**Exhibit 10.37**LOAN AND SECURITY AGREEMENTamongMERIDIAN BIOSCIENCE, INC.MERIDIAN BIOSCIENCE CORPORATIONOMEGA TECHNOLOGIES, INC.MERIDIAN LIFE SCIENCE, INC.andFIFTH THIRD BANKDated as of August 1, 2007
 

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

 
          “Borrower Default Rate” means 3% in excess of the otherwise applicable interest rate.          “Cash Equivalents” means (i) marketable direct obligations issued or unconditionallyguaranteed by the United States Government or issued by any agency thereof and backed by the fullfaith and credit of the United States, in each case maturing within three (3) months from the dateof acquisition thereof; (ii) investments in certificates of deposit or bankers’ acceptance maturingwithin three (3) months from the date of acquisition issued by the Lender or any commercial bankorganized under the laws of the United States or any state thereof having capital surplus andundivided profits aggregating at least Two Hundred Fifty Million Dollars ($250,000,000); (iii)investments in commercial paper of the Lender or of any other Person which, at the time ofissuance, have a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 fromMoody’s Investors Service, Inc. and maturing not more than six (6) months from the date ofacquisition thereof; (iv) obligations of the type described in (i), (ii) or (iii) above purchasedpursuant to a repurchase agreement obligating the counter party to repurchase such obligations notlater than thirty (30) days after the purchase thereof, secured by a fully perfected securityinterest in any such obligation, and having a market value at the time such repurchase agreement isentered into of not less than 100% of the repurchase obligation of the issuing bank; (v) timedeposits or Eurodollar time deposits maturing no more than thirty (30) days from the date ofcreation with commercial banks having membership in the Federal Deposit Insurance Corporation inamounts not exceeding the greater of One Hundred Thousand Dollars ($100,000) or the maximuminsurance applicable to the aggregate amount of such Person’s deposits in such institution; and(vi) direct-pay letter of credit bond or note issues that arebacked by a letter of credit from abank with a long term debt rating of “AA” or “AA-1” or its equivalent by any rating agency at thetime of purchase, though the issue itself does not have to be rated.          “Collateral” has the meaning set forth in Section 6.1.          “Current Assets” means all assets which may properly be classified as current assets inaccordance with generally accepted accounting principles, provided that for the purpose ofdetermining the Current Assets of Borrowers (i) notes and accounts receivable shall be includedonly if good and collectible and payable on demand or within twelve (12) months from the date asof which Current Assets are to be determined (and if not directly or indirectly renewable orextendible, at the option of the debtors, by their terms or by the terms of any instrument oragreement relating thereto, beyond such twelve (12) months) and shall be taken at their face valueless reserves determined to be sufficient in accordance with generally accepted accountingprinciples, and (ii) the cash surrender value of life insurance policies shall be excluded.          “Current Liabilities” mean all Indebtedness maturing on demand or within twelve (12) monthsfrom the date as of which Current Liabilities are to be determined (including, without limitation,liabilities, including taxes accrued as estimated, as may properly be classified as currentliabilities in accordance with generally accepted accounting principles).          “Default” means any event that, with the giving of notice or the passage of time, or both,would be an Event of Default.
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          “EBITDA” means income of Borrowers before taxes plus interest expenses, depreciation expenseand amortization expense for the four quarters ending with the applicable date of measurement on aconsolidated basis (on a rolling four quarters basis). Charges, if any, in future periods foracquired in-process research and development shall also be excluded form the calculation of EBITDA,provided such acquisitions are permitted under this Agreement.          “Election Year” means each one-year period commencing on each October 1, as further specifiedin Section 2.3(a) of this Agreement.          “Environmental Laws” means all applicable federal, state, local and foreign laws relating topollution or protection of the environment, including laws relating to emissions, discharges,releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic orhazardous substances or wastes into the environment (including without limitation ambient air,surface water, ground water, or land), or otherwise relating to the manufacture, processing,distribution, use, treatment, storage, disposal, transport, or handling of pollutants,contaminants, chemicals, or industrial, toxic or hazardous substances or wastes, and any and allregulations, codes, plans, orders, decrees, judgments, injunctions, notices or demand lettersissued, entered, promulgated or approved thereunder.          “Equipment” means all goods (excluding inventory, farm products or consumer goods), allmachinery, machine tools, equipment, fixtures, office equipment, furniture, furnishings, motors,motor vehicles, tools, dies, parts, jigs, goods (including, without limitation, each of the itemsof equipment set forth on any schedule which is either now or in the future attached to Bank’scopy of this Agreement), and all attachments, accessories, accessions, replacements,substitutions, additions and improvements thereto, all supplies used or useful in connectiontherewith, and all “Equipment” as same is now or hereinafter defined in the Uniform CommercialCode.          “Euro LIBOR Interest Period” means any 30, 60 or 90 day period selected by Agent, commencingon any Business Day. If a Euro LIBOR Interest Period so selected would otherwise end on a datewhich is not a Business Day, such Euro LIBOR Interest Period shall instead end on the nextBusiness Day, provided, however, that if such next Business Day shall fall in a succeeding month,such Euro LIBOR Interest Period shall instead end on the preceding Business Day.          “Euro LIBOR Pricing Option” means the option granted pursuant to Section 2.2 hereof to haveall or a portion of the interest on the principal amount of the Note computed with reference to aEuro LIBOR Rate.          “Euro LIBOR Rate” means the rate (adjusted for reserves if Bank is required to maintainreserves with respect to relevant advances) being asked on an amount of Euros deposits equal tothe amount of the Note on the first day of a Euro LIBOR Interest Period and which has a maturitycorresponding to the maturity of the Euro LIBOR Interest Period, as reported by the Reuters ratereporting system (or any successor) as determined by Bank by noon on the first day
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of the applicable Euro LIBOR Interest Period. Each determination by Bank of the Euro LIBOR Rateshall be conclusive in the absence of manifest error.          “Funded Debt” means all Indebtedness (i) in respect of money borrowed (senior andsubordinated) or (ii) evidenced by a note, debenture (senior or subordinated) or other like writtenobligation to pay money, or (iii) in respect of rent or hire of property under leases or leasearrangements which under Generally Accepted Accounting Principles are required to be capitalized,or (iv) in respect of obligations under conditional sales or other title retention agreements; andshall also include all guaranties of any of the foregoing. In no event shall any of mandatoryrepayments be counted twice in calculating Funded Indebtedness.          “GAAP” or “Generally Accepted Accounting Principles” means generally accepted accountingprinciples of the United Stated in effect on the date of this Agreement, which shall include theofficial interpretations thereof by the Financial Accounting Standards Board, consistently appliedor, in the case of compliance with Section 5.15 through 5.17, consistent with those utilized inpreparing the audited financial statements referred to in Section 3.8.          “General Intangibles” means all general intangibles, chooses in action, causes of action,obligations or indebtedness owed to a Borrower from any source whatsoever, payment intangibles,software and all other intangible personal property of every kind and nature (other than Accounts)including without limitation patents, trademarks, trade names, service marks, copyrights andapplications for any of the above, and goodwill, trade secrets, licenses, franchises, rights underagreements, tax refund claims, and all books and records including all computer programs, disks,tapes, printouts, customer lists, credit files and other business and financial records, theequipment containing any such information, and all “General Intangibles” as same is now orhereinafter defined in the Uniform Commercial Code.          “Indebtedness” means (i) all items (except items of capital stock, of capital surplus, ofgeneral contingency reserves or of retained earnings, deferred income taxes, amounts attributableto minority interest if any, and all short-term payables incurred in the ordinary course ofbusiness) which in accordance with generally accepted accounting principles would be included indetermining total liabilities on a consolidated basis shown on the liability side of a balancesheet as at the date as of which Indebtedness is to be determined, (ii) all indebtedness securedby any mortgage, pledge, lien or conditional sale or other title retention agreement to which anyproperty or asset owned or held is subject, whether or not the indebtedness secured thereby shallhave been assumed (excluding non-capitalized leases which may amount to title retention agreementsbut including capitalized leases), and (iii) all indebtedness of others which any Borrower or anySubsidiary has directly or indirectly guaranteed, endorsed (otherwise than for collection ordeposit in the ordinary course of business), discounted or sold with recourse or agreed(contingently or otherwise) to purchase or repurchase or otherwise acquire, or in respect of whichany Borrower or any Subsidiary has agreed to apply or advance funds (whether by way of loan, stockpurchase, capital contribution or otherwise) or otherwise to become directly or indirectly liable.          “Insolvency Event” means, with respect to a person, any of the following: a court enters adecree or order for relief in respect to such person in an involuntary case under any
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applicable bankruptcy, insolvency or other similar law then in effect, or appoints a receiver,liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of such personor for any substantial part of its property, or orders the wind-up or liquidation of its affairs;or a petition initiating an involuntary case under any such bankruptcy, insolvency or similar lawis filed against such person; or such person commences a voluntary case under any applicablebankruptcy, insolvency or other similar law in effect, or makes any general assignment for thebenefit of creditors, or fails generally to pay its debts as such debts become due, or takescorporate action in furtherance of any of the foregoing.          “Inventory” means goods, supplies, wares, merchandises and other tangible personal property,including raw materials, work in process, supplies and components, and finished goods, whetherheld for sale or lease, or furnished or to be furnished under any contract for service, or used orconsumed in business, and also including products of and accessions to inventory, packing andshipping materials, all documents of title, whether negotiable or non-negotiable, representing anyof the foregoing, and all “Inventory” as same is now or hereinafter defined in the UniformCommercial Code.          “Investment Property” means a security, whether certificated or uncertificated, securityentitlement, securities account, commodity contract or commodity account and all “InvestmentProperty” as same is now or hereafter defined in the Uniform Commercial Code.          “LIBOR Interest Period” means any period of time up to and including a 365 day periodselected by Agent, commencing on any Business Day. If a LIBOR Interest Period so selected wouldotherwise end on a date which is not a Business Day, such LIBOR Interest Period shall instead endon the next Business Day, provided, however, that if such next Business Day shall fall in asucceeding month, such LIBOR Interest Period shall instead end on the preceding Business Day.          “LIBOR Pricing Option” means the option granted pursuant to Section 2.2 hereof to have all ora portion of the interest on the principal amount of the Note computed with reference to a LIBORRate.          “LIBOR Rate” means, as applied to any LIBOR Interest Period, the rate (adjusted for LIBORReserves if Bank is required to maintain LIBOR Reserves with respect to the relevant loan) beingasked on an amount of Eurodollar deposits equal to the principal amount of the Note which is to besubject to a LIBOR Pricing Option, and which has a maturity corresponding to the LIBOR InterestPeriod in question, as reported by the TELERATE rate reporting system (or any successor), asdetermined by Bank by noon of the date upon which a LIBOR Interest Period is to commence. Eachdetermination by Bank of the LIBOR Rate shall be conclusive in the absence of manifest error.          “LIBOR Reserves” means, for any principal amount which is subject to a LIBOR Pricing Optionfor any LIBOR Interest Period therefor, the daily average maximum rate (expressed as a decimal) atwhich reserves (including any marginal, supplemental or emergency reserves) are required to bemaintained during such Interest Period under Regulation D established by the Board of Governors ofthe Federal Reserve System (or any successor rule or
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regulation) by Bank against “Eurocurrency Liabilities” (as such term is used in Regulation D) butwithout benefit of credit or proration, exemptions or offsets that might otherwise be available toBank from time to time under Regulation D. Without limiting the effect of the foregoing, LIBORReserves shall reflect any other reserves required to be maintained by Bank against (1) anycategory of liabilities that includes deposits by reference to which the LIBOR Interest Rate forloans is to be determined; or (2) any category of extension of credit or other assets that aresubject to an interest rate based on the LIBOR Rate.          “Lien” means any security interest, mortgage, pledge, assignment, or voluntary or involuntarylien, charge or other encumbrance of any kind, including interests of vendors or lessors underconditional sale contracts or capital leases.          “Loan Documents” means this Agreement, the Note, and all mortgages, instruments and documentssecuring Obligations, all guaranties of Obligations, and all other documents delivered orrequired, as a condition to the making of any Loan or otherwise, in connection with thisAgreement.          “Loans” means the Revolving Loans.          “Note” means the Revolving Note.          “Obligation(s)” means all loans, advances, indebtedness and other obligations of any Borrowerowed to Bank or any Bank Affiliate of every description whether now existing or hereafter arising(including those owed by any Borrower to others and acquired by Bank or any Bank Affiliate bypurchase, assignment or otherwise) and whether direct or indirect, primary or as guarantor(including guaranties of obligations owed by any Affiliate to Bank or any Bank Affiliate) orsurety, absolute or contingent, liquidated or unliquidated, matured or unmatured, whether or notsecured by additional collateral, and including without limitation obligations to perform orforbear from performing acts, all amounts represented by letters of credit now or hereafter issuedby Bank or any Bank Affiliate for the benefit of or at the request of any Borrower, and allexpenses and attorney’s fees incurred by Bank or any Bank Affiliate under this Agreement or anyother document or instrument related thereto.          “Permitted Investments” means          (a) investment in cash and Cash Equivalents;          (b) intercompany loans to, between or among Borrowers:          (c) loans and advances to employees for moving, entertainment, travel and other similarexpenses in the ordinary course of business;          (d) capital contributions by a Borrower to its Subsidiaries (whether now existing, or,subject to Section 5.4, hereafter created);
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          (e) investment in customers or account debtors of a Borrower or a Subsidiary of Borrowerreceived in connection with the bankruptcy or reorganization, or in settlement of delinquentobligations, of such entity, in the ordinary course of business and in accordance with suchentity’s usual and customary collection and credit policies;          (f) investments in connection with accounts receivable in the ordinary course of business;          (g) investments received as the non-cash portion of consideration received in connection withasset dispositions permitted hereunder;          (h) investments existing as of the date hereof;          (i) investments under Rate Management Agreements;          (j) investments in securities in accordance with the Investment Policy of the Borrowers asset forth on Exhibit 1.1; and          (k) other investments in an amount not to exceed $3,000,000.          “Permitted Liens” means the following liens, security interests and other encumbrances:          (a) Existing liens and security interests;          (b) Purchase money security interests (which term shall include mortgages, conditional salecontracts, capitalized leases and all other title retention or deferred purchase devices) tosecure the purchase price of property acquired hereafter by any Borrower, or to secureIndebtedness incurred solely for the purpose of financing such acquisitions subject to thelimitation set forth in the definition of Permitted Indebtedness;          (c) Deposits or pledges made in connection with, or to secure payment of, workmen’scompensation, unemployment insurance, old age pensions or other social security; liens in respectof judgments or awards; and liens for taxes, assessments or governmental charges or levies andliens to secure claims for labor, material or supplies to the extent that payment thereof shallnot at the time be required to be made in accordance with Section 5.7;          (d) Encumbrances in the nature of zoning restrictions, easements, and rights or restrictionsof record on the use of real property which do not materially detract from the value of suchproperty or impair its use in the business of the owner or lessee;          (e) Liens created by or resulting from any litigation or legal proceeding, provided theexecution or other enforcement thereof is effectively stayed and the claims secured thereby arebeing actively contested in good faith by appropriate proceedings;
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          (f) Liens arising by operation of law to secure carriers, materialman, mechanics, landlords,lessors or renters under leases or rental agreements made in the ordinary course of business andconfined to the premises or property rented; and          (g) Liens in favor of the Bank securing the Obligations;          (h) Inchoate liens for taxes and other governmental charges which are not yet due and payable;          (i) Banker’s liens and rights of set-off arising in the ordinary course; and          (j) Liens securing indebtedness hereunder.          “Pricing Option” means the LIBOR Pricing Option or the Euro LIBOR Pricing Option.          “Permitted Indebtedness: means:          (a) Indebtedness incurred under this Agreement and the other Loan Documents;          (b) (i) Indebtedness outstanding on the Closing Date and (ii) refinancings or renewalsthereof, *provided*that any such refinancing Indebtedness is in an aggregate principal amount notgreater than the aggregate principal amount of the Indebtedness being renewed or refinanced;          (c) Indebtedness under hedging contracts with respect to interest rates, foreign currencyexchange rates or commodity prices, in each case, not entered into for speculative purposes;          (d) Indebtedness incurred by an Affiliate or Subsidiary in connection with an investmentpermitted by Section 5.3;          (e) Indebtedness in respect of purchase money obligations and capital lease obligations, andrefinancings or renewals thereof, in an aggregate amount not to exceed $3,000,000 at any timeoutstanding;          (f) Indebtedness incurred by foreign subsidiaries in an aggregate amount not to exceed$3,000,000 any time outstanding;          (g) Indebtedness in respect of bid, performance or surety bonds, workers’ compensationclaims, self-insurance obligations and bankers acceptances issued for the account of any Borrowerin the ordinary course of business, including guarantees or obligations of any Borrower orSubsidiary with respect to letters of credit supporting such bid, performance or surety bonds,workers’ compensation claims, self-insurance obligations and bankers acceptances or issued in lieuof security deposits relating to Leases (in each case other than for an obligation for moneyborrowed);
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          (h) Guarantees of any Borrower or any other Subsidiary in respect of Indebtedness otherwisepermitted under this Agreement or leases permitted by Section 5.11;          (i) Indebtedness arising from the honoring by a bank or other financial institution of acheck, raft or similar instrument inadvertently drawn against insufficient funds in the ordinarycourse of business;          (j) Indebtedness arising in connection with endorsement of instruments for deposit in theordinary course of business;          (k) Indebtedness assumed in connection with any acquisition so long as such Indebtedness (i)was not created in anticipation of such acquisition and (ii) is either unsecured or secured solelyby the assets and property acquired or owned by the entity or entities acquired; and          (1) unsecured and subordinate Indebtedness of any Borrower in an aggregate amount not toexceed $30,000,000 at any time outstanding provided such Borrower has given Bank at least thirty(30) days prior written notice of the issuance of such Indebtedness.          “Prime Rate” means the rate of interest per annum announced to be its prime rate from time totime by Bank at its principal office in Cincinnati, Ohio, whether or not Bank shall at times lendto borrowers at lower rates of interest or, if there is no such prime rate, then its base rate orsuch other rate as may be substituted by Bank for the prime rate.          “Quick Assets” means Current Assets minus Inventory.          “Rate Management Agreement” means any agreement providing for payments which are related tofluctuations of interest rates, exchange rates, forward rates, or equity prices, including, butnot limited to, dollar-denominated or cross-currency interest rate exchange agreements, forwardcurrency exchange agreements, interest rate cap or collar protection agreements, forward ratecurrency or interest rate options, puts and warrants, and any agreement pertaining to equityderivative transactions (e.g., equity or equity index swaps, options, caps, floors, collars andforwards), including without limitation any ISDA master Agreement between the Borrowers and theBank or any affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents andother confirming evidence between the parties confirming transactions thereunder, all whether nowexisting or hereafter arising, and in each case as amended, modified or supplemented from time totime.          “Rate Management Obligations” means any and all obligations of the Borrowers to the Bank orany affiliate of Fifth Third Bancorp, whether absolute, contingent or otherwise and howsoever andwhensoever (whether now or hereafter) created, arising, evidenced or acquired (including allrenewals, extensions and modifications thereof and substitutions therefor), under or in connectionwith (i) any and all Rate Management Agreements, and (ii) any and all cancellations, buy backs,reversals, terminations or assignments of any Rate Management Agreement.
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          “Responsible Officer” means the chief operating officer or the president of a Borrower or,with respect to financial matters, the chief financial officer.          “Subsidiary” means any corporation of which a Borrower directly or indirectly owns orcontrols outstanding stock having under ordinary circumstances (not depending on the happening ofa contingency) voting power to elect a majority of the board of directors of said corporation.          “Subordinated Indebtedness” means Indebtedness that is subordinated to the Obligations owedto the Bank, in a manner satisfactory to the Bank in form and substance.          “Tangible Net Worth” shall mean the outstanding principal amount of the SubordinatedIndebtedness plus the total of the capital stock (less treasury stock), paid-in surplus, generalcontingency reserves and retained earnings (deficit) of Borrowers and any Subsidiary as determinedon consolidated basis in accordance with generally accepted accounting principles, aftereliminating all inter-company items and all amounts properly attributable to minority interests,if any, in the stock and surplus of any Subsidiary, minus the following items (withoutduplication of deductions) if any, appearing on the consolidated balance sheet of Borrowers:     (i) all deferred charges (less amortization, unamortized debt discount and expense andcorporate organization expenses);     (ii) the book amount of all assets which would be treated as intangibles under generallyaccepted accounting principles, including, without limitation, such items as goodwill, trademarkapplications, trade names, service marks, brand names, copyrights, patents, patent applicationsand licenses, and rights with respect to the foregoing;     (iii) the amount by which aggregate inventories or aggregate securities appearing on theasset side of such consolidated balance sheet exceed the lower of cost or market value (at thedate of such balance sheet) thereof; and     (iv) any subsequent write-up in the book amount of any intangible asset resulting from arevaluation thereof from the book amount entered upon acquisition of such asset.     1.2 GAAP and Uniform Commercial Code. All financial terms used in this Agreement,other than those defined in this Section 1, shall have the meanings given to them by generallyaccepted accounting principles in the United States. All other undefined terms shall have themeanings given to them in the Uniform Commercial Code.
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Section 2. Loan and Term.     2.1 Revolving Credit Loans.          (a) Subject to the terms and conditions hereof, Bank hereby extends to Borrowers a line ofcredit facility (the “Facility”) under which Bank shall make loans (the “Loans” or “RevolvingLoans”) to Borrowers at Agent’s request from time to time during the term of the Facility, in anamount up to Thirty Million Dollars ($30,000,000). Borrowers may borrow, prepay, and re-borrowhereunder, provided that the principal amount of all Revolving Loans outstanding at any one timeshall not exceed $30,000,000. If the amount of Revolving Loans outstanding at any time exceeds thatamount, Borrowers shall immediately pay the amount of such excess to Bank in cash. The principalbalance of the Revolving Note outstanding from time to time shall bear interest in accordance withSection 2.2 of this Agreement.          (b) Bank will apply funds in Agent’s principal depository account at Bank (the “CorporateBank Account”) on a daily basis to the payment of Revolving Loans automatically and withoutnotice, request or demand by Agent or any Borrower, in accordance with Bank’s automatic sweepprogram. Pursuant to that program, Bank will either make Revolving Loans or apply toward thepayment of interest and principal of Revolving Loans or apply toward the payment of interest andprincipal of Revolving Loans an amount necessary to maintain a minimum balance in the CorporateBank Account of $1,000,000. However, in no event will the principal amount of the Revolving Loansexceed the amount provided for in clause (a) of this Section. Bank reserves the right to changethe provisions (other than the minimum balance specified above) and mechanics of its automaticsweep program in any non-material respect in a separate writing to Agent on behalf of theBorrowers and such change need not be reflected by an amendment to this Agreement in order to beeffective.          (c) Borrowers shall execute and deliver to Bank the Revolving Note in the principal amount of$30,000,000, in the form attached as Exhibit 2.1(c).          (d) The Facility shall expire on September 15, 2012, and the entire outstanding principalbalance of the Revolving Note, and all accrued interest, shall become due and payable not laterthan that date. Borrowers may prepay the principal balance of the Revolving Note in whole or partat any time. Until all Obligations have been fully repaid and this Agreement has terminated, Bankshall retain its security interest in all Collateral then existing or arising thereafter.     2.2 Interest.          (a) Subject to the terms and conditions of this Agreement, the Loans shall bear interest asfollows:               (1) on amounts subject to a Pricing Option, at an annual rate equal to the LIBOR Rate or theEuro LIBOR Rate plus the Applicable LIBOR/Euro LIBOR Margin; and               (2) on amounts not subject to a Pricing Option, at an annual rate equal to the Prime Rate plusthe Applicable Prime Margin in effect on each date; or
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               (3) on a mounts so selected by Agent, the Borrowers have the right to use a LIBOR PricingOption in connection with the Bank’s overnight-sweep LIBOR pricing program, with the amountssubject to such election priced on a daily basis based upon the LIBOR Rate plus Applicable LIBORMargin for a 30-day LIBOR Interest Period.          (b) Subject to the terms and conditions of this Agreement, Borrowers may from time to timeelect to have a Pricing Option apply to a portion of the principal amount of outstanding Loans, asspecified by Agent on behalf of the Borrowers, for a permissible LIBOR Interest Period or a EuroLIBOR Interest Period specified by Agent. Agent shall make each such election by giving notice(which notice shah be irrevocable) to Bank in the manner and by the deadline reasonably acceptableto Bank.          (c) Borrowers’ right to elect a Pricing Option for any portion of outstanding Loans issubject to the following limitations: (i) Borrowers may not elect a Pricing Option at a time whenan Event of Default has occurred and has not been waived; (ii) no LIBOR Interest Period or EuroLIBOR Interest Period shall end later than the maturity date of the Note evidencing the borrowingof the relevant principal amount; (iii) the principal amount that can be subject to a PricingOption is $1,000,000 or a whole multiple thereof; (iv) once a Pricing Option has been selected fora portion of the Loans, no other Pricing Option may apply to such portion until the expiration ofthe LIBOR Interest Period or the Euro LIBOR Interest Period applicable to the first PricingOption; and (v) there may be no more than five separate Pricing Options at any given time.          (d) Interest on the principal amount subject to a LIBOR Pricing Option is payable on the lastday of the relevant LIBOR Interest Period. Interest on the principal amount subject to a EuroLIBOR Pricing Option is payable quarterly on the last day of each ninety (90) day period. Intereston the principal amount of Loans not subject to a Pricing Option is payable on the first BusinessDay of each calendar month. In addition, all accrued interest is payable at maturity (whether byacceleration, notice of intention to prepay or otherwise).          (e) Interest on the Loans shall be computed on the basis of a 360-day year and charged forthe actual number of days involved. The interest rate applicable to amounts not subject to anyPricing Option shall change automatically upon each change in the Prime Rate or, as specified inSection 2.2(a)(3), the LIBOR Rate. Upon the occurrence of an Event of Default and until such Eventof Default is waived, the Loans shall bear interest at the Borrower Default Rate; this provisiondoes not constitute a waiver of any Event of Default or an agreement by Bank to permit any latepayments whatsoever.          (f) Borrowers shall have the right to prepay the Loans in whole at any time, or in part fromtime to time, without premium or penalty, provided that, at any time when a Pricing Option is ineffect (other than is specified in Section 2.2(a)(3)), no prepayment of such portion of theprincipal amount of the Loans is subject to such Pricing Option shall be made except on the lastday of the applicable Interest Period. Each notice of prepayment shall be irrevocable and shallobligate Borrowers to prepay the amount stated therein on the date stated therein.
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          (g) In no event shall the interest rate and other charges hereunder exceed the highest ratepermissible under any law which a court of competent jurisdiction shall, in a final determination,deem applicable hereto. In the event that a court determines that Bank has received interest andother charges hereunder in excess of the highest permissible rate applicable hereto, such excessshall be deemed received on account of, and shall automatically be applied to reduce, theprincipal balance of the Loans, and the provisions hereof shall be deemed amended to provide forthe highest permissible rate. If there are no Obligations outstanding, the Bank shall refund toBorrowers such excess.          (h) Borrowers’ right to elect a LIBOR Pricing Option or a Euro LIBOR Pricing Option shall beterminated automatically if Bank, by telephonic or telegraphic or otherwritten notice, notifies Agent on behalf of Borrowers that Eurodollar deposits which have amaturity corresponding to the proposed LIBOR Interest Period or Euro LIBOR Interest Period, in anamount equal to the amount requested by Borrowers to be subject to a LIBOR Pricing Option or EuroLIBOR Pricing Option, are not readily available in the London Inter-Bank Eurocurrency Market, orthat, by reason of circumstances affecting such market, adequate and reasonable methods do notexist for ascertaining the interest rate applicable to such deposits for the proposed LIBORInterest Period or the Euro LIBOR Interest Period.          (i) Notwithstanding anything herein contained to the contrary, if at any time any change inany law, regulation or official directive, or in the interpretation thereof, by any governmentalbody charged with the administration thereof, shall make it unlawful, or any central bank or othergovernmental authority shall assert that it is unlawful, for Bank to fund or maintain its fundingin Eurodollars of any portion of the principal amount of the Note or otherwise to give effect toBank’s obligations as contemplated hereby, (i) Bank may by facsimile or other written noticethereof to Agent on behalf of Borrowers declare Bank’s obligations in respect of the LIBOR PricingOption or the Euro Pricing Option to be terminated forthwith, and (ii) all LIBOR Pricing Optionsand all Euro Pricing Options then in effect shall forthwith cease to be in effect, and interestshall from and after such date be calculated at the interest rate applicable to amounts to whichno Pricing Option applies; and (iii) Borrowers’ right to elect LIBOR Pricing Options or EuroPricing Options is terminated until Bank notifies Agent on behalf of Borrowers that the right toelect LIBOR Pricing Options or Euro Pricing Options is reinstated.          (j) If, due to either (i) the introduction of or any change in or in the interpretation of anylaw or regulation or (ii) the compliance with an guideline or request from any central bank orother governmental authority (whether or not having the force of law), there shall be any increasein the cost to Bank of agreeing to make or of making, funding or maintaining Loans subject to theLIBOR Pricing Option or the Euro Pricing Option, then from time to time, upon written demand byBank if it shall at the time be the general policy or practice of Bank to demand such compensationin similar circumstances under comparable provisions of other credit agreements, Borrowers shallpay to Bank additional amounts sufficient to compensate Bank for such increased cost and Bank shallbe entitled to additional compensation for only that portion of such costs incurred from and afterthe date that is ten (10) days prior to the date Borrower receives such notice. A certificate asto the amount of such increased cost
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submitted to Agent on behalf of Borrowers by Bank shall be conclusive and binding for allpurposes, absent manifest error.          (k) If, with respect to any LIBOR Pricing Option or Euro LIBOR Pricing Option the LIBORRate or the Euro LIBOR Rate for any LIBOR Interest Period or Euro LIBOR Interest Period will notadequately reflect the cost to Bank of making a Loan subject to the relevant LIBOR PricingOption or the relevant Euro LIBOR Pricing Option for such LIBOR Interest Period or for such EuroLIBOR Interest Period, Bank shall forthwith so notify Borrowers in writing, whereupon Borrowers’right to elect any LIBOR Pricing Option or Euro LIBOR Pricing Option shall be suspended untilBank shall notify them that Bank has determined that the circumstances causing such suspensionno longer exist. Bank shall use its best efforts to substitute a comparable rate during suchtime that the LIBOR Pricing Option or the Euro LIBOR Pricing Option is so suspended.     2.3 Applicable LIBOR/Euro LIBOR Margin          (a) Borrowers shall make an election on an annual basis to utilize the pricing contained ineither Option A or Option B as set forth in clause (b) of this Section. Agent, on behalf of theBorrower, shall notify the Bank of their election by September 1 of each year and that electionwill become effective as of the October 1 of such year and remain in effect until the followingOctober 1 (an “Election Year”). As of the date of this Agreement, Borrowers have elected to haveOption A apply for the period of time from the date of this Agreement until October 1, 2008.          (b) The Applicable LIBOR/Euro LIBOR Margin (“LIBOR+”) expressed as a percentage, in effecton any date shall be determined based on the ratio of Total Funded Debt to EBITDA of Borrowers(which shall be determined pursuant to clause (c) of this paragraph), as follows under eitherOption A or Option B, as may be applicable for such Election Year.Option A               Level I Status Funded Level II Status Funded Level III Status Funded  Debt/EBITDA Debt/EBITDA Debt/EBITDAApplicable Margin ≤1.00:1.00 >1.00:1.00≤2.00:1.00 >2.00:1.00<3.00:1.00Libor Rate/EuroLibor RateRevolver  +0.65%  +0.75%  +1.25%Option B         Level I Status Funded Level II Status Funded Level III Status Funded  Debt/EBITDA Debt/EBITDA Debt/EBITDAApplicable Margin ≤1.00:1.00 >1.00:1.00≤2.00:1.00 >2.00:1.00<3.00:1.00Unused Fee 10 basis points 10 basis points 10 basis points       Libor Rate/EuroLibor Rate Revolver +0.50% +0.60% +1.10%
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          (c) The Total Funded Debt to EBITDA in effect on a certain date is determined as follows: theBorrowers shall calculate Total Funded Debt to EBITDA each quarter and attach quarterly financialstatements to such calculation and deliver same to Bank at the time that the Bank receives thefinancial statements of Borrowers delivered to Bank pursuant to Section 4.1 hereof; provided,however, that if such financial statements or Total Funded Debt to EBITDA are not delivered on atimely basis, are not accurate and correct, or are not prepared in accordance with therequirements of this Agreement, then the Total Funded Debt to EBITDA shall be the ratiosdetermined by Bank in its sole judgment. If the Total Funded Debt to EBITDA as recalculatedrequires a change in Applicable LIBOR/Euro LIBOR Margin, the Applicable LIBOR/Euro LIBOR Marginwill change accordingly starting on the first day of the calendar month following the Bank’sreceipt of such financial statements. Notwithstanding the foregoing, the Applicable LIBOR/EuroLIBOR Margin in effect on the first day of the LIBOR Interest Period or the Euro LIBOR InterestPeriod applicable to a Pricing Option shall remain in effect for such entire LIBOR Interest Periodor Euro LIBOR Interest Period with respect to the amount of the Loan subject to such PricingOption.          (d) If any financial statements of Borrowers are later determined to have been incorrect, andif the Total Funded Debt to EBITDA determined pursuant to the correct information would result in agreater amount owing by Borrowers for the relevant period than had been actually paid by Borrowersfor such period, Borrowers shall pay to Bank upon demand, the difference between the amountactually paid for the relevant period and the amount owed based on the Total Funded Debt to EBITDAdetermined pursuant to the correct information, together with interest on the amount owed at thePrime Rate. If any financial statements of Borrowers are later determined to have been incorrect,and if the Total Funded Debt to EBITDA determined pursuant to the correct information will resultin a lesser amount of money owing by Borrowers for the relevant period than had actually been paidby Borrowers for such period, then Borrowers shall receive from Bank to the ratable benefit ofBorrowers upon demand, the difference between the amount actually paid for the relevant period andthe amount owed based on the Total Funded Debt to EBITDA, determined pursuant to the correctinformation.          (e) If any financial statements of Borrowers are later determined to have been incorrect as aresult of a retroactive change in Generally Accepted Accounting Principles, and if the TotalFunded Debt to EBITDA determined pursuant to such changed information would result in a lesseramount owing by Borrowers for the relevant period than had been actually paid by Borrowers forsuch period, Bank upon demand shall rebate or credit the difference to Borrowers between theamount actually paid for the relevant period and the amount owed based on the Total Funded Debt toEBITDA determined pursuant to the changed information.     2.4 Accounting. After the end of each calendar month, Bank will:          (a) if Bank so elects, charge Agent or any Borrower’s account for any or all amounts then dueto Bank under this Agreement for interest, expenses and the like and notify Borrowers in writingof such charges; and
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          (b) render to Agent a statement of Borrowers’ loan account with Bank hereunder, whichstatement shall be considered correct and to have been accepted by Borrowers and shall beconclusively binding upon Borrowers, absent manifest error, unless a Borrower notifies Bank inwriting of any discrepancy within fifteen (15) Business Days from the mailing of such statement. Asused herein, “Business Days” are days on which the principal office of Bank is open for thetransaction of its full banking business.     2.5 Costs. Borrowers shall pay to Bank its reasonable and customary costs andexpenses (including, without limitation, reasonable attorneys’ fees, court costs, litigation andother expense) incurred or paid by Bank in negotiating, documenting, administering and enforcingthis Agreement and the Loan Documents and in establishing, maintaining, protecting, perfecting orenforcing any of Bank’s rights or any Borrower’s obligations, including, without limitation, anyand all such reasonable and customary costs and expenses incurred or paid by Bank in defendingBank’s title or right to the Collateral or in collecting or enforcing payment of the Collateraland all costs of filing financing, continuation or termination statements or mortgages withrespect to the Collateral.     2.6 Banking Services. Borrowers shall maintain a full financial services relationshipwith Bank (including depository accounts and banking services) so long as the fees related to suchaccounts and banking services are reasonable, customary and consistent with fees being charged tosimilarly-situated borrowers.     2.7 Use of Proceeds. The proceeds of the Loans will be used only for generalcorporate purposes.     2.8 Maximum Interest Rate. In no event shall the interest rate and other chargeshereunder exceed the highest rate permissible under any law which a court of competentjurisdiction shall, in a final determination, deem applicable hereto. In the event that a courtdetermines that Bank has received interest and other charges hereunder in excess of the highestpermissible rate applicable hereto, such excess shall be deemed received on account of, and shallautomatically be applied to reduce, the principal balance of the Loans, in the inverse order ofmaturity, and the provisions hereof shall be deemed amended to provide for the highest permissiblerate. If there are no Obligations outstanding, Bank shall refund to Borrowers such excess.     2.9 Currency Option. (a) Bank hereby provides to Borrowers the option to choose tohave its Loans made to Borrowers in freely tradable foreign currency reasonable acceptable to theBank (a “Foreign Currency”) instead of U.S. Dollars (the “Foreign Currency Option”). Any borrowingto be funded in a Foreign Currency is subject to the following terms and conditions,notwithstanding anything to the contrary in this Agreement: (i) Agent must give Bank written notices of its intention to usethe Foreign Currency Option at least 3 days prior to the actual funding date.Such written notice shall specify the actual funding date, the principalamount of such funding and state that the Borrowers are not then in defaultunder the terms of this Agreement.
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 (ii) Borrowers, right to elect a Foreign Currency Option for any portion ofoutstanding Loans is subject to the following limitations: (A) the totalnumber of Foreign Currency Options outstanding at any one time under thisAgreement shall not exceed five; (B) Borrowers may not elect a ForeignCurrency Option at a time when an Event of Default has occurred and has notbeen waived; (C) no Foreign Currency Option shall end later than thematurity date of the Note evidencing the borrowing of the relevant principalamount; and (D) once a Foreign Currency Option has been selected for aportion of the Loans, no other Foreign Currency Option may apply to thatsame portion of the Loans until the expiration of the interest periodapplicable to such Foreign Currency Option (but nothing in this clause (D)shall be construed as prohibiting separate Foreign Currency Options ondifferent portions of the Loans as contemplated by clause (A) of thisparagraph).  (iii) Borrowers’ right to elect a Foreign Currency Option shall besuspended automatically if Bank, by telephonic or telegraphic or other writtennotice, notifies Borrowers that foreign currency contracts which have amaturity corresponding to the proposed interest period, in an amount equal tothe amount requested to be subject to a Foreign Currency Option, are notreadily available. Such suspension shall end automatically upon termination ofthe circumstances originally creating the suspension.          (a) Notwithstanding anything herein contained to the contrary, if at any time any change inany law, regulation or official directive, or in the interpretation thereof, by any governmentalbody charged with the administration thereof, shall make it unlawful, or any central bank or othergovernmental authority shall assert that it is unlawful, for Bank to fund or maintain its fundingin a Foreign Currency of any portion of the principal amount of the Loans or otherwise to giveeffect to Bank’s obligations as contemplated hereby, (A) Bank may by facsimile or other writtennotice thereof to Borrowers declare Bank’s obligations in respect of the Foreign Currency Optionto be terminated forthwith, and (B) all Foreign Currency Options then in effect shall forthwithcease to be in effect, and interest shall from and after such date be calculated at the interestrate applicable to amounts to which no Foreign Currency Option applies; and (C)Borrowers’ right to elect Foreign Currency Options is terminated until Bank notifiesAgent that Borrowers’ right to elect Foreign Currency Options is reinstated.          (b) If. due to either (A) the introduction of or any change in or in the interpretation ofany law or regulation or (B) the compliance with an guideline or request from any central bank orother governmental authority (whether or not having the force of law), there shall be any increasein the cost to Bank of agreeing to make or of making, funding or maintaining Loans subject to theForeign Currency Option, then from time to time, upon written demand by Bank if it shall at thetime be the general policy or practice of Bank to demand such compensation in similarcircumstances under comparable provisions of other credit agreements, Borrowers shall pay to Bankadditional amounts sufficient to compensate Bank for such
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increased cost. A certificate as to the amount of such increased cost submitted to Borrowers byBank shall be conclusive and binding for all purposes, absent manifest error.          (c) Each Borrower hereby indemnifies Bank and holds Bank harmless from and against any and alllosses or expenses that Bank may sustain or incur as a consequence of any prepayment or any defaultby any Borrower in the payment of the principal of or interest on any Foreign Currency Option orfailure by a Borrower to complete a borrowing of, a prepayment of or conversion of or to a ForeignCurrency Option after notice thereof has been given by any Borrower including (but not limited to)any interest payable by Bank to lenders of funds obtained by it in order to make or maintain itsForeign Currency Option hereunder, and any other loss obtained by it in order to make or maintainits Foreign Currency Option hereunder, and any other loss or expense incurred by Bank by reason ofthe liquidation or re-employment of deposits or other funds acquired by Bank to make, continue,convert into or maintain, a Foreign Currency Option.          (d) Without limiting and in addition to the provisions of this Agreement, if for the purposesof obtaining judgment in any court in any jurisdiction with respect to this Agreement or any otherLoan Document to which a Borrower is party it becomes necessary to convert into the currency ofsuch jurisdiction (the “Judgment Currency”) any amount due hereunder in any currency other thanthe Judgment Currency, then conversion shall be made at the rate of exchange prevailing on thebusiness day before the day of which judgment is given. For the purpose, “rate of exchange” meansthe rate at which Bank would, on the relevant date at or about 12:00 noon (New York time), beprepared to sell a similar amount of such currency in New York against the Judgment Currency. Inthe event that there is a change in the rate of exchange prevailing between the business daybefore the day on which the judgment is given and the date of payment of the amount due, theapplicable credit party shall, on the date of payment, pay such additional amounts (if any) as maybe necessary to ensure that the amount paid on such date is the amount in the Judgment Currencywhich when converted at the rate of exchange prevailing on the date of payment is the amount thendue under this Agreement or such other applicable Loan Document in such other currency. Anyadditional amount due from Borrowers under this Section will be due as a separate debt and shallnot be affected by judgment being obtained for any other sums due under or in respect of any ofthe Loan Documents.     2.10 Joint and Several Liability; Agent.          (a) The obligations and liabilities of Borrowers, under, and all representations, warrantiesand covenants of Borrowers in, this Agreement and the Loan Documents shall be joint and several inall respects whatsoever. Whenever the term “Borrower” or “Borrowers” is used in this Agreement orthe Loan Documents it shall mean each individual Borrower and all Borrowers jointly and severally.          (b) Bank may deal with each Borrower as if it were the sole obligor, without impairing in anyway the liability of any other Borrower. Without limiting the generality of that right, Bank mayin particular release, impair, or fail to perfect an interest in any Collateral of any Borrower,waive defaults by any Borrower, or extend, compromise or release the liability of any Borrower,without the consent of any other Borrower.
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          (c) Borrowers represent that they have carefully considered the alternatives to and the legalconsequences of incurring joint and several liability for the Obligations and have determined thatby such arrangement they are able to obtain financing on terms more favorable than otherwise, andthat under a joint and several loan facility they will each realize substantial interest savingsover alternative financing arrangements.          (d) All Borrowers hereby irrevocably appoint Agent as their representative to deal with Bankon their behalf in all respects in connection with this Agreement and the transactionscontemplated herein. All Borrowers agree to be bound by all actions of Agent in all such respects.          (e) Bank may bring a separate action or actions on the Obligations against each, any, or allof the Borrowers, whether action is brought against any other or all of such Borrowers, or any oneor more of the Borrowers is or is not joined therein. Each Borrower agrees that any release whichmay be given to any one or more of the Borrowers or any guarantor of the Obligations shall notrelease any other Borrower from its obligations hereunder. Each Borrower hereby waives any rightto assert against Bank any defense (legal or equitable), set off, counterclaim, or claims whichsuch Borrower individually may now or any time hereafter have against another Borrower or anyother party liable to Bank in any manner whatsoever.          (f) Any and all present and future debt and other obligations of any Borrower to any otherBorrower are hereby subordinated to the full payment and performance of the Obligations; provided,however, such debt and other obligations may be incurred and repaid, subject to the terms of thisAgreement, so long as no Default or Event of Default shall haveoccurred and not have been waived.          (g) Each Borrower is presently informed as to the financial condition of each of the otherBorrowers and of all other circumstances which a diligent inquiry would reveal and which bear uponthe risk of nonpayment of the Obligations. Each Borrower hereby covenants that it will continue tokeep itself informed as to the financial condition of all other Borrowers, the status of all otherBorrowers, and of all circumstances which bear upon the risk of nonpayment. Absent a writtenrequest from any of the Borrowers to Bank for information, each Borrower hereby waives any and allrights it may have to require Bank to disclose to such Borrower any information which Bank may nowor hereafter acquire concerning the condition or circumstances of any of the Borrowers.          (h) Each Borrower waives all rights to notices of default, existence, creation, or incurringof new or additional indebtedness, and all other notices of formalities to which such Borrowermay, as a joint and several Borrower hereunder, be entitled.
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Section 3. Representations and Warranties.     Each Borrower hereby warrants and represents to Bank the following: