Exhibit 10.28


 


PARENT GUARANTY


 


THIS PARENT GUARANTY (this “Guaranty”), entered into as of this 29th day
of December, 2003, by OCULAR SCIENCES, INC., a Delaware- corporation
(together with its permitted successors, assigns and transferees, “Guarantor”),
for the benefit of WELLS FARGO HSBC TRADE BANK N.A., a national banking
association (together with its successors, assigns and transferees, “Bank”),
and with respect to that certain Credit Agreement of even date herewith (as
amended, modified or supplemented from time to time, the “Credit Agreement”)
between Bank and OCULAR SCIENCES K.K., a Japanese corporation (together with its permitted successors,
assigns and transferees, “Borrower”).


 


W I T N E S S E T H:


 


WHEREAS, Borrower is a wholly owned Subsidiary of Guarantor; and


 


WHEREAS, it is a condition precedent to the effectiveness of the Loan
Documents that Guarantor shall have executed and delivered to Bank this
Guaranty:


 


NOW, THEREFORE, in order to induce Bank to execute and deliver the Loan
Documents, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, Guarantor hereby covenants and agrees with Bank as
follows:


 


1.             Definitions.  The following terms when used in this
Guaranty, including its preamble and recitals, shall have the following
meanings (such definitions to be equally applicable to the singular and plural
forms thereof).  All capitalized terms
not defined herein shall have the meaning set forth in the Credit Agreement.


 


“Accommodation
Obligation” means, as applied to any Person, any direct or indirect
guaranty, endorsement or other liability of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation (the “primary
obligation”) of another Person (the “primary obligor”), including any
obligation of that Person, whether or not contingent, (i) to purchase,
repurchase or otherwise acquire any such primary obligation or any property
constituting direct or indirect security therefor; (ii) to advance or
provide funds (A) for the payment or discharge of any such primary
obligation, or (B) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor; (iii) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation; or
(iv) otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof. The amount of any Accommodation
Obligation shall be deemed to be an amount equal to the maximum stated or determinable amount of the primary obligation in
respect of which such Accommodation Obligation is made or, if not stated or if
indeterminable, the maximum reasonably estimated potential 


 
















 


liability in respect thereof. Endorsements of checks for
collection or deposit in the ordinary course of business are not Accommodation
Obligations.


 


“Authorized
Officer” means the chief executive officer, president, chief financial
officer or controller of Guarantor.


 


“Bank”
has the meaning given it in the preamble.


 


“Borrower”
has the meaning given it in the preamble.


 


“Capital Lease” means, with respect to any Person, any
lease of any property by that Person as lessee which, in accordance with GAAP,
is required to be accounted for as a capital lease on the balance sheet of that
Person.


 


“Cash Flow” means, for any period, an
amount determined as (i) Consolidated Net Income for such period, plus (ii) to the extent
deducted in determining Consolidated Net Income and without duplication, the
sum of (A) all charges for Consolidated Interest Expense, depreciation and
amortization for such period, plus (B) all non-cash charges required by
GAAP relating to dispositions of property, plant and equipment for such period,
minus (iii) preferred stock dividends paid or payable (x) by
Guarantor or (y) by any of its consolidated Subsidiaries to any Person not
in the Ocular Sciences Group during such period and minus (iv) amounts
and/or expenditures incurred in connection with stock repurchases and/or
buybacks by Guarantor during such period, all computed and calculated in
accordance with GAAP.


 


“Cash Flow Coverage Ratio” means, as
of any date of determination, (a) Cash Flow, divided by (b) the sum
of the current portion of long-term debt and Capital Leases following the
relevant date of calculation.


 


“Consolidated Interest Expense” means,
for any period, total interest expense (including the interest component of Capital Leases) of Guarantor and its
consolidated Subsidiaries for such period determined in accordance with GAAP,
except that amortization or write-off of original issue discount, capitalized
debt issuance costs and expenses, and non-cash interest payments or accruals
shall in any event be excluded.


 


“Consolidated Net Income” means, for
any period, the net income of Guarantor and its consolidated Subsidiaries for
such period determined in accordance with GAAP.


 


“Consolidated Total Debt” means, as of
any date of determination for Guarantor and its consolidated Subsidiaries, all
items of indebtedness,
obligation or liability (other than Subordinated Debt) that should be
classified, and reported on Guarantor’s consolidated balance sheet, as
liabilities in accordance with GAAP.


 


“Credit
Agreement” has the meaning given it in the preamble.


 


2
















 


“Debt” means, as applied to any
Person, (i) all indebtedness of such Person for borrowed money (whether by
loan or the issuance of debt securities or otherwise); (ii) all
obligations of such Person issued, undertaken or assumed as the deferred
purchase price of property or services or interest thereon, except accounts and
accrued expenses currently payable; (iii) all reimbursement obligations of
such Person with respect to surety bonds, letters of credit, bankers’
acceptances and similar instruments, whether or not contingent; (iv) all
monetary obligations of such Person under any Capital Lease; (v) all
obligations of such Person (contingent or otherwise) to purchase, retire or
redeem any capital stock or other equity interests in such Person or any
Affiliate of such Person; (vi) all monetary obligations of such Person
measured by, or determined on the basis of, the value of any capital stock of
such Person or any Affiliate of such Person; (vii) all Accommodation
Obligations of such Person; and (viii) all liabilities and obligations
secured by (or as to which the holder of the liability or obligation has an
existing right, contingent or otherwise, to be secured by any Lien, except a
Non-Consensual Lien (as such term is defined in the Parent Credit Agreement as
in effect on the date hereof).


 


“Earnings
Before Interest and Taxes” means
the consolidated earnings (or loss) from the operations of any Person for any
period, after all expenses and other property charges but before payment or
provision for any income taxes or interest expense for such period, determined in
accordance with GAAP, excluding any extraordinary or non-recurring gains
or losses.


 


“EBITDA” means, for any period, an
amount equal to the sum of (a) Earnings Before Interest
and Taxes for Guarantor and its Subsidiaries on a consolidated basis for such
period, plus (b) depreciation, amortization and all other non-cash charges
of Guarantor and its Subsidiaries on a consolidated basis for such period.


 


“Equity Issuance” means the issuance
or sale of any capital stock or other equity, ownership or profit interests
(except a dividend on any such stock or interest declared and payable solely in
additional shares of such stock or interest) by (i) Guarantor to any
Person, or (ii) any Subsidiary of Guarantor to any Person, other than to
Guarantor or to any other wholly owned Subsidiary of Guarantor.


 


“ERISA Affiliate” has the meaning
given it in the Parent Credit Agreement as in effect on the date hereof.


 


“ERISA Event” has the meaning given it
in the Parent Credit Agreement as in effect on the date hereof.


 


“Fiscal
Quarter” means a fiscal quarter of
Guarantor.


 


“Fiscal
Quarter End Date” means the last day of a Fiscal Quarter.


 


“Fiscal Year”
means a fiscal year of Guarantor.


 


3
















 


“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronunciations of the Accounting Principles Board and American Institute of
Certified Public Accountants and statements and pronunciations of the Financial
Accounting Standard Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in such other
statements by such entity as may be in general use by significant segments of
the U.S. accounting profession, which are applicable to the facts and circumstances
on the date of determination.


 


“Guaranteed
Obligations” has the meaning given it in Section 2.1 hereof.


 


“Guarantor”
has the meaning given it in the preamble.


 


“Guaranty”
has the meaning given it in the preamble.


 


“Intangible Assets” means, as of any
date of determination for Guarantor and its consolidated Subsidiaries in
accordance with GAAP, assets having no physical existence and that should be
classified as intangible assets, including, without limitation, goodwill,
patents, patent rights, trademarks, trade names, franchises, copyrights,
licenses, organizational expenses and deferred charges (including, without
limitation, unamortized debt issuance costs).


 


“Interest”
means all or any of the right, title or interest and obligations of Bank in and
to the Loan Documents, and all or any of the benefits, advantages and
obligations of Bank under the Loan Documents.


 


“Interest
Coverage Ratio” means the consolidated Earning Before
Interest and Taxes of any Person for any period, divided by Consolidated Interest
Expense of such Person during such period.


 


“Investment”
has the meaning set forth in the Parent Credit Agreement as in effect on the
date hereof.


 


“Laws and
Permits” has the meaning given it in Section 3(b).


 


“Material
Adverse Change” means any materially adverse change in the financial
condition, assets, liabilities, business, operations or prospect of Guarantor
and its Subsidiaries, taken as a whole.


 


“Multiemployer
Plan” has the meaning given it in
the Parent Credit Agreement as in effect on the date hereof.


 


“Ocular Sciences Group” means, collectively, Guarantor and its Subsidiaries.


 


“Parent Credit Agreement” means a
Credit Agreement dated as of April 16, 2002 among Guarantor, as borrower,
the lenders referred to therein and Comerica Bank-California as the agent for
the lenders, as may be amended from time to time.


 


4
















 


“Parent Pledge Agreement” means a
Pledge Agreement executed by
Guarantor and delivered pursuant to Section 3.1 (a) of the Parent Credit
Agreement and each joinder therein by any Subsidiary of Guarantor in accordance
with the provisions of the Parent Credit Agreement.


 


“Permitted Cash Investments” means
(i) certificates of deposit or money market securities with maturities of
three years or less issued by
any United States, Australian, Canadian, Japanese or European commercial bank
with capital, surplus and undivided profits of $500,000,000 or more;
(ii) obligations issued by, or guaranteed by, the United States government
and maturing within three years from the date of acquisition thereof;
(iii) commercial paper, municipal bonds and similar instruments with
maturities of three years or less rated at least P-1 or A-3, respectively, by
Moody’s Investors Service, Inc., or rated at least A-1 or A, respectively, by
Standard & Poor’s Corporation, or receiving an equivalent rating from
any other nationally recognized rating agency; (iv) repurchase or reverse
repurchase agreements issued by any United States commercial bank with capital
surplus and undivided profits of $500,000,000 or more; and (v) investments
in money market funds or mutual funds that invest solely in investments
described in clauses (i) through (iv).


 


“Person”
means any individual, partnership, joint venture, firm, corporation, association,
limited liability company, trust or other enterprise.


 


“Prohibited
Asset Sale” means the sale, sale-leaseback, conveyance license, transfer or
other disposition, whether direct or indirect, of any asset, business or
property of Guarantor or any of its Subsidiaries, other than (i) sales and
other dispositions of inventory in the ordinary course of business;
(ii) sale of used, worn-out or surplus equipment in which the proceeds are
either (x) reinvested in other fixed assets within one hundred eighty
(180) days from the date of sale or (y) applied to prepay amounts
owed Bank under the Credit Agreement; (iii) sales and leasebacks of
equipment acquired by Guarantor or any of its Subsidiaries not more than one
hundred eighty (180) days prior to such sale or leaseback;
(iv) non-exclusive licenses and similar arrangements for the use of
intellectual property of Guarantor or any of its Subsidiaries;
(v) transfers of assets between Subsidiaries of Guarantor, or from any
Subsidiary of Guarantor to Guarantor; and (vi) the sale, lease, transfer
or other disposition of assets by Guarantor and its Subsidiaries, up to a
maximum amount of $2,000,000 in any calendar year.


 


“Property”
has the meaning given it in Section 3(b).


 


“Quick Ratio”
means, as of any Fiscal Quarter End Date for Guarantor and its Subsidiaries,
the ratio of (i) the sum of unrestricted cash, PLUS unrestricted Permitted
Cash Investments, PLUS trade accounts receivable (net of applicable reserves
therefor), DIVIDED BY (ii) the sum of current liabilities, PLUS (without
duplication) the aggregate principal amount of the “Revolving Advances” or
“Term Advances” (as each such term is defined in the “Parent Credit 


 


5
















 


Agreement”) outstanding under the Parent Credit Agreement, in each
case as of such Fiscal Quarter End Date.


 


“Subordinated Debt” means any Debt of Guarantor or any of its Subsidiaries
which is subordinate to the Obligations (as such term is defined in the Parent
Credit Agreement) having terms and conditions satisfactory to the “Required
Lenders” (as such term is defined in the Parent Credit Agreement).


 


“Subsidiary” means, with respect to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests is owned or
controlled directly or indirectly by such Person or one or more Subsidiaries of
such Person or a combination thereof.


 


“Tangible
Effective Net Worth” means, as of any date of determination for Guarantor
and its consolidated Subsidiaries in accordance with GAAP, the amount
determined as (i) the
net book value of all assets (other than Intangible Assets) after all
appropriate deductions which are either required or reflected by Guarantor in
its consolidated balance sheet (including, without limitation, reserves for
doubtful receivables, returns, obsolescence, depreciation and amortization),
MINUS (ii) Consolidated
Total Debt, PLUS (iii) Subordinated
Debt.


 


“Total
Funded Debt” means, at the relevant
calculation date, the aggregate amount of all Debt of Guarantor and its consolidated Subsidiaries relating to (i) the
borrowing of money or obligations under letters of credit or (ii) in
respect of Capital Leases outstanding during such period.


 


2.             Guaranty Provisions.


 


2.1           Guaranteed
Obligations.  Guarantor hereby
absolutely, unconditionally and irrevocably guarantees:


 


(i)            the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under section 362(a) of the Bankruptcy Code, would
become due) and liabilities of Borrower incurred under the Credit Agreement and
other Loan Documents, now existing or hereafter incurred under, arising out of
or in connection with the Credit Agreement and other Loan Documents, and the
due performance and compliance by Borrower with the terms of the Credit
Agreement and other Loan Documents; and


 


(ii)           all costs, fees, expenses and other amounts set forth in
Section 11.2 hereof or any other provisions of this Guaranty;


 


all such obligations,
liabilities, sums and expenses set forth in clauses (i) and (ii) of
this Section 2.1 being collectively called the “Guaranteed Obligations,” it
being acknowledged and agreed that the “Guaranteed Obligations” shall include
Loans made under the Loan Documents, whether made on the date of this Guaranty
or from time to time after the date of this Guaranty.


 


6
















 


2.2           Guaranty
of Payment.  This Guaranty
constitutes a guaranty of payment when due and not merely of collection, and
Guarantor specifically agrees that it shall not be necessary or required that
Bank exercise any right, assert any claim or demand or enforce any remedy
whatsoever against Borrower (or any other Person) or any property before or as
a condition to the obligations of Guarantor hereunder.


 


2.3           Guaranty
Absolute, etc.  This Guaranty shall
in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment, and shall remain in full force and effect until all of the
Guaranteed Obligations have been absolutely, irrevocably and unconditionally
fulfilled, performed or met, whether by Guarantor, Borrower or other Person.  Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents under which they arise, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of Bank. Without limiting the foregoing, the liability of Guarantor
under this Guaranty shall be absolute, unconditional and irrevocable, to the
fullest extent permitted by applicable laws irrespective of:


 


(a)           any
lack of validity, legality or enforceability of the Loan Documents or any lack
of capacity or change in status of Borrower (including, without limitation, any
bankruptcy reorganization, insolvency, merger, consolidation, liquidation or
other proceeding or event relating to Borrower);


 


(b)           any
exercise of, or any election not or failure to exercise, delay in the exercise
of, waiver of, or forbearance or other indulgence with respect to, any right,
remedy or power available to Bank, including (i) any election not or
failure to exercise any right of setoff, recoupment or counterclaim,
(ii) any election of remedies effected by Bank, including the foreclosure
upon any real estate constituting collateral, whether or not such election
affects the right to obtain a deficiency judgment, and (iii) any election
by Bank in any proceeding under the Bankruptcy Code of the application of
section 1111(b)(2) of such Code;


 


(c)           any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any other
increase, decrease, prepayment, extension, compromise or renewal of any
Guaranteed Obligation;


 


(d)           any
increase, reduction, limitation, impairment or termination of the Guaranteed
Obligations for any reason (other than payment), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to (and
Guarantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, the Guaranteed Obligations;


 


(e)           any amendment to, rescission, waiver, or other modification
of, or any consent to a departure from, any of the terms of the Loan Documents;


 


(f)            any
addition, exchange, release, surrender or nonperfection of any collateral, or
any amendment to or waiver or release or addition of, or consent to a departure
from, any other guaranty, provided in favor of Bank in connection with the
Guaranteed Obligations; or


 


7
















 


(g)           any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Guarantor, any
surety or any guarantor.


 


2.4           Reinstatement,
etc.  Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Guaranteed
Obligations is rescinded or must otherwise be restored by Bank, upon the
insolvency, bankruptcy or reorganization of Guarantor, Borrower or otherwise,
as though such payment had not been made.


 


2.5           Rights
and Remedies.  Guarantor waives any
and all rights under section 2845 of the California Civil Code or any other
provision of any other applicable law to require Bank to (a) proceed
against Borrower; (b) proceed against or exhaust any security held from
Borrower; or (c) pursue any other remedy in
Bank’s power whatsoever.  Bank may, at
its election, exercise any right or remedy it may have against Guarantor or any
security now or hereafter held by or for the benefit of Bank including, without
limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of
Guarantor hereunder except to the extent the Guaranteed Obligations may thereby
be paid, even though any rights which Guarantor may have or otherwise might
obtain by subrogation against others might be diminished or destroyed.  Guarantor waives all rights and defenses
arising out of an election or non-election of remedies by Bank, even though
that election or non-election of remedies, such as a nonjudicial foreclosure
with respect to security for a guaranteed obligation, has destroyed Guarantor’s
rights of subrogation and reimbursement against the principal by the operation
of section 580d of the California Code of Civil Procedure.  Guarantor acknowledges that any such exercise
or non-exercise of a right or remedy with respect to any collateral security
for the Guaranteed Obligations may result in a loss, in part or whole, of
Bank’s right to collect from Borrower any deficiency that may remain after any
such exercise of such a right or remedy and that, where such a loss occurs, Guarantor
will also suffer a loss of any rights and remedies, arising in law or equity,
which Guarantor may have to collect any amount from Borrower; and Guarantor
agrees to remain bound notwithstanding any such loss.  Only the net proceeds from any such foreclosure,
after deduction of all costs and expenses authorized to be deducted pursuant to
the documents under which such security is held or by law, shall be applied
against the Guaranteed Obligations.  Bank
may at its discretion purchase all or any part of such security so sold or
offered for sale for its own account and may apply against the amount bid
therefor all or any part of the Guaranteed Obligations for which such security
is held; and in such case, only that portion of the Guaranteed Obligations so
applied, after deduction of all costs and expenses authorized to be deducted
pursuant to the documents under which such security is held or by law, shall be
applied against the Guaranteed Obligations. 
Guarantor waives any defense arising out of the absence, impairment or
loss of any right of reimbursement or subrogation or other right or remedy of
Guarantor against Borrower or any such security, whether resulting from the
election by Bank to exercise any right or remedy it may have against Borrower,
any defect in, failure of, or loss or absence of priority with respect to
Bank’s interest in such security, or otherwise. 
In the event that any fore-closure sale is deemed to be not commercially
reasonable, Guarantor waives any right that it may have to have any portion of
the Guaranteed Obligations discharged except to the extent of the amount
actually bid and received by Bank at any such sale.  Bank shall not be required to institute or
prosecute proceedings to recover any deficiency as a condition of payment
hereunder or enforcement hereof.


 


8
















 


2.6           Separate
Guaranteed Obligation.  The
obligations hereunder are independent of the obligations of Borrower, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or whether Borrower be joined in any
such action or actions; Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof, to
the fullest extent permitted by law.  Any
part performance of the Guaranteed Obligations by Borrower or other
circumstances which operate to toll any statute of limitations as to Borrower
shall not operate to toll the statute of limitations as to Guarantor.  Guarantor hereby waives any rights it may
have under sections 2809 and 2810 of the California Civil Code and reaffirms
that, in any event, the obligations of Guarantor are independent of those of
Borrower.  Guarantor understands that
Bank would not have entered into the transaction with Guarantor in the absence
of the foregoing covenants by Guarantor and the other covenants of Guarantor
contained in this Guaranty.


 


2.7           Covenant
To Prevent Events of Default. 
Guarantor covenants and agrees that on and after the date hereof until
such time as (i) each of the Loan Documents is terminated in its entirety
and no provision thereof remains in force and effect and (ii) all
outstanding payments and obligations arising therefrom or from this Guaranty,
including, without limitation, the Guaranteed Obligations, have been paid in
full, Guarantor shall take, or refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in the Loan Documents, and so that
no Event of Default, is caused by the actions or failure to act of Guarantor or
Borrower.


 


2.8           Waiver
of Notices and Demands.  Guarantor
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of default, and
notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Guaranteed Obligations.  At the option of Bank, Guarantor may be
joined in any action or proceeding commenced by Bank against Borrower in
connection with or based upon the Guaranteed Obligations or any security
therefor and recovery may be had against Guarantor in such action or
proceeding, without any requirement that Bank first assert, prosecute or
exhaust any remedy or claim against Borrower. 
Without limiting the foregoing, Guarantor acknowledges that repeated and
successive demands may be made and payments or performance made hereunder in
response to such demands as and when, from time to time, Borrower may default
in performance of the Guaranteed Obligations. 
Notwithstanding any such performance hereunder, this Guaranty shall
remain in full force and effect and shall apply to any and all subsequent
defaults by Borrower in payment or performance of the Guaranteed Obligations.


 


2.9           Waiver
of Defenses.  Guarantor waives any
defense arising by reason of any disability or other defense of Borrower or by
reason of the cessation from any cause whatsoever of the liability of
Borrower.  Guarantor waives any setoff,
recoupment, defense or counterclaim which Borrower or Guarantor may have or
claim to have against Bank. Guarantor waives any and all rights under
California Civil Code sections 2787 through 2855.  All payments due to Bank hereunder shall be
made without any reduction or deduction whatsoever, including any reduction or
deduction for taxes (except for any withholding or deduction for taxes required
to be withheld or deducted under applicable law).


 


9
















 


2.10         Right
of Subrogation.  Notwithstanding any
payment or payments made by Guarantor hereunder or any setoff or application of
funds of Guarantor by Bank, Guarantor shall not be entitled to be subrogated to
any of the rights of Bank against Borrower or any other Person or any
collateral security or Guaranty or right of offset held by Bank for the payment
of the Guaranteed Obligations, nor shall Guarantor, in its capacity as
Guarantor, seek or be entitled to seek any contribution or reimbursement from
Borrower or any other Person in respect of payments made by Guarantor hereunder
until all the Guaranteed Obligations have been absolutely, irrevocably,
indefeasibly and unconditionally fulfilled, performed or met.  If any amount shall be paid to Guarantor on
account of such subrogation rights at any time when all of the Guaranteed
Obligations and all amounts owing hereunder shall not have been paid in full,
such amount shall be held by Guarantor in trust for Bank, segregated from other
funds of Guarantor, and shall, forthwith upon receipt by Guarantor, be turned
over to Bank in the exact form received by Guarantor (duly indorsed by
Guarantor to Bank, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as Bank may determine.


 


2.11         Transfers
of Interests, etc.  This Guaranty
shall inure to the benefit of and be enforceable by Bank.  Without limiting the generality of Section
11.1, Bank may assign or otherwise transfer (in whole or in part) any Interest
held by it to any other Person, and such other Person shall thereupon become
vested with all rights and benefits in respect thereof granted to Bank under
the Loan Documents and this Guaranty or otherwise.


 


2.12         Time,
Place and Manner of Payments by Guarantor. 
(1)  All payments due to Bank hereunder shall be made to Bank
at the time and place and in the manner specified under Section 1.09 of the
Credit Agreement.


 


(a)           In the
case of each Guaranteed Obligation that is payable in a currency other than
Dollars, Guarantor shall, at Bank’s option, either pay the unpaid amount of
such Guaranteed Obligation in accordance with the provisions of Section 2.12(a)
or pay to Bank at Bank’s Office the equivalent thereof in Dollars computed at
Bank’s selling rate, on the date such Guaranteed Obligation became or was
deemed to be due, for cable transfers of such foreign currency to the place
where such Guaranteed Obligation is payable, and shall hold Bank harmless from
any loss incurred by it arising from any change in the value in Dollars of such
foreign currency between the date such Guaranteed Obligation became or was
deemed to be due and the date of payment thereof.  For the avoidance of doubt, it is understood
that the exchange rate used for this purpose may be less favorable to Guarantor
than the definition of the Applicable Currency Exchange Rate.  If on the date such Guaranteed Obligation
became or was deemed to be due no such selling rate is quoted by Bank, or if at
any time Bank is unable for any reason, including interruption of
communications between Bank and any branch, to establish the amount of such
Guaranteed Obligation, Bank may determine the equivalent in Dollars of the
amount of such Guaranteed Obligation on the basis of such factors as it shall,
in its sole judgment, deem appropriate, and Guarantor shall be obligated, on
demand, to furnish such security or to make such payments on account of its
contingent liability hereunder in respect of such Guaranteed Obligation as Bank
shall request.


 


10
















 


2.13         Without
prejudice to Bank’s rights hereunder and under the Credit Agreement, Guarantor
hereby agrees to pay directly to Bank on behalf of Borrower all amounts
specified under Section 1.07 of the Credit Agreement that are not paid when due
by Borrower, and authorizes and instructs Bank to debit any such amounts due
from Guarantor’s account at Bank (account no. 4000027052).


 


3.             Representations and Warranties.  Guarantor hereby represents and warrants and
covenants that:


 


(a)           Guarantor
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it was incorporated, and is qualified to
do business and is in good standing as a foreign corporation in each other state
or jurisdiction where the character of the property owned or the nature of its
business requires it to be so qualified;


 


(b)           neither
the execution nor delivery of this Guaranty or any of the other documents
related hereto nor performance of nor compliance with the terms and provisions
hereof or thereof will conflict with or result in a breach of any laws,
statutes, codes, rules, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, permits, licenses, authorizations or orders of any governmental
department, commission, board, courts, authority or agency (collectively, “Laws
and Permits”) or any other agreement or instrument binding upon Guarantor or
any of its property (collectively, “Property”), or conflict with or result in a
breach of any provision of the charter documents or by-laws of Guarantor.  No authorization, consent or approval or
other action by, and no notice to or filing with, any governmental authority is
required to be obtained or made by Guarantor for the due execution, delivery
and performance by Guarantor of this Guaranty;


 


(c)           Guarantor
has full power and authority to execute, deliver and perform this Guaranty and
to incur the obligations provided for herein, all of which have been duly
authorized by all proper and necessary company action.  No consent or approval is required as a
condition to the validity or performance of, or the exercise by Bank of any of
its rights and remedies under this Guaranty;


 


(d)           this
Guaranty constitutes legal, valid and binding obligations enforceable against
Guarantor in accordance with its terms, and its execution and performance will
not cause a breach, or an act which with the passage of time or the giving of
notice, or both, would constitute a breach, of any other agreement to which Guarantor
is a party or to which any of its respective properties is subject;


 


(e)           Guarantor
is now, after giving effect to this Guaranty, and at all times during the term
of this Guaranty shall be, solvent;


 


(f)            the principal place of business of Guarantor is 1855 Gateway
Drive, Suite 700, Concord, CA 94520-3200.


 


(g)           there
is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency, domestic or foreign, now pending
or, to the knowledge of Guarantor, threatened against Guarantor or any property
or rights of Guarantor, the effect of which would result in a material adverse
change to Guarantor’s business, operations or 


 


11
















 


financial statements. 
Guarantor is not in default in any material respect with respect to any
judgment, writ, injunction, decree, rule or regulation applicable to Guarantor
of any court or governmental instrumentality or other agency, domestic or
foreign, which would result in a material adverse change to Guarantor’s
business, operations or financial statements;


 


(h)           neither
this Guaranty nor any of the other certificates, statements or information
furnished to Bank by or on behalf of Guarantor in connection with this Guaranty
or the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, misleading;


 


(i)            the
consolidated and consolidating balance sheets of Guarantor and its Subsidiaries
as at December 31, 2002 and the related income and cash flow statements
for the period then ended, each other financial statement of Guarantor and its
Subsidiaries delivered to Bank on or prior to the date hereof (including any
forecasts or financial projections which may have been delivered to Bank), and
each financial statement to be delivered to Bank pursuant to Section 4.5,
as and when delivered to Bank, fairly present the financial condition of
Guarantor and its Subsidiaries as at the date thereof and the results of their
operations for the period then ended, all in accordance with GAAP consistently
applied but subject, in the case of unaudited financial statements, to normal
year-end adjustments and the absence of footnotes.  Since December 31, 2002, there has been
no Material Adverse Change.


 


4.             Covenants.
 Guarantor covenants and agrees
that so long as any Guaranteed Obligation is outstanding it shall comply and
cause each Subsidiary to comply with the following provisions:


 


4.1           Mergers. 
Guarantor shall not enter into any transaction which violates Section
5.3(h) of the Parent Credit Agreement or, if the Parent Credit Agreement shall
not be in effect, any transaction which would violate said Section 5.3(h) if it
were in effect.


 


4.2           Financial
Covenants.


 


(a)           Total
Funded Debt to EBITDA.  As of each
Fiscal Quarter End Date, Guarantor shall not cause, permit or suffer a ratio of
Total Funded Debt to EBITDA, calculated on a rolling four Fiscal Quarter basis,
to be greater than 2.00 to 1.00.


 


(b)           Cash
Flow Coverage Ratio.  Guarantor shall
maintain at all times a Cash Flow Coverage Ratio which complies with the
requirements of Section 5.1(b) of the Parent Credit Agreement as in effect on
the date hereof.


 


(c)           Minimum
Quick Ratio.  Guarantor shall not
cause, permit or suffer the Quick Ratio as of each Fiscal Quarter End Date to
be less than (i) 0.80 to 1.00. for the Fiscal
Quarter ending December 31, 2003; and (ii) 1.00 to 1.00 thereafter.


 


(d)           Minimum
Tangible Effective Net Worth. 
Guarantor shall not cause, permit or suffer a Tangible Effective Net
Worth as of each Fiscal Quarter End Date to be less than the sum of (i) $203,541,000
plus (ii) seventy percent (70%) of Consolidated Net Income for each Fiscal
Quarter (on a cumulative basis but without taking into account any loss
incurred during any 


 


12
















 


Fiscal Quarter) plus (ii) one hundred percent (100%) of the
net cash proceeds from any Equity Issuance.


 


(e)           Minimum
Assets.  Guarantor shall not cause,
permit or suffer the assets of Guarantor, O.S.I Puerto Rico, Inc. and SunSoft,
Inc. on a consolidated basis determined in accordance with GAAP (after
excluding any intercompany receivables and any Investments in or between
Subsidiaries), to be less than $75,000,000 at any time.


 


(f)            Interest
Coverage Ratio.  As of each Fiscal
Quarter End Date, Guarantor shall not cause, permit or suffer the Interest
Coverage Ratio, calculated on a rolling four Fiscal Quarter basis, to be less
than 2.00 to 1.00.


 


4.3           Limits
on Debt; Accommodation Obligations. 
Guarantor shall not (i) agree to any amendment, waiver or other
modification of the Parent Credit Agreement which allows Guarantor to borrow, or
otherwise incur any other Debt or Accommodation Obligation under, the Parent
Credit Agreement in excess of $50,000,000, or (ii) incur any other Debt or
Accommodation Obligation after the date of this Agreement, other than
(x) Capital Leases, conditional sales agreement and other purchase money
Debt incurred after the date of this Agreement for property, plant or equity in
an aggregate amount not to exceed $5,000,000, or (y) Debt not exceeding
the notional amount of $75,000,000 in the aggregate at any one time outstanding
consisting of foreign exchange contracts on which delivery is to be effected
and settlement allowed at any time (or at a specified time) in the future (plus
related fees, costs and indemnities) entered into between Guarantor and any Person
having a credit rating that is similar to or better than Bank.


 


4.4           Pledge
of Borrower Equity.   Guarantor shall
not grant, or otherwise permit to exist, any Lien respecting any direct or
indirect equity or other ownership interest in Borrower held or otherwise owned
by Guarantor, including, without limitation, any Liens granted pursuant to the
Parent Credit Agreement.  Notwithstanding
the foregoing, Bank hereby represents and warrants that Bank has reviewed the
Parent Credit Agreement as in effect on the date hereof, including, without
limitation, those provisions of the Parent Credit Agreement which grant certain
Liens to secure the obligations of the Guarantor to Comerica Bank-California
thereunder, including, without limitation, the Lien granted to Comerica
Bank-California respecting the equity interest of Guarantor in Precision Lens
Manufacturing Technology, Inc., a Barbados corporation.


 


4.5           Reporting
Requirements.  Guarantor shall
furnish Bank:


 


(a)           as
soon as available and in any event within forty-five (45) days after the end of
each of the first Fiscal Quarters of each Fiscal Year, the consolidated and
consolidating balance sheet of Guarantor and its Subsidiaries as at the end of
such Fiscal Quarter and their consolidated and consolidating income and cash
flow statements for such Fiscal Quarter and for the Fiscal Year to date,
prepared by Guarantor and certified by an Authorized Officer;


 


(b)           as
soon as available and in any event within ninety (90) days after the end of
each Fiscal Year, the consolidated financial statements of Guarantor and its
Subsidiaries for such Fiscal Year, certified without any qualification by a
firm of certified public accountants of 


 


13
















 


nationally
recognized standing, together with a company-prepared consolidating balance
sheet of Guarantor and its Subsidiaries as at the end of such Fiscal Year and
their consolidating income and cash flow statements for such Fiscal Year,
certified by an Authorized Officer;


 


(c)           as
soon as available and in any event within forty-five (45) days of each Fiscal
Quarter, a Compliance Certificate signed by an Authorized Officer of Guarantor
in substantially the form of Exhibit A attached hereto and setting forth
the information requested therein;


 


(d)           a copy of any notice sent by Guarantor to Comerica
Bank-California as the Agent under the Parent Credit Agreement pursuant to
Section 5.2(c)(iii) of the Parent Credit Agreement;


 


(e)           promptly
after the filing thereof, copies of all reports and all registration statements
filed by or on behalf of Guarantor with the Securities and Exchange Commission
or any national securities exchange, excluding filings on Form S-8 (or any
successor form) and any other filing solely in respect of stock option plans of
Guarantor;


 


(f)            as
soon as possible and in any event within thirty (30) days after the end of
each Fiscal Year, company-prepared financial forecasts and projections for the
ensuing Fiscal Year in a form acceptable to Bank; and


 


(g)           such other information respecting the assets, liabilities,
condition or operations, financial or otherwise, of Guarantor or any of its
Subsidiaries as Bank from time to time may reasonably request.


 


4.6           Asset
Sales.  Guarantor shall not, and
shall not permit any of its Subsidiaries to, engage in any Prohibited Asset
Sales.


 


4.7           Compliance
with Laws.  Guarantor and each of its
Subsidiaries shall comply in all material respects with all applicable laws,
rules, regulations and orders, the failure with which to comply could
reasonably be expected to cause a Material Adverse Change.


 


4.8           Preservation
of Corporate Existence, etc.  Subject
to those exceptions set forth in Section 5.3(h) of the Parent Credit Agreement
as in effect on the date hereof, and in the case of Guarantor and its Subsidiaries,
Guarantor shall (i) preserve and maintain in full force and effect its
corporate or partnership existence and good standing under the laws of the
jurisdiction in which it was incorporated or organized and all rights,
privileges, qualifications, permits, licenses and franchises material to the
normal conduct of its business; (ii) use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its business
organization, reputation and goodwill; and (iii) preserve or renew all of
its patents, copyrights, trademarks and licenses therefore and other
intellectual property, in each case where the non-preservation of which
constitutes or could reasonably be expected to result in a Material Adverse
Change; provided, however, that Guarantor or any of its Subsidiaries may
consummate any merger or consolidation permitted under those exceptions set
forth in Section 5.3(h) of the Parent Credit Agreement as in effect on the date
hereof; and provided, further, that Guarantor or any of its Subsidiaries shall
not be required to preserve or maintain any right, asset, goodwill, business or
franchise if Guarantor or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Guarantor or
such Subsidiary, as the case may 


 


14
















 


be, and that the loss thereof is not disadvantageous in any
material respect to Guarantor, such Subsidiary or Bank.


 


4.9           Maintenance
of Property.  Guarantor shall
maintain and preserve all its property which is necessary for use in its
business in good working order and condition, except as permitted under those
exceptions set forth in Section 5.3(b) of the Parent Credit Agreement as in
effect on the date hereof, and except to the extent that Guarantor determines
in good faith that it is not in the best interest of Guarantor and its
Subsidiaries to do so.


 


4.10         Insurance.  Guarantor shall maintain insurance with
financially sound and reputable insurers with respect to its properties and
business against loss or damage of the kinds consistent with industry practice
of Persons engaged in the same or similar business, of such types and in such
amounts as are carried under similar circumstances by such other Persons.


 


4.11         Payment
of Taxes and Lienable Items. 
Guarantor shall pay and discharge, as they become due and payable, all
claims for material tax liabilities, assessments and governmental charges or
levies against it or upon its properties or assets and all lawful claims which,
if unpaid, would, with the passage of time or notice or both, by law become a
Lien upon its property (other than a Lien permitted by those exceptions set
forth in Section 5.3(a) of the Parent Credit Agreement as in effect on the date
hereof), unless (i) such claim is contested in good faith;
(ii) adequate reserves have been established for such claim to the extent
required by GAAP and other adequate provision for the payment thereof has been
made; (iii) enforcement of such claim is effectively stayed during any
time as such claim may otherwise become a Lien; and (iv) if such claim is
finally determined to be due, it is paid, with all interest or penalties
thereon, promptly after resolution of such contest.


 


4.12         Conduct
of Business.  Guarantor shall engage
in any business or activity other than the businesses described in Schedule
4.1(o) of the Parent Credit Agreement as in effect on the date hereof, and any
activity reasonably incidental thereto.


 


4.13         Compliance
with ERISA.  Guarantor shall directly
or indirectly (or permit any ERISA Affiliate directly or indirectly to)
(i) terminate any Plan subject to Title IV of ERISA so as to result in
liability to Guarantor or any ERISA Affiliate in excess of $1,000,000 in the
aggregate; (ii) permit any ERISA Event to exist; or (iii) make a
complete or partial withdrawal (within the meaning of ERISA section 4201) from
any Multiemployer Plan so as to result in liability to Borrower or any ERISA
Affiliate in excess of $1,000,000 in the aggregate.


 


5.             Renewal and Extension.  Guarantor authorizes Bank, without notice to,
demand of, or consent from Guarantor, and without affecting its liability to
Bank hereunder, from time to time to (a) renew, extend, accelerate or
otherwise change the time or place for payment of, or otherwise change the
terms of the Guaranteed Obligations or any part thereof; (b) take and hold
security for the payment or performance of the Guaranteed Obligations or this
Guaranty, and exchange, enforce, waive, surrender, modify, impair, change,
alter, renew, continue, compromise or release in whole or in part any security,
or fail to perfect its interest in any such security or to establish its
priority with respect thereof; (c) release Borrower, in whole or in part,
from any or all of the Guaranteed Obligations or substitute any or all of the
Guaranteed Obligations; (d) settle or compromise any or all of the
Guaranteed Obligations with Borrower or any endorser or 


 


15
















 


guarantor of the Guaranteed Obligations; and
(e) subordinate any or all of the Guaranteed Obligations to any other
obligations of or claim against Borrower, whether owing to or existing in favor
of Bank or any other party.  Guarantor
shall be and remains bound hereunder notwithstanding any such renewal,
extension, acceleration, change, taking, holding, exchange, enforcement,
waiver, surrender, modification, impairment, alteration, renewal, continuation,
compromise, release, failure, application, direction, substitution, settlement or
subordination.


 


6.             Insolvency.  In the event that Borrower becomes insolvent
or files a petition for reorganization, arrangement, composition, discharge or
similar relief under any present or future provision of the Bankruptcy Code, or
if such a petition be filed against Borrower, and in any such proceedings some
or all of the Guaranteed Obligations shall be terminated or rejected or any of
the Guaranteed Obligations shall be modified or abrogated, Guarantor agrees
that its liability hereunder shall not thereby be affected or modified, and
such liability shall continue in full force and effect as if no such action or
proceeding had occurred.  This Guaranty
shall continue to be effective or reinstated, as the case may be, if any
payment of any of the obligations must be returned by Bank upon the insolvency,
bankruptcy or reorganization of Borrower or Guarantor, or otherwise, as though
such payment had not been made.


 


7.             Duty To Keep Informed.  Guarantor assumes the responsibility for
being and keeping itself informed of the financial condition of Borrower until
the termination of all of the Guaranteed Obligations hereunder pursuant to
Section 2 above, and of all other circumstances bearing upon the risk of
nonpayment or default under the Guaranteed Obligations which diligent inquiry
would reveal, and agrees that Bank shall have no duty to advise Guarantor of
information known to it regarding such condition or any such circumstances.


 


8.             Lien and Right of Setoff.  In addition to all liens upon, and right of
setoff against the moneys, securities or other property of Guarantor given to
Bank by law, Bank shall have a lien upon and right to setoff against all
moneys, securities and other property of Guarantor now or hereafter in the
possession of or on deposit with Bank, whether held in a general or special
account or deposit, or for safekeeping or otherwise; and every such lien and
right of setoff may be exercised without demand upon or notice to
Guarantor.  No lien or right to setoff
shall be deemed to have been waived by any act or conduct on the part of Bank,
or by any neglect to exercise such right of setoff or to enforce such lien, or
by any delay in so doing; and every right of setoff and lien shall continue in
full force and effect until such right of setoff or lien is specifically waived
or released by an instrument in writing executed by Bank.


 


9.             Subordination of Liens.  Any obligations of Borrower now or hereafter
held by Guarantor are hereby subordinated to the Guaranteed Obligations, and
such obligations of Borrower to Guarantor if Bank so requests shall, upon the
occurrence of a Default or Event of Default under the Credit Agreement, be
collected, enforced, supervised and received by Guarantor as trustee for Bank
and be paid over to Bank but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty.


 


10.           Officers and Directors.  It is not necessary for Bank to inquire into
the power of Guarantor or the officers, directors or agents acting or purporting
to act on Guarantor’s behalf, and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.


 


16
















 


11.           Miscellaneous Provisions.


 


11.1         Binding
on Successors, Transferees and Assigns; Assignment of Guaranty.  This Guaranty shall be binding upon Guarantor
and its successors, transferees and assigns and shall inure to the benefit of
and be enforceable by Bank and its respective successors and assigns; provided,
however, that Guarantor may not transfer or assign any of its obligations
hereunder or, as long as Guarantor shall have any liability hereunder, enter
into any transaction which violates Section 4.1 without, in each case, the
prior written consent of Bank (any such transfer, assignment or transaction
without such consent to be void).


 


11.2         Expenses
of Borrower.  Guarantor shall
reimburse Bank for (a) any and all costs or expenses incurred by or on
behalf of Bank (including, without limitation, any legal fees and expenses of
Bank’s in-house or outside counsel and any fees and expenses incurred by any
auditor or in connection with any audit) in the preparation and consummation of
this Guaranty and any amendment, waiver or consent relating hereto or thereto
and (b) any and all costs or
expenses incurred by or on behalf of Bank (including, without limitation, any
fees and expenses of Bank’s in-house or outside counsel or any fees or expenses
incurred by any auditor or in connection with any audit) in the administration,
protection of rights under, and/or enforcement of, this Guaranty.


 


11.3         Amendments,
etc.  No amendment to or waiver of
any provision of this Guaranty, or consent to any departure by Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Bank and Guarantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.


 


11.4         Addresses
for Notices to Guarantor.  All
notices, demands, requests, consents, approvals and other communications
hereunder shall be in writing and directed to the address described in, and
deemed received in accordance with the provisions of, Section 8.01 of the
Credit Agreement.


 


11.5         No
Waiver; Remedies.  In addition to,
and not in limitation of, Section 2.3 and Section 2.5, no failure on the part
of Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.


 


11.6         Section
Captions.  Section captions used in
this Guaranty are for convenience of reference only, and shall not affect the
construction of this Guaranty.


 


11.7         Severability.  Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.


 


11.8         Termination
of Guaranty.  The obligations of
Guarantor under this Guaranty shall terminate on the date upon which
(i) Guarantor has fully performed all of its obligations under this
Guaranty and (ii) all Guaranteed Obligations are satisfied in full.


 


17
















 


11.9         Entire
Agreement.  This Guaranty constitutes
and contains the entire agreement of the parties with respect to the subject
matter hereof, and supersedes any and all prior negotiations, correspondence,
understandings and agreements respecting the subject matter hereof.


 


11.10       Notices.  Any notice or demand desired or required to
be given hereunder shall be in writing and deemed given when personally
delivered, sent by telecopier, overnight courier or deposited in the mail,
postage prepaid, sent certified or registered, return receipt requested, and
addressed as set forth in Section 8.01 of the Credit Agreement.  Any notice so delivered personally or by
telecopier shall be deemed to be received on the date of delivery or
transmission by telecopier; any notice so sent by overnight courier shall be
deemed to be received one (1) Business Day after the date sent; and any
notice so mailed shall be deemed to be received on the date stamped on the receipt.  Any party may change the address to which all
notices, requests and other communications are to be sent to it by giving
written notice of such address change to the other parties in conformity with
this section, but such change shall not be effective until notice of such
change has been received by the other party.


 


11.11       Counterparts.  This Guaranty may be executed in any number
of counterparts, each of which shall be an original with the same effect as if
the signatures thereof and hereto were upon the same instrument.


 


11.12       Governing
Law.  THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF THE STATE OF
CALIFORNIA.  FOR PURPOSES OF ANY ACTION
OR PROCEEDING INVOLVING THIS GUARANTY, GUARANTOR HEREBY EXPRESSLY SUBMITS TO
THE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN THE STATE OF
CALIFORNIA AND CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR PAPER BY
REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
CALIFORNIA.


 


11.13       Waiver
of Jury Trial.  EACH OF GUARANTOR AND
BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY.


 


[Remainder of this page intentionally
left blank]


 


18
















 


IN WITNESS
WHEREOF, Guarantor has caused this Guaranty to be duly executed as of the date
first set forth above.


 


	
   

  	
  OCULAR SCIENCES, INC.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Steven M. Neil

  	
   

  
	
   

  	
   

  	
  Name: Steven M. Neil

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Accepted by:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO HSBC TRADE BANK N.A.,

  
	
   

  	
  a national banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Virginia Adams

  	
   

  
	
   

  	
   

  	
  Name:  Virginia Adams

  	
   

  
	
   

  	
   

  	
  Title:  Vice President

  	
   

  



 


19
















 


EXHIBIT A


 


FORM OF COMPLIANCE CERTIFICATE


 


This Compliance Certificate is being delivered by the undersigned, an
Authorized Officer of Ocular Sciences, Inc. (referred to herein as “Guarantor”),
on behalf of Guarantor and its Subsidiaries, to Wells Fargo HSBC Trade Bank
N.A. ( “Bank”) pursuant to Section 4.5 of that certain Parent
Guaranty, dated as of December 26, 2003 issued by Guarantor in favor of Bank.


 


Capitalized terms used herein and not otherwise defined herein shall have
the same meanings as set forth in the Guaranty.


 


Guarantor hereby certifies and warrants to Bank,
on behalf of Guarantor and each Subsidiary, as follows:


 


1.                                       The
representations and warranties contained in Section 3 of the Guaranty (or,
in the case of representations and warranties stated as having been made only
on the execution date of the Guaranty, on the execution date of the Guaranty).


 


2.                                       No
event has occurred and is continuing which constitutes an Event of Default or a
Potential Default under the Parent Credit Agreement.


 


3.                                       Since
[the most recent Fiscal Quarter End Date], there has been no Material Adverse
Change.


 


4.                                       The
Guaranty is in full force and effect.


 


5.                                       The
following is a true and correct computation of the ratios and financial tests contained
in Section 4.2 of the Guaranty as of
                      ,
20    (the “Fiscal Quarter End Date”):


 


 


[The remainder of this page left blank intentionally]


 
















 


(a)           Section 4.2(a) -Total Funded Debt to
EBITDA.


 


	
  (i)

  	
   

  	
  Total amount of all Debt of Guarantor
  and its consolidated Subsidiaries as of the Fiscal Quarter End Date relating
  to (A) the borrowing of money and letters of credit and (B) Capital
  Leases, all determined in accordance with GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  EBITDA (calculated on a
  rolling four (4) Fiscal Quarter basis) determined in accordance with
  GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Total Funded Debt to EBITDA as
  of the Fiscal Quarter End Date [Item (i) divided by
  Item (ii)]:

  	
   

  	
  :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  The ratio in
  Item (iii) must not be greater than:

  	
   

  	
  2.00:1.00

  	
   

  



 
















 


(b)           Section 4.2 (b) – Cash Flow
Coverage Ratio


 


	
  (i)

  	
   

  	
  Consolidated Net Income for
  the four consecutive Fiscal Quarters ending on the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  To the extent deducted in
  (i) above, depreciation, Consolidated Interest Expense and amortization
  for the four consecutive Fiscal Quarters ending on the Fiscal Quarter End
  Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  All non-cash charges of
  Guarantor and its consolidated Subsidiaries required by GAAP relating to
  dispositions of property, plant and equipment for the four consecutive Fiscal
  Quarters ending on the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Preferred stock dividends paid
  or payable to a Person not in the Ocular Sciences Group by Ocular Sciences or
  any of its consolidated Subsidiaries during the four consecutive Fiscal
  Quarters ending on the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  Stock repurchases and/or buy
  backs by Ocular Sciences during the four consecutive Fiscal Quarters ending
  on the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  Cash Flow for the four
  consecutive Fiscal Quarters ending on the Fiscal Quarter End Date
  [Item (i) plus Item (ii) plus
  Item (iii) minus Item (iv) minus Item (v)]:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  The current portion of
  long-term debt and Capital Leases as at the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  Cash Flow Coverage Ratio as of
  the Fiscal Quarter End Date [Item (vi) divided by
  Item (vii)]:

  	
   

  	
  :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  The ratio in
  Item (viii) must not be less than:

  	
   

  	
  2.00:1.00

  	
   

  



 
















 


(c)           Section 4.2(c)3⁄4Minimum
Quick Ratio


 


	
  (i)

  	
   

  	
  The sum of unrestricted cash
  and unrestricted Permitted Cash Investments of Guarantor and its consolidated
  Subsidiaries as of the Fiscal Quarter End Date as determined in accordance
  with GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Trade accounts receivable (net
  of applicable reserves therefor) of Guarantor and its consolidated
  Subsidiaries as of the Fiscal Quarter End Date as determined in accordance
  with GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Item (i) plus
  Item (ii):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Current liabilities (excluding
  the aggregate principal amount of Revolving Advances or Term Advance
  outstanding under the Credit Agreement) of Guarantor and its consolidated
  Subsidiaries as of the Fiscal Quarter End Date as determined in accordance
  with GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  The aggregate principal amount
  of Revolving Advances and Term Advances outstanding under the Credit
  Agreement:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  Item (iv) plus
  Item (v):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Quick Ratio as of the Fiscal
  Quarter End Date [Item (iii) divided by Item (vi)]:

  	
   

  	
  :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  The ratio in
  Item (vii) must not be less than:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) for the quarter
  ending December 31, 2003: 

  	
   

  	
  0.80:1.00

  	
   

  
	
   

  	
   

  	
  (b) thereafter:

  	
   

  	
  1.00:1.00

  	
   

  



 
















 


(d)           Section 4.2 (d)3⁄4Minimum
Tangible Effective Net Worth


 


	
  (i)

  	
   

  	
  Base amount:

  	
   

  	
  $

  	
  203,541,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Cumulative Consolidated Net
  Income (but without taking into account any losses incurred during any Fiscal
  Quarter), commencing with the Fiscal Quarter ending on December 31,
  2003, and ending with the Fiscal Quarter ending on the Fiscal Quarter End
  Date of measurement:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  70% of Item (ii):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  100% of the net cash proceeds
  from any Equity Issuance after the Closing Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  Item (i) plus
  Item (iii) plus Item (iv):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  Net book value of all assets
  of Guarantor and its consolidated Subsidiaries as of the Fiscal Quarter End
  Date as determined in accordance with GAAP:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Intangible Assets as of the
  Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  Consolidated Total Debt as of
  the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  Subordinated Debt as of the
  Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (x)

  	
   

  	
  Tangible Effective Net Worth
  as of the Fiscal Quarter End Date [Item (vi) minus
  Item (vii) minus Item (viii) plus Item
  (ix)]:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (xi)

  	
   

  	
  The amount in
  Item (x) may not be less than the amount in Item (v).

  	
   

  	
  Complies:

  Yes/No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 
















 


(e)           Section 4.2(e)3⁄4
Minimum Assets.


 


	
  (i)

  	
   

  	
  Total value of assets of
  Guarantor, determined in accordance with GAAP (after excluding any
  intercompany receivables and any Investments in or between Subsidiaries):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Total value of assets of
  Ocular Sciences Puerto Rico, Inc., determined in accordance with GAAP (after
  excluding any intercompany receivables and any Investments in or between
  Subsidiaries):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Total value of assets of
  SunSoft, Inc., determined in accordance with GAAP (after excluding any
  intercompany receivables and any Investments in or between Subsidiaries):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  The sum of Item (i) plus
  Item (ii) plus Item (iii) must not be less than:

  	
   

  	
  $

  	
  75,000,000

  	
   

  



 
















 


(f)            Section 4.2
(f) – Interest Coverage Ratio


 


	
  (i)

  	
   

  	
  Consolidated earnings (or
  loss) from operations, after all expenses and other property charges but before
  payment or provision for any income taxes or interest expense, excluding any
  extraordinary or non-recurring gains or losses for the four consecutive
  Fiscal Quarters ending on the Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Total interest expense (including
  the interest component of Capital Leases) of Guarantor and its consolidated
  Subsidiaries excluding the amortization or write-off of original issue
  discount, capitalized debt issuance costs and expenses, and non-cash interest
  payments or accruals for the four consecutive Fiscal Quarters ending on the
  Fiscal Quarter End Date:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Interest Coverage Ratio as of
  the Fiscal Quarter End Date [Item (i) divided by
  Item (ii)]:

  	
   

  	
  :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  The ratio in
  Item (iii) must not be less than:

  	
   

  	
  2.00:1.00

  	
   

  



 
















 


The undersigned has reviewed the
terms of the Guaranty and has made, or caused to be made under his/her
supervision, a review in reasonable detail of the transactions and condition of
Guarantor and its Subsidiaries during the Fiscal Quarter covered by this
Compliance Certificate.


 


IN WITNESS WHEREOF, Guarantor has
caused this Compliance Certificate to be executed and delivered, and the
certifications and warranties contained herein to be made, as of this
           day of               ,
20   . 


 


	
   

  	
  OCULAR SCIENCES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  

  	
   

  
	
   

  	
   

  	
  Title: