Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

Dated as of January 31, 2005

 

among

 

QUIDEL CORPORATION

as Borrower,

 

BANK OF AMERICA, N.A.,
as Agent
and
L/C Issuer,

and

The Other Lenders Party from time to time hereto

 

 

 

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

 

TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

 

1.1

Defined Terms

 

 

1.2 [a05-4865_1ex10d1.htm#a1_2_162139]

Other interpretive provisions [a05-4865_1ex10d1.htm#a1_2_162139]

 

 

1.3 [a05-4865_1ex10d1.htm#a1_3_162147]

Accounting Terms. [a05-4865_1ex10d1.htm#a1_3_162147]

 

 

1.4 [a05-4865_1ex10d1.htm#a1_4_162157]

Rounding [a05-4865_1ex10d1.htm#a1_4_162157]

 

 

1.5 [a05-4865_1ex10d1.htm#a1_5_162204]

References to Agreements and Laws [a05-4865_1ex10d1.htm#a1_5_162204]

 

 

1.6 [a05-4865_1ex10d1.htm#a1_6_162217]

Times of Day [a05-4865_1ex10d1.htm#a1_6_162217]

 

 

1.7 [a05-4865_1ex10d1.htm#a1_7_162220]

Letter of Credit Amounts [a05-4865_1ex10d1.htm#a1_7_162220]

 

ARTICLE II [a05-4865_1ex10d1.htm#ArticleIi_162224]

THE COMMITMENTS AND CREDIT EXTENSIONS [a05-4865_1ex10d1.htm#ArticleIi_162224]

 

 

2.1 [a05-4865_1ex10d1.htm#a2_1_162226]

Loans [a05-4865_1ex10d1.htm#a2_1_162226]

 

 

2.2 [a05-4865_1ex10d1.htm#a2_2_162239]

Borrowings, Conversions and Continuations of Loans
[a05-4865_1ex10d1.htm#a2_2_162239]

 

 

2.3 [a05-4865_1ex10d1.htm#a2_3_162247]

Letters of Credit [a05-4865_1ex10d1.htm#a2_3_162247]

 

 

2.4 [a05-4865_1ex10d1.htm#a2_4_162302]

Intentionally Deleted [a05-4865_1ex10d1.htm#a2_4_162302]

 

 

2.5 [a05-4865_1ex10d1.htm#a2_5_162307]

Prepayments [a05-4865_1ex10d1.htm#a2_5_162307]

 

 

2.6 [a05-4865_1ex10d1.htm#a2_6_162317]

Termination or Reduction of Commitments [a05-4865_1ex10d1.htm#a2_6_162317]

 

 

2.7 [a05-4865_1ex10d1.htm#a2_7_162321]

Repayment of Loans [a05-4865_1ex10d1.htm#a2_7_162321]

 

 

2.8 [a05-4865_1ex10d1.htm#a2_8_162323]

Interest [a05-4865_1ex10d1.htm#a2_8_162323]

 

 

2.9 [a05-4865_1ex10d1.htm#a2_9_162333]

Fees [a05-4865_1ex10d1.htm#a2_9_162333]

 

 

2.10 [a05-4865_1ex10d1.htm#a2_10_162338]

Computation of Interest and Fees [a05-4865_1ex10d1.htm#a2_10_162338]

 

 

2.11 [a05-4865_1ex10d1.htm#a2_11_162343]

Evidence of Debt [a05-4865_1ex10d1.htm#a2_11_162343]

 

 

2.12 [a05-4865_1ex10d1.htm#a2_12_162348]

Payments Generally [a05-4865_1ex10d1.htm#a2_12_162348]

 

 

2.13 [a05-4865_1ex10d1.htm#a2_13_162355]

Sharing of Payments [a05-4865_1ex10d1.htm#a2_13_162355]

 

ARTICLE III [a05-4865_1ex10d1.htm#ArticleIii_162402]

TAXES, YIELD PROTECTION AND ILLEGALITY [a05-4865_1ex10d1.htm#ArticleIii_162402]

 

 

3.1 [a05-4865_1ex10d1.htm#a3_1_162405]

Taxes [a05-4865_1ex10d1.htm#a3_1_162405]

 

 

3.2 [a05-4865_1ex10d1.htm#a3_2_162411]

Illegality [a05-4865_1ex10d1.htm#a3_2_162411]

 

 

3.3 [a05-4865_1ex10d1.htm#a3_3_162417]

Inability to Determine Rates [a05-4865_1ex10d1.htm#a3_3_162417]

 

 

3.4 [a05-4865_1ex10d1.htm#a3_4_162422]

Increased Cost and Reduced Return; Capital Adequacy
[a05-4865_1ex10d1.htm#a3_4_162422]

 

 

3.5 [a05-4865_1ex10d1.htm#a3_5_162430]

Compensation for Losses [a05-4865_1ex10d1.htm#a3_5_162430]

 

 

3.6 [a05-4865_1ex10d1.htm#MattersApplicableToAllRequests_161603]

Matters Applicable to all Requests for Compensation
[a05-4865_1ex10d1.htm#MattersApplicableToAllRequests_161603]

 

 

3.7 [a05-4865_1ex10d1.htm#Survival_161606]

Survival [a05-4865_1ex10d1.htm#Survival_161606]

 

ARTICLE IV [a05-4865_1ex10d1.htm#ArticleIv_161609]

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
[a05-4865_1ex10d1.htm#ArticleIv_161609]

 

 

4.1 [a05-4865_1ex10d1.htm#ConditionsOfInitialCredit_161611]

Conditions of Initial Credit Extension
[a05-4865_1ex10d1.htm#ConditionsOfInitialCredit_161611]

 

 

4.2 [a05-4865_1ex10d1.htm#a4_2_170408]

Conditions to all Credit Extensions [a05-4865_1ex10d1.htm#a4_2_170408]

 

ARTICLE V [a05-4865_1ex10d1.htm#ArticleV_170411]

REPRESENTATIONS AND WARRANTIES [a05-4865_1ex10d1.htm#ArticleV_170411]

 

 

5.1 [a05-4865_1ex10d1.htm#a5_1_170413]

Existence, Qualification and Power; Compliance with Laws
[a05-4865_1ex10d1.htm#a5_1_170413]

 

 

5.2 [a05-4865_1ex10d1.htm#a5_2_170415]

Authorization; No Contravention [a05-4865_1ex10d1.htm#a5_2_170415]

 

 

5.3 [a05-4865_1ex10d1.htm#a5_3_170416]

Governmental Authorization; Other Consents [a05-4865_1ex10d1.htm#a5_3_170416]

 

 

5.4 [a05-4865_1ex10d1.htm#a5_4_170417]

Binding Effect [a05-4865_1ex10d1.htm#a5_4_170417]

 

 

5.5 [a05-4865_1ex10d1.htm#a5_5_170419]

Financial Statements; No Material Adverse Effect
[a05-4865_1ex10d1.htm#a5_5_170419]

 

 

5.6 [a05-4865_1ex10d1.htm#a5_6_170422]

Litigation [a05-4865_1ex10d1.htm#a5_6_170422]

 

 

5.7 [a05-4865_1ex10d1.htm#a5_7_170423]

No Default [a05-4865_1ex10d1.htm#a5_7_170423]

 

 

5.8 [a05-4865_1ex10d1.htm#a5_8_170428]

Ownership of Property; Liens [a05-4865_1ex10d1.htm#a5_8_170428]

 

 

5.9 [a05-4865_1ex10d1.htm#a5_9_170429]

Environmental Compliance [a05-4865_1ex10d1.htm#a5_9_170429]

 

 

i

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

 

 

5.10 [a05-4865_1ex10d1.htm#a5_10_170431]

Insurance [a05-4865_1ex10d1.htm#a5_10_170431]

 

 

5.11 [a05-4865_1ex10d1.htm#a5_11_170433]

Taxes [a05-4865_1ex10d1.htm#a5_11_170433]

 

 

5.12 [a05-4865_1ex10d1.htm#a5_12_170434]

ERISA Compliance [a05-4865_1ex10d1.htm#a5_12_170434]

 

 

5.13 [a05-4865_1ex10d1.htm#a5_13_170437]

Subsidiaries [a05-4865_1ex10d1.htm#a5_13_170437]

 

 

5.14 [a05-4865_1ex10d1.htm#a5_14_170438]

Margin Regulations; Investment Company Act; Public Utility Holding Company Act
[a05-4865_1ex10d1.htm#a5_14_170438]

 

 

5.15 [a05-4865_1ex10d1.htm#a5_15_170441]

Disclosure [a05-4865_1ex10d1.htm#a5_15_170441]

 

 

5.16 [a05-4865_1ex10d1.htm#a5_16_170443]

Compliance with Laws [a05-4865_1ex10d1.htm#a5_16_170443]

 

 

5.17 [a05-4865_1ex10d1.htm#a5_17_170507]

Intellectual Property; Licenses, Etc. [a05-4865_1ex10d1.htm#a5_17_170507]

 

 

5.18 [a05-4865_1ex10d1.htm#a5_18_170508]

Rights in Collateral; Priority of Liens. [a05-4865_1ex10d1.htm#a5_18_170508]

 

ARTICLE VI [a05-4865_1ex10d1.htm#ArticleVi_170513]

AFFIRMATIVE COVENANTS [a05-4865_1ex10d1.htm#ArticleVi_170513]

 

 

6.1 [a05-4865_1ex10d1.htm#a6_1_170514]

Financial Statements [a05-4865_1ex10d1.htm#a6_1_170514]

 

 

6.2 [a05-4865_1ex10d1.htm#a6_2_170517]

Certificates; Other Information [a05-4865_1ex10d1.htm#a6_2_170517]

 

 

6.3 [a05-4865_1ex10d1.htm#a6_3_170518]

Notices [a05-4865_1ex10d1.htm#a6_3_170518]

 

 

6.4 [a05-4865_1ex10d1.htm#a6_4_170521]

Payment of Obligations [a05-4865_1ex10d1.htm#a6_4_170521]

 

 

6.5 [a05-4865_1ex10d1.htm#a6_5_170522]

Preservation of Existence, Etc [a05-4865_1ex10d1.htm#a6_5_170522]

 

 

6.6 [a05-4865_1ex10d1.htm#a6_6_170524]

Maintenance of Properties; Application of Net Insurance/Condemnation Proceeds
[a05-4865_1ex10d1.htm#a6_6_170524]

 

 

6.7 [a05-4865_1ex10d1.htm#a6_7_170529]

Maintenance of Insurance [a05-4865_1ex10d1.htm#a6_7_170529]

 

 

6.8 [a05-4865_1ex10d1.htm#a6_8_170534]

Compliance with Laws and Contractual Obligations.
[a05-4865_1ex10d1.htm#a6_8_170534]

 

 

6.9 [a05-4865_1ex10d1.htm#a6_9_170536]

Books and Records [a05-4865_1ex10d1.htm#a6_9_170536]

 

 

6.10 [a05-4865_1ex10d1.htm#a6_10_170538]

Inspection Rights [a05-4865_1ex10d1.htm#a6_10_170538]

 

 

6.11 [a05-4865_1ex10d1.htm#a6_11_170544]

Use of Proceeds [a05-4865_1ex10d1.htm#a6_11_170544]

 

 

6.12 [a05-4865_1ex10d1.htm#a6_12_170545]

Financial Covenants [a05-4865_1ex10d1.htm#a6_12_170545]

 

 

6.13 [a05-4865_1ex10d1.htm#a6_13_170549]

Additional Guarantors [a05-4865_1ex10d1.htm#a6_13_170549]

 

 

6.14 [a05-4865_1ex10d1.htm#a6_14_170552]

Collateral Records [a05-4865_1ex10d1.htm#a6_14_170552]

 

 

6.15 [a05-4865_1ex10d1.htm#a6_15_170553]

Cash Management System [a05-4865_1ex10d1.htm#a6_15_170553]

 

 

6.16 [a05-4865_1ex10d1.htm#a6_16_170555]

Security Interests [a05-4865_1ex10d1.htm#a6_16_170555]

 

ARTICLE VII [a05-4865_1ex10d1.htm#ArticleVii_170558]

NEGATIVE COVENANTS [a05-4865_1ex10d1.htm#ArticleVii_170558]

 

 

7.1 [a05-4865_1ex10d1.htm#a7_1_170600]

Liens [a05-4865_1ex10d1.htm#a7_1_170600]

 

 

7.2 [a05-4865_1ex10d1.htm#a7_2_170603]

Investments [a05-4865_1ex10d1.htm#a7_2_170603]

 

 

7.3 [a05-4865_1ex10d1.htm#a7_3_170605]

Indebtedness [a05-4865_1ex10d1.htm#a7_3_170605]

 

 

7.4 [a05-4865_1ex10d1.htm#a7_4_170608]

Fundamental Changes [a05-4865_1ex10d1.htm#a7_4_170608]

 

 

7.5 [a05-4865_1ex10d1.htm#a7_5_170611]

Dispositions [a05-4865_1ex10d1.htm#a7_5_170611]

 

 

7.6 [a05-4865_1ex10d1.htm#a7_6_170613]

Restricted Payments [a05-4865_1ex10d1.htm#a7_6_170613]

 

 

7.7 [a05-4865_1ex10d1.htm#a7_7_170616]

Change in Nature of Business [a05-4865_1ex10d1.htm#a7_7_170616]

 

 

7.8 [a05-4865_1ex10d1.htm#a7_8_170617]

Transactions with Affiliates [a05-4865_1ex10d1.htm#a7_8_170617]

 

 

7.9 [a05-4865_1ex10d1.htm#a7_9_170619]

Burdensome Agreements [a05-4865_1ex10d1.htm#a7_9_170619]

 

 

7.10 [a05-4865_1ex10d1.htm#a7_10_170621]

Use of Proceeds [a05-4865_1ex10d1.htm#a7_10_170621]

 

 

7.11 [a05-4865_1ex10d1.htm#a7_11_170623]

Foreign Subsidiaries; OSC [a05-4865_1ex10d1.htm#a7_11_170623]

 

ARTICLE VIII [a05-4865_1ex10d1.htm#ArticleViii_170626]

EVENTS OF DEFAULT AND REMEDIES [a05-4865_1ex10d1.htm#ArticleViii_170626]

 

 

8.1 [a05-4865_1ex10d1.htm#a8_1_170632]

Events of Default [a05-4865_1ex10d1.htm#a8_1_170632]

 

 

8.2 [a05-4865_1ex10d1.htm#a8_2_170056]

Remedies Upon Event of Default [a05-4865_1ex10d1.htm#a8_2_170056]

 

 

ii

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

 

 

8.3 [a05-4865_1ex10d1.htm#a8_3_170059]

Application of Funds [a05-4865_1ex10d1.htm#a8_3_170059]

 

ARTICLE IX [a05-4865_1ex10d1.htm#ArticleIx_170110]

AGENT [a05-4865_1ex10d1.htm#ArticleIx_170110]

 

 

9.1 [a05-4865_1ex10d1.htm#a9_1_170112]

Appointment and Authorization Agent [a05-4865_1ex10d1.htm#a9_1_170112]

 

 

9.2 [a05-4865_1ex10d1.htm#a9_2_170115]

Delegation of Duties [a05-4865_1ex10d1.htm#a9_2_170115]

 

 

9.3 [a05-4865_1ex10d1.htm#a9_3_170118]

Liability of Agent [a05-4865_1ex10d1.htm#a9_3_170118]

 

 

9.4 [a05-4865_1ex10d1.htm#a9_4_170122]

Reliance by Agent [a05-4865_1ex10d1.htm#a9_4_170122]

 

 

9.5 [a05-4865_1ex10d1.htm#a9_5_170125]

Notice of Default [a05-4865_1ex10d1.htm#a9_5_170125]

 

 

9.6 [a05-4865_1ex10d1.htm#a9_6_170127]

Credit Decision; Disclosure of Information by Agent
[a05-4865_1ex10d1.htm#a9_6_170127]

 

 

9.7 [a05-4865_1ex10d1.htm#a9_7_170129]

Indemnification of Agent [a05-4865_1ex10d1.htm#a9_7_170129]

 

 

9.8 [a05-4865_1ex10d1.htm#a9_8_170131]

Agent in its Individual Capacity [a05-4865_1ex10d1.htm#a9_8_170131]

 

 

9.9 [a05-4865_1ex10d1.htm#a9_9_170133]

Successor Agent [a05-4865_1ex10d1.htm#a9_9_170133]

 

 

9.10 [a05-4865_1ex10d1.htm#a9_10_170135]

Agent May File Proofs of Claim [a05-4865_1ex10d1.htm#a9_10_170135]

 

 

9.11 [a05-4865_1ex10d1.htm#a9_11_170137]

Guaranty Matters [a05-4865_1ex10d1.htm#a9_11_170137]

 

 

9.12 [a05-4865_1ex10d1.htm#a9_12_170139]

Collateral Matters [a05-4865_1ex10d1.htm#a9_12_170139]

 

ARTICLE X [a05-4865_1ex10d1.htm#ArticleX_170146]

MISCELLANEOUS [a05-4865_1ex10d1.htm#ArticleX_170146]

 

 

10.1 [a05-4865_1ex10d1.htm#a10_1_170147]

Amendments, Etc [a05-4865_1ex10d1.htm#a10_1_170147]

 

 

10.2 [a05-4865_1ex10d1.htm#a10_2_170150]

Notices and Other Communications; Facsimile Copies.
[a05-4865_1ex10d1.htm#a10_2_170150]

 

 

10.3 [a05-4865_1ex10d1.htm#a10_3_170153]

No Waiver; Cumulative Remedies [a05-4865_1ex10d1.htm#a10_3_170153]

 

 

10.4 [a05-4865_1ex10d1.htm#a10_4_170154]

Attorney Costs, Expenses and Taxes [a05-4865_1ex10d1.htm#a10_4_170154]

 

 

10.5 [a05-4865_1ex10d1.htm#a10_5_170156]

Indemnification by Borrower [a05-4865_1ex10d1.htm#a10_5_170156]

 

 

10.6 [a05-4865_1ex10d1.htm#a10_6_170159]

Payments Set Aside [a05-4865_1ex10d1.htm#a10_6_170159]

 

 

10.7 [a05-4865_1ex10d1.htm#a10_7_170201]

Successors and Assigns [a05-4865_1ex10d1.htm#a10_7_170201]

 

 

10.8 [a05-4865_1ex10d1.htm#a10_8_170206]

Confidentiality [a05-4865_1ex10d1.htm#a10_8_170206]

 

 

10.9 [a05-4865_1ex10d1.htm#a10_9_170208]

Set-off [a05-4865_1ex10d1.htm#a10_9_170208]

 

 

10.10 [a05-4865_1ex10d1.htm#a10_10_170211]

Interest Rate Limitation [a05-4865_1ex10d1.htm#a10_10_170211]

 

 

10.11 [a05-4865_1ex10d1.htm#a10_11_170216]

Counterparts [a05-4865_1ex10d1.htm#a10_11_170216]

 

 

10.12 [a05-4865_1ex10d1.htm#a10_12_170219]

Integration [a05-4865_1ex10d1.htm#a10_12_170219]

 

 

10.13 [a05-4865_1ex10d1.htm#a10_13_170220]

Survival of Representations and Warranties [a05-4865_1ex10d1.htm#a10_13_170220]

 

 

10.14 [a05-4865_1ex10d1.htm#a10_14_170223]

Severability [a05-4865_1ex10d1.htm#a10_14_170223]

 

 

10.15 [a05-4865_1ex10d1.htm#a10_15_170224]

Governing Law; Submission to Jurisdiction [a05-4865_1ex10d1.htm#a10_15_170224]

 

 

10.16 [a05-4865_1ex10d1.htm#a10_16_170226]

Waiver of Right to Trial by Jury [a05-4865_1ex10d1.htm#a10_16_170226]

 

 

10.17 [a05-4865_1ex10d1.htm#a10_17_170229]

USA Patriot Act Notice [a05-4865_1ex10d1.htm#a10_17_170229]

 

 

10.18 [a05-4865_1ex10d1.htm#a10_18_170230]

Time of the Essence [a05-4865_1ex10d1.htm#a10_18_170230]

 

 

10.19 [a05-4865_1ex10d1.htm#a10_19_170231]

Foreign Lenders [a05-4865_1ex10d1.htm#a10_19_170231]

 

 

iii

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

 

SCHEDULES

 

1.1

IP Rights and Other Assets to be Sold in the Permitted Sale

 

2.1 [a05-4865_1ex10d1.htm#Schedule2_1_170301]

Commitments and Pro Rata Shares [a05-4865_1ex10d1.htm#Schedule2_1_170301]

 

5.5

Material Adverse Effect

 

5.6

Litigation

 

5.9

Environmental Matters

 

5.13

Subsidiaries and Other Equity Investments

 

5.18

Existing UCC and IP Filings

 

6.16(c)

Deposit Accounts and Securities Accounts

 

7.1

Existing Liens

 

7.3

Existing Indebtedness

 

10.2 [a05-4865_1ex10d1.htm#Schedule10_2_170306]

Agent’s Office, Certain Addresses for Notices
[a05-4865_1ex10d1.htm#Schedule10_2_170306]

 

EXHIBITS

 

A

Form of Loan Notice

 

B

Form of Note

 

C

Form of Guaranty

 

D

Form of Compliance Certificate

 

E

Form of Assignment and Assumption

 

F

Form of Security Agreement

 

G

Form of Landlord Waiver

 

H

Form of Deposit Account Control Agreement

 

I

Form of Securities Account Control Agreement

 

J

Form of Solvency Certificate

 

K-1

Form of Opinion of Counsel to Loan Parties

 

K-2

Form of Opinion of Oregon Counsel to Loan Parties

 

i

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

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of January 31, 2005
among QUIDEL CORPORATION, a Delaware corporation (“Borrower”), each lender from
time to time party hereto (collectively, “Lenders” and individually, a
“Lender”), and BANK OF AMERICA, N.A., as Agent and L/C Issuer.

 

Borrower has requested that the Lenders provide a revolving credit facility, and
the Lenders are willing to do so on the terms and conditions set forth herein. 
In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business unit or
division of a Person, or of any portion of the assets of a Person if such
portion exceeds $2,000,000 in the aggregate, (b) the acquisition of all of the
Capital Stock of any Person, or otherwise causing any Person to become a
wholly-owned Subsidiary, or (c) a merger or consolidation or any other
combination with another Person.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by Agent.

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.  “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.  “Controlling” and
“Controlled” have meanings correlative thereto.  Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

 

“Agent” means Bank of America in its capacity as administrative agent under any
of the Loan Documents, or any successor administrative agent.

 

“Agent’s Office” means Agent’s address and, as appropriate, account as set forth
on Schedule 10.2, or such other address or account as Agent may from time to
time notify Borrower and Lenders.

 

“Agent-Related Persons”  means Agent, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

 

“Aggregate Commitments” means the Commitments of all Lenders.

 

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“Agreement” means this Credit Agreement.

 

“Applicable Rate” means from time to time, the following percentages per annum,
based upon the Funded Debt to EBITDA Ratio (the “Financial Covenant) as set
forth in the most recent Compliance Certificate received by the Agent pursuant
to Section 6.2(b).

 

Applicable Rate

 

Pricing
Level

 

Funded Debt to EBITDA
Ratio

 

Commitment
Fee

 

Eurodollar Rate or
IBOR Rate Margin
or Standby
Letters of Credit

 

Base Rate
Margin

 

1

 

Greater than or equal to 2.00:1.00

 

0.25

%

2.00

%

1.00

%

2

 

Less than 2.00:1.00 but greater than or equal to 1.50:1.00

 

0.25

%

1.75

%

0.75

%

3

 

Less than 1.50:1.00 but greater than or equal to 1.00:1.00

 

0.25

%

1.50

%

0.50

%

4

 

Less than 1.00:1.00 but greater than or equal to 0.50:1.00

 

0.25

%

1.25

%

0.25

%

5

 

Less than 0.50

 

0.25

%

1.00

%

0.00

%

 

Any increase or decrease in the Applicable Rate resulting from a change in the
Financial Covenant shall become effective commencing on the 5th Business Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.2(b); provided, however, that if no Compliance Certificate is
delivered when due in accordance with such Section, then Pricing Level 1 shall
apply commencing on the 5th Business Day following the date such Compliance
Certificate was required to have been delivered to but excluding the date such
Compliance Certificate is received by Agent and, thereafter, the pricing level
indicated by such Compliance Certificate until such pricing level is required to
be adjusted pursuant to the terms of this definition.  The Applicable Rate in
effect from the Closing Date through the date a Compliance Certificate is
delivered pursuant to Section 6.2(b) for the reporting period ending on
December 31, 2005 shall be determined based upon Pricing Level 1.

 

“Asset Sale” means the sale by Borrower or any of its Subsidiaries to any Person
other than Borrower or its wholly-owned Guarantors of (i) any of the stock of
any of Borrower’s Subsidiaries (other than directors’ qualifying shares to the
extent required by law).  (ii) substantially all of the assets of any division
or line of business of Borrower or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of Borrower or any of its Subsidiaries
(other than (a) inventory and cash equivalents sold in the ordinary course of
business, (b) sales, assignments, transfers or dispositions of accounts in the
ordinary course of

 

3

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business for purposes of collection, (c) subleases of real property leases no
longer necessary to the business of Borrower and its Subsidiaries,
(d) non-exclusive licenses of immaterial IP Rights in the ordinary course of
business for not less than fair market value, (e) non-exclusive licenses of IP
Rights in the ordinary course of business solely in connection with cooperative
agreements with third parties for further development of such IP Rights, and
(f) any such other assets to the extent that the aggregate value of such assets
sold in any single transaction or related series of transactions is equal to
$100,000 or less).

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit E.

 

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.

 

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

 

“Audited Financial Statements” means the audited consolidated balance sheet of
Borrower and its Subsidiaries for the fiscal year ended December 31, 2003 and
the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of Borrower and its Subsidiaries,
including the notes thereto.

 

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.6, and (c) the date of termination
of the Commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.2.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.”  The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.  Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

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

 

4

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“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type
and, in the case of Eurodollar Rate Loans or IBOR Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Section 2.1.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of California or the state where Agent’s Office is located
and, if such day relates to any Eurodollar Rate Loan or IBOR Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank Eurodollar market.

 

“Capital Stock” means the capital stock or other equity interests of a Person.

 

“Cash” means money, currency or a credit balance in a Deposit Account.

 

“Cash Collateral” means the Cash deposited with the Agent as collateral when
Borrower Cash Collateralizes L/C Obligations.

 

“Cash Collateralize” has the meaning specified in Section 2.3(g).

 

“Change of Control” means, with respect to any Person, an event or series of
events by which:

 

(a)           any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of any
such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a person or group shall
be deemed to have “beneficial ownership” of all securities that such person or
group has the right tot acquire (such right, an “option right”), whether such
right is exercisable immediately or only after the passage of time) directly or
indirectly, of 30% or more of the equity securities of such Person entitled to
vote for members of the board of directors or equivalent governing body of such
Person on a fully diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or

 

(b)           during any period of 24 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of such
Person cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors).

 

5

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“Closing Date” means the first date all the conditions precedent in Section 4.1
are satisfied or waived in accordance with Section 10.1.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” shall mean any and all assets and rights and interests in or to
property of Borrower and each of the other Loan Parties, whether real or
personal, tangible or intangible, in which a Lien is granted or purported to be
granted pursuant to the Collateral Documents.

 

“Collateral Documents” means the Security Agreement, the Control Agreements, the
Landlord Waivers, and all agreements, instruments and documents now or hereafter
executed and delivered in connection with this Agreement pursuant to which Liens
are granted or purported to be granted to Agent in Collateral securing all or
part of the Obligations each in form and substance satisfactory to Agent.

 

“Commitment” means, as to each Lender, its obligation to (a) make Loans to
Borrower pursuant to Section 2.1, and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 2.1 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

 

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

 

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

 

“Control” has the meaning specified in the definition of “Affiliate.”

 

“Control Agreement” means an agreement, satisfactory in form and substance to
Agent substantially in the form of Exhibit H or Exhibit I, as applicable, (with
such changes that are reasonably acceptable to Agent) and executed by the
financial institution or securities intermediary at which a Deposit Account or
Securities Account, as the case may be, is maintained, pursuant to which such
financial institution or securities intermediary confirms and acknowledges
Agent’s security interest in such account and agrees that the financial
institution or securities intermediary, as the case may be, will comply with
instructions originated by Agent as to disposition of funds in such account,
without further consent by Borrower or the applicable Subsidiary, as the case
may be.

 

“Credit Extension” means each of the following:  (a) a Borrowing and (b) an L/C
Credit Extension.

 

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

 

6

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

 

“Default Rate” means (a) when used with respect to Obligations other than L/C
Fees and Lender Swap Contracts an interest rate equal to (i) the Base Rate plus
(ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2%
per annum; provided, however, that with respect to a Eurodollar Rate Loan or
IBOR Rate Loan, the Default Rate shall be an interest rate equal to the interest
rate (including any Applicable Rate) otherwise applicable to such Loan plus 2%
per annum, and (b) when used with respect to L/C Fees, a rate equal to the
Applicable Rate plus 2% per annum, in all cases to the fullest extent permitted
by applicable Laws.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Loans or participations in L/C Obligations required to be funded by it
hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any
other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

 

“Deposit Account” means a demand, time, savings, passbook or similar account
maintained with a Person engaged in the business of banking, including a savings
bank, savings and loan association, credit union or trust company.

 

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

 

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

 

“Dormant Foreign Subsidiary” means Metra Biosystems, GMBH, Metra Biosystems,
(UK) Limited and Metra Biosystems, Quidel Limited (Italy).

 

“EBITDA” means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense and debt
issuance costs and commissions, discounts and other fees and charges associated
with initial incurrence of any Indebtedness, plus depreciation, and
amortization; provided that EBITDA shall be determined after giving effect on a
pro forma basis to any Permitted Acquisitions that have been consummated to the
extent either Agent has approved the financial statements of the applicable
acquired Persons or assets or such financial statements are audited by a
national accounting firm reasonably acceptable to Agent (and in either case
giving effect to pro forma adjustments as determined by the Board of Directors
of Borrower in good faith and approved by Agent).

 

“Eligible Assignee” has the meaning specified in Section 10.7(g).

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including

 

7

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those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

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

 

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

 

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

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.

 

“Eurodollar Base Rate” has the meaning specified in the definition of Eurodollar
Rate.

 

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar
Rate Loan, a rate per annum determined by Agent pursuant to the following
formula:

 

Eurodollar Rate =

Eurodollar Base Rate

 

 

1.00 – Eurodollar Reserve Percentage

 

 

Where,

 

“Eurodollar Base Rate” means, for such Interest Period (rounded upwards, as
necessary, to the nearest 1/100 of 1%) the rate per annum equal to the British
Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other

 

8

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commercially available source providing quotations of BBA LIBOR as designated by
Agent from time to time) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period.  If such rate is not available at such time for any
reason, then the “Eurodollar Base Rate” for such Interest Period shall be the
rate per annum determined by Agent to be the rate at which deposits in Dollars
for delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the London
interbank Eurodollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period.

 

“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System of the United States for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
“Eurocurrency liabilities”).  The Eurodollar Rate for each outstanding
Eurodollar Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of Default” has the meaning specified in Section 8.1.

 

“Existing Credit Agreement” has the meaning specified in Section 4.1(a)(x).

 

“Facilities” means any and all real property (including all buildings, fixtures
or other improvements located thereon) now, hereafter or heretofore owned,
leased, operated or used by Borrower or any of its Subsidiaries or any of their
respective predecessors or Affiliates.

 

“Federal Funds Rate”  means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by Agent.

 

“First Priority Lien” means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that (i) such Lien is
perfected and has priority

 

9

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over any other Lien on such Collateral and (ii) such Lien is the only Lien
(other than Liens permitted pursuant to Section 7.1) to which such Collateral is
subject.

 

“Fixed Charge Coverage Ratio” means the ratio of (a) EBITDA, minus income tax
paid in cash, minus cash dividends paid, minus capital expenditures (excluding
any Permitted Acquisitions constituting capital expenditures), to (b) the sum
(without duplication) of (i) interest expense, (ii) an amount equal to 15% of
the aggregate principal amount of Funded Debt that bears interest (other than
the current portion of Funded Debt to the extent included in clause (iii) below)
and (iii) the current portion of long term liabilities.

 

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

 

“Funded Debt” means all outstanding Indebtedness for borrowed money and other
interest-bearing Indebtedness, including current and long term Indebtedness,
less the non-current portion of Subordinated Indebtedness.

 

“Funded Debt to EBITDA Ratio” means, as at any date of determination, the ratio
of Funded Debt as at such date to EBITDA for the consecutive four fiscal
quarters ending on the last day of the most recently ended fiscal quarter.

 

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

 

“Governing Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is
a corporation, partnership, trust or limited liability company.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

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

 

“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the

 

10

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payment or performance of such Indebtedness or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement
condition or liquidity or level of income or cash flow of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or other obligation,
or (iv) entered into for the purpose of assuring in any other manner the obligee
in respect of such Indebtedness or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such
Indebtedness or other obligation is assumed by such Person.  The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantor” or “Subsidiary Guarantor” means, collectively, Pacific Biotech,
Inc., a California corporation, Metra Biosystems, Inc., a California
corporation, Osteo Sciences Corporation, an Oregon corporation and Litmus
Concepts, Inc., a California corporation and any other Subsidiary of Borrower
that executes and delivers a counterpart of the Guaranty from time to time after
the Closing Date in accordance with Section 6.13.

 

“Guaranty” or “Subsidiary Guaranty” means the Subsidiary Guaranty made by the
Guarantor in favor of Agent and for the benefit of the Lenders, substantially in
the form of Exhibit C.

 

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

 

“Hostile Acquisition” means the acquisition of the capital stock or other equity
interests of a Person through a tender offer or similar solicitation of the
owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition and which approval remains in effect) by
resolutions of the Governing Body of such Person.

 

“IBOR Rate” means for any Interest Period with respect to any IBOR Rate Loan, a
rate per annum determined by Agent as of the first day of such Interest Period
pursuant to the following formula:

 

IBOR Rate =

IBOR Base Rate

 

1.00 – Reserve Percentage

 

Where,

 

(a)           “IBOR Base Rate” means, for such Interest Period, the interest
rate at which Bank of America’s Grand Cayman Banking Center, Grand Cayman,
British West

 

11

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Indies, would offer Dollar deposits for such Interest Period to other major
banks in the offshore Dollar interbank market.

 

(b)           “Reserve Percentage” means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System of the United States for determining the maximum reserve
requirement (including any emergency, supplemental, special, marginal or other
reserve requirement) with respect to Eurocurrency funding (currently referred to
as “Eurocurrency liabilities” in Board Regulation D).  The IBOR Rate for each
outstanding IBOR Rate Loan shall be adjusted automatically as of the effective
date of any change in the Reserve Percentage.

 

“IBOR Rate Loans” means Loans that bear interest at a rate based on the IBOR
Rate.

 

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

 

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

 

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

 

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

 

(d)           all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the ordinary
course of business);

 

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

 

(f)            capital leases and Synthetic Lease Obligations; and

 

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

 

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

 

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“Indemnified Liabilities” has the meaning specified in Section 10.5.

 

“Indemnitees” has the meaning specified in Section 10.5.

 

“Information” has the meaning specified in Section 10.8.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
or IBOR Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.

 

“Interest Period” means, (a) as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, and (b) as to each IBOR Rate Loan, the period commencing
on the date such IBOR Rate Loan is disbursed or converted to or continued as an
IBOR Rate Loan and ending on the date one, two, three or six months thereafter,
in each case as selected by Borrower in its Loan Notice; provided that:

 

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

 

(ii)           any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

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

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit.  For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment. Without
limiting the generality of the foregoing, the term “Investment” shall include,
without limitation, any Acquisition.

 

“IP Collateral” means, collectively, the IP Rights that constitute Collateral
under the Security Agreement.

 

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“IP Filing Office” means the United States Patent and Trademark Office, the
United States Copyright Office or any successor or substitute office in which
filings are necessary or, in the opinion of Agent, desirable in order to create
or perfect Liens on any IP Collateral.

 

“IP Rights” has the meaning specified in Section 5.17.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

 

“Issuer Documents” means with respect to any Letter of Credit, the L/C
Application, and any other document, agreement and instrument entered into by
the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C Issuer
and relating to any such Letter of Credit.

 

“Landlord Waiver” means any landlord waiver, mortgagee waiver, bailee letter or
any similar acknowledgement agreement of any landlord in respect of any Real
Property Asset or other location where any Collateral is located, substantially
in the form of Exhibit G annexed hereto, with such changes thereto as may be
agreed to by Agent in the reasonable exercise of its discretion.

 

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

 

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C Expiration Date” means the day that is thirty days prior to the first
anniversary of the Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).

 

“L/C Fee” has the meaning specified in Section 2.3(i).

 

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“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For all purposes of this
Agreement, if on any date of determination a Letter of Credit has expired by its
terms but any amount may still be drawn thereunder by reason of the operation of
Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding”
in the amount so remaining available to be drawn.

 

“L/C Sublimit” means an amount equal to $6,000,000.  The L/C Sublimit is part
of, and not in addition to, the Aggregate Commitments.

 

“Leasehold Property” means any leasehold interest of any Loan Party as lessee
under any lease of real property.

 

“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the L/C Issuer.

 

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

 

“Lender Swap Contracts” means any obligations of the Borrower or any other Loan
Party under Swap Contracts to which a Lender or its Affiliate is a party.

 

“Letter of Credit” means any letter of credit issued hereunder.  A Letter of
Credit may be a commercial letter of credit or a standby letter of credit.

 

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

 

“Loan” has the meaning specified in Section 2.1.

 

“Loan Documents” means this Agreement, each Note, each Issuer Document, the
Agent Fee Letter and each Collateral Document and the Guaranty.

 

“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from
one Type to the other, or (c) a continuation of Eurodollar Rate Loans or IBOR
Rate Loans, pursuant to Section 2.2(a), which, if in writing, shall be
substantially in the form of Exhibit A.

 

“Loan Parties” means, collectively, Borrower and each Person (other than Agent,
the L/C Issuer or any Lender) executing a Loan Document including, without
limitation, each Guarantor and each Person executing a Collateral Document.

 

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“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the business operations, properties, liabilities (actual or
contingent), condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries, taken as a whole; (b) a material impairment of the ability of any
Loan Party to perform its obligations under any Loan Document to which it is a
party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party of any Loan Document to which it
is a party.  Notwithstanding the foregoing, at any time there is entered a
judgment or order or any Loan Party enters into a settlement agreement, in each
case with respect to the litigation described in item number 1 in Schedule 5.6
(the “Specified Event”), the occurrence of such Specified Event shall be deemed
to have a Material Adverse Effect unless within 10 Business Days of the
Specified Event, Borrower delivers to Agent a pro forma Compliance Certificate
duly completed and duly signed by a Responsible Officer of Borrower, which
Compliance Certificate shall (i) set forth calculations that are identical to
the Compliance Certificate most recently delivered to Agent pursuant to Section
6.2(b) other than a pro forma adjustment of having the full amount payable under
such judgment, order or settlement agreement being paid on the last day of the
four fiscal quarter period covered by such Compliance Certificate (the “Previous
Period”) and other than a pro forma adjustment of having all other aspects of
such judgment, order or settlement being fully implemented (including
injunctions and royalty payments) during the Previous Period (it being
understood that such pro forma adjustments shall also make adjustments for the
incurrence of Indebtedness to make such payment on such last day and to
otherwise fully implement such judgment, order or settlement to the extent Loan
Parties did not have sufficient cash on hand to make such payment on such last
day and to otherwise fully implement such judgment, order or settlement),
(ii) set forth calculations that cover each of the next four fiscal quarter
periods (one covering the four fiscal quarter period ending one fiscal quarter
after the Previous Period, one covering the four fiscal quarter period ending
two fiscal quarters after the Previous Period, one covering the four fiscal
quarter period ending three fiscal quarters after the Previous Period, and one
covering the four fiscal quarter period ending four fiscal quarters after the
Previous Period), which calculations shall be based on financial forecast
information and assumptions that are reasonably satisfactory to Agent and
Required Lenders and which calculations shall have pro forma adjustments of
having the full amount payable under such judgment, order or settlement
agreement being paid on the last day of the applicable four fiscal quarter
period and of otherwise fully implementing such judgment, order or settlement,
and (iii) certify that none of the pro forma calculations described in clause
(i) and (ii) above shows that any Loan Party is or would be in default under the
Credit Agreement; provided that notwithstanding the foregoing, the Specified
Event shall be deemed to have a Material Adverse Effect if at the time of the
Specified Event or at any time thereafter, (x) any Loan Party or its accountants
shall have included a statement in such Loan Party’s financial statements to the
effect that the Specified Event would have or would likely have a material and
adverse effect on such Loan Party or its business (or any similar statement) or
(y) any Responsible Officer of any Loan Party is aware that any Loan Party or
its accountants is planning or intending to include such a statement (or any
similar statement) in such Loan Party’s financial statements.  Notwithstanding
any Specified Event not being deemed to have a Material Adverse Effect because
the conditions set forth in clauses (i), (ii) and (iii) in the immediately
preceding sentence were satisfied, such Specified Event shall be deemed to have
a Material Adverse Event at the time Borrower delivers (or is required to
deliver) any Compliance Certificate under Section 6.2(b) if any amounts under
such judgment, order or settlement are still payable at such time or if

 

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any other aspect of such judgment, order or settlement has yet to be fully
implemented unless at the time such Compliance Certificate is required to be
delivered, Borrower delivers to Agent such Compliance Certificate duly completed
and duly signed by a Responsible Officer of Borrower covering the applicable
four fiscal quarter period (the “Applicable Period”), which Compliance
Certificate shall (i) set forth calculations without any pro forma adjustments,
(ii) set forth calculations that are identical to the calculations described in
clause (i) in this sentence other than a pro forma adjustment of having the full
amount payable under such judgment, order or settlement agreement (excluding
amounts already paid) being paid on the last day of the Applicable Period and
other than a pro forma adjustment of having all other aspects of such judgment,
order or settlement being fully implemented (including injunctions and royalty
payments) during the Applicable Period (it being understood that such pro forma
adjustments shall also make adjustments for the incurrence of Indebtedness to
make such payment on such last day and to otherwise fully implement such
judgment, order or settlement to the extent Loan Parties did not have sufficient
cash on hand to make such payment on such last day and to otherwise fully
implement such judgment, order or settlement), (iii) set forth calculations that
cover each of the next four fiscal quarter periods (one covering the four fiscal
quarter period ending one fiscal quarter after the Applicable Period, one
covering the four fiscal quarter period ending two fiscal quarters after the
Applicable Period, one covering the four fiscal quarter period ending three
fiscal quarters after the Applicable Period, and one covering the four fiscal
quarter period ending four fiscal quarters after the Applicable Period), which
calculations shall be based on financial forecast information and assumptions
that are reasonably satisfactory to Agent and Required Lenders and which
calculations shall have a pro forma adjustment of having the full amount payable
under such judgment, order or settlement agreement (excluding amounts already
paid) being paid on the last day of the applicable four fiscal quarter period
and other than a pro forma adjustment of having all other aspects of such
judgment, order or settlement being fully implemented (including injunctions and
royalty payments) during the applicable four fiscal quarter period and
(iv) certify that none of the calculations or pro forma calculations described
in clauses (i), (ii) and (iii) in this sentence shows that any Loan Party is or
would be in default under the Credit Agreement.

 

“Maturity Date” means June 30, 2008.

 

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

 

“Net Asset Sale Proceeds,” with respect to any Asset Sale, means Cash payments
(including any Cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs and
expenses incurred in connection with such Asset Sale, including (i) sale, use or
other transaction taxes and income taxes paid or payable by Borrower or any of
its Subsidiaries as a direct result thereof (provided that with respect to
income taxes that are payable by Borrower or such Subsidiary, the amount shall
be limited to income taxes reasonably estimated to be actually payable by
Borrower or such Subsidiary within two years of the date of such Asset Sale as a
result of any gain recognized in connection with such Asset Sale) and
(ii) payment of the outstanding principal amount of, premium or penalty, if any,
and interest

 

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on any Indebtedness (other than the Loans) that is (a) secured by a Lien on the
stock or assets in question and that is required to be repaid under the terms
thereof as a result of such Asset Sale and (b) actually paid at the time of
receipt of such Cash payment to a Person that is not an Affiliate of any Loan
Party or of any Affiliate of a Loan Party.

 

“Net Insurance/Condemnation Proceeds” means any Cash payments or proceeds
received by Borrower or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Borrower or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
bona fide direct costs and expenses incurred by Borrower or any of its
Subsidiaries in connection with any such event described in clause (i) or (ii)
above, including (a) any actual third party costs and expenses (including
reasonable legal fees and expenses) incurred in connection with the adjustment
or settlement of any claims of Borrower or such Subsidiary in respect thereof,
(b) sale, use or other transaction taxes and income taxes paid or payable by
Borrower or any of its Subsidiaries as a direct result thereof (provided that
with respect to income taxes that are payable by Borrower or such Subsidiary,
the amount shall be limited to income taxes reasonably estimated to be actually
payable by Borrower or such Subsidiary within two years of the date of such
event as a result of any gain recognized in connection with such event) and
(c) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans) that is (A) secured by a
Lien on the stock or assets in question and that is required to be repaid under
the terms thereof as a result of such event and (B) actually paid at the time of
receipt of such Cash payment to a Person that is not an Affiliate of any Loan
Party or of any Affiliate of a Loan Party.

 

“Net Worth” means, as of any date of determination with respect to Borrower and
its Subsidiaries, net worth of Borrower and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.

 

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

 

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

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint

 

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venture or other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed in connection
with its formation or organization with the applicable Governmental Authority in
the jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

 

“OSC” means Osteo Sciences Corporation, an Oregon corporation.

 

“Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.

 

“Participant” has the meaning specified in Section 10.7(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

 

“Permitted Acquisition” means an Acquisition with respect to which all of the
following conditions shall have been satisfied (or Requisite Lenders shall have
otherwise approved such Acquisition):

 

(a)           the Person, division or business being acquired (the “Target”)
shall (i) be in such lines of business such that Borrower will be in compliance
with Section 7.7 after giving effect to such Acquisition, and (ii) have EBITDA
(calculated utilizing the definition of EBITDA as if Target were a Subsidiary)
for the most recent consecutive four fiscal quarter period exceeding zero;
provided that this clause (a) shall not apply to the extent no Person, division
or business is being acquired in connection with such Acquisition;

 

(b)           such Acquisition shall not be a Hostile Acquisition;

 

(c)           the assets so acquired shall be transferred free and clear of any
Liens (except to the extent permitted by Section 7.1), no Indebtedness shall be
incurred, guaranteed, assumed or consolidated in connection with such
Acquisition (except to the extent permitted by Section 7.3), and, if assets so
acquired shall be owned by a Subsidiary (after giving effect to such
Acquisition),  Agent shall have received Lien searches reasonably satisfactory
to Agent with respect to the assets of, and equity interests in, any business
being acquired

 

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(d)           the Total Consideration paid or payable with respect to such
Acquisition (excluding consideration paid or payable with Capital Stock of
Borrower) shall not exceed $10,000,000 and, after giving effect to such
Acquisition, the aggregate amount of the Total Consideration paid or payable for
all such Acquisitions consummated during the term of this Agreement commencing
on the Closing Date (excluding consideration paid or payable with Capital Stock
of Borrower) shall not exceed $20,000,000 in the aggregate;

 

(e)           before and after giving effect to such Acquisition, (i) all
representations and warranties contained in the Loan Documents shall be true and
correct on and as of the date of consummation of such Acquisition and (ii) no
Default or Event of Default shall exist, including with respect to the covenants
contained in Section 6.12, before and after giving effect to such Acquisition,
based on the financial statements most recently delivered to Agent pursuant to
Sections 6.1(a) or 6.1(b) as adjusted on a pro forma basis including the Target
based on pro forma assumptions acceptable to Agent;

 

(f)            Agent shall have received a First Priority Lien in substantially
all of the personal property and mixed property assets being acquired (except
for Liens securing Indebtedness permitted under Section 7.3(f)) and all filings,
recordings and other actions with respect thereto shall be reasonably
satisfactory in form and substance to Agent and Agent shall have received an
opinion of counsel in each applicable jurisdiction reasonably satisfactory to it
to the effect that Agent has been granted a perfected security interest in such
assets and as to such other matters as Agent may reasonably require;

 

(g)           to the extent any representation or warranty herein makes
reference to one or more of the Schedules to this Agreement, Borrower shall make
revisions to such Schedules, in each case as of the date of the consummation of
such Acquisition and notwithstanding that such representation or warranty may
expressly state that it is made as of an earlier date, reasonably acceptable to
Agent, solely to take into account the consummation of such Acquisition;

 

(h)           Borrower and its Subsidiaries shall have obtained all material
permits, licenses, authorizations or consents from all Governmental Authorities
and all material consents of other Persons, in each case that are necessary in
connection with such proposed Acquisition or the continued operation of the
business being acquired in such proposed Acquisition, prior to or concurrently
with the consummation thereof, and each of the foregoing shall be in full force
and effect;

 

(i)            subject to the waiver by Agent in its reasonable discretion, all
applicable waiting periods with respect to such proposed Acquisition shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on such
Acquisition (including the Pre-Merger/Hart-Scott-Rodino Act, as amended), and no
action, request for stay, petition for review or rehearing, reconsideration or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable Governmental Authority to take action to set aside its consent on
its own motion shall have expired;

 

(j)            Agent shall have received a certificate from the Borrower’s
insurance broker or other evidence satisfactory to it that all insurance
required to be maintained pursuant to

 

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Section 6.7 is in full force and effect with respect to the assets being
acquired in such Acquisition and that Agent on behalf of the Lenders has been
named as additional insured, mortgagee and loss payee thereunder to the extent
required under Section 6.7;

 

(k)           after giving effect to such Acquisition, the sum of (i) the amount
by which the Aggregate Commitments exceeds Total Outstandings plus (ii) the
amount of cash held by Borrower and its Subsidiaries, shall exceed $20,000,000;

 

(l)            after giving effect to such Acquisition, the ratio of Funded Debt
as at the date of such Acquisition to EBITDA for the consecutive four fiscal
quarters ending on the last day of the most recently ended fiscal quarter for
which this Agreement requires Borrower to deliver financial statements is at
least 0.25 below the applicable maximum Funded Debt to EBITDA Ratio covenant
level for the most recently ended fiscal quarter set forth in Section 6.12(b);

 

(m)          such Acquisition shall be made by Borrower or a wholly-owned
Subsidiary of Borrower and if such Acquisition involves acquisition of the
Capital Stock of any Person, such Acquisition shall be for 100% of the
outstanding Capital Stock of such Person and such Person shall be a Person
incorporated or organized under the laws of the United States of America or any
state thereof; and

 

(n)           (i) at least ten Business Days prior to the closing of such
Acquisition, Borrower shall have delivered to Agent and each Lender all
available financial statements of the Target and, if requested by Agent or any
Lender, (ii) within five Business Days prior to the closing of such Acquisition,
Borrower shall have delivered to Agent and any Lender, such other documents and
agreements relating to such Acquisition as Agent or such Lender may reasonably
request, and (iii) on or prior to the closing date of such Acquisition, Borrower
shall have delivered to Agent and each Lender (1) a copy of the purchase
agreement pursuant to which such Acquisition will be consummated, (2) unless
waived by Agent in its reasonable discretion, a consent to the assignment of
such purchase agreement to Agent for collateral purposes, which consent shall be
in form and substance satisfactory to Agent; (3) a copy of each material
services agreement, consulting agreement, lease, credit or financing agreement
or other material agreement relating to such Acquisition to be in effect after
the consummation of such Acquisition, (4) unless waived by Agent in its
reasonable discretion, an opinion of counsel to the sellers addressed to Agent
and the Lenders or permitting them to rely thereon, (5) such other information
or reports as Agent may reasonably request with respect to such Acquisition, and
(6) an executed officer’s certificate in form and substance reasonably
satisfactory to Agent and Requisite Lenders certifying that such Acquisition
satisfies all of the conditions set forth in this definition and attaching
thereto a Compliance Certificate.

 

“Permitted Sale” means the sale by Borrower on or before December 31, 2005 of
(i) all of the Capital Stock of Quidel Deutschland, a wholly-owned Subsidiary of
Borrower, and (ii) certain IP Rights and certain other assets described in
Schedule 1.1, for an aggregate total consideration (for both clauses (i) and
(ii)) of approximately $500,000.

 

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

 

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“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Pledged Collateral” has the meaning given such term in the Security Agreement.

 

“Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Commitment of such Lender at such time
and the denominator of which is the amount of the Aggregate Commitments at such
time; provided that if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.2, then the Pro Rata Share of each Lender shall be
determined based on the Pro Rata Share of such Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to the terms hereof.  The initial Pro Rata Share of each Lender is set forth
opposite the name of such Lender on Schedule 2.1 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Quidel Deutschland” means Quidel Deutschland GmbH, a German company.

 

“Real Property Asset” means, at any time of determination, any interest then
owned by any Loan Party in any real property.

 

“Register” has the meaning specified in Section 10.7(c).

 

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

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Loans, a Loan Notice and (b) with respect to an L/C Credit
Extension, a L/C Application.

 

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the Aggregate Commitments or, if the commitment of each Lender to
make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions
have been terminated pursuant to Section 8.2, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations being
deemed “held” by such Lender for purposes of this definition); provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Required Lenders.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party.  Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other equity
interest of Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other equity interest or of any option,
warrant or other right to acquire any such capital stock or other equity
interest or any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to any Subordinated Indebtedness.

 

“Securities Account” means an account to which a financial asset is or may be
credited in accordance with an agreement under which the Person maintaining the
account undertakes to treat the Person for whom the account is maintained as
entitled to exercise the rights that comprise the financial asset.

 

“Security Agreement” means the Security Agreement by and among Borrower,
Guarantors, the Agent and each of the other grantors party thereto executed and
delivered on the Closing Date, substantially in the form of Exhibit F annexed
hereto, as such Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time.

 

“Senior Debt” means, as of any date of determination, Funded Debt as at such
date minus Subordinated Indebtedness as at such date.

 

“Senior Debt to EBITDA Ratio” means, as at any date of determination, the ratio
of Senior Debt as at such date to EBITDA for the consecutive four fiscal
quarters ending on the last day of the most recently ended fiscal quarter.

 

“Solvency Certificate” means an officer’s certificate of each Loan Party
substantially in the form of Exhibit J with appropriate attachments.

 

“Solvent”, with respect to any Person, means that as of the date of
determination both (i)(a) the then fair saleable value of the tangible and
intangible property of such Person, including Capital Stock owned by such
Person, is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount that
will be required to pay the probable liabilities on such Person’s then existing
debts as they become absolute and due considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or reasonably believe that it will incur, debts beyond its ability to pay
such debts as they become due; and (ii) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances.  For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Specified Event” has the meaning assigned to such term in the definition of the
term Material Adverse Effect.

 

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“Subordinated Indebtedness” means unsecured Indebtedness incurred by Borrower or
any Subsidiary to the sellers in connection with any Permitted Acquisition or
otherwise in accordance with Section 7.3(e), the terms of which Indebtedness
(including the covenants, events of default and subordination provisions
thereof) and all documentation relating thereto shall be in form and substance
satisfactory to Agent and Required Lenders, it being understood that there shall
be no payments of any kind thereunder (other than payment of scheduled interest,
the amounts and frequency of which are acceptable to Agent and other Required
Lenders and other payments (if any) acceptable to Agent and Required Lenders) 
prior to the seventeen month anniversary after the Maturity Date then in effect
and all payments thereunder shall be subordinated in right of payment to the
Obligations pursuant to subordination provisions acceptable to Agent and
Required Lenders in their sole discretion.

 

“Subordinated Liabilities” means liabilities subordinated to the Obligations in
a manner acceptable to Agent in its sole discretion.

 

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

 

“Subsidiary Guarantor” or “Guarantor” means, collectively, Pacific Biotech,
Inc., a California corporation, Metra Biosystems, Inc., a California
corporation, Osteo Sciences Corporation, an Oregon corporation and Litmus
Concepts, Inc., a California corporation and any other Subsidiary of Borrower
that executes and delivers a counterpart of the Guaranty from time to time after
the Closing Date in accordance with Section 6.13.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

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

 

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

 

“Taxes” has the meaning specified in Section 3.1(a).

 

“Threshold Amount” means $1,000,000.

 

“Total Liabilities” means the sum of current liabilities plus long term
liabilities.

 

“Total Consideration” means, with respect to any Acquisition, (without
duplication) the sum of (a) the total amount of cash paid in connection with
such Acquisition, (b) all Indebtedness incurred in connection with such
Acquisition, (c) the amount of direct and contingent liabilities assumed in
connection with such Acquisition (excluding normal trade payables, accruals and
indemnities), (d) the amount of Indebtedness payable to the seller in connection
with such Acquisition, (e) the value of payments that Borrower or a Subsidiary
is obligated to make in the future under any covenant not to compete, consulting
agreements, “earn-up” or “earn-out” agreements and other deferred payment
obligations incurred in connection with any Acquisition accrued in accordance
with GAAP, and (f) the amounts paid or to be paid under “earn-out” and “earn-up”
agreements and similar contingent payment agreements in connection with such
Acquisition, as reasonably estimated by the Borrower and satisfactory to the
Agent in its reasonable discretion.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan or an IBOR Rate Loan.

 

“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction.

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

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

 

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“Unreimbursed Amount” has the meaning specified in Section 2.3(c)(i).

 

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

 

(a)           The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

 

(b)           The words “herein,” “hereto,” “hereof” and “hereunder” and words
of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.

 

(i)            Article, Section, Exhibit and Schedule references are to the Loan
Document in which such reference appears.

 

(ii)           The term “including” is by way of example and not limitation.

 

(iii)          The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

(iv)          any reference in this Agreement or any other Loan Document to any
law, statute, regulation, rule or other legislative action shall mean such law,
statute, regulation, rule or other legislative action as amended, supplemented,
restated or otherwise modified from time to time and any successor thereto, and
shall include any rule or regulation promulgated thereunder

 

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

 

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

 

1.3          Accounting Terms.

 

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

 

(b)           If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower
shall negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such

 

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change in GAAP (subject to the approval of the Required Lenders); provided that,
until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) Borrower shall
provide to Agent and Lenders financial statements and other documents required
under this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.

 

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

 

1.5          References to Agreements and Laws.  Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

 

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

 

1.7          Letter of Credit Amounts.  Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to mean the maximum face amount of such Letter of Credit after giving
effect to all increases thereof contemplated by such Letter of Credit or the
Issuer Documents related thereto, whether or not such maximum face amount is in
effect at such time.

 

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.1          Loans.  Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a “Loan”) to Borrower
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect to any
Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any
Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations shall not exceed such Lender’s Commitment.  Within the limits of
each Lender’s Commitment, and subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.1, prepay under Section 2.5, and
reborrow under this Section 2.1.  Loans may be Base Rate Loans or Eurodollar
Rate Loans or IBOR Rate Loans, as further provided herein.

 

The amount of each Lender’s Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the original Aggregate Commitment is
$30,000,000; provided that the

 

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amount of the Commitments of each Lender shall be adjusted to give effect to any
assignments of such Commitments pursuant to Section 10.7 and shall be reduced
from time to time by the amount of any reductions thereto made pursuant to
Section 2.5.  Each Lender’s Commitment shall expire immediately and without
further action on the Maturity Date and all Loans and all other amounts owed
hereunder with respect to the Loans and the Commitments shall be paid in full no
later than that date.

 

2.2          Borrowings, Conversions and Continuations of Loans.

 

(a)           Each Borrowing, each conversion of Loans from one Type to the
other, and each continuation of Eurodollar Rate Loans or IBOR Rate Loans shall
be made upon Borrower’s irrevocable notice to Agent, which may be given by
telephone.  Each such notice must be received by Agent not later than 11:00 a.m.
(i) three Business Days (in the case of Eurodollar Rate Loans) or one Business
Day (in the case of IBOR Rate Loans) prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or IBOR
Rate Loans or of any conversion of Eurodollar Rate Loans or IBOR Rate Loans to
Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans.  Borrower shall have the option to borrow or continue IBOR Rate Loans or
convert Loans into IBOR Rate Loans only so long as Bank of America, N.A. is the
sole Lender under this Agreement.  Each telephonic notice by Borrower pursuant
to this Section 2.2(a) must be confirmed promptly by delivery to Agent of a
written Loan Notice, appropriately completed and signed by a Responsible Officer
of Borrower.  Each Borrowing of, conversion to or continuation of Eurodollar
Rate Loans or IBOR Rate Loans shall be in a principal amount of $2,000,000 or a
whole multiple of $500,000 in excess thereof.  Except as provided in Sections
2.3(c) and 2.4(c), each Borrowing of or conversion to Base Rate Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof.  Each Loan Notice (whether telephonic or written) shall specify
(i) whether Borrower is requesting a Borrowing, a conversion of Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans or IBOR Rate
Loans, (ii) the requested date of the Borrowing, conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal amount of
Loans to be borrowed, converted or continued, (iv) the Type of Loans to be
borrowed or to which existing Loans are to be converted, and (v) if applicable,
the duration of the Interest Period with respect thereto.  If Borrower fails to
specify a Type of Loan in a Loan Notice or if Borrower fails to give a timely
notice requesting a conversion or continuation, then the applicable Loans shall
be made as, or converted to, Base Rate Loans.  Any such automatic conversion to
Base Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable Eurodollar Rate Loans or IBOR Rate
Loans.  If Borrower requests a Borrowing of, conversion to, or continuation of
Eurodollar Rate Loans or IBOR Rate Loans in any such Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.

 

(b)           Following receipt of a Loan Notice, Agent shall promptly notify
each Lender of the amount of its Pro Rata Share of the applicable Loans, and if
no timely notice of a conversion or continuation is provided by Borrower, Agent
shall notify each Lender of the details of any automatic conversion to Base Rate
Loans described in the preceding subsection.  In the case of a Borrowing, each
Lender shall make the amount of its Loan available to Agent in immediately
available funds at Agent’s Office not later than 1:00 p.m. on the Business Day

 

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specified in the applicable Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.2 (and, if such Borrowing is the initial
Credit Extension, Section 4.1), Agent shall make all funds so received available
to Borrower in like funds as received by Agent either by (i) crediting the
account of Borrower on the books of Bank of America with the amount of such
funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) Agent by Borrower;
provided, however, that if, on the date the Loan Notice with respect to such
Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the
proceeds of such Borrowing first, shall be applied, to the payment in full of
any such L/C Borrowings, and second, shall be made available to Borrower as
provided above.

 

(c)           Except as otherwise provided herein, a Eurodollar Rate Loan or
IBOR Rate Loan may be continued or converted only on the last day of an Interest
Period for such Eurodollar Rate Loan or IBOR Rate Loan, as applicable.  During
the existence of a Default, no Loans may be requested as, converted to or
continued as Eurodollar Rate Loans or IBOR Rate Loans without the consent of the
Required Lenders, and during the existence of an Event of Default, the Required
Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans
or IBOR Rate Loans be converted immediately to Base Rate Loans and Borrower
agrees to pay all amounts due under Section 3.5 in accordance with the terms
thereof due to any such conversion.

 

(d)           Agent shall promptly notify Borrower and Lenders of the interest
rate applicable to any Interest Period for Eurodollar Rate Loans or IBOR Rate
Loans upon determination of such interest rate.  The determination of the
Eurodollar Rate or the IBOR Rate by Agent shall be conclusive in the absence of
manifest error.

 

(e)           After giving effect to all Borrowings, all conversions of Loans
from one Type to the other, and all continuations of Loans as the same Type,
there shall not be more than 6 Interest Periods in effect with respect to Loans.

 

2.3          Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions set forth herein, (A) the L/C
Issuer agrees, in reliance upon the agreements of the other Lenders set forth in
this Section 2.3, (1) from time to time on any Business Day during the period
from the Closing Date until the day that is thirty days prior to the Maturity
Date, to issue Letters of Credit for the account of Borrower or its
Subsidiaries, and to amend or extend Letters of Credit previously issued by it,
in accordance with subsection (b) below, and (2) to honor drawings under the
Letters of Credit; and (B) the Lenders severally agree to participate in Letters
of Credit issued for the account of Borrower or its Subsidiaries and any
drawings thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Total Outstandings shall
not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of
the Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all L/C Obligations shall

 

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not exceed such Lender’s Commitment, or (z) the Outstanding Amount of the L/C
Obligations shall not exceed the L/C Sublimit.  Each request by Borrower for the
issuance or amendment of a Letter of Credit shall be deemed to be a
representation by Borrower that the L/C Credit Extension so requested complies
with the conditions set forth in the proviso to the preceding sentence.  Within
the foregoing limits, and subject to the terms and conditions hereof, Borrower’s
ability to obtain Letters of Credit shall be fully revolving,  and accordingly
Borrower may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and reimbursed.

 

(ii)           The L/C Issuer shall not issue any Letter of Credit, if:

 

(A)          subject to Section 2.3(b)(iv), the expiry date of such requested
commercial Letter of Credit would occur more than twelve months after the date
of issuance or last extension or such standby Letter of Credit would occur more
than twenty-four months after the date of issuance or last extension, unless the
Required Lenders have approved such expiry date; or

 

(B)           the expiry date of such requested Letter of Credit would occur
after the L/C Expiration Date, unless all the Lenders have approved such expiry
date.

 

(C)           the expiry date of such requested Letter of Credit would occur
after the Maturity Date, unless Borrower shall have Cash Collateralized 105% of
the maximum aggregate L/C Obligations of such Letter of Credit.

 

(iii)          The L/C Issuer shall be under no obligation to issue any Letter
of Credit if:

 

(A)          any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from
issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Closing Date
and which the L/C Issuer in good faith deems material to it;

 

(B)           the issuance of such Letter of Credit would violate any Laws or
one or more policies of the L/C Issuer;

 

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(C)           except as otherwise agreed by Agent and the L/C Issuer, such
Letter of Credit is in an initial face amount less than $100,000, in the case of
a commercial Letter of Credit, or $500,000, in the case of a standby Letter of
Credit;

 

(D)          such Letter of Credit is to be denominated in a currency other than
Dollars; or

 

(E)           a default of any Lender’s obligations to fund under Section 2.3(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into satisfactory arrangements with Borrower or such
Lender to eliminate the L/C Issuer’s risk with respect to such Lender; or

 

(F)           such Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder.

 

(iv)          The L/C Issuer shall not amend any Letter of Credit if the L/C
Issuer would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof.

 

(v)           The L/C Issuer shall be under no obligation to amend any Letter of
Credit if (A) the L/C Issuer would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

 

(b)           Procedures for Issuance and Amendment of Letters of Credit;
Extension of Letters of Credit.

 

(i)            Each Letter of Credit shall be issued or amended, as the case may
be, upon the request of Borrower delivered to the L/C Issuer (with a copy to
Agent) in the form of a L/C Application, appropriately completed and signed by a
Responsible Officer of Borrower.  Such L/C Application must be received by the
L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or
such later date and time as Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the case of a request for an initial
issuance of a Letter of Credit, such L/C Application shall specify in form and
detail satisfactory to the L/C Issuer:  (A) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the L/C Issuer may require.  In the case of a request for an
amendment of any outstanding Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to the L/C

 

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Issuer (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C Issuer may require. 
Additionally, Borrower shall furnish to the L/C Issuer and Agent such other
documents and information pertaining to such requested Letter of Credit issuance
or amendment, including any Issuer Documents, as the L/C Issuer or Agent may
require.

 

(ii)           Promptly after receipt of any L/C Application at the address set
forth in Section 10.2 for receiving L/C Applications and related correspondence,
the L/C Issuer will confirm with Agent (by telephone or in writing) that Agent
has received a copy of such L/C Application from Borrower and, if not, the L/C
Issuer will provide Agent with a copy thereof.  Unless the L/C Issuer has
received written notice from any Lender, Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions in Article
IV shall not then be satisfied, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of Borrower (or the applicable Subsidiary) or enter into the
applicable amendment, as the case may be, in each case in accordance with the
L/C Issuer’s usual and customary business practices.  Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk
participation in such Letter of Credit in an amount equal to the product of such
Lender’s Pro Rata Share times the amount of such Letter of Credit.

 

(iii)          Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, the L/C Issuer will also deliver to Borrower and Agent
a true and complete copy of such Letter of Credit or amendment.

 

(iv)          If Borrower so requests in any applicable L/C Application, the L/C
Issuer may, in its sole and absolute discretion, agree to issue a standby Letter
of Credit that has automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided that any such Auto-Extension Letter of Credit must
permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Non-Extension Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued.  Unless otherwise directed by
the L/C Issuer, Borrower shall not be required to make a specific request to the
L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the extension of such Letter of Credit at any
time to an expiry date not later than the day that is thirty days prior to the
Maturity Date; provided, however, that the L/C Issuer shall not permit any such
extension if (A) the L/C Issuer has determined that it would not be permitted,
or would have no obligation, at such

 

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time to issue such Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of Section
2.3(a) or otherwise), or (B) it has received notice (which may be by telephone
or in writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from Agent that the Required Lenders have elected
not to permit such extension or (2) from Agent, any Lender or any Loan Party
that one or more of the applicable conditions specified in Section 4.2 is not
then satisfied, and in each such case directing the L/C Issuer not to permit
such extension.

 

(v)           If any Letter of Credit contains provisions providing for
automatic reinstatement of the stated amount after any drawing thereunder,
(A) unless otherwise directed by the L/C Issuer, Borrower shall not be required
to make a specific request to the L/C Issuer to permit such reinstatement, and
(B) Agent and the Lenders hereby authorize and direct the L/C Issuer to permit
such automatic reinstatement, whether or not a Default then exists, unless the
L/C Issuer has received a notice (which may be by telephone or in writing) on or
before the day that is two Business Days before the reinstatement date from
Agent, the Required Lenders or any Loan Party that one or more of the applicable
conditions specified in Section 4.2 is not then satisfied and directing the L/C
Issuer to cease permitting such automatic reinstatement of such Letter of
Credit.

 

(c)           Drawings and Reimbursements; Funding of Participations.

 

(i)            Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the L/C Issuer shall notify
Borrower and Agent thereof.  Not later than 11:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), Borrower shall reimburse the L/C Issuer through Agent in an amount equal
to the amount of such drawing.  If Borrower fails to so reimburse the L/C Issuer
by such time, Agent shall promptly notify each Lender of the Honor Date, the
amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount
of such Lender’s Pro Rata Share thereof.  In such event, Borrower shall be
deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the
Honor Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.2 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of the Aggregate
Commitments and the conditions set forth in Section 4.2 (other than the delivery
of a Loan Notice).  Any notice given by the L/C Issuer or Agent pursuant to this
Section 2.3(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

 

(ii)           Each Lender (including Lender acting as L/C Issuer) shall upon
any notice pursuant to Section 2.3(c)(i) make funds available to Agent for the
account of the L/C Issuer at the Agent’s Office in an amount equal to its Pro
Rata Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by Agent, whereupon, subject to the provisions of
Section 2.3(c)(iii),

 

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each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to Borrower in such amount.  Agent shall remit the funds so received
to the L/C Issuer.

 

(iii)          With respect to any Unreimbursed Amount that is not fully
refinanced by a Borrowing of Base Rate Loans because the conditions set forth in
Section 4.2 cannot be satisfied or for any other reason, Borrower shall be
deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be
due and payable on demand (together with interest) and shall bear interest at
the Default Rate.  In such event, each Lender’s payment to Agent for the account
of the L/C Issuer pursuant to Section 2.3(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.3.

 

(iv)          Until each Lender funds its Loan or L/C Advance pursuant to this
Section 2.3(c) to reimburse the L/C Issuer for any amount drawn under any Letter
of Credit, interest in respect of such Lender’s Pro Rata Share of such amount
shall be solely for the account of the L/C Issuer.

 

(v)           Each Lender’s obligation to make Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.3(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of a Default, or (C) any other occurrence,
event or condition, whether or not similar to any of the foregoing; provided,
however, that each Lender’s obligation to make Loans pursuant to this Section
2.3(c) is subject to the conditions set forth in Section 4.2 (other than
delivery by Borrower of a Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

 

(vi)          If any Lender fails to make available to Agent for the account of
the L/C Issuer any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.3(c) by the time specified in Section
2.3(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting
through Agent), on demand, such amount with interest thereon for the period from
the date such payment is required to the date on which such payment is
immediately available to the L/C Issuer at a rate per annum equal to the Federal
Funds Rate from time to time in effect.  A certificate of the L/C Issuer
submitted to any Lender (through Agent) with respect to any amounts owing under
this clause (vi) shall be conclusive absent manifest error.

 

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(d)           Repayment of Participations.

 

(i)            At any time after the L/C Issuer has made a payment under any
Letter of Credit and has received from any Lender such Lender’s L/C Advance in
respect of such payment in accordance with Section 2.3(c), if Agent receives for
the account of the L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by Agent), Agent will
distribute to such Lender its Pro Rata Share thereof (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which such
Lender’s L/C Advance was outstanding) in the same funds as those received by
Agent.

 

(ii)           If any payment received by Agent for the account of the L/C
Issuer pursuant to Section 2.3(c)(i) is required to be returned under any of the
circumstances described in Section 10.6 (including pursuant to any settlement
entered into by the L/C Issuer in its discretion), each Lender shall pay to
Agent for the account of the L/C Issuer its Pro Rata Share thereof on demand of
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect.

 

(e)           Obligations Absolute.  The obligation of Borrower to reimburse the
L/C Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:

 

(i)            any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other Loan Document;

 

(ii)           the existence of any claim, counterclaim, set-off, defense or
other right that Borrower or any Subsidiary may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under such Letter of Credit;

 

(iv)          any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,

 

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debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

 

(v)           any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, Borrower or any
Subsidiary.

 

Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower’s instructions or other irregularity, Borrower will
immediately notify the L/C Issuer.  Borrower shall be conclusively deemed to
have waived any such claim against the L/C Issuer and its correspondents unless
such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each Lender and Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer,
any Agent-Related Person nor any of the respective correspondents, participants
or assignees of the L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted
in the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or L/C Application.  Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude Borrower’s pursuing such
rights and remedies as it may have against the beneficiary or transferee at law
or under any other agreement.  None of the L/C Issuer, any Agent-Related Person,
nor any of the respective correspondents, participants or assignees of the L/C
Issuer, shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.3(e); provided, however, that anything in
such clauses to the contrary notwithstanding, Borrower may have a claim against
the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by Borrower which Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit.  In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.

 

36

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(g)           Cash Collateral.  Upon the request of Agent, (i) if the L/C Issuer
has honored any full or partial drawing request under any Letter of Credit and
such drawing has resulted in an L/C Borrowing, or (ii) if, as of the day that is
thirty days prior to the Maturity Date, any Letter of Credit for any reason
remains outstanding and partially or wholly undrawn, Borrower shall immediately
Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an
amount equal to such Outstanding Amount determined as of the date of such L/C
Borrowing or the day that is thirty days prior to the Maturity Date, as the case
may be).  Sections 2.3(a), 2.5 and 8.2(c) set forth certain additional
requirements to deliver Cash Collateral hereunder.  For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to Agent, for the
benefit of the L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to Agent and the L/C Issuer (which documents are
hereby consented to by Lenders).  Derivatives of such term have corresponding
meanings.  Borrower hereby grants to Agent, for the benefit of the L/C Issuer
and Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing.  Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of America.

 

(h)           Applicability of ISP98 and UCP.  Unless otherwise expressly agreed
by the L/C Issuer and Borrower when a Letter of Credit is issued, (i) the rules
of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce (the “ICC”) at the time of
issuance shall apply to each commercial Letter of Credit.

 

(i)            L/C Fees.  Borrower shall pay to Agent for the account of each
Lender in accordance with its Pro Rata Share an L/C fee (the “L/C Fee”) (i) for
each commercial Letter of Credit equal to the then applicable commercial letter
of credit fees of the L/C Issuer then in effect, and (ii) for each standby
Letter of Credit equal to the Applicable Rate times the daily maximum amount
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit).  L/C Fees shall be
(i) computed on a quarterly basis in arrears and (ii) due and payable on the
first Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the L/C Expiration Date and thereafter on demand.  If there is any
change in the Applicable Rate during any quarter, the daily maximum amount of
each standby Letter of Credit shall be computed and multiplied by the Applicable
Rate separately for each period during such quarter that such Applicable Rate
was in effect.  Notwithstanding anything to the contrary contained herein, upon
the request of the Required Lenders, while any Event of Default exists, all L/C
Fees shall accrue at the Default Rate.

 

(j)            Fronting Fee and Documentary and Processing Charges Payable to
L/C Issuer.  During the time that there are two or more Lenders party to this
Agreement, Borrower shall pay directly to the L/C Issuer for its own account a
fronting fee with respect to each Letter of Credit in the amounts equal to 1/8
of 1% per annum, payable on the actual daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is then in
effect under such Letter of Credit).  Such fronting fee shall be due and payable
on the first Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of

 

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Credit, on the L/C Expiration Date and thereafter on demand.  In addition,
without regard to the number of Lenders party to this Agreement, Borrower shall
pay directly to the L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of the L/C Issuer relating to letters of credit as from time to time in
effect.  Such individual customary fees and standard costs and charges are due
and payable on demand and are nonrefundable.

 

(k)           Conflict with Issuer Documents.  In the event of any conflict
between the terms hereof and the terms of any Issuer Documents, the terms hereof
shall control.

 

(l)            Letters of Credit Issued for Subsidiaries.  Notwithstanding that
a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, Borrower shall be
obligated to reimburse the L/C Issuer hereunder for any and all drawings under
such Letter of Credit.  Borrower hereby acknowledges that the issuance of
Letters of Credit for the account of Subsidiaries inures to the benefit of
Borrower, and that Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.

 

2.4          Intentionally Deleted.

 

2.5          Prepayments.

 

(a)           Voluntary Prepayments.  Borrower may, upon notice to Agent, at any
time or from time to time voluntarily prepay Loans in whole or in part without
premium or penalty; but with accrued interest thereon and any amounts due under
Section 3.5, provided that (i) such notice must be received by Agent not later
than 11:00 a.m. (A) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans or IBOR Rate Loans and (B) on the date of prepayment of
Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans or IBOR Rate Loans
shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in
excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid.  Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender’s Pro Rata Share of such prepayment.  If such notice is given by
Borrower, Borrower shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein.  Any
prepayment of a Eurodollar Rate Loan or IBOR Rate Loan shall be accompanied by
all accrued interest thereon, together with any additional amounts required
pursuant to Section 3.5.  Each such prepayment shall be applied to the Loans of
Lenders in accordance with their respective Pro Rata Shares.

 

(b)           Intentionally Deleted.

 

(c)           Mandatory Prepayments from Excess Utilization.  If for any reason
the Total Outstandings at any time exceed the Aggregate Commitments then in
effect, Borrower shall immediately prepay Loans but with accrued interest
thereon and any amounts due under Section 3.5, and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to

 

38

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such excess; provided, however, that Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.5(c) unless after
the prepayment in full of the Loans the Total Outstandings exceed the Aggregate
Commitments then in effect.

 

(d)           Mandatory Prepayments and Mandatory Reductions of Commitments. 
The Loans shall be prepaid and/or the Aggregate Commitments shall be permanently
reduced in the amounts and under the circumstances set forth below, and all such
prepayments and/or reductions to be applied as set forth below or as more
specifically provided in Section 2.5(e)(ii):

 

(i)            Mandatory Prepayments and Reductions From Net Asset Sale
Proceeds.  No later than the date of receipt by Borrower or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale,
Borrower shall either (1) prepay Loans and/or permanently reduce the Aggregate
Commitments in accordance with Section 2.5(e)(ii), in each case, in an aggregate
amount equal to such Net Asset Sale Proceeds or (2), so long as no Default or
Event of Default shall have occurred and be continuing and to the extent that
the aggregate Net Asset Sale Proceeds from the Closing Date through the date of
determination that are so reinvested or proposed to be so reinvested under this
Section 2.5(d)(i) (together with the aggregate Net Insurance/Condemnation
Proceeds similarly applied from the Closing Date through the date of
determination under Section 2.5(d)(ii) or Section 6.6(b)(ii)) do not exceed
$1,500,000 (plus the Net Asset Sale Proceeds from the Permitted Sale not
exceeding $500,000 to the extent such Net Asset Sale Proceeds are so
reinvested), deliver to Agent an officer’s certificate setting forth (x) that
portion of such Net Asset Sale Proceeds that Borrower or such Subsidiary intends
to reinvest in equipment or other productive assets of the general type used in
the business of Borrower and its Subsidiaries within 180 days of such date of
receipt and (y) the proposed use of such portion of the Net Asset Sale Proceeds
and such other information with respect to such reinvestment as Agent may
reasonably request, and Borrower shall, or shall cause one or more of its
Subsidiaries to, promptly and diligently apply such portion to such reinvestment
purposes; provided, however, that, pending such reinvestment, such portion of
the Net Asset Sale Proceeds shall be applied to prepay outstanding Loans
(without a reduction in the Aggregate Commitments) to the full extent thereof. 
In addition, Borrower shall, no later than 180 days after receipt of such Net
Asset Sale Proceeds that have not theretofore been applied to the Obligations
hereunder or that have not been so reinvested as provided above, make an
additional prepayment of the Loans (and/or the Aggregate Commitments shall be
permanently reduced) as set forth above in the full amount of all such Net Asset
Sale Proceeds.

 

(ii)           Prepayments and Reductions from Net Insurance/Condemnation
Proceeds.  No later than three (3) Business Days following the date of receipt
by Agent, Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds that are required to be applied to prepay the Loans and/or reduce the
Aggregate Commitments pursuant to Section 6.6(b), Borrower shall either
(1) prepay Loans and/or permanently reduce the Aggregate Commitments in

 

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accordance with Section 2.5(e)(ii), in each case, in an aggregate amount equal
to such Net Insurance/Condemnation Proceeds or (2), so long as no Default or
Event of Default shall have occurred and be continuing and to the extent that
the aggregate Net Insurance/Condemnation Proceeds from the Closing Date through
the date of determination that are so reinvested or proposed to be so reinvested
under this Section 2.5(d)(ii) or under Section 6.6(b)(ii) (together with the
aggregate Net Asset Sale Proceeds similarly applied from the Closing Date
through the date of determination under Section 2.5(d)(i)) do not exceed
$1,500,000 (plus the Net Asset Sale Proceeds from the Permitted Sale not
exceeding $500,000 to the extent such Net Asset Sale Proceeds are so
reinvested), deliver to Agent an officer’s certificate setting forth (x) that
portion of such Net Insurance/Condemnation Proceeds that Borrower or such
Subsidiary intends to reinvest in equipment or other productive assets of the
general type used in the business of Borrower and its Subsidiaries within 180
days of such date of receipt and (y) the proposed use of such portion of the Net
Insurance/Condemnation Proceeds and such other information with respect to such
reinvestment as Agent may reasonably request, and Borrower shall, or shall cause
one or more of its Subsidiaries to, promptly and diligently apply such portion
to such reinvestment purposes; provided, however, that, pending such
reinvestment, such portion of the Net Insurance/Condemnation Proceeds shall be
applied to prepay outstanding Loans (without a reduction in the Aggregate
Commitments) to the full extent thereof.  In addition, Borrower shall, no later
than 180 days after receipt of such Net Insurance/Condemnation Proceeds that
have not theretofore been applied to the Obligations hereunder or that have not
been so reinvested as provided above, make an additional prepayment of the Loans
(and/or the Aggregate Commitments shall be permanently reduced) as set forth
above in the full amount of all such Net Insurance/Condemnation Proceeds.

 

(e)           Application of Prepayments and Reductions of Aggregate
Commitments.

 

(i)            Application of Voluntary Prepayments by Type of Loans.  Any
voluntary prepayments pursuant to Section 2.5(a) shall be applied as specified
by Borrower in the applicable notice of prepayment; provided that in the event
Borrower fails to specify the Type of Loans to which any such prepayment shall
be applied, such prepayment shall be applied to repay Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans and IBOR Rate
Loans, in each case in a manner that minimizes the amount of any payment
required to be made by Borrower pursuant to Section 3.5.

 

(ii)           Application of Mandatory Prepayments by Type of Loans.  Except as
provided in Section 2.5(c), any amount required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Aggregate Commitments shall be
applied first to prepay the Loans to the full extent thereof and to permanently
reduce the Aggregate Commitments by the amount of such prepayment, and second,
to the extent of any remaining portion of such amount, to further permanently
reduce the Aggregate Commitments to the full extent thereof.  Any

 

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mandatory prepayments pursuant to this Section 2.5 shall be applied as specified
by Borrower in written notice to Agent; provided that in the event Borrower
fails to specify the Type of Loan to which any such prepayment shall be applied,
such prepayment shall be applied to repay Base Rate Loans to the full extent
thereof before application to Eurodollar Rate Loans and IBOR Rate Loans, in each
case in a manner that minimizes the amount of any payment required to be made by
Borrower pursuant to Section 3.5.  Any mandatory reduction of the Aggregate
Commitments pursuant to this Section 2.5(e) shall be in proportion to each
Lender’s Pro Rata Share.

 

2.6          Termination or Reduction of Commitments.  Borrower may, upon notice
to Agent, terminate the Aggregate Commitments, or from time to time permanently
reduce the Aggregate Commitments; provided that (i) any such notice shall be
received by Agent not later than 11:00 a.m. five Business Days prior to the date
of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) Borrower shall not terminate or reduce the Aggregate Commitments
if, after giving effect thereto and to any concurrent prepayments hereunder, the
Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after
giving effect to any reduction of the Aggregate Commitments, the L/C Sublimit
exceeds the amount of the Aggregate Commitments, such Sublimit shall be
automatically reduced by the amount of such excess.  Agent will promptly notify
the Lenders of any such notice of termination or reduction of the Aggregate
Commitments.  Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Lender according to its Pro Rata Share.  All fees accrued
until the effective date of any termination of the Aggregate Commitments shall
be paid on the effective date of such termination.

 

2.7          Repayment of Loans.  Borrower shall repay to Lenders on the
Maturity Date the aggregate principal amount of Loans outstanding on such date.

 

2.8          Interest.

 

(a)           Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; (ii) each IBOR Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the IBOR Rate for such Interest
Period plus the Applicable Rate and (iii) each Base Rate Loan shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

 

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

 

(ii)           If any amount (other than principal of any Loan) payable by
Borrower under any Loan Document is not paid when due (without regard to any

 

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applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then upon the request of the Required Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required Lenders, while any Event of
Default exists, Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

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

 

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

 

2.9          Fees.  In addition to certain fees described in subsections (i) and
(j) of Section 2.3:

 

(a)           Commitment Fee.  Borrower shall pay to Agent for the account of
each Lender in accordance with its Pro Rata Share, a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate Commitments
exceed the sum of (i) the Outstanding Amount of Loans and (ii) the Outstanding
Amount of L/C Obligations.  The commitment fee shall accrue at all times during
the Availability Period, including at any time during which one or more of the
conditions in Article IV is not met, and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the Closing Date, and on the
Maturity Date.  The commitment fee shall be calculated quarterly in arrears, and
if there is any change in the Applicable Rate during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.

 

(b)           Agent’s Fees.  Borrower shall pay to Agent for Agent’s own
account, fees in the amounts and at the times specified in the letter agreement,
dated as of January 31, 2005 (the “Agent Fee Letter”), between Borrower and
Agent.  Such fees shall be fully earned when paid and shall be nonrefundable for
any reason whatsoever.

 

2.10        Computation of Interest and Fees.  All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America’s “prime
rate” shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed.  All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year).  Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or

 

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such portion is paid, provided that any Loan that is repaid on the same day on
which it is made shall, subject to Section 2.12(a), bear interest for one day.

 

2.11        Evidence of Debt.

 

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

 

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

 

2.12        Payments Generally.

 

(a)(i)        All payments to be made by Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff. 
Except as otherwise expressly provided herein, all payments by Borrower
hereunder shall be made to Agent, for the account of the respective Lenders to
which such payment is owed, at the Agent’s Office in Dollars and in immediately
available funds not later than 12:00 noon on the date specified herein.  Agent
will promptly distribute to each Lender its Pro Rata Share (or other applicable
share as provided herein) of such payment in like funds as received by wire
transfer to such Lender’s Lending Office.  All payments received by Agent after
12:00 noon shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.

 

(a)(ii)On each date when the payment of any principal, interest or fees are due
hereunder or under any Note, Borrower agrees to maintain on deposit in an
ordinary checking account maintained by Borrower with Agent (as such account
shall be designated by Borrower in a written notice to Agent from time to time,
the “Borrower Account”) an amount sufficient to pay such principal, interest or
fees in full on such date.  Borrower hereby authorizes Agent (A) to deduct
automatically all principal, interest or fees when due hereunder or under any
Note from the Borrower Account, and (B) if and to the extent any payment of
principal, interest or fees under this Agreement or any Note is not made when
due to deduct any such amount from any or all of the accounts of Borrower
maintained at Agent.  Agent agrees to provide written notice to

 

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Borrower of any automatic deduction made pursuant to this Section 2.12(a)(ii)
showing in reasonable detail the amounts of such deduction.  Lenders agree to
reimburse Borrower based on their Pro Rata Share for any amounts deducted from
such accounts in excess of amount due hereunder and under any other Loan
Documents.

 

(a)           If any payment to be made by Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.

 

(b)           Unless Borrower or any Lender has notified Agent, prior to the
date any payment is required to be made by it to Agent hereunder, that Borrower
or such Lender, as the case may be, will not make such payment, Agent may assume
that Borrower or such Lender, as the case may be, has timely made such payment
and may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto.  If and to the extent that
such payment was not in fact made to Agent in immediately available funds, then:

 

(i)            if Borrower failed to make such payment, each Lender shall
forthwith on demand repay to Agent the portion of such assumed payment that was
made available to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including the date such amount
was made available by Agent to such Lender to the date such amount is repaid to
Agent in immediately available funds at the Federal Funds Rate from time to time
in effect; and

 

(ii)           if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to Agent the amount thereof in immediately available
funds, together with interest thereon for the period from the date such amount
was made available by Agent to Borrower to the date such amount is recovered by
Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds
Rate from time to time in effect. If such Lender pays such amount to Agent, then
such amount shall constitute such Lender’s Loan included in the applicable
Borrowing.  If such Lender does not pay such amount forthwith upon Agent’s
demand therefor, Agent may make a demand therefor upon Borrower, and Borrower
shall pay such amount to Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest applicable
to the applicable Borrowing.  Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights
which Agent or Borrower may have against any Lender as a result of any default
by such Lender hereunder.

 

A notice of Agent to any Lender or Borrower with respect to any amount owing
under this subsection (c) shall be conclusive, absent manifest error.

 

(c)           If any Lender makes available to Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to Borrower by Agent because the
conditions to the applicable Credit

 

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Extension set forth in Article IV are not satisfied or waived in accordance with
the terms hereof, Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

(d)           The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit are several and not joint.  The failure of
any Lender to make any Loan or to fund any such participation on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.

 

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

 

2.13        Sharing of Payments.  If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it, or the
participations in L/C Obligations held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify Agent of such fact, and (b) purchase
from the other Lenders such participations in the Loans made by them and/or such
subparticipations in the participations in L/C Obligations held by them, as the
case may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Loans or such participations, as the case may
be, pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender under any
of the circumstances described in Section 10.6 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender’s ratable share (according to the proportion of
(i) the amount of such paying Lender’s required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered, without further interest thereon.  Borrower agrees that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.9) with respect to such participation as
fully as if such Lender were the direct creditor of Borrower in the amount of
such participation.  Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments.  Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

 

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ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.1          Taxes.

 

(a)           Any and all payments by Borrower to or for the account of Agent or
any Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of Agent and each
Lender, taxes imposed on or measured by its overall net income, and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which Agent or such Lender, as
the case may be, is organized or maintains a lending office (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred to
as “Taxes”).  If Borrower shall be required by any Laws to deduct any Taxes from
or in respect of any sum payable under any Loan Document to Agent or any Lender,
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), each of Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within 30 days after the date of such payment, Borrower shall
furnish to Agent (which shall forward the same to such Lender) the original or a
certified copy of a receipt evidencing payment thereof.

 

(b)           In addition, Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).

 

(c)           If Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to Agent or
any Lender (excluding Taxes for which Borrower is not responsible under
Section 3.1(e)), Borrower shall also pay to Agent or to such Lender, as the case
may be, at the time interest is paid, such additional amount that Agent or such
Lender specifies is necessary to preserve the after-tax yield (after factoring
in all taxes, including taxes imposed on or measured by net income) that Agent
or such Lender would have received if such Taxes or Other Taxes had not been
imposed.

 

(d)           Borrower agrees to indemnify Agent and each Lender for (i) the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section but
excluding Taxes for which Borrower is not responsible under Section 3.1(e)) paid
by Agent and such Lender, (ii) amounts payable under Section 3.1(c) and
(iii) any liability (including additions to tax, penalties, interest and
expenses) arising therefrom or with respect thereto, in each case whether or not
such Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant

 

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Governmental Authority.  Payment under this subsection (d) shall be made within
30 days after the date Lender or Agent makes a demand therefor.

 

(e)           For any period with respect to which a Lender has failed to
provide Borrower or Agent with the appropriate form as required by Section 10.19
(whether or not such Lender is lawfully able to do so, unless such failure is
due to a change in treaty, law or regulation occurring subsequent to the date on
which such form originally was required to be provided), such Lender shall not
be entitled to indemnification under this Section 3.1 with respect to Taxes
imposed on such Lender; provided that if a Lender, which is otherwise exempt
from withholding tax, becomes subject to Taxes because of its failure to deliver
a form required hereunder, Borrower shall take such steps as such Lender shall
reasonably request, at the Lender’s expense, to assist such Lender to recover
such Taxes.

 

3.2          Illegality.  If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans or IBOR Rate Loans, or to determine or charge interest
rates based upon the Eurodollar Rate or IBOR Rate, then, on notice thereof by
such Lender to Borrower through Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or IBOR Rate Loans or to convert Base Rate Loans
to Eurodollar Rate Loans or IBOR Rate Loans shall be suspended until such Lender
notifies Agent and Borrower that the circumstances giving rise to such
determination no longer exist.  Upon receipt of such notice, Borrower shall,
upon demand from such Lender (with a copy to Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans or IBOR Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans or IBOR Rate Loans
to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans or IBOR Rate Loans.  Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the amount
so prepaid or converted and all amounts due under Section 3.5 in accordance with
the terms thereof due to such prepayment or conversion.  Each Lender agrees to
designate a different Lending Office if such designation will avoid the need for
such notice and will not, in the good faith judgment of such Lender, otherwise
be materially disadvantageous to such Lender.

 

3.3          Inability to Determine Rates.  If Agent determines in connection
with any request for a Eurodollar Rate Loan or IBOR Rate Loan or a conversion to
or continuation thereof for any reason that (a) Dollar deposits are not being
offered to banks in the London interbank Eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan or IBOR Rate Loan,
(b) adequate and reasonable means do not exist for determining the Eurodollar
Base Rate or IBOR Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan or IBOR Rate Loan, as applicable, or (c) that the
Eurodollar Base Rate or IBOR Base Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan or IBOR Rate Loan, as applicable,
does not adequately and fairly reflect the cost to such Lenders of funding such
Loan, Agent will promptly so notify Borrower and each Lender.  Thereafter, the
obligation of Lenders to make or maintain Eurodollar Rate Loans or IBOR Rate
Loans shall be suspended until Agent (upon the instruction of the Required
Lenders) revokes such notice.  Upon receipt of such notice, Borrower may revoke
any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or IBOR Rate Loans or,

 

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failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.

 

3.4          Increased Cost and Reduced Return; Capital Adequacy.

 

(a)           If any Lender determines that as a result of the introduction of
or any change in or in the interpretation of any Law, or such Lender’s
compliance therewith, there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining Eurodollar Rate Loans or IBOR
Rate Loans (as the case may be) or issuing or participating in Letters of
Credit, or a reduction in the amount received or receivable by such Lender in
connection with any of the foregoing (excluding for purposes of this subsection
(a) any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which Section 3.1 shall govern), (ii) changes in the basis of
taxation of overall net income or overall gross income by the United States or
any foreign jurisdiction or any political subdivision of either thereof under
the Laws of which such Lender is organized or has its Lending Office, and
(iii) reserve requirements utilized in the determination of the Eurodollar Rate
or IBOR Rate), then from time to time within 5 days after demand of such Lender
(with a copy of such demand to Agent), Borrower shall pay to such Lender such
additional amounts as will compensate such Lender for such increased cost or
reduction.  If as a result of the foregoing, Borrower is required to pay to any
Lender any additional amounts, such Lender agrees to use commercially reasonable
efforts to designate a different Lending Office if such designation will avoid
such increased cost or reduced return and will not, in the good faith judgment
of such Lender, otherwise be materially disadvantageous to such Lender.

 

(b)           If any Lender determines that the introduction of any Law
regarding capital adequacy or any change therein or in the interpretation
thereof, or compliance by such Lender (or its Lending Office) therewith, has the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender’s
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and such Lender’s desired return on capital), then from time to
time within 5 days after demand of such Lender (with a copy of such demand to
Agent), Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction.

 

3.5          Compensation for Losses.  Upon demand of any Lender (with a copy to
Agent) from time to time, Borrower shall promptly compensate such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

 

(a)           any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or

 

(b)           any failure by Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by Borrower;
including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained.  Borrower shall also pay any
customary administrative fees charged by such Lender in connection with

 

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the foregoing.  For purposes of calculating amounts payable by Borrower to
Lenders under this Section 3.5, each Lender shall be deemed to have funded each
Eurodollar Rate Loan or IBOR Rate Loan made by it at the Eurodollar Base Rate or
IBOR Base Rate used in determining the Eurodollar Rate or IBOR Rate, as
applicable, for such Loan by a matching deposit or other borrowing in the London
interbank Eurodollar market for a comparable amount and for a comparable period,
whether or not such Eurodollar Rate Loan or IBOR Rate Loan was in fact so
funded.

 

3.6          Matters Applicable to all Requests for Compensation.  A certificate
of Agent or any Lender claiming compensation under this Article III and setting
forth the additional amount or amounts to be paid to it hereunder and setting
forth an explanation therefor shall be conclusive in the absence of manifest
error.  In determining such amount, Agent or such Lender may use any reasonable
averaging and attribution methods.

 

3.7          Survival.  All of Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

 

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.1          Conditions of Initial Credit Extension.  The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
of the following conditions precedent:

 

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

 

(i)            executed counterparts of this Agreement and the other Loan
Documents, sufficient in number for distribution to Agent, each Lender and
Borrower;

 

(ii)           a Note executed by Borrower in favor of each Lender requesting a
Note;

 

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

 

(iv)          such documents and certifications as Agent may reasonably require
to evidence that each Loan Party is duly organized or formed (including copies
of Organization Documents of each Loan Party certified by the Secretary of State
of its jurisdiction of incorporation), and that each Loan Party is validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its

 

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ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect;

 

(v)           a favorable opinion of counsel to the Loan Parties substantially
in the form of Exhibits K-1 and K-2 annexed hereto acceptable to Agent addressed
to Agent and each Lender, as to the matters set forth concerning the Loan
Parties and the Loan Documents in form and substance satisfactory to Agent;

 

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

 

(vii)         a certificate signed by a Responsible Officer of Borrower
certifying (A) that the conditions specified in Sections 4.2(a) and (b) have
been satisfied, and (B) other than the filing of the lawsuit described in item
number 1 in Schedule 5.6, that there has been no event or circumstance since
December 31, 2003 that has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;

 

(viii)        evidence that all insurance required to be maintained pursuant to
the Loan Documents has been obtained and is in effect;

 

(ix)           a duly completed Compliance Certificate as of the last day of the
fiscal quarter of Borrower most recently ended prior to the Closing Date, signed
by a Responsible Officer of Borrower, which Compliance Certificate shall show
that Borrower is in compliance with all of the covenants as of such last day;

 

(x)            evidence that all commitments under the Business Loan Agreement
dated August 29, 2002 among Borrower, Comerica Bank, as agent and a syndicate of
lenders (the “Existing Credit Agreement”) have been or concurrently with the
Closing Date are being terminated, and all outstanding amounts thereunder paid
in full and all Liens securing obligations under the Existing Credit Agreement
have been or concurrently with the Closing Date are being released;

 

(xi)           an officers’ certificate of each Loan Party dated the Closing
Date, substantially in the form of Exhibit J annexed hereto and with appropriate
attachments, in each case demonstrating that, after giving effect to the
consummation of the transactions contemplated by the Loan Documents, such Loan
Party on a consolidated basis will be Solvent; and

 

(xii)          such other assurances, certificates, documents, consents or
opinions as Agent, the L/C Issuer or the Required Lenders reasonably may
require.

 

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(b)           Fees.  Any fees required to be paid on or before the Closing Date
shall have been paid.

 

(c)           Attorneys’ Fees.  Unless waived by Agent, Borrower shall have paid
all Attorney Costs of Agent to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute its
reasonable estimate of Attorney Costs incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between Borrower and Agent).

 

(d)           Closing Date.  The Closing Date shall have occurred on or before
January 18, 2005.

 

(e)           No Litigation.  Except as specifically disclosed in Schedule 5.6,
no action, suit, investigation or proceeding shall be pending or threatened in
any court or before any arbitrator or Governmental Authority that purports to
(i) have a Material Adverse Effect on Borrower, or (ii) affect any transaction
contemplated hereunder or the ability of Borrower or any other Loan Party to
perform their respective obligations under the Loan Documents to which they are
a party.

 

(f)            Security Interests in Personal and Mixed Property.  Agent shall
have received evidence satisfactory to it that each Loan Party shall have taken
or caused to be taken all such actions, executed and delivered or caused to be
executed and delivered all such agreements, documents and instruments, and made
or caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (ii), (iii) and (iv) below) that may be
necessary or, in the opinion of Agent, desirable in order to create in favor of
Agent, for the benefit of Lenders, a valid and (upon such filing and recording)
perfected First Priority Lien (except for Liens permitted under clauses (b)
through (i) of Section 7.1) on the entire personal and mixed property
Collateral.  Such actions shall include the following:

 

(i)            Stock Certificates; Instruments.  Delivery to Agent of
(a) certificates (which certificates shall be accompanied by irrevocable undated
stock power, duly endorsed in blank and otherwise satisfactory in form and
substance to Agent) representing all Capital Stock pledged pursuant to the
Security Agreement, and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Agent) evidencing any
Collateral;

 

(ii)           Lien Searches and UCC Termination Statements.  Delivery to Agent
of (a) the results of a recent search, by a Person satisfactory to Agent, of all
effective UCC financing statements and fixture filings and all judgment and tax
lien filings (or similar filings in the applicable foreign jurisdictions) which
may have been made with respect to any personal or mixed property of Borrower or
any Subsidiary that is a Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements (or similar
terminations in the applicable foreign jurisdictions) duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture filings
(or similar

 

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filings in the applicable foreign jurisdictions) disclosed in such search (other
than any such financing statements or fixture filings in respect of Liens
permitted to remain outstanding pursuant to the terms of this Agreement).

 

(iii)          UCC Financing Statements.  Delivery to Agent of UCC financing
statements, with respect to all personal and mixed property Collateral of such
Loan Party, for filing in all jurisdictions as may be necessary or, in the
opinion of Agent, desirable to perfect the security interests created in such
Collateral pursuant to the Collateral Documents; and

 

(iv)          Cover Sheets, Etc.  Delivery to Agent of all cover sheets or other
documents or instruments required to be filed with any IP Filing Office in order
to create or perfect Liens in respect of any IP Collateral, together with
releases duly executed (if necessary) of security interests by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective filings in any IP Filing Office in respect of any IP
Collateral (other than any such filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement).

 

4.2          Conditions to all Credit Extensions.  The obligation of each Lender
to honor any Request for Credit Extension (other than a conversion or
continuation of Loans) is subject to the following conditions precedent:

 

(a)           The representations and warranties of Borrower and each other Loan
Party contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith, shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this Section
4.2, the representations and warranties contained in subsections (a) and (b) of
Section 5.5 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.1.

 

(b)           No Default shall exist, or would result from such proposed Credit
Extension.

 

(c)           Agent and, if applicable, the L/C Issuer shall have received a
Request for Credit Extension in accordance with the requirements hereof.

 

(d)           Agent shall have received, in form and substance satisfactory to
it, such other assurances, certificates, documents or consents related to the
foregoing as Agent or the Required Lenders reasonably may require.

 

Each Request for Credit Extension submitted by Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.2(a) and
(b) have been satisfied on and as of the date of the applicable Credit
Extension.

 

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ARTICLE V REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Agent and the Lenders that:

 

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

 

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

 

5.3          Governmental Authorization; Other Consents.  Except for filings
necessary to perfect Liens granted under the Loan Documents, no approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by any Loan Party of this
Agreement or any other Loan Document.

 

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

 

5.5          Financial Statements; No Material Adverse Effect.

 

(a)           The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its Subsidiaries as of the date thereof
required to be disclosed under GAAP, including liabilities for taxes, material
commitments and Indebtedness.

 

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(b)           The unaudited consolidated balance sheet of Borrower and its
Subsidiaries dated September 30, 2004, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for the fiscal
quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of
Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit adjustments.

 

(c)           Other than the filing of the lawsuit described in item number 1 in
Schedule 5.6, since December 31, 2003, there has been no event or circumstance,
either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.

 

(d)           As of December 31, 2004, the Net Worth of Borrower and its
Subsidiaries on a consolidated basis is at least $80,000,000.

 

5.6          Litigation.  Except as specifically disclosed in Schedule 5.6,
there are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues that
(a) purport to affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby, or (b) either individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.

 

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

 

5.8          Ownership of Property; Liens.  Each of Borrower and each Subsidiary
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The
property of Borrower and its Subsidiaries is subject to no Liens, other than
Liens permitted by Section 7.1.

 

5.9          Environmental Compliance.  Borrower and its Subsidiaries conduct in
the ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 5.9, such Environmental Laws and claims could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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5.10        Insurance.  The properties of Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of Borrower, in such amounts (after giving effect to any self-insurance
compatible with the following standards), with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where Borrower or the applicable
Subsidiary operates.

 

5.11        Taxes.  Borrower and its Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP.  There is no proposed tax
assessment against Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.

 

5.12        ERISA Compliance.

 

(a)           Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws.  Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto or the remedial
amendment period to file such application has not expired and, to the best
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification.  Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

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

 

(c)           (i)  No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

5.13        Subsidiaries.  As of the Closing Date,  Borrower has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.13 and has no
equity investments in any other corporation or entity other than those
specifically disclosed in Part(b) of Schedule 5.13.

 

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Neither the book value nor the fair market value of the total assets of OSC
(without netting against its liabilities and without taking into account any
intercompany loan (if any) receivable by OSC as of the Closing Date and
described in Schedule 7 of the Security Agreement) exceeds $10,000 and OSC does
not and will not engage in any operations or business other than owning its IP
Rights. Neither the book value nor the fair market value of the total assets of
any Dormant Foreign Subsidiary (without netting against its liabilities and
without taking into account any intercompany loan (if any) receivable by such
Dormant Foreign Subsidiary as of the Closing Date and described in Schedule 7 of
the Security Agreement) exceeds $100,000 and none of the Dormant Foreign
Subsidiaries engages in or will engage in any operations or business.

 

5.14        Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.

 

(a)           Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.  No part of the
proceeds of any Credit Extensions hereunder will be used for “purchasing” or
“carrying” “margin stock” as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of Regulations U or X of the
FRB.

 

(b)           None of Borrower, any Person Controlling Borrower, or any
Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

5.15        Disclosure.  Borrower has disclosed to Agent and Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party to Agent or any Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder (as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.

 

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

 

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5.17        Intellectual Property; Licenses, Etc.

Except for the matters described Schedule 5.6:

 

(a)           Borrower and its Subsidiaries own, or possess the right to use,
all of the trademarks, service marks, trade names, copyrights, patents, patent
rights, franchises, licenses and other intellectual property rights
(collectively, “IP Rights”) that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person;

 

(b)           To the best knowledge of Borrower, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Borrower or any Subsidiary
infringes in any material respect upon any rights held by any other Person; and

 

(c)           No claim or litigation regarding any of the foregoing is pending
or, to the best knowledge of Borrower, threatened, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

5.18        Rights in Collateral; Priority of Liens.

 

(a)           Borrower and each other Loan Party own the property granted by it
as Collateral under the Collateral Documents, free and clear of any and all
Liens in favor of third parties, except for Liens permitted under Section 7.1. 
The execution and delivery of the Collateral Documents by Loan Parties and the
delivery to Agent of the Pledged Collateral (all of which Pledged Collateral has
been so delivered) are effective to create in favor of Agent for the benefit of
Lenders, as security for the respective Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected First Priority Lien on all of the Collateral, subject to Liens
permitted under clauses (b) through (i) of Section 7.1, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
first priority status of such Liens have been duly made or taken and remain in
full force and effect, subject to Liens permitted under clauses (b) through (i)
of Section 7.1, other than the filing of any UCC financing statements delivered
to Agent for filing (but not yet filed) and the periodic filing of UCC
continuation statements in respect of UCC financing statements filed by or on
behalf of Agent.  Upon the proper filing of UCC financing statements, and the
taking of the other actions required by the Required Lenders, the Liens granted
pursuant to the Collateral Documents will constitute, subject to Liens permitted
under clauses (b) through (i) of Section 7.1, valid and enforceable first, prior
and perfected Liens on the Collateral in favor of Agent, for the ratable benefit
of Agent and Lenders.

 

(b)           No Governmental Authorization is required for either (i) the
pledge or grant by any Loan Party of the Liens purported to be created in favor
of Agent pursuant to any of the Collateral Documents, or (ii) the exercise by
Agent of any rights or remedies in respect of any Collateral (whether
specifically granted or created pursuant to any of the Collateral Documents or
created or provided for by applicable law), except for filings or recordings
contemplated by Section 5.18(a) and except as may be required, in connection
with the disposition of any Pledged Collateral, by laws generally affecting the
offering and sale of

 

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securities.  As of the Closing Date, Borrower and its Subsidiaries have received
no written notice of any pending or threatened condemnation proceeding, exercise
of the power of eminent domain by any Governmental Authority, or any similar
proceeding affecting any Facility or any interest therein.  As of the Closing
Date, to the best of Borrower’s knowledge, after due investigation and inquiry,
no such proceeding is pending, contemplated or threatened.

 

(c)           Except such as may have been filed in favor of Agent as
contemplated by Section 5.18(a) and as set forth on Schedule 5.18 annexed
hereto, (i) no effective UCC financing statement, fixture filing or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office, and (ii) no effective filing covering
all or any part of the IP Collateral is on file in any IP Filing Office.

 

(d)           The pledge of the Pledged Collateral pursuant to the Collateral
Documents does not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.

 

(e)           All information supplied to Agent by or on behalf of any Loan
Party with respect to any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete in all material
respects.  All representations and warranties of the Loan Parties set forth in
the Collateral Documents are true and correct.

 

ARTICLE VI AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.1, 6.2, 6.3 and 6.11) cause each Subsidiary
to:

 

6.1          Financial Statements.  Deliver to Agent a sufficient number of
copies for delivery by Agent to each Lender, in form and detail satisfactory to
Agent and the Required Lenders:

 

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

 

(b)           as soon as available, but in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of Borrower,
a consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of Borrower’s fiscal year then ended, setting forth in each

 

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case in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of Borrower as
fairly presenting the financial condition, results of operations, shareholders’
equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes.

 

6.2          Certificates; Other Information.  Deliver to Agent a sufficient
number of copies for delivery by Agent to each Lender, in form and detail
satisfactory to Agent and the Required Lenders:

 

(a)           concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of its independent certified public
accountants certifying such financial statements and stating that in making the
examination necessary therefor no knowledge was obtained of any Default under
the financial covenants set forth herein or, if any such Default shall exist,
stating the nature and status of such event;

 

(b)           concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and (b), a duly completed Compliance Certificate
signed by a Responsible Officer of Borrower; provided, that if at the time of
delivery of such financial statements, any amounts are payable under any
judgment, order or settlement agreement related to any Specified Event, then
Borrower shall include in such Compliance Certificate the additional
calculations for the additional five four-fiscal quarter periods described in
the third sentence of the definition of the term Material Adverse Effect;

 

(c)           promptly after any request by Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the
board of directors (or the audit committee of the board of directors) of
Borrower by independent accountants in connection with the accounts or books of
Borrower or any Subsidiary, or any audit of any of them;

 

(d)           promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders 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 Agent pursuant hereto; and

 

(e)           promptly, such additional information regarding the business,
financial or corporate affairs of Borrower or any Subsidiary, or compliance with
the terms of the Loan Documents, as Agent or any Lender may from time to time
reasonably request.

 

6.3          Notices.  Promptly after any Responsible Officer or any other
officer (including without limitation any senior vice president, executive vice
president or any other vice president) of any Loan Party obtains knowledge or
receives notice thereof, notify Agent and each Lender:

 

(a)           of the occurrence of any Default;

 

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

 

(c)           of the occurrence of a Specified Event, together with copies of
documents relating thereto and other information requested by Agent or any
Lender relating thereto and, within 10 Business Days of the occurrence of a
Specified Event, the pro forma Compliance Certificate described in the second
sentence of the definition of the term Material Adverse Effect, duly completed
and each signed by a Responsible Officer of Borrower;

 

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

 

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

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower setting forth details of the occurrence referred
to therein and stating what action Borrower has taken and proposes to take with
respect thereto.  Each notice pursuant to Section 6.3(a) shall describe with
particularity any provisions of this Agreement and any other Loan Document that
have been breached.

 

6.4          Payment of Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property , except
for Liens permitted under Section 7.1; and (c) all Indebtedness, as and when due
and payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness, except to the extent that
(i) such unpaid claims, obligations and liabilities under clauses (a), (b) and
(c) do not exceed $500,000 individually or in the aggregate and (ii) in the case
of such claims under clause (b), such claims, if unpaid, would not become a Lien
that is not permitted under Section 7.1.

 

6.5          Preservation of Existence, Etc.  (a) Preserve, renew and maintain
in full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.4 or 7.5; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) except for
the matters described on Schedule 5.6, preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

 

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6.6          Maintenance of Properties; Application of Net
Insurance/Condemnation Proceeds.

 

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

 

(b)           Application of Net Insurance/Condemnation Proceeds.

 

(i)            Business Interruption Insurance.  Upon receipt by Borrower or any
of its Subsidiaries of any business interruption insurance proceeds constituting
Net Insurance/Condemnation Proceeds, (a) so long as no Event of Default or
Default shall have occurred and be continuing,  Borrower or such Subsidiary may
retain and apply such Net Insurance/Condemnation Proceeds for working capital
purposes, and (b) if an Event of Default or Default shall have occurred and be
continuing, Borrower shall apply an amount equal to such Net Insurance/
Condemnation Proceeds to prepay the Loans (and/or the Aggregate Commitments
shall be reduced) as provided in Section 2.5(d)(ii); provided that if Borrower
makes a written request to Lenders through Agent requesting that it not be
required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments), then Borrower shall not be required to apply such an
amount to prepay the Loans (and/or to reduce the Aggregate Commitments) so long
as Required Lenders do not decline such a request in writing within 30 days of
such request.

 

(ii)           Net Insurance/Condemnation Proceeds Received by Borrower.  Upon
receipt by Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long as no
Event of Default or Default shall have occurred and be continuing, Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or reimburse
the costs of repairing, restoring or replacing the assets in respect of which
such Net Insurance/Condemnation Proceeds were received or, to the extent not so
applied, to either (1) prepay the Loans (and/or the Aggregate Commitments shall
be reduced) as provided in Section 2.5(d)(ii), or (2) so long as no Default or
Event of Default shall have occurred and be continuing and to the extent that
aggregate Net Insurance/Condemnation Proceeds so reinvested or proposed to be
reinvested under this Section 6.6(b)(ii) or Section 2.5(d)(ii) (together with
Net Asset Sale Proceeds similarly applied from the Closing Date through the date
of determination under Section 2.5(d)(i)) from the Closing Date through the date
of determination do not exceed $1,500,000 (plus the Net Asset Sale Proceeds from
the Permitted Sale not exceeding $500,000 to the extent such Net Asset Sale
Proceeds are so reinvested), deliver to Agent an officer’s certificate setting
forth (x) that portion of such Net Insurance/Condemnation Proceeds that Borrower
or

 

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such Subsidiary intends to reinvest in equipment or other productive assets of
the general type used in the business of Borrower and its Subsidiaries within
180 days of such date of receipt and (y) the proposed use of such portion of the
Net Insurance/Condemnation Proceeds and such other information with respect to
such reinvestment as Agent may reasonably request, and Borrower shall, or shall
cause one or more of its Subsidiaries to, promptly and diligently apply such
portion to such reinvestment purposes; provided, however, that, pending such
reinvestment, such portion of the Net Insurance/Condemnation Proceeds shall be
applied to prepay outstanding Loans (without a reduction in the Aggregate
Commitments) to the full extent thereof, and (b) if an Event of Default or
Default shall have occurred and be continuing, Borrower shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans (and/or
the Aggregate Commitments shall be reduced) as provided in Section 2.5(d)(ii);
provided that if Borrower makes a written request to Lenders through Agent
requesting that it not be required to apply such an amount to prepay the Loans
(and/or to reduce the Aggregate Commitments), then Borrower shall not be
required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments) so long as Required Lenders do not decline such a request
in writing within 30 days of such request.

 

(iii)          Net Insurance/Condemnation Proceeds Received by Agent.  Upon
receipt by Agent of any Net Insurance/Condemnation Proceeds as loss payee,
(a) if and to the extent Borrower would have been required to apply such Net
Insurance/Condemnation Proceeds (if it had received them directly) to prepay the
Loans and/or reduce the Aggregate Commitments, Agent shall, and Borrower hereby
authorizes Agent to, apply such Net Insurance/Condemnation Proceeds to prepay
the Loans (and/or the Aggregate Commitments shall be reduced) as provided in
Section 6.6(b)(ii), and (b) to the extent the foregoing clause (a) does not
apply and (1) the aggregate amount of such Net Insurance/Condemnation Proceeds
received (and reasonably expected to be received) by Agent in respect of any
covered loss does not exceed $250,000, Agent shall deliver such Net
Insurance/Condemnation Proceeds to Borrower, and Borrower shall, or shall cause
one or more of its Subsidiaries to, promptly apply such Net Insurance/
Condemnation Proceeds to the costs of repairing, restoring, or replacing the
assets in respect of which such Net Insurance/Condemnation Proceeds were
received or to reinvest such proceeds in productive assets of the general type
used in the business of Borrower and its Subsidiaries within 180 days of such
date of receipt in accordance with the requirements of clause (ii) above, and
(2) if the aggregate amount of Net Insurance/Condemnation Proceeds received (and
reasonably expected to be received) by Agent in respect of any covered loss
exceeds $250,000, Agent shall hold such Net Insurance/Condemnation Proceeds
pursuant to the terms of the Security Agreement and, so long as Borrower or any
of its Subsidiaries proceeds diligently to repair, restore or replace the assets
of Borrower or such Subsidiary in respect of which such Net
Insurance/Condemnation Proceeds were received or to reinvest such proceeds in
productive assets, Agent shall from time to time disburse to Borrower or such
Subsidiary from the Collateral Account, to the extent of any such Net

 

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Insurance/Condemnation Proceeds remaining therein in respect of the applicable
covered loss, amounts necessary to pay the cost of such repair, restoration,
replacement or reinvestment after, where applicable the receipt by Agent of
invoices or other documentation reasonably satisfactory to Agent relating to the
amount of costs so incurred and the work performed (including, if required by
Agent, lien releases and architects’ certificates); provided, however that if at
any time Agent reasonably determines (A) that Borrower or such Subsidiary is not
proceeding diligently with such repair, restoration or replacement or (B) that
such repair, restoration, replacement or reinvestment cannot be completed with
the Net Insurance/Condemnation Proceeds then held by Agent for such purpose,
together with funds otherwise available to Borrower for such purpose, or that
such repair, restoration, replacement or reinvestment cannot be completed within
180 days after the receipt by Agent of such Net Insurance/Condemnation Proceeds,
Agent shall, and Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Aggregate
Commitments shall be reduced) as provided in Section 2.5(d)(ii).

 

6.7          Maintenance of Insurance.  Maintain with financially sound and
reputable insurance companies not Affiliates of Borrower, insurance with respect
to its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts (after giving effect to any self-insurance compatible
with the following standards) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’
prior notice to Agent of termination, lapse or cancellation of such insurance. 
Each such insurance policy shall (a) in the case of each such insurance policy
other than each business interruption and casualty insurance policy, name Agent
for the benefit of Lenders as an additional insured thereunder as its interests
may appear and (b) in the case of each business interruption and casualty
insurance policy, contain a loss payable clause or endorsement, satisfactory in
form and substance to Agent, that names Agent for the benefit of Lenders as the
loss payee thereunder for any covered loss and provides for at least 30 days
prior written notice to Agent of any modification or cancellation of such
policy.

 

6.8          Compliance with Laws and Contractual Obligations.

 

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

 

(b)           Comply in all material respects with all Contractual Obligations,
except in such instances in which the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

 

6.9          Books and Records.  (a)  Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all

 

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financial transactions and matters involving the assets and business of Borrower
or such Subsidiary, as the case may be; and (b) maintain such books of record
and account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over Borrower or such
Subsidiary, as the case may be.  Borrower shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as Agent or
any Lender shall reasonably require.

 

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

 

6.11        Use of Proceeds.  Use the proceeds of the Credit Extensions for
general corporate purposes (including, without limitation, capital expenditures
and Permitted Acquisitions) not in contravention of any Law or of any Loan
Document.

 

6.12        Financial Covenants.

 

(a)           Net Worth.  Maintain on a consolidated basis Net Worth equal to at
least the sum of the following:

 

(i)            Eighty Million Dollars ($80,000,000); plus

 

(ii)           the sum of 75% of net income after income taxes (without
subtracting losses) earned in each fiscal year ending on or after December 31,
2004; plus

 

(iii)          the sum of 75% of the net proceeds from any equity securities
issued after the date of this Agreement and on or before the last day of the
most recently ended fiscal quarter.

 

(b)           Funded Debt to EBITDA Ratio.  Maintain on a consolidated basis a
Funded Debt to EBITDA Ratio not exceeding the ratios indicated for each period
specified below:

 

Fiscal quarter ending on

 

Ratios

December 31, 2004

 

3.50:1.00

December 31, 2005

 

2.25:1.00

March 31, 2006 and each fiscal quarter thereafter

 

2.00:1.00

 

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This ratio will be calculated at the end of each reporting period for which this
Agreement requires Borrower to deliver financial statements, using the results
of the four-fiscal quarter period ending with that reporting period. 
Notwithstanding the foregoing, if the Borrower issues Subordinated Indebtedness
on terms and conditions acceptable to Agent and the Required Lenders in their
sole discretion in accordance with Section 7.3(e), (i) Borrower shall maintain
on a consolidated basis a Senior Debt to EBITDA Ratio not exceeding 2.00:1.00
for all periods thereafter and (ii) Borrower shall maintain on a consolidated
basis a Funded Debt to EBITDA Ratio not exceeding the ratios indicated for each
period specified below occurring after such issuance (in lieu of the ratios
specified above):

 

Fiscal quarter ending on

 

Ratios

December 31, 2004

 

3.50:1.00

March 31, 2005

 

3.25:1.00

June 30, 2005

 

3.25:1.00

September 30, 2005

 

3.25:1.00

December 31, 2005

 

3.00:1.00

March 31, 2006 and each fiscal quarter thereafter

 

3.00:1.00

 

(c)           Fixed Charge Coverage Ratio.  Commencing with the fiscal quarter
ending on December 31, 2005 and for each fiscal quarter thereafter, maintain on
a consolidated basis a Fixed Charge Coverage Ratio of at least level 1.50:1.00.
This ratio will be calculated at the end of each reporting period for which this
Agreement requires Borrower to deliver financial statements, using the results
of the four-fiscal quarter period ending with that reporting period.  The
current portion of long-term liabilities will be measured as of the last day of
the calculation period.

 

(d)           Minimum EBITDA.

 

(i)            As of the last date of each period set forth below, maintain
EBITDA for such period in an amount in excess of the amount set forth below for
the period set forth below:

 

Period

 

Minimum EBITDA

 

10/1/04-12/31/04

 

$

2,800,000

 

1/1/05-3/31/05

 

$

2,000,000

 

1/1/05-6/30/05

 

$

3,000,000

 

1/1/05-9/30/05

 

$

5,000,000

 

1/1/05-12/31/05

 

$

15,000,000

 

 

(ii)           Commencing with March 31, 2006, maintain EBITDA for the trailing
four-fiscal quarter period ending on each of the dates set forth below in an
amount in excess of the amount set forth below:

 

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Period

 

Minimum EBITDA

 

March 31, 2006

 

$

16,000,000

 

June 30, 2006

 

$

17,000,000

 

September 30, 2006

 

$

18,000,000

 

December 31, 2006

 

$

23,000,000

 

 

(iii)          Commencing with December 31, 2007 and as of December 31 for each
fiscal year thereafter, maintain EBITDA for the fiscal year ending on such date
(the “Applicable Fiscal Year”) to be not less than the sum (without duplication)
of (x) 80% of EBITDA for the immediately preceding fiscal year (without giving
effect to any Permitted Acquisition consummated during the Applicable Fiscal
Year) plus (ii) 75% of EBITDA for the Applicable Fiscal Year of Persons acquired
pursuant to a Permitted Acquisition during the Applicable Fiscal Year as set
forth on the audited financial statements of such Persons for such period.

 

(e)           Operating Lease.  Not permit the aggregate payments due in any
fiscal year under all operating leases (including leases for real or personal
property) to exceed Two Million Dollars ($2,000,000).

 

6.13        Additional Guarantors.  Notify Agent at the time that any Person
becomes a Subsidiary, and promptly thereafter (and in any event within 30 days),
cause such Person to (a) become a Guarantor by executing and delivering to Agent
a counterpart of the Guaranty or such other document as Agent shall deem
appropriate for such purpose, and (b) execute and deliver to Agent a counterpart
of the Security Agreement and take such further actions and execute all such
further documents and instruments as may be necessary or, in the opinion of the
Agent, for the benefit of the Lenders, except for Liens permitted under clause
(b) through (i) of Section 7.1, a valid perfected First Priority Lien on all of
the personal and mixed property assets of such Subsidiary described in the
applicable forms of Collateral Documents.  In addition, Borrower shall, or shall
cause the Subsidiary that owns the Capital Stock of such Person to, execute and
deliver to Agent a supplement to the Security Agreement and to deliver to Agent
all certificates representing such Capital Stock of such Person (accompanied by
irrevocable undated stock powers, duly endorsed in blank) and deliver to Agent
documents of the types referred to in clauses (iii) and (iv) of Section 4.1(a)
and favorable opinions of counsel to the Loan Parties and such Person addressed
to Agent and Lenders (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
this Section 6.13), all in form, content and scope reasonably satisfactory to
Agent.  Notwithstanding the foregoing, Borrower and its Subsidiaries shall not
be required to cause Quidel Deutschland to become a Guarantor or to cause any of
the Capital Stock or any of the assets of Quidel Deutschland to be pledged
pursuant to the Loan Documents unless the Permitted Sale does not occur by
December 31, 2005 (it being understood that if the Permitted Sale does not occur
by such date, Borrower shall by such date execute and deliver to Agent a foreign
pledge agreement in form and substance satisfactory to Agent and other
documentation and opinions in form, content and scope reasonably satisfactory to
Agent, including documentation and opinions described in the immediately
foregoing sentence with respect to 65% of the Capital Stock of Quidel
Deutschland).

 

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6.14        Collateral Records.  To execute and deliver promptly, and to cause
each other Loan Party to execute and deliver promptly, to Agent, from time to
time, solely for Agent’s convenience in maintaining a record of the Collateral,
such written statements and schedules as Agent may reasonably require
designating, identifying or describing the Collateral.  The failure by Borrower
or any other Loan Party, however, to promptly give Agent such statements or
schedules shall not affect, diminish, modify or otherwise limit the Liens on the
Collateral granted pursuant to the Collateral Documents.

 

6.15        Cash Management System.  Borrower shall, and shall cause each of its
Subsidiaries to, at all times after the 180th day after the Closing Date use
commercially reasonable efforts to maintain all of their respective Deposit
Accounts, Securities Accounts and their respective treasury management
arrangements, depository and other cash management arrangements with Bank of
America, N.A. or other institutions providing a Control Agreement in form
attached hereto or otherwise acceptable to Agent.  Borrower shall not establish
or maintain, and shall not permit any of its Subsidiaries to establish or
maintain, any Deposit Account or Securities Account (other than Deposit Accounts
maintained at Bank of America, N.A.) unless Borrower or such Subsidiary, as the
case may be, has (i) executed and delivered to Agent a Control Agreement with
respect to such Deposit Account or Securities Account and (ii) taken all other
steps necessary or, in the opinion of Agent, desirable to ensure that Agent has
a perfected security interest in such account.  Notwithstanding the foregoing,
Borrower and its Subsidiaries may maintain Deposit Accounts and Securities
Accounts for 180 days after the Closing Date without complying with the second
sentence of this Section 6.15.

 

6.16        Security Interests.

 

(a)           General Covenant.  To, and to cause each other Loan Party to,
(i) in the exercise of Borrower’s commercial reasonable judgment, defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein, (ii) comply with the requirements of all state
and federal laws in order to grant to Agent and Lenders valid and perfected
first priority security interests in the Collateral (except for Liens permitted
under clauses (b) through (i) of Section 7.1), with perfection, in the case of
any investment property, deposit account or letter of credit, being effected by
giving Agent control of such investment property or deposit account or letter of
credit, rather than by the filing of a UCC financing statement with respect to
such investment property, and (iii) do whatever Agent may reasonably request,
from time to time, to effect the purposes of this Agreement and the other Loan
Documents, including filing notices of liens, UCC financing statements, fixture
filings and amendments, renewals and continuations thereof; cooperating with
Agent’s representatives; keeping stock records; obtaining waivers from landlords
and mortgagees and from warehousemen and their landlords and mortgages; and,
paying claims which might, if unpaid, become a Lien on the Collateral.  Agent is
hereby authorized by Borrower to file any UCC financing statements covering the
Collateral whether or not Borrower’s signatures appear thereon.

 

(b)           Landlord Waivers.  (i) On or before the date that is 90 days after
the Closing Date, deliver to Agent a fully executed Landlord Waiver with respect
to each Leasehold Property of any Loan Party and (ii) on or before the date that
any Loan Party enters

 

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into any lease with respect to any Leasehold Property after the Closing Date,
deliver to Agent a fully executed Landlord Waiver with respect to such Leasehold
Property of such Loan Party.

 

(c)           Cash Management Documentation.  On or before the date that is 180
days after the Closing Date, deliver to Agent fully executed Control Agreements
with respect to each Loan Party’s Deposit Accounts and Securities Accounts
(other than such Deposit Accounts maintained with Bank of America, N.A.), each
of which Deposit Accounts and Securities Accounts as of the Closing Date are set
forth on Schedule 6.16(c); provided that if the form of the Control Agreement
materially differs from Exhibit H or I, as the case may be, then at the
reasonable request of Agent, Borrower shall concurrently deliver with such
Control Agreement an opinion of counsel in form and substance reasonably
satisfactory to Agent.

 

ARTICLE VII NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly:

 

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

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and listed on Schedule 7.1 and
any renewals or extensions thereof, provided that the property covered thereby
is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.3(b);

 

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

 

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

 

(e)           pledges or deposits in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by any Plan or the PBGC under
ERISA;

 

(f)            deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

 

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

 

(h)           Liens securing judgments for the payment of money not constituting
an Event of Default under Section 8.1(h) or securing appeal or other surety
bonds related to such judgments; and

 

(i)            Liens securing Indebtedness permitted under Section 7.3(f);
provided that (i) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired, constructed or improved on the date of acquisition.

 

7.2          Investments.  Make or own any Investments, except:

 

(a)           Investments held by Borrower or such Subsidiary in the form of
cash equivalents or short-term marketable debt securities;

 

(b)           advances to officers, directors and employees of Borrower and
Subsidiary Guarantors in an aggregate amount not to exceed $250,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

 

(c)           Investments owned by Borrower as of the Closing Date in the
Capital Stock of any wholly-owned Subsidiary as described on Schedule 5.13;

 

(d)           Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss; and

 

(e)           Guarantees permitted by Section 7.3;

 

(f)            Permitted Acquisitions by Borrower or any wholly-owned Subsidiary
Guarantor;

 

(g)           Investments consisting of extensions of credit or capital
contributions by Borrower to wholly-owned Subsidiary Guarantors so long as such
Investments consisting of extensions of credit are evidenced by promissory notes
pledged to Agent under the Collateral Documents; and

 

(h)           additional Investments not exceeding at any time an aggregate
outstanding amount of $2,000,000.

 

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

 

(a)           Indebtedness under the Loan Documents;

 

(b)           Indebtedness outstanding on the date hereof and listed on Schedule
7.3 and any refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder;

 

(c)           Guarantees of Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of Borrower or any wholly-owned
Subsidiary Guarantor;

 

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

 

(e)           unsecured Subordinated Indebtedness of Borrower or any
wholly-owned Subsidiary Guarantor in an aggregate amount not exceeding
$5,000,000 so long as (i) after giving effect thereto, Borrower shall be in pro
forma compliance with all of the terms of this Agreement and (ii) prior to the
incurrence of such Subordinated Indebtedness, Borrower shall have delivered to
Agent and Lenders a Compliance Certificate evidencing such pro forma compliance
and Agent and Required Lenders shall have approved all of the terms and
conditions and documents relating to such Subordinated Indebtedness (which shall
include an intercreditor and subordination agreement with Agent) in their sole
discretion;

 

(f)            Indebtedness in respect of capital leases, Synthetic Lease
Obligations and purchase money obligations for fixed or capital assets
(including equipment) within the limitations set forth in Section 7.1(i);
provided, however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $2,000,000; and

 

(g)           other unsecured Indebtedness not exceeding $2,500,000 in the
aggregate at any time outstanding.

 

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

 

(a)           any Subsidiary may merge with (i) Borrower, provided that Borrower
shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided

 

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that when any wholly-owned Subsidiary is merging with another Subsidiary, the
wholly-owned Subsidiary shall be the continuing or surviving Person, and,
provided further that if a Guarantor is merging with another Subsidiary, the
Guarantor shall be the surviving Person; and

 

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

 

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

 

(a)           Dispositions of obsolete or worn out property, or immaterial
property no longer useful or necessary to the business of Borrower and its
Subsidiaries, whether now owned or hereafter acquired, in the ordinary course of
business;

 

(b)           Dispositions of inventory and cash equivalents in the ordinary
course of business and sales, assignments, transfers or dispositions of accounts
in the ordinary course of business for purposes of collection;

 

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

 

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

 

(e)           Dispositions permitted by Section 7.4;

 

(f)            non-exclusive licenses of immaterial IP Rights in the ordinary
course of business and non-exclusive licenses of IP Rights in the ordinary
course of business solely in connection with cooperative agreements with third
parties for further development of such IP Rights;

 

(g)           subleases of leased properties no longer needed by Borrower and
its Subsidiaries and not material to the operation of Borrower and its
Subsidiaries;

 

(h)           Dispositions not otherwise permitted hereunder if (i) at the time
of any Disposition, no Event of Default or Default shall exist or shall result
from such Disposition, (ii) the aggregate sales price of such Disposition shall
be paid in cash, and (iii) the proceeds from Dispositions under this clause (h)
since the Closing Date shall not exceed $500,000 in the aggregate; and

 

(i)            the Permitted Sale.

 

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provided, however, that any Disposition pursuant to clauses (a) through (h)
(other than clause (d)) shall be for fair market value.

 

7.6          Restricted Payments.  Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:

 

(a)           each Subsidiary may make Restricted Payments to Borrower and to
wholly-owned Subsidiary Guarantors  (and, in the case of a Restricted Payment by
a non-wholly-owned Subsidiary, to Borrower and any Subsidiary and to each other
owner of capital stock or other equity interests of such Subsidiary on a pro
rata basis based on their relative ownership interests);

 

(b)           Borrower and each Subsidiary Guarantor may declare and make
dividend payments or other distributions payable solely in the common stock or
other common equity interests of such Person; and

 

(c)           Borrower and each Subsidiary Guarantor may purchase, redeem or
otherwise acquire shares of its common stock or other common equity interests or
warrants or options to acquire any such shares with the proceeds received from
the substantially concurrent issue of new shares of its common stock or other
common equity interests.

 

7.7          Change in Nature of Business.  Engage in any material line of
business substantially different from those lines of business conducted by
Borrower and its Subsidiaries on the date hereof or any business substantially
related or incidental thereto.  Notwithstanding anything in this Agreement to
the contrary, OSC shall not at any time engage in any business other than owning
its IP Rights and none of the Dormant Foreign Subsidiaries shall engage in any
business.

 

7.8          Transactions with Affiliates.  Enter into any transaction of any
kind with any Affiliate of Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
Borrower or such Subsidiary as would be obtainable by Borrower or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall not apply
to (i) transactions between or among Borrower and any of its wholly-owned
Subsidiary Guarantors or between and among any wholly-owned Subsidiary
Guarantors, (ii) customary indemnification of directors, officers and employees
of Borrower and its Subsidiaries, (iii) loans and advances permitted by Section
7.2(b), (iv) Restricted Payments permitted by Section 7.6, or (v) transfer to
Quidel Deutschland the IP Rights and other assets described in Schedule 1.1
prior to the Permitted Sale permitted by Section 7.11.

 

7.9          Burdensome Agreements.  Enter into any Contractual Obligation
(other than this Agreement or any other Loan Document) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to Borrower or any
Guarantor or to otherwise transfer property to Borrower or any Guarantor,
(ii) of any Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of
Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on
property of such Person; provided, however, that clause (i) and clause (iii)
shall not prohibit any restriction on transfer or negative pledge incurred or
provided in favor of any holder of Indebtedness permitted

 

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under Section 7.3(f) solely to the extent any such restriction on transfer or
negative pledge relates to the property financed by or the subject of such
Indebtedness; or (b) requires the grant of a Lien to secure an obligation of
such Person if a Lien is granted to secure another obligation of such Person.

 

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

 

7.11        Foreign Subsidiaries; OSC.  Make any Investments in Quidel
Deutschland, OSC, any Dormant Foreign Subsidiary or any other foreign Subsidiary
after the Closing Date, Guarantee any obligations of Quidel Deutschland, OSC,
any Dormant Foreign Subsidiary or any other foreign Subsidiary after the Closing
Date, or otherwise transfer any assets (including the repayment of any
intercompany payables) to Quidel Deutschland, OSC, any Dormant Foreign
Subsidiary or any other foreign Subsidiary after the Closing Date; provided that
Borrower and its Subsidiary Guarantors may transfer to Quidel Deutschland the IP
Rights and other assets described in Schedule 1.1 prior to the Permitted Sale.

 

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

 

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

 

(a)           Non-Payment.  Borrower or any other Loan Party fails to pay
(i) when and as required to be paid herein, any amount of principal of any Loan
or any L/C Obligation, or (ii) within three days after the same becomes due, any
interest on any Loan or on any L/C Obligation, or any fee due hereunder, or
(iii) within five days after the same becomes due, any other amount payable
hereunder or under any other Loan Document; or

 

(b)           Specific Covenants.  Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.1, 6.2, 6.3, 6.5 (as
to existence), 6.10, 6.11, 6.12, 6.13, 6.15 or 6.16 or Article VII; or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in any other subsection of this
Section 8) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days after the earlier of (i) any
Responsible Officer or any other officer (including without limitation any
senior vice president, executive vice president or any other vice president) of
any Loan Party becoming aware of such failure or (ii) receipt by Borrower or any
other Loan Party of notice from Agent or any Lender of such failure; or

 

(d)           Representations and Warranties.  Any representation, warranty or
certification made or deemed made by or on behalf of Borrower or any other Loan
Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be incorrect or misleading when made or
deemed made; or

 

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(e)           Cross-Default.  (i) Borrower or any Subsidiary (A) fails to make
any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded (except for
due on sale clauses in Indebtedness relating to capital leases permitted under
Section 7.3(b) or 7.3(f)); or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which Borrower or any Subsidiary is
the Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by Borrower or such Subsidiary as a result thereof is
greater than the Threshold Amount and, in the case of clause (B) above, such
amount is not paid within 10 days; or

 

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

 

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

 

(h)           Judgments.  There is entered against Borrower or any Subsidiary
(i) a judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) (other
than a judgment or order for the payment of money entered

 

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in connection with the litigation specified in item number 1 of Schedule 5.6 so
long as such judgment or order is not deemed to have a Material Adverse Effect
(pursuant to the second and/or third sentences of the definition of the term
Material Adverse Effect)), or (ii) any one or more non-monetary judgments that
have, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect (other than a non-monetary judgment entered in
connection with the litigation specified in item number 1 of Schedule 5.6 so
long as such judgment is not deemed to have a Material Adverse Effect (pursuant
to the second and/or third sentences of the definition of the term Material
Adverse Effect)) and, in either case, (A) enforcement proceedings are commenced
by any creditor upon such judgment or order, or (B) there is a period of 30 days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or

 

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

 

(j)            Invalidity of Loan Documents; Failure of Security.  (i) Any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any Loan
Document; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document or (ii) the Agent shall not have or shall cease to have a
valid and perfected First Priority Lien in any Collateral (other than Liens
permitted under clauses (b) through (i) of Section 7.1 and items of Collateral
deemed immaterial by Agent in its sole discretion) purported to be covered by
the Collateral Documents, in each case for any reason other than failure of
Agent or any Lender to take any action within its control; or

 

(k)           Change of Control.  There occurs any Change of Control with
respect to Borrower and/or any Guarantor; or

 

(l)            Material Adverse Effect.  There occurs any event or circumstance
that has a Material Adverse Effect (other than any event or circumstance
relating to the litigation described in item 1 of Schedule 5.6 unless such event
or circumstance relating to such litigation is a Specified Event which is deemed
to have a Material Adverse Effect pursuant to the second and/or third sentences
of the definition of the term Material Adverse Effect); or

 

(m)          Loss of ISO 9001 Certifications.  Borrower or any of its
Subsidiaries shall have ceased to have maintained in full force and effect each
of their respective International Organization for Standardization (“ISO”) 9001
certifications (other than due to the sale of any such ISO 9001 certification
pursuant to a Disposition permitted under this Agreement and other than due to
any voluntary shutdown of plants by any Loan Party for reasons other than the
loss of the applicable ISO 9001 certification).

 

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

 

(a)           declare the commitment of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;

 

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

 

(c)           require that Borrower Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and

 

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

 

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

 

8.3          Application of Funds.  After the exercise of remedies provided for
in Section 8.2 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.2), any amounts received
on account of the Obligations shall be applied by Agent in the following order:

 

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

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders and their Affiliates (including Attorney Costs and amounts payable under
Article III), ratably among them in proportion to the amounts described in this
clause Second payable to them;

 

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

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings and the Swap Termination Value and
other amounts owing to Lenders and

 

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their Affiliates under Lender Swap Contracts, ratably among the Lenders and its
Affiliates in proportion to the respective amounts described in this clause
Fourth held by them;

 

Fifth, to Agent for the account of the L/C Issuer, to Cash Collateralize that
portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit; and

 

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

 

Subject to Section 2.3(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

ARTICLE IX AGENT

 

9.1          Appointment and Authorization Agent.

 

(a)           Each Lender hereby irrevocably appoints, designates and authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto. 
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent.  Without limiting the generality of the foregoing sentence, the
use of the term “agent” herein and in the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law.  Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties.

 

(b)           The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the Issuer Documents associated
therewith, and the L/C Issuer shall have all of the benefits and immunities
(i) provided to Agent in this Article IX with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and the Issuer Documents pertaining to such
Letters of Credit as fully as if the term “Agent” as used in this Article IX and
in the definition of “Agent-Related Person” included the L/C Issuer with respect
to such acts or omissions, and (ii) as additionally provided herein with respect
to the L/C Issuer.

 

9.2          Delegation of Duties.  Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to

 

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such duties.  Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects in the absence of gross negligence
or willful misconduct.

 

9.3          Liability of Agent.  No Agent-Related Person shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein as determined by a
final non-appealable judgment by a court of competent jurisdiction), or (b) be
responsible in any manner to any Lender or Participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of any Loan Party
or any other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Agent-Related Person shall be under any obligation to any Lender
or Participant to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of any Loan
Party or any Affiliate thereof.

 

9.4          Reliance by Agent.

 

(a)           Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, electronic mail message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants and
other experts selected by Agent.  Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. 
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders (or such greater number of Lenders as
may be expressly required hereby in any instance) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders.

 

(b)           For purposes of determining compliance with the conditions
specified in Section 4.1, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

9.5          Notice of Default.  Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default, except with respect to defaults in the
payment of principal, interest

 

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and fees required to be paid to Agent for the account of the Lenders, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default and stating that such notice is a
“notice of default.”  Agent will notify the Lenders of its receipt of any such
notice.  Agent shall take such action with respect to such Default as may be
directed by the Required Lenders in accordance with Article VIII; provided,
however, that unless and until Agent has received any such direction, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable or in the best
interest of the Lenders.

 

9.6          Credit Decision; Disclosure of Information by Agent.  Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by Agent hereafter taken, including any consent
to and acceptance of any assignment or review of the affairs of any Loan Party
or any Affiliate thereof, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender as to any matter, including
whether Agent-Related Persons have disclosed material information in their
possession.  Each Lender represents to Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower and the other Loan Parties
hereunder.  Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower and the
other Loan Parties.  Except for notices, reports and other documents expressly
required to be furnished to the Lenders by Agent herein, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.

 

9.7          Indemnification of Agent.  Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section.  Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by Agent in
connection with the preparation, execution, delivery, administration,

 

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modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrower.  The undertaking in
this Section shall survive termination of the Aggregate Commitments, the payment
of all other Obligations and the resignation of Agent.

 

9.8          Agent in its Individual Capacity.  Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with each of
the Loan Parties and their respective Affiliates as though Bank of America were
not Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders.  The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
Agent shall be under no obligation to provide such information to them.  With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Lender and may exercise such rights and powers
as though it were not Agent or the L/C Issuer, and the terms “Lender” and
“Lenders” include Bank of America in its individual capacity.

 

9.9          Successor Agent.  Agent may resign as Agent upon 30 days’ notice to
the Lenders; provided that any such resignation by Bank of America shall also
constitute its resignation as L/C Issuer.  If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be consented to by Borrower at all times other than during the existence of an
Event of Default (which consent of Borrower shall not be unreasonably withheld
or delayed).  If no successor administrative agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders and Borrower, a successor administrative agent from among the
Lenders.  Upon the acceptance of its appointment as successor administrative
agent hereunder, the Person acting as such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Agent, L/C Issuer
and the respective terms “Agent” and “L/C Issuer” shall mean such successor
administrative agent, Letter of Credit issuer, and the retiring Agent’s
appointment, powers and duties as Agent shall be terminated and the retiring L/C
Issuer’s rights, powers and duties as such shall be terminated, without any
other or further act or deed on the part of such retiring L/C Issuer or any
other Lender, other than the obligation of the successor L/C Issuer to issue
letters of credit in substitution for the Letters of Credit, if any, outstanding
at the time of such succession or to make other arrangements satisfactory to the
retiring L/C Issuer to effectively assume the obligations of the retiring L/C
Issuer with respect to such Letters of Credit.  After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Article IX and
Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.  If no
successor administrative agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for above.

 

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9.10        Agent May File Proofs of Claim.

 

(a)           In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to any Loan Party, Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether Agent shall have made any demand on Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise

 

(b)           to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders and
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and Agent and their respective agents
and counsel and all other amounts due the Lenders and Agent under Sections
2.3(i) and (j), 2.9 and 10.4) allowed in such judicial proceeding; and

 

(c)           to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to Agent and, in the event that Agent shall consent to the making of
such payments directly to the Lenders, to pay to Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of Agent and its
agents and counsel, and any other amounts due Agent under Sections 2.9 and
10.4.  Nothing contained herein shall be deemed to authorize Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.

 

9.11        Guaranty Matters.  Each Lender hereby irrevocably authorizes Agent,
at its option and in its discretion, to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted hereunder.  Upon request by Agent at any time,
each Lender will confirm in writing Agent’s authority to release any Guarantor
from its obligations under the Guaranty pursuant to this Section 9.11.

 

9.12        Collateral Matters.

 

(a)           Each Lender hereby irrevocably authorizes and directs Agent to
enter into the Collateral Documents for the benefit of such Lender.  Each Lender
hereby agrees, and each holder of any Note by the acceptance thereof will be
deemed to agree, that, except as otherwise set forth in Section 10.1, any action
taken by the Required Lenders, in accordance with the provisions of this
Agreement or the Collateral Documents, and the exercise by the Required Lenders
of the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
Lenders.  Agent is hereby authorized on behalf of all of Lenders, without the
necessity of any notice to or further consent from any Lender from time to time
prior to, an Event of Default, to take any action

 

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with respect to any Collateral or Collateral Documents which may be necessary to
perfect and maintain perfected the Liens upon the Collateral granted pursuant to
the Collateral Documents.

 

(b)           Each Lender hereby irrevocably authorizes Agent, at its option and
in its discretion,

 

(i)            to release any Lien on any property granted to or held by Agent
under any Loan Document (A) upon termination of the Aggregate Commitments and
payment in full of all Obligations (other than contingent indemnification
obligations) and the expiration or termination of all Letters of Credit,
(B) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, (C) subject to
Section 10.1, if approved, authorized or ratified in writing by the Required
Lenders, or (D) in connection with any foreclosure sale or other disposition of
Collateral after the occurrence of an Event of Default; and

 

(ii)           to subordinate any Lien on any property granted to or held by
Agent under any Loan Document to the holder of any Lien on such property that is
permitted by this Agreement or any other Loan Document.

 

Upon request by Agent at any time, each Lender will confirm in writing Agent’s
authority to release or subordinate its interest in particular types or items of
Collateral pursuant to this Section 9.12.

 

(c)           Subject to (b) above, Agent shall (and is hereby irrevocably
authorized by each Lender, to) execute such documents as may be necessary to
evidence the release or subordination of the Liens granted to Agent for the
benefit of Agent and Lenders herein or pursuant hereto upon the applicable
Collateral; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agent’s opinion, would expose Agent to or create any
liability or entail any consequence other than the release or subordination of
such Liens without recourse or warranty and (ii) such release or subordination
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of Borrower or any other Loan Party in respect of) all
interests retained by Borrower or any other Loan Party, including the proceeds
of the sale, all of which shall continue to constitute part of the Collateral. 
In the event of any sale or transfer of Collateral, or any foreclosure with
respect to any of the Collateral, Agent shall be authorized to deduct all
expenses reasonably incurred by Agent from the proceeds of any such sale,
transfer or foreclosure.

 

(d)           Agent shall have no obligation whatsoever to any Lender or any
other Person to assure that the Collateral exists or is owned by Borrower or any
other Loan Party or is cared for, protected or insured or that the Liens granted
to Agent herein or in any of the Collateral Documents or pursuant hereto or
thereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
or to continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to Agent in this Section 9.12 or in any of the Collateral Documents,
it being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it

 

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may deem appropriate, in its sole discretion, given Agent’s own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders.

 

(e)           Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting Lenders’ security interest in assets which, in accordance
with Article 9 of the UCC can be perfected only by possession or control. 
Should any Lender (other than Agent) obtain possession or control of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s
request therefor shall deliver such Collateral to Agent or in accordance with
Agent’s instructions.

 

ARTICLE X MISCELLANEOUS

 

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

 

(a)           waive any condition set forth in Section 4.1(a) without the
written consent of each Lender; provided, however, in the sole discretion of
Agent, only a waiver by Agent shall be required with respect to immaterial
matters or items specified in Section 4.1(a) (iii) or (iv) with respect to which
Borrower has given assurances satisfactory to Agent that such items shall be
delivered promptly following the Closing Date;

 

(b)           extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.2) without the written consent of
such Lender;

 

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

 

(d)           reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso
to this Section 10.1) any fees or other amounts payable hereunder or under any
other Loan Document, without the written consent of each Lender directly
affected thereby; provided, however, that only the consent of the Required
Lenders shall be necessary (i) to amend the definition of “Default Rate” or to
waive any obligation of Borrower to pay interest or L/C Fees at the Default Rate
or (ii) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to reduce the rate of
interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

(e)           change Section 2.13 or Section 8.3 in a manner that would alter
the pro rata sharing of payments required thereby without the written consent of
each Lender;

 

(f)            change any provision of this Section or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders

 

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required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; or

 

(g)           release any Guarantor from the Guaranty or release the Liens on
all or substantially all of the Collateral except in accordance with the terms
of any Loan Document without the written consent of each Lender; and,

 

provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any L/C
Application relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed by
Agent in addition to the Lenders required above, affect the rights or duties of
Agent under this Agreement or any other Loan Document; and (iii) the Agent Fee
Letter may be amended, or rights or privileges thereunder waived, in a writing
executed only by the parties thereto.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.

 

10.2        Notices and Other Communications; Facsimile Copies.

 

(a)           General.  Unless otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
by facsimile transmission).  All such written notices shall be mailed, certified
or registered mail, faxed or delivered to the applicable address, facsimile
number or (subject to subsection (c) below) electronic mail address, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

 

(i)            if to Borrower, Agent and the L/C Issuer, to the address,
facsimile number, electronic mail address or telephone number specified for such
Person on Schedule 10.2 or to such other address, facsimile number, electronic
mail address or telephone number as shall be designated by such party in a
notice to the other parties; and

 

(ii)           if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its Administrative
Questionnaire or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
Borrower, Agent and the L/C Issuer.

 

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

 

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(b)           Electronic Communications.  Notices and other communications to
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by Agent, provided that the foregoing shall not apply to notices to any
Lender pursuant to Article II if such Lender has notified the Agent that it is
incapable of receiving notices under such Article by electronic communication. 
Agent or Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

 

(c)           Effectiveness of Facsimile Documents and Signatures.  Loan
Documents may be transmitted and/or signed by facsimile.  The effectiveness of
any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, Agent and the Lenders.  Agent may also require that any such
documents and signatures be confirmed by a manually-signed original thereof;
provided, however, that the failure to request or deliver the same shall not
limit the effectiveness of any facsimile document or signature.

 

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

 

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

 

10.4        Attorney Costs, Expenses and Taxes.  Borrower agrees (a) to pay or
reimburse Agent for all costs and expenses incurred in connection with the
development, preparation, negotiation and execution of this Agreement and the
other Loan Documents and any amendment, waiver, consent or other modification of
the provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any “workout”
or restructuring in respect of the Obligations and during

 

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any legal proceeding, including any proceeding under any Debtor Relief Law),
including all Attorney Costs.  The foregoing costs and expenses shall include
all search, filing, recording, title insurance and appraisal charges and fees
and taxes related thereto, and other out-of-pocket expenses incurred by Agent
and the cost of independent public accountants and other outside experts
retained by Agent or any Lender.  All amounts due under this Section 10.4 shall
be payable within ten Business Days after demand therefor.  The agreements in
this Section shall survive the termination of the Aggregate Commitments and
repayment of all other Obligations.

 

10.5        Indemnification by Borrower.  Whether or not the transactions
contemplated hereby are consummated, Borrower shall indemnify and hold harmless
each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) any Commitment, Loan
or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (c) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by Borrower, any Subsidiary or any other
Loan Party, or any Environmental Liability related in any way to Borrower, any
Subsidiary or any other Loan Party, or (d) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”), in all cases, whether or not caused by or arising, in whole or in
part, out of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.  No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date).  All amounts due under this Section 10.5 shall be payable within
ten Business Days after demand therefor.  The agreements in this Section shall
survive the resignation of Agent, the replacement of any Lender, the termination
of the Aggregate Commitments and the repayment, satisfaction or discharge of all
the other Obligations.

 

10.6        Payments Set Aside.  To the extent that any payment by or on behalf
of Borrower is made to Agent or any Lender, or Agent or any Lender exercises its
right of set-off,

 

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and such payment or the proceeds of such set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Agent or such
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to Agent upon demand
its applicable share of any amount so recovered from or repaid by Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in effect.

 

10.7        Successors and Assigns.  (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of subsection (b) of this Section,
(ii) by way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f)  of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d)
of this Section and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)           Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans (including for
purposes of this subsection (b), participations in L/C Obligations) at the time
owing to it); provided that (i) except in the case of an assignment of the
entire remaining amount of the assigning Lender’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender , the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000 unless each of Agent and, so long as no Event of Default has occurred
and is continuing, Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); (ii) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned; (iii) any assignment of a Commitment must be approved by Agent and the
L/C Issuer unless the Person that is the proposed assignee is itself a Lender
(whether or not the proposed assignee would otherwise qualify as an Eligible
Assignee); and (iv) the parties to each assignment shall execute and deliver to
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500.  Subject to acceptance and recording thereof by Agent pursuant to
subsection (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder

 

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shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.1, 3.4, 3.5, 10.4 and 10.5 with
respect to facts and circumstances occurring prior to the effective date of such
assignment).  Upon request, Borrower (at its expense) shall execute and deliver
a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this subsection
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d)
of this Section.

 

(c)           Agent, acting solely for this purpose as an agent of Borrower,
shall maintain at Agent’s Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitments of, and principal amounts of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”).  The entries in the Register shall be conclusive, and
Borrower, Agent and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary.  The Register shall
be available for inspection by Borrower, at any reasonable time and from time to
time upon reasonable prior notice.  In addition, at any time that a request for
a consent for a material or other substantive change to the Loan Documents is
pending, any Lender wishing to consult with other Lenders in connection
therewith may request and receive from Agent a copy of the Register.

 

(d)           Any Lender may at any time, without the consent of, or notice to,
Borrower or Agent, sell participations to any Person (other than a natural
person or Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
Loans (including such Lender’s participations in L/C Obligations) owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Borrower, Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 10.1 that directly affects such Participant.  Subject to subsection (e)
of this Section, Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.1, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection (b) of this
Section.  To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.9 as

 

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though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.

 

(e)           A Participant shall not be entitled to receive any greater payment
under Section 3.1 or 3.4 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with Borrower’s prior
written consent.

 

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

 

(g)           “Eligible Assignee” as used herein, means (a) a Lender; (b) an
Affiliate of a Lender;  and (c) any other Person (other than a natural person)
approved by (i) Agent and the L/C Issuer, and (ii) unless an Event of Default
has occurred and is continuing, Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include Borrower or any of Borrower’s Affiliates
or Subsidiaries.

 

(h)           If the consent of Borrower to an assignment to an Eligible
Assignee is required hereunder (including a consent to an assignment which does
not meet the minimum assignment threshold specified in clause (i) of the proviso
to the first sentence of Section 10.7(b)), Borrower shall be deemed to have
given its consent five Business Days after the date notice thereof has been
delivered to Borrower by the assigning Lender (through Agent) unless such
consent is expressly refused by Borrower prior to such fifth Business Day.

 

(i)            Notwithstanding anything to the contrary contained herein, if at
any time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, upon 30 days’ notice to Borrower and
the Lenders, resign as L/C Issuer.  In the event of any such resignation as L/C
Issuer, Borrower shall be entitled to appoint from among the Lenders a successor
L/C Issuer hereunder; provided, however, that no failure by Borrower to appoint
any such successor shall affect the resignation of Bank of America as L/C
Issuer.  If Bank of America resigns as L/C Issuer, it shall retain all the
rights and obligations of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.3(c)).

 

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

 

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

 

10.9        Set-off.  In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to Borrower or any other Loan Party, any such notice being waived
by Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not Agent or such Lender shall have made
demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness.  Each Lender
agrees promptly to notify Borrower and Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.

 

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

 

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thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.

 

10.11      Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10.12      Integration.  This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter.  In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of Agent or the Lenders in any other Loan Document shall not
be deemed a conflict with this Agreement.  Each Loan Document was drafted with
the joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.

 

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

 

10.14      Severability.  If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.15      Governing Law; Submission to Jurisdiction.

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT AGENT AND EACH LENDER SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE

 

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CENTRAL DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER, AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  BORROWER, AGENT
AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. 
BORROWER, AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.

 

10.16      Waiver of Right to Trial by Jury.

 

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.17      USA Patriot Act Notice.  Each Lender and Agent (for itself and not on
behalf of any Lender) hereby notifies Borrower that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies Borrower, which information includes the name and address of Borrower
and other information that will allow such Lender or Agent, as applicable, to
identify Borrower in accordance with the Act.

 

10.18      Time of the Essence.  Time is of the essence of the Loan Documents.

 

10.19      Foreign Lenders.  Each Lender that is a “foreign corporation,
partnership or trust” within the meaning of the Code shall deliver to Agent,
prior to receipt of any payment subject to withholding under the Code (or after
accepting an assignment of an interest herein), two duly signed completed copies
of either Form W-8BEN or any successor thereto (relating to such Person and
entitling it to a complete exemption from withholding on all payments to be made
to such Person by Borrower pursuant to this Agreement) or Form W-8ECI or any
successor thereto (relating to all payments to be made to such Person by
Borrower pursuant to this Agreement) of the IRS or such other evidence
satisfactory to Borrower and Administrative Agent that no withholding under the
federal income tax laws is required with respect to such

 

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Person.  Thereafter and from time to time, each such Person shall (a) promptly
submit to Agent such additional duly completed and signed copies of one of such
forms (or such successor forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may then be available under then
current United States laws and regulations to avoid, or such evidence as is
satisfactory to Borrower and Agent of any available exemption from, United
States withholding taxes in respect of all payments to be made to such Person by
Borrower pursuant to this Agreement, and (b) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that Borrower make any
deduction or withholding for taxes from amounts payable to such Person.  If such
Persons fails to deliver the above forms or other documentation, then Agent and
Borrower may withhold from any interest payment to such Person an amount
equivalent to the applicable withholding tax imposed by Sections 1441 and 1442
of the Code, without reduction.  If any Governmental Authority asserts that
Agent did not properly withhold any tax or other amount from payments made in
respect of such Person, such Person shall indemnify Agent therefor, including
all penalties and interest and costs and expenses (including Attorney Costs) of
Agent.  The obligation of Lenders under this Section shall survive the payment
of all Obligations and the resignation or replacement of Agent.

 

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

 

 

 

QUIDEL CORPORATION

 

 

 

By:

/s/ Paul Landers

 

 

Name: Paul Landers

 

 

 

Title: Chief Financial Officer

 

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BANK OF AMERICA, N.A., as

 

 

Agent

 

 

 

 

 

By:

/s/ Robert W. Troutman

 

 

Name: Robert W. Troutman

 

 

 

 

 

Title: Senior Vice President

 

 

 

 

 

 

 

 

BANK OF AMERICA, N.A., as a Lender, L/C
Issuer

 

 

 

 

 

By:

/s/ Robert W. Troutman

 

 

Name:  Robert W. Troutman

 

 

 

 

 

Title:  Senior Vice President

 

 

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