Exhibit 10.20
FOURTH AMENDMENT TO CREDIT AGREEMENT
 
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the “Fourth Amendment”) is made and
dated as of the 28 day of June, 2002 by and among THE BANK OF THE WEST, doing
business as UNITED CALIFORNIA BANK (the “Bank”), and OSI SYSTEMS, INC., a
California corporation (the “Borrower”).
 
RECITALS
 
A.    Pursuant to that certain Credit Agreement dates as of February 27, 2001 by
and among the Bank and the Borrower (as amended, extended and replace from time
to time, the “Credit Agreement,” and with capitalized terms not otherwise
defined herein used with the meanings given such terms in the Credit Agreement),
the Bank agreed to extend credit to the Borrower on the terms and subject to the
conditions set forth therein.
 
B.    The Borrower has requested the Bank to amend the Credit Agreement in
certain respects and the Bank has agreed to do so on the terms and subject to
the conditions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
 
AGREEMENT
 
1.    Increase in Line of Credit.    To reflect the agreement of the parties
hereto in increase the Line of Credit, effective as of the Fourth Amendment
Effective Date (as defined in Paragraph 10 below),Section 2.1.1 of the Credit
Agreement is hereby amended to delete the dollar amount “$12,000,000.00” set
forth therein and replacing the same with the dollar amount “$22,000,000.00”.
 
2.    Extension of Expiration Date of Line of Credit.    To reflect the
agreement of the parties hereto to extend the Expiration Date of the Line of
Credit, effective as of the Fourth Amendment Effective Date, the definition of
the term “Expiration Date of Line of Credit” set forth in Section 1/1 of the
Credit Agreement is hereby amended by deleting the date “November 30, 2002” set
forth therein and replacing the same with the date “November 30, 2003”.
 
3.    Increase in Letter of Credit Sub-Facility.    To reflect the agreement of
the parties hereto to increase the maximum aggregate amount of Letter of Credit
that may be outstanding at any one time, effective as of the Fourth Amendment
Effective Date:
 
(a)    Section 2.3.1 of the Credit Agreement is hereby amended by deleting the
dollar amount “$10,000,000.00” set forth therein and replacing the same with the
dollar amount “22,000,000.00”.
 
(b)    Section 2.4.1 of the Credit Agreement is hereby amended by deleting the
dollar amount “$10,000,000.00” set forth therein and replacing the same with the
dollar amount “$22,000,000.00”.
 
4.    Addition of Cash Secured Letter of Credit Facility.    To reflect the
agreement of the parties hereto to add a new cash secured letter of credit
facility to the Credit Agreement, effective as of the Fourth Amendment Effective
Date:

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(a)    A new Section 2.3A is hereby added to the Credit Agreement to read in its
entirety as follows:
 
“2.3A    CASH SECURED LETTER OF CREDIT FACILITY
 
2.3A.1    Cash Secured Letter of Credit Facility:    The Bank agrees to issue
commercial and/or standby letters of credit secured by cash of the Borrower
being held by the Bank (each a “Cash Secured Letter of Credit”) on behalf of the
Borrower or any Eligible Borrower of up to $4,000,000.00.
 
(i)    Upon the Bank’s request, the Borrower or the relevant Eligible Borrower
shall promptly pay to the Bank issuance fees and such other fees, commissions,
costs and any out-of-pocket expenses charged or incurred by the Bank with
respect to any Cash Secured Letter of Credit.
 
(ii)    The commitment by the Bank to issue Cash Secured Letters of Credit
shall, unless earlier terminated in accordance with the terms of the Agreement,
automatically terminate on the Expiration Date of Line of Credit and no Cash
Secured Letter of Credit shall expire on a date which is 180 days after the
Expiration Date of Line of Credit or as negotiated by the Borrower and the Bank
 
(iii)    Each Cash Secured Letter of Credit shall be in form and substance
satisfactory to the Bank and in favor of beneficiaries satisfactory to the Bank,
provided that the Bank may refuse to issue a Cash Secured Letter of Credit due
to the nature of the transaction or its terms or in connection with any
transaction where the Bank, due to the beneficiary or the nationality or
residence of the beneficiary, would be prohibited by any applicable law,
regulation or order from issuing such Cash Secured Letter of Credit.
 
(iv)    Prior to the issuance of each Cash Secured Letter of Credit, but in no
event later than 10:00 am (California time) on the day such Cash Secured Letter
of Credit is to be issued (which shall be a Business Day), the Borrower or the
relevant Eligible Borrower shall deliver to the Bank a duly executed form of the
Bank’s standard form of application for issuance of a Cash Secured Letter of
Credit with proper insertions.
 
(v)    The Borrower or the relevant Eligible Borrower shall, upon the Bank’s
request, promptly pay to and reimburse the Bank for all costs incurred and
payments made by the Bank by reason of any future assessment, reserve, deposit
or similar requirement or any surcharge, tax or fee imposed upon the Bank or as
a result of the Bank’s compliance with any directive or requirement of any
regulatory authority pertaining or relating to any Cash Secured Letter of
Credit.
 
(vi)    As a condition precedent to the issuance of each Cash Secured Letter of
Credit, the Borrower shall have delivered to the Bank cash in amount equal to
the original face amount of such Cash Secured Letter of Credit to be held by the
Bank as security for the repayment of any drawings under such Cash Secured
Letter of Credit and all other Obligations relating thereto. The Borrower hereby
grants to the Bank a first priority, perfected security interest in and lien
upon all cash delivered as required hereunder, in any and all accounts in which
such cash may be held, in all interest and other earnings thereon and in any and
all property in which said cash may be invested (collectively, the “Cash
Collateral”) as collateral security for the Obligations arising at any time with
respect to the related Cash Secured Letter of Credit and acknowledges that the
Bank

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shall have all rights, remedies and powers with respect thereto of a secured
party under the California Uniform Commercial Code. The Borrower hereby agrees
to execute and deliver, and cause to be executed and delivered, to the Bank from
time to time such documents, instruments and agreements as the Bank may request
to obtain and maintain for the Bank a first priority, perfected security
interest in the Cash Collateral. The Borrower hereby irrevocably authorizes the
Bank at any time, including, without limitation, prior to the occurrence of an
Event of Default, to debit the Cash Collateral in the amount of each drawing
under the related Cash Secured Letter of Credit and for other amounts payable
with respect thereto; provided, however, that the Bank shall have no obligations
to so debit the Cash Collateral and nothing contained herein shall in any manner
or to any extent affect the obligation of the Borrower to make such payments
from other sources.
 
In addition to and not in lieu of the right of the Bank, in its discretion, to
debit the Cash Collateral as set forth above, in the event that the Borrower or
the relevant Eligible Borrower fails to pay any drawing under any Cash Secured
Letter of Credit or the balances in the depository account or accounts
maintained by the Borrower with Bank are insufficient to pay such drawing,
without limiting the rights of Bank hereunder or waiving any Event of Default
caused thereby, Bank may, and Borrower hereby authorizes Bank to create an
Advance bearing interest at the rate or rates provided in Section 9.2 hereof to
pay such drawing.”
 
(b)    Section 8.4 of the Credit Agreement is hereby amended to read in its
entirety as follows:
 
“8.4    Letters of Credit:    Require the Borrower to pay immediately to the
Bank, for application against drawings under any outstanding Letters of Credit
or Cash Secured Letters of Credit, the outstanding principal amount of any such
Letters of Credit or Cash Secured Letters of Credit which have not expired. Any
portion of the amount so paid to the Bank which is not applied to satisfy draws
under any such Letters of Credit or Cash Secured Letters of Credit or any other
obligations of the Borrower to the Bank shall be repaid to the Borrower without
interest.”
 
5.    Unused Line of Credit Fee.    To reflect the agreement of the parties
hereto to add an unused fee with respect to the Line of Credit, effective as of
the Fourth Amendment Effective Date, a new Section 2.1.10 is hereby added to the
Credit Agreement to read in its entirety as follows:
 
“2.1.10    Unused Fee:    The Borrower shall pay to the Bank on the last
Business Day of the calendar quarter ending on June 30, 2002, on the last
Business Day of each calendar quarter thereafter, and on the Expiration Date of
Line of Credit, a non-usage fee for such calendar quarter (or portion thereof)
in the amount set forth in a fee billing delivered by the Bank to the Borrower,
which non-usage fee shall equal: (i) the average daily Line of Credit in effect
during such calendar quarter (or portion thereof), minus the daily average
amount of Advances outstanding under the Line of Credit and Letters of Credit
outstanding during such calendar quarter (or portion thereof), multiplied by
(ii) the product of : (a) one eighth of one percent (0.125%), and (b) a
fraction, the numerator of which is the number of days in the applicable
calculation period and the denominator if which is 365; provided, however, for
the purposes of calculating such fee payable on June 30, 2002, the applicable
calculation period for such quarter shall be deemed to commence on the Fourth
Amendment Effective Date (as such term is defined in that certain Fourth
Amendment dated as of June 28, 2002 by and among the Bank and the Borrower).”
 
6.    Modification of Applicable Margin.    To reflect the agreement of the
parties hereto to modify the Applicable Margin, effective as of the Fourth
Amendment Effective Date, the definition of the term “Applicable Margin” set
forth in Section 1.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:

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“‘Applicable Margin’:    shall mean the following interest rate percentages
based upon the Funded Debt Ratio provided for in Section 6.2(iv) then in effect:
 
Funded Debt Ratio
    
Applicable Margin for LIBOR or Fixed Rate:

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Applicable Margin for Reference Rate:

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Less than 1.50 to 1
    
1.50
%
    
0
%
1.50 to 1 or greater
    
2.00
%
    
0.15
%

 
7.    Modification of Financial Covenants.    To reflect the agreement of the
parties hereto to modify certain of the financial covenants applicable to the
Company, effective as of the Fourth Amendment Effective Date:
 
(a)    Subsection (i) of Section 6.2 of the Credit Agreement is hereby amended
to read in its entirety as follows:
 
“(i)    Net Worth:    A minimum Effective Tangible Net Worth of at least
$55,000,000.00, plus seventy five percent (75%) of the Borrower’s net profit
after taxes for the fiscal year ending on June 30, 2002, plus seventy five
percent (75%) of the Borrower’s net profit after taxes for each fiscal year
thereafter.”
 
(b)    Subsection (iv) of Section 6.2 of the Credit Agreement is hereby amended
to read in its entirety as follows:
 
“(iv)    Funded Debt Ratio:    A ratio of Funded Debt to EBITDA of not more than
2.25 to 1 at the end of any fiscal quarter, with EBITDA based upon the
immediately preceding three fiscal quarters and the current quarter just ended.”
 
8.    Modification of Collateral.    To reflect the agreement of the parties
hereto to revise the description of the Collateral to conform with certain
changes that have been enacted in Article 9 of the California Uniform Commercial
Code, effective as of the Fourth Amendment Effective Date, Section 3.1 of the
Credit Agreement is hereby amended to read in its entirety as follows:
 
“3.1    The Collateral:    To secure payment and performance of all the
Borrower’s Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank, whether or
not evidenced by this or by any other agreement, absolute or contingent, due or
to become due, now existing or hereafter and howsoever created, the Borrower
hereby grants the Bank a security interest in and to all of the following
property (“Collateral”):
 
(i)    All now existing and hereafter arising accounts, chattel paper,
documents, instruments, letter-of-credit rights, commercial tort claims, and
general intangibles (as those terms are defined in the California Uniform
Commercial Code as in effect from time to time) of Borrower, whether or not
arising out of or in connection with the sale or lease of goods or the rendering
of services, and all rights of Borrower now and hereafter arising in and to all
security agreements, guaranties, leases and other writings securing or otherwise
relating to any such accounts, chattel paper, documents, instruments,
letter-of-credit rights, commercial tort claims and general intangibles, but
excluding accounts, chattel paper, chattel paper, documents, instruments,
letter-of-credit rights, commercial tort claims and general intangibles of any
Foreign Subsidiary;

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(ii)    All inventory of Borrower, now owned and hereafter acquired, wherever
located, including, without limitation, all merchandise, goods and other
personal property which are held for sale or lease or leased by Borrower or to
be furnished under a contract of service, all raw materials, work in process,
materials used or consumed in Borrower’s business and finished goods, all goods
in which Borrower has an interest in mass or a joint or other interest or gifts
of any kind (including goods in which Borrower has an interest or right as
consignee), and all goods which are returned to or repossessed by Borrower,
together with all additions and accessions thereto and replacements therefor and
products thereof and documents therefor, but excluding the inventory or any
Foreign Subsidiary;
 
(iii)    All equipment of Borrower, now owned and hereafter acquired, wherever
located, and all parts thereof and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor, including,
without limitation, all machinery, tools, dies, blueprints, catalogues, computer
hardware and software, furniture, furnishings and fixtures, but excluding the
equipment of any Foreign Subsidiary;
 
(iv)    All now existing and hereafter acquired computer hardware and software,
copyrights, patents, trademarks and trade secrets;
 
(v)    All deposit accounts, now existing and hereafter arising or established,
maintained in Borrower’s name with any financial institution and any and all
funds at any time held therein and all certificates, instruments and other
writings, if any, from time to time representing, evidencing or deposited into
such accounts, and all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the foregoing, but excluding any interests in
deposit accounts of any Foreign Subsidiary;
 
(vi)    All of Borrower’s right, title and interest in and to (but not
Borrower’s obligations under) all now existing and hereafter arising contracts
and agreements to which Borrower is party, in each case as such agreements may
be amended, supplemented or otherwise modified from time to time (such
agreements, as so amended, supplemented or modified, individually, an “Assigned
Agreement,” and, collectively, the “Assigned Agreements”), including, without
limitation, all rights of Borrower to receive moneys due and to become due under
or pursuant to the Assigned Agreements, all rights of Borrower to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, all claims of Borrower for damages arising out of or for
breach of or default under the Assigned Agreements, and all rights of Borrower
to terminate, amend, supplement or modify the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder; provided, however, that with respect to any such contract or
agreement where the grant of a security interest in Borrower’s right, title and
interest therein in prohibited by the terms thereof, or would give any other
party the right to terminate its obligations thereunder, or is not permitted
because any necessary consent to such grant has not been obtained, the
Collateral shall include only the rights of Borrower to receive moneys due and
to become due, if any, under or pursuant to such contract or agreement, but
excluding any agreement or contract to which a Foreign Subsidiary is a party
(other than any such agreement or contract to which the Borrower is also a
party);
 
(vii)    All now existing and hereafter acquired books, records, writings, data
bases, information and other property relating to, used or useful in connection
with, embodying, incorporating or referring to, any of the foregoing Collateral;

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(viii)    All other property of Borrower now or hereafter in the possession,
custody or control of the Bank, and all property of Borrower in which the Bank
now has or hereafter acquires a security interest, but excluding any property of
any Foreign Subsidiary;
 
(ix)    All now existing and hereafter acquired cash and cash equivalents held
by Borrower not otherwise included in the foregoing Collateral, but excluding
any cash and cash equivalents held by any Foreign Subsidiary; and
 
(x)    All products and proceeds of the foregoing Collateral. For purposes of
this Security Agreement, the term “proceeds” shall have the meaning provided in
the California Uniform Commercial Code as in effect from time to time, and also
includes any voluntary or involuntary disposition, and all rights to payment,
including return premiums, with respect to any insurance.
 
The security interest granted to Bank in the Collateral shall not secure or be
deemed to secure any Indebtedness of the Borrower to the Bank which is, at the
time of its creation, subject to the provisions of any state or federal consumer
credit or truth-in-lending disclosure statutes.
 
The Borrower hereby acknowledges and agrees that the Bank, in connection with
the filing of any UCC financing statements necessary to perfect or maintain the
perfection of its lien in the Collateral hereunder, may utilize a general
description of the Collateral, such as ‘all now owned and hereafter acquired
personal property of the Borrower.’”
 
9.    Reaffirmation of Loan Documents.    The Borrower hereby confirms and
agrees that the execution and delivery by the Borrower of this Fourth Amendment
shall not in any manner or to any extent be deemed to amend, impair, invalidate
or otherwise affect any of the obligations of the Borrower or the rights of the
Bank under the Credit Agreement or any other document of instrument made or
given by the borrower in connection therewith and that the term “Obligations” as
used in the Credit Agreement as amended hereby.
 
10.    Fourth Amendment Effective Date.    This Fourth Amendment shall be
effective, as of the day and year first above written, on the date (the “Fourth
Amendment Effective Date”) that there shall have been delivered to the Bank:
 
(a)    A copy of this Fourth Amendment duly executed by all parties required as
signatories hereto;
 
(b)    From each of UDT Sensors, Inc., Rapiscan Security Products (U.S.A.),
Inc., Metorex Security Products, Inc., Aristo Medical Products, Inc., OSI
Fibercomm, Inc., Osteometer Meditech, Inc., and Ferson Optics, Inc. (each a
“Guarantor”, and, collectively, the “Guarantors”), a duly executed replacement
guaranty in the form of that attached hereto as Exhibit A, which shall replace
the existing guaranty previously delivered by each such Guarantor in its
entirety (collectively, the “Replacement Guaranties”);
 
(c)    Such amendments to any UCC financing statements previously filed naming
the Borrower as the “Debtor” and the Bank as the “Secured Party” thereunder as
the Bank may require;
 
(d)    An amendment fee payable to the Bank in the amount of $37,500.00; and
 
(e)    Such corporate resolutions and other authorizing documentation from the
Borrower and each of the Guarantors as the Borrower may require.

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11.    No Other Amendment.    Except as expressly amended hereby, the Credit
Agreement and the other loan documents shall remain in full force and effect as
written.
 
12.    Counterparts.    This Fourth Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
 
13.    Representations and Warranties.    The Borrower and, by executing this
Fourth Amendment is provided below, each of the Guarantors, hereby represents
and warrants to the Bank as follows:
 
(a)    The Borrower and each of the Guarantors each have the power and authority
and the legal right to execute, deliver and perform this Fourth Amendment, and
in the case of the Guarantors, the Replacement Guaranties, and have taken all
corporate action necessary to authorize the execution, delivery and performance
of this Fourth Amendment. This Fourth Amendment and the Replacement Guaranties
have been duly executed and delivered on behalf of the Borrower and each of the
Guarantors, as applicable, and each such document constitutes the legal, valid
and binding obligations of such persons, enforceable against such Persons in
accordance with its terms.
 
(b)    Both prior to and after giving effect to this Fourth Amendment: (1) the
representations and warranties of the Borrower and the Guarantors contained in
the Credit Agreement, the Replacement Guaranties and the other loan documents
are accurate and complete in all respects, and (2) there has not occurred in
Event of Default.
 
[Signature Pages Following]

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be
executed as of the day and year first above written.
 
OSI SYSTEMS, INC., as the Borrower
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
THE BANK OF THE WEST, doing business as
UNITED CALIFORNIA BANK, as the Bank
By:
 
/S/    GREGG HESSICK        

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Gregg Hessick

 
ACKNOWLEDGED AND AGREED TO
as of the day and year first above written:
 
UDT SENSORS, INC., as a Guarantor
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
RAPISCAN SECURITY PRODUCTS (U.S.A), INC., as a Guarantor
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
 
 
 
 

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METOREX SECURITY PRODUCTS, INC., as a Guarantor
 
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
ARISTO MEDICAL PRODUCTS, INC., as a Guarantor
 
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
OSI FIBERCOMM, INC., as a Guarantor
 
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
FERSON OPTICS, INC., as a Guarantor
 
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

 
OSTEOMETER MEDITECH, INC., as a Guarantor
 
By:
 
/S/    DEEPAK CHOPRA        

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Deepak Chopra

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EXHIBIT A
 
FORM OF
 
REPLACEMENT GUARANTY
 
THIS GUARANTY (the “Guaranty”) is made and dated as of the 28 day of June, 2002
by             , a California corporation (“Guarantor”).
 
RECITALS
 
A.    This Guaranty is being executed and delivered by Guarantor to THE BANK OF
THE WEST, doing business as UNITED CALIFORNIA BANK (“Bank”) pursuant to that
certain Credit Agreement dated as of February 27, 2001 by and among the Bank and
OSI SYSTEMS, INC., a California corporation (“Borrower”) (as amended, extended
and replaced from time to time, the “Credit Agreement,” and with capitalized
terms not otherwise defined herein used with the meanings given such terms in
the Credit Agreement).
 
B.    Pursuant to the Credit Agreement Bank has agreed to extend credit to
Borrower on the terms and subject to the conditions set forth therein.
 
C.    As a condition precedent to Bank’s obligation to extend credit under the
Credit Agreement, Guarantor was required, among other things, to execute and
deliver that certain Continuing Guaranty dated as of February 27, 2001 to Bank
(the “Existing Guaranty”).
 
D.    Pursuant to that certain Fourth Amendment to Credit Agreement dated as of
June     , 2002 by and among the Bank and the Borrower (the “Fourth Amendment”),
Guarantor is required to execute and deliver this Guaranty, which shall replace
the Existing Guaranty.
 
NOW, THEREFORE, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees as follows:
 
AGREEMENT
 
1.    Guarantor hereby absolutely and unconditionally guarantees the payment
when due, upon maturity, acceleration or otherwise, of all Obligations of
Borrower to Bank under the Credit Agreement, including in all cases, whether
heretofore, now, or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not such Obligations are
from time to time reduced, or extinguished and thereafter increased or incurred,
whether Borrower may be liable individually or jointly with others, whether or
not recovery upon such Obligations may be or hereafter become barred by any
statute of limitations, and whether or not such Obligations may be or hereafter
become otherwise unenforceable.
 
2.    Guarantor hereby absolutely and unconditionally guarantees the payment of
the Obligations, whether or not due or payable by Borrower, upon: (a) the
dissolution, insolvency or business failure of, or any assignment for benefit of
creditors by, or commencement of any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceedings by or against, either Borrower or
Guarantor, as applicable, or (b) the appointment of a receiver for, or the
attachment, restraint of or making or levying of any order of court or legal
process affecting, the property of either Borrower or

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Guarantor, and unconditionally promises to pay such Obligations to Bank, or
order, on demand, in lawful money of the United States.
 
3.    The liability of Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the Obligations, whether executed by Guarantor
or by any other party, and the liability of Guarantor hereunder is not affected
or impaired by (a) any direction of application of payment by Borrower or by any
other party, or (b) any other guaranty, undertaking or maximum liability of
Guarantor or of any other party as to the Obligations, or (c) any payment on or
in reduction of any such other guaranty or undertaking, or (d) any revocation or
releases of any obligations of any other guarantor of the Obligations, or (e)
any dissolution, termination or increase, decrease or change in personnel of
Guarantor, or (f) any payment made to Bank on the Obligations which Bank repays
to Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and Guarantor waives
any right to the deferral or modification of Guarantor’s obligations hereunder
by reason of any such proceeding.
 
4.    (a)    The obligations of Guarantor hereunder are independent of the
obligations of Borrower with respect to the Obligations, and a separate action
or actions may be brought and prosecuted against Guarantor whether or not action
is brought against Borrower and whether or not Borrower be joined in any such
action or actions. Guarantor waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by Borrower or other circumstance which
operates to toll any statute or limitations as to Borrower shall operate to toll
the statute of limitations as to Guarantor.
 
(b)    All payments made by Guarantor under this Guaranty shall be made without
set-off or counterclaim and free and clear of and without deductions for any
present or future taxes, fees, withholdings or conditions of any nature
(“Taxes”). Guarantor shall pay any such Taxes, including Taxes on any amounts so
paid, and will promptly furnish Bank copies of any tax receipts or such other
evidence of payment as Bank may require.
 
5.    Guarantor authorizes Bank (whether or not after termination of this
Guaranty), without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of Obligations or any part thereof, including increase or decrease of the
rate of interest thereon; (b) take and hold security for the payment of this
Guaranty or the Obligations and exchange, enforce, waive and release any such
security; (c) apply such security and direct the order or manner of sale thereof
as Bank in its discretion may determine; and (d) release or substitute any one
or more endorsers, guarantors, Borrower or other obligors. Bank may, without
notice to or the further consent of Borrower or Guarantor, assign this Guaranty
in whole or in part to any person acquiring an interest in the Obligations.
 
6.    It is not necessary for Bank to inquire into the capacity or power of
Borrower or the officers acting or purporting to act on their behalf, and
Obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
 
7.    Guarantor waives any right to require Bank to (a) proceed against Borrower
or any other party; (b) proceed against or exhaust any security held from
Borrower, or (c) pursue any other remedy whatsoever. Guarantor waives any
personal defense based on or arising out of any personal defense of Borrower
other than payment in full of the Obligations, including, without limitation,
any defense based on or arising out of the disability of either Borrower, or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of Borrower other than payment in

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full of the Obligations. Bank may, at its election, foreclose on any security
held for the Obligations by one or more judicial or nonjudicial sales, or
exercise any other right or remedy they may have against Borrower, or any
security, without affecting or impairing in any way the liability of Guarantor
hereunder except to the extent the Obligations have been paid. Guarantor waives
all rights and defenses arising out of an election of remedies, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed Guarantor’s rights or subrogation and
reimbursement against the principal by operation of Section 580d of the
California Code of Civil Procedure.
 
8.    Guarantor hereby waives any claim or other rights which Guarantor may now
have or may hereafter acquire against Borrower or any other guarantor of all or
any of the Obligations that arise from the existence or performance of
Guarantor’s obligations under this Guaranty or any other of the Credit Documents
(all such claims and rights being referred to as the “Guarantor’s Conditional
Rights”), including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, or indemnification, any right to
participate in any claim or remedy which Bank has against Borrower or any
collateral which Bank now has or hereafter acquires for the Obligations, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, by any payment made hereunder or otherwise, including, without
limitation, the right to take or receive from Borrower, directly or indirectly,
in cash or other property or by setoff or in any other manner, payment or
security on account of such claim or other rights. If, notwithstanding the
foregoing provisions, any amount shall be paid to Guarantor on account of
Guarantor’s Conditional Rights and either (a) such amount is paid to Guarantor
at any time when the Obligations shall not have been paid or performed in full,
or (b) regardless of when such amount is paid to Guarantor any payment made by
Borrower to Bank is at any time determined to be a preferential payment, then
such amount paid to Guarantor shall be deemed to be held in trust for the
benefit of Bank and shall forthwith be paid to Bank to be credited and applied
upon the Obligations, whether matured or unmatured, in such order and manner as
Bank, in its sole discretion, shall determine. To the extent that any of the
provisions of this Paragraph 8 shall not be enforceable, Guarantor agrees that
until such time as the Obligations have been paid and preformed in full and the
period of time has expired during which any payment made by Borrower or
Guarantor may be determined to be a preferential payment, Guarantor’s
Conditional Rights to the extent not validly waived shall be subordinate to
Bank’s right to full payment and performance of the Obligations and Guarantor
shall not seek to enforce Guarantor’s Conditional Rights during such period.
 
9.    Guarantor waives all presentments, demands for performance, protests and
notices, including, without limitation, notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional
Obligations. Guarantor assumes all responsibility for being and keeping itself
informed of either Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks which Guarantor assumes and incurs
hereunder, and agrees that Bank shall have no duty to advise Guarantor of
information known to it regarding such circumstances or risks.
 
10.    In addition to the Obligations, Guarantor agrees to pay reasonable
attorney’s fees and all other reasonable costs and expenses incurred by Bank in
enforcing this Guaranty in any action or proceeding arising out of or relating
to this Guaranty.
 
11.    Guarantor hereby represents and warrants as follows:
 
(a)    Guarantor has reviewed and approved the Credit Agreement and the other
credit documents, including, without limitation, the Fourth Amendment.

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(b)    Guarantor has the power and authority and the legal right to execute,
deliver and perform this Guaranty and has taken all necessary action to
authorize the execution, delivery and performance of this Guaranty. This
Guaranty has been duly executed and delivered on behalf of Guarantor and
constitutes the legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms, subject to the effect of
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and the effect of equitable principles whether applied in an action at
law or a suit in equity.
 
12.    Guarantor hereby covenants and agrees with Bank that it will cooperate
with Borrower to facilitate Borrower’s compliance with all the covenants set
forth in the Credit Agreement. Guarantor further agrees to execute any and all
further documents, instruments and agreements as Bank from time to time
reasonably requests to evidence Guarantor’s obligations hereunder.
 
13.    This Guaranty shall be governed by and construed in accordance with the
laws of the State of California without giving effect to its choice of law
rules.
 
14.    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY,
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. GUARANTOR 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 THIS
GUARANTY. GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
 
15.    GUARANTOR, AND BY ACCEPTING THIS GUARANTY BANK, WAIVES ITS RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS GUARANTY OR THE TRANSCTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIIMS, TORT CLAIMS, OR
OTHERWISE. GUARANTOR AND BANK AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
 
[Signature page following]

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IN WITNESS WHEREOF, this Guaranty is executed as of the day and year first above
written.
 
 
                                    , a California corporation
By:
 
/S/    DEEPAK CHOPRA      

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Deepak Chopra

 

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