by the Board of Governors of the
Federal Reserve System (or any successor rule or

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regulation) by Bank against “Eurocurrency Liabilities” (as such term is used in
Regulation D) but without benefit of credit or proration, exemptions or offsets
that might otherwise be available to Bank from time to time under Regulation D.
Without limiting the effect of the foregoing, LIBOR Reserves shall reflect any
other reserves required to be maintained by Bank against (1) any category of
liabilities that includes deposits by reference to which the LIBOR Interest Rate
for loans is to be determined; or (2) any category of extension of credit or
other assets that are subject to an interest rate based on the LIBOR Rate.
          “Lien” means any security interest, mortgage, pledge, assignment, or
voluntary or involuntary lien, charge or other encumbrance of any kind,
including interests of vendors or lessors under conditional sale contracts or
capital leases.
          “Loan Documents” means this Agreement, the Note, and all mortgages,
instruments and documents securing Obligations, all guaranties of Obligations,
and all other documents delivered or required, as a condition to the making of
any Loan or otherwise, in connection with this Agreement.
          “Loans” means the Revolving Loans.
          “Note” means the Revolving Note.
          “Obligation(s)” means all loans, advances, indebtedness and other
obligations of any Borrower owed to Bank or any Bank Affiliate of every
description whether now existing or hereafter arising (including those owed by
any Borrower to others and acquired by Bank or any Bank Affiliate by purchase,
assignment or otherwise) and whether direct or indirect, primary or as guarantor
(including guaranties of obligations owed by any Affiliate to Bank or any Bank
Affiliate) or surety, absolute or contingent, liquidated or unliquidated,
matured or unmatured, whether or not secured by additional collateral, and
including without limitation obligations to perform or forbear from performing
acts, all amounts represented by letters of credit now or hereafter issued by
Bank or any Bank Affiliate for the benefit of or at the request of any Borrower,
and all expenses and attorney’s fees incurred by Bank or any Bank Affiliate
under this Agreement or any other document or instrument related thereto.
          “Permitted Investments” means
          (a) investment in cash and Cash Equivalents;
          (b) intercompany loans to, between or among Borrowers:
          (c) loans and advances to employees for moving, entertainment, travel
and other similar expenses in the ordinary course of business;
          (d) capital contributions by a Borrower to its Subsidiaries (whether
now existing, or, subject to Section 5.4, hereafter created);

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          (e) investment in customers or account debtors of a Borrower or a
Subsidiary of Borrower received in connection with the bankruptcy or
reorganization, or in settlement of delinquent obligations, of such entity, in
the ordinary course of business and in accordance with such entity’s usual and
customary collection and credit policies;
          (f) investments in connection with accounts receivable in the ordinary
course of business;
          (g) investments received as the non-cash portion of consideration
received in connection with asset dispositions permitted hereunder;
          (h) investments existing as of the date hereof;
          (i) investments under Rate Management Agreements;
          (j) investments in securities in accordance with the Investment Policy
of the Borrowers as set forth on Exhibit 1.1; and
          (k) other investments in an amount not to exceed $3,000,000.
          “Permitted Liens” means the following liens, security interests and
other encumbrances:
          (a) Existing liens and security interests;
          (b) Purchase money security interests (which term shall include
mortgages, conditional sale contracts, capitalized leases and all other title
retention or deferred purchase devices) to secure the purchase price of property
acquired hereafter by any Borrower, or to secure Indebtedness incurred solely
for the purpose of financing such acquisitions subject to the limitation set
forth in the definition of Permitted Indebtedness;
          (c) Deposits or pledges made in connection with, or to secure payment
of, workmen’s compensation, unemployment insurance, old age pensions or other
social security; liens in respect of judgments or awards; and liens for taxes,
assessments or governmental charges or levies and liens to secure claims for
labor, material or supplies to the extent that payment thereof shall not at the
time be required to be made in accordance with Section 5.7;
          (d) Encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which do not
materially detract from the value of such property or impair its use in the
business of the owner or lessee;
          (e) Liens created by or resulting from any litigation or legal
proceeding, provided the execution or other enforcement thereof is effectively
stayed and the claims secured thereby are being actively contested in good faith
by appropriate proceedings;

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          (f) Liens arising by operation of law to secure carriers, materialman,
mechanics, landlords, lessors or renters under leases or rental agreements made
in the ordinary course of business and confined to the premises or property
rented; and
          (g) Liens in favor of the Bank securing the Obligations;
          (h) Inchoate liens for taxes and other governmental charges which are
not yet due and payable;
          (i) Banker’s liens and rights of set-off arising in the ordinary
course; and
          (j) Liens securing indebtedness hereunder.
          “Pricing Option” means the LIBOR Pricing Option or the Euro LIBOR
Pricing Option.
          “Permitted Indebtedness: means:
          (a) Indebtedness incurred under this Agreement and the other Loan
Documents;
          (b) (i) Indebtedness outstanding on the Closing Date and
(ii) refinancings or renewals thereof, provided that any such refinancing
Indebtedness is in an aggregate principal amount not greater than the aggregate
principal amount of the Indebtedness being renewed or refinanced;
          (c) Indebtedness under hedging contracts with respect to interest
rates, foreign currency exchange rates or commodity prices, in each case, not
entered into for speculative purposes;
          (d) Indebtedness incurred by an Affiliate or Subsidiary in connection
with an investment permitted by Section 5.3;
          (e) Indebtedness in respect of purchase money obligations and capital
lease obligations, and refinancings or renewals thereof, in an aggregate amount
not to exceed $3,000,000 at any time outstanding;
          (f) Indebtedness incurred by foreign subsidiaries in an aggregate
amount not to exceed $3,000,000 any time outstanding;
          (g) Indebtedness in respect of bid, performance or surety bonds,
workers’ compensation claims, self-insurance obligations and bankers acceptances
issued for the account of any Borrower in the ordinary course of business,
including guarantees or obligations of any Borrower or Subsidiary with respect
to letters of credit supporting such bid, performance or surety bonds, workers’
compensation claims, self-insurance obligations and bankers acceptances or
issued in lieu of security deposits relating to Leases (in each case other than
for an obligation for money borrowed);

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          (h) Guarantees of any Borrower or any other Subsidiary in respect of
Indebtedness otherwise permitted under this Agreement or leases permitted by
Section 5.11;
          (i) Indebtedness arising from the honoring by a bank or other
financial institution of a check, raft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business;
          (j) Indebtedness arising in connection with endorsement of instruments
for deposit in the ordinary course of business;
          (k) Indebtedness assumed in connection with any acquisition so long as
such Indebtedness (i) was not created in anticipation of such acquisition and
(ii) is either unsecured or secured solely by the assets and property acquired
or owned by the entity or entities acquired; and
          (1) unsecured and subordinate Indebtedness of any Borrower in an
aggregate amount not to exceed $30,000,000 at any time outstanding provided such
Borrower has given Bank at least thirty (30) days prior written notice of the
issuance of such Indebtedness.
          “Prime Rate” means the rate of interest per annum announced to be its
prime rate from time to time by Bank at its principal office in Cincinnati,
Ohio, whether or not Bank shall at times lend to borrowers at lower rates of
interest or, if there is no such prime rate, then its base rate or such other
rate as may be substituted by Bank for the prime rate.
          “Quick Assets” means Current Assets minus Inventory.
          “Rate Management Agreement” means any agreement providing for payments
which are related to fluctuations of interest rates, exchange rates, forward
rates, or equity prices, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and any agreement
pertaining to equity derivative transactions (e.g., equity or equity index
swaps, options, caps, floors, collars and forwards), including without
limitation any ISDA master Agreement between the Borrowers and the Bank or any
affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents
and other confirming evidence between the parties confirming transactions
thereunder, all whether now existing or hereafter arising, and in each case as
amended, modified or supplemented from time to time.
          “Rate Management Obligations” means any and all obligations of the
Borrowers to the Bank or any affiliate of Fifth Third Bancorp, whether absolute,
contingent or otherwise and howsoever and whensoever (whether now or hereafter)
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under or in connection with
(i) any and all Rate Management Agreements, and (ii) any and all cancellations,
buy backs, reversals, terminations or assignments of any Rate Management
Agreement.

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          “Responsible Officer” means the chief operating officer or the
president of a Borrower or, with respect to financial matters, the chief
financial officer.
          “Subsidiary” means any corporation of which a Borrower directly or
indirectly owns or controls outstanding stock having under ordinary
circumstances (not depending on the happening of a contingency) voting power to
elect a majority of the board of directors of said corporation.
          “Subordinated Indebtedness” means Indebtedness that is subordinated to
the Obligations owed to the Bank, in a manner satisfactory to the Bank in form
and substance.
          “Tangible Net Worth” shall mean the outstanding principal amount of
the Subordinated Indebtedness plus the total of the capital stock (less treasury
stock), paid-in surplus, general contingency reserves and retained earnings
(deficit) of Borrowers and any Subsidiary as determined on consolidated basis in
accordance with generally accepted accounting principles, after eliminating all
inter-company items and all amounts properly attributable to minority interests,
if any, in the stock and surplus of any Subsidiary, minus the following items
(without duplication of deductions) if any, appearing on the consolidated
balance sheet of Borrowers:
     (i) all deferred charges (less amortization, unamortized debt discount and
expense and corporate organization expenses);
     (ii) the book amount of all assets which would be treated as intangibles
under generally accepted accounting principles, including, without limitation,
such items as goodwill, trademark applications, trade names, service marks,
brand names, copyrights, patents, patent applications and licenses, and rights
with respect to the foregoing;
     (iii) the amount by which aggregate inventories or aggregate securities
appearing on the asset side of such consolidated balance sheet exceed the lower
of cost or market value (at the date of such balance sheet) thereof; and
     (iv) any subsequent write-up in the book amount of any intangible asset
resulting from a revaluation thereof from the book amount entered upon
acquisition of such asset.
     1.2 GAAP and Uniform Commercial Code. All financial terms used in this
Agreement, other than those defined in this Section 1, shall have the meanings
given to them by generally accepted accounting principles in the United States.
All other undefined terms shall have the meanings given to them in the Uniform
Commercial Code.

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Section 2. Loan and Term.
     2.1 Revolving Credit Loans.
          (a) Subject to the terms and conditions hereof, Bank hereby extends to
Borrowers a line of credit facility (the “Facility”) under which Bank shall make
loans (the “Loans” or “Revolving Loans”) to Borrowers at Agent’s request from
time to time during the term of the Facility, in an amount up to Thirty Million
Dollars ($30,000,000). Borrowers may borrow, prepay, and re-borrow hereunder,
provided that the principal amount of all Revolving Loans outstanding at any one
time shall not exceed $30,000,000. If the amount of Revolving Loans outstanding
at any time exceeds that amount, Borrowers shall immediately pay the amount of
such excess to Bank in cash. The principal balance of the Revolving Note
outstanding from time to time shall bear interest in accordance with Section 2.2
of this Agreement.
          (b) Bank will apply funds in Agent’s principal depository account at
Bank (the “Corporate Bank Account”) on a daily basis to the payment of Revolving
Loans automatically and without notice, request or demand by Agent or any
Borrower, in accordance with Bank’s automatic sweep program. Pursuant to that
program, Bank will either make Revolving Loans or apply toward the payment of
interest and principal of Revolving Loans or apply toward the payment of
interest and principal of Revolving Loans an amount necessary to maintain a
minimum balance in the Corporate Bank Account of $1,000,000. However, in no
event will the principal amount of the Revolving Loans exceed the amount
provided for in clause (a) of this Section. Bank reserves the right to change
the provisions (other than the minimum balance specified above) and mechanics of
its automatic sweep program in any non-material respect in a separate writing to
Agent on behalf of the Borrowers and such change need not be reflected by an
amendment to this Agreement in order to be effective.
          (c) Borrowers shall execute and deliver to Bank the Revolving Note in
the principal amount of $30,000,000, in the form attached as Exhibit 2.1(c).
          (d) The Facility shall expire on September 15, 2012, and the entire
outstanding principal balance of the Revolving Note, and all accrued interest,
shall become due and payable not later than that date. Borrowers may prepay the
principal balance of the Revolving Note in whole or part at any time. Until all
Obligations have been fully repaid and this Agreement has terminated, Bank shall
retain its security interest in all Collateral then existing or arising
thereafter.
     2.2 Interest.
          (a) Subject to the terms and conditions of this Agreement, the Loans
shall bear interest as follows:
               (1) on amounts subject to a Pricing Option, at an annual rate
equal to the LIBOR Rate or the Euro LIBOR Rate plus the Applicable LIBOR/Euro
LIBOR Margin; and
               (2) on amounts not subject to a Pricing Option, at an annual rate
equal to the Prime Rate plus the Applicable Prime Margin in effect on each date;
or

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               (3) on a mounts so selected by Agent, the Borrowers have the
right to use a LIBOR Pricing Option in connection with the Bank’s
overnight-sweep LIBOR pricing program, with the amounts subject to such election
priced on a daily basis based upon the LIBOR Rate plus Applicable LIBOR Margin
for a 30-day LIBOR Interest Period.
          (b) Subject to the terms and conditions of this Agreement, Borrowers
may from time to time elect to have a Pricing Option apply to a portion of the
principal amount of outstanding Loans, as specified by Agent on behalf of the
Borrowers, for a permissible LIBOR Interest Period or a Euro LIBOR Interest
Period specified by Agent. Agent shall make each such election by giving notice
(which notice shah be irrevocable) to Bank in the manner and by the deadline
reasonably acceptable to Bank.
          (c) Borrowers’ right to elect a Pricing Option for any portion of
outstanding Loans is subject to the following limitations: (i) Borrowers may not
elect a Pricing Option at a time when an Event of Default has occurred and has
not been waived; (ii) no LIBOR Interest Period or Euro LIBOR Interest Period
shall end later than the maturity date of the Note evidencing the borrowing of
the relevant principal amount; (iii) the principal amount that can be subject to
a Pricing Option is $1,000,000 or a whole multiple thereof; (iv) once a Pricing
Option has been selected for a portion of the Loans, no other Pricing Option may
apply to such portion until the expiration of the LIBOR Interest Period or the
Euro LIBOR Interest Period applicable to the first Pricing Option; and (v) there
may be no more than five separate Pricing Options at any given time.
          (d) Interest on the principal amount subject to a LIBOR Pricing Option
is payable on the last day of the relevant LIBOR Interest Period. Interest on
the principal amount subject to a Euro LIBOR Pricing Option is payable quarterly
on the last day of each ninety (90) day period. Interest on the principal amount
of Loans not subject to a Pricing Option is payable on the first Business Day of
each calendar month. In addition, all accrued interest is payable at maturity
(whether by acceleration, notice of intention to prepay or otherwise).
          (e) Interest on the Loans shall be computed on the basis of a 360-day
year and charged for the actual number of days involved. The interest rate
applicable to amounts not subject to any Pricing Option shall change
automatically upon each change in the Prime Rate or, as specified in
Section 2.2(a)(3), the LIBOR Rate. Upon the occurrence of an Event of Default
and until such Event of Default is waived, the Loans shall bear interest at the
Borrower Default Rate; this provision does not constitute a waiver of any Event
of Default or an agreement by Bank to permit any late payments whatsoever.
          (f) Borrowers shall have the right to prepay the Loans in whole at any
time, or in part from time to time, without premium or penalty, provided that,
at any time when a Pricing Option is in effect (other than is specified in
Section 2.2(a)(3)), no prepayment of such portion of the principal amount of the
Loans is subject to such Pricing Option shall be made except on the last day of
the applicable Interest Period. Each notice of prepayment shall be irrevocable
and shall obligate Borrowers to prepay the amount stated therein on the date
stated therein.

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          (g) In no event shall the interest rate and other charges hereunder
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that a court determines that Bank has received interest and other charges
hereunder in excess of the highest permissible rate applicable hereto, such
excess shall be deemed received on account of, and shall automatically be
applied to reduce, the principal balance of the Loans, and the provisions hereof
shall be deemed amended to provide for the highest permissible rate. If there
are no Obligations outstanding, the Bank shall refund to Borrowers such excess.
          (h) Borrowers’ right to elect a LIBOR Pricing Option or a Euro LIBOR
Pricing Option shall be terminated automatically if Bank, by telephonic or
telegraphic or other written notice, notifies Agent on behalf of Borrowers that
Eurodollar deposits which have a maturity corresponding to the proposed LIBOR
Interest Period or Euro LIBOR Interest Period, in an amount equal to the amount
requested by Borrowers to be subject to a LIBOR Pricing Option or Euro LIBOR
Pricing Option, are not readily available in the London Inter-Bank Eurocurrency
Market, or that, by reason of circumstances affecting such market, adequate and
reasonable methods do not exist for ascertaining the interest rate applicable to
such deposits for the proposed LIBOR Interest Period or the Euro LIBOR Interest
Period.
          (i) Notwithstanding anything herein contained to the contrary, if at
any time any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for Bank to fund or maintain its
funding in Eurodollars of any portion of the principal amount of the Note or
otherwise to give effect to Bank’s obligations as contemplated hereby, (i) Bank
may by facsimile or other written notice thereof to Agent on behalf of Borrowers
declare Bank’s obligations in respect of the LIBOR Pricing Option or the Euro
Pricing Option to be terminated forthwith, and (ii) all LIBOR Pricing Options
and all Euro Pricing Options then in effect shall forthwith cease to be in
effect, and interest shall from and after such date be calculated at the
interest rate applicable to amounts to which no Pricing Option applies; and
(iii) Borrowers’ right to elect LIBOR Pricing Options or Euro Pricing Options is
terminated until Bank notifies Agent on behalf of Borrowers that the right to
elect LIBOR Pricing Options or Euro Pricing Options is reinstated.
          (j) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with an
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to Bank of agreeing to make or of making, funding or maintaining Loans
subject to the LIBOR Pricing Option or the Euro Pricing Option, then from time
to time, upon written demand by Bank if it shall at the time be the general
policy or practice of Bank to demand such compensation in similar circumstances
under comparable provisions of other credit agreements, Borrowers shall pay to
Bank additional amounts sufficient to compensate Bank for such increased cost
and Bank shall be entitled to additional compensation for only that portion of
such costs incurred from and after the date that is ten (10) days prior to the
date Borrower receives such notice. A certificate as to the amount of such
increased cost

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submitted to Agent on behalf of Borrowers by Bank shall be conclusive and
binding for all purposes, absent manifest error.
          (k) If, with respect to any LIBOR Pricing Option or Euro LIBOR Pricing
Option the LIBOR Rate or the Euro LIBOR Rate for any LIBOR Interest Period or
Euro LIBOR Interest Period will not adequately reflect the cost to Bank of
making a Loan subject to the relevant LIBOR Pricing Option or the relevant Euro
LIBOR Pricing Option for such LIBOR Interest Period or for such Euro LIBOR
Interest Period, Bank shall forthwith so notify Borrowers in writing, whereupon
Borrowers’ right to elect any LIBOR Pricing Option or Euro LIBOR Pricing Option
shall be suspended until Bank shall notify them that Bank has determined that
the circumstances causing such suspension no longer exist. Bank shall use its
best efforts to substitute a comparable rate during such time that the LIBOR
Pricing Option or the Euro LIBOR Pricing Option is so suspended.
     2.3 Applicable LIBOR/Euro LIBOR Margin
          (a) Borrowers shall make an election on an annual basis to utilize the
pricing contained in either Option A or Option B as set forth in clause (b) of
this Section. Agent, on behalf of the Borrower, shall notify the Bank of their
election by September 1 of each year and that election will become effective as
of the October 1 of such year and remain in effect until the following October 1
(an “Election Year”). As of the date of this Agreement, Borrowers have elected
to have Option A apply for the period of time from the date of this Agreement
until October 1, 2008.
          (b) The Applicable LIBOR/Euro LIBOR Margin (“LIBOR+”) expressed as a
percentage, in effect on any date shall be determined based on the ratio of
Total Funded Debt to EBITDA of Borrowers (which shall be determined pursuant to
clause (c) of this paragraph), as follows under either Option A or Option B, as
may be applicable for such Election Year.
Option A

                              Level I Status Funded   Level II Status Funded  
Level III Status Funded     Debt/EBITDA   Debt/EBITDA   Debt/EBITDA Applicable
Margin   ≤1.00:1.00   >1.00:1.00≤2.00:1.00   >2.00:1.00<3.00:1.00
Libor Rate/Euro Libor Rate Revolver
    +0.65 %     +0.75 %     +1.25 %

Option B

                  Level I Status Funded   Level II Status Funded   Level III
Status Funded     Debt/EBITDA   Debt/EBITDA   Debt/EBITDA Applicable Margin  
≤1.00:1.00   >1.00:1.00≤2.00:1.00   >2.00:1.00<3.00:1.00
Unused Fee
  10 basis points   10 basis points   10 basis points
 
           
Libor Rate/Euro Libor Rate Revolver
  +0.50%   +0.60%   +1.10%

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          (c) The Total Funded Debt to EBITDA in effect on a certain date is
determined as follows: the Borrowers shall calculate Total Funded Debt to EBITDA
each quarter and attach quarterly financial statements to such calculation and
deliver same to Bank at the time that the Bank receives the financial statements
of Borrowers delivered to Bank pursuant to Section 4.1 hereof; provided,
however, that if such financial statements or Total Funded Debt to EBITDA are
not delivered on a timely basis, are not accurate and correct, or are not
prepared in accordance with the requirements of this Agreement, then the Total
Funded Debt to EBITDA shall be the ratios determined by Bank in its sole
judgment. If the Total Funded Debt to EBITDA as recalculated requires a change
in Applicable LIBOR/Euro LIBOR Margin, the Applicable LIBOR/Euro LIBOR Margin
will change accordingly starting on the first day of the calendar month
following the Bank’s receipt of such financial statements. Notwithstanding the
foregoing, the Applicable LIBOR/Euro LIBOR Margin in effect on the first day of
the LIBOR Interest Period or the Euro LIBOR Interest Period applicable to a
Pricing Option shall remain in effect for such entire LIBOR Interest Period or
Euro LIBOR Interest Period with respect to the amount of the Loan subject to
such Pricing Option.
          (d) If any financial statements of Borrowers are later determined to
have been incorrect, and if the Total Funded Debt to EBITDA determined pursuant
to the correct information would result in a greater amount owing by Borrowers
for the relevant period than had been actually paid by Borrowers for such
period, Borrowers shall pay to Bank upon demand, the difference between the
amount actually paid for the relevant period and the amount owed based on the
Total Funded Debt to EBITDA determined pursuant to the correct information,
together with interest on the amount owed at the Prime Rate. If any financial
statements of Borrowers are later determined to have been incorrect, and if the
Total Funded Debt to EBITDA determined pursuant to the correct information will
result in a lesser amount of money owing by Borrowers for the relevant period
than had actually been paid by Borrowers for such period, then Borrowers shall
receive from Bank to the ratable benefit of Borrowers upon demand, the
difference between the amount actually paid for the relevant period and the
amount owed based on the Total Funded Debt to EBITDA, determined pursuant to the
correct information.
          (e) If any financial statements of Borrowers are later determined to
have been incorrect as a result of a retroactive change in Generally Accepted
Accounting Principles, and if the Total Funded Debt to EBITDA determined
pursuant to such changed information would result in a lesser amount owing by
Borrowers for the relevant period than had been actually paid by Borrowers for
such period, Bank upon demand shall rebate or credit the difference to Borrowers
between the amount actually paid for the relevant period and the amount owed
based on the Total Funded Debt to EBITDA determined pursuant to the changed
information.
     2.4 Accounting. After the end of each calendar month, Bank will:
          (a) if Bank so elects, charge Agent or any Borrower’s account for any
or all amounts then due to Bank under this Agreement for interest, expenses and
the like and notify Borrowers in writing of such charges; and

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          (b) render to Agent a statement of Borrowers’ loan account with Bank
hereunder, which statement shall be considered correct and to have been accepted
by Borrowers and shall be conclusively binding upon Borrowers, absent manifest
error, unless a Borrower notifies Bank in writing of any discrepancy within
fifteen (15) Business Days from the mailing of such statement. As used herein,
“Business Days” are days on which the principal office of Bank is open for the
transaction of its full banking business.
     2.5 Costs. Borrowers shall pay to Bank its reasonable and customary costs
and expenses (including, without limitation, reasonable attorneys’ fees, court
costs, litigation and other expense) incurred or paid by Bank in negotiating,
documenting, administering and enforcing this Agreement and the Loan Documents
and in establishing, maintaining, protecting, perfecting or enforcing any of
Bank’s rights or any Borrower’s obligations, including, without limitation, any
and all such reasonable and customary costs and expenses incurred or paid by
Bank in defending Bank’s title or right to the Collateral or in collecting or
enforcing payment of the Collateral and all costs of filing financing,
continuation or termination statements or mortgages with respect to the
Collateral.
     2.6 Banking Services. Borrowers shall maintain a full financial services
relationship with Bank (including depository accounts and banking services) so
long as the fees related to such accounts and banking services are reasonable,
customary and consistent with fees being charged to similarly-situated
borrowers.
     2.7 Use of Proceeds. The proceeds of the Loans will be used only for
general corporate purposes.
     2.8 Maximum Interest Rate. In no event shall the interest rate and other
charges hereunder exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Bank has received interest and
other charges hereunder in excess of the highest permissible rate applicable
hereto, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the principal balance of the Loans, in the
inverse order of maturity, and the provisions hereof shall be deemed amended to
provide for the highest permissible rate. If there are no Obligations
outstanding, Bank shall refund to Borrowers such excess.
     2.9 Currency Option. (a) Bank hereby provides to Borrowers the option to
choose to have its Loans made to Borrowers in freely tradable foreign currency
reasonable acceptable to the Bank (a “Foreign Currency”) instead of U.S. Dollars
(the “Foreign Currency Option”). Any borrowing to be funded in a Foreign
Currency is subject to the following terms and conditions, notwithstanding
anything to the contrary in this Agreement:

  (i)   Agent must give Bank written notices of its intention to use the Foreign
Currency Option at least 3 days prior to the actual funding date. Such written
notice shall specify the actual funding date, the principal amount of such
funding and state that the Borrowers are not then in default under the terms of
this Agreement.

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  (ii)   Borrowers, right to elect a Foreign Currency Option for any portion of
outstanding Loans is subject to the following limitations: (A) the total number
of Foreign Currency Options outstanding at any one time under this Agreement
shall not exceed five; (B) Borrowers may not elect a Foreign Currency Option at
a time when an Event of Default has occurred and has not been waived; (C) no
Foreign Currency Option shall end later than the maturity date of the Note
evidencing the borrowing of the relevant principal amount; and (D) once a
Foreign Currency Option has been selected for a portion of the Loans, no other
Foreign Currency Option may apply to that same portion of the Loans until the
expiration of the interest period applicable to such Foreign Currency Option
(but nothing in this clause (D) shall be construed as prohibiting separate
Foreign Currency Options on different portions of the Loans as contemplated by
clause (A) of this paragraph).     (iii)   Borrowers’ right to elect a Foreign
Currency Option shall be suspended automatically if Bank, by telephonic or
telegraphic or other written notice, notifies Borrowers that foreign currency
contracts which have a maturity corresponding to the proposed interest period,
in an amount equal to the amount requested to be subject to a Foreign Currency
Option, are not readily available. Such suspension shall end automatically upon
termination of the circumstances originally creating the suspension.

           (a) Notwithstanding anything herein contained to the contrary, if at
any time any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for Bank to fund or maintain its
funding in a Foreign Currency of any portion of the principal amount of the
Loans or otherwise to give effect to Bank’s obligations as contemplated hereby,
(A) Bank may by facsimile or other written notice thereof to Borrowers declare
Bank’s obligations in respect of the Foreign Currency Option to be terminated
forthwith, and (B) all Foreign Currency Options then in effect shall forthwith
cease to be in effect, and interest shall from and after such date be calculated
at the interest rate applicable to amounts to which no Foreign Currency Option
applies; and (C) Borrowers’ right to elect Foreign Currency Options is
terminated until Bank notifies Agent that Borrowers’ right to elect Foreign
Currency Options is reinstated.
          (b) If. due to either (A) the introduction of or any change in or in
the interpretation of any law or regulation or (B) the compliance with an
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to Bank of agreeing to make or of making, funding or maintaining Loans
subject to the Foreign Currency Option, then from time to time, upon written
demand by Bank if it shall at the time be the general policy or practice of Bank
to demand such compensation in similar circumstances under comparable provisions
of other credit agreements, Borrowers shall pay to Bank additional amounts
sufficient to compensate Bank for such

17

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increased cost. A certificate as to the amount of such increased cost submitted
to Borrowers by Bank shall be conclusive and binding for all purposes, absent
manifest error.
          (c) Each Borrower hereby indemnifies Bank and holds Bank harmless from
and against any and all losses or expenses that Bank may sustain or incur as a
consequence of any prepayment or any default by any Borrower in the payment of
the principal of or interest on any Foreign Currency Option or failure by a
Borrower to complete a borrowing of, a prepayment of or conversion of or to a
Foreign Currency Option after notice thereof has been given by any Borrower
including (but not limited to) any interest payable by Bank to lenders of funds
obtained by it in order to make or maintain its Foreign Currency Option
hereunder, and any other loss obtained by it in order to make or maintain its
Foreign Currency Option hereunder, and any other loss or expense incurred by
Bank by reason of the liquidation or re-employment of deposits or other funds
acquired by Bank to make, continue, convert into or maintain, a Foreign Currency
Option.
          (d) Without limiting and in addition to the provisions of this
Agreement, if for the purposes of obtaining judgment in any court in any
jurisdiction with respect to this Agreement or any other Loan Document to which
a Borrower is party it becomes necessary to convert into the currency of such
jurisdiction (the “Judgment Currency”) any amount due hereunder in any currency
other than the Judgment Currency, then conversion shall be made at the rate of
exchange prevailing on the business day before the day of which judgment is
given. For the purpose, “rate of exchange” means the rate at which Bank would,
on the relevant date at or about 12:00 noon (New York time), be prepared to sell
a similar amount of such currency in New York against the Judgment Currency. In
the event that there is a change in the rate of exchange prevailing between the
business day before the day on which the judgment is given and the date of
payment of the amount due, the applicable credit party shall, on the date of
payment, pay such additional amounts (if any) as may be necessary to ensure that
the amount paid on such date is the amount in the Judgment Currency which when
converted at the rate of exchange prevailing on the date of payment is the
amount then due under this Agreement or such other applicable Loan Document in
such other currency. Any additional amount due from Borrowers under this Section
will be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of any of the Loan
Documents.
     2.10 Joint and Several Liability; Agent.
          (a) The obligations and liabilities of Borrowers, under, and all
representations, warranties and covenants of Borrowers in, this Agreement and
the Loan Documents shall be joint and several in all respects whatsoever.
Whenever the term “Borrower” or “Borrowers” is used in this Agreement or the
Loan Documents it shall mean each individual Borrower and all Borrowers jointly
and severally.
          (b) Bank may deal with each Borrower as if it were the sole obligor,
without impairing in any way the liability of any other Borrower. Without
limiting the generality of that right, Bank may in particular release, impair,
or fail to perfect an interest in any Collateral of any Borrower, waive defaults
by any Borrower, or extend, compromise or release the liability of any Borrower,
without the consent of any other Borrower.

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          (c) Borrowers represent that they have carefully considered the
alternatives to and the legal consequences of incurring joint and several
liability for the Obligations and have determined that by such arrangement they
are able to obtain financing on terms more favorable than otherwise, and that
under a joint and several loan facility they will each realize substantial
interest savings over alternative financing arrangements.
          (d) All Borrowers hereby irrevocably appoint Agent as their
representative to deal with Bank on their behalf in all respects in connection
with this Agreement and the transactions contemplated herein. All Borrowers
agree to be bound by all actions of Agent in all such respects.
          (e) Bank may bring a separate action or actions on the Obligations
against each, any, or all of the Borrowers, whether action is brought against
any other or all of such Borrowers, or any one or more of the Borrowers is or is
not joined therein. Each Borrower agrees that any release which may be given to
any one or more of the Borrowers or any guarantor of the Obligations shall not
release any other Borrower from its obligations hereunder. Each Borrower hereby
waives any right to assert against Bank any defense (legal or equitable), set
off, counterclaim, or claims which such Borrower individually may now or any
time hereafter have against another Borrower or any other party liable to Bank
in any manner whatsoever.
          (f) Any and all present and future debt and other obligations of any
Borrower to any other Borrower are hereby subordinated to the full payment and
performance of the Obligations; provided, however, such debt and other
obligations may be incurred and repaid, subject to the terms of this Agreement,
so long as no Default or Event of Default shall have occurred and not have been
waived.
          (g) Each Borrower is presently informed as to the financial condition
of each of the other Borrowers and of all other circumstances which a diligent
inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Borrower hereby covenants that it will continue to keep itself
informed as to the financial condition of all other Borrowers, the status of all
other Borrowers, and of all circumstances which bear upon the risk of
nonpayment. Absent a written request from any of the Borrowers to Bank for
information, each Borrower hereby waives any and all rights it may have to
require Bank to disclose to such Borrower any information which Bank may now or
hereafter acquire concerning the condition or circumstances of any of the
Borrowers.
          (h) Each Borrower waives all rights to notices of default, existence,
creation, or incurring of new or additional indebtedness, and all other notices
of formalities to which such Borrower may, as a joint and several Borrower
hereunder, be entitled.

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Section 3. Representations and Warranties.
     Each Borrower hereby warrants and represents to Bank the following:

     3.1 Organization and Qualification. Each Borrower is duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, has the power and authority (corporate and otherwise) to carry on
its business and to enter into and perform this Agreement, the Notes and each
Loan Document to which it is a party and is not qualified and licensed (nor is
such qualification or licensing required) to do business in any other
jurisdiction. All information set forth in the Certificate of Borrower for such
Borrower, and in all attachments thereto, is true and correct.
     3.2 Due Authorization. The execution, delivery and performance by each
Borrower of this Agreement, the Notes and each Loan Document to which it is a
party have been duly authorized by all necessary corporate action, and will not
contravene any law or any governmental rule or order binding on such Borrower,
or the certificate of incorporation or regulations of such Borrower, nor violate
any material agreement or instrument by which such Borrower is bound nor result
in the creation of a Lien on any assets of such Borrower except the Liens to
Bank granted herein. Each Borrower has duly executed and delivered this
Agreement, the Notes and each Loan Document to which it is a party and they are
valid and binding obligations of each Borrower enforceable according to their
terms except as limited by equitable principles and by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally. No notice to or consent by any government body is needed in
connection with this transaction.
     3.3 Litigation. There are no suits or proceedings pending or, to the best
knowledge of Borrowers, threatened against or affecting any Borrower, and no
proceedings before any governmental body pending or threatened against any
Borrower or which, if adversely determined, would have a material negative
affect on the Borrower’s business, financial condition or prospects.
     3.4 Margin Stock. No part of the Loans will be used to purchase or carry,
or to reduce or retire or refinance any credit incurred to purchase or carry,
any margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin slock. If requested by Bank, each
Borrower will furnish to Bank statements in conformity with the requirements of
Federal Reserve Form U-l. Margin Stock as defined in Regulations U and X
principally includes: (a) stocks that are registered on a national securities
exchange; (b) debt securities (bonds) that are convertible into margin stocks;
(c) any over-the-counter security designated as qualified for trading in the
National Market System under a designation plan approved by the Securities and
Exchange Commission (NMS security); and (d) shares of most mutual funds, unless
95 per cent of the assets of the fund are continuously invested in U.S.
government, agency, state, or municipal obligations.
     3.5 Business. Each Borrower has all franchises, authorizations, patents,
trademarks, copyrights and other rights necessary or appropriate to conduct its
business, except where the lack of such rights would not have a material adverse
effect on Borrower’s business, assets or financial condition. They are all in
full force and effect and are not in known conflict with the rights of others.
No Borrower is a party to or subject to any agreement or restriction which in
the opinion of such Borrower’s management is so unusual or burdensome that it
might have a

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material adverse effect on such Borrower’s business, properties or prospects.
Each Borrower is in material compliance with all material agreements applicable
to it, including obligations to contribute to any employee benefit plan or
pension plan regulated by the federal Employee Retirement Income Security Act
(“ERISA”).
     3.6 Laws and Taxes. Each Borrower is in material compliance with all laws
applicable to it, has filed all required tax returns and has paid all taxes
shown to be due and payable on those returns. No taxing authority has asserted
or assessed any additional tax liabilities against any Borrower.
     3.7 Environmental Laws. (a) Each Borrower has obtained all material
permits, licenses and other authorizations which are required under
Environmental Laws and each Borrower is in compliance in all material respects
with all terms and conditions of such required permits, licenses and
authorizations, and is also in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws;
          (b) No Borrower is aware of, and has not received notice of, any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance or
continued compliance in any material respect with Environmental Laws, or may
give rise to any material common law or legal liability, or otherwise form the
basis of any material claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste; and
          (c) There is no material civil, criminal or administrative action,
suit, demand, claim, hearing, notice or demand letter, notice of violation,
investigation, or proceeding pending or, to the knowledge of any Borrower,
threatened against any Borrower, relating in any way to Environmental Laws.
     3.8 Financial Condition. All financial statements and information relating
to Borrowers which have been or may hereafter be delivered by Borrowers to Bank
are true and correct in all material respects and have been prepared in
accordance with Generally Accepted Accounting Principles. Borrowers do not have
any material obligations or liabilities of any kind not disclosed in that
financial information, and there has been no material adverse change in the
financial condition of Borrowers since the submission of such financial
information to Bank.
     3.9 Solvency. Each Borrower is Solvent and upon consummation of the
transactions contemplated hereby will be Solvent. “Solvent” means that: (a) the
present fair salable value of a Borrower’s assets is in excess of the total
amount of its liabilities (including contingent liabilities); (b) each Borrower
is able to pay its debts as they become due; and (c) no Borrower intends to or
believe it will incur obligations beyond its ability to pay as they mature.

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Section 4. Financial Statements and Information.
     4.1 Financial Statements. So long as any Obligations to Bank are
outstanding, Borrowers shall maintain a standard and modern system for
accounting in accordance with Generally Accepted Accounting Principles and Agent
shall furnish to Bank:
          (a) Within forty-five (45 ) days after the end of the first three
fiscal quarters of each fiscal year, a copy of its balance sheet as of the end
of such quarter, and profit and loss statements and cash flow statements for
such quarter and for the year to date, which statements shall be in reasonable
detail, prepared and certified as complete and correct, subject to changes
resulting from year-end adjustments, by the principal financial officer of the
Agent and shall be in such form as is reasonably acceptable to the Bank;
          (b) Within ninety (90) days after the end of each fiscal year
beginning with the current fiscal year, a copy of its financial statements for
such year including its balance sheet, profit and loss and surplus statements
for such year, which statements shall be audited by a firm of independent
certified public accountants acceptable to Bank (which acceptance shall not be
unreasonably withheld), and accompanied by a standard audit opinion of such
accountants without significant qualification;
          (c) With the statements submitted under (a) and (b) above (being on a
quarterly and an annual basis), a certificate signed by the principal financial
officer of the Agent, (i) stating he is familiar with this Agreement and the
other Loan Documents and that no Default or Event of Default has occurred, or if
any such condition or event existed or exists, specifying it and describing what
action the Borrower has taken or proposes to take with respect thereto, and
(ii) setting forth, in summary form, figures showing the financial status of the
Borrowers in respect of the financial covenants and restrictions contained in
this Agreement;
          (d) Promptly after any Responsible Officer of any Borrower obtains
knowledge of any condition or event which constitutes a Default or Event of
Default, a certificate of such person specifying the nature and period of the
existence thereof, and what action Borrowers have taken or is taking or proposes
to take in respect thereof;
          (e) Promptly upon receipt thereof, copies of all letters to management
and all audit reports submitted to Borrowers by independent certified public
accountants in connection with each audit of the books of Borrowers made by such
accountants;
          (f) Copies of all statements, notices and reports any Borrower shall
hereafter send to its creditors generally;
          (g) Promptly upon the occurrence thereof, notice that a material
reportable event (as defined in Section 4043(b) of the Employee Retirement
Income Security Act of 1974 (“ERISA”)) (a “Reportable Event”) has occurred with
respect to any employee benefit plan maintained by a Borrower for its employees
(a “Plan”); and
          (h) With reasonable promptness, such other information as Bank
requests.

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If at any time a Borrower has any subsidiaries which have financial statements
that could be consolidated with those of such Borrower under generally accepted
accounting principles, the financial statements required by subsections (a) and
(b) above shall be the financial statements of Parent’s consolidated world-wide
operations, consolidated US operations and consolidated European operations.
Section 5. Covenants. Each Borrower hereby covenants to Bank the following:
     5.1 Existence; Merger; Disposition of Assets. Except with the prior written
consent of Bank, which consent shall not be unreasonably withheld, each Borrower
(a) will maintain its existence, (b) will not (i) change its capital structure
(except that sales of additional shares of common stock and treasury stock
transactions shall be permitted), (ii) merge or consolidate with any
corporation, partnership or other entity (except (A) in connection with any
acquisition or investment not prohibited by this Agreement, a Borrower may merge
or consolidate with another corporation or entity so long as the resulting
entity is fully liable as a Borrower under this Agreement, and (B) any Borrower
may merge or consolidate with another Borrower), or (iii) sell, lease, transfer
or otherwise dispose of all or substantially all of its assets (except (A) to
another Borrower or to a new Subsidiary which has complied or is complying with
Section 5.4 or (B) the sale, abandonment or other disposition of obsolete
assets).
     5.2 Pledge or Encumbrance of Assets. No Borrower will create, incur,
assume, cause or permit to occur or permit to continue in existence (i) any Lien
on any property or asset now owned or hereafter acquired by a Borrower, except
for Permitted Liens, (ii) any material impairment of the value or priority of
Bank’s Lien in Collateral other than impairment in the value of Collateral
resulting from economic fluctuations in the value of assets (including
inventory) outside of the control of Borrowers, (iii) any condition or
circumstance allowing a notice of lien, levy or assessment to be filed against a
Borrower or an asset of such Borrower by any government authority (other than
Permitted Liens), or (iv) a seizure, attachment or other levy upon an asset of a
Borrower by a judicial officer (other than Permitted Liens).
     5.3 Guarantees and Loans. No Borrower will enter into any direct or
indirect guarantees other than by endorsement of checks for deposit in the
ordinary course of such Borrower’s business and guarantees permitted by clause
(h) of the definition of Permitted Indebtedness, nor make any advance or loan
other than in the ordinary course of such Borrower’s business as presently
conducted except that a Borrower may make loans or advances to its Affiliates
and Subsidiaries and other Permitted Investments.
     5.4 Business. Each Borrower will engage primarily in business of the same
general character as that now conducted. Each Borrower will not make any
investment in any other entity, through the direct or indirect holding of
securities or otherwise, except that a Borrower shall be permitted to
(a) conduct its business outside of the United States through newly formed,
wholly-owned (or as near to wholly-owned as legally possible where resident
share or other restrictions on such ownership apply) Subsidiaries, and
(b) conduct its business through newly-formed, wholly-owned domestic
Subsidiaries so long as Bank is notified in advance of such formation and Bank
consents to such formation (which consent shall not be unreasonably

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withheld or delayed) and each such Subsidiary (if requested by Bank) (i) grants
to Bank a first-priority and perfectable security interest in its Accounts and
the other classes of assets that are Collateral hereunder, and (ii) executes in
favor of Bank an agreement whereby such Subsidiary is bound to abide by
covenants and restrictions substantially similar to those applicable to
Borrowers hereunder, and (c) invest in Permitted Investments.
     5.5 Condition and Repair. Each Borrower will maintain in good repair and
working order, subject to normal wear and tear, all material properties used in
its business and from time to time will make all appropriate repairs and
replacements thereof.
     5.6 Insurance. Each Borrower will maintain, with financially sound and
reputable insurers, insurance with respect to its properties and business
against loss or damage of the kinds and in the amounts customarily insured
against by corporations of established reputation engaged in the same or similar
businesses, together with any other insurance requested by Bank. All such
policies relating to Collateral will name Bank as an additional insured and,
where applicable, as loss payee under a lender loss payable endorsement
satisfactory to Bank, and shall provide for thirty (30) days written notice to
Bank before such policy is altered or canceled.
     5.7 Taxes. Each Borrower has paid and will pay all taxes, assessments and
other governmental charges imposed upon it or any of its assets or in respect of
any of its franchises, business, income or profits before any penalty or
interest accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums which have become due and
payable and which by law have or might become a Lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially damaged as a result thereof) no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted, if Bank is notified in advance of
such contest and if a Borrower establishes any reserve or other appropriate
provision required by generally accepted accounting principles and deposits with
Bank cash or bond in an amount acceptable to Bank.
     5.8 Compliance with Law. Each Borrower will comply with all federal, state
and local laws, regulations and orders applicable to it or its assets, in all
respects material to such Borrower’s business, assets or prospects, including
without limitation all Environmental Laws.
     5.9 Transactions with Affiliates. Affiliate Transactions shall be permitted
under this Agreement. As used herein, “Affiliate Transaction” shall mean any of
the following: (a) directly or indirectly making or causing to be made any
guarantee for the benefit of any Affiliate (other than another Borrower),
(b) directly or indirectly making or causing to be made any loans or advances to
or investments in any Affiliate (other than another Borrower), or (c) entering
into any transaction with any Affiliate (other than another Borrower) except
sales of goods or inventory to or from subsidiaries in the ordinary course of
business. Borrowers shall give Bank prior written notification of any Affiliate
Transaction in excess of $5,000,000.
     5.10 Indebtedness. No Borrower will incur, create, assume or permit to
exist indebtedness for borrowed money (other than the Obligations), or
indebtedness on account of deposits, advances or progress payments under
contracts, or notes, bonds, debentures or similar

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obligations (other than Permitted Indebtedness), unless the creditor relating to
any new indebtedness and such Borrower have entered into an intercreditor
agreement with Bank effectively subordinating such new indebtedness to all
Obligations on terms reasonably satisfactory to Bank.
     5.11 Leases. No Borrower will enter into any operating or capital lease of
real or personal property as lessee if the aggregate rentals due under such
lease and all other leases then in effect would exceed $2,500,000 in any fiscal
year.
     5.12 Management. At least one of William J. Motto or John A. Kraeutler
shall be employed full-time in at least one of the following positions: Chairman
of the Board, Chief Executive Officer or President.
     5.13 Depository. At all times the Bank shall be Borrowers’ principal
depository in which the majority of Borrowers’ operating funds and accounts are
deposited and Bank shall be the principal bank of account of Borrowers.
     5.14 Stock Repurchases. Borrowers shall provide to Bank written
notification of any redemption or repurchase any shares of its capital stock in
any fiscal year in a total amount exceeding $5,000,000.
     5.15 Fixed Charge Coverage Ratio. At the end of each fiscal quarter on a
rolling four quarter basis, Borrowers shall maintain a Fixed Charge Coverage
Ratio of at least 1.05:1.0. “Fixed Charge Coverage Ratio” means the ratio of
(a) EBITDA for a given measurement period to (b) required principal payments on
Funded Indebtedness plus income taxes, plus interest expense, plus unfunded
capital expenditures and paid dividends, for such measurement period.
     5.16 Tangible Net Worth. Borrowers shall maintain a Tangible Net Worth as
of the end of each fiscal period of at least $26,500,000 on a consolidated
basis.
     5.17 Funded Debt Ratio. At the end of each fiscal quarter of Borrowers
during the term of this Agreement on a rolling four quarter basis, the ratio of
Borrowers’ Funded Debt to EBITDA shall not exceed 3.00:1.00.
     5.18 Representations. Each Borrower covenants that the representations set
forth herein will continue to be correct so long as this Agreement is in effect.
Each Borrower will, within three days of its knowledge thereof, give written
notice to Bank of the existence of any event which would prohibit such Borrower
from continuing to make the representations set forth in this Agreement.
Section 6. Security.
     6.1 Security Interest of Bank. To induce Bank to make the Loans, and as
security for all Obligations, each Borrower hereby assigns to Bank as Collateral
and grants to Bank a continuing pledge and security interest in the following
property of such Borrower (together with all proceeds and products thereof and
all additions and accessions thereto, replacements thereof, supporting
obligations therefor, guaranties thereof, insurance or condemnation proceeds
thereof,

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documents related thereto, all sales of accounts constituting a right of payment
therefrom, all tort or other claims against third parties arising out of damage
thereto or destruction thereof, all property received wholly or partly in trade
or exchange therefor, all fixtures attached or appurtenant thereto, all leases
thereof, and all rents, revenues, issues, profits and proceeds arising from the
sale, lease, encumbrance, collection or any other temporary or permanent
disposition thereof, or any other interest therein, the “Collateral”), whether
now owned or existing or hereafter acquired or arising and regardless of where
located:
          (a) all Accounts, all Inventory, all Equipment, all General
Intangibles, all Investment Property;
          (b) all instruments, chattel paper, electronic chattel paper,
documents, securities, moneys, cash, letters of credit, letter of credit rights,
promissory notes, warrants, dividends, distributions, contracts, agreements,
contract rights or other property, owned by a Borrower or in which a Borrower
has in interest, including but not limited to, those which now or hereafter are
in the possession or control of Bank or in transit by mail or carrier to or in
the possession of any third party acting on behalf of Bank, without regard to
whether Bank received the same in pledge, for safekeeping, as agent for
collection or transmission or otherwise or whether Bank had conditionally
released the same, and the proceeds thereof, all rights to payment from, and all
claims against Bank, and any deposit accounts of a Borrower with Bank, including
all demand, time, savings passbook or other accounts and all deposits therein;
          (c) all assets and all personal property now owned or hereafter
acquired; all now owned and hereafter acquired inventory, equipment, fixtures,
goods, accounts, chattel paper, documents, instruments, farm products, general
intangibles, supporting obligations, software, and all rents, issues, profits,
products and proceeds thereof, wherever any of the foregoing is located; and
          (d) all cash, instruments, documents, securities, money or other
property, owned by a Borrower or in which a Borrower has an interest, which now
or hereafter are at any time in the possession or control of Bank or in transit
by mail or carrier to or in the possession of any third party acting on behalf
of Bank, without regard to whether Bank received the same in pledge, for
safekeeping, as agent for collection or transmission or otherwise or whether
Bank had conditionally released the same, and any deposit accounts of any
Borrower with Bank, including all demand, time, savings, passbook or other
accounts.
     6.2 Representations in Exhibit 6.2. Each Borrower represents and warrants
that the representations and warranties set forth in Exhibit 6.2, the Specific
Representations Exhibit, are true and correct. Except as otherwise permitted
hereunder and without the prior written consent of Bank (which consent shall not
be unreasonably withheld), no Borrower shall change its name, transfer its
executive offices or maintain records with respect to Accounts at any location
other than its present executive offices specified in that Exhibit.
     6.3 Provisions Concerning Accounts. (a) Each Borrower represents and
warrants that each Account reflected in its books and records submitted to Bank
is, or will at the time it arises be, owned by such Borrower free and clear of
all Liens in favor of any third party (other than

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Permitted Liens), will be a bona fide existing obligation created by the final
sale and delivery of goods or the completed performance of services by such
Borrower in the ordinary course of its business, will be for a liquidated amount
maturing as stated in the supporting data covering such transaction, and will
not be subject to any known deduction, offset, counterclaim, return privilege or
other condition except as reflected on Borrowers’ books and records delivered to
Bank. No Borrower shall re-date any invoices. Any allowances between a Borrower
and its customers will be in accordance with the usual customary practices of
such Borrower, as they exist on the date of this Agreement. Notwithstanding the
foregoing, the Bank acknowledges that the Borrowers do have distribution rebates
and such distribution rebates are permitted under this Agreement.
          (b) After Default, Bank or its designee may at any time notify Account
Debtors that Accounts have been assigned to Bank or of Bank’s security interest
therein, and after default by Borrowers hereunder collect the same directly and
charge all collection costs and expenses to a Borrower’s account.
          (c) Bank shall not be liable to Borrowers or any third person for the
correctness, validity or genuineness of any instruments or documents released or
endorsed to a Borrower by Bank (which shall automatically be deemed to be
without recourse to Bank in any event), or for the existence, character,
quantity, quality, condition, value or delivery of any goods purporting to be
represented by any such documents; and Bank, by accepting a Lien in the
Collateral, or by releasing any Collateral to a Borrower, shall not be deemed to
have assumed any obligation or liability to any supplier or Account Debtor of a
Borrower or to any other third party, and Borrowers agree to indemnify and
defend Bank and hold it harmless in respect to any claim or proceeding arising
out of any matter referred to in this subparagraph.
          (d) A Borrower shall immediately notify Bank if it becomes aware of a
receivership petition or a petition under any chapter of the federal bankruptcy
act being filed (or pending) by or against an Account Debtor owing such Borrower
more than $500,000, or if an Account Debtor owing such Borrower such an amount
dissolves, makes an assignment for the benefit of creditors, becomes insolvent,
fails or goes out of business. After the occurrence of an Event of Default, no
discount, credit or allowance shall be given with respect to an Account in
excess of $250,000 without the Bank’s consent. The foregoing provisions of this
clause (d) do not apply to any distribution rebates granted by any Borrower.
          (e) Upon the occurrence of an Event of Default, each Borrower appoints
Bank and Bank’s designees as its attorney-in-fact to endorse such Borrower’s
name on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into Bank’s possession; to sign a Borrower’s
name on any invoice or bill of lading relating to any Accounts, on drafts
against Account Debtors, on schedules and assignments of Accounts, on
verifications of Accounts, on notices to Account Debtors, and on proofs of
claim, releases of lien or any other documents needed to collect Accounts; to
notify post office authorities to change the address for delivery of a
Borrower’s mail to an address designated by Bank, to receive and open all mail
addressed to any Borrower and to retain all mail relating to Collateral and
forward all other mail to such Borrower; to send requests for verification of
Accounts to customers or Account Debtors, and to do all things necessary to
carry out or enforce this Agreement. Each

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Borrower ratifies and approves all acts of Bank or its designees as
attorney-in-fact. Bank or its designees as attorney-in-fact will not be liable
for any acts or omissions, or for any error of judgment or mistake of fact or
law except for bad faith. This power, being coupled with an interest, is
irrevocable until all Obligations have been fully satisfied. Any person dealing
with Bank shall be entitled to conclusively rely on any written or oral
statement of Bank or its designee that this power of attorney is in effect. Bank
will not exercise this power of attorney until an Event of Default has occurred.
          (f) If any Accounts in excess of $5,000,000 shall arise out of a
contract with the United States of America or any department, agency,
subdivision or instrumentality thereof, Borrowers shall promptly notify Bank
thereof in writing and take all other action requested by Bank to perfect Bank’s
Lien in such Accounts under the provisions of the Federal laws on assignment of
claims.
     6.4 Liens. each Borrower represents and warrants that: it has good and
marketable title to the Collateral, and the Liens granted to Bank pursuant to
this Agreement are fully perfected first priority Liens in and to the Collateral
with priority over the rights of every person other than such Borrower in the
Collateral and other than as described in the definition of “Permitted Liens”;
each Borrower is the owner of all personal property in its possession or shown
on its books and records; and all assets of such Borrower are owned free, clear
and unencumbered, except for Permitted Liens.
     6.5 Further Assurances. (a) Each Borrower shall execute and deliver to Bank
at Bank’s request all financing statements, continuation statements, fixture
filings, endorsements of filings, mortgages, schedules of accounts, letters of
authority and all other documents that Bank may reasonably request, in form
satisfactory to Bank, to perfect and maintain perfected Bank’s security interest
in the Collateral and to fully consummate all transactions contemplated under
this Agreement. Each Borrower hereby irrevocably appoints Bank and Bank’s
designee as such Borrower’s true and lawful attorney-in-fact with power to sign
the name of such Borrower on any such documents. Each Borrower ratifies and
approves all acts of Bank and its designees as attorney-in-fact. Bank or its
designees as attorney-in-fact will not be liable for any acts or omissions, or
for any error of judgment or mistake of fact or law, except for bad faith.
          (b) If any Collateral, including proceeds, consists of a letter of
credit or an advice of credit in excess of $5,000,000, or an instrument, money,
negotiable documents, chattel paper or similar property (collectively,
“Negotiable Collateral”) Borrowers shall, immediately upon receipt thereof,
endorse and assign such Negotiable Collateral over to Bank and deliver actual
physical possession of the Negotiable Collateral to Bank, along with causing the
execution and delivery of any control agreement deemed necessary by Bank to
perfect its interest in such Negotiable Collateral. In addition, Borrowers shall
assign and deliver to Bank certain specific promissory notes for certain foreign
subsidiaries of Agent.
          (c) Bank may, at any time or times hereafter upon reasonable notice,
during Borrowers usual business hours, or during the usual business hours of any
third party having control over the records of Borrowers, inspect and verify the
Collateral and Borrowers books and records in order to verify the amount or
condition of, or any other matter relating to, the

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Collateral and Borrowers financial condition. Borrowers shall promptly deliver
to Bank copies of all books and records requested by Bank.
     6.6 Reinstatement of Lien. If, at any time after payment in full by
Borrowers of all Obligations and termination of Bank’s Liens, any payments on
Obligations secured by Collateral theretofore made by any Borrower or any other
person must be disgorged by Bank for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of a Borrower or such
other person), this Agreement and Bank’s Liens granted hereunder shall be
reinstated as to all disgorged payments as though such payment had not been
made, and Borrowers shall sign and deliver to Bank all documents and things
necessary to reperfect all terminated Liens.
     6.7 Other Amounts Deemed Loans. If a Borrower fails to pay any tax,
assessment, government charge or levy or to maintain insurance within the time
permitted by this Agreement, or to discharge any Lien prohibited hereby, or to
comply with any other obligation, Bank may, but shall not be required to, pay,
satisfy, discharge or bond the same for the account of such Borrower, and to the
extent permitted by law and at the option of Bank all monies so paid out shall
be deemed Loans.
     6.8 Borrower Remains Liable. Each Borrower shall remain liable under any
contracts and agreements included in the Collateral to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, and Bank shall not have any obligation or liability under such
contracts and agreements by reason of this Agreement or otherwise.
     6.9 Financing Statements. Each Borrower hereby authorizes Bank to file a
copy of this Agreement as a Financing Statement with appropriate county and
state government authorities necessary to perfect Bank’s security interest in
the Collateral as set forth herein. Each Borrower hereby further authorizes Bank
to file UCC Financing Statements on behalf of such Borrower and Bank with
respect to the Collateral.
     6.10 Additional Collateral and Credit Support. Each Borrower agrees as
follows: (a) the Obligations shall be secured by a pledge of the capital stock
of any direct or indirect subsidiary of any Borrower now in existence or
hereafter arising in the future; (b) the Borrowers shall assign to Bank as
collateral security for the Obligations, any and all intercompany notes in favor
of any Borrower whether now in existence or arising in the future; and (c) the
Obligations shall be guaranteed by all existing or hereafter created direct or
indirect subsidiaries of any Borrower to the extent permitted by law; provided,
however, that this Section 6.10 shall not be applicable to any subsidiary of any
Borrower that is not created under the laws of the United States or any state or
territory thereof.
Section 7. Conditions Precedent.
     7.1 Conditions to Loans. Bank shall not make any Loan until Borrowers have
delivered to Bank, in addition to this Agreement and the Note, the following in
form and substance satisfactory to Bank:

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          (a) all appropriate financing statements (Form UCC-1) and all consents
or waivers of mortgagees, and all items of Negotiable Collateral.
          (b) a Certificate of Borrower in the form of Exhibit 3.1, and all
attachments thereto.
          (c) UCC searches, tax lien and litigation searches, insurance
certificates, notices, filings or other documents which Bank may require to
reflect, perfect, or protect the priority of Bank’s priority Lien in the
Collateral and to fully consummate this transaction.
          (d) a favorable opinion of counsel to Borrowers, substantially in the
form of Exhibit 7.1(d).
          (e) payment by Borrowers of all fees and expenses of Bank’s counsel
and all recording fees and taxes, if any.
          (f) executed copies of all documents set forth on Bank’s document list
for this transaction.
          (g) such additional information and materials as Bank may reasonably
request.
     7.2 Conditions to each Loan. Bank will not make any Loan if there has
occurred, and has not been waived, any Default or Event of Default.
Section 8. Events of Default and Remedies.
     8.1 Events of Default. Any of the following events shall be an Event of
Default:
          (a) any representation or warranty made by any Borrower or officer of
any Borrower herein, or in any other Loan Document or any document furnished to
Bank by any Borrower under this Agreement, is incorrect in any material respect
when made or when reaffirmed; provided that if the same shall be susceptible of
being cured by Borrowers, including elimination of all adverse effects thereof,
no Event of Default shall exist with respect thereto unless the same shall
remain uncured for a period of thirty (30) days after Borrowers shall have
received written notice thereof; or
          (b) Borrowers default in the payment of any principal or interest on
any Obligation when due and payable, by acceleration or otherwise, and such
default continues for a period of five (5) business days thereafter; or
          (c) Any Borrower fails to observe or perform any covenant, condition
or agreement to be observed or performed pursuant to the terms hereof, provided
such default continues unremedied for 30 days after written notice thereof to
Borrowers by Bank, unless such failure or nonperformance is curable and
Borrowers shall, after delivery of such notice, be

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diligently proceeding to correct such failure or nonperformance and shall in
fact correct such failure or non-performance within ninety (90) days of the
delivery of such notice (provided, further, that this additional 90 day-cure
period shall not be applicable to a violation of Sections 8.1 (b), 5.15, 5.16 or
5.17 of this Agreement); or
          (d) Any Borrower fails to keep its assets insured as required herein,
or material uninsured damage to or loss, theft or destruction of the Collateral
occurs; or
          (e) an Insolvency Event occurs with respect to any Borrower or any
guarantor of an Obligation; or
          (f) Any Borrower defaults under the terms of any indebtedness or lease
not related to the Obligations and involving total payment obligations of such
Borrower in excess of $500,000 which is not cured within the time period
permitted pursuant to the terms and conditions of such indebtedness or lease, or
an event occurs which gives any creditor or lessor the right to accelerate the
maturity of any such indebtedness or lease payments; or
          (g)  final judgment for the payment of money in excess of $500,000 is
rendered against any Borrower and remains undischarged for 60 days (or the
period for appeal thereof has lapsed) during which execution is not effectively
stayed or bonded; or
          (h) any event occurs which might, in Bank’s opinion, have an material
adverse effect on the Collateral or on a Borrower’s financial condition,
operations or prospects; or
          (i) a Reportable Event occurs with respect to any Plan, other than a
Reportable Event caused solely by a decrease in employment or a Reportable Event
for which the 30-day notice requirements of Section 4043(a) of ERISA have been
waived by the Pension Benefit Guaranty Corporation (the “PBGC”); or a trustee is
appointed by a United States District Court to administer any Plan; or the PBGC
institutes proceedings to terminate any Plan; or
          (j) an Event of Default occurs and is continuing under any Loan
Document; or
          (k) the occupation of a majority of the seats (other than vacant
seats) on the board of directors or other governing body of the Agent by Persons
who were neither (i) nominated by the board of directors or other governing body
of Borrower nor (ii) appointed by directors so nominated; or
          (1) Nonpayment by the Borrowers of any Rate Management Obligation when
due or the breach by the Borrowers of any term, provision or condition contained
in any Rate Management Agreement.

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     8.2 Remedies. If any Event of Default shall occur and be continuing:

          (a) Bank may cease advancing money hereunder, and/or declare all
Obligations to be due and payable immediately (and, upon the occurrence of an
Event of Default based on an Insolvency Event, all Obligations shall become
automatically due and payable without a declaration by Bank), whereupon they
shall immediately become due and payable without presentment, demand, protest,
or notice of any kind, all of which are hereby expressly waived by Borrowers.
          (b) Bank may set off against the Obligations, all Collateral,
balances, credits, deposits, accounts or monies of any Borrower then or
thereafter held with Bank, including amounts represented by certificates of
deposit.
          (c) Bank may resort to the rights and remedies of a secured party
under the Uniform Commercial Code including the right to enter any premises of
any Borrower, with or without legal process and take possession of the
Collateral and remove it and any records pertaining thereto and/or remain on
such premises and use it for the purpose of collecting, preparing and disposing
of the Collateral.
          (d) Bank may dispose of the Collateral as is or at its election may
refurbish, repair, improve, process, finish, operate, demonstrate and prepare
for sale the Collateral, and may store, ship, reclaim, recover, protect,
advertise for sale or lease, and insure the Collateral; if any Collateral
consists of documents, Bank may proceed either as to the documents or as to the
goods represented thereby; Bank’s failure to take steps to preserve rights
against any parties or property shall not be deemed to be failure to exercise
reasonable care with respect to the Collateral.
          (e) Bank may in its sole discretion pay, purchase, contest or
compromise any encumbrance, charge or lien which in the opinion of Bank appears
to be prior or superior to its Lien, and pay all expenses incurred in connection
therewith.
          (f) Bank may sell the Collateral at public or private sale, and
Borrowers shall be credited with the net proceeds of such sale only when they
are actually received by Bank; any requirement of reasonable notice of any
disposition of the Collateral shall be satisfied if such notice is sent to
Borrowers, as provided in the Notices Section of this Agreement, 10 days prior
to such disposition.
          (g) A Borrower shall upon request of Bank assemble the Collateral and
any records pertaining thereto and make them available at a place designated by
Bank.
          (h) Bank may use, in connection with any assembly or disposition of
the Collateral, any trademark, trade name, tradestyle, copyright, patent right,
trade secret or technical process used or utilized by any Borrower.
     8.3 Cumulative Remedies. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy given under this Agreement or any other agreement or now or
hereafter existing at law or in

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equity or by statute. Bank may pursue its rights and remedies concurrently or in
any sequence, and no exercise of one right or remedy shall be deemed to be an
election. If a Borrower fails to comply with this Agreement, no remedy of law
will provide adequate relief to Bank, and Bank shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual damages.
     8.4 Fees and Expenses. Upon a sale, lease or other disposition of the
Collateral, the proceeds shall be applied first to the expenses of retaking,
holding, storing, processing and preparing for sale, selling and the like, and,
to the extent permitted by law, to reasonable attorneys’ fees and legal
expenses, and then to the satisfaction of the Obligations secured by this
Agreement. Borrowers shall be liable for any deficiency.
Section 9. Miscellaneous Provisions.
     9.1 Delays and Waiver. No delay or omission to exercise any right shall
impair any such right or be a waiver thereof, but any such right may be
exercised from time to time and as often as may be deemed expedient. A waiver on
one occasion shall be limited to that particular occasion.
     9.2 Waiver by Borrower. Each Borrower waives notice of non-payment, demand,
presentment, protest, or notice of protest of any Accounts or other Collateral,
and all other notices; consents to any renewals or extensions of time of payment
thereof; and generally waives any and all suretyship defenses and defenses in
the nature thereof.
     9.3 Complete Agreement. This Agreement and the Exhibits are the complete
agreement of the parties hereto and supersede all previous understandings
relating to the subject matter hereof. This Agreement may be amended only by an
instrument in writing which explicitly states that it amends this Agreement, and
is signed by the party against whom enforcement of the amendment is sought. This
Agreement may be executed in counterparts, each of which will be an original and
all of which will constitute a single agreement.
     9.4 Severability. If any part of this Agreement or the application thereof
to any person or circumstance is held invalid, the remainder of this Agreement
shall not be affected thereby. The section headings herein are included for
convenience only and shall not be deemed to be a part of this Agreement.
     9.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective legal representatives, successors and assigns of the
parties hereto; however, a Borrower may not assign any of its rights or delegate
any of its obligations hereunder. Bank (and any subsequent assignee) may, upon
thirty days notice to Borrowers, transfer and assign this Agreement and deliver
the Collateral to the assignee, who shall thereupon have all of the rights of
Bank; and Bank (or such subsequent assignee who in turn assigns as aforesaid)
shall then be relieved and discharged of any responsibility or liability with
respect to this Agreement and said Collateral. Bank may also assign partial
interests or participations in the Loans to other persons. Bank may disclose to
all prospective and actual assignees and participants all financial, business
and other information about Borrowers which Bank may possess at any time.

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     9.6 Subsidiaries. If a Borrower has any Subsidiaries incorporated in the
United States of America or any State thereof at any time during the term of
this Agreement, the term “Borrower” in each representation, warranty and
covenant herein shall mean “the Borrower and each Subsidiary incorporated in the
United Slates of America or any State thereof individually and in the
aggregate,” and such Borrower shall cause each such Subsidiary to be in
compliance therewith.
     9.7 Notices. Any notices under or pursuant to this Agreement shall be
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, addressed as follows:

         
 
  To Borrowers:   Meridian Bioscience, Inc., as agent for itself and for
 
      Meridian Bioscience Corporation
 
      Omega Technologies, Inc.
 
      Meridian Life Science, Inc.
 
       3471 River Hills Drive
 
      Cincinnati, Ohio 45244
 
      Attention: Chief Financial Officer
 
       
 
  With copy to:   James M. Jansing, Esq.
 
      Keating, Muething & Klekamp
 
       1400 Provident Tower
 
      One E. 4th Street
 
      Cincinnati, Ohio 45202
 
       
 
  To Bank:   Fifth Third Bank
 
       38 Fountain Square Plaza
 
      Cincinnati, Ohio 45263
 
      Attention: Commercial Loan Department

     Either party may change such address by sending notice of the change to the
other party.
     9.8 Governing Law: Jurisdiction. All acts and transactions hereunder and
the rights and obligations of the parties hereto shall be governed, construed
and interpreted in accordance with the domestic laws of the State of Ohio. Each
Borrower agrees that the state and federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding shall be effective if mailed to such Borrower at its address
described in the Notices section of this Agreement. BANK AND BORROWERS HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

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     IN WITNESS WHEREOF, the Borrowers and the Bank have executed this Agreement
by their duly authorized officers as of the date first above written.

                      MERIDIAN BIOSCIENCE CORPORATION       MERIDIAN BIOSCIENCE,
INC.                      
 
                   
By:
          By:        
 
 
 
         
 
   
 
                   
Its:
          Its:        
 
 
 
         
 
   
 
                    OMEGA TECHNOLOGIES, INC.       MERIDIAN LIFE SCIENCE, INC.  
 
 
                   
By:
          By:        
 
 
 
         
 
   
 
                   
Its:
          Its:        
 
 
 
         
 
   
 
                    FIFTH THIRD BANK                
 
                   
By:
                   
 
 
 
         
 
   
 
                   
Its:
                   
 
 
 
         
 
   

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EXHIBIT 2.1(c)
REVOLVING NOTE

$30,000,000   Cincinnati, Ohio
Dated: August 1, 2007

     Meridian Bioscience, Inc., an Ohio corporation, Meridian Bioscience
Corporation an Ohio corporation (“Corp.”), Omega Technologies, Inc., an Ohio
corporation (“Omega”), and Meridian Life Science, Inc., a Maine corporation
(collectively and jointly and severally the “Borrowers” and individually a
“Borrower”), for value received, hereby promises to pay to the order of FIFTH
THIRD BANK (the “Bank”) at its offices, 38 Fountain Square Plaza, Cincinnati,
Ohio 45263, in lawful money of the United States of America and in immediately
available funds, the principal sum of $30,000,000 or such lesser unpaid
principal amount as may be advanced by the Bank pursuant to the terms of the
Loan and Security Agreement dated August 1, 2007 by and among the Borrowers and
the Bank, as same may be amended from time to time (the “Agreement”). This Note
shall mature and be payable in full on September 15, 2012, or such later date as
may be determined and agreed upon between Bank and Borrowers pursuant to the
Agreement.
     The principal balance hereof outstanding from time to time shall bear
interest as set forth in the Agreement. Interest will be calculated based on a
360-day year and charged for the actual number of days elapsed, and will be
payable as set forth in the Agreement. After the occurrence of an Event of
Default, this Note shall bear interest (computed and adjusted in the same
manner, and with the same effect, as interest hereon prior to maturity), payable
on demand, at a rate per annum equal to six percent (6%) above the rate that
would otherwise be in effect, until paid, and whether before or after the entry
of judgment hereon.
     The principal amount of each loan made by the Bank and the amount of each
prepayment made by the Borrowers shall be recorded by the Bank on the schedule
attached hereto or in the regularly maintained data processing records of the
Bank, The aggregate unpaid principal amount of all loans set forth in such
schedule or in such records shall be presumptive evidence of the principal
amount owing and unpaid on this Note. However, failure by Bank to make any such
entry shall not limit or otherwise affect Borrowers’ obligations under this Note
or the Agreement.
     This Note is the Revolving Note referred to in the Agreement, and is
entitled to the benefits, and is subject to the terms, of the Agreement. The
principal of this Note is prepayable in the amounts and under the circumstances,
and its maturity is subject to acceleration upon the terms, set forth in the
Agreement. Except as otherwise expressly provided in the Agreement, if any
payment on this Note becomes due and payable on a day other than one on which
Bank is open for business (a “Business Day”), the maturity thereof shall be
extended to the next Business Day, and interest shall be payable at the rate
specified herein during such extension period.
     In no event shall the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this

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Note in excess of the highest permissible rate applicable hereto, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce the amounts due to Bank from the Borrowers under this Note, other than
interest, and the provisions hereof shall be deemed amended to provide for the
highest permissible rate. If there are no such amounts outstanding, Bank shall
refund to Borrowers such excess.
     Borrowers and all endorsers, sureties, guarantors and other persons liable
on this Note hereby waive presentment for payment, demand, notice of dishonor,
protest, notice of protest and all other demands and notices in connection with
the delivery, performance and enforcement of this Note, and consent to one or
more renewals or extensions of this Note.
     This Note may not be changed orally, but only by an instrument in writing.
     This Note is being delivered in, is intended to be performed in, shall be
construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
Borrowers agree that the State and federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings have exclusive jurisdiction
over all matters arising out of this Note, and that service of process in any
such proceeding shall be effective if mailed to Borrowers at their address
described in the Notices section of the Agreement. BORROWERS HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.

                  MERIDIAN BIOSCIENCE CORPORATION       MERIDIAN BIOSCIENCE,
INC.
 
               
By:
          By:    
 
               
 
               
Its:
          Its:    
 
               
 
                OMEGA TECHNOLOGIES, INC.       MERIDIAN LIFE SCIENCE, INC.
 
               
By:
          By:    
 
               
 
               
Its:
          Its:    
 
               

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