EXHIBIT 10.17


 


EXECUTION COPY


 




 





 


REVOLVING CREDIT LOAN AGREEMENT


 


 


dated
as of November 21, 2003 by and among


 


 


HARVARD BIOSCIENCE, INC.


 


(the
“Borrower”),


 


THE LENDERS THAT ARE SIGNATORIES HERETO


 


(the
“Lenders”),


 


and


BROWN BROTHERS HARRIMAN & CO.


 


(the
“Agent”)


 




 





 








TABLE
OF CONTENTS


 


	
  Section 1.

  	
  Amount and
  Terms of the Credit.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Recitals; Maximum Line Commitment

  	
   

  
	
   

  	
  1.2.

  	
  Revolving Credit Loans; Reborrowings;
  Compliance Certificates

  	
   

  
	
   

  	
  1.3.

  	
  Revolving Credit Notes

  	
   

  
	
   

  	
  1.4.

  	
  Interest; Applicable Margins

  	
   

  
	
   

  	
  1.5.

  	
  Fees

  	
   

  
	
   

  	
  1.6.

  	
  Subsidiary Guaranties and Pledge Agreement

  	
   

  
	
   

  	
  1.7.

  	
  Reserved

  	
   

  
	
   

  	
  1.8.

  	
  Default Rate of Interest

  	
   

  
	
   

  	
  1.9.

  	
  Notations

  	
   

  
	
   

  	
  1.10.

  	
  Form and Terms of Payment

  	
   

  
	
   

  	
  1.11.

  	
  Pro-forma Compliance Certificate

  	
   

  
	
   

  	
  1.12.

  	
  Capital Adequacy

  	
   

  
	
   

  	
  1.13.

  	
  Reserved

  	
   

  
	
   

  	
  1.14.

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
  LIBOR Provisions.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  LIBOR Option

  	
   

  
	
   

  	
  2.2.

  	
  Certain Definitions

  	
   

  
	
   

  	
  2.3.

  	
  Conditions
  for Basing Interest on the LIBOR Rate

  	
   

  
	
   

  	
  2.4.

  	
  Indemnification
  for Funding and Other Losses

  	
   

  
	
   

  	
  2.5.

  	
  Change
  in Applicable Laws, Regulations, etc.

  	
   

  
	
   

  	
  2.6.

  	
  LIBOR Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Representations and
  Warranties.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Organization, Standing, etc. of the
  Borrower

  	
   

  
	
   

  	
  3.2.

  	
  Subsidiaries

  	
   

  
	
   

  	
  3.3.

  	
  Qualification

  	
   

  
	
   

  	
  3.4.

  	
  Financial Information; Disclosure;
  Solvency Certificate; Opening Balance Sheet; Projections, etc.

  	
   

  
	
   

  	
  3.5.

  	
  Licenses; Franchises, etc.

  	
   

  
	
   

  	
  3.6.

  	
  Material Agreements

  	
   

  
	
   

  	
  3.7.

  	
  Tax Returns and Payments

  	
   

  
	
   

  	
  3.8.

  	
  Indebtedness, Liens and Investments, etc.

  	
   

  
	
   

  	
  3.9.

  	
  Real Estate Owned and Leased; Title to
  Properties; Liens

  	
   

  
	
   

  	
  3.10.

  	
  Litigation, etc.

  	
   

  
	
   

  	
  3.11.

  	
  Authorization; Compliance with Other
  Instruments

  	
   

  
	
   

  	
  3.12.

  	
  Eligible Accounts

  	
   

  
	
   

  	
  3.13.

  	
  Eligible Inventory

  	
   

  
	
   

  	
  3.14.

  	
  Governmental and Other Third Party Consents

  	
   

  
	
   

  	
  3.15.

  	
  Regulation U, etc.

  	
   

  
	
   

  	
  3.16.

  	
  Employee Retirement Income Security Act of
  1974

  	
   

  
	
   

  	
  3.17.

  	
  Reserved

  	
   

  
	
   

  	
  3.18.

  	
  Environmental Matters

  	
   

  
	
   

  	
  3.19.

  	
  Patents, Trademarks, Intellectual Property

  	
   

  
	
   

  	
  3.20.

  	
  Chief Executive Offices Principal Place of
  Business

  	
   

  



 


i

















 


	
   

  	
  3.21.

  	
  Trade and Other Names

  	
   

  
	
   

  	
  3.22.

  	
  Securities Laws

  	
   

  
	
   

  	
  3.23.

  	
  Loan Documents

  	
   

  
	
   

  	
  3.24.

  	
  Depository and Other Accounts

  	
   

  
	
   

  	
  3.25.

  	
  Burdensome Obligations; Future Expenditures

  	
   

  
	
   

  	
  3.26.

  	
  Insurance Policies

  	
   

  
	
   

  	
  3.27.

  	
  Employment and Labor Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Conditions of
  Closing/Lending.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Conditions Precedent to Initial Loan on the
  Closing Date

  	
   

  
	
   

  	
  4.2.

  	
  Reserved

  	
   

  
	
   

  	
  4.3.

  	
  Conditions Precedent to Loans on and After
  the Closing Date.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Affirmative Covenants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Financial Statements, Field Audits etc.

  	
   

  
	
   

  	
  5.2.

  	
  Legal Existence; Licenses; Compliance
  with Laws

  	
   

  
	
   

  	
  5.3.

  	
  Insurance

  	
   

  
	
   

  	
  5.4.

  	
  Payment of Taxes

  	
   

  
	
   

  	
  5.5.

  	
  Payment of Other Indebtedness, etc.

  	
   

  
	
   

  	
  5.6.

  	
  Further Assurances

  	
   

  
	
   

  	
  5.7.

  	
  Depository Accounts

  	
   

  
	
   

  	
  5.8.

  	
  Communication with Accountants

  	
   

  
	
   

  	
  5.9.

  	
  Environmental Indemnification; Compliance

  	
   

  
	
   

  	
  5.10.

  	
  Mandatory Repayment of Outstanding
  Revolving Credit Loans in Excess of Working Capital; Prepayment From Proceeds
  of Asset Sales

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Negative
  Covenants.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Indebtedness

  	
   

  
	
   

  	
  6.2.

  	
  Liens, etc.

  	
   

  
	
   

  	
  6.3.

  	
  Loans, Guarantees
  and Investments

  	
   

  
	
   

  	
  6.4.

  	
  Reserved.

  	
   

  
	
   

  	
  6.5.

  	
  Restricted Payments

  	
   

  
	
   

  	
  6.6.

  	
  Capital
  Expenditures

  	
   

  
	
   

  	
  6.7.

  	
  Subsidiaries,
  Mergers and Consolidations; Changes in Business

  	
   

  
	
   

  	
  6.8.

  	
  Sale
  of Assets

  	
   

  
	
   

  	
  6.9.

  	
  Reserved

  	
   

  
	
   

  	
  6.10.

  	
  Compliance
  with ERISA

  	
   

  
	
   

  	
  6.11.

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
  6.12.

  	
  Reserved

  	
   

  
	
   

  	
  6.13.

  	
  Environmental Liabilities

  	
   

  
	
   

  	
  6.14.

  	
  Fiscal Year

  	
   

  
	
   

  	
  6.15.

  	
  Reserved

  	
   

  
	
   

  	
  6.16.

  	
  Reserved

  	
   

  
	
   

  	
  6.17.

  	
  Permitted Acquisitions;
  Conditions Precedent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.17. A  Permitted Acquisitions Not Requiring
  Consent of Required Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


ii

















 


	
   

  	
  6.17. B 
  Permitted Acquisitions Requiring Consent of Required Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Financial
  Covenants.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Maximum
  Leverage Ratio

  	
   

  
	
   

  	
  7.2.

  	
  Minimum Fixed Charge Coverage
  Ratio

  	
   

  
	
   

  	
  7.3.

  	
  Minimum
  Working Capital

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Defaults;
  Remedies; Delivery of Pledged Collateral.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Events of Default; Acceleration

  	
   

  
	
   

  	
  8.2.

  	
  Remedies
  on Default.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Definitions;
  Certain Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Setoffs.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Expenses;
  Indemnification.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Amendments
  and Waivers, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Pledge to
  the Federal Reserve

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Jurisdiction;
  Waiver of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Miscellaneous.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
  Notices, etc.

  	
   

  
	
   

  	
  15.2.

  	
  Calculations,
  etc.

  	
   

  
	
   

  	
  15.3.

  	
  Governmental
  Approval

  	
   

  
	
   

  	
  15.4.

  	
  Survival of Agreements,
  Assignments, etc.

  	
   

  
	
   

  	
  15.5.

  	
  Counterparts, etc.

  	
   

  
	
   

  	
  15.6.

  	
  Entire
  Agreement, etc.

  	
   

  
	
   

  	
  15.7.

  	
  Governing
  Law, etc.; Construction

  	
   

  
	
   

  	
  15.8.

  	
  Participation

  	
   

  
	
   

  	
  15.9.

  	
  Confidentiality Agreement of
  the Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agent, the
  Lender Group.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1.

  	
  Appointment and Authorization of
  Agent

  	
   

  
	
   

  	
  16.2.

  	
  Delegation of Duties

  	
   

  
	
   

  	
  16.3.

  	
  Liability of Agent

  	
   

  
	
   

  	
  16.4.

  	
  Reliance by Agent

  	
   

  
	
   

  	
  16.5.

  	
  Notice of Default or Event of
  Default

  	
   

  
	
   

  	
  16.6.

  	
  Credit
  Decision

  	
   

  
	
   

  	
  16.7.

  	
  Costs and Expenses;
  Indemnification

  	
   

  
	
   

  	
  16.8.

  	
  Agent in Individual Capacity

  	
   

  
	
   

  	
  16.9.

  	
  Successor
  Agent

  	
   

  
	
   

  	
  16.10.

  	
  Lender in Individual Capacity

  	
   

  
	
   

  	
  16.11.

  	
  Withholding Taxes

  	
   

  
	
   

  	
  16.12.

  	
  Reserved.

  	
   

  
	
   

  	
  16.13.

  	
  Restrictions on
  Actions by Lenders; Sharing of Payments

  	
   

  
	
   

  	
  16.14.

  	
  Agency for Perfection

  	
   

  
					



 


iii

















 


	
   

  	
  16.15.

  	
  Payments by Agent to the
  Lenders

  	
   

  
	
   

  	
  16.16.

  	
  Concerning the Collateral and
  Related Loan Documents

  	
   

  
	
   

  	
  16.17.

  	
  Field Audits and Examination
  Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
  Information

  	
   

  
	
   

  	
  16.18.

  	
  Several Obligations; No Liability

  	
   

  
	
   

  	
  16.19.

  	
  Legal Representation of Agent

  	
   

  



 


iv

















 


Exhibit A - Compliance Certificate


Exhibit B - Revolving Credit Note


Exhibit C - Pro-forma Compliance Certificate


Exhibit D - Solvency Certificate


Exhibit E - Borrowing Request


 


 


Schedule 1.1 -               Commitments


Schedule 3.2 -               Subsidiaries


Schedule 3.8 -               Indebtedness, Liens and
Investments, etc.


Schedule 3.9 -               Real Estate Leases


Schedule 3.10 -             Litigation


Schedule 3.13 -             Eligible Inventory


Schedule 3.16 -             ERISA


Schedule 3.18 -             Hazardous Material


Schedule 3.21 -             Trade and Other Names


Schedule 3.24 -             Depository and Other Accounts


Schedule 3.26 -             Insurance Policies


Schedule 3.27 -             Employment and Labor Agreements


Schedule 4.1(e) -           Termination of Financing Statements


 


v

















 


REVOLVING CREDIT LOAN
AGREEMENT dated as of November 21, 2003 by and among Harvard Bioscience, Inc.,
a Delaware corporation (the “Borrower”) and the Lenders from time to
time party hereto, including Brown Brothers Harriman & Co. (both in its
capacity as a “Lender” and in its capacity as “Agent” for itself
and the other Lenders), and Fleet National Bank (as a “Lender” and,
collectively with Brown Brothers Harriman & Co. the “Lenders”).  Certain other terms used herein are defined
in Section 2 (LIBOR Provisions) and in Section 9.


 


For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Borrower and the Lenders hereby agree as follows:


 


Section
1.               Amount and Terms of
the Credit.


 


1.1.          Recitals; Maximum Line
Commitment.  The Borrower wishes to
establish a revolving credit facility (the “Line of Credit”) with the
Lenders in an aggregate principal amount at any one time outstanding not in
excess of Twenty Million Dollars ($20,000,000) (the “Maximum Line Commitment”),
to expire November 21, 2006 (the “Maturity Date”).


 


The Lenders, severally in
accordance with their respective Commitments set forth on Schedule 1.1,
are willing to establish such Line of Credit, subject to the terms and
conditions hereafter set forth.


 


1.2.          Revolving Credit Loans;
Reborrowings; Compliance Certificates.


 


(a)           Establishment of Line of Credit.  Subject to the terms and conditions hereof,
and in reliance upon the representations and warranties contained herein, the
Lenders hereby establish the Line of Credit in an aggregate principal amount at
any one time outstanding not to exceed the Maximum Line Commitment.  Under the Line of Credit, subject to the
terms and conditions hereof, the Borrower may borrow, from time to time, an
aggregate principal amount at any time not in excess of the Maximum Line
Commitment.  Each such borrowing
pursuant to the Line of Credit is herein called a “Revolving Credit Loan”
or a “Loan” and such borrowings are collectively called the “Revolving
Credit Loans” or the “Loans”.


 


(b)           Mechanics of Revolving Credit Loans.  Each Revolving Credit Loan shall be made by
the Lenders, severally in accordance with their respective Commitments and in
such amounts (not in excess of the Maximum Line Commitment) as the Borrower
shall request.  Revolving Credit Loans
shall be effected at the principal banking office of the Agent at 40 Water
Street, Boston, Massachusetts 
02109-3661, and shall be made at such times as the Borrower may request
upon one (1) Banking Day’s prior notice to the Agent in the case of any
borrowing for which interest is calculated using the Base Rate (collectively, “Base
Rate Loans”) and three (3) Banking Days’ prior notice in the case of any
borrowing for which interest is calculated using the LIBOR Rate (collectively,
“LIBOR Portions”).  Each borrowing
request shall be in the form attached hereto as Exhibit E (the “Borrowing
Request”).  Each Borrowing Request
may be sent to the Agent by facsimile. 
The Lenders will use their best efforts to fund requests for Revolving
Credit Loans on the requested Banking Day. 
In the event that notwithstanding its best efforts, the Lenders are
unable to fund a requested Revolving Credit Loan on the requested Banking Day,
the Lenders shall have no liability whatsoever for such failure to fund and
will fund such Revolving Credit Loan on the next Banking Day.  The Lenders shall make each Revolving 


 

















 


Credit Loan hereunder by
crediting the amount of such Revolving Credit Loan to the Borrower’s operating
account (Account No. 8142333) with the Agent (together with any other account
from time to time designated by the Borrower for the purpose of effecting
Revolving Credit Loans, the “Operating Account”).


 


(c)           Reborrowings. 
The Borrower may, at its option, from time to time prepay all or any
portion of the Revolving Credit Loans made from time to time hereunder, subject
at all times to payment of any applicable LIBOR Premium, compliance with the
provisions of subsection 5.10, and, subject to compliance with subsection 4.3,
the Borrower may reborrow from time to time hereunder amounts so paid up to the
amount of the Maximum Line Commitment.


 


1.3.          Revolving Credit Notes.  The Revolving Credit Loans shall be
evidenced by revolving credit promissory notes of the Borrower payable to the
order of each Lender, in a principal amount equal to each Lender’s Commitment
and in the form attached hereto as Exhibit B (the “Revolving Credit
Notes” or the “Notes”).


 


1.4.          Interest; Applicable Margins.


 


(a)           The Revolving Credit Notes shall bear interest (computed
on the basis of the actual number of days elapsed over a 360-day year) on the
unpaid principal amount thereof until paid in full at the rate or rates per
annum determined as follows:


 


(i)            The per annum rate for any portion
of the outstanding principal balance of the Revolving Credit Notes which is not
then subject to a LIBOR Option shall be equal to the Applicable Base Rate
Margin (as hereinafter defined in subsection 1.4(c)) plus the Base Rate;
and


 


(ii)           The per annum rate for any LIBOR Portion
shall be equal to the Applicable LIBOR Margin (as hereinafter defined in
subsection 1.4(c)) plus the LIBOR Rate.


 


(b)           Interest on any portion of the Revolving Credit Notes
accruing interest based on the Base Rate shall be payable monthly in arrears on
the first day of each month, commencing on the first such date next succeeding
the date of issuance of the Revolving Credit Notes, and interest on any LIBOR
Portion of the Revolving Credit Notes shall be payable on the earlier to occur
of (i) the last day of the LIBOR Period applicable to such LIBOR Portion or
(ii) the 90th day of such LIBOR Period, and at maturity (whether by
acceleration or otherwise).  Each change
in the rate of interest payable on any portion of the outstanding principal
balance of the Revolving Credit Notes which is not then subject to a LIBOR
Option shall take effect simultaneously with the corresponding change in the
Base Rate.  Notwithstanding anything
contained herein or in any other Loan Document to the contrary, in no event shall
the amount paid or agreed to be paid by the Borrower as interest on the
Revolving Credit Loans exceed the highest lawful rate permissible under any law
applicable thereto.


 


(c)           Applicable Margin. 
For the purpose of this subsection 1.4, the “Applicable Margin”
shall be determined as follows:


 


2

















 


(i)            subject to the provisions of
subparagraph (iii) hereof, from and after the Closing Date, until the first
Interest Adjustment Date, and thereafter from and after each Interest
Adjustment Date until the next Interest Adjustment Date, the Applicable Margin
for Base Rate Revolving Credit Loans (the “Applicable Base Rate Margin”)
and for Revolving Credit Loans subject to a LIBOR Option (the “Applicable
LIBOR Margin”) shall be the respective amounts set forth in the following
table opposite the applicable ratio of outstanding Total Funded Debt to
Adjusted EBITDA:


 


	
  Ratio of
  Outstanding Total

  Funded Debt to Adjusted

  EBITDA 

  	
   

  	
  Applicable Base Rate

  Margin

  	
   

  	
  Applicable LIBOR

  Margin

  
	
  (for the most recently concluded period of four consecutive fiscal
  quarters)

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal to 1.00:1.00 but less than or equal to 

  2.00:1.00

  	
   

  	
  0%

  	
   

  	
  2.75%

  
	
  Less than 1.00:1.00

  	
   

  	
  0%

  	
   

  	
  2.50%

  



 


The Applicable Margin in
effect from the Closing Date until the first Interest Adjustment Date shall be
0% (in the case of the Applicable Base Rate Margin) or 2.50% (in the case of
the Applicable LIBOR Margin).


 


(ii)           As used herein, the term “Interest
Adjustment Date” shall mean (A) the first day of the first month after the
date on which each of the quarterly compliance certificates (together with
quarterly unaudited financial statements for such quarter) required to be
delivered under subsection 5.1 (the “Required Financial Statements”)
with respect to the then most recently ended quarter were due, if the foregoing
table indicates an upward adjustment of the Applicable Margin, or (B) the later
of such date or the first day of the first month after the date that all of the
Required Financial Statements for such quarter shall have been received by the
Agent, if the foregoing table indicates a downward adjustment of the Applicable
Margin.


 


(iii)          The determination of the Applicable
Margin hereunder as of any Interest Adjustment Date shall be based on unaudited
quarterly financial statements and compliance certificates as provided above, provided,
that in the event of any discrepancy between computations based upon any
compliance certificates and the related audited financial statements furnished
pursuant to subsection 5.1 (the “Audited Financial Statements”) the
computation based upon the Audited Financial Statements shall govern
(retroactive to the most recent Interest Adjustment Date).  In the event of a retroactive correction in
the determination of the Applicable Margin in favor of the Lenders, the amount
of


 


3

















 


interest thereby overdue and
payable by the Borrower shall be paid to the Agent for the account of each
Lender in accordance with and proportionate to such Lender’s Commitment within
five (5) Banking Days after the date of such retroactive correction.  Notwithstanding any of the foregoing, upon
any upward adjustment of the Applicable Margin, there shall be no subsequent
downward adjustment of the Applicable Margin until the first day of the first
month after the ratio of outstanding Total Funded Debt to Adjusted EBITDA would
result in such downward adjustment as of the end of a subsequent fiscal
quarter.  Notwithstanding anything to
the contrary set forth in this Agreement, no downward adjustment of the
Applicable Margin shall occur if, at the time such downward adjustment would
otherwise be made, there shall exist any Event of Default, provided that
such downward adjustment shall be made on the first day of the first month
after the date on which any Event of Default preventing such downward
adjustment shall have been cured in accordance with Section 12, assuming that
no other Event of Default exists at the time of such downward adjustment.


 


1.5.          Fees.


 


(a)           Unused Line Fee. 
The Borrower shall pay the Agent for the ratable benefit of the Lenders
an unused line fee (the “Unused Line Fee”) for the period commencing on
the Closing Date to and including the Maturity Date, or the earlier date of
termination of the Line of Credit hereunder, in an amount equal to the
applicable per annum rate set forth below (computed on the basis of the actual
number of days elapsed over a 360-day year) of the average daily unused portion
of the Maximum Line Commitment.  The Unused
Line Fee shall be paid quarterly in arrears on the last day of each March,
June, September and December of each year, commencing on the first such date
next succeeding the Closing Date, and on the date of termination of the Line of
Credit.


 


	
  Ratio of
  Outstanding Total Funded Debt to Adjusted

  EBITDA 

  	
   

  	
  Unused Line Fee

  
	
  (for the most recently concluded period of four 

  consecutive fiscal quarters)

  	
   

  	
   

  
	
  Greater than or equal to 1.00:1.00 but less than or 

  equal to 2.00:1.00

  	
   

  	
  0.375%

  
	
  Less than 1.00:1.00

  	
   

  	
  0.25%

  



 


(b)           Changes Affecting Unused Line Fee.  If any change in any requirement imposed
upon any Lender by any law of the United States of America or by any
regulation, order, interpretation, ruling or official directive (whether or not
having the force of law) of the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation or any other board or
governmental or administrative agency of the United States of America shall
impose, increase, modify or deem applicable any reserve, special deposit,
assessment or other requirement against the commitment of such Lender
hereunder, and the result of the


 


4

















 


foregoing, in the reasonable
determination of such Lender, is to impose an increased cost on such Lender
that is attributable to the maintaining of the commitment, then the Unused Line
Fee payable to such Lender shall be increased on the same basis as such fees
are increased for all similar commitments maintained by such Lender, for so long
as the increased cost is imposed on such Lender, to the extent reasonably
determined by such Lender to be necessary to compensate such Lender for such
increased cost.  The determination by
such Lender of the amount of such cost, if done in good faith, shall, in the
absence of manifest error, be conclusive, and at the Borrower’s request such
Lender shall demonstrate the basis for such determination.


 


(c)           Origination Fee. 
The Borrower shall pay to the Agent, for the accounts of the Lenders on
a pro rata basis, an origination fee (the “Origination Fee”) in an
aggregate amount of One Hundred Thousand Dollars ($100,000) on the Closing
Date.  No portion of the Origination Fee
paid to the Agent, for the accounts of the Lenders, shall under any
circumstances be refunded to the Borrower.


 


(d)           Agent Fee. 
The Borrower shall pay to the Agent (for its own account) on the Closing
Date and on each anniversary thereafter during the term of the Agreement an
annual fee of Ten Thousand Dollars ($10,000), which shall be fully earned and
payable on the Closing Date and on each anniversary of the Closing Date.


 


1.6.          Subsidiary Guaranties and
Pledge Agreement.


 


(a)           The Notes and all other Obligations of the Borrower
hereunder and/or under the other Loan Documents shall be secured by and
entitled to the benefits of unconditional payment and performance guaranties
from all Subsidiaries of the Borrower organized under the laws of any state in
the United States (collectively, the “US Subsidiaries” and each a “US
Subsidiary”).  The Subsidiary
Guaranties (collectively, the “Subsidiary Guaranties”) will be
satisfactory in form and substance to the Agent.


 


(b)           Subsidiary Pledge Agreements(s).  The Notes and all other Obligations of the
Borrower hereunder and/or under the other Loan Documents shall be further
secured by and entitled to the benefits of one or more pledge agreements of the
Borrower in favor of the Agent (collectively, the “Pledge Agreement”)
pursuant to which the Borrower will pledge to the Agent sixty-five percent
(65%) of the outstanding capital stock or other equity interests held by the
Borrower in each of its directly owned Subsidiaries which is not a US
Subsidiary (each a “Foreign Subsidiary” and collectively, the “Foreign
Subsidiaries”).  Within ten (10)
Banking Days after demand by Agent following the occurrence and during the
continuance of an Event of Default, Borrower will deliver to the Agent all
Pledged Collateral (as defined in the Pledge Agreement) and other instruments
(including stock powers) referenced in the Pledge Agreement, and will certify
as to the accuracy (as of the date of such delivery) of all information set
forth on the Schedules to such Pledge Agreement.


 


1.7.          Reserved.


 


1.8.          Default Rate of Interest.  In the event of any Event of Default, including
but not limited to the Borrower’s failure to make any payment of principal of
or interest on the Notes when due, whether at maturity or at a date fixed for
the payment of any installment or


 


5

















 


prepayment thereof or by declaration, acceleration
or otherwise, interest on the full outstanding balance of principal and (to the
extent permitted by law) interest on the Notes shall, during the continuance of
such Event of Default, be payable on demand at a rate per annum equal to two
percent (2%) above the rate otherwise applicable to each Note hereunder.  Interest shall accrue at such default rate
until the Event of Default is cured by the Borrower or waived by the Lenders in
accordance with the provisions of Section 12 below.


 


1.9.          Notations.  Prior to any sale or other disposition of
any Note by any Lender, such Lender shall make a notation on such Note (or on a
paper annexed thereto) of the unpaid principal amount thereof at the time
outstanding, the last date to which interest has been paid thereon and the
amount of unpaid interest accrued thereon to the date of such sale or
disposition.  Upon payment in full of
the principal of and interest on the Note, such Note shall be cancelled and
returned to the Borrower, provided that the Revolving Credit Note shall
not be cancelled or returned so long as the Lender shall be obligated to make
Revolving Credit Loans hereunder.


 


1.10.        Form and Terms of Payment.  All payments by the Borrower of principal of
or interest on the Notes due to the Lenders pursuant to the Loan Documents
shall be made as described below.  All
other payments shall be made to the Agent for the account of each Lender in
accordance with and proportionate to such Lender’s Commitment at the address
hereinafter set forth in this Agreement (or at such other address as the Agent
shall have furnished to the Borrower in writing) and shall be made in
immediately available funds free of any counterclaim, set-off or charge.  The Borrower hereby authorizes the Agent to
charge, on the first Banking Day of each month, the Borrower’s Operating
Account or any other deposit accounts from time to time maintained by the
Borrower with the Agent for the purpose of effecting payments of principal and
interest on the Loans.  Any other
amounts due to the Lenders from the Borrower under the Loan Documents or
otherwise shall be billed to the Borrower. 
If such amounts are not paid by the date specified in any such bill, the
Agent is authorized to effect such payment by charging the Operating Account or
any other deposit accounts from time to time maintained by the Borrower with
the Agent and giving prompt notice thereof to Borrower.  If any payment due to the Agent shall become
due on a day which is not a Banking Day, such payment may be made on the next
succeeding Banking Day and such extension shall be included in computing
interest in connection with such payment. 
All payments made by Borrower hereunder or under any Note or other Loan
Document will be made without setoff, counterclaim, or other defense.  Except as required by applicable law, all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i)
measured by or based on the net income or net profits of a Lender, or (ii) to
the extent that such tax results from a change in the circumstances of the
Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and
all interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as “Taxes”).  If any Taxes are so levied or imposed, Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under


 


6

















 


this Agreement or under any Note, including any
amount paid pursuant to this subsection 1.10 after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for
herein; provided, however, that Borrower shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of subsection 16.11, or (ii) if the increase in
such amount payable results from Agent’s or such Lender’s own willful
misconduct or gross negligence. 
Borrower will furnish to Agent as promptly as possible after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by Borrower.


 


1.11.        Pro-forma Compliance
Certificate.  On or before the
Closing Date, the Borrower shall deliver to the Agent the Pro-forma Compliance
Certificate (the “Pro-forma Compliance Certificate”).  The Pro-forma Compliance Certificate shall
be in the form of the Compliance Certificate attached hereto as Exhibit C,
and shall be completed by the Borrower so as to give effect to consummation of
this Agreement (including the making of the initial Loans hereunder).


 


1.12.        Capital Adequacy.  If after the date of this Agreement, any
Lender shall have reasonably determined that the adoption or implementation of
any applicable law, rule or regulation regarding capital requirements for banks
or bank holding companies, or any change therein (including, without
limitation, any change according to a prescribed schedule of increasing
requirements, whether or not known on the date of this Agreement), or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any request or
directive of any such Person regarding capital adequacy (whether or not having
the force of law) has the effect of reducing the return on such Lender’s
capital to a level below that which such Lender could have achieved (taking into
consideration such Lender’s policies with respect to capital adequacy
immediately before such adoption, implementation, change or compliance) but for
such adoption, implementation, change or compliance as a consequence of its
Commitment to make Loans hereunder by any amount reasonably deemed by such
Lender to be material, the Borrower shall pay to such Lender as an additional
fee from time to time on demand such amount as such Lender shall have
reasonably determined to be necessary to compensate it for such reduction.  The determination by such Lender of such
amount, if done on the basis of any reasonable averaging and attribution
methods, shall in the absence of manifest error be conclusive, and at the
Borrower’s request, such Lender shall demonstrate the basis of such
determination.


 


1.13.        Reserved.


 


1.14.        Use of Proceeds.  The Borrower will use the proceeds of the
Loans as follows:  (i) on the Closing
Date to repay in full all amounts outstanding under a certain demand promissory
note dated March 11, 2003 made by the Borrower in favor of the Agent, in an
original principal amount of $6,000,000 (the “First Demand Note”) and a
second demand promissory note dated October 10, 2003 made by the Borrower in
favor of the Agent in an original principal amount of $6,500,000 (the “Second
Demand Note” and, together with the First Demand Note, the “Demand Notes”)
and (ii) from and after the Closing Date, the proceeds of the Revolving Credit
Loans shall be used to fund Permitted Acquisitions, ongoing working capital needs
and other general corporate purposes of the Borrower and its Subsidiaries,
including closing costs relating to this


 


7

















 


Agreement. 
On the Closing Date, the Agent shall return the Demand Notes to the Borrower
marked “cancelled”.  The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, use any
part of such proceeds (i) for the purpose of making any Restricted
Payment except with the prior written consent of the Agent, (ii) for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve
System, or (iii) for any other purpose which would violate any provision
of this Agreement or of any applicable statute, regulation, order or
restriction.


 


Section 2.               LIBOR Provisions.


 


2.1.          LIBOR Option.  Subject to the provisions of this Section 2,
the Borrower shall have the right to have the interest on all or any portion of
the principal amount of the Revolving Credit Loans based on a LIBOR Rate.


 


2.2.          Certain Definitions.  As used herein, the following terms have the
following respective meanings:


 


Banking
Day:  (i) when used with respect to the LIBOR
Option, a day on which dealings may be effected in deposits of US dollars in
the London interbank foreign currency deposits market and on which banks may
conduct business in London, England and Boston, Massachusetts, and (ii) when
used with respect to the other provisions of this Agreement, any day excluding
Saturday and Sunday and excluding any other day which shall be in Boston,
Massachusetts, a legal holiday or a day on which banking institutions are
authorized by law to close.


 


Board:  the
Board of Governors of the Federal Reserve System of the United States.


 


Legal
Requirement:  any requirement imposed upon the Agent or
any Lender by any law of the United States of America or the United Kingdom or
by any regulation, order, interpretation, ruling or official directive (whether
or not having the force of law) of the Board, the Bank of England or any other
board, central bank or governmental or administrative agency, institution or
authority of the United States of America, the United Kingdom or any political
subdivision of either thereof.


 


LIBOR
Option:  the option granted pursuant to this
Section  2 to have the interest on all
or any portion of the principal amount of the Loans based on a LIBOR Rate.


 


LIBOR
Period:  any period, selected as provided below in
this Section 2, of 30, 60 or 90 days, commencing on any Banking Day; provided,
however, that no LIBOR Period with respect to any LIBOR Portion shall extend
beyond the Maturity Date.  At the
commencement of the LIBOR Period, the Agent shall notify the Borrower of the
termination date of such LIBOR Period. 
If any LIBOR Period so selected would otherwise end on a date which is
not a Banking Day, such LIBOR Period shall instead end on the next preceding or
succeeding Banking Day as determined by the Agent in accordance with the then
current banking practice in London. 
Each determination by the Agent of any LIBOR Period shall, in the
absence of manifest error, be conclusive, and at the Borrower’s request the
Agent shall demonstrate the basis for such determination.


 


8

















 


LIBOR
Portion:  that portion of the Revolving Credit Loans
specified in a LIBOR Request (including any portion of such Revolving Credit
Loans which are being borrowed by the Borrower concurrently with such LIBOR
Request) which is not less than $100,000 and is an integral multiple of
$100,000, and which, as of the date of the LIBOR Request specifying such LIBOR
Portion, has met the conditions for basing interest on the LIBOR Rate in
subsection 2.3 hereof and the LIBOR Period of which has commenced and not
terminated.


 


LIBOR
Premium:  With respect to the prepayment of any LIBOR
Portion of any Revolving Credit Loans prior to the end of the applicable LIBOR
Period, an amount equal to the product of (i) the excess, if any, of the
original LIBOR Rate on the amount so prepaid over the LIBOR Rate of interest on
Eurodollar deposits in effect on the date of such prepayment and having a
maturity date approximating the last Banking Day of the applicable LIBOR
Period, multiplied by (ii) the principal amount so prepaid, multiplied by (iii)
a fraction, the numerator of which is the number of days remaining in the
related LIBOR Period and the denominator of which is 360.  If the result of clause (i) is less than or
equal to zero, there shall be no LIBOR Premium.


 


LIBOR
Rate:  with respect to any LIBOR Portion for the
related LIBOR Period, an interest rate per annum (rounded upwards, if
necessary, to the next higher 1/8 of 1%) equal to the product of (a) the Base
LIBOR Rate (as hereinafter defined) and (b) Statutory Reserves.  For purposes of this definition, the term “Base
LIBOR Rate” shall mean the rate (rounded to the nearest 1/8 of 1% or, if
there is no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which deposits of
US dollars approximately equal in principal amount to the LIBOR Portion and for
a maturity equal to the applicable LIBOR Period are offered to the Agent in the
London interbank foreign currency deposits market at approximately 11:00 a.m.,
London time (or, if such rate is not then offered to the Agent, at the rate
(rounded as provided above) at which deposits of US dollars approximately equal
in principal amount to the LIBOR Portion and for a maturity equal to the
applicable LIBOR Period are offered on the Telerate (page 3750) or any
successor page), three (3) Banking Days prior to the commencement of such LIBOR
Period, for delivery on the first day of such LIBOR Period.  Each determination by the Agent of any LIBOR
Rate shall, in the absence of manifest error, be conclusive, and at the
Borrower’s request, the Agent shall demonstrate the basis for such
determination.  Promptly upon
determining the LIBOR Rate for an applicable LIBOR Period, the Agent shall give
written notice of such LIBOR Rate to the Borrower and, if requested by the
Borrower, shall provide reasonable details demonstrating the basis for such
LIBOR Rate determination.


 


LIBOR
Request:  notice in writing (or by telephonic
communication confirmed by telex, telecopy or other facsimile transmission on
the same day as the telephone request) from the Borrower to the Agent
requesting that interest on a LIBOR Portion be based on the LIBOR Rate,
specifying: (i) the first day of the LIBOR Period, (ii) the length of the LIBOR
Period consistent with the definition of that term, and (iii) a dollar amount
of the LIBOR Portion consistent with the definition of that term.


 


Statutory
Reserves:  a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency or supplemental reserves),
expressed as a decimal, established by the Board and any other


 


9

















 


banking authority to which any Lender is
subject for Eurocurrency Liabilities (as defined in Regulation D of the
Board).  Such reserve percentages shall
include, without limitation, those imposed under such Regulation D.  LIBOR Portions of the Revolving Credit Loans
shall be deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of or credit
for proration, exceptions or offsets which may be available from time to time
to the Lenders under such Regulation D. 
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.


 


LIBOR
Tax:  in relation to any LIBOR Portion and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or other
charges of whatever nature required by any Legal Requirement (i) to be paid by
the Lenders and/or (ii) to be withheld or deducted from any payment otherwise
required hereby to be made by the Borrower to the Lenders, provided  that
the term “LIBOR Tax” shall not include any taxes imposed upon the net
income of the Lenders by the United States of America, the United Kingdom or
any political subdivision thereof.


 


2.3.          Conditions for Basing
Interest on the LIBOR Rate.  Upon
the condition that:


 


(a)           The Agent shall have received a LIBOR Request from the
Borrower, at least three (3) Banking Days prior to the first day of the LIBOR
Period requested;


 


(b)           There shall have occurred no change in applicable law
which would make it unlawful for the Agent to obtain deposits of US dollars in
the London interbank foreign currency deposits market;


 


(c)           As of the date of the LIBOR Request and the first day of
the LIBOR Period, there shall exist no Default or Event of Default; and


 


(d)           The Agent shall not have determined in good faith that it
is unable to determine the LIBOR Rate in respect of the requested LIBOR Period
or that it is unable to obtain deposits of US dollars in the London interbank
foreign currency deposits market in the applicable amounts and for the requested
LIBOR Period; then


 


the interest on the LIBOR Portion specified
in the LIBOR Request during the LIBOR Period specified in the LIBOR Request
will be based on the applicable LIBOR Rate.


 


2.4.          Indemnification for Funding
and Other Losses.  Each LIBOR Request
shall be irrevocable and binding on the Borrower, provided  that
the Borrower may specify in any such LIBOR Request a maximum LIBOR Rate which
they will accept for the related LIBOR Period and the LIBOR Option elected in
such LIBOR Request shall not become effective if the applicable LIBOR Rate
determined by the Agent shall exceed such specified maximum.  Without limiting the generality of
subsection 2.5, the Borrower hereby agrees to indemnify the Agent and Lenders
against any loss or expense incurred by the Agent or any Lender as a result of
any failure on the part of the Borrower (so long as such failure is through no
fault of the Agent or Lenders) to fulfill, on or before the date specified in
any LIBOR Request, the applicable conditions set forth in this Agreement,
including, without limitation, any loss (including loss of anticipated profits)
or expense incurred by reason of the liquidation of redeployment of deposits or
other funds acquired by the Agent or any Lender to fund or maintain the requested
LIBOR


 


10

















 


Portion when interest on such LIBOR Portion, as a
result of such failure on the part of the Borrower, is not based on the
applicable LIBOR Rate for the requested LIBOR Period.


 


2.5.          Change in Applicable
Laws, Regulations, etc.  If any
Legal Requirement shall make it unlawful for any Lender to fund through the
purchase of US dollar deposits any LIBOR Portion, or otherwise to give effect
to its obligations as contemplated hereby, or shall impose on any Lender any
costs based on or measured by the excess above a specified level of the amount
of a category of deposits or other liabilities of any Lender which includes
deposits by reference to which the LIBOR Rate is determined as provided herein
or a category of extensions of credit or other assets of any Lender which
includes any LIBOR Portion, or shall impose on any Lender any restrictions on
the amount of such a category of liabilities or assets which such Lender may
hold, (a) the Lenders by notice thereof to the Borrower may terminate the LIBOR
Option, (b) any LIBOR Portion subject thereto shall immediately bear interest
thereafter at the rate provided for (with respect to Revolving Credit Loans not
subject to a LIBOR Option) in subsection 1.4, and (c) the Borrower shall
indemnify the Lenders against any loss, penalty or expense incurred by the
Lenders by reason of the liquidation or redeployment of deposits or other funds
acquired by the Lenders, to fund or maintain such LIBOR Portion if and to the extent
such loss, penalty or expense is caused by the nature of the business of the
Borrower and its Subsidiaries or the locations and jurisdictions where the
Borrower or its Subsidiaries are operating. 
Promptly after becoming aware of the occurrence of any event or
condition described in this subsection 2.5, the affected Lender(s) shall give
written notice thereof to the Borrower and shall provide reasonable details
setting fourth the basis for its determination and such other information as
shall be reasonably requested by Borrower to confirm the affected Lenders’
determination and computations.  A
certificate of an officer of such Lender setting forth the amount of such loss,
penalty or expense, and the basis therefor shall, in the absence of manifest
error, be conclusive.


 


2.6.          LIBOR Taxes.  It is the understanding of the Borrower and
the Lenders that the Lenders shall receive payments of amounts of principal of
and interest on the Notes (including but not limited to interest with respect
to the LIBOR Portions from time to time subject to a LIBOR Option) free and
clear of, and without deduction for, any LIBOR Taxes.  If (a) any Lender shall be subject to any such LIBOR Tax in
respect of any such LIBOR Portion or part thereof or (b) the Borrower shall be
required to withhold or deduct any such LIBOR Tax from any such amount, and (c)
such LIBOR Tax shall not have existed as of the date of the applicable LIBOR
Request, the LIBOR Rate applicable to such LIBOR Portion shall be adjusted by
any such Lender to reflect all additional costs incurred by such Lender in
connection with the payment by such Lender or the withholding by the Borrower
of such LIBOR Tax and the Borrower shall provide each such Lender with a
statement detailing the amount of any such LIBOR Tax actually paid by the
Borrower.  Determination by any affected
Lender of the amount of such costs shall, in the absence of manifest error, be
conclusive.  Promptly upon obtaining
knowledge of any such circumstance set forth above, the Lender shall give written
notice of such determination to the Borrower and shall provide reasonable
details and facts demonstrating the basis for its determination and shall
provide such other information as shall be reasonably requested by the Borrower
to permit the Borrower to confirm Lender’s computations and determination.  If after any such adjustment, any part of
any LIBOR Tax paid by a Lender is subsequently recovered by such Lender, the
Lender shall reimburse the Borrower to the extent of the amount so
recovered.  A certificate of an officer
of the Lender setting forth the amount of


 


11

















 


such recovery and the basis therefor shall, in the
absence of manifest error, be conclusive, and at the Borrower’s request, the
Lender shall demonstrate the basis of such determination.


 


Section 3.               Representations and Warranties.


 


In order to induce the
Lenders to enter into this Agreement and to make the Loans provided for
hereunder, the Borrower makes the following representations and warranties,
which shall survive the execution and delivery hereof and of the Notes, and
which shall be re-made by the Borrower each time the Borrower submits a
quarterly Compliance Certificate pursuant to subsection 5.1.


 


3.1.          Organization, Standing,
etc. of the Borrower.  The Borrower
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted, to enter into this Agreement, the Loan Documents to which it is a
party and all other documents to be executed by it in connection with the
transactions contemplated hereby, to execute the Pledge Agreement and deliver
the Pledged Collateral thereunder, to issue the Notes, and to carry out the
terms hereof and thereof.


 


3.2.          Subsidiaries.  Schedule 3.2 attached hereto
correctly sets forth as to each Subsidiary, its name, the jurisdiction of its
incorporation or other formation, the number of shares of its capital stock or
other beneficial interest of each class outstanding and the number of such
outstanding shares or other beneficial interests owned by the Borrower and/or
its Subsidiaries.  Each such Subsidiary
is a corporation or other entity duly organized, validly existing and, in good
standing under the laws of the jurisdiction of its incorporation or other
formation, and has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and to enter into such of
the Loan Documents, if any, to be executed by it in connection with the
transactions contemplated hereby.  All
of the outstanding capital stock or other beneficial interests of each
Subsidiary is validly issued, fully-paid and nonassessable, and is owned by the
Borrower or its Subsidiaries as specified in Schedule 3.2, in each case
free of any mortgage, pledge, lien, security interest, charge, option or other
encumbrance other than Permitted Liens. 
The Borrower or a Subsidiary of Borrower own all of the outstanding
capital stock or other beneficial interest of each of its Subsidiaries which is
not a US Subsidiary free and clear of any mortgage, pledge, lien, security
interest, charge, option or other encumbrance.


 


3.3.          Qualification.  The Borrower and its Subsidiaries are duly
qualified or licensed and in good standing as foreign corporations or other
entities duly authorized to do business in each jurisdiction in which the
character of the properties owned or the nature of the activities conducted
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed is not reasonably likely to have a Material Adverse
Effect.


 


3.4.          Financial Information;
Disclosure; Solvency Certificate; Opening Balance Sheet; Projections, etc.


 


(a)           The Borrower has furnished the Lenders with the financial
statements and other reports requested by the Agent, and has furnished the
Pro-forma Compliance Certificate


 


12

















 


referred to in subsection
1.11, the Opening Balance Sheet and the Solvency Certificate referred to below
in this subsection 3.4.  Such financial
statements and Opening Balance Sheet have been or will be prepared in
accordance with GAAP applied on a consistent basis and such financial
statements and Opening Balance Sheet fairly present in all material respects
the financial position and results of operations of the Borrower and its
Subsidiaries on a consolidated basis as of the dates and for the periods
indicated.  Since December 31, 2002,
there has not occurred any event, circumstance or condition which has had or is
reasonably likely to have a Material Adverse Effect.


 


(b)           Neither this Agreement, the Opening Balance Sheet, the
Solvency Certificate, nor any financial statements, reports or other documents
or certificates furnished to the Lenders by the Borrower in connection with the
transactions contemplated hereby or thereby contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements herein or therein contained not misleading, in light of the
circumstances under which they are made, except to the extent that such
financial statements, reports or other documents or certificates expressly
relate to an earlier date or are affected by the consummation of the
transactions contemplated by this Agreement.


 


(c)           Without limiting the scope of the Solvency Certificate in
the form attached hereto as Exhibit D (the “Solvency Certificate”)
delivered by the Borrower to the Lenders on the Closing Date, none of the Loans
will render the Borrower unable to pay its debts as they become due; the
Borrower is not contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of its property; and the Borrower does not have any knowledge of
any person contemplating the filing of any such petition against it.  The Borrower is solvent (within the meanings
of all applicable fraudulent transfer or fraudulent conveyance statutes and
acts, the federal bankruptcy code and all other applicable laws) and has assets
having a fair value in excess of the amount required to pay its probable
liabilities on its existing debts (including the Loans and contingent debts) as
they become absolute and matured, and has access to adequate capital for the
conduct of its business and the ability to pay its debts from time to time
incurred therewith as such debts mature.


 


3.5.          Licenses; Franchises, etc.  The Borrower and its Subsidiaries have all
material authorizations, licenses, permits, approvals and franchises of any
public or governmental regulatory body necessary for the conduct of the
business of the Borrower and its Subsidiaries as now conducted except where the
failure to have the same is not reasonably likely to have a Material Adverse
Effect (such authorizations, licenses, permits and franchises, together with
any extensions or renewals thereof, being herein sometimes referred to
collectively as the “Licenses”). 
All of such Licenses are validly issued and in full force and effect and
the Borrower and its Subsidiaries have fulfilled and performed all of their
obligations with respect thereto and have full power and authority to operate
thereunder.


 


3.6.          Material Agreements.  The Borrower’s most recent form 10-K  filed with the SEC, as supplemented by the
Borrower’s forms 10-Q and 8-K filed with the SEC thereafter, accurately and
completely lists each material agreement and instrument required to be
disclosed therein, including but not limited to any material leases, employment
agreements or other agreements with management of the Borrower or any
Subsidiary, stockholder agreements and all


 


13

















 


other material agreements required to be disclosed
therein.  Each of the Borrower and its
Subsidiaries (as applicable) and, to the best of the Borrower’s knowledge, all
third parties to such material agreements, are in material compliance with the
terms thereof, and no default or event of default by the Borrower or, to the
Borrower’s knowledge, any other party thereto, exists thereunder.


 


3.7.          Tax Returns and Payments.  The Borrower and its Subsidiaries have filed
all tax returns required by law to be filed and have paid all taxes, assessments
and other governmental charges levied upon any of their respective properties,
assets, income or franchises, other than those (i) not yet delinquent, (ii) not
material in aggregate amount, (iii) being or about to be contested as provided
in subsection 5.4 and/or (iv) not reasonably likely to have a Material Adverse
Effect.  The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of their
respective taxes are adequate in the opinion of the Borrower, and the Borrower
knows of no unpaid assessment for additional taxes or of any basis therefor
other than those which in the aggregate, are not reasonably likely to have a
Material Adverse Effect.


 


3.8.          Indebtedness, Liens and
Investments, etc.  Other than
intercompany Indebtedness, Schedule 3.8 attached hereto correctly
describes, as of the date or dates indicated therein, (a) all outstanding
Indebtedness of the Borrower and its Subsidiaries in respect of borrowed money,
Capital Leases and the deferred purchase price of property; (b) all existing
mortgages, liens and security interests in respect of any property or assets of
the Borrower or its Subsidiaries; (c) all outstanding investments, loans and
advances of the Borrower and its Subsidiaries; and (d) all existing guarantees
by the Borrower and its Subsidiaries.


 


3.9.          Real Estate Owned and
Leased; Title to Properties; Liens. 
The Borrower and its Subsidiaries have good and marketable title to or
leasehold interests in all of their respective properties and assets, and none
of such properties or assets is subject to any mortgage, pledge, lien, security
interest, charge or encumbrance except the existing mortgages and security
interests, if any, referred to in Schedule 3.8 attached hereto and
Permitted Liens.  The real property
owned by the Borrower and/or its Subsidiaries and the real property leased by
the Borrower and/or its Subsidiaries (the “Real Estate Leases”) are
listed on Schedule 3.9 hereto. 
The Borrower and its Subsidiaries enjoy quiet possession under all Real
Estate Leases to which they are parties as lessees, and all of such Real Estate
Leases are valid, subsisting and in full force and effect.


 


3.10.        Litigation, etc.  Except as may be set forth on Schedule
3.10, there is no action, proceeding or investigation pending or threatened
(or any basis therefor known to the Borrower) (i) which questions the validity
of this Agreement, the Notes, the Loan Documents, or the other documents
executed in connection herewith or therewith, or any action taken or to be taken
pursuant hereto or thereto, or (ii) which if adversely determined against the
Borrower, would result in liability of the Borrower in an amount which exceeds
$250,000.


 


3.11.        Authorization; Compliance
with Other Instruments.  The
execution, delivery and performance of this Agreement, the Notes and the other
Loan Documents, have been duly authorized by all necessary action on the part
of the Borrower and its Subsidiaries party thereto, will not result in any
violation of or be in conflict with or constitute a default under any term of
the charter or by-laws of the Borrower or any Subsidiary party to any of the
Loan Documents, or


 


14

















 


of any material agreement, or any material
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to the Borrower or any Subsidiary party to any of the Loan Documents
or to which the Borrower or any such Subsidiary is a party, as the case may be,
or result in the creation of any mortgage, lien, charge or encumbrance upon any
of the properties or assets of the Borrower or any such Subsidiary pursuant to
any such term, other than the liens created under the Loan Documents.  No consent of stockholders of the Borrower
is necessary in order to authorize the execution, delivery or performance of
this Agreement or the Loan Documents, or the issuance of the Notes other than
those consents which have been obtained as of the Closing Date.  Neither the Borrower nor any Subsidiary is
in violation of any term of its charter or by-laws, or of any material term of
any material agreement or instrument to which it is a party, or, of any
judgment, decree, order, statute, rule or governmental regulation applicable to
it which is reasonably likely to have a Material Adverse Effect.


 


3.12.        Eligible Accounts.  The Eligible Accounts included the
calculation of minimum Working Capital are bona fide existing payment
obligations of Account Debtors created by the sale or lease and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrower’s and/or its Subsidiaries’ business, owed to Borrower and/or
such Subsidiaries without defenses, disputes, offsets, counterclaims, or rights
of return or cancellation (other than normal return policies) known to the
Borrower or such Subsidiary.  As to each
Account that is identified by Borrower as an Eligible Account in a Compliance
Certificate submitted to Agent, such Account is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Accounts.


 


3.13.        Eligible Inventory.  All Eligible Inventory included in the
calculation of minimum Working Capital is of good and merchantable
quality.  As to each item of Inventory
that is identified by Borrower as Eligible Inventory in a Compliance
Certificate submitted to Agent, such Inventory is located at one of the
locations set forth on Schedule 3.13 or at such other location
identified in writing by Borrower to Agent, or is in transit from one such location
to another such location and is not otherwise excluded as ineligible by virtue
of one or more of the excluding criteria set forth in the definition of
Eligible Inventory.


 


3.14.        Governmental and Other
Third Party Consents.  Except for
such filings or notices which have already been made or are being made on or
prior to the Closing Date, none of the Borrower or any Subsidiary which is a
party to any of the Loan Documents is required to obtain any order, consent,
approval or authorization of (collectively, the “Consents”), or required
to make any declaration or filing with, any governmental unit or other
regulatory agency or authority (other than the SEC) in connection with (a) the
execution and delivery of this Agreement and the issuance and delivery of the
Notes pursuant hereto, (b) the execution and delivery of the Loan Documents,
(c) the exercise by the Agent of any rights and remedies following an Event of
Default (other than the filing of UCC financing statements) or (d) for the
purpose of maintaining in full force and effect each of the Licenses and
enabling the Borrower to operate thereunder. 
To the Borrower’s knowledge, no appeal, reconsideration, or rehearing or
other review of any Consent has been taken or instituted.


 


3.15.        Regulation U, etc.  Neither the Borrower nor any Subsidiary owns
or has any present intention of acquiring any margin stock within the meaning
of Regulation U (12 CFR Part 221) of the Board of Governors of the Federal
Reserve System (herein called “margin


 


15

















 


stock”).  None of the proceeds of the
Loans will be used, directly or indirectly, by the Borrower or any Subsidiary
for the purpose of purchasing or carrying, or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry,
any margin stock or for any other purpose which might constitute the
transactions contemplated hereby a “purpose credit” within the meaning
of said Regulation U, or cause this Agreement to violate Regulation U,
Regulation T, Regulation X, or any other regulation of the Board of Governors
of the Federal Reserve System or the Securities Exchange Act of 1934, as
amended.  If requested by the Agent, the
Borrower will promptly furnish the Agent with a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation U.


 


3.16.        Employee Retirement Income
Security Act of 1974.  Schedule  3.16 attached hereto sets forth a true,
correct and complete list of all employee benefit plans and arrangements of the
Borrower, including, without limitation, all pension, profit sharing or similar
plans providing for a program of deferred compensation to any employee or any
plan subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”). 
The terms used in this subsection 3.16 and in subsection 5.1 and
subsection 6.10 of this Agreement shall have the meanings assigned thereto in
the applicable provisions of ERISA and the Internal Revenue Code of 1986, as
amended (the “IRC”), and the term “Affiliated Company” shall mean
the Borrower and all corporations, partnerships, trades or businesses (whether
or not incorporated) which constitute a controlled group of corporations with
the Borrower, a group of affiliated service group or other affiliated group,
within the meaning of Section 414(b), Section 414(c), Section 414(m) or Section
414(o), respectively, of the IRC, or Section 4001 of ERISA.  The Borrower and each employee benefit plan
sponsored by an Affiliated Company and, to the best of the Borrower’s
knowledge, each multi-employer plan (as defined in Section 4001(a)(3) of ERISA)
to which any Affiliated Company makes contributions, are in material compliance
with applicable provisions of ERISA and the IRC.  No Affiliated Company has incurred any material liability to the
Pension Benefit Guaranty Corporation (“PBGC”) or any employee benefit
plan on account of any failure to meet the contribution requirements of any
such plan, minimum funding requirements or prohibited transactions under ERISA
or the IRC, termination of a single employer plan, partial or complete
withdrawal from a multi-employer plan, or the insolvency, reorganization or
termination of any multi-employer plan, and no event has occurred or conditions
exist which present a material risk that any Affiliated Company will incur any
material liability on account of any of the foregoing circumstances.  The consummation of the transactions
contemplated by this Agreement will not result in any prohibited transaction
under ERISA or the IRC for which an exemption is not available.


 


3.17.        Reserved.


 


3.18.        Environmental Matters.  Neither the Borrower nor any US Subsidiary
has ever caused or permitted any Hazardous Material to be disposed of on or
under any real property owned, leased or operated by the Borrower and/or any US
Subsidiary in material violation of applicable law and no such real property
has ever been used (by the Borrower and/or any US Subsidiary or, to the
Borrower’s knowledge, by any other Person) as (a) a disposal site or permanent
storage site for any Hazardous Material or (b) a temporary storage site for any
Hazardous Material, in each instance in material violation of applicable
law.  Except as may be set forth on Schedule
3.18, the Borrower has been issued and is in compliance with all material
permits, licenses, approvals and other authorizations relating to environmental
matters and


 


16

















 


necessary or desirable for its business, and has filed
all notifications and reports relating to chemical substances, air emissions,
underground storage tanks, effluent discharges and Hazardous Material waste
storage, treatment and disposal required in connection with the operation of
its businesses.  All Hazardous Materials
used or generated by the Borrower or any US Subsidiary or any business merged
into or otherwise acquired by the Borrower or any US Subsidiary have been
generated, accumulated, stored, transported, treated, recycled and disposed of
in compliance with all applicable laws and regulations.  Neither the Borrower nor any of its US
Subsidiaries has any liabilities with respect to Hazardous Materials, and to
the knowledge of the Borrower, no facts or circumstances exist which could give
rise to liabilities with respect to the violation (whether by the Borrower or
any other Person) of any Environmental Law and/or Hazardous Materials, which is
reasonably likely to have a Material Adverse Effect.


 


3.19.        Patents, Trademarks, Intellectual
Property.  The Borrower owns or
otherwise has rights to use all of its material Proprietary Rights and such
Proprietary Rights are adequate for the conduct of its business as now
conducted, without any known conflict with the rights or claimed rights of
others.


 


3.20.        Chief Executive Offices
Principal Place of Business.  The
chief executive office and principal place of business of the Borrower is, and
at all times since April, 1997, has been, located at 84 October Hill Road,
Holliston, Massachusetts  01746.  The Borrower shall not make any change in
the location of its chief executive office without giving the Agent at least
thirty (30) days’ prior written notice thereof.


 


3.21.        Trade and Other Names.  The exact legal name of the Borrower is
Harvard Bioscience, Inc.  Except as set
forth on Schedule 3.21 attached hereto, during the last five years
ending on the date hereof, the Borrower has not conducted any business under
any other name (including any d/b/a, trade or assumed name).


 


3.22.        Securities Laws.  The Borrower is not a “holding company”
or a “subsidiary company” of a “holding company”, or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding
company”, as such terms are defined in the Public Utility Holding Company
Act of 1935.  The Borrower is not an “investment
company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940.


 


3.23.        Loan Documents.  The representations and warranties of the
Borrower and its Subsidiaries contained herein and in the other Loan Documents,
are true and correct in all material respects, and the Borrower and its
Subsidiaries thereto are in compliance in all material respects with the terms
of the Loan Documents to which each is a party.


 


3.24.        Depository and Other
Accounts.  Schedule 3.24
attached hereto lists all banks and other financial institutions and
depositories at which the Borrower and/or any US Subsidiary maintains (or has
caused to be maintained) or will maintain deposit accounts, operating accounts,
trust accounts, tax or trust receivable accounts or other accounts of any kind
or nature into which funds of the Borrower and/or each US Subsidiary (including
funds in which the Borrower or any US Subsidiary maintains a contingent or
residual interest) are from time to time deposited, and such Schedule 3.24
correctly identifies the name and address of each depository, the name in


 


17

















 


which each account is held, the purpose of the
account and the complete account number. 
The Borrower will notify the Agent simultaneously with the submission of
the quarterly Compliance Certificate, and thereby supplement such Schedule
3.24 as new accounts are established by the Borrower and/or any US
Subsidiary.  The Borrower hereby
authorizes the Agent to attach such supplements to Schedule 3.24 from
time to time delivered by the Borrower to Schedule 3.24 attached hereto.


 


3.25.        Burdensome Obligations;
Future Expenditures.  To the
Borrower’s knowledge, neither the Borrower nor any of its Subsidiaries is party
to or bound by any agreement (including but not limited to the Material
Agreements listed on the Borrower’s most recent form 10-K filed with the SEC,
as supplemented by the Borrower’s forms 10-Q and 8-K filed with the SEC
thereafter), instrument, deed or lease or is subject to any charter, by-law or
other restriction, commitment or requirement which, in the opinion of the
management of such Person, is so unusual or burdensome as in the foreseeable
future to have or cause or create a material risk of having or causing a
Material Adverse Effect.  Neither the
Borrower nor any of its Subsidiaries anticipate that the future expenditures,
if any, by the Borrower and its Subsidiaries needed to meet the provisions of
any federal, state or foreign governmental statutes, orders, rules or
regulations will be so burdensome as to have or cause, or create a material
risk of having or causing, a Material Adverse Effect.


 


3.26.        Insurance Policies.  Schedule 3.26 lists all material
insurance policies of any kind or nature maintained by or on behalf of the
Borrower, as well as a summary of the principal terms of such insurance.  All such insurance policies, together with
any insurance policies obtained by the Borrower after the Closing Date, are or
will be in full force and effect and provide coverage of such risks and in such
amounts as is customarily maintained for businesses of the scope and size of
the Borrower.


 


3.27.        Employment and Labor
Agreements.  Schedule 3.27
accurately and completely describes each employment agreement, agreement for
the payment of deferred compensation, severance or so-called change in control
agreement covering executive officers of the Borrower, as well as all
collective bargaining agreements or other labor agreements covering any
employees of the Borrower.


 


Section 4.               Conditions of Closing/Lending.


 


4.1.          Conditions Precedent to
Initial Loan on the Closing Date. 
The obligation of the Agent and Lenders to execute this Agreement and
the obligations of the Lenders to make the initial Loan hereunder is subject to
the conditions set forth below:


 


(a)           This Agreement, all related Schedules, the Pledge
Agreement, the Subsidiary Guaranties, and such other Loan Documents,
instruments, schedules, exhibits or certificates as shall be designated by the
Agent shall have been executed by the Borrower and the other parties thereto
and delivered to the Agent;


 


(b)           The Pro-forma Compliance Certificate, based on the
Borrower’s September 30, 2003 financial statements shall have been delivered to
the Agent;


 


18

















 


(c)           The Agent shall have received all other information and
documents which the Agent or its counsel reasonably required in connection with
the transactions contemplated by this Agreement, such information and documents
where appropriate to be certified by the proper officers of the Borrower, its
Subsidiaries or governmental authorities.


 


(d)           The Agent shall have received from the Borrower a Solvency
Certificate, which shall be satisfactory in all respects in the sole discretion
of the Agent;


 


(e)           The Agent shall have received satisfactory evidence that
the Borrower is taking all appropriate steps to terminate the financing
statements identified on Schedule 4.1(e) hereto;


 


(f)            The Agent shall have received the favorable opinion of
Goodwin Procter LLP in form and substance reasonably satisfactory to the Agent
and dated as of the Closing Date;


 


(g)           The Agent shall have received a completed Compliance
Certificate, current through the immediately preceding quarter-end showing the
Working Capital in an amount equal to or greater than the Revolving Credit
Loans requested on the Closing Date;


 


(h)           The Borrower shall have paid in full all invoiced costs
and expenses (including reasonable attorneys’ fees) incurred on behalf of the
Agent in connection with this Agreement, which amounts may be paid with the
proceeds of the initial Revolving Credit Loan;


 


(i)            The Borrower shall have paid to the Agent the full amount
of the Origination Fee set forth in subsection 1.5(c) and the Agent Fee set
forth in subsection 1.5(d) of this Agreement, which amounts may be paid with
the proceeds of the initial Revolving Credit Loan;


 


(j)            The Agent shall have received a certificate dated as of
the Closing Date, signed by the Chief Executive Officer, Chief Financial
Officer or such other executive officer of Borrower as may be reasonably
acceptable to Agent, certifying that (i) the conditions precedent specified in
this subsection 4.1 have been fulfilled; (ii) the representations and
warranties of the Borrower and its Subsidiaries contained in this Agreement and
in each of the other Loan Documents and the schedules to this Agreement
delivered as of the Closing Date, are true, complete and correct as of the
Closing Date; (iii) no event or condition has occurred which is reasonably
likely to have a Material Adverse Effect; and (iv) as of the Closing Date there
is no Default or Event of Default under this Agreement;


 


(k)           The Agent shall have received evidence of insurance
coverage for the Borrower and each US Subsidiary in compliance with subsection
5.3.


 


Without limiting any other
provision of this Agreement, each of the opinions, agreements, certificates,
and other conditions precedent listed above must be reasonably satisfactory in
all respects to the Agent and its counsel in order for such condition precedent
to be deemed satisfied.


 


19

















 


4.2.          Reserved.


 


4.3.          Conditions Precedent to
Loans on and After the Closing Date.


 


(a)           No Default; Representations and Warranties, etc.  On the Closing Date and on the effective
date of each Compliance Certificate submitted by the Borrower hereunder: (i)
the representations and warranties of the Borrower and its Subsidiaries
contained in this Agreement and in each of the other Loan Documents shall be
true and correct in all material respects on and as of such dates as if they
had been made on such dates (except to the extent that such representations and
warranties expressly relate to an earlier date or are affected by the
consummation of transactions permitted under this Agreement and except that
references to financial statements shall be deemed to refer to the most recent
audited financial statements delivered to the Agent pursuant to Section 5.1(a)
hereof); (ii) the Borrower shall be in compliance in all material respects with
all of the terms and provisions set forth herein on its part to be observed or
performed on or prior to such dates; (iii) after giving effect to any Loans to
be made on such dates, no Default or Event of Default shall have occurred and
be continuing; and (iv) since the date of the most recently delivered audited
financial statements of the Borrower and its Subsidiaries, no event or
condition shall have occurred or exist which is reasonably likely to have a
Material Adverse Effect.  Each request
for a Loan hereunder shall constitute a representation and warranty by the
Borrower to the Agent and Lenders that all of the conditions specified in this
subsection 4.3(a), have been and continue to be satisfied in all material
respects as of the date of each such Loan (except the Borrower and its
Subsidiaries shall only be required to confirm their representations and
warranties on a quarterly basis in connection with the delivery of a Compliance
Certificate).  As of the date of each
request for a Loan hereunder, the Borrower shall not have knowledge that that
it is in violation of subsection 7.3 hereof. 
The Lenders hereby agree that the Borrower shall be permitted, from time
to time, to supplement each of the Schedules provided to the Agent in
connection with the execution and delivery of this Agreement and the other Loan
Documents with respect to any matter arising after the Closing Date which is
not otherwise prohibited by the terms of this Agreement (or with respect to
which the Agent has otherwise consented) and which is necessary in order to
render the representations and warranties of the Borrower and its Subsidiaries
given in the Loan Documents true and correct, provided that any such
supplements shall not be required more than once every year and such Schedules
shall be deemed automatically updated by information contained in each
Compliance Certificate and all SEC filings without the need for any further
action on the part of the Borrower or any Subsidiary.


 


(b)           The Borrower shall have paid the fees specified in
subsection 1.5 and all other amounts (including reimbursement for legal fees)
owing from the Borrower to the Agent and Lenders from and after the Closing
Date in accordance with the terms hereof.


 


(c)           Except in connection with Permitted Acquisitions in
accordance with subsection 6.17.B, if any portion of the requested Loan is to
be used to fund an acquisition, at least five (5) Banking Days prior to the
consummation of any such acquisition, the Borrower shall have delivered to the
Agent a certificate, signed by the Chief Executive Officer or Chief Financial
Officer of the Borrower, certifying that such acquisition is a Permitted
Acquisition under subsection 6.17.A.


 


20

















 


(d)           Within thirty (30) days of the Closing Date, the Borrower
shall deliver to the Agent evidence of insurance coverage for each Foreign
Subsidiary in compliance with subsection 5.3.


 


(e)           Within forty-five (45) days of the Closing Date, the
Borrower shall deliver to the Agent evidence of the termination of the
financing statements identified on Schedule 4.1(e).


 


Section 5.               Affirmative Covenants.


 


So long as any of the Loans
shall remain available to the Borrower, and until the principal of and interest
on the Notes and all fees due hereunder and all of the Borrower’s obligations
to the Agent and Lenders hereunder shall have been paid in full, the Borrower
agrees that:


 


5.1.          Financial Statements,
Field Audits etc.  The Borrower will
furnish or cause to be furnished to the Agent:


 


(a)           Within one hundred twenty (120) days after the end of each
fiscal year of the Borrower, (i) the audited consolidated balance sheets of the
Borrower and its Subsidiaries as at the end of such year, and (ii) the related
audited consolidated statements of income and surplus and cash flows for such
year, setting forth in comparative form with respect to such consolidated
financial statements figures for the previous fiscal year, all in reasonable
detail, together with the opinion thereon of independent public accountants
selected by the Borrower with an established national or regional reputation,
which opinion shall be in a form generally recognized as unqualified and shall
state that such financial statements have been prepared in accordance with GAAP
applied on a basis consistent with that of the preceding fiscal year (except
for changes, if any, which shall be specified and approved in such opinion) and
that the audit by such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards related
to reporting;


 


(b)           within forty-five (45) days after the end of each
of the first three quarterly accounting periods and within sixty (60) days
after the end of the fourth quarterly accounting period in each fiscal year of
the Borrower, (i) (A) the unaudited consolidated and consolidating balance
sheets and related statements of income and surplus for such period and for the
period from the beginning of the current fiscal year to the end of such period
and (B) consolidated cash flows for the period from the beginning of the
current fiscal year to the end of such period, all in reasonable detail and
signed by the Chief Financial Officer of the Borrower and (ii) a compliance
certificate substantially in the form of Exhibit A attached hereto (the
“Compliance Certificate”) signed by the Chief Executive Officer, or the
Chief Financial Officer, or such other officer of the Borrower as may be
acceptable in the sole discretion of the Agent, certifying that the
representations and warranties of the Borrower and its Subsidiaries contained
herein and in each of the other Loan Documents (as supplemented and updated as
provided in subsection 4.3(a) hereof) are true, complete and correct in all
material respects as of such date, that no event or condition which constitutes
a Default or Event of Default exists, and demonstrating the calculations used
to determine compliance with the financial covenants listed in such Compliance
Certificate;


 


21

















 


(c)           As soon as available, but in any event within 45 days
after the end of each quarterly accounting period in each fiscal year of the
Borrower, (i) a quarterly summary accounts receivable aging report, in such
form as Agent may from time to time reasonably require and (ii) reports
detailing such other information as Agent may from time to time reasonably
require.  All of the reports listed in
the foregoing clauses (i) and (ii) shall be in reasonable detail and current
through at least the close of business for the immediately preceding quarter
and certified by the Chief Executive Officer, or the Chief Financial Officer or
such other officer of the Borrower as may be acceptable in the sole discretion
of the Agent;


 


(d)           On or before January 30 of each fiscal year (commencing
January 30, 2004), an annual budget prepared on a quarterly basis for the
Borrower and its Subsidiaries for the then current fiscal year, (displaying
anticipated balance sheets and statements of income and surplus and cash
flows); and promptly upon preparation thereof, any amendments or revisions
thereto or any other significant budgets which the Borrower prepares;


 


(e)           Promptly upon their becoming available, copies of all
10-Ks and 10-Qs and other periodic or special reports filed by the Borrower or
any Subsidiary with the SEC, or any such periodic or special reports filed with
any other federal, state or local governmental agency or authority, and copies
of any material notices and other material communications from the SEC or from
any other federal, state or local governmental agency or authority which
specifically relate to the Borrower or any Subsidiary, except in each case for
those reports, notices and other communications required by such governmental
agencies to be kept confidential;


 


(f)            Forthwith upon any officer of the Borrower obtaining
knowledge of any condition or event which constitutes a Default or Event of
Default, a certificate signed by such officer specifying in reasonable detail
the nature and period of existence thereof and what action the Borrower has
taken or proposes to take with respect thereto;


 


(g)           Promptly upon receipt thereof, copies of all audit reports
and management letters, if any, submitted to the Borrower by independent public
accountants in connection with each interim or special audit of the books of
the Borrower made by such accountants and, upon request by the Agent, copies of
all financial statements, reports, notices and proxy statements, if any, sent
by the Borrower to its shareholders;


 


(h)           Immediately, after the Borrower obtains knowledge thereof,
notice of:  (i)  the institution or commencement of any
action, suit, proceeding or investigation by or against or affecting the
Borrower or any of its Subsidiaries or any of its or their assets which, if
determined adversely to the Borrower, is reasonably likely to have a Material
Adverse Effect; (ii)  any litigation or
proceeding instituted by or against the Borrower, or any judgment, award,
decree, order or determination relating to any litigation or proceeding
involving the Borrower which is reasonably likely to have a Material Adverse
Effect; (iii) the imposition or creation of any lien against any asset of the
Borrower except those permitted by this Agreement; (iv) any reportable event
under Section 4043 of ERISA for which the notice requirement is not waived by
the regulations thereunder, together with a statement of the Borrower’s chief
executive officer, chief financial officer and/or controller as to the details
thereof and a copy of its notice thereof to the PBGC; and (v) any known release
or threat of release of Hazardous Materials on, onto or under


 


22

















 


any site owned or operated
by the Borrower or any Subsidiary in material violation of applicable law or
the incurrence of any expense or loss in connection therewith or upon the
Borrower’s obtaining knowledge of any investigation, action or the incurrence
of any expense or loss by any governmental authority in connection with the
containment or removal of any Hazardous Materials for which expense or loss the
Borrower or any Subsidiary may be liable or potentially responsible;


 


(i)            Promptly notify Agent of any material adverse change in
the Borrower’s financial condition or of any condition or event which
constitutes a Default or an Event of Default under this Agreement or any other
Loan Document or any other event or condition which has had or is reasonably
likely to have a Material Adverse Effect;


 


(j)            The Borrower will permit the Agent to inspect and audit
the books and records and any of the properties or assets of the Borrower and
its Subsidiaries during normal business hours and, prior to the occurrence of
an Event of Default, upon reasonable notice to the Borrower and any such
Subsidiary, each such inspection to be at the Borrower’s expense, provided,
that the Borrower shall not be responsible for the expenses of such inspections
and audits more than two times per fiscal year prior to the occurrence of a
Default or Event of Default; and


 


(k)           Promptly upon request therefor, all such other information
regarding the business, affairs and condition of the Borrower as the Agent may
from time to time reasonably request.


 


5.2.          Legal Existence;
Licenses; Compliance with Laws.  The
Borrower will, and will cause each Subsidiary to: maintain its corporate or
other organizational existence and business, except as otherwise permitted
pursuant to Section 6.7 hereof; maintain all properties which are reasonably
necessary for the conduct of such business, now or hereafter owned, in good
repair, working order and condition; take all actions necessary to maintain and
keep in full force and effect its rights and franchises, including the
Licenses, unless the failure to do so is not reasonably likely to have a
Material Adverse Effect; maintain at all times proper books of record and
account in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and set aside on its books from its
earnings for each fiscal year all such proper reserves as shall be required in
accordance with GAAP in connection with its business; and comply with all
applicable statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of the conduct
of its business and the ownership of its properties in states in which the
Borrower desires to continue business operations, except where the failure to
comply is not reasonably likely to have a Material Adverse Effect; provided
that neither the Borrower nor any Subsidiary shall be required by reason of
this subsection to comply therewith at any time while the Borrower or such
Subsidiary shall be contesting its obligations to do so in good faith by
appropriate proceedings promptly initiated and diligently conducted, and if it
shall have set aside on its books such reserves, if any, with respect thereto
as are required by GAAP and deemed adequate by the Borrower and its independent
public accountants.


 


23

















 


5.3.          Insurance.


 


(a)           Business Interruption Insurance.  Each of the Borrower and its Subsidiaries
shall be covered by or maintain with financially sound and reputable insurers
insurance related to interruption of business, either for loss of revenues or
for extra expense, in the manner customary for businesses of similar size
engaged in similar activities.


 


(b)           Property Insurance.  Each of the Borrower and its Subsidiaries shall keep its assets
which are of an insurable character insured by financially sound and reputable
insurers against theft and fraud and against loss or damage by fire, explosion
and hazards insured against by extended coverage to the extent, in amounts and
with deductibles which are customary for businesses of similar size engaged in
similar activities.


 


(c)           Liability Insurance.  Each of the Borrower and its Subsidiaries shall be covered by or
maintain with financially sound and reputable insurers insurance against
liability for hazards, risks and liability to persons and property to the
extent, in amounts and with deductibles which are customary for businesses of
similar size engaged in similar activities.


 


(d)           Key Person Life Insurance.  The Borrower shall maintain at all times
“Key Person” life insurance in the amount of at least $1,000,000 each on the
lives of Chane Graziano and David Green.


 


(e)           Requirements; Proceeds.  Each insurance policy maintained pursuant to this subsection 5.3
shall provide that the Agent shall be notified of any proposed cancellation of
such policy at least thirty (30) days in advance of such proposed
cancellation.  Upon the request of the
Agent, copies of all such policies shall be delivered to the Agent.  All insured losses under any policy of
insurance will be adjusted by the insurer with, and paid to, the Borrower.


 


5.4.          Payment of Taxes.  The Borrower will, and will cause each
Subsidiary to, pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed upon it or
its income or upon any of its properties or assets, or upon any part thereof,
as well as all lawful claims of any kind (including claims for labor, materials
and supplies) which, if unpaid, might by law become a lien or a charge upon its
property; provided that neither the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and if the
Borrower or such Subsidiary, as the case may be, shall have set aside on its
books such reserves, if any, with respect thereto as are required by GAAP and
deemed appropriate by the Borrower and its independent public accountants.


 


5.5.          Payment of Other
Indebtedness, etc.  Except as to
matters being contested in good faith and by appropriate proceedings, and
subject to the provisions of subsection 6.5 (Restricted Payments) hereof, the
Borrower will, and will cause each Subsidiary to, pay promptly when due, or in
conformance with customary trade terms, all other Indebtedness and obligations
incident to the conduct of its business where any failure to pay is reasonably
likely to result in a Material Adverse Effect.


 


24

















 


5.6.          Further Assurances.  From time to time hereafter, the Borrower
will execute and deliver, or will cause to be executed and delivered, such additional
instruments, certificates or documents, and will take all such actions, as the
Agent may reasonably request, for the purposes of implementing or effectuating
the provisions of this Agreement, the Loan Documents or the Notes, provided
that, the Borrower shall not be required to effect a public registration of all
or any part of the Pledged Collateral (as defined in the Pledge Agreement)
pursuant to the Securities Act of 1933, as amended, or other similar foreign or
state securities law.  Subject to the
proviso in the preceding sentence, upon the exercise by the Agent of any power,
right, privilege or remedy pursuant to this Agreement or the Loan Documents
which requires any consent, approval, registration, qualification or
authorization of any governmental authority or instrumentality, the Borrower
will execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that
the Agent may be required to obtain for such governmental consent, approval,
registration, qualification or authorization.


 


5.7.          Depository Accounts.  The Borrower will maintain its primary
depository account with the Agent.


 


5.8.          Communication with
Accountants.  The Borrower
authorizes the Agent to communicate directly with the Borrower’s independent
certified public accountants and, on or before the Closing Date, will instruct
those accountants to disclose to and discuss with the Agent any and all
prepared financial statements and all other supporting financial documents and
schedules delivered to the Borrower by such accountants.


 


5.9.          Environmental
Indemnification; Compliance.


 


(a)           The Borrower shall at all times, both before and after
repayment of the Loans, at its sole cost and expense indemnify, exonerate and
save harmless the Agent and Lenders and all those claiming by, through or under
the Agent and Lenders (collectively, the “Indemnified Parties”) against
and from all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind whatsoever, including, without
limitation, reasonable attorneys’ fees and experts’ fees and disbursements,
which may at any time (including, without limitation, before or after discharge
or foreclosure of the Agent’s security interests, mortgages or leasehold
mortgages or deeds of trust or any other instrument now or hereafter
constituting a Loan Document) be imposed upon, incurred by or asserted or
awarded against the Indemnified Parties and arising from or out of:  (a) 
any Hazardous Materials liability or other liability for damage to
person or property arising out of any Hazardous Materials released on, upon,
under, into or about any property at any time owned, leased or operated by the
Borrower or any of its Subsidiaries (including without limitation with respect
to any condition or circumstance which existed on any such property prior to or
as of the time the Borrower or any of its Subsidiaries first acquired, leased or
occupied the same) or any violation of any Environmental Laws by the Borrower
or any of its Subsidiaries, or any contractor, sub-contractor, tenant, occupant
or invitee thereof; or (b)  any act,
omission, negligence or conduct of the Borrower or any Subsidiary of the
Borrower or any contractor, sub-contractor, tenant, occupant or invitee thereof
resulting in any Hazardous Material liability. 
Notwithstanding any limitation which otherwise might be imposed by any
applicable statute of limitations, any cause of action which the Indemnified
Parties may have


 


25

















 


against the Borrower under
this subsection 5.9, may be brought against the Borrower and/or any Subsidiary
at any time within two (2) years following assertion of the claim against the
Indemnified Parties for which indemnification or exoneration is sought (it
being understood that the foregoing shall not require the Indemnified Parties
to bring any claim or action within such two (2) year period if a longer
statute applies).


 


(b)           The Borrower shall take all appropriate response actions,
including any removal and remedial action, in the event of a release, emission,
discharge or disposal of any Hazardous Materials in violation of applicable law
on, upon, under, into or about any property at any time, owned, leased or
operated by the Borrower so as to (a) remain in compliance with subsection 3.18
and (b) keep all property at any time owned, leased or operated by the Borrower
free from and uncontaminated by Hazardous Materials and in compliance with
applicable Environmental Laws, the failure to comply with which is reasonably
likely to have a Material Adverse Effect.


 


5.10.        Mandatory Repayment of
Outstanding Revolving Credit Loans in Excess of Working Capital; Prepayment
From Proceeds of Asset Sales.


 


(a)           If as of the last day of any fiscal quarter the aggregate
outstanding principal amount of the Revolving Credit Loans exceeds the
Borrower’s Working Capital, the Borrower will within five (5) Banking Days
repay the Revolving Credit Notes, without penalty or premium (other than the
LIBOR Premiums, if applicable, provided that the Lenders agree that any such
repayments shall be applied to repayment in full of Base Rate Loans prior to
application to any LIBOR Portions), in an amount necessary to cause the
outstanding principal amount of the Revolving Credit Loans not to exceed the
Borrower’s Working Capital as of the last day of such fiscal quarter.  To the extent any such payment is made
within five (5) Banking Days, any Default as a result of a breach of subsection
7.3 hereof shall be deemed to have been cured.


 


(b)           Without limiting the provisions of subsection 6.8 below,
the Borrower will prepay all of the Revolving Credit Loans (with proceeds to be
applied as set forth below) in an amount equal to one hundred percent (100%) of
all proceeds of asset sales (other than sales of Inventory) in excess of
$250,000 per fiscal year, immediately upon receipt by the Borrower of such
proceeds.  Amounts paid to the Lenders
pursuant to the preceding sentence will not reduce the Maximum Line Commitment
and may be reborrowed by the Borrower pursuant to the terms hereof.


 


(c)           Any prepayments of the Loans shall be applied first to the
portion of the Loans not then subject to any LIBOR Option, then the balance of
any such prepayment shall be applied to the portion of the Loans then subject
to any LIBOR Option, in the chronological order of the respective maturities
thereof.  After the occurrence and
during the continuance of an Event of Default, all payments or prepayments of
the Loans may be applied to the Borrower’s Obligations under this Agreement and
the other Loan Documents in such amounts and manner as may be specified in the
Loan Documents or otherwise determined by the Agent in its sole
discretion.  All payments of principal
hereunder shall be made to the Agent for the account of the Lenders in
accordance with the Lender’s respective Commitment.


 


26



















Section
6.                                            Negative Covenants.


 


So long as any of the Loans
shall remain available to the Borrower, and until the principal of and interest
on the Notes and all fees due hereunder and all of the Borrower’s obligations
to the Lenders hereunder shall have been paid in full, the Borrower agrees
that:


 


6.1.                              Indebtedness.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or become or remain liable in respect
of any Indebtedness, except:


 


(a)                                  Indebtedness to the Lenders hereunder;


 


(b)                                 Liabilities of the Borrower and/or its
Subsidiaries (other than for borrowed money) incurred in the ordinary course of
its business and in accordance with customary trade practices;


 


(c)                                  Existing Indebtedness, together with all
accrued and unpaid interest thereon, of the Borrower and/or any Subsidiary
referred to in Schedule 3.8 attached hereto, and refinancings thereof in
an amount not more than the greater of (i) the respective unpaid principal
amounts thereof or (ii) the respective principal amounts available to be drawn
thereunder on the date hereof, in each case as specified in such schedule,
together with all accrued and unpaid interest thereon;


 


(d)                                 Indebtedness of the Borrower and/or any
Subsidiary secured as permitted by, and subject to the proviso to, subparagraph
(c) of subsection 6.2;


 


(e)                                  Unsecured Indebtedness incurred or assumed in
connection with (i) any Permitted Acquisition consummated pursuant to
subsection 6.17.A hereof in an amount not to exceed seventy-five percent (75%)
of the purchase price of such Permitted Acquisition (excluding as Indebtedness
incurred or assumed for the purpose of this computation, any promissory notes
issued in connection with and included in the payment of the purchase price of
any such Permitted Acquisition) and (ii) any Permitted Acquisition consummated
pursuant to subsection 6.17. B hereof;


 


(f)                                    Indebtedness in respect of promissory notes
issued in connection with any Permitted Acquisition and secured as permitted by
subparagraph (l) of subsection 6.2;


 


(g)                                 Other secured Indebtedness incurred or
assumed in connection with any Permitted Acquisition consummated pursuant to
(i) subsection 6.17. A hereof in an aggregate principal amount at any time
outstanding not to exceed $500,000 and (ii) subsection 6.17 B hereof;


 


(h)                                 Other unsecured Indebtedness not to exceed
$100,000;


 


(i)                                     Indebtedness in respect of (i) taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment thereof shall not at the time be required
to be made or is being contested in accordance with the provisions of
subsection 5.4 hereof, (ii) judgments or awards which have been in force for
less than the applicable appeal period so long as execution is not levied
thereunder or in respect of which the


 


27

















 


Borrower or any Subsidiary
shall in good faith be prosecuting an appeal or proceedings for review in a
manner reasonably satisfactory to the Agent and in respect of which a stay of
execution shall have been obtained pending such appeal or review and for which
adequate reserves have been established in accordance with, and to the extent
required by, GAAP, and (iii) endorsements made in connection with the deposit
of items for credit or collection in the ordinary course of business; and


 


(j)                                     Intercompany Indebtedness.


 


6.2.                              Liens, etc.  The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, create, incur,
assume or suffer to exist, any mortgage, lien, charge or encumbrance on, or
security interest in, or pledge of, or conditional sale or other title
retention agreement (including any Capital Lease) with respect to, any real or
personal property (tangible or intangible, now existing or hereafter
acquired)(each being a “Lien”), including but not limited to the
Accounts and Inventory, except the following each being a “Permitted Lien”:


 


(a)                                  Liens for taxes not yet delinquent or being
contested in good faith as provided in subsection 5.4; mechanics’, workmen’s,
materialmen’s or other like liens arising in the ordinary course of business in
respect of obligations which are not yet due or which are being contested in
good faith (as to which adequate reserves have been established on the
Borrower’s books to the extent required by GAAP) and which were not incurred in
connection with the purchase of property, borrowing of money or the obtaining
of credit and which do not detract from the value of the properties or assets
of the Borrower and its Subsidiaries or affect the use thereof in the operation
of their business;


 


(b)                                 The existing Liens referred to in Schedule
3.8, securing Indebtedness permitted under Section 6.1(c) hereof and any
refinancings thereof, provided that existing Liens set forth on Schedules
4.1(e) shall be terminated pursuant to subsection 4.3(e) hereof;


 


(c)                                  Purchase money mortgages, liens and other
security interests, including Capital Leases, created in respect of property
acquired by the Borrower and/or any of its Subsidiaries after the date hereof or
existing in respect of property so acquired prior to the date hereof, provided
that (i) each such lien shall at all times be confined solely to the item of
property so acquired, and (ii) the aggregate principal amount of indebtedness
secured by all such liens incurred after the Closing Date shall at no time
exceed $1,000,000;


 


(d)                                 Easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the businesses of the
Borrower;


 


(e)                                  Liens arising solely by virtue of any
contractual, statutory or common law provision relating to banker’s liens,
rights of set-off or similar rights and remedies as to deposit accounts or
other funds maintained with any financial institution;


 


(f)                                    Liens in connection with operating leases and
granted to secure obligations with respect to “off balance sheet” or
“synthetic” leases (i.e., leases where for tax


 


28

















 


purposes the lessee is
treated as the owner of the leased property but for GAAP purposes the lease is
treated as an operating lease and the lessor is treated as the owner of the
leased property);


 


(g)                                 Liens consisting of security deposits
securing the Borrower’s and/or any Subsidiary’s obligations under real property
leases;


 


(h)                                 Any Lien securing Indebtedness to the
Lenders;


 


(i)                                     Deposits or pledges made in connection with,
or to secure payment of, worker’s compensation, unemployment insurance, old age
pensions or social security;


 


(j)                                     Liens arising by operation of law or under
rental agreements made in the ordinary course of business to secure landlords,
lessors or renters under leases and confined to the premises or property
rented;


 


(k)                                  Liens acquired in connection with the
consummation of Permitted Acquisitions and subject to subparagraph (g) of
subsection 6.1; and


 


(l)                                     Liens in favor of any bank or other financial
institution solely against the Borrower’s and/or any Subsidiary’s deposit
account(s) with such bank or other financial institution securing such bank’s
or other financial institution’s obligation to guarantee the Borrower’s and/or
its Subsidiaries’ promissory notes issued in connection with a Permitted
Acquisition.


 


6.3.                              Loans, Guarantees and Investments.  The
Borrower will not, and will not permit any Subsidiary to, make or permit to
remain outstanding any loan or advance to, or guarantee or endorse (except as a
result of endorsing negotiable instruments for deposit or collection in the
ordinary course of business) or otherwise assume or agree to purchase or
otherwise remain liable with respect to any obligation of, or enter into any
indemnification agreement for the benefit of, or make or own any investment in,
or acquire (except in the ordinary course of business) the properties or assets
of, any Person, except:


 


(a)                                  Extensions of credit by the Borrower and/or
any of its Subsidiaries in the ordinary course of business in accordance with
its and their customary trade practices;


 


(b)                                 The outstanding investments, loans and
advances, if any, and the presently existing guarantees, if any, referred to in
Schedule 3.8 attached hereto;


 


(c)                                  Cash Equivalents;


 


(d)                                 Capital Expenditures, to the extent permitted
by subsection 6.6(a);


 


(e)                                  Investments and indemnification agreements in
connection with Permitted Acquisitions;


 


(f)                                    Other Investments not to exceed $200,000 per
a fiscal year;


 


29

















 


(g)                                 Investments by the Borrower in its
Subsidiaries in the form of capital contributions and/or intercompany loans;


 


(h)                                 Investments by Subsidiaries in Borrower
and/or other Subsidiaries in the form of dividends, capital contributions
and/or intercompany loans;


 


(i)                                     Investments consisting of normal travel and
similar advances to employees of the Borrower and/or Subsidiaries; and


 


(j)                                     Indemnification agreements in connection with
contractual arrangements entered into in the ordinary course of business.


 


6.4.                              Reserved.


 


6.5.                              Restricted
Payments.  The
Borrower shall not directly or indirectly declare, order, pay or make any
Restricted Payment or set aside any sum or property therefor.


 


As used herein, the term “Restricted
Payment” means (i) any cash dividend or other cash distribution or payment,
direct or indirect, on or on account of any shares of any class of stock of the
Borrower now or hereafter outstanding or (ii) any redemption, purchase or other
acquisition, direct or indirect, of any shares of any class of stock of the
Borrower now or hereafter outstanding or of any warrants, options or rights to
purchase any such stock (including, without limitation, the repurchase of any
such stock, warrant, option or right or any refund of the purchase price
thereof in connection with the exercise by the holder thereof of any right of
rescission or similar remedies with respect thereto), provided, however, that
Borrower shall be permitted to repurchase or otherwise redeem up to an
aggregate of $5,000,000 of shares of its capital stock pursuant to any stock
buyback program now or hereafter instituted by the Borrower or any greater
amount as shall be consented to by the Agent, provided, that both before
and after giving effect to any such Restricted Payment, no Default or Event of
Default exists under this Agreement (including under subsection 7.2 hereof).


 


6.6.                              Capital
Expenditures.  The
Borrower will not, and will not permit any Subsidiary to, make any Capital
Expenditure during any fiscal year of the Borrower if, after giving effect
thereto, the aggregate amount of all Capital Expenditures made by the Borrower
and its Subsidiaries during such period would exceed $4,000,000.


 


6.7.                              Subsidiaries, Mergers and Consolidations; Changes in
Business.  The Borrower will not, and will not permit
any Subsidiary to, create any additional Subsidiaries or enter into any merger
or consolidation (or any agreement relating to any merger or consolidation)
without the prior written consent of the Required Lenders, other than in each
case in connection with Permitted Acquisitions and except that the Subsidiary
may merge into another Subsidiary or into the Borrower.  The Borrower will not, without the prior
written consent of the Required Lenders, engage in any business other than the
business engaged in as of the date hereof and any other business related
thereto which may be acquired in connection with Permitted Acquisitions, and
entering into contracts in connection with the foregoing.


 


6.8.                              Sale of Assets.  The Borrower will not, and
will not permit any Subsidiary to, sell, lease or otherwise dispose of any of
its properties or assets, except for (a) sales, leases or other


 


30

















 


dispositions in the ordinary course of business, (b)
sales, leases or other dispositions of obsolete or unusable property or assets
(it being understood that customer lists, contracts, inventory and accounts
receivable are excluded from this exception), (c) sales, leases or other
dispositions of duplicative property or other assets acquired in connection
with Permitted Acquisitions and (d) sales, leases and other dispositions of
other property and assets in an aggregate amount not to exceed $2,000,000 per
fiscal year.


 


6.9.                              Reserved.


 


6.10.                        Compliance with ERISA.  The Borrower will make, and
will cause all Affiliated Companies to make, all payments or contributions to
employee benefit plans required under the terms thereof in all material
respects and in accordance in all material respects with applicable minimum
funding requirements of ERISA and the IRC and applicable collective bargaining
agreements.  The Borrower will cause all
employee benefit plans sponsored by any Affiliated Company to be maintained in
material compliance with ERISA and the IRC. 
The Borrower will not engage, and will not permit or suffer any
Affiliated Company or any Person entitled to indemnification or reimbursement
from the Borrower or any Affiliated Company to engage, in any prohibited
transaction under ERISA for which an exemption is not available.  No Affiliated Company will terminate, or
permit the PBGC to terminate, any employee benefit plan or withdraw from any
multi-employer plan, in any manner which could result in material liability of
any Affiliated Company.


 


6.11.                        Transactions
with Affiliates.  The
Borrower will not, and will not permit any Subsidiary to, directly or
indirectly, enter into any lease or other transaction after the Closing Date
with any shareholder of the Borrower, on terms that are less favorable to the
Borrower or such Subsidiary than those which might be obtained at the time from
Persons who are not such a shareholder except for those transactions disclosed
in Borrower’s public filings with the SEC.


 


6.12.                        Reserved.


 


6.13.                        Environmental
Liabilities.  The
Borrower will not, and will not permit any Subsidiary to, violate any
Environmental Laws or other requirement of law, rule or regulation regarding
Hazardous Materials, the violation of which is reasonably likely to have a
Material Adverse Effect; and, without limiting the foregoing, the Borrower will
not and will not permit any Subsidiary or any other Person to (except in
accordance with applicable law), dispose of any Hazardous Material into, upon,
under or onto, or (except in accordance with applicable law) from, any real property
owned, leased or operated by the Borrower or any Subsidiary or in which the
Borrower or any Subsidiary holds, directly or indirectly, any legal or
beneficial interest or estate except as is not reasonably likely to cause a
Material Adverse Effect, nor allow any lien imposed pursuant to any law,
regulation or order relating to Hazardous Materials or the disposal thereof to
be imposed or to remain on such real property, except as is not reasonably
likely to have a Material Adverse Effect or for liens being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established and are being maintained on the books of the Borrower and its
Subsidiaries (to the extent required by GAAP).


 


6.14.                        Fiscal Year.  The Borrower will not change
its fiscal year end from December 31 without prior written notice to the Agent.


 


31

















 


6.15.                        Reserved.


 


6.16.                        Reserved.


 


6.17.                        Permitted
Acquisitions; Conditions
Precedent.  The Borrower will not, and will not permit
any Subsidiary to, acquire or enter into any agreement (other than purchases of
equipment or inventory from any Person in the ordinary course of business)
requiring the Borrower or such Subsidiary to acquire, all or substantially all
of the assets or stock or other equity interests of any Person unless such
acquisition (whether by acquisition, merger or otherwise) is to be consummated
by (i) the Borrower, (ii) a US Subsidiary, provided, that such US
Subsidiary is or becomes a party to a Subsidiary Guaranty or (iii) a Foreign
Subsidiary, provided, that to the extent such Foreign Subsidiary
is directly owned by the Borrower, its stock or other equity interests have
been or will be pledged by the Borrower pursuant to the Pledge Agreement and unless
each of the following conditions precedent has been satisfied:


 


6.17.  A  Permitted Acquisitions Not Requiring
Consent of Required Lenders.  The
Borrower and/or its Subsidiaries may enter into any agreement to acquire, and
shall be permitted to acquire, all or substantially all of the assets or stock
or other equity interests of any Person (whether by acquisition, merger or
otherwise) without the prior written consent of the Agent or Lenders, provided
that the purchase price paid by the Borrower and/or its Subsidiaries in
connection with Permitted Acquisitions consummated under this Section 6.17(A)
is payable (i) solely in shares of capital stock of the Borrower in an amount
not to exceed $10,000,000 in connection with any single Permitted Acquisition
(such capital stock valuation shall be the closing price of the Borrower’s
common stock on the NASDAQ National Market on the date such transaction is
approved by the Borrower’s board of directors), (ii) solely in cash, (iii)
solely by issuance of one or more promissory notes or (iv) some combination of
the foregoing, provided, however, that except in the case of
clause (i) above, the amount of cash consideration plus promissory notes
plus shares of capital stock of the Borrower does not exceed $6,000,000
in connection with any single Permitted Acquisition.


 


The Borrower will notify the Agent of all
proposed Permitted Acquisitions under this Section 6.17A no less than thirty
(30) days prior to the anticipated closing date.  The Borrower will notify the Agent as soon as practicable
following any material changes in the business terms or projected impact of any
Permitted Acquisition which has previously been disclosed to the Agent.


 


6.17.  B  Permitted Acquisitions Requiring Consent of
Required Lenders.  Except in
connection with Permitted Acquisitions consummated in accordance with Section
6.17A, the Borrower and/or its Subsidiaries will only enter into agreements to
acquire, and shall only be permitted to acquire, all or substantially all of
the assets or stock or other equity interests of any Person (whether by
acquisition, merger or otherwise) with the prior written consent of the
Required Lenders upon satisfaction of each of the following conditions:


 


(a)                                  The Lenders shall have received notice of
such acquisition and the basic terms thereof, as soon as reasonably
practicable, but in any event not less than thirty (30) days prior to the
anticipated consummation of the acquisition;


 


32

















 


(b)                                 The assets to be acquired are employed or, if
such acquisition is structured as purchase of stock or other equity interests,
the Person so acquired conducts its business in an industry described in
subsection 6.7 and the Required Lenders are satisfied as to the foregoing;


 


(c)                                  At the time of consummation of such
acquisition, no Default and no Event of Default exists, or would be caused by
such consummation and the Required Lenders are satisfied as to the foregoing;


 


(d)                                 At least five (5) Banking Days prior to the
consummation of any such acquisition, the Borrower shall have delivered to the
Agent a certificate, signed by the Chief Executive Officer or Chief Financial
Officer of the Borrower, certifying that the Borrower has conducted or caused
to be conducted all due diligence deemed reasonably necessary for the proposed
acquisition, and that the results of such due diligence are deemed satisfactory
by the officer of the Borrower executing such certificate;


 


(e)                                  Reserved;


 


(f)                                    No less than thirty (30) days prior to the
anticipated consummation of the acquisition, the Borrower shall deliver to the
Lenders, among such other financial information and reports as may be required
by the Lenders, revised financial projections, income statements and balance
sheets setting forth the effect of the acquisition and demonstrating to the
satisfaction of the Required Lenders (in their sole discretion) that the
Borrower will, on a going forward basis, be in compliance with all covenants
(including the financial covenants contained in Section 7) set forth in this
Agreement, and further demonstrating that the proposed acquisition will, prior
to the end of the second fiscal quarter of the Borrower immediately succeeding
the fiscal quarter during which any such acquisition is consummated,  increase the Borrower’s Adjusted EBITDA,
after giving effect to all additional interest and Indebtedness related to such
acquisition (including any Indebtedness incurred under this Agreement), as well
as the relevant income statement effects deemed applicable by the Lenders and
all adjustments to historical performance approved by the Required Lenders, all
in the Required Lenders’ sole discretion;


 


(g)                                 Reserved;


 


(h)                                 Reserved; and


 


(i)                                     The Agent (at the direction of the Required
Lenders) shall not have issued notice to the Borrower that, in the Required
Lenders’ reasonable discretion, the Required Lenders have determined that a
proposed acquisition is not a Permitted Acquisition as a result of the
Borrower’s failure to satisfy any of the conditions set forth in paragraphs (a)
through (h) of this Section 6.17.B, any such notice to be delivered to the
Borrower within 15 days of receipt of notice from the Borrower required by
paragraph (a) of this Section 6.17.B and such notice to set forth, in
reasonable detail, the basic for such determination by the Required Lenders.


 


Each acquisition consummated in accordance
with the provisions of  subsections
6.17.A and B shall be referred to as a “Permitted Acquisition”.


 


33

















 


Section
7.                                            Financial Covenants.


 


So long as any of the Loans
shall remain available to the Borrower, and until the principal of and interest
on the Notes and all fees and other amounts due hereunder and all of the
Borrower’s other obligations to the Agent and the Lenders hereunder shall have
been indefeasibly paid in full in cash, the Borrower agrees that:


 


7.1.                              Maximum Leverage Ratio.  As of the last day of any
fiscal quarter, the Borrower will not permit the ratio of (a) Total Funded Debt
of the Borrower and its Subsidiaries as of the last day of such fiscal quarter,
to (b) the Borrower’s and its Subsidiaries’ consolidated Adjusted EBITDA for
the period of four consecutive fiscal quarters ending on the last day of such
fiscal quarter to be more than 2.0:1.0.


 


7.2.                              Minimum  Fixed Charge Coverage Ratio.  As
of the last day of any fiscal quarter, the Borrower will not permit the ratio
of (a) consolidated Adjusted  EBITDA
of the Borrower and its Subsidiaries  for
the four-quarter period ending on the last day of such fiscal quarter, minus,
aggregate cash capital expenditures for the four-quarter  period ending on the last day of such  fiscal quarter, minus cash taxes
paid and minus amounts paid in connection with any stock buy back
program for the four-quarter period ending on the last day such fiscal quarter,
to (b) the current portion of Funded Debt as of the last day of such fiscal
quarter, plus (without duplication) 
Interest Expense during such fiscal quarter to be less than 1.5:1.0.


 


7.3.                              Minimum Working Capital.  As of the last day of any
fiscal quarter, the Borrower will not permit its Working Capital to be less
than the aggregate outstanding principal balance of the Revolving Credit
Loans.  As used herein, the term
“Working Capital” means an amount equal to the sum of (i) eighty percent (80%)
of the Borrower’s and its Subsidiaries’ Eligible Accounts (as defined below)
plus (ii) the lesser of (a) an amount equal to forty percent (40%) of
the Borrower’s and its Subsidiaries’ Eligible Inventory (as defined below) and
(b) $8,500,000.  For purposes of
computing Working Capital hereunder after application of the forty percent
(40%) formula as set forth in clause (ii) above, the Borrower shall not include
more than $4,250,000 of Eligible Inventory maintained at any one warehouse, distribution
center or other real property leased by the Borrower or any Subsidiary in the
calculation thereof.  As used herein:


 


“Eligible Accounts”
means those Accounts created by Borrower and/or any of its directly or
indirectly wholly-owned Subsidiaries in the ordinary course of Borrower’s or
such Subsidiary’s business, that arise out of Borrower’s or such Subsidiary’s
sale of goods or rendition of services, that are less than ninety (90) days
past the invoice date, and that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower under the Loan
Documents.  In determining the amount to
be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash remitted to Borrower or any Subsidiaries.  All Eligible Accounts not otherwise
denominated in United States dollars shall be converted to United States
dollars for purposes of inclusion in any Compliance Certificate (with the
conversion calculation set forth in such Compliance Certificate) based on the
exchange rate of the applicable currency to United States dollars quoted in the
Wall Street Journal for the last
day of the applicable quarter with respect to which such Compliance Certificate
is delivered.


 


34

















 


“Eligible Inventory”
means Inventory of Borrower and/or its Subsidiaries consisting of first quality
finished goods and raw materials (other than work-in-process) held for sale or
lease or to be furnished under a contract of service in the ordinary course of
Borrower’s or such Subsidiary’s business located at one of Borrowers’ or such
Subsidiary’s business locations set forth on Schedule 3.9 or at such
other location identified in writing by the Borrower to the Agent (or
in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Inventory made by Borrower
in the Loan Documents, and that is not excluded as ineligible by virtue of the
one or more of the criteria set forth below. 
In determining the value of Eligible Inventory, Inventory shall be
valued at the lower of Cost or market on a basis consistent with Borrower’s
accounting practices less the aggregate amount of all reserves for
obsolesce, slow-moving and excess inventory.


 


An item of Inventory shall
not be included in Eligible Inventory if:


 


(a)                                  Borrower or any Subsidiary does not have
good, valid and marketable title thereto (including Inventory acquired on
consignment), or


 


(b)                                 it is not located at one of the locations of
the Borrower or its Subsidiaries set forth on Schedule 3.9 or at such
other location identified in writing by the Borrower to the Agent or in transit
from one such location to another such location, or


 


(c)                                  it is located at a warehouse, distribution
center or other real property leased by a Borrower or any Subsidiary or in a
fulfillment center or contract warehouse, in circumstances under which, by
operation of law or by the terms of the Borrower’s or any Subsidiary’s lease, a
third party has or may have a lien on any Inventory located on the premises,
provided, that notwithstanding the foregoing, Inventory in an amount not to
exceed $4,250,000 (after application of the forty percent (40%) formula set
forth in the definition of Working Capital in subsection 7.3 hereof) located at
any of the foregoing locations, and subject to subparagraphs (a), (b) and (d)
hereof, may be included in Eligible Inventory for purposes of calculating
Working Capital, or


 


(d)                                 it consists of work-in-process or goods
returned or rejected by the Borrower’s or any Subsidiary’s customers if such
goods can not be re-sold by Borrower or such Subsidiary in the ordinary course
of its business.


 


For any Subsidiary whose Eligible Accounts
and Eligible Inventory exceed $1,000,000 in the calculation of minimum Working
Capital pursuant to subsection 7.3 hereof, the Agent shall have received the
following with respect to such Subsidiary:


 


(i)                                     satisfactory lien, tax and judgment searches
confirming the absence of any liens, claims, charges or encumbrances of any
nature on any Accounts of such Subsidiary; and


 


(ii)                                  certified copies of the charter documents and
by-laws of each such Subsidiary, together with certificates of appropriate
governmental authorities as to


 


35

















 


the corporate good standing
of such Subsidiaries (to the extent such documents and certificates are
available in the applicable jurisdiction).


 


Section 8.                                            Defaults; Remedies;
Delivery of Pledged Collateral.


 


8.1.                              Events of
Default; Acceleration.  If
any of the following events (each an “Event of Default”) shall occur:


 


(a)                                  The Borrower shall default in the payment of
principal of or interest on the Notes or any other fee due hereunder when the
same becomes due and payable, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or by declaration,
acceleration or otherwise, and such default shall continue for a period of
three (3) Banking Days (a “Payment Default”); or


 


(b)                                 The Borrower shall default in the performance
of or compliance with any term contained in Section 5 (other than subsection
5.10(a)), Section 6 or subsections 7.1 or 7.2 and, to the extent any default is
susceptible of remedy or cure, the Borrower has failed to remedy or cure any such
default within ten (10) days after the occurrence thereof; or


 


(c)                                  The Borrower shall default in the performance
of or compliance with any term contained in subsection 5.10(a) or subsection
7.3 and the Borrower has failed to remedy or cure any such default within five
(5) Banking Days; or


 


(d)                                 The Borrower shall default in the performance
of or compliance with any term contained herein other than those referred to
above in this Section 8 and such default shall not have been remedied within
thirty (30) days after the occurrence thereof provided, that if such
default cannot be remedied or cured, then such default shall be deemed an Event
of Default as of the date of its occurrence; or


 


(e)                                  The Borrower or any Subsidiary which is a
party to any of the Loan Documents shall default in the performance of or
compliance with any material term contained in the Loan Documents (other than
this Revolving Credit Loan Agreement) or in the performance of or compliance
with any material term contained in any other written agreement with the Agent
and/or the Lenders, executed in connection therewith and such default shall not
have been remedied within thirty (30) days after the occurrence thereof provided,
that if such default cannot be remedied or cured, then such default shall be
deemed an Event of Default as of the date of its occurrence; or


 


(f)                                    Any representation or warranty made by the
Borrower or any Subsidiary herein or in any other Loan Document or shall prove
to have been false or incorrect in any material respect when made; or


 


(g)                                 The Borrower or any Subsidiary shall default
in any payment due on any Indebtedness in respect of borrowed money where the
aggregate principal balance thereof together with interest thereon exceeds
$500,000 or any lesser aggregate principal balance where such failure to pay is
reasonably likely to have a Material Adverse Effect (other than to the
Lenders, as to which subsection 8.1(a) shall apply), any Capital Lease or the
deferred purchase price of property with a principal balance together with
interest thereon, lease balance or


 


36

















 


purchase price (as the case
may be) in excess of $500,000 outstanding as of the date of such default, and
such default shall continue for more than the period of grace, if any,
applicable thereto, or in the performance of or compliance with any term of any
evidence of such Indebtedness or of any mortgage, indenture or other agreement
relating thereto, and any such default shall continue for more than the period
of grace, if any, specified therein and shall not have been waived pursuant
thereto, (except such defaults which are being contested in good faith and, if
applicable, as to which adequate reserves have been established on the
Borrower’s books to the extent required by GAAP); or


 


(h)                                 The Borrower or any Subsidiary shall cease to
be solvent (as represented in the Solvency Certificate) or shall discontinue
its business (except as otherwise permitted hereby) or the Borrower or any
Subsidiary shall make an assignment for the benefit of creditors, or shall fail
generally to pay its debts as such debts become due, or shall apply for or
consent to the appointment of or taking possession by a trustee, receiver or
liquidator (or other similar official) of the Borrower or such Subsidiary or
any substantial part of the property of the Borrower or such Subsidiary, or
shall commence a case or have an order for relief entered against it under the
federal bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or if the
Borrower or any Subsidiary shall take any action to dissolve or liquidate the
Borrower or such Subsidiary (except as otherwise permitted hereby); or


 


(i)                                     An involuntary proceeding shall be commenced
against the Borrower or any Subsidiary under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or a decree shall be entered
appointing a trustee, receiver or liquidator (or other similar official) of the
Borrower or any Subsidiary or any substantial part of the property of the
Borrower or such Subsidiary; or


 


(j)                                     A final judgment which, with other
outstanding final judgments against the Borrower and its Subsidiaries shall be
rendered against the Borrower or any Subsidiary which is reasonably likely to
have a Material Adverse Effect and if, within the earlier of 60 days after
entry thereof, such judgment shall not have been discharged or execution
thereof stayed pending appeal, or if, within 60 days after the expiration of
any such stay, such judgment shall not have been discharged, or if any such
judgment shall not be discharged forthwith upon the commencement of proceedings
to foreclose any lien, attachment or charge which may attach as security
therefor and before any of the property or assets of the Borrower or any
Subsidiary shall have been seized in satisfaction thereof; or


 


(k)                                  If the Borrower is enjoined, restrained, or
in any material way prevented by the order of any court or any administrative
or regulatory agency from conducting all or any material part of its business
and such order is not stayed or revoked within five (5) days; or


 


(l)                                     This Agreement, the Notes, the Pledge
Agreement, any Subsidiary Guaranties or any other Loan Documents shall be
cancelled, terminated, revoked, rescinded or declared invalid or unenforceable
in whole or in any material respect, otherwise than pursuant to its terms by
virtue of the expiration of its term or otherwise than in accordance with the
express prior written agreement, consent or approval of the Required Lenders or
the Lenders, as the case may be, or any action at law, suit in equity or other
legal proceeding to cancel, revoke or rescind


 


37

















 


this Agreement, the Notes,
the Pledge Agreement, any Subsidiary Guaranties or any other Loan Documents
shall be commenced by or on behalf of the Borrower or any other Person bound
thereby or party thereto or by any governmental or regulatory authority or
agency of competent jurisdiction; or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or shall issue a judgment, order, decree or ruling to the
effect that any one or more of the Loan Documents or any one or more of the
material obligations of any Person or Persons under any one or more of the Loan
Documents are illegal, invalid or unenforceable in accordance with the terms
thereof;


 


then, and in any such event, and at any time
thereafter, either or both of the following actions may be taken: the Agent may
by written notice to the Borrower, (i) declare the principal of and accrued
interest in respect of the Notes to be forthwith due and payable, whereupon the
principal of and accrued interest in respect of the Notes shall become
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrower, and/or (ii)
terminate the Maximum Line Commitment, whereupon the Maximum Line Commitment
shall forthwith terminate without any other notice of any kind; provided
that, in the case of an Event of Default arising by reason of the
occurrence of any event described in subsections 8.1(h) or 8.1(i), both such
actions shall be deemed to have been automatically taken by the Agent and all
obligations of the Borrower to the Lenders shall forthwith automatically become
due and payable without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived by the Borrower.  Without limiting any provision of this Agreement or any Loan
Documents, a Default or Event of Default hereunder shall also constitute a Default
or Event of Default under the Loan Documents.


 


8.2.                              Remedies on
Default.


 


(a)                                  In case any one or more Events of Default
shall occur and be continuing, the Agent may proceed to protect and enforce its
rights by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in
the Notes or any Loan Documents or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law.  In case of
a default in the payment of any principal of or interest on the Notes, or in
the payment of any fee due hereunder or under any other Loan Document, the
Borrower will pay to the Lenders such further amount as shall be sufficient to
cover the costs and expenses of collection, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.  No course of dealing and no delay on the
part of the Agent in exercising any right shall operate as a waiver thereof or
otherwise prejudice the rights of the Agent or the Lenders.  No right conferred hereby or by the Notes or
any Loan Documents upon the Agent or the Lenders shall be exclusive of any
other right referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise.


 


(b)                                 Power of Attorney. 
Borrower hereby irrevocably makes, constitutes, and appoints Agent (and
any of Agent’s officers, employees, or agents designated by Agent) as
Borrower’s true and lawful attorney, with power to (i) at any time an Event of
Default has occurred and is continuing endorse Borrower’s name on any
collection item that may come into Agent’s possession and (ii) at any time that
an Event of Default has occurred and is continuing, make, settle, and adjust
all claims under Borrower’s policies of insurance.  The appointment of


 


38

















 


Agent as Borrower’s
attorney, and each and every one of its rights and powers, being coupled with
an interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and Agent’s obligations to extend credit hereunder
are terminated.


 


(c)                                  Right to Inspect.  At
any time an Event of Default has occurred and is continuing, Agent and its
officers, employees, or agents shall have the right, from time to time
hereafter to inspect the Books and to check, test, and appraise the Borrower’s
or any Eligible Availability Subsidiary’s assets in order to verify Borrower’s
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Accounts and Inventory, all at Borrower’s expense.


 


Section 9.                                            Definitions; Certain
Rules of Construction.  Certain
capitalized terms are used in this Agreement and in the other Loan Documents
with the specific meanings defined below in this Section 9.  Except as otherwise explicitly specified to
the contrary or unless the context clearly requires otherwise, (a) the
capitalized term “Section” refers to Section of this Agreement, (b) the
capitalized term “Exhibit” refers to exhibits to this Agreement, (c) the
term “subsection” includes particular Sections included in subsections
thereof, (d) the word “including” shall be construed as “including
without limitation”, (e) accounting terms not otherwise defined herein have
the meanings provided under GAAP, (f) terms defined in the UCC and not
otherwise defined herein have the meaning provided under the UCC, (g)
references to particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect and (h) references to a particular Person
include such Person’s successors and assigns to the extent not prohibited by
this Agreement and the other Loan Documents.


 


Accounts: 
means all of Borrower’s and its Subsidiaries’ now owned or hereafter
acquired right, title and interest with respect to “accounts” (as that term is
defined in the Code), and any and all supporting obligations in respect
thereof.


 


Account
Debtor:  means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.


 


Act: means the Securities Exchange Act of 1934,
as may be amended from time to time.


 


Adjusted
EBITDA: means for any
period, EBITDA for such period after adjusting for (a) non-cash stock
compensation expense, (b) restructuring charges related to Permitted
Acquisitions contemplated at the time of such Permitted Acquisition and
mutually agreed upon by the Borrower and the Agent, (c) acquired in-process
research and development expense, (d) fair value adjustments resulting from
purchase price allocation related to Permitted Acquisitions and (e) other
non-recurring exceptional items of income or expense mutually agreed upon by
the Borrower and the Agent.


 


Affiliate: 
shall mean, as applied to any Person, a spouse or relative of such
Person, any managing member, director or officer of such Person, any
corporation, association, firm or other entity of which such Person is a managing
member, director or officer, and any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person.  For purposes of this
definition, “control” of a Person shall mean the possession,


 


39

















 


directly or indirectly, of power to direct or
cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.


 


Affiliated
Company:  shall have the meaning specified in
subsection 3.16.


 


Agent: 
shall have the meaning specified at the beginning of this Agreement.


 


Agent
- Related Persons:  shall have the meaning specified in
subsection 16.3.


 


Applicable
LIBOR Margin:  shall have the meaning specified in subsection
1.4(c).


 


Applicable
Base Rate Margin:  shall have the meaning specified in
subsection 1.4(c).


 


Applicable
Margin:  shall have the meaning specified in
subsection 1.4.


 


Audited
Financial Statements:  shall have the meaning specified in
subsection 1.4.


 


Banking
Day:  shall have the meaning specified in
subsection 2.2.


 


Base
Rate:  the per annum rate of interest
announced from time to time by the Agent in Boston, Massachusetts as its Base
Rate.


 


Base
Rate Loans:  shall have the meaning specified in subsection
1.2.


 


BBH: 
shall have the meaning specified in Section 16.


 


Books: 
means all of Borrower’s now owned or hereafter acquired books and
records (including all of its records indicating, summarizing, or evidencing
its assets (including the Accounts and Inventory) or liabilities, all of
Borrower’s records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).


 


Borrower: 
shall have the meaning specified at the beginning of this Agreement.


 


Borrowing
Request:  shall have the meaning specified in
subsection 1.2.


 


Capital
Expenditure:  shall mean any payment made directly or
indirectly for the purpose of acquiring or constructing fixed assets, real
property or equipment which in accordance with GAAP would be added as a debit
to the fixed asset account of the Person making such expenditure, including
without limitation, amounts paid or payable under any conditional sale or other
title retention agreement or under any lease or other periodic payment
arrangement which is of such a nature that payment obligations of the lessee or
obligor thereunder would be required by GAAP to be capitalized and shown as
liabilities or otherwise appear in the category of property, plant or equipment
or intangibles on the balance sheet of such lessee or obligor but excluding
amounts expended in connection with Permitted Acquisitions (including
reasonable capitalized transaction costs related to such Permitted
Acquisitions).


 


Capital
Lease:  shall mean any lease of property (real,
personal or mixed) which, in accordance with GAAP, should be capitalized on the
lessee’s balance sheet.


 


40

















 


Cash
Equivalents:  shall mean (a) negotiable certificates of
deposit, time deposits (including sweep accounts), demand deposits and bankers’
acceptances having a maturity of nine months or less and issued by any United
States financial institution having capital and surplus and undivided profits
aggregating at least $100,000,000 and rated Prime-1 by Moody’s Investors
Service, Inc. or A-1 by Standard & Poor’s Ratings Group or issued by the
Agent or any Lender; (b) corporate obligations having a maturity of nine months
or less and rated Prime-1 by Moody’s Investors Service, Inc. or A-1 by Standard
& Poor’s Ratings Group or issued by the Agent or any Lender; (c) any direct
obligation of the United States of America or any agency or instrumentality
thereof, or of any state or municipality thereof, (i) which has a remaining
maturity at the time of purchase of not more than one year or which is subject
to a repurchase agreement with the Agent or any Lender (or any other financial
institution referred to in clause (a) above) exercisable within one year from
the time of purchase and (ii) which, in the case of obligations of any state or
municipality, is rated AA or better by Moody’s Investors Services, Inc. or AA
or better by Standard & Poor’s Ratings Group; and (d) any mutual fund or
other pooled investment vehicle rated AA or better by Moody’s Investors
Service, Inc. or AA or better by Standard & Poor’s Ratings Group which
invests principally in obligations described above.


 


Closing
Date:  shall mean the date on which each of the
conditions precedent to execution set forth in subsection 4.1 shall have been
met to the satisfaction of the Agent, and this Agreement shall have been
executed by the Borrower and the Agent.


 


Code: 
means the Massachusetts Uniform Commercial Code, as in effect from time
to time.


 


Commitment: 
means, with respect to any Lender, such Lender’s obligation to extend
the Line of Credit loans contemplated by Section 1.  The Commitments are set forth in Schedule 1.1.


 


Compliance
Certificate:  shall mean a certificate in substantially
the form of Exhibit A hereto, as such form may from time to time be
revised by Agent and Borrower, together with such other information as Agent
may reasonably require.


 


Consents: 
shall have the meaning specified in subsection 3.14.


 


Cost: 
means the calculated cost of Inventory, as determined from invoices
received by Borrower or any of its Subsidiaries, Borrower’s or such
Subsidiaries’ purchase journals or stock ledgers, based upon Borrower’s
accounting practices, known to Agent, which practices are in effect on the date
on which this Agreement was executed. 
“Cost” does not include any inventory capitalization costs inclusive of
advertising, but may include other charges used in Borrower’s determination of
cost of goods sold and bringing goods to market, all within Agent’s reasonable
discretion and in accordance with GAAP.


 


Default: 
shall mean any event or condition which, with the giving of notice or
the expiration of any applicable grace period, or both, would constitute an
Event of Default.


 


Demand
Notes:  shall have the meaning specified in
subsection 1.14.


 


Dollars or $:  means United States dollars.


 


41

















 


EBITDA: 
means for any period, Net Income for such period, after restoring
thereto amounts deducted for (a) federal and state taxes in respect of
income and profits, (b) Interest Expense and (c) depreciation and
amortization, as determined in accordance with GAAP.


 


Eligible
Accounts:  shall have the meaning specified in
subsection 7.3.  


 


Eligible
Inventory:  shall have the meaning specified in
subsection 7.3.


 


Environmental
Laws:  collectively, shall mean the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund Amendments
and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act and any other federal, state or local statute, regulation,
ordinance, order or decree relating to the environment, as now or hereafter in
effect.


 


ERISA: 
shall have the meaning specified in subsection 3.16.


 


Event
of Default:  shall have the meaning specified in Section
8.


 


First
Demand Note:  shall have the meaning specified in
subsection 1.14.


 


Funded
Debt:  means all Indebtedness to the Lenders, all
Indebtedness for borrowed money incurred in connection with Permitted
Acquisitions which is not subordinated to the Indebtedness owing to the Lenders
hereunder and all Indebtedness in respect of Capital Leases.


 


GAAP: 
shall mean generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.


 


General
Intangible: means all
of Borrowers’ and its Subsidiaries’ now owned or hereafter acquired right,
title, and interest with respect to “general intangibles” (as such term is
defined from time to time in the Code), and any and all supporting obligations
in respect thereof.


 


Hazardous
Material:  shall mean (a) any asbestos or insulation or
other material composed of or containing asbestos and (b) any petroleum product
and any hazardous, toxic or dangerous waste, substance or material defined as
such in (or for purposes of) the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called “Superfund” or “Superlien”
law, or any other applicable federal, state, local or other statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in
effect.


 


Indebtedness: 
shall mean as applied to any Person, (i) all items (except items of
capital or surplus or of retained earnings) which in accordance with GAAP would
be included in determining total liabilities as shown on the liability side of
the balance sheet of such Person as of the date of which Indebtedness is to be
determined, including without limitation subordinated debt, if any, and any
Capital Lease, (ii) all indebtedness secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any property or
asset owned or held by such Person is subject, whether or not the indebtedness
secured thereby shall have been


 


42

















 


assumed, and (iii) all indebtedness of others
which such Person has directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit 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 which such Person has agreed
to supply or advance funds (whether by way of loan, stock purchase, capital
contributions or otherwise) or otherwise to become directly or indirectly
liable.  For avoidance of doubt, the
parties hereby agree that the term Indebtedness shall not include the issuance
of any equity interests by the Borrower and/or any of its Subsidiaries, whether
such equity interests constitute common stock or preferred stock.


 


Indemnified
Parties:  shall have the meaning specified in
subsection 5.9.


 


Insolvency
Proceeding:  means any proceeding commenced by or against
any Person under any provision of the United States Bankruptcy Code, as in
effect from time to time, or under any other state or federal bankruptcy or
insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.


 


Interest
Adjustment Date:  shall have the meaning specified in
subsection 1.4(c).


 


Interest
Expense:  means required cash interest paid or payable
on Funded Debt.


 


Inventory: 
means all Borrower’s and its Subsidiaries now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by Borrower or any of its Subsidiaries as lessor, goods that are
furnished by Borrower or any of its Subsidiaries under a contract of service,
and raw materials, work in process, or materials used or consumed in Borrower’s
or any of its Subsidiaries’ business.


 


IRC: 
shall have the meaning specified in subsection 3.16.


 


Lender: 
shall have the meaning specified at the beginning of this Agreement.


 


Licenses: 
shall have the meaning specified in subsection 3.5.


 


Lien: 
shall have the meaning specified in subsection 6.2


 


Line
of Credit:  shall have the meaning specified in
subsection 1.1.


 


Loan
or Loans:  shall have the meanings specified in
subsection 1.2.


 


Loan
Documents:  shall mean collectively, this Agreement, the
Notes, the Pledge Agreement, the Subsidiary Guaranties and any and all
financing statements, agreements, instruments and certificates now or hereafter
related hereto or thereto or executed in connection herewith or therewith, all
as amended from time to time.


 


Material
Adverse Effect:  shall mean any event, matter or condition
which is reasonably likely to have a material adverse effect on (a) the
financial performance or condition, assets,


 


43

















 


operations or financial or other condition of
the Borrower and its Subsidiaries taken as a whole, (b) the Borrower’s ability
to pay and perform all of the Loans and other material obligations owing by it
to the Lenders in accordance with the terms thereof, and/or (c) the Eligible
Accounts or the Eligible Inventory.


 


Maturity
Date:  means November 21, 2006.


 


Maximum
Line Commitment:  shall have the meaning specified in
subsection 1.1.


 


Net
Income:  for any period, shall mean net income (or
loss) for such period, determined in accordance with GAAP.


 


Note
or Notes:  shall have the meanings specified in
subsection  1.3.


 


Obligations: 
shall mean the sums evidenced by the Notes and any and all other
liabilities, loans, advances, sums due or to become due and all Indebtedness of
Borrower to the Agent or the Lenders of every kind, nature and description
(whether or not evidenced by any note or other instrument), direct or indirect,
absolute or contingent, primary or secondary, joint or several, secured or
unsecured, due or to become due, now existing or hereafter arising under the
Loan Documents, any liability of Borrower to the Agent or the Lenders including
but not limited to all interest, fees, charges, expenses and attorneys’ fees,
paid or incurred by Agent or the Lenders at any time in connection with the
commitment for, preparation, execution, delivery, amendment, review,
perfection, administration and/or enforcement of any of the Loan Documents and
any and all other obligations of Borrower to the Agent or the Lenders pursuant
to the Loan Documents.


 


Opening
Balance Sheet:  shall mean the Borrower’s balance sheet
dated September 30, 2003.


 


Operating
Account:  shall have the meaning specified in
subsection 1.2(b).


 


Origination
Fee:  shall have the meaning specified in
subsection 1.5.


 


Participant: 
shall have the meaning specified in subsection 15.8.


 


Payment
Default:  shall have the meaning specified in
subsection 8.1.


 


PBGC: 
shall have the meaning specified in subsection 3.16.


 


Permitted
Acquisition:  shall have the meaning specified in
subsection 6.17.


 


Permitted
Lien:  shall have the meaning specified in
subsection 6.2.


 


Person: 
means a corporation, an association, a partnership, a limited liability
company, an owner, grantor or master trust, a joint venture, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.


 


Pledge
Agreement:  shall have the meaning specified in
subsection 1.6.


 


44

















 


Pro-forma
Compliance Certificate:  shall have the meaning specified in
subsection 1.11.


 


Projections: 
means Borrower’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent
with Borrower’s historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions, accepted by the
Agent, in its reasonable discretion, and any revision, amendment, or updates
thereto, provided such revision, amendment, or update has been accepted in
writing by the Agent (provided that such acceptance shall not be unreasonably
withheld.).


 


Proprietary
Rights:  any patents, registered trademarks, service
marks, trade names, copyrights, licenses and other similar rights, including,
applications for each of the foregoing.


 


Real
Estate Leases:  shall have the meaning specified in
subsection 3.9.


 


Report: 
shall have the meaning specified in subsection 16.17.


 


Required
Financial Statements:  shall have the meaning specified in
subsection 1.4.


 


Required
Lenders:  shall mean the Lenders holding greater than
sixty-six and two thirds percent (66-2/3%) of the principal amount of the Loans
outstanding or, if no Loans are outstanding, sixty-six and two-thirds percent
(66-2/3%) of the Commitments.


 


Restricted
Payment:  shall have the meaning specified in  subsection 6.5.


 


Revolving
Credit Loan or Loans:  shall have the meanings specified in
subsection 1.2.


 


Revolving
Credit Note or Notes:  the meaning specified in subsection 1.3.


 


SEC: 
means the Securities and Exchange Commission or any governmental
authority succeeding to any of its functions.


 


Second
Demand Note:  shall have the meaning specified in
subsection 1.14.


 


Solvent: 
means, with respect to any Person on a particular date, that such Person
is not insolvent (as such term is defined in the Uniform Fraudulent Transfer
Act).


 


Solvency
Certificate:  shall have the meaning specified in
subsection 3.4.


 


Subsidiary: 
means any Person of which more than 50% of the outstanding Voting Stock
(or other similar beneficial interest) (other than director’s qualifying
shares) is at the time owned or controlled by the Borrower or by one or more
Subsidiaries of the Borrower or by the Borrower and one or more Subsidiaries.


 


Subsidiary
Guaranties:  shall have the meaning specified in
subsection 1.6.


 


Taxes: 
shall have the meaning specified in subsection 1.10.


 


Total
Funded Debt:  means at any date of determination, the
aggregate outstanding amount of Funded Debt.


 


45

















 


UCC: 
means the Uniform Commercial Code, as from time to time in effect in The
Commonwealth of Massachusetts or any other applicable jurisdiction.


 


Unused
Line Fee:  shall have the meaning specified in
subsection 1.5.


 


US
Subsidiaries:  shall have the meaning specified in
subsection 1.6.


 


Voting
Stock:  means stock having ordinary voting power to
elect a majority of the board of directors of the corporation in question,
irrespective of whether or not at the time there exists stock of any class or
classes of such corporation which has or might have by its terms accrued voting
power by reason of the happening of any contingency.


 


Working
Capital:  shall have the meaning specified in
subsection 7.3.


 


Section
10.                                      Setoffs.


 


If the Borrower becomes
insolvent, howsoever evidenced, or any Event of Default occurs and is
continuing, any Indebtedness from the Lenders to the Borrower or any Subsidiary
may, without regard to the value or adequacy of any collateral, be offset and
applied toward the payment of any Indebtedness from the Borrower to the
Lenders, whether or not such Indebtedness, or any part thereof shall then be
due provided, that Agent or any lender executing such right shall
promptly provide notice thereof to Borrower and any affected Subsidiary.


 


Section 11.                                      Expenses;
Indemnification.


 


(a)                                  Whether or not the transactions contemplated
hereby shall be consummated, the Borrower agrees (i) to pay all reasonable
expenses, including reasonable fees and disbursements of counsel for the Agent,
which the Agent has incurred or may hereafter incur in connection with the
preparation of this Agreement, the Loan Documents, the Notes, and all other
documents related hereto and thereto (including any amendment, consent or
waiver hereof and/or thereof) and the transactions contemplated hereby or the
protection, preservation and/or enforcement of the rights of the Lenders
hereunder or under the Notes or the Loan Documents (whether in connection with
a Permitted Acquisition or otherwise) or in the event of a Default hereunder or
thereunder (including without limitation amounts incurred with respect to any
so-called “workout” of the Loans) and (ii) to pay all taxes (other
than the Lenders’ income taxes) and fees (including interest and
penalties), including without limitation all recording and filing fees,
transfer and documentary stamp and similar taxes, which may be payable in
respect of the execution and delivery of this Agreement, the Loan Documents,
the Notes, and all other documents related hereto and thereto (including any
amendment, consent or waiver hereafter requested by the Borrower hereunder or
thereunder) and to indemnify the Agent and Lenders and hold the Agents and
Lenders harmless against any loss or liability resulting from non-payment or
delay in payment of any such tax.  The
Borrower hereby authorizes the Agent to pay all such amounts described above to
the Agent or the Lenders, as applicable, and to charge the same to the
Operating Account or any other depository account maintained by the Borrower
with the Agent if the same are not paid within five (5) Banking Days after the
Agent notifies the Borrower in writing of the amounts owed.


 


46

















 


(b)                                 The Borrower hereby agrees to indemnify the
Agent and Lenders, and their respective directors, officers, employees, agents,
attorneys and each other Person, if any, who controls any Lender, and will hold
the Agent and Lenders and such other Persons harmless from and against any and
all claims, damages, losses, liabilities, judgments and expenses (including
without limitation all reasonable fees and expenses of counsel and all expenses
of litigation or preparation therefor) which the Agent and Lenders or such
other Persons may incur or which may be asserted against the Agent and Lenders
or such other Persons in connection with or arising out of any investigation,
litigation or proceeding relating to the transactions contemplated hereby
involving the Borrower or any shareholder or any Affiliate of the Borrower or
any such shareholder (including compliance with or contesting of any subpoenas
or other process issued against the Agent and Lenders, or any director, officer
or employee of the Agent and Lenders, or any Person, if any, who controls any
Lender in any proceeding relating to the transactions contemplated hereby
involving the Borrower or any shareholder or any Affiliate of the Borrower or
any such shareholder), whether or not a Lender is party thereto, other than
claims, damages, losses, liabilities or judgments with respect to any matter as
to which the Agent or a Lender or such other Person seeking indemnity shall
have been finally adjudicated not to have acted in good faith or to have been
grossly negligent in its actions or inactions. 
Promptly upon receipt by any indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the Borrower hereunder, notify the
Borrower in writing of the commencement thereof.


 


(c)                                  The Borrower acknowledges and agrees that its
agreements and obligations under this Section 11 shall survive the termination
of this Agreement and repayment in full of the Loans.


 


Section 12.                                      Amendments and
Waivers, etc.


 


(a)                                  Amendments and Waivers.  No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by Borrower therefrom,
shall be effective unless the same shall be in writing and signed by the
Required Lenders (or by Agent at the written request of the Required Lenders)
and Borrower and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all of the Lenders affected thereby and Borrower and
acknowledged by Agent, do any of the following:


 


(i)                                     increase or extend any Commitment of any
Lender,


 


(ii)                                  postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,


 


(iii)                               reduce the principal of, or the rate of
interest on, any loan or other extension of credit hereunder, or reduce any
fees or other amounts payable hereunder or under any other Loan Document,


 


47

















 


(iv)                              change the percentage of the Commitments that
is required to take any action hereunder,


 


(v)                                 amend this Section 12 or any provision of the
Agreement providing for consent or other action by all Lenders,


 


(vi)                              reserved,


 


(vii)                           change the definition of “Required Lenders”,


 


(viii)                        contractually subordinate any of the Agent’s
Liens,


 


(ix)                                release any Borrower or Subsidiary from any
obligation for the payment of money,


 


(x)                                   change the definitions of Eligible Accounts,
Eligible Inventory or Maximum Line Commitment, or


 


(xi)                                amend any of the provisions of Section 16.


 


The foregoing notwithstanding, any amendment,
modification, waiver, consent, termination, or release of, or with respect to,
any provision of this Agreement or any other Loan Document that relates only to
the relationship of the Lenders and the Agent among themselves, and that does
not affect the rights or obligations of Borrower, shall not require consent by
or the agreement of Borrower so long as such amendment, modification, waiver,
consent, termination or release does not adversely affect the Borrower in any
way, including without limitation by making any agreement or covenant set forth
herein more restrictive for the Borrower or any Subsidiary, or adversely affect
the rights or benefits of the Borrower under this Agreement or any other Loan
Document.


 


(b)                                 The failure of the Agent, the Lenders or
Required Lenders to insist upon the strict performance of any term, condition
or other provision of this Agreement or the Loan Documents or the Notes or to
exercise any right or remedy hereunder or thereunder shall not constitute a
waiver by the Agent, the Lenders or Required Lenders of any such term,
condition or other provision or Default or Event of Default in connection
therewith; and any waiver of any such term, condition or other provision or of
any such Default or Event of Default shall not affect or alter this Agreement
or the Loan Documents or the Notes, and each and every term, condition and
other provision of this Agreement, the Loan Documents and the Notes shall, in
such event, continue in full force and effect and shall be operative with
respect to any other then existing or subsequent Default or Event of Default in
connection therewith.


 


Section 13.                                      Pledge to the Federal
Reserve.  The Lenders may at any time pledge or assign
all or any portion of their rights under the Loan Documents including any
portion of the Notes to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement
thereof shall release any such Lender from its obligations under any of the
Loan Documents.


 


48

















 


Section 14.                                      Jurisdiction; Waiver
of Jury Trial.  THE BORROWER, TO THE EXTENT
THAT IT MAY LAWFULLY DO SO, HEREBY CONSENTS TO SERVICE OF PROCESS, AND TO BE
SUED, IN THE COMMONWEALTH OF MASSACHUSETTS AND CONSENTS TO THE JURISDICTION OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL
COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF ITS OBLIGATIONS
HEREUNDER OR UNDER THE NOTES OR ANY OF THE LOAN DOCUMENTS OR WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND EXPRESSLY WAIVES ANY AND
ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY SUCH COURTS.  THE BORROWER FURTHER AGREES THAT A SUMMONS
AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY OF SUCH COURTS SHALL BE
PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY OR
BY CERTIFIED MAIL TO IT AT ITS ADDRESS PROVIDED IN  SUBSECTION 15.1 OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.  THE
BORROWER IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING
HEREAFTER INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTES, THE LOAN
DOCUMENTS, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.  The Borrower hereby
certifies that neither the Agent nor the Lenders nor any of their respective
representatives, agents or counsel have represented, expressly or otherwise,
that the Agent and/or the Lenders would not, in the event of any such suit,
action or proceeding, seek to enforce this waiver of right to trial by
jury.  The Borrower acknowledges that
the Lenders have been induced to enter into this Agreement by, among other
things, this waiver.  The Borrower acknowledges
that it has read the provisions of this Agreement and in particular this
paragraph; has consulted legal counsel; understands the rights it is granting
in this Agreement and is waiving under this Section in particular; and makes
the above waiver knowingly, voluntarily and intentionally.


 


Section 15.                                      Miscellaneous.


 


15.1.                        Notices, etc.  All notices and other
communications hereunder shall be in writing and shall be personally delivered
or mailed by first class mail, postage prepaid, as follows:


 


(a)                                  If to the Agent:


 


Brown Brothers Harriman
& Co.


40 Water Street


Boston, Massachusetts  02109


Attention:  Peter D. Costa, Vice President


 


with
a copy to:


 


Peter M. Palladino, P.C.


Choate, Hall & Stewart


Exchange Place


 


49

















 


53 State Street


Boston, Massachusetts  02109


 


(b)                                 If to the Lenders:


 


Brown Brothers Harriman
& Co.


40 Water Street


Boston, Massachusetts  02109


Attention:  Peter D. Costa, Vice President


 


and to:


 


Fleet National Bank


100 Federal Street


Boston, Massachusetts  02109


Attention:  Michael W. Sweeney, Vice President


 


(c)                                  If to the Borrower:


 


Harvard Bioscience, Inc.


84 October Hill Road


Holliston,
Massachusetts  01746


Attention:  Susan M. Luscinski, CFO


 


with a copy to:


 


H. David Henken, P.C.


Goodwin Procter LLP


Exchange Place


53 State Street


Boston, Massachusetts  02109


 


or to such other address or addresses as the
party to whom such notice is directed may have designated in writing to the
other parties hereto.  A notice shall be
deemed to have been given upon receipt by the party to whom such notice is
directed.


 


15.2.                        Calculations, etc.  Calculations hereunder shall
be made and financial data required hereby shall be prepared, both as to
classification of items and as to amounts, in accordance with GAAP and
practices which principles and practices shall be consistently applied and in
conformity with those used in the preparation of the financial statements
referred to herein.


 


15.3.                        Governmental Approval.  The
Borrower agrees to take any action which the Agent may reasonably request in
order to obtain and enjoy the full rights and benefits granted to the Agent by
this Agreement and the Loan Documents, including specifically, at the
Borrower’s own cost and expense, the use of its best efforts to assist in
obtaining approval of any applicable governmental or regulatory authority or
court for any action or transaction contemplated by this


 


50

















 


Agreement or the Loan Documents which is then
required by law, provided, that, the Borrower shall not be required to effect a
public registration of all or any part of the Pledged Collateral (as defined in
the Pledge Agreement) pursuant to the Securities Act of 1933, as amended, or
other similar foreign or state securities law.


 


15.4.                        Survival of
Agreements,
Assignments, etc.  This Agreement shall inure to the benefit of
the Agent and the Lenders and their respective successors and assigns including
any subsequent holder or holders of the Notes, and the term “Lenders”
shall include any such subsequent holders. 
Each Lender may, with the prior consent of the Agent (such consent not
to be unreasonably withheld), sell, assign or delegate all or any part of the
Loans and other Obligations held by such Lender to one or more transferees or
other purchasers thereof.  In the event
of a sale, assignment or delegation by any Lender of all or any part of the
Loans or any of the Obligations (as defined in the Loan Documents) held by it,
such Lender may assign or transfer its rights and interests under this
Agreement, the Notes and any one or more of the Loan Documents in whole or in
part to the transferee(s), purchaser or purchasers thereof, whereupon such
transferee(s), purchaser or purchasers shall become vested with all of the
powers and rights of such Lender hereunder and thereunder, and such Lender shall
thereafter be forever released and fully discharged from any liability or
responsibility hereunder or thereunder accruing or arising after the effective
date of the assignment with respect to the rights and interests so assigned.  All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.


 


15.5.                        Counterparts, etc. 
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.


 


15.6.                        Entire Agreement, etc.  This Agreement constitutes
the entire contract between the parties hereto and shall supersede and take the
place of any other instrument purporting to be an agreement of the parties
hereto relating to the transactions contemplated hereby.  This Agreement may not be changed orally but
only by an agreement in writing signed by the party against whom any waiver,
change, modification or discharge is sought.


 


15.7.                        Governing Law, etc.; Construction.


 


(a)                                  This Agreement, the Notes and the other Loan
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, shall be construed in
accordance with and governed by the internal laws of The Commonwealth of
Massachusetts (without reference to conflicts of laws principles) and is
intended to take effect as a sealed instrument.  Except as prohibited by law which cannot be waived, the Borrower,
the Agent and each Lender hereby waive any right that they may have to claim or
recover in any litigation involving the Agent, any Lender or the Borrower any
special, exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages. 
The provisions of this Agreement are severable; the unenforceability of
any provision of this Agreement shall not affect the validity, binding effect
and enforceability of any other provision or provisions of this Agreement.


 


51

















 


(b)                                 Any reference to this Agreement, the Notes,
the Loan Documents and the other Loan Documents contained herein or in any other
Loan Document shall (unless otherwise expressly indicated) be deemed to refer
to such writing as the same may be amended, extended and/or restated from time
to time in accordance with the terms thereof. 
The words “herein”, “hereof”, “hereunder” and words
of like import shall refer to this Agreement as a whole and not to any
particular Section or paragraph of this Agreement.  In the event of any conflict between the provisions of this
Agreement (on the one hand) and the provisions of any of the other Loan
Documents (on the other hand), the provisions of this Agreement shall prevail.


 


15.8.                        Participation.  Each Lender shall have the unrestricted
right at any time and from time to time, and without the consent of or notice
to the Borrower, to grant to one or more banks or other financial institutions
(each, a “Participant”) participating interests in such Lender’s
obligation to lend hereunder and/or any or all of the Loans held by such Lender
hereunder.  In the event of any such
grant by a Lender of a participating interest to a Participant, whether or not
upon notice to the Borrower, such Lender shall remain responsible for the
performance of its obligations hereunder and the Borrower shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations hereunder.  The
Lenders may furnish any information concerning the Borrower in their possession
from time to time to prospective Participants, provided that the Lenders shall
require any such prospective Participant to agree in writing to maintain the
confidentiality of such information pursuant to Section 15.9 herein.


 


15.9.                        Confidentiality
Agreement of the
Lenders.  All confidential and non-public information
obtained by the Agent, the Lenders and their representatives, assigns and
successors with respect to the Borrower or any of its Subsidiaries shall be
kept strictly confidential by the Agent, the Lenders and their representatives,
assigns and successors until otherwise notified by the Borrower.  The confidentiality provisions of this
subsection 15.9 do not apply to information that (i) is or becomes available in
the public domain through no fault of the Agent, the Lenders and their
representatives, assigns and successors, (ii) was received by any of them lawfully
from a third party through no breach of any obligation of confidentiality owed
to the disclosing party or (iii) was created by a party independently of its
access to or use of the other party’s confidential information.


 


Section
16.                                      Agent, the Lender Group.


 


16.1.                        Appointment
and Authorization of
Agent.  Each Lender hereby designates and appoints
Brown Brothers Harriman & Co. (“BBH”) as its agent and
representative under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto.  Agent agrees to act as such on the express conditions contained
in this Section 16.  The provisions of
this Section 16 are solely for the benefit of Agent and the Lenders, and
Borrower shall have no rights as a third party beneficiary of any of the
provisions contained herein.  Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to


 


52

















 


have any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that
the use of the word “Agent” is for convenience only, that BBH is merely the
representative of the Lenders, and only has the contractual duties set forth
herein.  Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents.  Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have
the right to exercise the following powers as long as this Agreement remains in
effect:  (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the
status of the Obligations, any collateral, and related matters, (b) execute or
file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and
other written agreements with respect to the Loan Documents, (c) fund Loans,
for itself or on behalf of Lenders as provided in the Loan Documents, (d)
exclusively receive, apply, and distribute the collections as provided in the
Loan Documents, (e) open and maintain such bank accounts and cash management
accounts as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to any collateral and the
collections, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lenders with respect to Borrower, the Obligations, any
collateral, the collections, or otherwise related to any of same as provided in
the Loan Documents, and (g) incur and pay such Lender group expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.


 


16.2.                        Delegation
of Duties. 
Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties.  Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.


 


16.3.                        Liability
of Agent.  None of the Agent, its
Affiliates, officers or directors, employees or agents (collectively, the “Agent-Related
Persons”) shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
Borrower or any Affiliate of Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of Borrower or any other party to any Loan Document to perform
its obligations hereunder or thereunder. 
No Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books, records or properties of Borrower.


 


53

















 


16.4.                        Reliance by
Agent.  Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrower or counsel to any Lender), independent accountants and
other experts selected by Agent.  Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable.  If Agent so requests, it
shall first be indemnified to its reasonable satisfaction by Lenders against
any and all liability and expense that may be incurred by it by reason of
taking or continuing to take any such action. 
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.


 


16.5.                        Notice of
Default or Event of
Default.  Agent shall not be deemed tohave knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest, fees, and expenses
required to be paid to Agent for the account of the Lenders, except with
respect to Events of Default of which Agent has actual knowledge, unless Agent
shall have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default, and stating that such
notice is a “notice of default.”  Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event of Default,
such Lender promptly shall notify the other Lenders and Agent of such Event of
Default.  Each Lender shall be solely
responsible for giving any notices to its participants, if any.  Subject to subsection 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be
requested by the Lenders or the Required Lenders, as applicable, provided,
however, that unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable.


 


16.6.                        Credit Decision.  Each Lender acknowledges that
none of the Agent-Related Persons has made any representation or warranty to
it, and that no act by Agent hereinafter taken, including any review of the
affairs of Borrower, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender.  Each Lender represents to Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower and any other Person party to
a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower. 
Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and


 


54

















 


creditworthiness of Borrower
and any other Person party to a Loan Document. 
Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.


 


16.7.                        Costs and
Expenses; Indemnification. 
Agent may incur and pay Lender expenses to the extent Agent reasonably
deems necessary or appropriate for the performance and fulfillment of its
functions, powers, and obligations pursuant to the Loan Documents, including
court costs, reasonable attorneys fees and expenses, costs of collection by
outside collection agencies and auctioneer fees and costs of security guards or
insurance premiums paid to maintain any collateral, whether or not Borrower is
obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan
Agreement or otherwise.  Agent is
authorized and directed to deduct and retain sufficient amounts from
collections of Accounts received by Agent to reimburse Agent for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders.  In the event Agent is not reimbursed
for such costs and expenses from collections of Accounts received by Agent,
each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender’s pro rata share (based upon
total Commitments) thereof.  Whether or
not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed
by or on behalf of Borrower and without limiting the obligation of Borrower to
do so), according to their pro rata shares (based upon total Commitments), from
and against any and all indemnified liabilities; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such indemnified liabilities resulting solely from such Person’s
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any defaulting Lender in failing to make a Loan or other
extension of credit hereunder.  Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender’s ratable share (based upon total Commitments) of any costs or
out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrower.  The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Agent.


 


16.8.                        Agent in
Individual Capacity.  BBH
and its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in, and generally engage in
any kind of banking, trust, financial advisory, underwriting, or other business
with Borrower and its Affiliates and any other Person party to any Loan
Documents as though BBH were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lenders.  The Lenders acknowledge that, pursuant to
such activities, BBH or its Affiliates may receive information regarding
Borrower and any other Person  party to
any Loan Documents that is subject to confidentiality obligations in favor of Borrower
or such other Person and that prohibit the disclosure of such information to
the Lenders, and the Lenders acknowledge that, in such circumstances (and in
the absence of a waiver of such confidentiality


 


55

















 


obligations, which waiver
Agent will use its reasonable best efforts to obtain), Agent shall not be under
any obligation to provide such information to them.  The terms “Lender” and “Lenders” include BBH in its individual
capacity.


 


16.9.                        Successor Agent.  Agent may resign as Agent
upon 45 days notice to the Lenders.  If
Agent resigns under this Agreement, the Required Lenders shall appoint a
successor Agent for the Lenders.  If no
successor Agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Lenders, a successor
Agent.  If Agent has materially breached
or failed to perform any material provision of this Agreement or of applicable
law, the Required Lenders may agree in writing to remove and replace Agent with
a successor Agent from among the Lenders. 
In any such event, upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers,
and duties of the retiring Agent and the term “Agent” shall mean such successor
Agent and the retiring Agent’s appointment, powers, and duties as Agent shall
be terminated.  After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.  If
no successor Agent has accepted appointment as Agent by the date which is 45
days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.


 


16.10.                  Lender in
Individual Capacity.  Any
Lender and its respective Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with Borrower and Affiliates and any other
Person party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender
group.  The other members of the Lender
group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Borrower or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them.


 


16.11.                  Withholding
Taxes.


 


(a)                                  If any Lender is a “foreign corporation,
partnership or trust” within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, US withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to
deliver to Agent and Borrower:


 


(i)                                     if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (a) a statement
of the Lender, signed under penalty of perjury, that it is not a (I) a “bank”
as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder (within
the meaning of Section 881(c)(3)(B) of


 


56

















 


the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the IRC,
and (B) a properly completed IRS Form W-8BEN, before the first payment of any
interest under this Agreement and at any other time reasonably requested by
Agent or Borrower;


 


(ii)                                  if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or Borrower;


 


(iii)                               if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender,
two properly completed and executed copies of IRS Form W-8ECI before the first
payment of any interest is due under this Agreement and at any other time
reasonably requested by Agent or Borrower;


 


(iv)                              such other form or forms as may be required
under the IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.


 


Such Lender agrees promptly to notify Agent
and Borrower of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.


 


(b)                                 If any Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by providing IRS
Form W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the obligations of Borrower to such Lender,
such Lender agrees to notify Agent of the percentage amount in which it is no
longer the beneficial owner of obligations of Borrower to such Lender.  To the extent of such percentage amount,
Agent will treat such Lender’s IRS Form W-8BEN as no longer valid.


 


(c)                                  If any Lender is entitled to a reduction in
the applicable withholding tax, Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction.  If the
forms or other documentation required by subsection (a) of this section are not
delivered to Agent, then Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable withholding tax.


 


(d)                                 If the Internal Revenue Service or any other
governmental authority of the United States or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section, together
with all costs and expenses (including attorneys fees and expenses).


 


57

















 


The obligation of the
Lenders under this subsection shall survive the payment of all Obligations
and/or the resignation or replacement of Agent.


 


16.12.                  Reserved.


 


16.13.                  Restrictions
on Actions by Lenders;
Sharing of Payments.


 


(a)                                  Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so subject to the terms of this Agreement, upon the
request of Agent, set off against the Obligations, any amounts owing by such
Lender to Borrower or any deposit accounts of Borrower now or hereafter
maintained with such Lender.  Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any collateral the purpose of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to any collateral.


 


(b)                                 If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of any
collateral or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms
of this Agreement, or (ii) payments from Agent in excess of such Lender’s
ratable portion of all such distributions by Agent, such Lender promptly shall
(1) turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their pro rata shares (calculated in accordance with the Lenders’
respective Commitments); provided, however, that if all or part
of such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.


 


16.14.                  Agency for
Perfection. 
Agent hereby appoints each other Lender as its agent (and each Lender
hereby accepts such appointment) for the purpose of perfecting the Agent’s
Liens in assets which, in accordance with Article 9 of the Code can be
perfected only by possession.  Should
any Lender obtain possession of any such collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent’s request therefor shall deliver such
collateral to Agent or in accordance with Agent’s instructions.


 


16.15.                  Payments
by Agent to the Lenders.  All
payments to be made by Agent to the Lenders shall be made by bank wire transfer
or internal transfer of immediately available funds pursuant to such wire
transfer instructions as each party may designate for itself by written notice


 


58

















 


to Agent.  Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, or interest of the Obligations.


 


16.16.                  Concerning
the Collateral and
Related Loan Documents.  Each member of the Lender group authorizes
and directs Agent to enter into this Agreement and the other Loan Documents
relating to any collateral, for the benefit of the Lender group.  Each member of the Lender group agrees that
any action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to any collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that
are reasonably incidental thereto, shall be binding upon all of the Lenders.


 


16.17.                  Field Audits
and Examination
Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information.  By
becoming a party to this Agreement, each Lender:


 


(a)                                  is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field
audit or examination report (each a “Report” and collectively, “Reports”)
prepared by Agent, and Agent shall so furnish each Lender with such Reports;


 


(b)                                 expressly agrees and acknowledges that Agent
does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report;


 


(c)                                  expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrower and will rely significantly upon the books, as well as on
representations of Borrower’s personnel;


 


(d)                                 agrees to keep all Reports and other
material, non-public information regarding Borrower and its operations, assets,
and existing and contemplated business plans in a confidential manner; it being
understood and agreed by Borrower that in any event such Lender may make
disclosures (a) to counsel for and other advisors, accountants, and auditors to
such Lender, (b) reasonably required by any bona
fide potential or actual assignee or participant in connection with
any contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender’s rights hereunder,
provided that any such assignee or participant shall agree to and become bound
by the confidentiality provisions set forth in subsection 15.9 hereof, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; and


 


(e)                                  without limiting the generality of any other
indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or


 


59

















 


loans of Borrower; and (ii)
to pay and protect, and indemnify, defend and hold Agent, and any such other
Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including, attorneys
fees and costs) incurred by Agent and any such other Lender preparing a Report
as the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.


 


In addition to the foregoing:  (x) any Lender may from time to time request
of Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrower, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender’s
notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and,
upon receipt thereof from Borrower, Agent promptly shall provide a copy of same
to such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.


 


16.18.                  Several
Obligations; No
Liability.  Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.  Nothing contained herein shall confer upon
any Lender any interest in, or subject any Lender to any liability for, or in
respect of, the business, assets, profits, losses, or liabilities of any other
Lender.  Each Lender shall be solely
responsible for notifying its participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any participant of any other
Lender.  Except as provided in
subsection 16.7, no member of the Lender group shall have any liability for the
acts or any other member of the Lender group. 
No Lender shall be responsible to any Borrower or any other Person for
any failure by any other Lender to fulfill its obligations to make credit
available hereunder, nor to advance for it or on its behalf in connection with
its Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.


 


16.19.                  Legal
Representation of
Agent.  In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Choate, Hall
& Stewart only has represented and only shall represent BBH in its capacity
as Agent and as a Lender.  Each other
Lender hereby acknowledges that Choate, Hall & Stewart does not represent
it in connection with any such matters.


 


[Signature
page follows]


 


60

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as a sealed instrument as of the
date first above written.


 


	
   

  	
  HARVARD BIOSCIENCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Susan Luscinski

  
	
   

  	
  Name: Susan Luscinski,
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BROWN BROTHERS HARRIMAN
  & CO.,

  
	
   

  	
  as Lender and as Agent for
  the Lenders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Joseph E. Hall

  
	
   

  	
  Name: Joseph E. Hall,
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /S/ Michael Sweeney

  
	
   

  	
  Name: Michael Sweeney,
  Vice President

  



 


61

















 


Schedule 1.1


 


Commitments


 


	
  Brown Brothers Harriman
  & Co.

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fleet National Bank

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Commitments

  	
   

  	
  $

  	
  20,000,000

  	
   

  



 

















 


EXHIBIT A


 


FORM OF COMPLIANCE CERTIFICATE


 


Dated:
                               


 


Brown Brothers Harriman &
Co., as Agent


40 Water Street


Boston, Massachusetts  02109


Attention:  Peter D. Costa, Vice President


 


Re:                     Revolving
Credit Loan Agreement, dated as of November      ,
2003 (as amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”) by and among Harvard Bioscience, Inc., a Delaware corporation
(the “Borrower”), Brown Brothers Harriman & Co., as Agent for the
Lenders (the “Agent”) and the Lenders from time to time party
thereto.  Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Loan
Agreement.


 


Ladies and Gentlemen:


 


Concurrently
herewith the Borrower delivers to the Agent (i) the unaudited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries and the
related unaudited consolidated and consolidating statements of income and
surplus for the most recently ended quarterly accounting period of the Borrower
and for the period from the beginning of the current fiscal year to the end of
such period and (ii) the related unaudited consolidated cash flows for the
period from the beginning of the current fiscal year to the end of such period.


 


This letter
shall serve as certification to the Agent that:


 


(a)  In accordance with subsection 5.1(b)
of the Loan Agreement, (i) all financial statements delivered herewith have
been prepared in accordance with GAAP and fairly present the financial
condition of Borrower and its Subsidiaries on a consolidated basis at the close
of, and the consolidated results of Borrower’s and its Subsidiaries’ operations
and cash flows for, the periods covered, subject, however to usual year end
adjustments and the absence of footnotes, (ii) there does not exist any
condition or event that constitutes a Default or Event of Default, or if there
is such a Default or Event of Default, the nature of it and the steps (if any)
being taken or contemplated by Borrower to be taken on account thereof are set
forth as Exhibit 1 attached hereto, and (iii) all representations and
warranties of Borrower set forth in the Loan Agreement and other Loan Documents
(as supplemented and updated as provided in subsection 4.3(a) of the
Loan Agreement) are true and correct in all material respects on and as of the
date of this certification, as though made on and as of such date (A) except to
the extent that such representations and warranties relate solely to an earlier
date, (B) except to the extent such representations and warranties are affected
by the consummation of transactions permitted under


 

















 


the Loan Agreement, (C) except
that references to financial statements shall be deemed to refer to the most
recent audited financial statements delivered pursuant to subsection 5.1(a)
of the Loan Agreement, and (D) except as set forth on the correspondingly
numbered schedule(s) to the Loan Agreement and/or Loan Document, as applicable,
attached hereto as Annex 1  (provided that, the Borrower shall not
be required to update such schedules more than once every year and such
schedules shall be deemed automatically updated pursuant to subsection 4.3(a)
of the Loan Agreement).  The Borrower
hereby authorizes the Agent to attach the foregoing schedule(s) to the applicable
Loan Document.


 


(b)  All premiums for insurance as required under
subsection 5.3 of the Loan Agreement have been paid, or if any such
premiums have not been paid, any unpaid premiums are set forth as Exhibit 2
attached hereto.


 


(c)  Other than such assessments and taxes which
are being contested in good faith in accordance with the terms of subsection 5.4
of the Loan Agreement, all assessments and taxes as required under subsection 5.4
of the Loan Agreement have been paid, or if any such assessments or taxes have
not been paid, any unpaid assessments or taxes are set forth as Exhibit 3
attached hereto.


 


(d)  In accordance with subsection 5.5 of
the Loan Agreement, except as to matters being contested in good faith and by
appropriate proceedings, and subject to the provisions of subsection 6.5
(Restricted Payments) thereof, the Borrower and each Subsidiary has paid when
due, or in conformance with customary trade terms, all other Indebtedness and
obligations incident to the conduct of its business where any failure to pay is
reasonably likely to result in a Material Adverse Effect, or if any such
amounts have not been paid, any unpaid amounts are set forth as Exhibit 4
attached hereto.


 


(e)  The Leverage Ratio, as of the last day of
the fiscal quarter ending
[                ]
is   .    :1.0. 
The maximum permitted Leverage Ratio pursuant to subsection 7.1 of the
Loan Agreement for the period is 2.0:1.0.


 


(f)  The Fixed Charge Coverage Ratio, as of the
last day of the fiscal quarter ending
[                ]
is   .    :1.0. 
The minimum permitted Fixed Charge Coverage Ratio pursuant to subsection
7.2 of the Loan Agreement for the period is 1.5:1.0.


 


(g)  The aggregate outstanding principal balance
of the Revolving Credit Loans as of the last day of the fiscal quarter ending
[                ]
is
$                .  Pursuant to subsection 7.3 of the Loan
Agreement, the Working Capital and maximum permitted aggregate outstanding
principal balance of the Revolving Credit Loans as of the last day of such
period is
$                .


 


[Signature page follows]


 

















 


Such
certification is made as of the fiscal quarter ending 
                     ,
200     .


 


 


	
   

  	
  HARVARD
  BIOSCIENCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


ANNEX 1


 

















 


EXHIBIT 1


 

















 


EXHIBIT 2


 

















 


EXHIBIT 3


 

















 


EXHIBIT 4


 

















 


EXHIBIT B


 


FORM OF REVOLVING CREDIT NOTE


 


HARVARD BIOSCIENCE, INC.


 


	
  $10,000,000

  	
   

  	
  Boston, Massachusetts

  
	
   

  	
   

  	
  November    , 2003

  



 


Harvard Bioscience, Inc., a Delaware
corporation (the “Borrower”), for value received, hereby promises to pay
to
                         
(the “Holder”), or order, on or before November    ,
2006, the principal amount of TEN MILLION and 00/100 dollars ($10,000,000), or
such lesser amount as may, on November    , 2006 (the “Maturity
Date”), be the aggregate unpaid principal amount of all Revolving Credit
Loans made by the Holder to the Borrower pursuant to a certain Revolving Credit
Loan Agreement dated as of the date hereof (as amended, restated, supplemented,
and/or modified from time to time, the “Loan Agreement”) by and between
the Borrower, the Holder and other Lenders named therein.  Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.


 


Prior to the Maturity Date, interest only
shall be payable on the unpaid principal amount hereof at the rate or rates
(including the default rate) specified in the Loan Agreement, payable monthly
in arrears on the first day of each calendar month with respect to any portion
of this Revolving Credit Note accruing interest based on the Base Rate, and on
the earlier to occur of (i) the last day of the LIBOR Period applicable to such
LIBOR Portion or (ii) the 90th day of such LIBOR Period in the case of
any LIBOR Portion, commencing on the first such date next succeeding the date
hereof, and at maturity (whether by acceleration or otherwise).  In no event shall the amount contracted for
and agreed to be paid by the Borrower as interest on this Revolving Credit Note
exceed the highest lawful rate permissible under any law applicable
hereto.  Each change in the rate of
interest payable on this Revolving Credit Note shall take place at the times
set forth in the Loan Agreement.


 


This Revolving Credit Note evidences a loan
or loans and other advances under, and is subject to the provisions of, the
Loan Agreement.  The Holder is entitled
to the benefits of the Loan Agreement and to the benefits of the other Loan
Documents referred to therein.  Neither
this reference to the Loan Agreement and the other Loan Documents, nor any
provisions thereof, shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this
Revolving Credit Note as provided herein. 
All payments of principal of and interest on this Revolving Credit Note
shall be payable in immediately available funds as set forth in the Loan
Agreement.  In the event of a conflict
between the terms of this Revolving Credit Note and the terms of the Loan
Agreement, the terms of the Loan Agreement will prevail.


 


This Revolving Credit Note is subject to
prepayment in whole or in part, and to acceleration, in both instances at the
times and in the manner specified in the Loan Agreement.


 

















 


The maker and all endorsers of this Revolving Credit Note hereby waive
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance or enforcement of this
Revolving Credit Note.


 


[Signature page follows]


 

















 


This Revolving Credit Note is governed by the
laws of The Commonwealth of Massachusetts and is executed as a sealed
instrument as of the date first above written.


 


 


	
   

  	
  HARVARD
  BIOSCIENCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


EXHIBIT C


 


FORM OF PRO-FORMA COMPLIANCE CERTIFICATE


 


Brown Brothers Harriman &
Co., as Agent


40 Water Street


Boston, Massachusetts  02109


Attention:  Peter D. Costa, Vice President


 


Re:                     Revolving
Credit Loan Agreement, dated as of November
      , 2003 (the “Loan Agreement”) by and
among Harvard Bioscience, Inc., a Delaware corporation (the “Borrower”),
Brown Brothers Harriman & Co., as Agent for the Lenders (the “Agent”)
and the Lenders from time to time party thereto.  Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Loan Agreement.


 


Ladies and Gentlemen:


 


Concurrently
herewith the Borrower delivers to the Agent (i) the Opening Balance Sheet and
(ii) the Solvency Certificate.


 


This letter
shall serve as certification to the Agent that after giving effect to the
transactions contemplated by the Loan Agreement and Loans thereunder requested
on the date hereof, that:


 


(a)  In accordance with subsection 3.4 of the
Loan Agreement:


 


(i) all financial statements delivered to the Agent have been prepared
in accordance with GAAP applied on a consistent basis and fairly present the
financial position and results of operations of the Borrower and its
Subsidiaries on a consolidated basis as of the dates and for the periods
indicated; (ii) all representations and warranties of Borrower set forth in the
Loan Agreement and other Loan Documents are true and correct in all material
respects on and as of the date of this certification; and (iii) there does not
exist any condition or event that constitutes a Default or Event of Default.


 


(b)  The Leverage Ratio, as of the last day of
the fiscal quarter ending September 30, 2003 pro forma to give effect to the
transactions contemplated by the Loan Agreement and the Loans made on the date
hereof, is    .    :1.0.  The maximum permitted Leverage Ratio pursuant
to subsection 7.1 of the Loan Agreement for the period is 2.0:1.0.


 


(c)  The Fixed Charge Coverage Ratio, as of the
last day of the fiscal quarter ending September 30, 2003 pro forma to give
effect to the transactions contemplated by the Loan Agreement and the Loans
made on the date hereof, is
   .    :1.0.  The minimum permitted Fixed Charge Coverage Ratio pursuant to
subsection 7.2 of the Loan Agreement for the period is 1.5:1.0.


 


(d)  Pursuant to subsection 7.3 of the Loan
Agreement, the Working Capital and maximum permitted aggregate outstanding
principal balance of the Revolving Credit Loans as of


 

















 


the last day of the fiscal
quarter ending September 30, 2003 pro forma to give effect to the transactions
contemplated by the Loan Agreement and the Loans made on the date hereof, is
$                .


 


[Signature page follows]


 

















 


Such
certification is made as of November      , 2003.


 


 


	
   

  	
  HARVARD
  BIOSCIENCE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
					



 

















 


EXHIBIT D


 


FORM OF SOLVENCY CERTIFICATE


 


November      , 2003


 


This Solvency Certificate is delivered to Brown Brothers Harriman &
Co., as Agent for the Lenders (the “Agent”), pursuant to subsection 4.1
of the Revolving Credit Loan Agreement dated as of the date hereof (the “Loan
Agreement”) by and among Harvard Bioscience, Inc., a Delaware corporation
(the “Borrower”), the Agent and the Lenders from time to time party
thereto.  Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Loan
Agreement.


 


I, Susan
Luscinski, as Chief Financial Officer of the Borrower and not in my individual
capacity, hereby certify on behalf of the Borrower as follows:


 


1.             I am the duly elected Chief Financial Officer of the
Borrower.  I am familiar with the
properties, business, assets and financial affairs of the Borrower and its
Subsidiaries and am authorized to execute this Certificate on behalf of the
Borrower;


 


2.             The fair value of the assets of the Borrower
individually and on a consolidated basis with its Subsidiaries is greater than
the amount of the Borrower’s liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(32) of the United States Bankruptcy Code,
as in effect from time to time;


 


3.             The present fair salable value of the assets of the
Borrower and its Subsidiaries on a consolidated basis in an orderly liquidation
of the Borrower and its Subsidiaries is not less than the amount that will be
required to pay the probable liability of the Borrower and its Subsidiaries on
their respective debts as they become absolute and matured;


 


4.             The Borrower individually and on a consolidated basis
with its Subsidiaries is able to realize upon its property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business;


 


5.             The Borrower does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay as such
debts and liabilities mature;


 


6.             The Borrower is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
its property would constitute unreasonably small capital; and


 


7.             On the date hereof, immediately before and after giving
effect to the Loans and the consummation of the transactions contemplated by
the Loan Agreement, the Borrower individually and on a consolidated basis with
its Subsidiaries is Solvent.


 


[Signature page follows]


 

















 


IN WITNESS
WHEREOF, I have executed this Solvency Certificate under seal as of the date
first above written.


 


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HARVARD
  BIOSCIENCE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Susan
  Luscinski

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  



 

















 


EXHIBIT E


 


FORM OF BORROWING REQUEST


 


Dated:
                                 


 


Brown Brothers Harriman &
Co., as Agent


40 Water Street


Boston, Massachusetts  02109


Attention:  Peter D. Costa, Vice President


 


Re:                     Revolving
Credit Loan Agreement, dated as of November      ,
2003 (as amended, supplemented or otherwise modified from time to time, the “Loan
Agreement”) by and among Harvard Bioscience, Inc., a Delaware corporation
(the “Borrower”), Brown Brothers Harriman & Co., as Agent for the
Lenders (the “Agent”) and the Lenders from time to time party
thereto.  Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Loan
Agreement.


 


Ladies and Gentlemen:


 


(a)           Pursuant to subsection 1.2(b) of
the Loan Agreement, the Borrower hereby gives notice of its intention to borrow
a Revolving Credit Loan in an aggregate principal amount of
$                         
on
                       ,
200   , (the “Borrowing Date”) which borrowing shall
consist of the following Loan:


 


	
  Type of
  Loan

  (LIBOR Portion or

  Base Rate Loan)

  	
   

  	
  Amount

  	
   

  	
  first day
  of the

  LIBOR Period

  	
   

  	
  LIBOR
  Period

  
	
                      

  	
   

  	
  $

  	
                

  	
   

  	
              ,
  200

  	
   

  	
         days

  
								



 


(b)           The location and account to which
funds are to be disbursed is the following:


 


[To be completed by the Borrower]


 


(c)           The Borrower hereby certifies that on
the date hereof and on the Borrowing Date set forth above, and immediately
after giving effect to the Loan requested hereby, no Default or Event of
Default shall have occurred and be continuing.


 


IN WITNESS
WHEREOF, the Borrower has duly executed this Borrowing Request as of the date
and year first above written.


 


	
   

  	
  HARVARD
  BIOSCIENCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Chief Financial Officer