Exhibit 10.(ac)

 

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NEOGEN CORPORATION

 

CREDIT AGREEMENT

 

WITH

 

COMERICA BANK

 

NOVEMBER 26, 2003

 

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TABLE OF CONTENTS

 

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1.

  

DEFINITIONS

   1

2.

  

THE INDEBTEDNESS

   9      2.1   

Revolving Loan Commitment

   9           (a )  

Revolving Loan Note

   9      2.2   

Types of Loans and Maturity

   9      2.3   

Requests for Revolving Loan Advance

   9      2.4   

Commitment and other Fees

   10      2.5   

Purpose of Loans

   10      2.6   

Prepayment and Readvances

   10      2.7   

Letters of Credit

   10           (a)    

Conditions to Issuance

   10           (b)    

Letter of Credit Fees

   11           (c)    

Issuance Fees

   11           (d)    

Indemnification

   11           (e)    

Fund Letter of Credit Obligations as Advances

   11      2.8   

Support Letter of Credit

   12           (a)    

Reimbursement Obligation / Drawing Fee

   12           (b)    

Support Letter of Credit Fee

   13 3.   

INTEREST, FEE AND INTEREST CALCULATION, INTEREST PERIODS, CONVERSIONS,
PREPAYMENTS

   12      3.1   

Repayment

   12      3.2   

Prime-based Rate

   12      3.3   

Eurodollar-based Rate

   12      3.4   

Interest Payments

   12      3.5   

Interest Payments Upon Refundings and Conversions

   12      3.6   

Maximum Rate

   12      3.7   

Fees and Reimbursements

   13      3.8   

Basis of Payments

   13      3.9   

Receipt of Payments

   13      3.10   

Default Interest

   14

 

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TABLE OF CONTENTS

(continued)

 

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     3.11   

Conversion and Renewal of Loans

   14

4.

  

SPECIAL PROVISIONS FOR LOANS

   14      4.1   

Reimbursement of Prepayment Costs

   14      4.2   

Eurodollar Lending Offices

   14      4.3   

Circumstances Affecting Eurodollar-based Availability

   14      4.4   

Laws Affecting Eurodollar-based Loan Availability

   15      4.5   

Increased Costs

   15

5.

  

PAYMENTS

   16      5.1   

Payment Procedure

   16      5.2   

Application of Proceeds

   16      5.3   

Deposits and Accounts

   16

6.

  

CONDITIONS

   17      6.1   

Conditions Precedent To Initial Advance of the Revolving Loan and Closing Date

   17           (a)  

Documents Executed and Filed

   17           (b)  

Certified Resolutions

   17           (c)  

Certified Articles of Incorporation

   17           (d)  

Certified Bylaws

   17           (e)  

Certificate of Good Standing

   17           (f)  

Certificate of Incumbency

   17           (g)  

Lien Search

   18           (h)  

Liability and Casualty Insurance

   17           (i)  

Opinion of Borrower’s Counsel

   17           (j)  

Approval of Bank’s Counsel

   17           (k)  

Bank Accounts

   18           (l)  

Appraisal

   18           (m)  

Environmental

   19           (n)  

Accounts Audit

   19           (o)  

Approvals

   19      6.2   

Conditions Precedent to All Loans

   18

 

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TABLE OF CONTENTS

(continued)

 

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          (a)  

Effectiveness

   18           (b)  

No Default; Representations and Warranties

   18           (c)  

Adverse Change, etc.

   18           (d)  

Enforceability of Documents

   18

7.

  

REPRESENTATIVE AND WARRANTIES

   18      7.1   

Corporate Status

   18      7.2   

Corporate Power and Authority; Business

   18      7.3   

No Violation

   19      7.4   

Litigation

   19      7.5   

Use of Proceeds

   19      7.6   

Governmental Approvals, etc.

   19      7.7   

True and Complete Disclosure

   19      7.8   

Financial Statements

   19      7.9   

Security Interests

   21      7.10   

Tax Returns and Payments

   19      7.11   

Patents, etc.

   19      7.12   

Compliance with Laws, etc.

   20      7.13   

Collective Bargaining Agreements

   20      7.14   

Indebtedness Outstanding

   21      7.15   

Environmental Protection

   21      7.16   

Employee Benefit Plans

   21      7.17   

Survival of Representations and Warranties

   21

8.

  

AFFIRMATIVE COVENANTS

   22      8.1   

Reporting Requirements Covenants

   22      8.2   

Maintenance of Existence and Status

   23      8.3   

Insurance

   23      8.4   

Books, Records and Inspections

   23      8.5   

Payment of Taxes

   23      8.6   

Compliance with Statutes, etc.

   24      8.7   

Performance of Obligations

   24

 

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TABLE OF CONTENTS

(continued)

 

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     8.8   

Environmental Events

   24      8.9   

Compliance with Formula Amount

   26      8.10   

Continuation of Business

   24      8.11   

Maintenance of Property

   24

9.

  

NEGATIVE COVENANTS

   25      9.1   

Changes in Business

   25      9.2   

Liens

   25      9.3   

Indebtedness

   25      9.4   

Financial Covenants

   28      9.5   

Partner Loans, Advances

   28      9.6   

Stock Acquisition

   28      9.7   

Extension of Credit

   28      9.8   

Guarantee Obligations

   26      9.9   

Subordinate Indebtedness

   26      9.10   

Property Transfer, Merger or Lease-Back

   26      9.11   

Acquire Securities

   26      9.12   

Use of Loan Proceeds

   26

10.

  

DEFAULTS

   26      10.1   

Failure to Pay Monies Due

   26      10.2   

Misrepresentation

   27      10.3   

Noncompliance with Agreement

   27      10.4   

Other Defaults

   27      10.5   

Judgments

   27      10.6   

Business Suspension, Bankruptcy, Etc.

   27      10.7   

Change of Control

   30      10.8   

Repudiation, Revocation

   27      10.9   

Inadequate Funding or Termination of Employee Benefit Plan(s)

   27      10.10   

Occurrence of Certain Reportable Events

   28      10.11   

Cross Default

   28      10.12   

Support Letter of Credit

   31

 

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TABLE OF CONTENTS

(continued)

 

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     10.13   

Exercise of Remedies

   28      10.14   

Waiver of Defaults

   28

11.

  

MISCELLANEOUS

   28      11.1   

Law of Michigan; Submission to Jurisdiction

   28      11.2   

Bank’s Costs and Expenses

   29      11.3   

Notices

   29      11.4   

Further Action

   29      11.5   

Successors and Assigns

   30      11.6   

Indulgence

   30      11.7   

Counterparts

   30      11.8   

Entire Agreement; Amendments; Waivers; Consents

   30      11.9   

Confidentiality

   30      11.10   

Interest

   30      11.11   

Cross-Collateralization/Cross-Default

   31      11.12   

JURY WAIVER

   31      11.13   

Conflicts

   31      11.14   

Effective Upon Execution

   31

 

EXHIBITS

 

EXHIBIT “A” [FORM OF REQUEST FOR ADVANCE]

 

EXHIBIT “B” [FORM OF REVOLVING NOTE]

 

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, made as of the 26th day of November, 2003, between NEOGEN
CORPORATION, a Michigan corporation (“Borrower”), and COMERICA BANK, a Michigan
banking corporation (“Bank”).

 

WHEREAS, Borrower has requested the Bank to make certain loans and extensions of
credit to Borrower, and

 

WHEREAS, Bank is willing to do so, but only on the terms and conditions of this
Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1. DEFINITIONS

 

For the purposes of this Agreement the following terms (when capitalized) will
have the following meanings:

 

“Account(s)” shall mean, with respect to any Person, all accounts receivables,
monies and book debts at any time owed to such Person, and all instruments,
chattel paper and other documents evidencing or securing any such accounts
receivable, monies or book debts.

 

“Advance” shall mean a borrowing under the Revolving Loan requested by Borrower
and made by the Bank pursuant hereto.

 

“Affiliate” shall mean, when used with respect to any Person, any other Person
which, directly or indirectly, controls or is controlled by or is under common
control with such Person. For purposes of this definition, “control” (including
the correlative meanings of the terms “controlled by” and “under common control
with”), with respect to any Person, shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.

 

“Agreement” shall mean this Credit Agreement, as amended from time to time in
accordance with the terms hereof.

 

“Applicable Interest Rate” shall mean either the Eurodollar-based Rate, Floating
Rate or Prime-based Rate, as selected by Borrower from time to time or otherwise
determined pursuant to the terms and conditions of this Agreement.

 

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“Applicable Margin” shall mean:

 

(a) minus (i.e., negative) one and one-quarter percent (1.25%) per annum with
respect to any Prime-based Loan; and

 

(b) one and one-half percent (1.50%) per annum with respect to any Floating Rate
Loan or Eurodollar-based Loan.

 

“Business Day” shall mean any day on which commercial banks are open for
domestic and international business in Detroit, Michigan and when used in
reference to any Floating Rate Loan or Eurodollar-based Loan, also a day on
which dealings are made in deposits in Dollars in the London interbank market.

 

“Capital Expenditures” shall mean, for any period of determination thereof, the
aggregate gross expenditures during that period, in the property, plant or
equipment reflected in the balance sheet of Borrower in conformity with GAAP.

 

“Closing Date” shall mean the date, on or before November 20, 2003, on which the
conditions of Section 6.1 hereof have been satisfied.

 

“Closing Statement” shall mean that Closing Statement, in form and substance
satisfactory to Bank, entered into by Borrower.

 

“Commitment Fees” shall mean the commitment fees payable to the Bank pursuant to
Section 2.4 hereof.

 

“Current Assets” shall mean, as of any applicable date of determination, the
current assets of Borrower determined in accordance with GAAP.

 

“Current Liabilities” shall mean, as of any applicable date of determination,
all liabilities of a Person that should be classified as current in accordance
with GAAP.

 

“Current Ratio” shall mean, as of any applicable date of determination, the
ratio of Current Assets to Current Liabilities, each determined in accordance
with GAAP.

 

“Default” shall mean an event, occurrence or circumstance which, with the giving
of notice and/or passage of time, would constitute an Event of Default.

 

“Default Rate” shall mean a per annum rate of interest equal to the Applicable
Interest Rate, plus three percent (3%).

 

“Documents” shall mean this Agreement, the Note, the Closing Statement, and all
other documents, agreements and instruments delivered to Bank pursuant to this
Agreement or any of the foregoing.

 

“Dollars” and the sign “$” shall mean lawful money of the United States of
America.

 

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“EBITDA” shall mean the Net Income of Borrower before interest, income taxes,
depreciation and amortization.

 

“Eligible Accounts” shall mean an Account arising in the ordinary course of
Borrower’s business which meets each of the following requirements:

 

(a) it is not owing more than one hundred twenty (120) days after the date of
the original invoice or other writing evidencing such Account;

 

(b) it is not owing by an account debtor who has failed to pay twenty five
percent (25%) or more of the aggregate amount of its accounts owing to the
Borrower within one hundred twenty (120) days after the date of the original
invoice or other writing evidencing such Account;

 

(c) it is not evidenced by any note, trade acceptance, draft or other negotiable
instrument or by any chattel paper, unless such note or other document or
instrument previously has been endorsed and delivered by the Borrower to the
Bank;

 

(d) it arises from the sale or lease of goods and such goods have been shipped
or delivered to the account debtor; or it arises from services rendered and such
services have been performed;

 

(e) it is evidenced by an invoice, dated not later than the date of shipment or
performance, rendered to such account debtor, or some other evidence of billing
acceptable to the Bank;

 

(f) it is a valid, legally enforceable obligation of the account debtor
thereunder, and is not subject to any offset, counterclaim or other defense on
the part of such account debtor or to any claim on the part of such account
debtor denying liability thereunder in whole or in part;

 

(g) it is not an Account billed in advance, payable on delivery, for consigned
goods, for guaranteed sales, for unbilled sales, for progress billings, payable
at a future date in accordance with its terms, subject to a retainage or
holdback by the account debtor or insured by a surety company;

 

(h) it is not owing by a subsidiary or Affiliate of the Borrower;

 

(i) it is not owing by an account debtor which (i) does not maintain its chief
executive office in the United States of America or Canada, (ii) is not
organized under the laws of the United States of America or Canada, or any state
or province thereof, as applicable, or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality or other
instrumentality thereof;

 

(j) it is not an Account owing by the United States of America or any state or
political subdivision thereof, or by any department, agency, public body
corporate or other instrumentality of any of the foregoing, unless all necessary
steps are taken to comply with the Federal Assignment of Claims Act of 1940, as
amended, or with any comparable state law, if

 

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applicable, and all other necessary steps are taken to perfect the Bank’s
security interest in such Account;

 

(k) the Account has not arisen out of a written order or contract with or from
an account debtor which by its nature or terms prevents, restricts, forbids or
makes void or unenforceable the assignment to the Bank of such Account, or
requires notice to, or the consent of, the account debtor;

 

(l) it is not owing by an account debtor for which the Borrower has received a
notice of (i) the death of the account debtor or any partner of the account
debtor, (ii) the dissolution, liquidation, termination of existence, insolvency
or business failure of the account debtor, (iii) the appointment of a receiver
for any part of the property of the account debtor, or (iv) an assignment for
the benefit of creditors, the filing of a petition in bankruptcy, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the account debtor; and

 

(m) it is not owing by any account debtor whose obligations the Bank, acting in
its sole discretion, shall have notified the Borrower are not deemed to
constitute Eligible Accounts.

 

An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.

 

“Environmental Laws” shall mean the common law and all federal, state, local and
foreign laws or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of public or employee health and safety or
the environment, including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous constituent substances or wastes,
including, without limitation, petroleum, including crude oil or any fraction
thereof, or any petroleum product (collectively referred to as “Hazardous
Materials”), into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of Hazardous Materials, and (iii) underground
storage tanks, and related piping, and emissions, discharges, releases or
threatened releases therefrom.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.

 

“Eurodollar-based Loan” shall mean a Loan which bears interest at a rate based
on the Eurodollar-based Rate.

 

“Eurodollar-based Rate” shall mean a per annum interest rate equal to the
Eurodollar Rate for the relevant Loan, plus the Applicable Margin for
Eurodollar-based Loans.

 

“Eurodollar Lending Office” shall mean Bank’s office located at Grand Cayman,
the British West Indies or such other branch of Bank, domestic or foreign, as it
may hereafter designate as its Eurodollar Lending Office by notice to Borrower.

 

4

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“Eurodollar Rate” shall mean:

 

(a) the per annum interest rate at which the Eurodollar Lending Office offers
deposits in the relevant Eurodollar to prime banks in the Eurodollar market in
an amount comparable to the relevant Eurodollar-based Loan and for a period
equal to the relevant Interest Period at approximately 11:00 a.m. Detroit time
two (2) Business Days prior to the first day of such Interest Period; divided
by,

 

(b) a percentage (expressed as a decimal) equal to one hundred percent (100%)
minus that percentage which is in effect on the date for an Advance of a
Eurodollar-based Loan, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirements for a member bank of the Federal Reserve System with deposits
exceeding five billion dollars in respect of “Eurodollar Liabilities” (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar-based Loans is determined or
any category of extensions of credit or other assets which includes loans by a
non-United States Eurodollar Lending Office of such a bank to United States
residents).

 

“Event of Default” shall mean the Events of Default specified in Sections 10.1
through 10.12 hereof.

 

“Floating Rate” shall mean, as of any day:

 

(a) the per annum interest rate at which the Eurodollar Lending Office offers
overnight deposits in the relevant Eurodollar to prime banks in the Eurodollar
market in an amount comparable to the relevant Floating Rate Loan; divided by,

 

(b) a percentage (expressed as a decimal) equal to one hundred percent (100%)
minus that percentage which is in effect on the date for an Advance of a
Floating Rate Loan, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirements for a member bank of the Federal Reserve System with deposits
exceeding five billion dollars in respect of “Eurodollar Liabilities” (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar-based Loans is determined or
any category of extensions of credit or other assets which includes loans by a
non-United States Eurodollar Lending Office of such a bank to United States
residents); plus

 

(c) the Applicable Margin.

 

“Floating Rate Loan” shall mean a Loan which bears interest at the Floating
Rate.

 

“Funded Debt” shall mean, as of any time of determination, the sum of all
Indebtedness of Borrower, less accounts payable, accruals, deferred taxes,
deferred compensation and loans payable to Affiliates.

 

“Funded Debt Ratio” shall mean the ratio of Borrower’s Funded Debt to EBITDA for
the previous four (4) fiscal quarters of Borrower.

 

5

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“GAAP” shall mean, at any time, accounting principles generally accepted in the
United States applied in a manner consistent with the method of application
utilized in the preparation of the financial statements mentioned in Section 7.8
hereof.

 

“Highest Lawful Rate” shall mean the maximum nonusurious interest rate that at
any time or from time to time may be contracted for, taken, reserved, charged or
received on its Note or other indebtedness under laws applicable to Bank which
are in effect as of the date hereof or, to the extent allowed by law, under such
laws applicable to Bank which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws allow as of the
date hereof.

 

“Indebtedness” shall mean, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) all obligations of any
other Person secured by any lien on any property owned by such first Person,
whether or not such obligations have been assumed by such first Person, (iv) all
capitalized lease obligations of such Person, and (v) all obligations of such
Person under interest rate hedge agreements or interest rate swap agreements.

 

“Interest Expense” shall mean, for the period of any calculation thereof, the
amount of interest expense of the Borrower, determined in accordance with GAAP.

 

“Interest Period” shall mean:

 

(a) in the case of any Prime-based Loan or Floating Rate Loan, an initial period
beginning on the date of the Advance thereof and ending on the first Business
Day of the month following the month in which such Advance is made, and
thereafter, successive Interest Periods ending on the first Business Day of each
month thereafter; and

 

(b) in the case of any Loan which is a Eurodollar-based Loan, a period of thirty
(30) days or any multiple thereof up to three hundred sixty (360) days.

 

provided however, that:

 

(i) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless the
next succeeding Business Day falls in another calendar month, in which case,
such Interest Period shall end on the immediately preceding Business Day;

 

(ii) when an Interest Period for a Eurodollar-based Loan begins on a day which
has no numerically corresponding day in another calendar month during which such
Interest Period is to end, it shall end on the last Business Day of such other
calendar month; and

 

(iii) no Interest Period for any Loan shall extend beyond the Maturity Date.

 

“Letter(s) of Credit” shall mean any letters of credit hereafter issued by Bank
at the request of or for the account of Borrower pursuant to Section 2.7 hereof.

 

6

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“Letter of Credit Agreement” shall mean in respect of each Letter of Credit
issued pursuant to this Agreement, the application of Borrower requesting Bank
to issue such Letter of Credit (including the terms and conditions on the
reverse side thereof or otherwise therewith), in the form and substance
acceptable to Bank.

 

“Letter of Credit Fees” shall mean the fees payable to Bank in connection with
Letters of Credit issued by it pursuant to Section 2.7 hereof.

 

“Letter of Credit Maximum” shall mean One Million Dollars ($1,000,000).

 

“Letter of Credit Obligation” shall mean the obligation of Borrower under each
Letter of Credit Agreement to reimburse the Bank for each payment made by Bank
under the Letter of Credit issued pursuant to such Letter of Credit Agreement,
together with all other sums, fees, charges and amounts which may be owing under
such Letter of Credit Agreement.

 

“Letter of Credit Outstandings” shall mean, as of any date, the sum of:

 

(a) the face amounts of any Letters of Credit then issued and unexpired; plus

 

(b) the amounts of Letter of Credit Payments that have not yet been reimbursed
to Bank.

 

“Letter of Credit Payment” shall mean any amount paid or required to be paid by
Bank in its capacity as issuer of a Letter of Credit as a result of a draw
against any Letter of Credit.

 

“Loan” shall mean the Revolving Loan(s).

 

“Material Adverse Effect” shall mean:

 

(a) any materially adverse effect with respect to the operations, business,
properties, assets, nature of assets, liabilities (contingent or otherwise) or
financial condition of Borrower or any other Person; or

 

(b) any facts or circumstances that create a reasonable likelihood that Borrower
will be rendered unable to perform obligations under any of the Documents, or a
reasonable likelihood that the Bank will be rendered unable to enforce in any
material respect rights or remedies purported to be granted Bank under any of
the Documents.

 

“Maturity Date” shall mean the earlier of an Event of Default or September 1,
2005;

 

“Net Income” shall mean net income (or loss) for any period, determined in
accordance with GAAP.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any Person
succeeding to the present powers and functions of the Pension Benefit Guaranty
Corporation.

 

“Person” shall mean an individual, corporation, partnership, trust, incorporated
or unincorporated organization, association, syndicate, joint venture, joint
stock company, or a

 

7

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government or any agent or political subdivision thereof or other entity of any
kind, and pronouns have a similarly extended meaning.

 

“Prime Rate” shall mean the per annum interest rate established by Bank as its
prime rate for its borrowers as such rate may vary from time to time, which rate
is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime-based Loan” shall mean a Loan which bears interest at a rate based on the
Prime-based Rate.

 

“Prime-based Rate” shall mean, as of any day that rate of interest which is
equal to the Prime Rate plus the Applicable Margin.

 

“Property” shall mean, with respect to any Person, any interest of such Person
in any land or property or asset, wherever situated, whether real or immovable,
personal, movable or mixed, tangible or corporeal, intangible or incorporeal,
including capital stock in any other Person.

 

“Real Estate Purchase Agreements” shall mean (a) the                         ,
dated                 , between Borrower and                 , pursuant to which
Borrower will purchase certain real estate located at 928 Nandino Blvd.,
Lexington, Kentucky from                          and (b) the
                        , dated                         , between Borrower and
                        , pursuant to which Borrower will purchase certain real
estate located at 301 N. Hosmer, Lansing, Michigan from
                        .

 

“Request for Loan” shall mean a request for an Advance under the Revolving Note
issued by a Borrower under this Agreement in the form annexed hereto as Exhibit
“A”.

 

“Revolving Loan” or “Revolving Loans” shall mean the revolving credit loans to
be advanced and readvanced to Borrower pursuant to Section 2.1 hereof.

 

“Revolving Loan Commitment” shall mean Fifteen Million Dollars ($15,000,000).

 

“Revolving Note” shall mean the Note evidencing the Revolving Loans.

 

“Stock Purchase Agreements” shall mean (a) the Stock Purchase Agreement, dated
on or about the date hereof, between HACCO and Borrower, pursuant to which
Borrower will purchase 100% of the stock of HACCO, and (b) the Stock Purchase
Agreement, dated on or about the date hereof, between Hess & Clark and Borrower,
pursuant to which Borrower will purchase 100% of the stock of Hess & Clark.

 

“Tangible Effective Net Worth” shall mean, as of any applicable date of
determination, the excess of (i) the net book value of all assets of a Person
(other than patents, patent rights, trade marks, trade names, franchises,
copyrights, licenses, goodwill, capitalized organization expense and similar
intangible assets and also excluding any amounts due from loans, investments or
advances from or to any joint venture, subsidiary or Affiliate of such Person)
after all appropriate deductions in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization) and excluding Affiliate non-trade accounts receivable, less (ii)
its Total Liabilities.

 

8

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“Total Liabilities” shall mean, as of the date of any determination thereof, all
liabilities and other obligations of Borrower, determined on in accordance with
GAAP.

 

“UCC” shall mean Public Act 174 of 1962 of State of Michigan, as amended.

 

2. THE INDEBTEDNESS

 

2.1 Revolving Loan Commitment. Subject to the terms and conditions of this
Agreement, Bank and Borrower agree that Borrower may request and, as to any such
request Bank may in its discretion make, Revolving Loans to Borrower, at any
time prior to the Maturity Date, in aggregate principal amount outstanding at
any time which, when added to the Letter of Credit Outstandings, will not exceed
the Revolving Loan Commitment.

 

2.2 Revolving Loan Note. The Revolving Loan shall be evidenced by a Revolving
Note in the form attached as Exhibit “B” made to the Bank in the principal
amount of the Revolving Loan Commitment.

 

2.3 Types of Loans and Maturity. The Revolving Note, and all principal and
interest then outstanding thereunder, shall mature and become due and payable in
full on the Maturity Date. Each Loan from time to time outstanding shall be
either a Prime-based Loan, a Floating Rate Loan or a Eurodollar-based Loan as
the Borrower may elect or as otherwise applicable pursuant to the provisions
hereof. The amount and date of each Loan, its Applicable Interest Rate, its
Interest Period, and the amount and date of any repayment shall be noted on
Bank’s records, which records will be presumed correct absent manifest error.

 

2.4 Requests for Revolving Loan Advance. Borrower may request Advances by
delivery to Bank of a Request for Loan form executed by an authorized officer of
Borrower and subject to the following:

 

(a) each such Request for Loan shall set forth all information required on the
Request for Loan form;

 

(b) in the case of a Floating Rate Loan, the Request for Loan form may be
substituted by another form reasonably acceptable to Bank and Borrower, and such
substitute form constitute a Request for Loan for all purposes hereunder;

 

(c) each such Request for Loan shall be delivered to Bank by 2:00 p.m. (Detroit
time) on such proposed date;

 

(d) the principal amount of such Advance, plus the amount of any outstanding
Advance under the same Note having the same Applicable Interest Rate and
Interest Period shall be, in the case of a Eurodollar-based Loan, at least One
Million Dollars ($1,000,000) or a greater integral multiple of Five Hundred
Thousand Dollars ($500,000).

 

(e) a Request for Loan, once delivered to Bank, shall not be revocable by
Borrower;

 

9

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(f) each Request for Loan shall constitute a certification by the Borrower as of
the date thereof that all of the conditions set forth in Section 6.2 hereof are
satisfied as of the date of such request and shall be satisfied as of the date
such Advance is requested; and

 

(g) the principal amount requested, together with the principal amount of all
other Advances (plus the Letter of Credit Outstandings), shall not exceed the
Revolving Loan Commitment.

 

2.5 Commitment and other Fees.

 

(a) Borrower shall pay to Bank, with respect to the Revolving Loan, a $7,500
commitment fee payable on the Closing Date, which amount shall be deemed fully
earned by Bank as of the Closing Date and shall not be refundable under any
circumstance, together with all other fees of Bank and its counsel as set forth
on the Closing Statement.

 

(b) Borrower shall pay to the Bank an unused facility fee for the period from
the date of this Agreement to and including the Maturity Date, equal to one
tenth of one percent (.10%) per annum on the average daily excess of the
Revolving Loan Commitment over the aggregate principal balance of the Revolving
Loans. Such unused facility fee shall be computed and paid quarterly in arrears
by automatic deduction from Borrower’s deposit account with the Bank, on the
first Business Day of the months of January, April, July and October, beginning
January 1, 2004, and on the Maturity Date, for the immediately preceding three
(3) month period.

 

2.6 Purpose of Loans. The Revolving Loan shall be available to and used by
Borrower for working capital purposes, to fund the purchase prices to be paid by
Borrower pursuant to the Stock Purchase Agreements, and to fund the purchase
prices to be paid by Borrower in connection with the Real Estate Purchases.

 

2.7 Prepayment and Readvances. Subject to Section 4.1 of this Agreement, the
Revolving Loans outstanding hereunder may be prepaid from time to time in
accordance with the terms of this Agreement. Amounts so prepaid shall be
available for readvance.

 

2.8 Letters of Credit. Subject to the terms and conditions of this Agreement,
Bank shall, at the request of Borrower at any time and from time to time from
the Closing Date until the third (3rd) Business Day prior to the Maturity Date,
issue Letters of Credit for the account of Borrower in an aggregate amount at
any one time outstanding not to exceed the Letter of Credit Maximum. Each Letter
of Credit shall provide an initial expiration date not later than the earlier of
two (2) years from its date of issuance (subject to renewals) and three (3)
Business Days prior to the Maturity Date.

 

(a) Conditions to Issuance. No Letter of Credit shall be issued unless, as of
the date the issuance of such Letter of Credit is requested:

 

(i) the sum of all Revolving Loans outstanding and Letter of Credit
Outstandings, upon the issuance of the Letter of Credit requested, will not
exceed the Revolving Loan Commitment;

 

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(ii) the face amount of the Letter of Credit requested plus the Letter of Credit
Outstandings will not exceed the Letter of Credit Maximum;

 

(iii) the execution of the Letter of Credit Agreement with respect to the Letter
of Credit requested will not violate the terms and conditions of any contract,
agreement or other borrowing of Borrower;

 

(iv) Borrower shall have delivered to Bank, prior to the requested date for
issuance, the Letter of Credit Agreement related thereto, together with such
other documents and materials as may be required pursuant to the terms thereof,
and the terms of the proposed Letter of Credit shall be satisfactory to Bank;

 

(v) no order, judgment or decree of any court, arbitrator or governmental
authority shall purport by its terms to enjoin or restrain Bank from issuing the
Letter of Credit, and no law, rule, regulation, request or directive (whether or
not having the force of law) of or from any governmental authority shall
prohibit or request that Bank refrain from issuing the Letter of Credit
requested or letters of credit generally; and

 

(vi) all of the conditions set forth herein, and in the related Letter of Credit
Agreement, are satisfied as of the date of such request and shall be satisfied
as of the date requested for issuance of such Letter of Credit.

 

(b) Letter of Credit Fees. Borrower shall pay to Bank letter of credit fees upon
the date of issuance of each Letter of Credit in an amount to be agreed upon
between Borrower and Bank.

 

(c) Issuance Fees. In connection with the Letters of Credit, Borrower will pay
Bank’s letter of credit issuance fees and standard administration, payment
drawing and cancellation charges assessed by Bank, at the times, in the amounts
and on the terms customarily charged by Bank in connection with the
administration of and transactions involving its letter of credit program.

 

(d) Indemnification. Borrower hereby indemnifies and holds Bank harmless from
and against any and all claims, damages, losses, liabilities, costs or expenses
whatsoever which any such party may incur (or which may be claimed against any
such party by any Person) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to pay under, any Letter of
Credit; provided, however, that they shall not be required to indemnify Bank
pursuant to this Section 2.7(d) for claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by the willful
misconduct or gross negligence of Bank.

 

(e) Fund Letter of Credit Obligations as Advances. Borrower hereby irrevocably
authorizes and directs Bank, in the event that any Letter of Credit Obligation
is not paid when due, to make a Revolving Loan under the Revolving Note in the
amount of such unpaid Letter of Credit Obligation and to apply the proceeds
thereof toward satisfaction of such unpaid Letter of Credit Obligation.

 

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3. INTEREST, FEE AND INTEREST CALCULATION, INTEREST PERIODS, CONVERSIONS,
PREPAYMENTS

 

3.1 Repayment. The Note, and all principal and interest outstanding thereunder,
shall mature and become due and payable on the Maturity Date, and each Revolving
Loan from time to time outstanding thereunder shall bear interest at its
Applicable Interest Rate. The amount and date of each Revolving Loan, its
Applicable Interest Rate, its Interest Period (if applicable) and the amount and
date of any repayment shall be noted on Bank’s records, which records will be
prima facie evidence thereof, absent manifest error; provided, however, any
failure by Bank to record any such information shall not relieve Borrower of its
obligations to repay the outstanding principal amount of the Revolving Loans,
accrued interest thereon, and any other amounts payable by Borrower hereunder in
accordance with the terms of this Agreement.

 

3.2 Prime-based Rate. Interest on the unpaid balance of all Prime-based Loans
from time to time outstanding shall accrue from the date of such Revolving Loan
until paid at a per annum rate equal to such Revolving Loan’s Prime-based Rate,
and shall be computed on the basis of a 360 day year and shall be assessed for
the actual number of days elapsed, and in such computation, effect shall be
given to any change in the Prime-based Rate if resulting from a change in the
Prime Rate, on the date of each such change in the Prime Rate.

 

3.3 Floating Rate. Interest on the unpaid balance of all Floating Rate Loans
from time to time outstanding shall accrue from the date of such Revolving Loan
until paid at a per annum rate equal to the Floating Rate, and shall be computed
on the basis of a 360 day year and shall be assessed for the actual number of
days elapsed, and in such computation, effect shall be given to any change in
the Floating Rate on the date of each such change in the Floating Rate.

 

3.4 Eurodollar-based Rate. Interest on each Eurodollar-based Loan shall accrue
at its Eurodollar-based Rate, and shall be computed on the basis of a 360 day
year and shall be assessed for the actual number of days elapsed from the first
day of the Interest Period applicable thereto to, but not including the last day
thereof.

 

3.5 Interest Payments. Interest shall be due and payable:

 

(a) On all Revolving Loans outstanding as Floating Rate Loans or Prime-based
Loans, on the first Business Day of each month beginning January 1, 2004; and

 

(b) On all Revolving Loans to the extent funded as a Eurodollar-based Loan, on
the last day of the Interest Period applicable thereto.

 

3.6 Interest Payments Upon Refundings and Conversions. Notwithstanding anything
to the contrary set forth herein, all accrued and unpaid interest on any
Revolving Loan (or portion thereof) which is refunded or converted pursuant to
Section 3.11 hereof shall be due and payable in full on the date of such
refunding or conversion, together with any amounts payable under Section 3.10
hereof if such refunding or conversion occurs on any day other than the last day
of the Interest Period applicable thereto.

 

3.7 Maximum Rate. At no time shall the rate of interest payable on the Note be
deemed to exceed the Highest Lawful Rate. In the event any interest is charged
or received by

 

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the Bank in excess of the Highest Lawful Rate, the Borrower acknowledges that
any such excess interest shall be the result of an accidental and bona fide
error, and such excess shall first be applied to reduce the principal then
unpaid hereunder (in inverse order of their maturities if principal amounts are
due in installments); second, applied to reduce any obligation for other
indebtedness of the Borrower to the Bank; and third, any remaining excess
returned to the Borrower.

 

3.8 Fees and Reimbursements. Simultaneously with the execution of this
Agreement, the Borrower shall reimburse Bank for the amount of the expenses
(including without limit reasonable attorneys’ fees, whether of inside or
outside counsel, and disbursements) incurred by the Bank in connection with the
preparation and closing of this Agreement and related instruments and/or making
of advances hereunder.

 

3.9 Basis of Payments. All sums payable by the Borrower to the Bank under this
Agreement or the other documents contemplated hereby shall be paid directly to
the Bank at its principal office in United States funds, without set off,
deduction or counterclaim. In its sole discretion, from and after the occurrence
of an Event of Default, the Bank may charge any and all deposit or other
accounts (including without limit an account evidenced by a certificate of
deposit) of the Borrower with the Bank for all or a part of any indebtedness of
Borrower to Bank then due; provided, however, that this authorization shall not
affect the Borrower’s obligation to pay, when due, any indebtedness of Borrower
to Bank whether or not account balances are sufficient to pay amounts due.

 

3.10 Receipt of Payments. Any payment of the indebtedness of Borrower to Bank
made by mail will be deemed tendered and received only upon actual receipt by
the Bank at the address designated for such payment, whether or not the Bank has
authorized payment by mail or any other manner, and shall not be deemed to have
been made in a timely manner unless received on the date due for such payment,
time being of the essence. The Borrower expressly assumes all risks of loss or
liability resulting from non-delivery or delay of delivery of any item of
payment transmitted by mail or in any other manner. Acceptance by the Bank of
any payment in an amount less than the amount then due shall be deemed an
acceptance on account only, and the failure to pay the entire amount then due
shall be and continue to be an Event of Default, and at any time thereafter and
until the entire amount then due has been paid, the Bank shall be entitled to
exercise any and all rights conferred upon it herein upon the occurrence of an
Event of Default. The Borrower waives the right to direct the application of any
and all payments at any time or times hereafter received by the Bank from or on
behalf of the Borrower. The Borrower agrees that the Bank shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the indebtedness of Borrower to Bank in
such manner as the Bank may deem advisable, notwithstanding any entry by the
Bank upon any of its books and records. The Borrower expressly agrees that to
the extent that the Bank receives any payment or benefit and such payment or
benefit, or any part thereof, is subsequently invalidated, declared to be
fraudulent or preferential, set aside or is required to be repaid to a trustee,
receiver, or any other party under any bankruptcy act, state or federal law,
common law or equitable cause, then to the extent of such payment or benefit,
the indebtedness of Borrower to Bank or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if such payment or
benefit had not been made and, further, any such repayment by the

 

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Bank, to the extent that the Bank did not directly receive a corresponding cash
payment, shall be added to and be additional Indebtedness of Borrower to Bank
payable upon demand by the Bank.

 

3.11 Default Interest. Notwithstanding anything herein to the contrary, in the
event and so long as an Event of Default shall exist, all principal outstanding
under the Note shall bear interest, payable on demand, from the date of such
Event of Default or acceleration at a rate per annum equal to the Default Rate,
provided, however, that in no event shall the Note or Loans bear interest at a
rate greater than the Highest Lawful Rate.

 

3.12 Conversion and Renewal of Loans. Providing that no Event of Default shall
have occurred, the Borrower may elect to renew or convert Applicable Interest
Rates applicable to the Revolving Loan from the Prime-based Rate, Floating Rate
or Eurodollar-based Rate to any other of said Rates; provided that the Borrower
pays the prepayment costs required under Section 4.1 hereof, if applicable.
Eurodollar-based Rates may be selected only for portions of the Revolving Loan
which are in an amount of One Million Dollars ($1,000,000) or a greater integral
multiple of Five Hundred Thousand Dollars ($500,000). The Borrower may select
the Applicable Interest Rate and Interest Periods for such renewals and
conversions by giving the Bank not less than three (3) Business Days’ prior
notice in the manner provided in Section 2.3 hereof, specifying the date of such
renewal or conversion, the Revolving Loans to be converted, the type of
Revolving Loan elected and the duration of the Interest Period therefor. If with
respect to any Revolving Loan outstanding at any time, the Bank does not receive
notice of the election three (3) or more Business Days prior to the last day of
the Interest Period therefor Borrower shall be deemed to have elected to convert
such Revolving Loan to a Prime-based Loan at the end of the then current
Interest Period.

 

4. SPECIAL PROVISIONS FOR LOANS

 

4.1 Reimbursement of Prepayment Costs. As to any Eurodollar-based Loan, if any
prepayment thereof shall occur on any day other than the last day of an Interest
Period (whether pursuant to this Article, or by acceleration, or otherwise), or
if an Applicable Interest Rate shall be changed (other than as a result of a
change in the Applicable Margin occurring pursuant to the terms hereof) during
any Interest Period pursuant to this Article, or if Borrower shall fail to
borrow any such Advance on the date requested therefor, Borrower hereby agrees
to reimburse Bank on demand for any costs incurred by Bank as a result of the
timing thereof including but not limited to any net costs incurred in
liquidating or employing deposits from third parties. Upon the written request
of Borrower, Bank shall deliver to Borrower a certificate setting forth the
basis for determining such costs, which certificate shall be conclusively
presumed correct, absent manifest error.

 

4.2 Eurodollar Lending Offices. For any Floating Rate Loan or Eurodollar-based
Loan, if Bank shall designate a Eurodollar Lending Office which maintains books
separate from those of the rest of Bank, Bank shall have the option of
maintaining and carrying the relevant Revolving Loan on the books of such
Eurodollar Lending Office.

 

4.3 Circumstances Affecting Eurodollar-based Availability. If with respect to
any Floating Rate Loan or Eurodollar-based Loan, Bank determines that, by reason
of circumstances affecting the foreign exchange and interbank markets generally,
deposits in the relevant

 

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Eurodollar in the applicable amounts are not being offered to Bank for such
Interest Period, then Bank shall give notice thereof to Borrower. Thereafter,
the obligations of Bank to make Eurodollar-based Loans for such Interest
Periods, the obligations of Bank to make Floating Rate Loans, and the right of
Borrower to convert an Advance to or refund an Advance as a Eurodollar-based
Loan for such Interest Period shall be suspended until Bank notifies Borrower
that such circumstance no longer exists.

 

4.4 Laws Affecting Eurodollar-based Loan Availability. If, after the date
hereof, the introduction of, or any change in, any applicable law, rule or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by Bank (or its Eurodollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, shall make it unlawful or impossible for Bank (or its Eurodollar
Lending Office) to honor its obligations hereunder to make or maintain any Loan
or Advance with interest at the Floating Rate or the Eurodollar-based Rate, Bank
shall give notice thereof to Borrower. Thereafter: (a) the obligations of Bank
to make Floating Rate Loans and Eurodollar-based Loans and the right of Borrower
to convert an Advance or refund an Advance as a Floating Rate Loan or a
Eurodollar-based Loan shall be suspended; (b) if Bank may not lawfully continue
to maintain a Eurodollar-based Loan to the end of the then current Interest
Period, the Prime-based Rate shall be the Applicable Interest Rate for Bank’s
Eurodollar-based Loans for the remainder of such Interest Period; and (c) if
Bank may not lawfully continue to maintain a Floating Rate Loan, the Prime-based
Rate shall be the Applicable Interest Rate for Bank’s Floating Rate Loans.

 

4.5 Increased Costs. In the event that any change after the date hereof in
applicable law, treaty or governmental regulation, or in the interpretation or
application thereof, or compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority:

 

(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty or
other charge with respect to any Loan or any Note or any Letter of Credit or
shall change the basis of taxation of payments to Bank (or its Eurodollar
Lending Office) of the principal of or interest on any Loan or any Note or any
Letter of Credit or any other amounts due under this Agreement (except for
changes in the rate of tax on the overall net income or gross receipts of Bank
or its Eurodollar Lending Office imposed by the jurisdiction in which Bank’s
principal executive office or Eurodollar Lending Office is located); or

 

(b) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve System
but excluding with respect to any Floating Rate Loan or Eurodollar-based Loan
any such requirement included in an applicable Eurodollar Reserve Requirement),
risk-based capital requirement, liquidity ratio or special deposit, or similar
requirement against assets of, deposits with or for the account of, or credit
extended by Bank (or its Eurodollar Lending Office) or shall impose on Bank (or
its Eurodollar Lending Office) or the foreign exchange and interbank markets or
other condition affecting the Loan or the Note or any Letter of Credit or any
commitment of Bank under this Agreement;

 

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and the result of any of the foregoing is to increase the costs to Bank of
making, renewing or maintaining any part of the Loans, Letters of Credit or its
commitments hereunder or to reduce the amount or rate of return on any sum
received or receivable by, or the rate of return on the capital of, Bank under
this Agreement, or under the Note, or with respect to Letters of Credit then
Bank shall promptly notify Borrower of such fact and demand compensation
therefor and, Borrower hereby agrees to pay to Bank such additional amount or
amounts as will compensate Bank for such increased costs or reduced return
within thirty (30) days of such notice. A certificate of Bank demanding such
compensation setting forth in reasonable detail the basis for determining such
additional amount or amounts necessary to compensate Bank shall be conclusively
presumed to be correct save for manifest error.

 

5. PAYMENTS

 

5.1 Payment Procedure.

 

(a) All payments by Borrower of principal of, or interest on, the Note or of
Commitment Fees, shall be made without setoff, deduction or counterclaim on the
date specified for payment under this Agreement not later than 3:00 p.m.
(Detroit time) in immediately available funds to Bank.

 

(b) Whenever any payment to be made shall otherwise be due on a day that is not
a Business Day, such payment shall be made (except as specifically indicated to
the contrary herein) on the next succeeding Business Day and such extension of
time shall be included in computing interest, if any, in connection with such
payment.

 

5.2 Application of Proceeds. Notwithstanding anything to the contrary in this
Agreement, after an Event of Default the proceeds of any offsets, voluntary
payments by Borrower or others and any other sums received or collected in
respect of the indebtedness hereunder, shall be applied first to the costs and
expenses of Bank in enforcement and collection and, second, to the indebtedness
and obligations of Borrower hereunder in such order as Bank elects, and then, if
there is any excess, to Borrower.

 

5.3 Deposits and Accounts. In addition to and not in limitation of any rights of
Bank or other holder of any Note, Bank and each other such holder shall, in the
event and so long as there exists an Event of Default and without notice or
demand of any kind, have the right to liquidate and collect all property or
assets of Borrower (including deposits and other credits), whether presently
owned or hereafter acquired, in possession or control of (or owing by) Bank or
other holder for any purpose, and to apply the proceeds of any such liquidations
and collections and offset any amounts owing to Borrower against obligations
hereunder and under the Note and the Documents.

 

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6. CONDITIONS

 

6.1 Conditions Precedent To Initial Advance of the Revolving Loan and Closing
Date. The right of Borrower to request the initial advance of the Revolving Loan
pursuant to this Agreement is subject to, and the Closing Date of this Agreement
shall be, the date of satisfaction of the following conditions:

 

(a) Documents Executed and Filed. The Borrower shall have executed (or caused to
be executed) and delivered to the Bank the following:

 

(i) This Agreement;

 

(ii) The Note; and

 

(iii) The Closing Statement.

 

(b) Certified Resolutions. The Borrower shall have furnished to the Bank a copy
of resolutions of the Directors of the Borrower authorizing the execution,
delivery and performance of this Agreement, the borrowing hereunder, the Note
and the other Documents, which shall have been certified by an authorized
officer of the Borrower as being complete, accurate and in effect.

 

(c) Certified Articles of Incorporation. The Borrower shall have furnished to
the Bank a copy of the Articles of Incorporation including all amendments
thereto and restatements thereof, and all other charter documents of the
Borrower, all of which shall have been certified by the jurisdiction of
incorporation.

 

(d) Certified Bylaws. The Borrower shall have furnished to the Bank a copy of
the Bylaws of the Borrower, including all amendments thereto and restatements
thereof, which shall have been certified by an authorized officer of the
Borrower, as being complete, accurate and in effect.

 

(e) Certificate of Good Standing. To the extent such certificates are issued, a
good standing or like certificate with respect to the Borrower issued by
appropriate government officials of the jurisdiction of its incorporation and of
each jurisdiction in which it carries on business.

 

(f) Certificate of Incumbency. The Borrower shall have furnished to the Bank a
certificate of an authorized officer of the Borrower, as to the incumbency and
signatures of the officer(s) of the Borrower signing Documents to which it is a
party.

 

(g) Liability and Casualty Insurance. The Borrower shall have furnished to the
Bank, in form, content and amounts and with companies satisfactory to the Bank,
liability insurance with coverage acceptable to Bank, and casualty insurance
policies relating to the assets and properties of the Borrower.

 

(h) Opinion of Borrower’s Counsel. Bank shall have received an opinion of
counsel to the Borrower addressed to Bank and covering such matters as Bank
shall require.

 

(i) Approval of Bank’s Counsel. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or incidental thereto and all other related legal matters shall have been
satisfactory to and approved by legal counsel for the Bank, and said counsel
shall have been furnished with such certified copies of actions and proceedings
and such other instruments and documents as they shall have reasonably
requested.

 

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(j) Bank Accounts. Borrower shall have established with Bank deposit accounts
for all of its transactional account(s), other than those accounts listed on
Schedule 6.1(j) attached hereto, and such lock box, dominion of funds and other
arrangements as required by Bank.

 

(k) Approvals. Bank shall have received true and correct copies of all
governmental and third party approvals, if any, necessary for Borrower to enter
into this Agreement and the Documents and the transactions contemplated by this
Agreement and the Documents.

 

6.2 Conditions Precedent to All Loans. The obligation of Bank to make Advances
and Loans shall be subject to the satisfaction of the following conditions:

 

(a) Effectiveness. This Agreement shall have become effective as provided in
Section 6.1.

 

(b) No Default; Representations and Warranties. At the time of the making of
such Loan or Advance and after giving effect thereto: (i) there shall exist no
Event of Default or facts or circumstances, which with the passage of time,
would constitute or give rise to an Event of Default; and (ii) all
representations and warranties contained herein or in the other Documents shall
be true and correct in all material respects.

 

(c) Adverse Change, etc. Since August 31, 2003, nothing shall have occurred or
become known which the Bank shall have determined has a Materially Adverse
Effect.

 

(d) Enforceability of Documents. Both before and after such Advance, the
obligations of Borrower under the Documents shall be valid, binding and
enforceable.

 

7. REPRESENTATIONS AND WARRANTIES

 

In order to induce the Bank to enter into this Agreement and to make Revolving
Loans and Advances hereunder, Borrower represents and warrants to the Bank:

 

7.1 Corporate Status. Borrower and each subsidiary thereof is a duly
incorporated and validly existing corporation, in good standing under the laws
of the jurisdiction of its incorporation, has the organizational power and
authority and has obtained all material requisite governmental licenses,
authorizations, consents and approvals necessary to own and operate its property
and assets and to transact the business in which it is engaged and presently
proposes to engage, including, without limitation, those required by the
Environmental Laws, and is duly qualified and authorized to do business in, and
is in good standing in, all jurisdictions where by virtue of the nature of its
activities or extent of its properties it is required to be so qualified and
where the failure to be so qualified would have a Material Adverse Effect.

 

7.2 Corporate Power and Authority; Business. Borrower has the corporate power
and authority to execute, deliver and carry out the terms and provisions of the
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Documents to which it
is a party and has duly executed and delivered each Document to which it is a
party and each such Document constitutes the legal,

 

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valid and binding obligation of Borrower enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency or
by equitable principles relating to enforceability, good faith and fair dealing.

 

7.3 No Violation. Neither the execution, delivery or performance by Borrower of
the Documents, nor compliance with the terms and provisions thereof, nor the
consummation of the transactions contemplated therein will result in a material
contravention of any applicable provision of any relevant law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality, or will conflict or be inconsistent, in any material respect,
with or result in any material breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of any lien upon any of the property or assets of any of them
pursuant to the terms of any indenture, mortgage, deed of trust, material
agreement or other material instruments to which it is a party.

 

7.4 Litigation. There are no actions, judgments, suits or proceedings pending
or, to the Borrower’s knowledge, threatened against Borrower that are likely to
have a Material Adverse Effect.

 

7.5 Use of Proceeds. Neither the making of any Loan hereunder, nor the use of
the proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

7.6 Governmental Approvals, etc. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any third party or any foreign or domestic governmental or public
body or authority, or by any subdivision thereof, is required to authorize or is
required in connection with the execution, delivery and performance of any
Document or the transactions contemplated therein, or the legality, validity,
binding effect or enforceability of any Document.

 

7.7 True and Complete Disclosure. There is no fact known to Borrower which
affects the business, operations, property, assets, nature of assets,
liabilities, condition (financial or otherwise) or prospects of Borrower which
would have a Material Adverse Effect and which has not been disclosed herein, or
in such other documents, certificates, schedules, and written statements
furnished.

 

7.8 Financial Statements. Borrower’s financial statements previously delivered
to the Bank and most recent form 10-K and form 10-Q filed with the Securities
and Exchange Commission were prepared in accordance with GAAP and fairly present
in all material respects the financial position and results of the Borrower as
of the dates thereof and for the periods covered thereby.

 

7.9 Tax Returns and Payments. Borrower has filed all tax returns required to be
filed by it and has paid all taxes and assessments payable which have become
due, other than those not yet delinquent and except for those contested in good
faith and for which adequate reserves have been established to the extent
required by GAAP.

 

7.10 Patents, etc. Borrower has all material patents, trademarks, servicemarks,
trade names, copyrights, licenses and other rights, free from burdensome
restrictions, that are

 

19

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necessary for the operation of its respective businesses as presently conducted
and as proposed to be conducted.

 

7.11 Compliance with Laws, etc. Borrower is in compliance, in all material
respects, with all applicable laws and regulations, including without limitation
those relating to pollution and environmental control, equal employment
opportunity and employee safety, in all jurisdictions in which it is presently
doing business, and will comply, in all material respects, with all such laws
and regulations which may be imposed in the future in jurisdictions in which it
may then be doing business.

 

7.12 Collective Bargaining Agreements. Borrower is not a party or subject to any
collective bargaining or similar agreement with any union, labor organization or
other bargaining agent in respect of its employees.

 

7.13 Environmental Protection. Borrower represents and warrants that, except as
disclosed to Borrower in either of the Stock Purchase Agreements:

 

(a) Borrower has all permits, licenses and other authorizations which are
required with respect to the operation of its business under any Environmental
Law and each such authorization is in full force and effect.

 

(b) Borrower is in compliance with all terms and conditions of the permits,
licenses and authorizations specified in Subsection 7.13(a) above, and is also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any Environmental Laws applicable to it and its business, assets, operations and
properties (including, without limitation, compliance with standards, schedules
and timetables therein), including without limitation those arising under the
Resource Conservation and Recovery Act of 1976, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (“CERCLA”), the Federal
Water Pollution Control Act, the Federal Clean Air Act, and the Toxic Substances
Control Act.

 

(c) There is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice or demand letter
or request for information pending or, to the knowledge of Borrower threatened
against Borrower under any Environmental Laws.

 

(d) Borrower has not received notice that it has been identified as a
potentially responsible party under CERCLA or any comparable state law nor has
it received any notification that any hazardous substances or any pollutant or
contaminant, as defined in CERCLA and its implementing regulations, or any toxic
substance, hazardous waste, hazardous constituents, hazardous materials,
asbestos or asbestos containing materials, petroleum, including crude oil and
any fractions thereof, or other wastes, chemicals, substances or materials
regulated by any Environmental Laws (collectively “Hazardous Materials”) that it
or any of its predecessors in interest has used, generated, stored, tested,
handled, transported or disposed of, has been found at any site at which any
governmental agency or private party is conducting a remedial investigation or
other action pursuant to any Environmental Law.

 

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(e) To the best knowledge of Borrower there have been no releases (i.e., any
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping) of
Hazardous Materials by Borrower on, upon, into or from any of the real
properties owned or operated by it at any time. To the best knowledge of
Borrower there have been no such releases on, upon, under or into any such real
property or in the vicinity of any of such real property that, through soil,
surface water or groundwater migration or contamination, may be located on, in
or under such real properties.

 

(f) To the best knowledge of Borrower, there is no friable asbestos in, on, or
at the respective real properties or any facility or equipment of Borrower.

 

(g) To the best knowledge of Borrower, no real property owned or operated by the
Borrower is: (i) listed or proposed for listing on the National Priorities List
under CERCLA; or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA,
or on any comparable list maintained by any governmental authority.

 

(h) To the best of Borrower’s knowledge, there are no past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance by Borrower with any
Environmental Laws, or which may give rise to any common law or legal liability,
including, without limitation, liability under CERCLA or similar state, local or
foreign laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing or notice of violation, study or investigation, based on or
related to the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport, shipping 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.

 

7.14 Employee Benefit Plans. Borrower currently maintains a “pension benefit
plan” (as such term is defined in Section 3 of ERISA) which is subject to the
provisions of ERISA. Borrower is not an employer required to contribute to any
multiemployer pension or benefit plan. The aggregate present value of all
benefits vested under all pension plans of the Borrower did not exceed, as of
the last annual valuation date, the value of the assets of the pension plans
allocable to such vested benefits. Borrower is in compliance in all material
respects with ERISA to the extent applicable to it and has received no notice to
the contrary from the PBGC or any other governmental authority. No condition
exists or event or transaction has occurred with respect to any pension plan
which could reasonably be expected to result in the incurrence by Borrower of
any material liability, fine or penalty. Borrower does not have any contingent
liability with respect to any post-retirement benefits under a welfare plan,
other than liability for continuation of coverage described in Part 6 of Title I
of ERISA.

 

7.15 Survival of Representations and Warranties. All the representations and
warranties of the Borrower contained in Section 7.1 through 7.14, inclusive,
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect until all amounts owing hereunder have been repaid and the
credit facilities made available hereunder have been terminated, notwithstanding
any investigation made at any time by or on behalf of the Bank.

 

21

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8. AFFIRMATIVE COVENANTS

 

Borrower covenants and agrees that, for so long as this Agreement is in effect
and until the Revolving Loan Commitment is fully terminated and the Loans
together with interest, fees and all other obligations incurred hereunder or
under the Documents are paid in full it will:

 

8.1 Reporting Requirements Covenants. Furnish or cause to be furnished to Bank:

 

(a) as soon as available and in any event within ninety (90) days after the
close of each fiscal year of Borrower, on a consolidated and consolidating
basis, the balance sheet of Borrower as at the end of such fiscal year and the
related statements of operations, shareholder’s equity and cash flows for such
fiscal year, setting forth comparative figures for the preceding fiscal year,
audited by independent certified public accountants of recognized standing in
accordance with GAAP;

 

(b) as soon as available and in any event within thirty (30) days after the end
of each fiscal quarter of Borrower, commencing with the quarter ending November
30, 2003, financial statements on a consolidated and consolidating basis
containing the balance sheet of Borrower as at the end of such quarterly period
and the related statements of operations, of shareholder’s equity and of cash
flows for such quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and setting forth comparative
figures for the related periods in the prior fiscal year, subject to normal
year-end audit adjustments, in form and content satisfactory to Bank and
certified by the chief financial officer, controller or chief accounting officer
of Borrower;

 

(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the shareholders
of Borrower, and copies of all annual, regular, periodic and special reports and
registration statements which Borrower may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto, including without limitation, form 10-Q
within forty-five (45) days of each fiscal quarter end and form 10-K within 90
days of each fiscal year end;

 

(d) within thirty (30) days of the end of each fiscal quarter of Borrower, a
compliance certificate in a form reasonably acceptable to the Bank setting forth
the calculations required to establish whether Borrower was in compliance with
the covenants in this Agreement as at the end of such period;

 

(e) at the time of the delivery of the compliance report provided for in
Subsection 8.1(d), a certificate of the chief financial officer, controller or
chief accounting officer of Borrower to the effect that no Default or Event of
Default exists, or, if any Default or Event of Default does exist, specifying
the nature and extent thereof; and

 

(f) promptly upon any officer of Borrower obtaining knowledge of any condition
or event which constitutes a Default or Event of Default, or becoming aware that
Bank has given any notice or taken any other action with respect to a claimed
Default or Event of Default under this Agreement, an officers’ certificate
specifying the nature and period of

 

22

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existence of any such condition or event, or specifying the nature of such
claimed Default or Event of Default, and explaining the action Borrower has
taken or proposes to take with respect thereto; and

 

(g) with reasonable promptness, such other information and data with respect to
Borrower as from time to time may be reasonably requested by Bank.

 

8.2 Maintenance of Existence and Status. Except as otherwise expressly provided
herein, (i) preserve its legal existence, (ii) preserve all its rights and
licenses to the extent necessary or desirable in the operation of its business
and affairs, and (iii) be qualified to do business and conduct its affairs in
each jurisdiction where its ownership of Property or the conduct of its business
or affairs requires such qualification.

 

8.3 Insurance. Keep its insurable properties adequately insured and maintain (a)
insurance against fire and other risks customarily insured against under an
“all-risk” policy and such additional risks customarily insured against by
companies engaged in the same or a similar business to that of the Borrower, (b)
necessary worker’s compensation insurance, (c) public liability and product
liability insurance, and (d) such other insurance as may be required by law or
as may be reasonably required in writing by the Bank, all of which insurance
shall be in such amounts, containing such terms, in such form, for such
purposes, prepaid for such time period, and written by such companies as shall
be satisfactory to the Bank. All such policies shall contain a provision whereby
they may not be canceled or amended except upon thirty (30) days’ prior written
notice to the Bank. The Borrower will promptly deliver to the Bank, at the
Bank’s request, evidence satisfactory to the Bank that such insurance has been
so procured. If the Borrower fails to maintain satisfactory insurance as herein
provided, the Bank shall have the option to do so, and the Borrower agrees to
repay the Bank upon demand, with interest at the Default Rate then in effect for
the Revolving Loan, all amounts so expended by the Bank.

 

8.4 Books, Records and Inspections. Borrower will keep true books of records and
accounts of all its business transactions in accordance with GAAP or (with
respect to activities and transactions in foreign jurisdictions) such other
accounting principals as may be required in such foreign jurisdiction. Borrower
will permit, upon reasonable prior notice by Bank to any authorized officer of
Borrower, officers and designated representatives of the Bank to visit and
inspect properties or assets of Borrower and to examine the books of account of
Borrower and to discuss the affairs, finances and accounts of Borrower with its
officers and independent accountants, all at such times and intervals as the
Bank may request.

 

8.5 Payment of Taxes. Borrower will pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of Borrower or cause a failure or forfeiture
of title thereto; provided that Borrower shall not be required to pay any such
tax, assessment, charge, levy or claim that is being contested in good faith and
by proper proceedings promptly instituted and diligently conducted if it has
maintained adequate reserves with respect thereto in accordance with GAAP.

 

23

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8.6 Compliance with Statutes, etc. Borrower will comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, including but not limited to ERISA
and Environmental Laws.

 

8.7 Performance of Obligations. Borrower will perform in all material respects
all of its obligations under the terms of each mortgage, indenture, security
agreement, other debt instrument, trade obligations and material contracts by
which it is bound or to which it is a party.

 

8.8 Environmental Events.

 

(a) The Borrower will promptly give notice to the Bank upon becoming aware of
any of the following which would reasonably be expected to result in liability
under any Environmental Laws: (i) violation by Borrower of any Environmental
Laws; (ii) any inquiry, proceeding, investigation or other action, including a
request for information or a notice of potential environmental liability from
any foreign, federal, state or local environmental agency or board; or (iii) the
discovery of the release of any Hazardous Materials at, on, under or from any of
the real properties owned or operated by Borrower or any facility or equipment
thereat in excess of reportable or allowable standards or levels under any
Environmental Laws. Bank acknowledges that Borrower has notified Bank of the
environmental liabilities disclosed to Borrower in the Stock Purchase Agreements
to the extent said liabilities are described in the Stock Purchase Agreements.

 

(b) In the event of the presence of any Hazardous Materials on any of the real
properties owned or operated by Borrower which is in violation of, or which
could reasonably be expected to result in liability under, any Environmental
Laws, upon discovery thereof, take all necessary steps to initiate and
expeditiously complete all remedial, corrective and other action to mitigate and
eliminate any such liability, and shall keep the Bank informed of its actions
and the results.

 

8.9 Compliance with Revolving Loan Commitment . In the event that, at any time,
the principal amount of the Revolving Loan (plus Letter of Credit Outstandings)
exceeds the Revolving Loan Commitment, pay to Bank, for application to such
Revolving Loans, an amount sufficient to eliminate such excess.

 

8.10 Continuation of Business. Borrower will continue to be principally engaged
in those businesses in which it is engaged on the date hereof and will not make
a change in its business or engage in any business, enterprise or activity which
is different from or unrelated to the business in which it is engaged on the
date of this Agreement.

 

8.11 Maintenance of Property. Maintain, preserve and keep its Property and the
grounds and structure, improvements and equipment appurtenant thereto or used
therewith, and each and every part and parcel thereof, in good repair and
working order, reasonable wear and tear, obsolescence and insured casualties
excepted, and in safe condition at all times.

 

24

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9. NEGATIVE COVENANTS

 

Borrower hereby covenants and agrees that so long as this Agreement is in effect
and until the Revolving Loan Commitment is fully terminated and the Revolving
Loan together with interest, fees and all other obligations incurred hereunder
or under the Documents is paid in full, it will not:

 

9.1 Changes in Business. Alter the character of its primary businesses from, or
enter into or acquire businesses different from its business as of the Closing
Date.

 

9.2 Financial Covenants. Permit as of the end of each fiscal quarter, commencing
with the fiscal quarter ending November 30, 2003:

 

(a) The Current Ratio to be less than 1.5:1.0

 

(b) The Tangible Effective Net Worth to be less than Twenty Million Dollars
($20,000,000).

 

(c) The Funded Debt Ratio to be greater than 2.0 to 1.0.

 

9.3 Liens. Create, incur, assume or suffer to exist any lien upon or with
respect to any of its property or assets, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets or
assign any right to receive income, or file or permit the filing of any
financing statement under the UCC or any other similar notice of lien under any
similar recording or notice statute, except:

 

(a) liens for taxes, assessments or other governmental charges incurred in the
ordinary course of business and not yet past due;

 

(b) liens not delinquent created by statute in connection with worker’s
compensation, unemployment insurance, social security and similar statutory
obligations;

 

(c) mechanics’, materialmen’s, carriers’, warehousemen’s and similar liens and
encumbrances arising in the ordinary course of business and securing obligations
of such Person that are not overdue for a period of more than thirty (30) days;

 

(d) liens arising from the filing, for notice purposes only, of financing
statements in respect of true leases.

 

9.4 Indebtedness. Incur, create, assume or permit to exist any Indebtedness
direct or contingent, on book account or otherwise for borrowed money, or any
other Indebtedness evidenced by notes, bonds, debentures or similar obligations,
except for (a) Indebtedness which constitutes trade indebtedness incurred in the
ordinary course of Borrower’s business, (b) Indebtedness to the Bank, (c)
Indebtedness subordinated to the prior payment in full of Borrower’s
Indebtedness to the Bank, upon terms and conditions approved in writing in
advance by the Bank, and (d) Indebtedness which in the aggregate does not exceed
Two Hundred Thousand Dollars ($200,000) per fiscal year.

 

25

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9.5 Extension of Credit. Make loans, advances or extensions of credit to any
Person, except for sales on open account in the ordinary course of business.

 

9.6 Guarantee Obligations. Guarantee or otherwise be or become responsible for
obligations of any other Person, whether by agreement to purchase the
indebtedness of any other Person, agreement for the furnishing of funds, goods,
supplies or services for the purpose of paying or discharging indebtedness of
any other person, or otherwise, except for by endorsement of negotiable
instruments in the ordinary course of business for deposit or collection.

 

9.7 Subordinate Indebtedness. Subordinate any indebtedness due to it from a
Person to indebtedness of other creditors of such Person.

 

9.8 Property Transfer, Merger or Lease-Back. (a) Sell, lease, transfer or
otherwise dispose of properties or assets, except for sales of Inventory in the
ordinary course of business; (b) change its name, consolidate with or merge into
any other corporation, permit another corporation to merge into it, acquire all
or substantially all the properties or assets of any other person, enter into
any reorganization or recapitalization or reclassify its capital stock; or (c)
enter into any sale-leaseback transaction; provided, however, that Borrower may
perform its obligations under and otherwise consummate the Stock Purchase
Agreements and the Real Estate Purchase Agreements.

 

9.9 Acquire Securities. Purchase or hold beneficially any stock or other
securities of, or make any investment or acquire any interest whatsoever in, any
other Person except for:

 

(a) investments in obligations issued by the United States of America, or an
instrumentality or agency of the United States of America, maturing within 365
days of the date of acquisition of such obligation, and guaranteed fully as to
principal, premium, if any, and interest by the United States of America;

 

(b) investments in certificates of deposit issued or guaranteed by a bank or
trust company organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than $100,000,000, maturing within 365 days of the date of purchase;
and

 

(c) investments in commercial paper given the highest or second highest rating
by two established national credit rating agencies in the United States of
America and maturing not more than 90 days from the date of acquisition thereof.

 

9.10 Use of Loan Proceeds. Use, or permit the use of, the proceeds of Loans for
purposes other than those permitted under this Agreement, or use or permit the
use of any such Loan proceeds in violation of Regulation T, U, or X of the Board
of Governors of the Federal Reserve System as now or hereafter in effect, or for
any other purpose which violates provisions of regulations of the Board of
Governors of the Federal Reserve System.

 

10. DEFAULTS. Each of the following shall be an Event of Default:

 

10.1 Failure to Pay Monies Due. If the Borrower shall fail to pay, when due, any
principal, interest, or fee under any Note or this Agreement.

 

26

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10.2 Misrepresentation. If any warranty or representation of the Borrower in
connection with or contained in this Agreement or any other Document, or if any
financial data or other information now or hereafter furnished to the Bank or
the Bank by or on behalf of the Borrower shall prove to be false or misleading
in any material respect.

 

10.3 Noncompliance with Agreement. If the Borrower shall fail to perform any of
its obligations and covenants under, or shall fail to comply with any of the
provisions of, this Agreement or any of the other Documents.

 

10.4 Other Defaults. If the Borrower or any subsidiary shall default in the due
payment of any of its indebtedness or in the observance or performance of any
term, covenant or condition in any agreement or instrument evidencing, securing
or relating to such indebtedness, and such default shall not be waived and shall
be continued for a period sufficient to permit acceleration of the indebtedness
thereunder.

 

10.5 Judgments. If there shall be rendered against the Borrower one or more
judgments or decrees which has or have become non-appealable and shall remain
undischarged, unsatisfied by insurance and unstayed for more than thirty (30)
days, whether or not consecutive; or if a writ of attachment or garnishment
against the property of the Borrower shall be issued and levied and not released
or appealed and bonded in a manner reasonably satisfactory to the Bank.

 

10.6 Business Suspension, Bankruptcy, Etc. If the Borrower voluntarily suspends
transaction of its business, makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is unable generally to pay its debts as they
come due, is adjudicated insolvent or bankrupt or there is entered any order or
decree granting relief in any involuntary case commenced against the Borrower
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or if the Borrower petitions or applies to any tribunal for
any receiver, trustee, liquidator, assignee, custodian, sequestrator or other
similar official for the Borrower or of any substantial part of its Property, or
commences any proceeding in a court of law for a reorganization, readjustment of
debt, dissolution, liquidation or other similar procedure under the law or
statutes of any jurisdiction, whether now or hereafter in effect, or if there is
commenced against the Borrower any such proceeding in a court of law which
remains undismissed or shall not be discharged, vacated or stayed, or such
jurisdiction shall not be relinquished within ninety (90) days after
commencement, or the Borrower by any act, indicates its consent to, approval of,
or acquiescence in any such proceeding in a court of law, or to an order for
relief in an involuntary case commenced against the Borrower under any such law,
or to the appointment of any receiver, trustee, liquidator, assignee, custodian,
sequestrator or other similar official for the Borrower or a substantial part of
its Property, or if the Borrower suffers any such receivership, trusteeship,
liquidation, assignment, custodianship, sequestration or other similar procedure
to continue undischarged for a period of ninety (90) days after commencement or
if the Borrower takes any action for the purposes of effecting the foregoing.

 

10.7 Repudiation, Revocation. If there is any repudiation, termination,
revocation or any attempt to repudiate, terminate or revoke any Document.

 

10.8 Inadequate Funding or Termination of Employee Benefit Plan(s). If the
Borrower or any guarantor shall fail to meet its minimum funding requirements
under ERISA

 

27

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with respect to any employee benefit plan established or maintained by it, or if
any such plan shall be the subject of termination proceedings (whether voluntary
or involuntary) and there shall result from such termination proceedings a
liability of the Borrower or any guarantor to the PBGC which in the sole opinion
of the Bank will have a Material Adverse Effect on the Borrower or any
guarantor.

 

10.9 Occurrence of Certain Reportable Events. If there shall occur, with respect
to any pension plan maintained by the Borrower or any guarantor any reportable
event (within the meaning of Section 4043(b) of ERISA) which the Bank shall
determine constitutes a ground for the termination of any such plan, and if such
event continues for thirty (30) days after the Bank gives written notice to the
Borrower or guarantor, provided that termination of such plan or appointment of
such trustee would, in the opinion of the Bank, have a Material Adverse Effect
on the Borrower or guarantor.

 

10.10 Cross-Default. If there shall occur an Event of Default under (and as
defined in) any agreement between Borrower and Bank.

 

10.11 Exercise of Remedies. If an Event of Default has occurred hereunder:

 

(a) Bank’s commitment to make Advances shall immediately and automatically
terminate;

 

(b) Bank may declare the entire unpaid balance of the indebtedness hereunder,
including the Note, immediately due and payable, without presentment, notice or
demand, all of which are hereby expressly waived by Borrower;

 

(c) immediately and automatically upon the occurrence of any Event of Default
specified in Subsection 10.6 above, and notwithstanding the lack of any
declaration by Bank under preceding clause (b), the entire unpaid principal of
the Loans and other indebtedness hereunder, including the Note, shall become
automatically due and payable; and

 

(d) Bank may exercise any remedy permitted by this Agreement, the other
Documents or law.

 

10.12 Waiver of Defaults. No Event of Default shall be waived by Bank except in
a writing made in accordance with Section 11.8 hereof. No single or partial
exercise of any right, power or privilege hereunder, nor any delay in the
exercise thereof, shall preclude other or further exercise of Bank’s rights. No
waiver of any Event of Default shall extend to any other or future Event of
Default. No forbearance any of Bank’s rights shall constitute a waiver of any of
any such rights. Borrower expressly agrees that this Section may not be waived
or modified by Bank by course of performance, estoppel or otherwise.

 

11. MISCELLANEOUS

 

11.1 Law of Michigan; Submission to Jurisdiction. This Agreement, the Note and
Documents have been delivered at Lansing, Michigan, and shall be governed by and
construed and enforced in accordance with the laws of the State of Michigan.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid

 

28

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under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

 

Any legal action or proceeding with respect to this Agreement or any other
Document may be brought in the courts of the State of Michigan or of the United
States District Court for the Eastern District of Michigan, and, by execution
and delivery of this Agreement, each party hereto hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts. Borrower further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to its address for notices pursuant to Section
11.3 hereof, such service to become effective three (3) Business Days after such
mailing. Nothing herein shall affect the rights of Bank to serve process in any
other manner permitted by law.

 

Borrower hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any proceedings arising out of or in connection
with this Agreement or any Document brought in the courts referred to above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

 

11.2 Bank’s Costs and Expenses. Borrower shall pay all costs and expenses,
including, by way of description and not limitation, reasonable attorney fees
and out-of-pocket expenses and fees incurred by Bank in connection with the
commitment, consummation, and closing of the loans contemplated hereby and in
the exercise and enforcement of its rights and prerogatives hereunder and under
the Documents. All costs, including attorney fees, incurred by Bank in revising,
protecting, exercising or enforcing any of its rights hereunder and under the
Documents, or otherwise incurred by Bank in connection with an Event of Default
or in connection with the enforcement hereof, including by way of description
and not limitation, such charges in any court or bankruptcy proceedings or
arising out of any claim or action by any person against Bank which would not
have been asserted were it not for Bank’s relationship with Borrower hereunder
or under the Documents, shall also be paid by Borrower.

 

11.3 Notices. Except as otherwise provided herein, all notices hereunder shall
be sufficient if made in writing and delivered to the mailing and delivery
address of the respective parties indicated on the signature pages to this
Agreement, or transmitted to the facsimile or telex numbers set forth on their
respective signature pages to this Agreement. All such notices shall be deemed
received (i) two (2) Business Days after deposit thereof in the mails, if given
by mail, (ii) one (1) Business Day after deposit with express courier service,
or (iii) if by facsimile or telex transmission, the Business Day of transmission
if transmitted during customary business hours of the addressee and, if not
transmitted during such business hours, the following Business Day, provided,
however, that notices to the Bank shall not be effective until actual receipt
thereof.

 

11.4 Further Action. Borrower, from time to time, upon written request of Bank
will make, execute, acknowledge and deliver or cause to be made, executed,
acknowledged and

 

29

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delivered, all such further and additional instruments, and take all such
further action as may be required to carry out the intent and purpose of this
Agreement and the Documents, and to provide for Loans under and payment of the
Note, according to the intent and purpose herein and therein expressed.

 

11.5 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Borrower and Bank and their respective successors and
assigns, provided that the foregoing shall not authorize any assignment by
Borrower of its rights or duties hereunder. Borrower hereby acknowledges that
Bank may (but is not obligated to) sell participations or make assignments of
interests in the Loans and Bank’s other interests under the Documents to
financial institutions to be selected in Bank’s discretion. Borrower hereby
agrees to any such participation or assignment and further agrees to execute and
deliver, at Bank’s request, any additional documentation reasonably deemed
necessary by Bank in connection therewith.

 

11.6 Indulgence. No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege nor shall any
single or partial exercise thereof preclude any further exercise thereof, nor
the exercise of any other right, power or privilege. The rights of Bank
hereunder are cumulative and are not exclusive of any rights or remedies which
Bank would otherwise have.

 

11.7 Counterparts. This Agreement may be executed in several counterparts, and
each executed copy shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.

 

11.8 Entire Agreement; Amendments; Waivers; Consents. This Agreement, the Note,
the Documents, and any agreements, certificates, or other documents given
pursuant to the foregoing, contain and will contain the entire agreement of the
parties hereto, and none of the parties shall be bound by anything not expressed
in writing, except that Borrower shall be bound by telephonic requests for Loans
made hereunder. No amendment or waiver of any provision of this Agreement or any
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Bank.

 

11.9 Confidentiality. Bank agrees that all documentation and other information
made available by Borrower to Bank under the terms of this Agreement shall
(except to the extent required by regulatory authority or legal or governmental
process or otherwise by governmental authority or law, or if such documentation
and other information is publicly available or hereafter becomes publicly
available other than by action of Bank, or was theretofore known or hereafter
becomes known to Bank independent of any disclosure thereto by Borrower) be held
in the strictest confidence by Bank and used solely in administration and
enforcement of Loans from time to time outstanding from Bank to Borrower and in
the prosecution or defense of legal proceedings arising in connection herewith;
provided that Bank may disclose such documentation and other information to any
other bank or other Person to which Bank sells or proposes to sell a
participation in its Loans hereunder if such other bank or Person, prior to such
disclosure, agrees for the benefit of Borrower to comply with the provisions of
this Section 11.9.

 

11.10 Interest. It is the intention of the parties hereto that Bank shall
conform to usury laws applicable to it, if any. Accordingly, if the transactions
with Bank contemplated hereby

 

30

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would be usurious under such applicable laws, then, notwithstanding anything to
the contrary in the Note or Documents payable to Bank, this Agreement or any
other agreement entered into in connection with or as security for or
guaranteeing this Agreement or the Indebtedness, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under applicable
law that is contracted for, taken, reserved, charged or received by Bank under
the Note payable to Bank, this Agreement, the Documents or under any other
agreement entered into in connection with or as security for or guaranteeing
this Agreement or such Note or Documents shall under no circumstances exceed the
Highest Lawful Rate and any excess shall be credited automatically, if
theretofore paid, on the principal amount of Loans owed to Bank or, if it has no
Loans outstanding, shall be refunded to Borrower by Bank; and (ii) in the event
that the maturity of any such Note or other Indebtedness hereunder is
accelerated or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to Bank may never
include more than the Highest Lawful Rate and excess interest, if any, to Bank
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by Bank on the principal
amount of the Indebtedness owed to Bank by the Borrower or, if no such
Indebtedness is then outstanding, shall be refunded to the Borrower.

 

11.11 Cross-Default. Any default by Borrower under the terms of any Indebtedness
to the Bank shall also constitute an Event of Default under this Agreement and
the Documents and any Event of Default under this Agreement or the Documents
shall be a default under any Indebtedness of Borrower to the Bank.

 

11.12 JURY WAIVER. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

11.13 Conflicts. In the event of direct conflict between the provision of this
Agreement and any term of any Document, the relevant term of this Agreement
shall control.

 

11.14 Effective Upon Execution. This Agreement shall become effective upon the
later of the execution hereof by Bank and Borrower and the Closing Date, and
shall remain effective until all Loans and obligations hereunder have been
repaid and discharged in full and no commitment to fund any Loan hereunder
remains outstanding.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

31

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WITNESS the due execution hereof as of the day and year first above written.

 

NEOGEN CORPORATION By:   /s/    RICHARD R. CURRENT          

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

    Richard R. Current

Its:

  Vice President and CFO

 

620 Lesher Place

Lansing, Michigan 48912

 

Attn: Chief Financial Officer

Telephone No. 517-372-9200

Facsimile No. 517-372-0108

COMERICA BANK By:   /s/    DAVID G. GRANTHAM          

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

    David G. Grantham

Its:

  Vice President

 

101 North Washington Square

Lansing, Michigan 48933

Telephone No. 517-342-5801

Facsimile No. 517-342-5905

 

32

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Schedule 6.1(j)

PERMITTED BANK ACCOUNTS

 

33

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EXHIBIT “A”

[FORM OF REQUEST FOR ADVANCE]

 

REQUEST FOR ADVANCE

 

The undersigned hereby requests COMERICA BANK (“Bank”) to make an advance to the
undersigned on                         ,             , in the amount of
$                     under the $15,000,000 Revolving Note dated as of November
    , 2003, issued by the undersigned to Bank (herein called “Note”) under that
Credit Agreement between Neogen Corporation and Bank dated November     , 2003.

 

The undersigned requests that the Applicable Interest Rate be:
                            1 and that with respect to a Eurodollar-based Rate
Loan, that the Interest Period be                             .2

 

The undersigned certifies that no Event of Default, or any condition or event
which, with the giving of notice or the running of time, or both, would
constitute an Event of Default has occurred, and none will exist upon the making
of the Advance requested hereunder. The undersigned further certifies that upon
advancing the sum requested hereunder, the aggregate principal amount
outstanding under the Note will not exceed the face amount thereof.

 

The undersigned hereby authorizes said Bank to disburse the proceeds of this
Request for Advance by crediting the account of the undersigned with Bank
separately designated by the undersigned or as the undersigned may otherwise
direct.

 

Dated this      day of                 , 20    .

 

NEOGEN CORPORATION By:      

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

Printed Name:      

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

Its:      

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

     

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

1 Insert Prime-based Rate, Floating Rate or Eurodollar- based Rate

2 Insert Interest Period – 30, 60, 90, 120, 150, 180, 210, 240, 270, 300, 330 or
360 days

 

Exhibit A-1

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

EXHIBIT “B”

[FORM OF REVOLVING NOTE]

 

REVOLVING NOTE

 

$15,000,000

   Tax ID: 38-2367843      Lansing, Michigan      November 26, 2003

 

FOR VALUE RECEIVED, on or before the Maturity Date, NEOGEN CORPORATION, a
Michigan corporation (herein called “Company”), promises to pay to the order of
COMERICA BANK, a Michigan banking corporation (herein called “Bank”) at its
office at 101 North Washington Square, Lansing, Michigan 48933, in lawful money
of the United States of America, the indebtedness or so much of the sum of
FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000) as may from time to time have
been advanced and then be outstanding hereunder pursuant to the Credit Agreement
of even date herewith, made by and between Company and Bank (herein called
“Agreement”), together with interest thereon as hereinafter set forth.

 

Capitalized terms used herein and not defined to the contrary have meanings
given them in the Agreement.

 

Interest shall accrue on the unpaid principal balance of this Note from time to
time outstanding at the Applicable Interest Rate, as selected by Borrower or as
otherwise applicable pursuant to the provisions of the Agreement; provided,
however, that in the event, and so long as an Event of Default shall exist,
interest shall accrue (subject to limitations thereon specifically described in
the Agreement) at the per annum rate equal to the Default Rate.

 

Interest on the unpaid balance of all Loans shall accrue and be due and payable
pursuant to the terms of the Agreement.

 

This Note is a note under which advances, repayments and re-advances may be made
from time to time, subject to the terms and conditions of the Agreement. This
Note evidences borrowing under, is subject to, may be prepaid in accordance
with, and may be matured under the terms of the Agreement, to which reference is
hereby made. This Note is secured by the Documents described in the Agreement,
to which reference is made for, among other things, the conditions under which
this Note may be accelerated. As additional security for this Note, Company
grants Bank a lien on all property and assets, including deposits and other
credits, of the Company, at any time in possession or control of or owing by
Bank for any purpose.

 

All payments under this Note shall be in immediately available United States
funds, without setoff or counterclaim.

 

The undersigned and all accommodation parties, guarantors and indorsers (i)
waive presentment, demand, protest and notice of dishonor, (ii) agree that no
extension or indulgence to the undersigned or release or non-enforcement of any
security, whether with or without notice,

 

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

shall affect the obligations of any accommodation party, guarantor or indorser,
and (iii) agree to reimburse the holder of this Note for any and all costs and
expenses incurred in collecting or attempting to collect any and all principal
and interest under this Note (including, but not limited to, court costs and
reasonable attorney fees, whether such costs and expenses are incurred in formal
or informal collection actions, federal bankruptcy proceedings, appellate
proceedings, probate proceedings, or otherwise). Any transferees of, or
endorser, guarantor or surety paying this Note in full shall succeed to all
rights of Bank, and Bank shall be under no further responsibility for the
exercise thereof or the loan evidenced hereby. Nothing herein shall limit any
right granted Bank by other instrument or by law.

 

COMPANY AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, AND, AFTER CONSULTING WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT, WAIVE ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING
THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED HERETO.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Michigan.

 

NEOGEN CORPORATION By:      

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

    Richard R. Current

Its:

  Vice President and CFO

 

B