Exhibit 10.1

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[utmd8k20110323usd0.jpg]
 
 
CREDIT AGREEMENT
 
 
dated as of
 
 
March 17, 2011
 
 
among
 
 
UTAH MEDICAL PRODUCTS, INC.,
as Borrower,
 
 
and
 
 
JPMORGAN CHASE BANK, N.A.,
as Lender
 
 
 
 

 
 
 

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CREDIT AGREEMENT dated as of March 17, 2011 (as it may be amended or modified
from time to time, this “Agreement”), among UTAH MEDICAL PRODUCTS, INC., a Utah
corporation, the other Loan Parties party hereto, and JPMORGAN CHASE BANK, N.A.
 
The parties hereto agree as follows:
 
ARTICLE I
 
Definitions
 
SECTION 1.01.  Defined Terms.  As used in this Agreement, the following terms
have the meanings specified below:
 
“Account” has the meaning assigned to such term in the Security Agreement.
 
“Account Debtor” means any Person obligated on an Account.
 
“Acquisition” means the acquisition of 100% of the issued and outstanding Equity
Interests in Femcare Group by the Borrower.
 
“Adjusted LIBOR Rate” means, with respect to any Interest Period, an interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBOR Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.
 
 “Adjusted One Month LIBOR Rate” means, an interest rate per annum equal to the
sum of (i) the Applicable Margin per annum plus (ii) the Adjusted LIBOR Rate for
a one month Interest Period on such day (or if such day is not a business Day,
the immediately preceding business Day); provided that, for the avoidance of
doubt, the Adjusted LIBOR Rate for any day shall be based on the rate appearing
on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day.
 
“Affiliate” means, with respect to a specified 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.
 
“Applicable Margin” means, for any day, with respect to the Adjusted LIBOR Rate,
based upon the Borrower’s Leverage Ratio as of the most recent determination
date, provided that until the delivery to Lender, pursuant to Section 5.01, of
the Borrower’s consolidated financial information for the Borrower’s first
fiscal quarter ending after the Effective Date, the “Applicable Margin” shall be
the Applicable Margin per annum set forth below in Category 2:
 
Leverage Ratio
 
Applicable Margin
 
Category 1
≤ 1.50 to 1.0
2.00%
Category 2
> 1.5 to 1.0  but
≤ 2.50 to 1.0
2.80%
Category 3
> 2.50 to 1.0
3.75%

For purposes of the foregoing, (a) the Applicable Margin shall be determined as
of the end of each fiscal quarter of the Borrower based upon the Borrower’s
annual or quarterly consolidated financial statements delivered pursuant to
Section 5.01 and (b) each change in the Applicable Margin resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to Lender of such consolidated financial
statements indicating such change and ending on the date immediately preceding
the effective date of the next such change, provided that the Leverage Ratio
shall be deemed to be in Category 3: (A) at any time that an Event of Default
has occurred and is continuing or (B) at the option of Lender if the Borrower
fails to deliver the annual or quarterly consolidated financial statements
required to be delivered by it pursuant to Section 5.01, during the period from
the expiration of the time for delivery thereof until five (5) days after such
consolidated financial statements are delivered.

 
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“Banking Services” means each and any of the following bank services provided to
any Loan Party by Lender or any of its Affiliates: (a) credit cards for
commercial customers (including, without limitation, “commercial credit cards”
and purchasing cards), (b) stored value cards and (c) treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).
 
“Banking Services Obligations” of the Loan Parties means any and all obligations
of the Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.
 
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
 
“Borrower” means Utah Medical Products, Inc., a Utah corporation.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, the term “Business Day” shall also exclude any day
on which banks are not open for dealings in dollar deposits in the London
interbank market.
 
“Capital Expenditures” means, without duplication, any expenditure or commitment
to expend money for any purchase or other acquisition of any asset which would
be classified as a fixed or capital asset on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
 
“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
 
“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall never be less than the Adjusted One Month LIBOR Rate for a one month
Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day).  Any change in the CB Floating Rate due to
a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Adjusted One Month LIBOR Rate, respectively.
 
“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of Equity
Interests representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group other than Femcare Group.
 
“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by Lender with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Collateral” means any and all property owned, leased or operated by a Person
covered by the Collateral Documents and any and all other property of any Loan
Party, now existing or hereafter acquired, that may at any time be or become
subject to a security interest or Lien in favor of Lender to secure the Secured
Obligations.
 

 
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“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages, any document governing or evidencing a pledge of Equity Interests,
and any other documents granting a Lien upon the Collateral as security for
payment of the Secured Obligations.
 
“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.
 
“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
 
“Distributions” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
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 Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower, but excluding reasonable
bonuses and other compensation to employees, officers and directors.
 
“dollars” or “$” refers to lawful money of the United States of America.
 
“EBITDA” means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (i) Interest Expense for such period, (ii) income tax expense
for such period net of tax refunds, (iii) all amounts attributable to
depreciation and amortization expense for such period, (iv) any extraordinary
non-cash charges for such period (v) any other non-cash charges for such period
(but excluding any non-cash charge in respect of an item that was included in
Net Income in a prior period, minus (b) without duplication and to the extent
included in Net Income, (i) any cash payments made during such period in respect
of non-cash charges described in clause (a)(v) taken in a prior period and (ii)
any extraordinary gains and any non-cash items of income for such period, all
calculated for the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
 
“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 8.02).
 
“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
 
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary 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.
 
“Equity Interests “ means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
 

 
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“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
 
“Event of Default” has the meaning assigned to such term in Article VII.
 
“Excluded Taxes” means, with respect to Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income by the
United States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of Lender, in which its applicable lending office is located, and (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located.
 
“Femcare Group” means Femcare Group Limited (Company number: 5147637).
 
“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 
“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
 
“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
 
“Guaranteed Obligations” has the meaning assigned to such term in Section 9.01.
 
“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.
 
“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, and (k)
obligations under any Off-Balance Sheet Liability.  The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
 

 
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“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Interest Coverage Ratio” means, for any period, the ratio of (a) EBITDA minus
(i) Capital Expenditures which were not financed with long term debt, (ii)
Distributions, and (i) income tax expense for such period net of tax refunds for
such period to (b) Interest Expense, plus scheduled payments on Capital Leases
Obligations, principal payments on debt that is not Subordinated Indebtedness,
and principal payments on Subordinated Indebtedness for such period.
 
 “Interest Expense” means, with reference to any period, total interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and
its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Borrower and its Subsidiaries (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers’
acceptance financing and net costs under Swap Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance
with GAAP), calculated on a consolidated basis for the Borrower and its
Subsidiaries for such period in accordance with GAAP.
 
 “Interest Payment Date” means (a) with respect to any time during which
interest on the principal balance of the Loan is accruing based on the CB
Floating Rate, the 1st day of each month and the Maturity Date, (b) with respect
to any time during which interest on the principal balance of the Loan is
accruing based on the Adjusted One Month LIBOR Rate, the last day of the
Interest Period applicable to the Loan, and (b) the Maturity Date. 
 
“Interest Period” means the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month that is one
month thereafter, as the Borrower may elect; provided, that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period.  For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Revolving Borrowing, thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
 
“Inventory” has the meaning assigned to such term in the Security Agreement.

“Joinder Agreement” has the meaning assigned to such term in Section 5.11.
 
“Lender” means JPMORGAN CHASE BANK, N.A., and its successors and assigns.
 
“Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness on such
date less Accounts arising from the purchase of goods and services in the
ordinary course of business, accrued expenses and losses and deferred gains and
revenues to (b) EBITDA for the period of four consecutive fiscal quarters ended
on such date (or, if such date is not the last day of a fiscal quarter, ended on
the last day of the fiscal quarter most recently ended prior to such date).
 
“LIBOR Rate” means, with respect to any Interest Period, the rate appearing on
Reuters Screen LIBOR01 Page (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by Lender from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period.  In the event that such rate is not
available at such time for any reason, then the “LIBOR Rate” for such Interest
Period shall be the rate at which dollar deposits in the approximate principal
amount outstanding and for a maturity comparable to such Interest Period are
offered by the principal London office of Lender in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
 

 
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“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
 
“Loan” means the credit facility and advances made by Lender pursuant to this
Agreement.
 
“Loan Amount” means Fourteen Million and No/100 Dollars ($14,000,000.00).
 
“Loan Documents” means this Agreement, any promissory notes issued pursuant to
the Agreement, the Collateral Documents, the Loan Guaranty and all other
agreements, instruments, documents and certificates identified in Section 4.01
executed and delivered to, or in favor of, Lender and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written matter whether heretofore, now or
hereafter executed by or on behalf of any Loan Party, or any employee of any
Loan Party, and delivered to Lender in connection with the Agreement or the
transactions contemplated thereby.  Any reference in the Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
 
“Loan Guarantor” means each Loan Party (other than the Borrower and the
Borrower’s foreign Subsidiaries).
 
“Loan Guaranty” means Article IX of this Agreement.
 
“Loan Parties” means the Borrower, the Borrower's domestic Subsidiaries and any
other Person who becomes a party to this Agreement pursuant to a Joinder
Agreement and their successors and assigns.
 
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under the Loan Documents to which it is
a party, (c) the Collateral, or Lender’s Liens on the Collateral or the priority
of such Liens, or (d) the rights of or benefits available to Lender thereunder.
 
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $250,000.  For purposes of determining Material Indebtedness, the
“obligations” of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if
such Swap Agreement were terminated at such time.
 
“Maturity Date” means March 17, 2016.
 
“Maximum Liability” has the meaning assigned to such term in Section 9.10.
 
“Mortgages” means any mortgage, deed of trust or other agreement which conveys
or evidences a Lien in favor of Lender on real property of a Loan Party,
including any amendment, modification or supplement thereto.
 
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
 
“Net Income” means, for any period, the consolidated net income (or loss) of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which the Borrower or any of
its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
 

 
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“Net Proceeds” means, with respect to any event, (a) the cash proceeds received
in respect of such event including (i) any cash received in respect of any
non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) and the amount of any reserves established
to fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by a Financial Officer).
 
“Net Worth” means the gross fair market value of the Borrower’s assets
(excluding all intangibles including goodwill, patents, trademarks, copyrights,
trade names, start-up costs, non-compete covenants, and other like intangibles,
and monies due from stockholders and Affiliates of the Borrower), less total
liabilities, including, but not limited to, estimated taxes on asset
appreciation and any reserves or offsets against assets.
 
“Non-Paying Guarantor” has the meaning assigned to such term in Section 9.11.
 
“Obligated Party” has the meaning assigned to such term in Section 9.02.
 
“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loan all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to Lender or any
indemnified party arising under the Loan Documents including all obligations of
Borrower under the Parent Guaranty with respect to the UK Loan Facility.
 
 “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation
or liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person (other than operating leases).
 
“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
 
“Participant” has the meaning set forth in Section 8.04.
 
“Paying Guarantor” has the meaning assigned to such term in Section 9.11.
 
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
 
“Parent Guaranty” means that certain Continuing Guaranty dated March 17, 2011 by
Borrower of the obligations of Femcare Group and any other Loan Party under the
UK Loan Facility.
 

 
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“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
 
“Permitted Encumbrances” means:
 
(a)           Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
 
(b)           carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
 
(c)           pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
 
(d)           deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
 
(e)           judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and
 
(f)           easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;
 
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
 
“Permitted Investments” means:
 
(a)           direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
 
(b)           investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;
 
(c)           investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
 
(d)           fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
 
(e)           money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“Plan”  means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
 

 
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“Prime Rate” means the rate of interest per annum publicly announced from time
to time by  JPMorgan Chase Bank, N.A. as its prime rate at its offices at 270
Park Avenue in New York City; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.
 
“Projections” has the meaning assigned to such term in Section 5.01(f).
 
“Rate Management Transaction” means (i) any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between Borrower
and JPMorgan Chase Bank, N.A. and/or its affiliates which is a rate swap, swap
option, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap, floor, collar, currency
swap, cross-currency rate swap, currency option, credit protection transaction,
credit swap, credit default swap, credit default option, total return swap,
credit spread, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including an option with respect to any of
these transactions), or (ii) any type of transaction that is similar to any
transaction referred to in clause (i) above that is currently, or in the future
becomes, recurrently entered into in the financial markets and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, or any combination of the foregoing transactions.

“Related Parties” means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
 
“Requirement of Law” means, as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
 
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
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 Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower.
      
“Secured Obligations” means all Obligations, together with all (i) Banking
Services Obligations (ii) any and all obligations, contingent or otherwise,
whether now existing or hereafter arising, of Borrower to Lender or its
Affiliates arising under or in connection with Rate Management Transactions,
including without limitation that certain 2002 Master Agreement dated as of
March 15, 2011, in the amount of $7,000,000, (iii) the obligations of Borrower
under the Parent Guaranty, and (iv) all obligations of Femcare Group and any
other Loan Party under the UK Loan Facility and all related documents,
instruments and agreements.
 
“Security Agreement” means that certain Pledge and Security Agreement, dated as
of the date hereof, between the Loan Parties and Lender, and any other pledge or
security agreement entered into, after the date of this Agreement by any other
Loan Party (as required by this Agreement or any other Loan Document), or any
other Person, as the same may be amended, restated or otherwise modified from
time to time.
 
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which Lender is subject with respect to the Adjusted
LIBOR Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board).  Such reserve percentages shall
include those imposed pursuant to such Regulation D.  The Loan shall be deemed
to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to Lender under such Regulation D or any
comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
 

 
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“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the Secured Obligations to
the satisfaction of the Lender.
 
“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
 
“Subsidiary” means any direct or indirect subsidiary of the Borrower or a Loan
Party, as applicable.
 
 “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
 
“Total Indebtedness” means, at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP.
 
“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement, the borrowing of Loan and the use of the proceeds thereof.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Utah or any other state the laws of which are required to be applied in
connection with the issue of perfection of security interests.
 
“UK Loan Facility” means that certain credit facility extended by JPMorgan Chase
Bank, N.A., London Branch to Femcare Group and any other Loan Party pursuant to
that certain £8,000,000 Facility Agreement dated March 17, 2011.
 
“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.
 
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
 
“Working Capital” means, at any date, the excess of current assets of the
Borrower and its Subsidiaries on such date over current liabilities of the
Borrower and its Subsidiaries on such date, all determined on a consolidated
basis in accordance with GAAP.
 
SECTION 1.02.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding mascu­line,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word
“will” shall be construed to have the same meaning and effect as the word
“shall”.  Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
 

 
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SECTION 1.03.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies Lender that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if Lender notifies the Borrower that it request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until  such
notice shall have been withdrawn or such provision  amended in accordance
herewith.
 
ARTICLE II

The Loan
 
SECTION 2.01.  Agreement to Lend and Borrow.  Subject to the terms and
conditions of this Agreement and the other Loan Documents, Lender agrees to lend
to Borrower, and Borrower agrees to borrow from Lender, an advance of the
proceeds of the Loan equal to the Loan Amount.
 
(a)           Proceeds of the Loan prepaid or repaid by Borrower may not be
reborrowed.
 
(b)           The proceeds of the Loan less costs, fees and expenses payable
hereunder shall be advanced to Borrower on the Closing Date as provided in a
Disbursement and Rate Management Authorization Form executed and delivered by
Borrower to Lender, or by such other means as Lender and Borrower may agree,
subject in all cases to the provisions of the Loan Documents.
 
SECTION 2.02.  Interest and Payments.
 
(a)           The outstanding principal balance of the Loan shall bear interest
at the Adjusted One Month LIBOR Rate in effect from time to time..
 
(b)           Notwithstanding the foregoing, during the occurrence and
continuance of an Event of Default, Lender may, at its option, by notice to the
Borrower, declare that (i) the outstanding principal balance of the Loan shall
bear interest at 3% plus the rate otherwise applicable to such Loan as provided
in the preceding paragraphs of this Section or (ii) in the case of any other
amount outstanding hereunder, such amount shall accrue at 3% plus the rate
applicable to such fee or other obligation as provided hereunder.
 
(c)           Accrued interest on the Loan shall be payable in arrears on each
Interest Payment Date and upon the Maturity Date; provided that (i) interest
accrued pursuant to paragraph (b) of this Section shall be payable on demand and
(ii) in the event of any repayment or prepayment of the Loan, accrued interest
on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment.
 
(d)           Commencing on the first Payment Date following the Closing Date,
and continuing on each monthly Payment Date thereafter, Borrower shall make, in
addition to payments of accrued interest as set forth herein, monthly payments
of principal hereunder and under the Note to Lender in the amount of TWO HUNDRED
THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE AND33/100 DOLLARS
($233,333.33), which is equal to one sixtieth of the principal amount of the
Loan.
 
(e)           The outstanding principal balance of the Loan, together with all
unpaid accrued interest thereon, and all other amounts payable by Borrower with
respect to this Agreement or pursuant to the terms of any other Loan Documents,
shall be due and payable on the Maturity Date in lawful money of the United
States of America.
  
(g)           All interest hereunder shall be computed on the basis of a year of
360 days, and shall be payable for the actual number of days elapsed.  The
applicable CB Floating Rate, Adjusted One Month LIBOR Rate, Adjusted LIBOR Rate
or LIBOR Rate shall be determined by Lender, and such determination shall be
conclusive absent manifest error.
 
(f)           Borrower agrees to pay an effective rate of interest that is the
sum of (i) the interest rate provided in this Agreement and (ii) any additional
rate of interest resulting from any other charges or fees paid or to be paid in
connection herewith that are determined to be interest or in the nature of
interest.  Any other provision of this Agreement or any of the other Loan
Documents to the contrary notwithstanding, Lender and Borrower agree that none
of the terms and provisions contained herein or in any of the Loan Documents
shall be construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate in excess of the maximum interest
rate permitted to be charged by the Requirements of Laws of the State of
Utah.  In such event, if any holder of the Note shall collect monies which are
deemed to constitute interest which would otherwise increase the effective
interest rate on the Note to a rate in excess of the maximum rate permitted to
be charged by applicable Requirements of Law, all such sums deemed to constitute
interest in excess of such maximum rate shall, at the option of the holder, be
credited to the payment of other amounts payable under the Loan Documents or
returned to Borrower.

 
 
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SECTION 2.03.  Evidence of Indebtedness.  The Loan shall be evidenced by a
promissory note.  Disbursements of the Loan shall be charged and funded under
such promissory note.  If there is any inconsistency between the promissory and
this Agreement, the provisions of this Agreement shall prevail.
 
SECTION 2.04.  Application of Payments.
 
(c)           Application of Payments.  Unless otherwise agreed to, in writing,
or otherwise required by applicable Requirements of Law, payments will be
applied first to accrued, unpaid interest, then to any unpaid collection costs,
late charges and other charges, and any remaining amount to principal; provided,
however, upon the occurrence of a Default or an Event of Default, Lender
reserves the right to apply payments among principal, interest, late charges,
collection costs and other charges at its sole and absolute discretion.  All
prepayments shall be applied to the indebtedness owing hereunder in such order
and manner as Lender may from time to time determine in its sole and absolute
discretion.
 
(d)           No Deductions.  All payments of principal or interest hereunder or
under the Note shall be made (i) without deduction of any present and future
taxes, levies, imposts, deductions, charges or withholdings, which amounts shall
be paid by Borrower, and (ii) without any other set off.  Borrower will pay the
amounts necessary such that the gross amount of the principal and interest
received by Lender is not less than that required hereby and by the Note.
 
SECTION 2.05.  Late Charges.  If any payment of interest or principal required
pursuant to any provision of this Agreement is not received by Lender within ten
(10) days after its due date, then, in addition to the other rights and remedies
of Lender pursuant to this Agreement and the other Loan Documents, Borrower will
be charged five percent (5.0%) of the regularly scheduled payment or Twenty-Five
and No/100 Dollars ($25.00), whichever is greater, up to the maximum amount of
One Thousand Five Hundred and No/100 Dollars ($1,500.00) per late charge.  Such
late charge will be immediately due and payable and is in addition to any other
costs, fees, and expenses that Borrower may owe as a result of such late
payment.
 
SECTION 2.06.  Prepayment of Principal.   Borrower may at any time pay the full
amount or any part of the Note.  The Borrower shall notify the Lender by
telephone (confirmed by telecopy) of any prepayment hereunder not later than
11:00 a.m., Salt Lake City, Utah time, three Business Days before the date of
prepayment.  Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid.  Prepayments shall be accompanied by accrued interest on the amount
prepaid, plus any other amounts due under the section on Break Funding Payments.
 
SECTION 2.07.  Manner and Time of Payment.  All amounts payable by Borrower on
or with respect to the Loan, or pursuant to the terms of any other Loan
Documents, shall be paid without condition or reservation of right, in lawful
money of the United States of America at Lender’s address set forth therien, or
at such other place as Lender may from time to time designate in writing, not
later than 1:00 p.m. (Utah time), in same day funds, on the date due, and to
such account of Lender as Lender may designate; funds received by Lender after
that time shall be deemed to have been paid on the next succeeding Business
Day.  If any payment would otherwise be due on a day which is not a Business
Day, the payment instead shall be due on the next succeeding Business Day and
such extension of time shall be included in computing the interest due in
respect of said payment.
 
SECTION 2.08.  Alternate Rate of Interest.  If prior to the commencement of any
Interest Period:
 

 
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(a)           Lender determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBOR Rate or the LIBOR Rate, as applicable, for such Interest
Period; or
 
(b)           Lender determines that the Adjusted LIBOR Rate or the LIBOR Rate,
as applicable, for such Interest Period will not adequately and fairly reflect
the cost to Lender of making or maintaining the Loan for such Interest Period;
 
then Lender shall give notice thereof to the Borrower by telephone or facsimile
as promptly as practicable thereafter and, until Lender notifies the Borrower
that the circumstances giving rise to such notice no longer exist, the Borrower
shall repay in full the then outstanding principal amount of each advance
evidenced by the Note, together with accrued interest, on the last day of the
then current Interest Period or each such advance shall bear interest at the CB
Floating Rate plus the Applicable Margin.

SECTION 2.09.  Fees.  All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to Lender.  Fees paid shall not be refundable
under any circumstances.
 
SECTION 2.10.  Increased Costs.
 
(a)           If any Change in Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, Lender (except any such reserve requirement reflected in the
Adjusted LIBOR Rate); or
 
(ii)           impose on Lender or the London interbank market any other
condition affecting this Agreement or the Loan made by Lender;
 
and the result of any of the foregoing shall be to increase the cost to Lender
of making or maintaining the Loan or to reduce the amount of any sum received or
receivable by Lender hereunder (whether of principal, interest or otherwise),
then the Borrower will pay to Lender, as the case may be, such additional amount
or amounts as will compensate Lender for such additional costs incurred or
reduction suffered.
 
(b)           If Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
Lender's capital or on the capital of Lender's holding company, if any, as a
consequence of this Agreement or the Loan made by Lender to a level below that
which Lender or Lender's holding company could have achieved but for such Change
in Law (taking into consideration Lender's policies and the policies of Lender's
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to Lender such additional amount or amounts as will compensate
Lender or Lender’s holding company for any such reduction suffered.
 
(c)           A certificate of Lender setting forth the amount or amounts
necessary to compensate or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error.  The Borrower shall pay Lender the
amount shown as due on any such certificate within 10 days after receipt
thereof.
 
(d)           Failure or delay on the part of Lender to demand compensation
pursuant to this Section shall not constitute a waiver of Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate  Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that Lender notifies
the Borrower of the Change in Law giving rise to such increased costs or
reductions and of Lender's intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
 
SECTION 2.11.  Break Funding Payments.  In the event of (a) the payment of any
principal other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), the Borrower shall compensate
the Lender for the loss, cost and expense attributable to such event.  Such
loss, cost or expense to the Lender shall be deemed to include an amount
determined by the Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such borrowing had such
event not occurred, at the Adjusted LIBOR Rate that would have been applicable
to such borrowing, for the period from the date of such event to the last day of
the then current Interest Period therefor, over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate
which the Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
eurodollar market.  A certificate of the Lender setting forth any amount or
amounts that the Lender is entitled to receive pursuant to this Section 2.11
shall be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay the Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
 

 
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SECTION 2.12.  Taxes.
 
(a)           Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(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) Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
 
(b)           In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
 
(c)           The Borrower shall indemnify Lender, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by Lender on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to the Borrower by Lender shall be conclusive absent manifest error.
 
(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to Lender the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to
Lender.
 
(e)           If Lender determines, in its sole discretion, that it has received
a refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.11, it shall pay over such refund to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.12 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to Lender in the event Lender is required to repay such refund to
such Governmental Authority. This Section shall not be construed to require
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.
 
           SECTION 2.13.  Returned Payments.  If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, Lender is
for any reason compelled to surrender such payment or proceeds to any Person
because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by Lender.  The provisions of this Section
2.13 shall be and remain effective notwithstanding any contrary action which may
have been taken by Lender in reliance upon such payment or application of
proceeds.  The provisions of this Section 2.13 shall survive the termination of
this Agreement.
 

 
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ARTICLE III

Representations and Warranties
 
Each Loan Party represents and warrants to Lender that:
 
SECTION 3.01.  Organization; Powers.  Each of the Loan Parties and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every juris­diction where such qualification is
required.
 
SECTION 3.02.  Authorization; Enforceability.  The Transactions are within each
Loan Party's organizational powers and have been duly authorized by all
necessary organizational actions and, if required, actions by equity
holders.  The Loan Documents to which each Loan Party is a party have been duly
executed and delivered by such Loan Party and constitute a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
 
SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except for filings necessary to
perfect Liens created pursuant to the Loan Documents, (b) will not violate any
Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its assets,
or give rise to a right thereunder to require any payment to be made by any Loan
Party or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of any Loan Party or any of its
Subsidiaries, except Liens created pursuant to the Loan Documents.
 
SECTION 3.04.  Financial Condition; No Material Adverse Change.
 
(a)           The Borrower has heretofore furnished to Lender its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended December 31, 2009, reported on by Borrower’s
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended September 30, 2010, certi­fied by its chief
financial officer.  Such financial state­ments present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
 
(b)           No event, change or condition has occurred that has had, or could
reasonably be expected to have, a Material Adverse Effect, since September 30,
2010.
 
SECTION 3.05.  Properties.
 
(a)           As of the date of this Agreement, Schedule 3.05 sets forth the
address of each parcel of real property that is owned or leased by each Loan
Party.  Each of such leases and subleases is valid and enforceable in accordance
with its terms and is in full force and effect, and no default by any party to
any such lease or sublease exists.  Each of the Loan Parties and its
Subsidiar­ies has good and indefeasible title to, or valid leasehold interests
in, all its real and personal property, free of all Liens other than those
permitted by Section 6.02.
 
(b)           Each Loan Party and its Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business as currently conducted, a correct and complete list of
which, as of the date of this Agreement, is set forth on Schedule 3.05, and the
use thereof by the Loan Parties and its Subsidiaries does not infringe in any
material respect upon the rights of any other Person, and the Loan Parties’
rights thereto are not subject to any licensing agreement or similar
arrangement.
 
SECTION 3.06.  Litigation and Environmental Matters.

 
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(a)           There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of any
Loan Party, threatened against or affecting the Loan Parties or any of their
Subsidiaries (i) as to which there is a reasonable possi­bility of an adverse
determination and that, if adversely deter­mined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve this Agreement or the
Transactions.
 
(b)           Except for the Disclosed Matters (i) no Loan Party nor any of its
Subsidiaries has received notice of any claim with respect to any Environmental
Liability or knows of any basis for any Environmental Liability and (ii) and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, no Loan
Party nor any of its Subsidiaries (1) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law or (2) has become subject to
any Environmental Liability.
 
(c)           Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
 
SECTION 3.07.  Compliance with Laws and Agreements.  Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  No Default has occurred and is continuing.
 
SECTION 3.08.  Investment Company Status.  No Loan Party nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.
 
SECTION 3.09.  Taxes.  Each Loan Party and its Subsidiaries has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which such Loan Party or such Subsidiary, as applicable, has set aside on
its books adequate reserves or (b) to the extent that the failure to do so could
not be expected to result in a Material Adverse Effect.  No tax liens have been
filed and no claims are being asserted with respect to any such taxes.
 
SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.  The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $1,000 the fair market value of the
assets of all such underfunded Plans.
 
SECTION 3.11.  Disclosure.  The Borrower has disclosed to Lender all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary 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.  The other reports, financial statements, certificates or other
information furnished by or on behalf of the any Loan Party to Lender in
connection with the negotiation of this Agreement or any other Loan Document (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, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time
delivered and, if such projected financial information was delivered prior to
the Effective Date, as of the Effective Date.
 
SECTION 3.12.  Material Agreements.  No Loan Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any material agreement to which it is a party or
(ii) any agreement or instrument evidencing or governing Indebtedness.
 
SECTION 3.13.  Solvency.

 
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(a)           Immediately after the consummation of the Transactions to occur on
the Effective Date, (i) the fair value of the assets of each Loan Party, at a
fair valuation, will exceed its debts and liabilities, subordinated, contingent
or otherwise; (ii) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted after the Effective
Date.
 
(b)           No Loan Party intends to, or will permit any of its Subsidiaries
to, and no Loan Party believes that it or any of its Subsidiaries will, incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it or any such Subsidiary
and the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.
 
SECTION 3.14.  Insurance.  Schedule 3.14 sets forth a description of all
insurance maintained by or on behalf of the Loan Parties and the Subsidiaries as
of the Effective Date.  As of the Effective Date, all premiums in respect of
such insurance have been paid.  The Borrower believes that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate.
 
SECTION 3.15.  Capitalization and Subsidiaries.  Schedule 3.15 sets forth (a) a
correct and complete list of the name and relationship to the Borrower of each
and all of the Borrower’s Subsidiaries, (b) a true and complete listing of each
class of each of the Borrower’s authorized Equity Interests, of which all of
such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 3.15, and (c) the type of entity of the Borrower  and each of its
Subsidiaries.  All of the issued and outstanding Equity Interests owned by any
Loan Party has been (to the extent such concepts are relevant with respect to
such ownership interests) duly authorized and issued and is fully paid and
non-assessable.
 
SECTION 3.16. Security Interest in Collateral.  The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all the Collateral
in favor of Lender, and such Liens constitute perfected and continuing Liens on
the Collateral, securing the Secured Obligations, enforceable against the
applicable Loan Party and all third parties, and having priority over all other
Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the
extent any such Permitted Encumbrances would have priority over the Liens in
favor of Lender pursuant to any applicable law or agreement and (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent Lender has not obtained or does not maintain possession of such
Collateral.
 
SECTION 3.17. Employment Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of the Borrower, threatened.  The hours worked by and
payments made to employees of the Loan Parties and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters.  All payments
due from any Loan Party or any Subsidiary, or for which any claim may be made
against any Loan Party or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Loan Party or such Subsidiary.
 
SECTION 3.18.  Common Enterprise.  The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance of
the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party.  Each Loan Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
(i) successful operations of each of the other Loan Parties and (ii) the credit
extended by Lender to the Borrower hereunder, both in their separate capacities
and as members of the group of companies.  Each Loan Party has determined that
execution, delivery, and performance of this Agreement and any other Loan
Documents to be executed by such Loan Party is within its purpose, will be of
direct and indirect benefit to such Loan Party, and is in its best interest.
 
ARTICLE IV

Conditions
 

 
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SECTION 4.01.  Effective Date.  The obligations of Lender to make the Loan
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 8.02):
 
(a)           Credit Agreement and Loan Documents.  Lender (or its counsel)
shall have received (i) from each party hereto either (A) a counterpart of this
Agreement signed on behalf of such party or (B) written evidence satisfactory to
the Lender (which may include facsimile transmission of a signed signature page
of this Agreement) that such party has signed a counterpart of this Agreement
and (ii) duly executed copies of the Loan Documents and such other certificates,
documents, instruments and agreements as the Lender shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including any promissory notes requested by a Lender pursuant to
Section 2.10 payable to the order of each such requesting Lender and a written
opinion of the Loan Parties' counsel, addressed to the Lender in substantially
the form of Exhibit B.
 
(b)           Financial Statements and Projections.  Lender shall have received
(i) audited consolidated financial statements of Borrower for the 2008 and 2009
fiscal years, (ii) unaudited interim consolidated financial statements of
Borrower for each fiscal quarter ended after the date of the latest applicable
financial statements delivered pursuant to clause (i) of this paragraph as to
which such financial statements are available, and such financial statements
shall not, in the reasonable judgment of the Lender, reflect any material
adverse change in the consolidated financial condition of Borrower, as reflected
in the financial statements and (iii) satisfactory projections through 2013.
 
(c)           Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates.  The Lender shall have received (i) a certificate of each
Loan Party, dated the Effective Date and executed by its Secretary or Assistant
Secretary, which shall (A) certify the resolutions of its Board of Directors,
members or other body authorizing the execution, delivery and performance of the
Loan Documents to which it is a party, (B) identify by name and title and bear
the signatures of the Financial Officers and any other officers of such Loan
Party authorized to sign the Loan Documents to which it is a party, and (C)
contain appropriate attachments, including the certificate or articles of
incorporation or organization of each Loan Party certified by the relevant
authority of the jurisdiction of organization of such Loan Party and a true and
correct copy of its by-laws or operating, management or partnership agreement,
and (ii) a long form good standing certificate for each Loan Party from its
jurisdiction of organization.
 
(d)           No Default Certificate.  The Lender shall have received a
certificate, signed by the chief financial officer of the Borrower and each
other Loan Party (i) stating that no Default has occurred and is continuing,
(ii) stating that the representations and warranties contained in Article III
are true and correct as of such date, and (iii) certifying any other factual
matters as may be reasonably requested by the Lender.
 
(e)           Fees.  Lender shall have received all fees required to be paid,
and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Effective
Date.  All such amounts will be paid with proceeds of the Loan and will be
reflected in the funding instructions given by the Borrower to Lender on or
before the Effective Date.
 
(f)           Lien Searches.  Lender shall have received the results of a recent
lien search in each of the jurisdictions where assets of the Loan Parties are
located, and such search shall reveal no liens on any of the assets of the Loan
Parties except for liens permitted by Section 6.02 or discharged on or prior to
the Effective Date pursuant to a pay-off letter or other documentation
satisfactory to the Lender.
 
(g)           Funding Account.  Lender shall have received a notice setting
forth the deposit account of the Borrower (the “Funding Account”) to which the
Lender is authorized by the Borrower to transfer the proceeds of any Borrowings
requested or authorized pursuant to this Agreement.
 
(h)           Control Agreements.  Lender shall have received Deposit Account
Control Agreement required to be provided pursuant to the Security Agreement.
 
(i)           Solvency.  If required by Lender, Lender shall have received a
solvency certificate from a Financial Officer.

 
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(j)           Pledged Stock; Stock Powers; Pledged Notes.  Lender shall have
received (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Security Agreement or any other Collateral Document, together
with an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof and (ii) each promissory note (if
any) pledged to the Lender pursuant to the Security Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.
 
(p)           Filings, Registrations and Recordings.  Each document (including
any Uniform Commercial Code financing statement) required by the Collateral
Documents or under law or reasonably requested by Lender to be filed, registered
or recorded in order to create in favor of the Lender, a perfected Lien on the
Collateral described therein, prior and superior in right to any other Person
(other than with respect to Liens expressly permitted by Section 6.02), shall be
in proper form for filing, registration or recordation.
 
(r)            Mortgages, etc.  The Lender shall have received, with respect to
each parcel of real property which is required to be subject to a Lien in favor
of the Lender, each of the following, in form and substance reasonably
satisfactory to the Lender:
 
(i)             a Mortgage on such property;
 
(ii)            evidence that a counterpart of the Mortgage has been recorded in
the place necessary, in the Lender’s judgment, to create a valid and enforceable
first priority Lien in favor of the Lender;
 
(iii)          if any such parcel of real property is determined by Lender to be
in a flood zone, a flood notification form signed by the Borrower and evidence
that flood insurance is in place for the building and contents, all in form and
substance satisfactory to the Lender; and
 
(vii)         such other information, documentation, and certifications as may
be reasonably required by the Lender.
 
(s)           Acquisition.  A fully executed counterpart copy of the stock
purchase agreement governing the Acquisition by Borrower of 100% of the issued
Equity Interests of Femcare Group, all schedules and exhibits thereto, and such
other documents related thereto as Lender may require.
 
(t)           Insurance.  Lender shall have received evidence of insurance
coverage in form, scope, and substance reasonably satisfactory to the Lender and
otherwise in compliance with the terms of Section 5.09 and the Security
Agreement and other Collateral Documents.
 
(u)           Tax Withholding.  Lender shall have received a properly completed
and signed IRS Form W-8 or W-9, as applicable, for each Loan Party.
 
(v)           Other Documents.  Lender shall have received such other opinions,
documents as the Lender or its counsel may have reasonably requested.
 
ARTICLE V

Affirmative Covenants
 
Each Loan Party executing this Agreement covenants and agrees, jointly and
severally with all of the Loan Parties, with Lender that:
 
SECTION 5.01.  Financial Statements; Borrowing Base and Other Information.  The
Borrower will furnish to Lender:
 
(a)           within 120 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year (with
consolidating schedules), setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by the firm of Jones
Simpkins, P.C. or other independent public accountants of recognized national
standing which are acceptable to Lender or certified by the Public Company
Accounting Oversight Board (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, accompanied by any management letter
prepared by said accountants;

 
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(b)           within 45 days after the end of each of the first three fiscal
quarters of the Borrower, its consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Finan­cial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consis­tently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
 
(c)           concurrently with any delivery of financial statements under
clause (a) or (b)  above, a certificate of a Financial Officer of the Borrower
in substantially the form of Exhibit D  (i) certifying, in the case of the
financial statements delivered under clause (b), as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consis­tently applied, subject to normal year-end audit adjustments
and the absence of footnotes, (ii) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (iii) setting forth
reasonably detailed calculations demonstrating compliance with Section 6.12 and
(iv) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
 
(d)           as soon as possible and in any event within 30 days of filing
thereof, copies of all tax returns filed by any Loan Party with the U.S.
Internal Revenue Service;
 
(e)           promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Govern­mental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be; and
 
(f)           promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
Lender may reasonably request.
 
SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to Lender
prompt written notice of the following:
 
(a)           the occurrence of any Default;
 
(b)           receipt of any notice of any governmental investigation or any
litigation or proceeding commenced or threatened against any Loan Party that (i)
seeks damages in excess of $250,000 (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets, (iv)
alleges criminal misconduct by any Loan Party, (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental Laws,
(vi) contests any tax, fee, assessment, or other governmental charge in excess
of $250,000, or (vii) involves any product recall;
 
(c)           any Lien (other than Permitted Encumbrances) or claim made or
asserted against any of the Collateral;
 
(d)           any loss, damage, or destruction to the Collateral in the amount
of $100,000 or more, whether or not covered by insurance;
 

 
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(e)           any and all default notices received under or with respect to any
leased location or public warehouse where Collateral is located (which shall be
delivered within two Business Days after receipt thereof);
 
(f)           the fact that a Loan Party has entered into a Swap Agreement or an
amendment to a Swap Agreement, together with copies of all agreements evidencing
such Swap Agreement or amendments thereto (which shall be delivered within two
Business Days);
 
(g)           the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$250,000; and
 
(h)           any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
 
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
 
SECTION 5.03.  Existence; Conduct of Business.  Each Loan Party will, and will
cause each Subsidiary to, (a) do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 and (b) carry on and conduct its
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted.
 
SECTION 5.04.  Payment of Obligations.  Each Loan Party will, and will cause
each  Subsidiary to, pay or discharge all Material Indebtedness and all other
material liabilities and obligations, including Taxes, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropri­ate proceedings, (b) such Loan
Party or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) such liabilities would not
result in aggregate liabilities in excess of $250,000 and none of the Collateral
becomes subject to forfeiture or loss as a result of the contest or the failure
to make payment pending such contest could not reasonably be expected to result
in a Material Adverse Effect.
 
SECTION 5.05.  Maintenance of Properties.  Each Loan Party will, and will cause
each Subsidiary to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.
 
SECTION 5.06.  Books and Records; Inspection Rights.  Each Loan Party will, and
will cause each Subsidiary to, (i) keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities and (ii) permit any representatives
designated by Lender (including employees of Lender or any consultants,
accountants, lawyers and appraisers retained by Lender), upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, including environmental assessment reports and Phase I or
Phase II studies, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
 
SECTION 5.07.  Compliance with Laws.  Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
 
SECTION 5.08.  Use of Proceeds.  The proceeds of the Loans will be used only for
costs and expenses related to the Acquisition and otherwise for general
corporate purposes.  No part of the proceeds of the Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X.
 
SECTION 5.09.  Insurance. Each Loan Party will, and will cause each Subsidiary
to, maintain with financially sound and reputable carriers having a financial
strength rating of at least A- by A.M. Best Company (a) insurance in such
amounts (with no greater risk retention) and against such risks (including loss
or damage by fire and loss in transit; theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; business interruption; and general
liability) and such other hazards, as is customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the
same or similar locations and (b) all insurance required pursuant to the
Collateral Documents.  The Borrower will furnish to Lender information in
reasonable detail as to the insurance so maintained.

 
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SECTION 5.10.  Casualty and Condemnation.  The Borrower (a) will furnish to
Lender prompt written notice of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or interest
therein under power of eminent domain or by condemnation or similar proceeding
and (b) will ensure that the Net Proceeds of any such event (whether in the form
of insurance proceeds, condemnation awards or otherwise) are collected and
applied in accordance with the applicable provisions of this Agreement and the
Collateral Documents
 
SECTION 5.11.  Appraisals.  At any time that Lender requests, the Borrower and
the Subsidiaries will provide Lender with appraisals or updates thereof of the
Collateral from an appraiser selected and engaged by the Lender, and prepared on
a basis satisfactory to Lender, such appraisals and updates to include, without
limitation, information required by applicable law and regulations; provided,
however, that if no Event of Default has occurred and is continuing, one such
appraisal per calendar year shall be at the sole expense of the Loan Parties.
 
SECTION 5.12. Depository Banks.  The Borrower and each domestic Subsidiary will
maintain Lender as its principal depository bank, including for the maintenance
of operating, administrative, cash management, collection activity, and other
deposit accounts for the conduct of its business.
 
SECTION 5.13. Additional Collateral; Further Assurances.
 
(a)           Subject to applicable law, the Borrower and each Subsidiary that
is a Loan Party shall cause each of its domestic Subsidiaries formed or acquired
after the date of this Agreement in accordance with the terms of this Agreement
to become a Loan Party by executing the Joinder Agreement set forth as Exhibit E
hereto (the “Joinder Agreement”). Upon execution and delivery thereof, each such
Person (i) shall automatically become a Loan Guarantor hereunder and thereupon
shall have all of the rights, benefits, duties, and obligations in such capacity
under the Loan Documents and (ii) will grant Liens to Lender in any property of
such Loan Party which constitutes Collateral, including any parcel of real
property located in the U.S. owned by any Loan Party.
 
(b)           The Borrower and each Subsidiary that is a Loan Party will cause
(i) 100% of the issued and outstanding Equity Interests of each of its domestic
Subsidiaries and (ii) 65% (or such greater percentage that, due to a change in
applicable law after the date hereof, (1) could not reasonably be expected to
cause the undistributed earnings of such foreign Subsidiary as determined for
U.S. federal income tax purposes to be treated as a deemed dividend to such
foreign Subsidiary's U.S. parent and (2) could not reasonably be expected to
cause any material adverse tax consequences) of the issued and outstanding
Equity Interests entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2) in
each foreign Subsidiary directly owned by the Borrower or any domestic
Subsidiary to be subject at all times to a first priority, perfected Lien in
favor of Lender pursuant to the terms and conditions of the Loan Documents or
other security documents as Lender shall reasonably request.
 
(c)           Without limiting the foregoing, each Loan Party will, and will
cause each Subsidiary to, execute and deliver, or cause to be executed and
delivered, to Lender such documents, agreements and instruments, and will take
or cause to be taken such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents and such other actions or deliveries of the type required by Section
4.01, as applicable), which may be required by law or which Lender may, from
time to time, reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents and to ensure perfection and priority of
the Liens created or intended to be created by the Collateral Documents, all at
the expense of the Loan Parties.  Notwithstanding the foregoing, at any time
after an Event of Default has occurred, each Loan Party will, upon the request
of Lender, cause each Foreign Subsidiary to become a Loan Party and a Loan
Guarantor and to grant Liens to Lender on its assets and have the balance of its
stock pledged to Lender.
 
(d)           If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary that is a Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien in favor of the Security Agreement upon acquisition thereof), the Borrower
will notify Lender thereof, and, if requested by Lender, the Borrower will cause
such assets to be subjected to a Lien securing the Secured Obligations and will
take, and cause the Subsidiary Loan Parties to take, such actions as shall be
necessary or reasonably requested by Lender to grant and perfect such Liens,
including actions described in paragraph (c) of this Section, all at the expense
of the Loan Parties.
 

 
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ARTICLE VI

Negative Covenants
 
The Loan Parties covenant and agree, jointly and severally, with Lender that:
 
SECTION 6.01.  Indebtedness.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
 
(a)           the Secured Obligations including the Parent Guaranty;
 
(b)           Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness
in accordance with clause (f) hereof;
 
(c)           Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other  Subsidiary, provided that (i)
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or any
Subsidiary that is a Loan Party shall be subject to Section 6.04 and (ii)
Indebtedness of the Borrower to any Subsidiary and Indebtedness of any
Subsidiary that is a  Loan Party to any Subsidiary that is not a Loan Party
shall be subordinated to the Secured Obligations on terms reasonably
satisfactory to Lender;
 
(d)           Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that (i) the Indebtedness so Guaranteed is permitted by this
Section 6.01, including the Parent Guaranty, (ii) Guarantees by the Borrower or
any Subsidiary that is a Loan Party of Indebtedness of any Subsidiary that is
not a Loan Party shall be subject to Section 6.04 and (iii) Guarantees permitted
under this clause (d) shall be subordinated to the Secured Obligations of the
applicable Subsidiary on the same terms as the Indebtedness so Guaranteed is
subordinated to the Secured Obligations;
 
(e)           Indebtedness of the Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital assets
(whether or not constituting purchase money Indebtedness), including Capital
Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness in accordance with clause (f) hereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (e) shall not exceed
$500,000 at any time outstanding;
 
(f)           Indebtedness which represents an extension, refinancing, or
renewal of any of the Indebtedness described in clauses (b) and (e), (i) and (j)
hereof; provided that, (i) the principal amount or interest rate of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness are not
extended to any additional property of any Loan Party, (iii) no Loan Party that
is not originally obligated with respect to repayment of such Indebtedness is
required to become obligated with respect thereto, (iv) such extension,
refinancing or renewal does not result in a shortening of the average weighted
maturity of the Indebtedness so extended, refinanced or renewed, (v) the terms
of any such extension, refinancing, or renewal are not less favorable to the
obligor thereunder than the original terms of such Indebtedness and (iv) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Secured Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to Lender as those that were
applicable to the refinanced, renewed, or extended Indebtedness;
 

 
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(g)           Indebtedness owed to any person providing workers' compensation,
health, disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
person, in each case incurred in the ordinary course of business;
 
(h)           Indebtedness of the Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business;
 
(i)           Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (i) shall not exceed $100,000 at any
time outstanding; and
 
(j)           other unsecured Indebtedness in an aggregate principal amount not
exceeding $1,000,000 at any time outstanding; provided that the aggregate
principal amount of other unsecured Indebtedness permitted by this clause (j)
shall not exceed $3,000,000 at any time outstanding.
 
SECTION 6.02.  Liens.  No Loan Party will, nor will it permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
 
(a)           Liens created pursuant to any Loan Document;
 
(b)           Permitted Encumbrances;
 
(c)           any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or Subsidiary and (ii) such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
 
(d)           Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (i) such security interests
secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 70% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or Subsidiary;
 
(e)           any Lien existing on any property or asset (other than Accounts
and Inventory) prior to the acquisition thereof by the Borrower or any
Subsidiary or existing on any property or asset (other than Accounts and
Inventory) of any Person that becomes a Loan Party after the date hereof prior
to the time such Person becomes a Loan Party; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisi­tion or such
Person becoming a Loan Party, as the case may be, (ii) such Lien shall not apply
to any other property or assets of the Loan Party and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Loan Party, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;
 
(g)           Liens of a collecting bank arising in the ordinary course of
business under Section 4-208 of the Uniform Commercial Code in effect in the
relevant jurisdiction covering only the items being collected upon;
 
(h)           Liens arising out of sale and leaseback transactions permitted by
Section 6.06; and
 
(i)           Liens granted by a Subsidiary that is not a Loan Party in favor of
the Borrower or another Loan Party in respect of Indebtedness owed by such
Subsidiary.
 
Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 may at any time attach to any Loan Party’s (1) Accounts, other than
those permitted under clause (a) of the definition of Permitted Encumbrance and
clause (a) above and (2) Inventory, other than those permitted under clauses (a)
and (b) of the definition of Permitted Encumbrance and clause (a) above.
 

 
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SECTION 6.03.  Fundamental Changes.
 
(a)           No Loan Party will, nor will it permit any Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Subsidiary of the Borrower may
merge into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Loan Party (other than the Borrower) may merge into any
Loan Party in a transaction in which the surviving entity is a Loan Party and
(iii) any Subsidiary that is not a Loan Party may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not materially disadvantageous to Lender;
provided that any such merger involving a Person that is not a wholly owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
 
(b)           No Loan Party will, nor will it permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
 
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions.  No
Loan Party will, nor will it permit any Subsidiary to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a Loan Party and
a wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit (whether through purchase of assets, merger
or otherwise), except:
 
(a)           Permitted Investments, subject to control agreements in favor of
Lender or otherwise subject to a perfected security interest in favor of Lender;
 
(b)           investments in existence on the date of this Agreement and
described in Schedule 6.04;
 
(c)           investments by the Borrower and the Subsidiaries in Equity
Interests in their respective Subsidiaries, provided that (A) any such Equity
Interests held by a Loan Party shall be pledged pursuant to the Security
Agreement (subject to the limitations applicable to common stock of a Foreign
Subsidiary referred to in Section 5.12) and (B) the aggregate amount of
investments by Loan Parties in Subsidiaries that are not Loan Parties (together
with outstanding intercompany loans permitted under clause (B) to the proviso to
Section 6.04(d) and outstanding Guarantees permitted under the proviso to
Section 6.04(e)) shall not exceed $1,000,000 at any time outstanding (in each
case determined without regard to any write-downs or write-offs);
 
(d)           loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary, provided that (A) any
such loans and advances made by a Loan Party shall be evidenced by a promissory
note pledged pursuant to the Security Agreement and (B) the amount of such loans
and advances made by Loan Parties to Subsidiaries that are not Loan Parties
(together with outstanding investments permitted under clause (B) to the proviso
to Section 6.04(c) and outstanding Guarantees permitted under the proviso to
Section 6.04(e)) shall not exceed $1,000,000 at any time outstanding (in each
case determined without regard to any write-downs or write-offs);
 
(e)           Guarantees constituting Indebtedness permitted by Section 6.01,
provided that the aggregate principal amount of Indebtedness of Subsidiaries
that are not Loan Parties that is Guaranteed by any Loan Party shall (together
with outstanding investments permitted under clause (B) to the proviso to
Section 6.04(c) and outstanding intercompany loans permitted under clause (B) to
the proviso to Section 6.04(d)) shall not exceed $1,000,000 at any time
outstanding (in each case determined without regard to any write-downs or
write-offs);
 

 
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(f)           loans or advances made by a Loan Party to its employees on an
arms-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $100,000 in the aggregate at any one time
outstanding;
 
(g)           subject to Sections 4.2(a) and 4.4 of the Security Agreement,
notes payable, or stock or other securities issued by Account Debtors to a Loan
Party pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, consistent with
past practices;
 
(h)           investments in the form of Swap Agreements permitted by
Section 6.07;
 
(i)           investments of any Person existing at the time such Person becomes
a Subsidiary of the Borrower or consolidates or merges with the Borrower or any
of the Subsidiaries (including in connection with a permitted acquisition) so
long as such investments were not made in contemplation of such Person becoming
a Subsidiary or of such merger;
 
(j)           investments received in connection with the dispositions of assets
permitted by Section 6.05; and
 
(k)           investments constituting deposits described in clauses (c) and (d)
of the definition of the term “Permitted Encumbrances.”
 
SECTION 6.05.  Asset Sales.  No Loan Party will, nor will it permit any
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any
Subsidiary to issue any additional Equity Interest in such Subsidiary (other
than to the Borrower or another Subsidiary in compliance with Section 6.04),
except:
 
(a)           sales, transfers and dispositions of (i) inventory in the ordinary
course of business and (ii) used, obsolete, worn out or surplus equipment or
property in the ordinary course of business;
 
(b)           sales, transfers and dispositions to the Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;
 
(c)           sales, transfers and dispositions of accounts receivable in
connection with the compromise, settlement or collection thereof;
 
(d)           sales, transfers and dispositions of Permitted Investments and
other investments permitted by clauses (i) and (k) of Section 6.04;
 
(e)           sale and leaseback transactions permitted by Section 6.06;
 
(f)           dispositions resulting from any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of the Borrower or any Subsidiary; and
 
(g)           sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary unless all Equity Interests in such Subsidiary
are sold) that are not permitted by any other paragraph of this Section,
provided that the aggregate fair market value of all assets sold, transferred or
otherwise disposed of in reliance upon this paragraph (g) shall not exceed
$100,000 during any fiscal year of the Borrower;
 
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by paragraphs (b) and (f) above) shall be
made for fair value and for at least 75% cash consideration.
 
SECTION 6.06.  Sale and Leaseback Transactions.  No Loan Party will, nor will it
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property that it intends to use for substantially
the same purpose or purposes as the property sold or transferred, except for any
such sale of any fixed or capital assets by the Borrower or any Subsidiary that
is made for cash consideration in an amount not less than the fair value of such
fixed or capital asset and is consummated within 90 days after the Borrower or
such Subsidiary acquires or completes the construction of such fixed or capital
asset.

 
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SECTION 6.07.  Swap Agreements.  No Loan Party will, nor will it permit
any  Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary
has actual exposure (other than those in respect of Equity Interests of the
Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in
order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.
 
SECTION 6.08.  Restricted Payments; Certain Payments of Indebtedness.
 
(a)           No Loan Party will, nor will it permit any Subsidiary to, declare
or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except (i)
Borrower may declare cash dividends or other cash distributions with respect to
any Equity Interests in the Borrower provided that after giving effect to such
dividends or other distributions, Borrower remains in compliance the covenants
of Section 6.12 below and no Default or Event of Default has occurred and is
continuing hereunder, (ii) Borrower may repurchase issued and outstanding Equity
Interests in Borrower provided that after giving effect to such dividends or
other distributions, Borrower remains in compliance the covenants of Section
6.12 below and no Default or Event of Default has occurred and is continuing
hereunder, (iii) the Borrower may declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock, and, with
respect to its preferred stock, payable solely in additional shares of such
preferred stock or in shares of its common stock, (iv) Subsidiaries may declare
and pay dividends ratably with respect to their Equity Interests, and (v) the
Borrower may make non-cash Restricted Payments pursuant to and in accordance
with stock option plans or other benefit plans for management or employees of
the Borrower and its Subsidiaries.
 
(b)           No Loan Party will, nor will it permit any Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (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 Indebtedness, except:
 
(i)           payment of Indebtedness created under the Loan Documents;
 
(ii)           payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness, other than payments in respect of
the Subordinated Indebtedness prohibited by the subordination provisions
thereof;
 
(iii)           refinancings of Indebtedness to the extent permitted by
Section 6.01; and
 
(iv)           payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness.
 
SECTION 6.09.  Transactions with Affiliates.  No Loan Party will, nor will it
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions that (i) are in the ordinary course of business and
(ii) are at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arm’s-length basis from
unrelated third parties, (b) transactions between or among the Borrower and any
Subsidiary that is a Loan Party not involving any other Affiliate, (c) any
investment permitted by Sections 6.04(c) or 6.04(d), (d) any Indebtedness
permitted under Section 6.01(c), (e) any Restricted Payment permitted by
Section 6.08, (f) loans or advances to employees permitted under Section 6.04,
(g) the payment of reasonable fees to directors of the Borrower or any
Subsidiary who are not employees of the Borrower or any Subsidiary, and
compensation and employee benefit arrangements paid to, and indemnities provided
for the benefit of, directors, officers or employees of the Borrower or its
Subsidiaries in the ordinary course of business and (h) any issuances of
securities or other payments, awards or grants in securities or otherwise
pursuant to, or the funding of, employment agreements, stock options and stock
ownership plans approved by the Borrower’s board of directors.
 

 
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SECTION 6.10.  Restrictive Agreements.  No Loan Party will, nor will it permit
any Subsidiary to, directly or indirectly, enter into, incur or permit to exist
any agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of such Loan Party or any of its Subsidiaries to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.10 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
 
SECTION 6.11. Amendment of Material Documents.  No Loan Party will, nor will it
permit any Subsidiary to, amend, modify or waive any of its rights under (a) 
agreement relating to any Subordinated Indebtedness, (b) its certificate of
incorporation, by-laws, operating, management or partnership agreement or other
organizational documents or (c) any agreement with CooperSurgical, Inc. relating
to the Filshie system or related matters, to the extent any such amendment,
modification or waiver would be adverse to Lender.
 
SECTION 6.12.  Financial Covenants.
 
(a)           Interest Coverage Ratio.  The Borrower will not permit the
Interest Coverage Ratio, determined for any period of four consecutive fiscal
quarters ending on the last day of each fiscal quarter during any period set
forth below, to be less than the ratio set forth below opposite such period:
 
                      Period
Ratio
March 31, 2011 to December 31, 2013
1.15 to 1.00
March 31, 2014 and thereafter
1.20 to 1.00

 
(b)           Tangible Net Worth.  The Borrower will not permit its Net Worth,
determined for any period of four consecutive fiscal quarters ending on the last
day of each fiscal quarter during any period set forth below, to be less than
<$12,000,000> (i.e. negative) plus the sum of fifty percent (50%) of Borrower’s
Net Income from all fiscal quarters ending after the date hereof.
 
(c)           Leverage Ratio.  The Borrower will not permit the Leverage Ratio,
determined for any period of four consecutive fiscal quarters ending on any date
during any period set forth below, to be more than 2.75 to 1.00.
 
ARTICLE VII

Events of Default
 
If any of the following events (“Events of Default”) shall occur:
 
(a)           the Borrower shall fail to pay any principal or any reimbursement
obligation when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepay­ment thereof or otherwise;
 
(b)           the Borrower shall fail to pay any interest or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five days;
 
(c)           any representation or warranty made or deemed made by or on behalf
of any Loan Party or any Subsidiary in or in connection with this Agreement or
any Loan Document or any amendment or modification thereof or waiver thereunder,
or in any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
materially incorrect when made or deemed made;

 
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(d)           any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to a
Loan Party’s existence) or 5.08 or in Article VI;
 
(e)           any Loan Party shall fail to observe or perform any covenant,
condition or agree­ment contained in this Agreement (other than those which
constitute a default under another Section of this Article), and such failure
shall continue unremedied for a period of (i) 5 days after the earlier of
knowledge of such breach or notice thereof from Lender (which notice will be
given at the request of Lender) if such breach relates to terms or provisions of
Section 5.01, 5.02 (other than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10
or 5.12 of this Agreement or (ii) 15 days after the earlier of knowledge of such
breach or notice thereof from Lender (which notice will be given at the request
of Lender) if such breach relates to terms or provisions of any other Section of
this Agreement;
 
(f)           any Loan Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
 
(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
 
(h)           an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or any Subsidiary of any Loan Party or its debts, or
of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, seques­trator,
conservator or similar official for any Loan Party or any Subsidiary of any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
 
(i)           any Loan Party or any Subsidiary of any Loan Party shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar offi­cial for such Loan Party or
Subsidiary of any Loan Party or for a substan­tial part of its assets, (iv) file
an answer admit­ting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the fore­going;
 
(j)           any Loan Party or any Subsidiary of any Loan Party shall become
unable, admit in writing its inability or fail generally to pay its debts as
they become due;
 
(k)           one or more judgments for the payment of money in an aggregate
amount in excess of $250,000 shall be rendered against any Loan Party, any
Subsidiary of any Loan Party or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of any Loan Party or any
Subsidiary of any Loan Party to enforce any such judgment or any Loan Party or
any Subsidiary of any Loan Party shall fail within 30 days to discharge one or
more non-monetary judgments or orders which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, which judgments
or orders, in any such case, are not stayed on appeal or otherwise being
appropriately contested in good faith by proper proceedings diligently pursued;
 
(l)           an ERISA Event shall have occurred that, in the opinion of Lender,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;
 

 
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(m)           a Change in Control shall occur;
 
(n)           the occurrence of any “default”, as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach continues
beyond any period of grace therein provided;
 
(o)           the Loan Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Loan Guaranty, or any Loan Guarantor shall fail to
comply with any of the terms or provisions of the Loan Guaranty to which it is a
party, or any Loan Guarantor shall deny that it has any further liability under
the Loan Guaranty to which it is a party, or shall give notice to such effect;
 
(p)           any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any Collateral purported
to be covered thereby, except as permitted by the terms of any Collateral
Document, or any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document, or any Loan Party shall fail to
comply with any of the terms or provisions of any Collateral Document; or
 
(q)           any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Loan
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms);or
 
(r)           the occurrence or existence of any default, event of default or
other similar condition or event (however described) with respect to any Rate
Management Transactions; or
 
(s)           the occurrence of any “default”, as defined in the Parent Guaranty
or in any document, instrument or agreement governing, evidencing, securing or
otherwise related to the UK Loan Facility, or the breach of any of the terms or
provisions of any such document, instrument or agreement, which default or
breach continues beyond any period of grace therein provided;
 
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, Lender shall, by notice to the Borrower,
take either or both of the following actions, at the same or different
times:  (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then out­standing to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
present­ment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.  Upon the occurrence and the continuance of an
Event of Default, Lender may exercise any rights and remedies provided to Lender
under the Loan Documents or at law or equity, including all remedies provided
under the UCC.
 
ARTICLE VIII

Miscellaneous
 
SECTION 8.01.  Notices.
 
(a)           Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, as follows:

 
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(i)
if to any Loan Party, to the Borrower at:
   
Utah Medical Products, Inc.
   
7043 South 300 West
   
Midvale, Utah 84047
   
Attention: Paul Richins
   
Facsimile No: 801-566-7305
     
with a copy to:
 
Osborne Clarke
   
2 Palo Alto Square
   
Suite 200
   
Palo Alto, CA 94306, USA
   
Attention: Steve Wilson, Esq.
   
Facsimile No: 650-739-0360
       
(ii)
if to Lender at:
   
JPMorgan Chase Bank, N.A.
   
201 South Main Street
   
Suite 300
   
Salt Lake City, Utah 84111
   
Attention: Lynn Goodale
   
Facsimile No: 801-715-7401
     
with a copy to:
 
Snell & Wilmer L.L.P.
   
Beneficial Tower
   
15 West South Temple, Suite 1200
   
Salt Lake City, Utah 84101
   
Attention: Brian D. Cunningham, Esq.
   
Facsimile No: 801-257-1800

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent, provided 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.
 
(b)  Notices and other communications to Lender hereunder may be delivered or
furnished by electronic communications (including e-mail and internet or
intranet websites) pursuant to procedures approved by Lender; provided that the
foregoing shall not apply to compliance and no Event of Default certificates
delivered pursuant to Section 5.01(d) unless otherwise agreed by Lender.  Lender
or the Borrower (on behalf of the Loan Parties) 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. All such
notices and other communications (i) sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if not given
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient, and (ii) posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (b)(i) of
notification that such notice or communication is available and identifying the
website address therefor.
 
(c)           Any party hereto may change its address or facsimile number for
notices and other communications hereunder by notice to the other parties
hereto.

 
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SECTION 8.02.  Waivers; Amendments.
 
(a)           No failure or delay by Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of Lender hereunder and under any other
Loan Document are cumulative and are not exclusive of any rights or remedies
that they would otherwise have.  No waiver of any provision of any Loan Document
or consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effec­tive only in the specific
instance and for the purpose for which given.
 
(b)           Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower and
Lender.
 
SECTION 8.03.  Expenses; Indemnity; Damage Waiver.
 
(a)           The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by Lender and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for Lender, in connection with the Loan, the
preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provi­sions of the Loan Documents (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all out-of-pocket expenses incurred by Lender and its Affiliates, including the
fees, charges and disbursements of any counsel for Lender, in connection with
the enforcement, collection or protection of its rights in connection with the
Loan Documents, including its rights under this Section, or in connection with
the Loan, including all such out-of-pocket expenses incurred during  any
workout, restructuring or negotiations in respect of the Loan.
 
(b)           The Borrower shall indemnify Lender, and each Related Party of
Lender (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, penalties,
incremental taxes, liabilities and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of
(i) the execution or delivery of the Loan Documents or any agreement or
instrument contemplated thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) the Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, (iv) the failure of the Borrower to deliver
to Lender the required receipts or other required documentary evidence with
respect to a payment made by the Borrower for Taxes pursuant to this Agreement,
or (v) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, penalties, liabilities or related expenses
are deter­mined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
 
(c)           To the extent permitted by applicable law, no Loan Party shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, the Loan or the use of the proceeds thereof.
 
(d)           All amounts due under this Section shall be payable promptly after
written demand therefor.
 
SECTION 8.04.  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 the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
Lender (and any attempted assignment or transfer by the Borrower without such
consent 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 paragraph (c) of this Section) and, to the extent
expressly contemplated hereby, the Related Parties of Lender) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
 

 
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(b)           Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement and the other Loan Documents.
 
(c)           Borrower agrees that Lender may elect, at any time, to sell,
assign or grant participations in all or any portion of its rights and
obligations under the Loan Documents, and that any such sale, assignment or
participation may be to one or more financial institutions, private investors,
and/or other entities, at Lender's sole discretion (“Participant”).  Borrower
further agrees that Lender may disseminate to any such actual or potential
purchaser(s), assignee(s) or participant(s) all documents and information
(including, without limitation, all financial information) which has been or is
hereafter provided to or known to Lender with respect to: (a) the Collateral;
(b) any party connected with the Loan (including, without limitation, the
Borrower, any partner of Borrower, any constituent partner or member of Borrower
and any Loan Guarantor); and/or (c) any lending relationship other than the Loan
which Lender may have with any party connected with the Loan.  In the event of
any such sale, assignment or participation, Lender and the parties to such
transaction shall share in the rights and obligations of Lender as set forth in
the Loan Documents only as and to the extent they agree among themselves.  In
connection with any such sale, assignment or participation, Borrower further
agrees that the Loan Documents shall be sufficient evidence of the obligations
of Borrower to each purchaser, assignee, or participant, and upon written
request by Lender, Borrower shall enter into such amendments or modifications to
the Loan Documents as may be reasonably required in order to evidence any such
sale, assignment or participation.  The indemnity obligations of Borrower under
the Loan Documents shall also apply with respect to any purchaser, assignee or
participant.  Anything in this Agreement to the contrary notwithstanding, and
without the need to comply with any of the formal or procedural requirements of
this Agreement, including this Section, Lender may at any time and from time to
time pledge and assign all or any portion of its rights under all or any of the
Loan Documents to a Federal Reserve Bank; provided that no such pledge or
assignment shall release Lender from its obligations thereunder.
    
SECTION 8.05.  Survival.  All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instru­ments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loan, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on the Loan or any fee or any other amount payable under this
Agreement is outstand­ing and unpaid and as long as the principal of or any
accrued interest on the UK Loan Facility or any fee or any other amount payable
under the UK Loan Facility is outstanding or any obligations of Borrower
continue under the Parent Guarantee.
 
SECTION 8.06.  Counterparts; Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to Lender constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by Lender and when Lender shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.  Delivery of an
executed counterpart of a signature page of this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
 
SECTION 8.07.  Severability.  Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 
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SECTION 8.08.  Right of Setoff.  If an Event of Default shall have occurred and
be continuing, Lender and each of its Affiliates is hereby authorized at any
time and from time to time, 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 and other obligations at any time owing by Lender or
its Affiliate to or for the credit or the account of the Borrower or such Loan
Guarantor against any of and all the Secured Obligations held by Lender,
irrespective of whether or not Lender shall have made any demand under the Loan
Documents and although such obligations may be unmatured.  Lender shall notify
the Borrower of such set-off or application, provided that any failure to give
or any delay in giving such notice shall not affect the validity of any such
set-off or application under this Section.  The rights of Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which Lender may have.
 
SECTION 8.09.  Governing Law; Jurisdiction; Consent to Service of Process.
 
(a)           The Loan Documents (other than those containing a contrary express
choice of law provision) shall be governed by and construed in accordance with
the internal laws of the State of Utah, but giving effect to federal laws
applicable to national banks.
 
(b)           Each Loan Party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any U.S.
Federal or Utah State court sitting in Salt Lake City, Utah in any action or
proceeding arising out of or relating to any Loan Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such Utah State or, to the
extent permitted by law, in such Federal court.  Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement or any other
Loan Document shall affect any right that Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or its proper­ties in the courts of any jurisdiction.
 
(c)           Each Loan Party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or here­after have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
 
(d)           Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
 
SECTION 8.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREE­MENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
 
SECTION 8.11.  Headings.  Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
 
SECTION 8.12.  Confidentiality.  Lender agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (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 authority, (c) to
the extent required by Requirement of Law or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, 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 the Loan Parties and
their obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to Lender on a non-confidential
basis from a source other than the Borrower.  For the purposes of this Section,
“Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
Lender on a non-confidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower 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.

 
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SECTION 8.14.  USA PATRIOT Act.  The 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
Lender to identify Borrower in accordance with the Act.
 
SECTION 8.15.  Integration.  The Loan Documents contain the complete
understanding and agreement of Borrower and Lender and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations.  PURSUANT TO UTAH CODE ANNOTATED SECTION 25-5-4, BORROWER IS
NOTIFIED THAT THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
 
SECTION 8.16.  Waiver of Special Damages. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST LENDER, ON
ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE TRANSACTIONS, THE LOAN OR THE USE OF THE PROCEEDS
THEREOF.
 

ARTICLE IX

Loan Guaranty
 
SECTION 9.01.  Guaranty.  Each Loan Guarantor (other than those that have
delivered a separate Guaranty) hereby agrees that it is jointly and severally
liable for, and absolutely and unconditionally guarantees to the Lender, the
prompt payment when due, whether at stated maturity, upon acceleration or
otherwise, and at all times thereafter, of the Secured Obligations and all costs
and expenses including, without limitation, all court costs and attorneys' and
paralegals' fees (including allocated costs of in-house counsel and paralegals)
and expenses paid or incurred by Lender in endeavoring to collect all or any
part of the Secured Obligations from, or in prosecuting any action against, the
Borrower, any Loan Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured
Obligations, collectively the “Guaranteed Obligations”). Each Loan Guarantor
further agrees that the Guaranteed Obligations may be extended or renewed in
whole or in part without notice to or further assent from it, and that it
remains bound upon its guarantee notwithstanding any such extension or renewal.
All terms of this Loan Guaranty apply to and may be enforced by or on behalf of
any domestic or foreign branch or Affiliate of Lender that extended any portion
of the Guaranteed Obligations.
 
SECTION 9.02.  Guaranty of Payment.  This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require Lender to
sue the Borrower, any Loan Guarantor, any other guarantor, or any other person
obligated for all or any part of the Guaranteed Obligations (each, an “Obligated
Party”), or otherwise to enforce its payment against any collateral securing all
or any part of the Guaranteed Obligations.
 
 
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SECTION 9.03.  No Discharge or Diminishment of Loan Guaranty.
 
(a)           Except as otherwise provided for herein, the obligations of each
Loan Guarantor hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations),
including:  (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by
operation of law or otherwise; (ii) any change in the corporate existence,
structure or ownership of the Borrower or any other guarantor of or other person
liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Obligated Party, or
their assets or any resulting release or discharge of any obligation of any
Obligated Party; or (iv) the existence of any claim, setoff or other rights
which any Loan Guarantor may have at any time against any Obligated Party,
Lender, or any other person, whether in connection herewith or in any unrelated
transactions.
 
(b)           The obligations of each Loan Guarantor hereunder are not subject
to any defense or setoff, counterclaim, recoupment, or termination whatsoever by
reason of the invalidity, illegality, or unenforceability of any of the
Guaranteed Obligations or otherwise, or any provision of applicable law or
regulation purporting to prohibit payment by any Obligated Party, of the
Guaranteed Obligations or any part thereof.
 
(c)           Further, the obligations of any Loan Guarantor hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of Lender to
assert any claim or demand or to enforce any remedy with respect to all or any
part of the Guaranteed Obligations; (ii) any waiver or modification of or
supplement to any provision of any agreement relating to the Guaranteed
Obligations; (iii) any release, non-perfection, or invalidity of any indirect or
direct security for the obligations of the Borrower for all or any part of the
Guaranteed Obligations or any obligations of any other guarantor of or other
person liable for any of the Guaranteed Obligations; (iv) any action or failure
to act by Lender with respect to any collateral securing any part of the
Guaranteed Obligations; or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations,
or any other circumstance, act, omission or delay that might in any manner or to
any extent vary the risk of such Loan Guarantor or that would otherwise operate
as a discharge of any Loan Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of the Guaranteed Obligations).
 
SECTION 9.04.  Defenses Waived.  To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of all
or any part of the Guaranteed Obligations from any cause, or the cessation from
any cause of the liability of the Borrower or any Loan Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without
limiting the generality of the foregoing, each Loan Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any person against any Obligated Party,
or any other person.  Each Loan Guarantor confirms that it is not a surety under
any state law and shall not raise any such law as a defense to its obligations
hereunder.  Lender may, at its election, foreclose on any Collateral held by it
by one or more judicial or nonjudicial sales, accept an assignment of any such
Collateral in lieu of foreclosure or otherwise act or fail to act with respect
to any collateral securing all or a part of the Guaranteed Obligations,
compromise or adjust any part of the Guaranteed Obligations, make any other
accommodation with any Obligated Party or exercise any other right or remedy
available to it against any Obligated Party, without affecting or impairing in
any way the liability of such Loan Guarantor under this Loan Guaranty except to
the extent the Guaranteed Obligations have been fully and indefeasibly paid in
cash.  To the fullest extent permitted by applicable law, each Loan Guarantor
waives any defense arising out of any such election even though that election
may operate, pursuant to applicable law, to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of any Loan Guarantor
against any Obligated Party or any security.
 
SECTION 9.05.  Rights of Subrogation.  No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification that it has against any Obligated Party, or any
collateral, until the Loan Parties and the Loan Guarantors have fully performed
all their obligations to Lender.
 
SECTION 9.06.  Reinstatement; Stay of Acceleration.  If at any time any payment
of any portion of the Guaranteed Obligations is rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, or reorganization of the
Borrower or otherwise, each Loan Guarantor's obligations under this Loan
Guaranty with respect to that payment shall be reinstated at such time as though
the payment had not been made and whether or not Lender is in possession of this
Loan Guaranty. If acceleration of the time for payment of any of the Guaranteed
Obligations is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
any agreement relating to the Guaranteed Obligations shall nonetheless be
payable by the Loan Guarantors forthwith on demand by the Lender.
 
 
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SECTION 9.07.  Information.  Each Loan Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
Lender shall not have any duty to advise any Loan Guarantor of information known
to it regarding those circumstances or risks.
 
SECTION 9.08.  Termination.  Lender may continue to make loans or extend credit
to the Borrower based on this Loan Guaranty until five days after it receives
written notice of termination from any Loan Guarantor.  Notwithstanding receipt
of any such notice, each Loan Guarantor will continue to be liable to Lender for
any Guaranteed Obligations created, assumed or committed to prior to the fifth
day after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any
part of that Guaranteed Obligations.
 
SECTION 9.09.  Taxes.  All payments of the Guaranteed Obligations will be made
by each Loan Guarantor free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Loan Guarantor shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(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) Lender  receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Loan Guarantor shall make
such deductions and (iii) such Loan Guarantor shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
 
SECTION 9.9.  Maximum Liability.  The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor's liability under this Loan Guaranty, then, notwithstanding any other
provision of this Loan Guaranty to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or Lender, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor's “Maximum
Liability”.  This Section with respect to the Maximum Liability of each Loan
Guarantor is intended solely to preserve the rights of Lender to the maximum
extent not subject to avoidance under applicable law, and no Loan Guarantor nor
any other person or entity shall have any right or claim under this Section with
respect to such Maximum Liability, except to the extent necessary so that the
obligations of any Loan Guarantor hereunder shall not be rendered voidable under
applicable law. Each Loan Guarantor agrees that the Guaranteed Obligations may
at any time and from time to time exceed the Maximum Liability of each Loan
Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of Lender hereunder, provided that, nothing in this sentence shall be
construed to increase any Loan Guarantor's obligations hereunder beyond its
Maximum Liability.
 
SECTION 9.11.  Contribution.  In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each other Loan Guarantor
(each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor's “Applicable Percentage” of such
payment or payments made, or losses suffered, by such Paying Guarantor.  For
purposes of this Article IX, each Non-Paying Guarantor's “Applicable Percentage”
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor's Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the date hereof (whether by loan,
capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Guarantor, the aggregate amount of all monies received
by such Loan Guarantors from the Borrower after the date hereof (whether by
loan, capital infusion or by other means).  Nothing in this provision shall
affect any Loan Guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor's Maximum Liability).  Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations.  This provision is for the benefit Lender and the Loan
Guarantors and may be enforced by any one, or more, or all of them in accordance
with the terms hereof.
 
 
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SECTION 9.12.  Liability Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article IX is in addition to and shall be cumulative with
all liabilities of each Loan Party to Lender under this Agreement and the other
Loan Documents to which such Loan Party is a party or in respect of any
obligations or liabilities of the other Loan Parties, without any limitation as
to amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 

 
UTAH MEDICAL PRODUCTS, INC.
 
a Utah corporation
 
By:        /s/ Paul O. Richins                     
 
Name:
       Paul O. Richins             
 
Title:
            V.P.                            
                         
JPMORGAN CHASE BANK, N.A.
             
By:      /s/ Lynn Goodale                             
 
Name:
      Lynn Goodale                    
 
Title:
      Senior Banker                    

 
 

 
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EXHIBIT A

Kruse Landa Maycock & Ricks, LLC

 
136 EAST SOUTH TEMPLE, TWENTY-FIRST FLOOR
   
SALT LAKE CITY, UTAH  84111-1124
         
MAILING ADDRESS:
 
ATTORNEYS AT LAW
Post Office Box 45561
TELEPHONE:  (801) 531-7090
www.klmrlaw.com
Salt Lake City, Utah  84145-0561
FACSIMILE:  (801) 531-7091

March 17, 2011

JPMorgan Chase Bank, N.A.
201 South Main Street, Suite 300
Salt Lake City, Utah 84111

Re:           Utah Medical Products, Inc.

Ladies and Gentlemen:

We have acted as counsel for Utah Medical Products, Inc., a Utah corporation
(the “Company”), in connection with the Credit Agreement dated as of March 17,
2011 (the “Credit Agreement”), between the Company and JPMorgan Chase Bank, N.A.
(the “Lender”).  Terms defined in the Credit Agreement are used herein with the
same meanings.

In rendering the opinions set forth below, we have examined the following:

(a)           Articles of Incorporation and Bylaws, as amended as of this date,
of the Company;

(b)           Credit Agreement;

(c)           Security Agreement;

(d)           Intellectual Property Agreement;

(e)           Secured Promissory Note;

(f)           Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (Midvale Property);

(g)           Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (Redwood Property);

(h)           Leasehold Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Leased Property);

(i)           Environmental Indemnity Agreement;

(j)           Disbursement and Rate Management Authorization and Instruction
Agreement;

(k)           resolutions adopted by the Company’s board of directors respecting
the transactions contemplated by the foregoing; and

(l)           certificates of the Company’s officers.

Items (b) through (j) of the above list are referred to herein as the “Loan
Documents” and items (c) through (h) are referred to as the “U.S. Collateral
Documents.”

We have also examined the originals or copies, certified or otherwise identified
to our satisfaction, of such documents and records of the Company and the
Company’s stockholders, certificates of public officials, and such other
documents, corporate records, statutes, decisions, and questions of law as we
have deemed necessary or appropriate to enable us to render the opinion
expressed herein.
 
 
 

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

 
 
We are admitted to practice before the courts of the State of Utah, and are thus
opining herein only as to the effect on the subject matter hereof of the laws of
the state of Utah (excluding conflicts of laws and choice of law rules) and the
federal laws of the United States of America, all as in effect on the date
hereof, and this opinion is rendered as if only those laws, and not the laws of
any other domestic or foreign jurisdiction, were applicable.  Accordingly, we
are not opining on, and we assume no responsibility as to, the applicability to
or effect on any matters covered herein of the laws of any other
jurisdiction.  In addition, we express no opinion as to the enforceability of
the choice of law provisions contained in the Loan Documents.

Based on the foregoing, and upon such investigations as we have deemed necessary
for purposes of the opinion expressed herein, and subject to the limitations set
forth below, we are of the opinion that:

1.           The Company: (a) is a corporation duly and properly incorporated,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation; (b) has all requisite power and authority to carry on its
business as now conducted; and (c) except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

2.           The Transactions are within the Company’s corporate powers and have
been duly authorized by all necessary corporate and, if required, stockholder
action.  The Loan Documents have been duly executed and delivered by the Company
and constitute legal, valid, and binding obligations of the Company, enforceable
in accordance with its their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

3.           The Transactions: (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect; (b)
will not violate any applicable law or regulation or the articles of
incorporation, by-laws, or other organizational documents of the Company or any
order of any Governmental Authority; (c) will not violate or result in a default
under any indenture, agreement, or other instrument binding upon the Company or
its assets and attached as an exhibit to the reports filed by the Company with
the United States Securities and Exchange Commission, or give rise to a right
thereunder to require any payment to be made by the Company; and (d) will not
result in the creation or imposition of any Lien on any asset of the Company,
other than as contemplated by the U.S. Collateral Documents.

4.           To our knowledge, there are no actions, suits, or proceedings by or
before any arbitrator or Governmental Authority pending against or, to our
knowledge,  threatened against or affecting the Company: (a) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect (other than the Disclosed Matters); or (b) that
involve the Loan Documents or the Transactions.

5.           The Company is not an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

6.           The Obligations constitute senior indebtedness which is entitled to
the benefits of the subordination provisions of all outstanding Subordinated
Indebtedness.

7.           The making of the Loans and the application of proceeds thereof as
provided in the Credit Agreement do not violate Regulation U of the Board of
Governors of the Federal Reserve System.

8.           The provisions of the U.S. Collateral Documents are sufficient to
create in favor of Lender a security interest in all right, title, and interest
of the Company in those items and types of collateral described in the U.S.
Collateral Documents in which a security interest may be created under Article 9
of the UCC as in effect on the date hereof in the State of Utah. A financing
statements on Form UCC-1 has been duly authorized by the Company.

This opinion is limited by and subject to the following:

A.           This opinion is rendered as of the date hereof, and we express no
opinion as to, and disclaim any undertaking or obligation to update this opinion
in respect of, changes of circumstances or events that occur subsequent to this
date.  We assume no obligation to revise or supplement this opinion should the
present laws of applicable jurisdictions be changed by legislative action,
judicial decision, or otherwise.
 
 
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B.           With respect to certain questions of fact material to the opinions
expressed above, we have relied, without independent investigation, on
representations of the Company and the Lender, on certificates of officers and
directors of the Company, and certificates or other advice of public
officials.  In doing so, we have assumed: (i) the correctness of the facts set
forth therein; (ii) the genuineness of signatures, the authenticity of documents
purporting to be originals, and the conformity to originals of all documents
purporting to be copies; (iii) the due authorization, execution, and delivery by
all parties to the Transaction Documents other than the Company and the
enforceability of such agreements against such parties in accordance with their
terms; and (iv) that the corporate minute books, stockholder records, and other
similar information furnished to us are true, correct, and complete.  Whenever
an opinion is expressed as “to our knowledge” or is similarly qualified, we have
not received any information in the course of our limited representation of the
Company that would make such opinion untrue.  Except as expressly stated, we
have not conducted any independent investigation concerning such matters and
have relied solely on information provided to us.

C.           In rendering the foregoing opinions, we have made no examination of
any title to any interest in real or personal property or accounting or
financial matters and express no opinion with respect thereto.  In addition, we
express no opinion as to the enforceability of any right of indemnification,
setoff, or contribution.  Further, we express no opinion respecting the
organization or standing of any entity organized outside the United States and
in which the Company has a direct or indirect interest.

D.           We have made no examination of, and do not by this opinion express
any opinion as to, the ownership or status of title to any personal property or
whether the Company has rights in said property or has the right to encumber
and/or assign said property.  We have made no examination of, and do not by this
opinion express any opinion as to, the accuracy or sufficiency of the
description or existence of the personal property collateral.

E.           We have made no examination of, and do not by this opinion express
any opinion as to, the priority or rank of the liens of the Transaction
Documents or any proceeds thereof.

F.           We express no opinion as to the creation of a security interest in:
(i) any personal property subject to a certificate of title statute; (ii) any
personal property that is a trademark, copyright, patent, or other intellectual
property; (iii) any personal property that consists of accounts or general
intangibles that are or will be due from the United States of America or any
agency or department thereof; (iv) any personal property that is subject to
statutory or contractual prohibitions against assignment for the purpose of
security; or (v) any personal property that consists of consumer goods,
equipment used in farming operations, farm products, crops, timber, minerals and
the like (including oil and gas), or accounts or general intangibles resulting
from the sale thereof.

G.           We advise you (and give no opinion as to the fact) that a security
interest in collateral will continue after its sale, exchange, or other
disposition only to the extent provided in Utah Code Ann. §§ 70A-9a-315,
70A-9a-320, 70A-9a-321, and 70A-9a-323.

This opinion is furnished to you solely for your benefit and the benefit of your
successors and assigns and may not be used by you in any other context and may
not be relied upon by any other person or entity without our prior written
consent or as set forth herein.

 
Sincerely,
     
/s/ Kruse Landa Maycock & Ricks, LLC
     
KRUSE LANDA MAYCOCK & RICKS, LLC

KLMR/KCT/vs
 
cc:           Utah Medical Products, Inc.
 
 

 
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 EXHIBIT D

COMPLIANCE CERTIFICATE

To:
JPMorgan Chase Bank, N.A.

 
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of March 17, 2011 (as amended, modified, renewed or extended
from time to time, the “Agreement”) among  Utah Medical Products, Inc., a Utah
corporation (the “Borrower”), the other Loan Parties and JPMorgan Chase Bank,
N.A.  Unless otherwise defined herein, capitalized terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:
 
1.      I am the duly elected V.P. of the Borrower;
 
2.     I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements [for quarterly or monthly financial
statements add: and such financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consis­tently applied, subject to normal year-end audit adjustments and the
absence of footnotes];
 
3.     The examinations described in paragraph 2 did not disclose, except as set
forth below, and I have no knowledge of (i) the existence of any condition or
event which constitutes a Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate or (ii) any change in GAAP or in the application thereof that has
occurred since the date of the audited financial statements referred to in
Section 3.04 of the Agreement;
 
4.     I hereby certify that no Loan Party has changed (i) its name, (ii) its
chief executive office, (iii) principal place of business, (iv) the type of
entity it is or (v) its state of incorporation or organization without having
given Lender the notice required by Section 4.15 of the Security Agreement;
 
5.     Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct;  and
 
6.      Schedule II hereto sets forth the computations necessary to determine
the Applicable Margin commencing on the Business Day this certificate is
delivered.

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the (i) nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event or (i) the change in GAAP or
the application thereof and the effect of such change on the attached financial
statements:
______________________________________________________

______________________________________________________
 
The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this ___ day of ____,
_____.

 
UTAH MEDICAL PRODUCTS, INC.
     
By ______________________________
 
     Name:
 
      Title:

Exhibit D
 
 

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

 

SCHEDULE I

Compliance as of _________, ____ with
Provisions of   and   of
the Agreement

SCHEDULE II

Borrower's Applicable Margin Calculation

Exhibit D
 
 

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EXHIBIT E

JOINDER AGREEMENT

 
THIS JOINDER AGREEMENT (this "Agreement"), dated as of __________, ____, 200_,
is entered into between ________________________________, a _________________
(the "New Subsidiary") and JPMORGAN CHASE BANK, N.A.(the "Lender") under that
certain Credit Agreement, dated as of March 17, 2011 among Utah Medical
Products, Inc.(the "Borrower"), the Loan Parties party thereto, and Lender (as
the same may be amended, modified, extended or restated from time to time, the
"Credit Agreement").  All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Credit Agreement.
 
The New Subsidiary and Lender hereby agree as follows:
 
1.           The New Subsidiary hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, the New Subsidiary will be deemed to be a
Loan Party under the Credit Agreement and a "Loan Guarantor" for all purposes of
the Credit Agreement and shall have all of the obligations of a Loan Party and a
Loan Guarantor thereunder as if it had executed the Credit Agreement.  The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement,
including without limitation (a) all of the representations and warranties of
the Loan Parties set forth in Article III of the Credit Agreement, *[and]* (b)
all of the covenants set forth in Articles V and VI of the Credit Agreement
*[and (c) all of the guaranty obligations set forth in Article IX of the Credit
Agreement.  Without limiting the generality of the foregoing terms of this
paragraph 1, the New Subsidiary, subject to the limitations set forth in Section
9.10 of the Credit Agreement, hereby guarantees, jointly and severally with the
other Loan Guarantors, to Lender, as provided in Article IX of the Credit
Agreement, the prompt payment and performance of the Guaranteed Obligations in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise) strictly in accordance with the terms thereof and
agrees that if any of the Guaranteed Obligations are not paid or performed in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise), the New Subsidiary will, jointly and severally
together with the other Loan Guarantors, promptly pay and perform the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.]*  *[The New Subsidiary has delivered to Lender an
executed Loan Guaranty.]*
 
2.           If required, the New Subsidiary is, simultaneously with the
execution of this Agreement, executing and delivering such Collateral Documents
(and such other documents and instruments) as requested by Lender in accordance
with the Credit Agreement.
 
3.           The address of the New Subsidiary for purposes of Section 9.01 of
the Credit Agreement is as follows:
 
__________________________________
__________________________________
__________________________________
__________________________________
 
4.           The New Subsidiary hereby waives acceptance by Lender of the
guaranty by the New Subsidiary upon the execution of this Agreement by the New
Subsidiary.
 
5.           This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.
 
6.           THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF UTAH.
 

Exhibit E
 
 

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

 
 
IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed by its authorized officer, and Lender has caused the same to be
accepted by its authorized officer, as of the day and year first above written.

 
[NEW SUBSIDIARY]
         
By:______________________________
   
Name:____________________________
   
Title:_____________________________
         
Acknowledged and accepted:
               
JPMORGAN CHASE BANK, N.A.
         
By:______________________________
   
Name:____________________________
   
Title:_____________________________
 

 

 
 

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Schedule 3.05 -- Real Estate and Intellectual Property
 
Real Property
 

 
Midvale Property:
 
7043 South 300 West
Midvale, UT 84047
 
Redwood Road Property:
 
1032 South Redwood Road
Salt Lake City, UT 84104
 
Leased Property:
 
That certain real property leased by Borrower and situated in the County of Salt
Lake County, State of Utah and described as follows:
 
Beginning at a point on the East right-of-way line of Cottonwood Street, said
point being South 785.45 feet and East 329.54 feet from the North Quarter Corner
of Section 25, Township 2 South, Range 1 West, Salt Lake Base and Meridian, and
running thence North 0°20’ East along said East line 281.67 feet; thence South
89°41’50” East 269.79 feet to the West right-of-way line of Union Pacific
Railroad Property; thence South 0°30’ West along said West line 281.67 feet;
thence North 89°41’50” West 268.97 feet to the point of beginning.  Contains
1.742 acres.

 
 

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Intellectual Property
 
Patents

Patent
Patent
Issue
Description
Number
Date
MGM
4,572,208
2/25/1986
MGM Jr. Monitor
4,619,269
10/28/1986
Dispiro
des 266,695
10/26/1982
Glove Leak Detector
4,909,069
3/20/1990
Delta-Flow Flush Device
4,192,303
3/11/1980
Delta-Flow Flush Device
4,278,083
7/14/1981
Delta-Flow Flush Device
4,337,770
7/6/1982
Disposa-Hood Neonatal Respiratory Hood
4,407,280
10/4/1983
Disposa-Hood Neonatal Respiratory Hood
des 273,612
4/24/1984
Deltran DPT-BPM
4,576,181
3/18/1986
Veri-Cal
4,610,256
9/9/1986
Delta-Cal
4,658,829
4/21/1987
Delta-Plex
4,949,723
8/21/1990
PTCA
5,004,472
4/2/1991
PTCA
5,009,662
4/23/1991
PTCA
5,021,046
6/4/1991
Intran I - FM
4,785,822
11/22/1988
Combined IUP & FHR
4,873,986
10/17/1989
Intran II - FM
4,966,161
10/30/1990
FSE - FM
5,046,965
9/10/1991
Delta-Plex
5,097,840
3/24/1992
FeO2Sat - FM
5,361,757
11/8/1994
FeO2Sat - FM
5,662,103
9/2/1997
FeO2Sat - FM
5,911,689
6/15/1999
External Bubble Toco - FM
5,195,536
3/23/1993
Cordguard
5,190,556
3/2/1993
Cordguard I
5,415,665
5/16/1995
Cordguard I
5,520,699
5/28/1996
Cordguard II
5,575,796
11/19/1996
Finesse ESU w/ integral smoke evacuator
5,160,334
11/3/1992
Loop SAFE-T-GAUGE
5,324,288
6/28/1994
Knurled Rollerball
5,395,363
3/7/1995
Carbazine Dye for pH
5,567,624
10/22/1996
Lumin Uterine Manipulator
5,645,561
7/8/1997
ABC Blood Sampling System Reservoir
5,759,160
6/2/1998
ABC Blood Sampling System Reservoir
6,159,164
12/12/2000
Intran 500 Meconium Detection System
5,713,351
2/3/1998
Epitome Ceramic Blade Electrode
6,126,656
10/3/2000
Epitome Bendable Ceramic Blade Electrode
5,860,976
1/19/1999
LETZ Contoured Loop Conization Electrode
5,951,550
9/14/1999
Liberty Plus
6,086,549
7/11/2000
EndoCurette
5,807,282
9/15/1998
Fluid Trap Filter for Vacuum Assisted Delivery Hand Pump
4,957,629
9/18/1990
Soft Vacuum Assisted Delivery Cup
5,224,947
7/6/1993
Soft Vacuum Assisted Delivery Cup
des 320,855
10/15/1991
Vacuum Assisted Delivery Hand Pump
5,277,557
1/11/1994
Vacuum Assisted Delivery Hand Pump
des 321,927
11/26/1991
AROM-COT Digital Amniotome w/ directional indicator
6,027,511
2/22/2000
Hemo-Nate Micro-Filtration Blood Filter
4,453,927
6/12/1984
Pala-Nate Neonatal Palate Protector
5,195,513
3/23/1993
TVUS/HSG-Cath
s.n. 11/870,491
 
OptiSpec Gynecology Light
7,631,981
12/15/2009
Nutri-Lok
s.n. 11/970,894
 
Nutri-Lok
des 29/305,248
 
BT-Cath
s.n. 12/207,578
 
Epitome Patent – Europe
0880342
 

 
 

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Trademarks

     
Reg.
Trademark
Serial #
Reg. #
Date
AROM-COT ®
75-525596
2278017
9/14/99
BT-CATH ®
76-693715
3629206
6/2/09
CMI TM
75-327101
2210508
12/15/98
CORDGUARD TM
74-378898
1909886
8/8/95
DELTA-CAL TM
     
DELTA-FLOW TM
     
DELTRAN ®
74-491516
1879646
2/21/95
DIALY-NATE ®
75-492730
2576950
6/11/02
DISPOSA-HOOD TM
     
ENDOCURETTE ®
76-167841
2673892
1/14/03
EPITOME ®
75-151472
2077593
7/8/97
FILTRESSE TM
74-706215
2031185
1/14/97
FINESSE ®
74-181220
1775806
6/8/93
FLEX CUP TM
     
LETZ ®
74-173056
1775804
6/8/93
LIBERTY ®
75-071029
2060901
5/13/97
LUMIN TM
75-071008
2071431
6/17/97
MUC-X TM
     
MYELO-NATE ®
75-492726
2590142
7/9/02
NUTRI-CATH ®
75-492729
2277697
9/14/99
NUTRI-LOK ®
76-663534
3294526
9/18/07
OPTIMICRO TM
     
OPTISPEC ®
76-682937
3518749
10/21/08
PALA-NATE ®
74-713788
2186181
9/1/98
PATHFINDER PLUS TM
     
PICC-NATE ®
76-265687
2575945
6/4/02
SAFE-T-GAUGE ®
74-235835
1773536
5/25/93
SECURE CUP TM
75-723368
   
SNAP-TAB TM
     
SOFT TOUCH TM
     
Stork Design TM
     
TENDER TOUCH ®
74-143209
1841265
6/21/94
THORA-CATH ®
76-016454
2495841
10/9/01
TVUS/HSG-CATH TM
     
UMBILI-CATH  TM
     
URI-CATH TM
76-015576
   
UTAHBALL ®
76-167842
2613576
8/27/02
UTAHBALL ®
76-696498
3697380
10/20/09
UTAHLOOP ®
76-167840
2687578
3/11/03
UTAHLOOP ®
76-696534
3697381
10/20/09
VAC-U-NATE TM
     
VELVET TOUCH TM
     
VERI-CAL TM
     
ZAPGUARD TM
     
DISPIRO TM
73-419541
1280628
6/5/84
GESCO TM
     
HEMO-NATE ®
73-320271
1229499
3/8/83
HEMO-TAP ®
73-320360
1221539
12/28/82
INTRAN ®
73-678290
1499413
8/9/88
UTAH MEDICAL PRODUCTS INC. UM ®
73-416682
1285922
7/17/84

 
 
 

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Schedule 3.06 – Litigation
 
Paula Brickner v. Hapner, D.O. et al v. UTMD (Third Party Defendant)
Superior Court of New Jersey
Salem County Law Division
Docket No. L-205-10
 
 

 

 
 

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Schedule 3.14 -- Insurance.
 

Commercial Package, Excess Liability and Crime Insurance 12/31/10-12/31/11
 
Insurer
One Beacon Insurance
 
Broker
Thoits Insurance, Santa Clara, CA
     
Commercial Package 12/21/10 – 12/20/11
 
Insurer
Zurich Insurance Company
 
Broker
Gateway Insurance, Athlone, Ireland
     
Workers Compensation 7/1/10 – 7/1/11
 
Insurer
Workers Compensation Fund
 
Broker
The Buckner Company, Salt Lake City, UT
     
Medical Plan Stop Loss 3/1/11 – 2/29/12
 
Insurer
RMTS LLC (Trustmark)
 
Broker
Wansutter Insurance, Salt Lake City, UT

 
 

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

 

Schedule 3.15 – Corporate Matters

Borrower:

Utah Medical Products, Inc.
a Utah corporation

Borrower’s Subsidiaries:

Utah Medical Products Limited
an exempted company incorporated under the laws of Bermuda

Femcare Group Limited
a UK private company limited by shares

Each 100% owned by Borrower.

Borrower’s Equity Interests:

None – except in Borrower’s Subsidiaries listed above

 
 

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

 

Schedule 6.01 --   Existing Indebtedness.
 
None – Except by Utah Medical Products Limited as listed under Schedule 6.10
 

 

 
 

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Schedule 6.02 – Existing Liens.
 
None
 
 
 
 

 
 

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Schedule 6.04 -- Investments.
 
Fidelity Investments Acct# Z75-342394, $15,247,000 value at 2/28/2011
Payments under this Credit Agreement will deplete this account by $15,000,000.
 
 

 
 
 

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

 

Schedule 6.10 – Restrictive Agreements.
 
 
Facility Agreement between Bank of Ireland and Utah Medical Products Limited
dated March 12, 2008 and related Guarantee and Indemnity from Borrower dated
June 13, 2008
 
 
 
 

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