EX-10.37



 





Exhibit 10.37




LOAN AND SECURITY AGREEMENT




among




MERIDIAN BIOSCIENCE, INC.




MERIDIAN BIOSCIENCE CORPORATION




OMEGA TECHNOLOGIES, INC.




MERIDIAN LIFE SCIENCE, INC.




and




FIFTH THIRD BANK




Dated as of August 1, 2007




 









 





     This Loan and Security Agreement (the “Agreement”) is entered into as of August 1, 2007, by
and among Meridian Bioscience, Inc., an Ohio corporation (“Parent” or “Agent”), Meridian Bioscience
Corporation, an Ohio corporation (“Corp.”), Omega Technologies, Inc., an Ohio corporation
(“Omega”), Meridian Life Science, Inc., a Maine corporation (“MLS”) (collectively, the “Borrowers”
and individually a “Borrower”) and Fifth Third Bank, an Ohio banking corporation (the “Bank”). Bank
and Borrowers hereby agree as follows:


Section 1. Definitions.




     1.1 Specific Definitions. The following definitions shall apply:



          “Account Debtors” means a Borrower’s customers and all other persons who are obligated or
indebted to a Borrower in any manner, whether directly or indirectly, primarily or secondarily,
contingently or otherwise, with respect to Accounts or General Intangibles.




          “Accounts” means all accounts, accounts receivable, health-care insurance receivables, credit
card receivables, contract rights, instruments, documents, chattel paper, tax refunds from
federal, state or local governments and all obligations in any form including without limitation
those arising out of the sale or lease of goods or the rendition of services by a Borrower; all
guaranties, letters of credit and other security and support obligations for any of the above; all
merchandise returned to or reclaimed by any Borrower; and all books and records (including
computer programs, tapes and data processing software) evidencing an interest in or relating to
the above; all winnings in a lottery or other game of chance operated by a governmental unit or
person licensed to operate such game by a governmental unit and all rights to payment therefrom;
and all “Accounts” as same is now or hereinafter defined in the Uniform Commercial Code.




          “Affiliate” means, as to a Borrower, (a) any person which, directly or indirectly, is in
control of, is controlled by or is under common control with, such Borrower, or (b) any person who
is a director, officer or employee (i) of a Borrower or (ii) of any person described in the
preceding clause (a). For purposes of this definition, control of a person shall mean (a) the
power, direct or indirect, (i) to vote 15% or more of the securities having ordinary voting power
for the election of directors of such person or (ii) to direct or cause the direction of the
management and policies of such person whether by contract or otherwise, or (b) the ownership,
direct or indirect, of 15% or more of any class of equity securities of such person.




          “Applicable LIBOR/Euro LIBOR Margin” on any date means the percentage identified as such in
Section 2.3 hereof.




          “Applicable Prime Margin” on any date means -1.0% (minus one percent) per annum.




          “Bank Affiliate” means the Bank, Fifth Third Leasing Company and any other entity the
majority of the ownership of which is held directly or indirectly by Fifth Third Bancorp.




 









 





          “Borrower Default Rate” means 3% in excess of the otherwise applicable interest rate.




          “Cash Equivalents” means (i) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within three (3) months from the date
of acquisition thereof; (ii) investments in certificates of deposit or bankers’ acceptance maturing
within three (3) months from the date of acquisition issued by the Lender or any commercial bank
organized under the laws of the United States or any state thereof having capital surplus and
undivided profits aggregating at least Two Hundred Fifty Million Dollars ($250,000,000); (iii)
investments in commercial paper of the Lender or of any other Person which, at the time of
issuance, have a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from
Moody’s Investors Service, Inc. and maturing not more than six (6) months from the date of
acquisition thereof; (iv) obligations of the type described in (i), (ii) or (iii) above purchased
pursuant to a repurchase agreement obligating the counter party to repurchase such obligations not
later than thirty (30) days after the purchase thereof, secured by a fully perfected security
interest in any such obligation, and having a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of the issuing bank; (v) time
deposits or Eurodollar time deposits maturing no more than thirty (30) days from the date of
creation with commercial banks having membership in the Federal Deposit Insurance Corporation in
amounts not exceeding the greater of One Hundred Thousand Dollars ($100,000) or the maximum
insurance applicable to the aggregate amount of such Person’s deposits in such institution; and
(vi) direct-pay letter of credit bond or note issues that are
backed by a letter of credit from a
bank with a long term debt rating of “AA” or “AA-1” or its equivalent by any rating agency at the
time of purchase, though the issue itself does not have to be rated.




          “Collateral” has the meaning set forth in Section 6.1.




          “Current Assets” means all assets which may properly be classified as current assets in
accordance with generally accepted accounting principles, provided that for the purpose of
determining the Current Assets of Borrowers (i) notes and accounts receivable shall be included
only if good and collectible and payable on demand or within twelve (12) months from the date as
of which Current Assets are to be determined (and if not directly or indirectly renewable or
extendible, at the option of the debtors, by their terms or by the terms of any instrument or
agreement relating thereto, beyond such twelve (12) months) and shall be taken at their face value
less reserves determined to be sufficient in accordance with generally accepted accounting
principles, and (ii) the cash surrender value of life insurance policies shall be excluded.




          “Current Liabilities” mean all Indebtedness maturing on demand or within twelve (12) months
from the date as of which Current Liabilities are to be determined (including, without limitation,
liabilities, including taxes accrued as estimated, as may properly be classified as current
liabilities in accordance with generally accepted accounting principles).




          “Default” means any event that, with the giving of notice or the passage of time, or both,
would be an Event of Default.




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          “EBITDA” means income of Borrowers before taxes plus interest expenses, depreciation expense
and amortization expense for the four quarters ending with the applicable date of measurement on a
consolidated basis (on a rolling four quarters basis). Charges, if any, in future periods for
acquired in-process research and development shall also be excluded form the calculation of EBITDA,
provided such acquisitions are permitted under this Agreement.




          “Election Year” means each one-year period commencing on each October 1, as further specified
in Section 2.3(a) of this Agreement.




          “Environmental Laws” means all applicable federal, state, local and foreign laws relating to
pollution or protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including without limitation ambient air,
surface water, ground water, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.




          “Equipment” means all goods (excluding inventory, farm products or consumer goods), all
machinery, machine tools, equipment, fixtures, office equipment, furniture, furnishings, motors,
motor vehicles, tools, dies, parts, jigs, goods (including, without limitation, each of the items
of equipment set forth on any schedule which is either now or in the future attached to Bank’s
copy of this Agreement), and all attachments, accessories, accessions, replacements,
substitutions, additions and improvements thereto, all supplies used or useful in connection
therewith, and all “Equipment” as same is now or hereinafter defined in the Uniform Commercial
Code.




          “Euro LIBOR Interest Period” means any 30, 60 or 90 day period selected by Agent, commencing
on any Business Day. If a Euro LIBOR Interest Period so selected would otherwise end on a date
which is not a Business Day, such Euro LIBOR Interest Period shall instead end on the next
Business Day, provided, however, that if such next Business Day shall fall in a succeeding month,
such Euro LIBOR Interest Period shall instead end on the preceding Business Day.




          “Euro LIBOR Pricing Option” means the option granted pursuant to Section 2.2 hereof to have
all or a portion of the interest on the principal amount of the Note computed with reference to a
Euro LIBOR Rate.




          “Euro LIBOR Rate” means the rate (adjusted for reserves if Bank is required to maintain
reserves with respect to relevant advances) being asked on an amount of Euros deposits equal to
the amount of the Note on the first day of a Euro LIBOR Interest Period and which has a maturity
corresponding to the maturity of the Euro LIBOR Interest Period, as reported by the Reuters rate
reporting system (or any successor) as determined by Bank by noon on the first day





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of the applicable Euro LIBOR Interest Period. Each determination by Bank of the Euro LIBOR Rate
shall be conclusive in the absence of manifest error.




          “Funded Debt” means all Indebtedness (i) in respect of money borrowed (senior and
subordinated) or (ii) evidenced by a note, debenture (senior or subordinated) or other like written
obligation to pay money, or (iii) in respect of rent or hire of property under leases or lease
arrangements which under Generally Accepted Accounting Principles are required to be capitalized,
or (iv) in respect of obligations under conditional sales or other title retention agreements; and
shall also include all guaranties of any of the foregoing. In no event shall any of mandatory
repayments be counted twice in calculating Funded Indebtedness.




          “GAAP” or “Generally Accepted Accounting Principles” means generally accepted accounting
principles of the United Stated in effect on the date of this Agreement, which shall include the
official interpretations thereof by the Financial Accounting Standards Board, consistently applied
or, in the case of compliance with Section 5.15 through 5.17, consistent with those utilized in
preparing the audited financial statements referred to in Section 3.8.




          “General Intangibles” means all general intangibles, chooses in action, causes of action,
obligations or indebtedness owed to a Borrower from any source whatsoever, payment intangibles,
software and all other intangible personal property of every kind and nature (other than Accounts)
including without limitation patents, trademarks, trade names, service marks, copyrights and
applications for any of the above, and goodwill, trade secrets, licenses, franchises, rights under
agreements, tax refund claims, and all books and records including all computer programs, disks,
tapes, printouts, customer lists, credit files and other business and financial records, the
equipment containing any such information, and all “General Intangibles” as same is now or
hereinafter defined in the Uniform Commercial Code.




          “Indebtedness” means (i) all items (except items of capital stock, of capital surplus, of
general contingency reserves or of retained earnings, deferred income taxes, amounts attributable
to minority interest if any, and all short-term payables incurred in the ordinary course of
business) which in accordance with generally accepted accounting principles would be included in
determining total liabilities on a consolidated basis shown on the liability side of a balance
sheet as at the date as of which Indebtedness is to be determined, (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 is subject, whether or not the indebtedness secured thereby shall
have been assumed (excluding non-capitalized leases which may amount to title retention agreements
but including capitalized leases), and (iii) all indebtedness of others which any Borrower or any
Subsidiary 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
any Borrower or any Subsidiary has agreed to apply or advance funds (whether by way of loan, stock
purchase, capital contribution or otherwise) or otherwise to become directly or indirectly liable.




          “Insolvency Event” means, with respect to a person, any of the following: a court enters a
decree or order for relief in respect to such person in an involuntary case under any





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applicable bankruptcy, insolvency or other similar law then in effect, or appoints a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of such person
or for any substantial part of its property, or orders the wind-up or liquidation of its affairs;
or a petition initiating an involuntary case under any such bankruptcy, insolvency or similar law
is filed against such person; or such person commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law in effect, or makes any general assignment for the
benefit of creditors, or fails generally to pay its debts as such debts become due, or takes
corporate action in furtherance of any of the foregoing.




          “Inventory” means goods, supplies, wares, merchandises and other tangible personal property,
including raw materials, work in process, supplies and components, and finished goods, whether
held for sale or lease, or furnished or to be furnished under any contract for service, or used or
consumed in business, and also including products of and accessions to inventory, packing and
shipping materials, all documents of title, whether negotiable or non-negotiable, representing any
of the foregoing, and all “Inventory” as same is now or hereinafter defined in the Uniform
Commercial Code.




          “Investment Property” means a security, whether certificated or uncertificated, security
entitlement, securities account, commodity contract or commodity account and all “Investment
Property” as same is now or hereafter defined in the Uniform Commercial Code.




          “LIBOR Interest Period” means any period of time up to and including a 365 day period
selected by Agent, commencing on any Business Day. If a LIBOR Interest Period so selected would
otherwise end on a date which is not a Business Day, such LIBOR Interest Period shall instead end
on the next Business Day, provided, however, that if such next Business Day shall fall in a
succeeding month, such LIBOR Interest Period shall instead end on the preceding Business Day.




          “LIBOR Pricing Option” means the option granted pursuant to Section 2.2 hereof to have all or
a portion of the interest on the principal amount of the Note computed with reference to a LIBOR
Rate.




          “LIBOR Rate” means, as applied to any LIBOR Interest Period, the rate (adjusted for LIBOR
Reserves if Bank is required to maintain LIBOR Reserves with respect to the relevant loan) being
asked on an amount of Eurodollar deposits equal to the principal amount of the Note which is to be
subject to a LIBOR Pricing Option, and which has a maturity corresponding to the LIBOR Interest
Period in question, as reported by the TELERATE rate reporting system (or any successor), as
determined by Bank by noon of the date upon which a LIBOR Interest Period is to commence. Each
determination by Bank of the LIBOR Rate shall be conclusive in the absence of manifest error.




          “LIBOR Reserves” means, for any principal amount which is subject to a LIBOR Pricing Option
for any LIBOR Interest Period therefor, the daily average maximum rate (expressed as a decimal) at
which reserves (including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D established by the Board of Governors of
the Federal Reserve System (or any successor rule or





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regulation) by Bank against “Eurocurrency Liabilities” (as such term is used in Regulation D) but
without benefit of credit or proration, exemptions or offsets that might otherwise be available to
Bank from time to time under Regulation D. Without limiting the effect of the foregoing, LIBOR
Reserves shall reflect any other reserves required to be maintained by Bank against (1) any
category of liabilities that includes deposits by reference to which the LIBOR Interest Rate for
loans is to be determined; or (2) any category of extension of credit or other assets that are
subject to an interest rate based on the LIBOR Rate.




          “Lien” means any security interest, mortgage, pledge, assignment, or voluntary or involuntary
lien, charge or other encumbrance of any kind, including interests of vendors or lessors under
conditional sale contracts or capital leases.




          “Loan Documents” means this Agreement, the Note, and all mortgages, instruments and documents
securing Obligations, all guaranties of Obligations, and all other documents delivered or
required, as a condition to the making of any Loan or otherwise, in connection with this
Agreement.




          “Loans” means the Revolving Loans.




          “Note” means the Revolving Note.




          “Obligation(s)” means all loans, advances, indebtedness and other obligations of any Borrower
owed to Bank or any Bank Affiliate of every description whether now existing or hereafter arising
(including those owed by any Borrower to others and acquired by Bank or any Bank Affiliate by
purchase, assignment or otherwise) and whether direct or indirect, primary or as guarantor
(including guaranties of obligations owed by any Affiliate to Bank or any Bank Affiliate) or
surety, absolute or contingent, liquidated or unliquidated, matured or unmatured, whether or not
secured by additional collateral, and including without limitation obligations to perform or
forbear from performing acts, all amounts represented by letters of credit now or hereafter issued
by Bank or any Bank Affiliate for the benefit of or at the request of any Borrower, and all
expenses and attorney’s fees incurred by Bank or any Bank Affiliate under this Agreement or any
other document or instrument related thereto.




          “Permitted Investments” means




          (a) investment in cash and Cash Equivalents;




          (b) intercompany loans to, between or among Borrowers:




          (c) loans and advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business;




          (d) capital contributions by a Borrower to its Subsidiaries (whether now existing, or,
subject to Section 5.4, hereafter created);




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          (e) investment in customers or account debtors of a Borrower or a Subsidiary of Borrower
received in connection with the bankruptcy or reorganization, or in settlement of delinquent
obligations, of such entity, in the ordinary course of business and in accordance with such
entity’s usual and customary collection and credit policies;




          (f) investments in connection with accounts receivable in the ordinary course of business;




          (g) investments received as the non-cash portion of consideration received in connection with
asset dispositions permitted hereunder;




          (h) investments existing as of the date hereof;




          (i) investments under Rate Management Agreements;




          (j) investments in securities in accordance with the Investment Policy of the Borrowers as
set forth on Exhibit 1.1; and




          (k) other investments in an amount not to exceed $3,000,000.




          “Permitted Liens” means the following liens, security interests and other encumbrances:




          (a) Existing liens and security interests;




          (b) Purchase money security interests (which term shall include mortgages, conditional sale
contracts, capitalized leases and all other title retention or deferred purchase devices) to
secure the purchase price of property acquired hereafter by any Borrower, or to secure
Indebtedness incurred solely for the purpose of financing such acquisitions subject to the
limitation set forth in the definition of Permitted Indebtedness;




          (c) Deposits or pledges made in connection with, or to secure payment of, workmen’s
compensation, unemployment insurance, old age pensions or other social security; liens in respect
of judgments or awards; and liens for taxes, assessments or governmental charges or levies and
liens to secure claims for labor, material or supplies to the extent that payment thereof shall
not at the time be required to be made in accordance with Section 5.7;




          (d) Encumbrances in the nature of zoning restrictions, easements, and rights or restrictions
of record on the use of real property which do not materially detract from the value of such
property or impair its use in the business of the owner or lessee;




          (e) Liens created by or resulting from any litigation or legal proceeding, provided the
execution or other enforcement thereof is effectively stayed and the claims secured thereby are
being actively contested in good faith by appropriate proceedings;




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




          (g) Liens in favor of the Bank securing the Obligations;




          (h) Inchoate liens for taxes and other governmental charges which are not yet due and payable;




          (i) Banker’s liens and rights of set-off arising in the ordinary course; and




          (j) Liens securing indebtedness hereunder.




          “Pricing Option” means the LIBOR Pricing Option or the Euro LIBOR Pricing Option.




          “Permitted Indebtedness: means:




          (a) Indebtedness incurred under this Agreement and the other Loan Documents;




          (b) (i) Indebtedness outstanding on the Closing Date and (ii) refinancings or renewals
thereof, provided that any such refinancing Indebtedness is in an aggregate principal amount not
greater than the aggregate principal amount of the Indebtedness being renewed or refinanced;




          (c) Indebtedness under hedging contracts with respect to interest rates, foreign currency
exchange rates or commodity prices, in each case, not entered into for speculative purposes;




          (d) Indebtedness incurred by an Affiliate or Subsidiary in connection with an investment
permitted by Section 5.3;




          (e) Indebtedness in respect of purchase money obligations and capital lease obligations, and
refinancings or renewals thereof, in an aggregate amount not to exceed $3,000,000 at any time
outstanding;




          (f) Indebtedness incurred by foreign subsidiaries in an aggregate amount not to exceed
$3,000,000 any time outstanding;




          (g) Indebtedness in respect of bid, performance or surety bonds, workers’ compensation
claims, self-insurance obligations and bankers acceptances issued for the account of any Borrower
in the ordinary course of business, including guarantees or obligations of any Borrower or
Subsidiary with respect to letters of credit supporting such bid, performance or surety bonds,
workers’ compensation claims, self-insurance obligations and bankers acceptances or issued in lieu
of security deposits relating to Leases (in each case other than for an obligation for money
borrowed);




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          (h) Guarantees of any Borrower or any other Subsidiary in respect of Indebtedness otherwise
permitted under this Agreement or leases permitted by Section 5.11;




          (i) Indebtedness arising from the honoring by a bank or other financial institution of a
check, raft or similar instrument inadvertently drawn against insufficient funds in the ordinary
course of business;




          (j) Indebtedness arising in connection with endorsement of instruments for deposit in the
ordinary course of business;




          (k) Indebtedness assumed in connection with any acquisition so long as such Indebtedness (i)
was not created in anticipation of such acquisition and (ii) is either unsecured or secured solely
by the assets and property acquired or owned by the entity or entities acquired; and




          (1) unsecured and subordinate Indebtedness of any Borrower in an aggregate amount not to
exceed $30,000,000 at any time outstanding provided such Borrower has given Bank at least thirty
(30) days prior written notice of the issuance of such Indebtedness.




          “Prime Rate” means the rate of interest per annum announced to be its prime rate from time to
time by Bank at its principal office in Cincinnati, Ohio, whether or not Bank shall at times lend
to borrowers at lower rates of interest or, if there is no such prime rate, then its base rate or
such other rate as may be substituted by Bank for the prime rate.




          “Quick Assets” means Current Assets minus Inventory.




          “Rate Management Agreement” means any agreement providing for payments which are related to
fluctuations of interest rates, exchange rates, forward rates, or equity prices, including, but
not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and any agreement pertaining to equity
derivative transactions (e.g., equity or equity index swaps, options, caps, floors, collars and
forwards), including without limitation any ISDA master Agreement between the Borrowers and the
Bank or any affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents and
other confirming evidence between the parties confirming transactions thereunder, all whether now
existing or hereafter arising, and in each case as amended, modified or supplemented from time to
time.




          “Rate Management Obligations” means any and all obligations of the Borrowers to the Bank or
any affiliate of Fifth Third Bancorp, whether absolute, contingent or otherwise and howsoever and
whensoever (whether now or hereafter) created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor), under or in connection
with (i) any and all Rate Management Agreements, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Agreement.




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          “Responsible Officer” means the chief operating officer or the president of a Borrower or,
with respect to financial matters, the chief financial officer.




          “Subsidiary” means any corporation of which a Borrower directly or indirectly owns or
controls outstanding stock having under ordinary circumstances (not depending on the happening of
a contingency) voting power to elect a majority of the board of directors of said corporation.




          “Subordinated Indebtedness” means Indebtedness that is subordinated to the Obligations owed
to the Bank, in a manner satisfactory to the Bank in form and substance.




          “Tangible Net Worth” shall mean the outstanding principal amount of the Subordinated
Indebtedness plus the total of the capital stock (less treasury stock), paid-in surplus, general
contingency reserves and retained earnings (deficit) of Borrowers and any Subsidiary as determined
on consolidated basis in accordance with generally accepted accounting principles, after
eliminating all inter-company items and all amounts properly attributable to minority interests,
if any, in the stock and surplus of any Subsidiary, minus the following items (without
duplication of deductions) if any, appearing on the consolidated balance sheet of Borrowers:




     (i) all deferred charges (less amortization, unamortized debt discount and expense and
corporate organization expenses);



     (ii) the book amount of all assets which would be treated as intangibles under generally
accepted accounting principles, including, without limitation, such items as goodwill, trademark
applications, trade names, service marks, brand names, copyrights, patents, patent applications
and licenses, and rights with respect to the foregoing;



     (iii) the amount by which aggregate inventories or aggregate securities appearing on the
asset side of such consolidated balance sheet exceed the lower of cost or market value (at the
date of such balance sheet) thereof; and



     (iv) any subsequent write-up in the book amount of any intangible asset resulting from a
revaluation thereof from the book amount entered upon acquisition of such asset.



     1.2 GAAP and Uniform Commercial Code. All financial terms used in this Agreement,
other than those defined in this Section 1, shall have the meanings given to them by generally
accepted accounting principles in the United States. All other undefined terms shall have the
meanings given to them in the Uniform Commercial Code.



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Section 2. Loan and Term.




     2.1 Revolving Credit Loans.



          (a) Subject to the terms and conditions hereof, Bank hereby extends to Borrowers a line of
credit facility (the “Facility”) under which Bank shall make loans (the “Loans” or “Revolving
Loans”) to Borrowers at Agent’s request from time to time during the term of the Facility, in an
amount up to Thirty Million Dollars ($30,000,000). Borrowers may borrow, prepay, and re-borrow
hereunder, provided that the principal amount of all Revolving Loans outstanding at any one time
shall not exceed $30,000,000. If the amount of Revolving Loans outstanding at any time exceeds that
amount, Borrowers shall immediately pay the amount of such excess to Bank in cash. The principal
balance of the Revolving Note outstanding from time to time shall bear interest in accordance with
Section 2.2 of this Agreement.




          (b) Bank will apply funds in Agent’s principal depository account at Bank (the “Corporate
Bank Account”) on a daily basis to the payment of Revolving Loans automatically and without
notice, request or demand by Agent or any Borrower, in accordance with Bank’s automatic sweep
program. Pursuant to that program, Bank will either make Revolving Loans or apply toward the
payment of interest and principal of Revolving Loans or apply toward the payment of interest and
principal of Revolving Loans an amount necessary to maintain a minimum balance in the Corporate
Bank Account of $1,000,000. However, in no event will the principal amount of the Revolving Loans
exceed the amount provided for in clause (a) of this Section. Bank reserves the right to change
the provisions (other than the minimum balance specified above) and mechanics of its automatic
sweep program in any non-material respect in a separate writing to Agent on behalf of the
Borrowers and such change need not be reflected by an amendment to this Agreement in order to be
effective.




          (c) Borrowers shall execute and deliver to Bank the Revolving Note in the principal amount of
$30,000,000, in the form attached as Exhibit 2.1(c).




          (d) The Facility shall expire on September 15, 2012, and the entire outstanding principal
balance of the Revolving Note, and all accrued interest, shall become due and payable not later
than that date. Borrowers may prepay the principal balance of the Revolving Note in whole or part
at any time. Until all Obligations have been fully repaid and this Agreement has terminated, Bank
shall retain its security interest in all Collateral then existing or arising thereafter.




     2.2 Interest.



          (a) Subject to the terms and conditions of this Agreement, the Loans shall bear interest as
follows:




               (1) on amounts subject to a Pricing Option, at an annual rate equal to the LIBOR Rate or the
Euro LIBOR Rate plus the Applicable LIBOR/Euro LIBOR Margin; and



               (2) on amounts not subject to a Pricing Option, at an annual rate equal to the Prime Rate plus
the Applicable Prime Margin in effect on each date; or



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               (3) on a mounts so selected by Agent, the Borrowers have the right to use a LIBOR Pricing
Option in connection with the Bank’s overnight-sweep LIBOR pricing program, with the amounts
subject to such election priced on a daily basis based upon the LIBOR Rate plus Applicable LIBOR
Margin for a 30-day LIBOR Interest Period.



          (b) Subject to the terms and conditions of this Agreement, Borrowers may from time to time
elect to have a Pricing Option apply to a portion of the principal amount of outstanding Loans, as
specified by Agent on behalf of the Borrowers, for a permissible LIBOR Interest Period or a Euro
LIBOR Interest Period specified by Agent. Agent shall make each such election by giving notice
(which notice shah be irrevocable) to Bank in the manner and by the deadline reasonably acceptable
to Bank.




          (c) Borrowers’ right to elect a Pricing Option for any portion of outstanding Loans is
subject to the following limitations: (i) Borrowers may not elect a Pricing Option at a time when
an Event of Default has occurred and has not been waived; (ii) no LIBOR Interest Period or Euro
LIBOR Interest Period shall end later than the maturity date of the Note evidencing the borrowing
of the relevant principal amount; (iii) the principal amount that can be subject to a Pricing
Option is $1,000,000 or a whole multiple thereof; (iv) once a Pricing Option has been selected for
a portion of the Loans, no other Pricing Option may apply to such portion until the expiration of
the LIBOR Interest Period or the Euro LIBOR Interest Period applicable to the first Pricing
Option; and (v) there may be no more than five separate Pricing Options at any given time.




          (d) Interest on the principal amount subject to a LIBOR Pricing Option is payable on the last
day of the relevant LIBOR Interest Period. Interest on the principal amount subject to a Euro
LIBOR Pricing Option is payable quarterly on the last day of each ninety (90) day period. Interest
on the principal amount of Loans not subject to a Pricing Option is payable on the first Business
Day of each calendar month. In addition, all accrued interest is payable at maturity (whether by
acceleration, notice of intention to prepay or otherwise).




          (e) Interest on the Loans shall be computed on the basis of a 360-day year and charged for
the actual number of days involved. The interest rate applicable to amounts not subject to any
Pricing Option shall change automatically upon each change in the Prime Rate or, as specified in
Section 2.2(a)(3), the LIBOR Rate. Upon the occurrence of an Event of Default and until such Event
of Default is waived, the Loans shall bear interest at the Borrower Default Rate; this provision
does not constitute a waiver of any Event of Default or an agreement by Bank to permit any late
payments whatsoever.




          (f) Borrowers shall have the right to prepay the Loans in whole at any time, or in part from
time to time, without premium or penalty, provided that, at any time when a Pricing Option is in
effect (other than is specified in Section 2.2(a)(3)), no prepayment of such portion of the
principal amount of the Loans is subject to such Pricing Option shall be made except on the last
day of the applicable Interest Period. Each notice of prepayment shall be irrevocable and shall
obligate Borrowers to prepay the amount stated therein on the date stated therein.




12









 





          (g) In no event shall the interest rate and other charges hereunder exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that a court determines that Bank has received interest and
other charges hereunder in excess of the highest permissible rate applicable hereto, such excess
shall be deemed received on account of, and shall automatically be applied to reduce, the
principal balance of the Loans, and the provisions hereof shall be deemed amended to provide for
the highest permissible rate. If there are no Obligations outstanding, the Bank shall refund to
Borrowers such excess.




          (h) Borrowers’ right to elect a LIBOR Pricing Option or a Euro LIBOR Pricing Option shall be
terminated automatically if Bank, by telephonic or telegraphic or other
written notice, notifies Agent on behalf of Borrowers that Eurodollar deposits which have a
maturity corresponding to the proposed LIBOR Interest Period or Euro LIBOR Interest Period, in an
amount equal to the amount requested by Borrowers to be subject to a LIBOR Pricing Option or Euro
LIBOR Pricing Option, are not readily available in the London Inter-Bank Eurocurrency Market, or
that, by reason of circumstances affecting such market, adequate and reasonable methods do not
exist for ascertaining the interest rate applicable to such deposits for the proposed LIBOR
Interest Period or the Euro LIBOR Interest Period.




          (i) Notwithstanding anything herein contained to the contrary, if at any time any change in
any law, regulation or official directive, or in the interpretation thereof, by any governmental
body charged with the administration thereof, shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for Bank to fund or maintain its funding
in Eurodollars of any portion of the principal amount of the Note or otherwise to give effect to
Bank’s obligations as contemplated hereby, (i) Bank may by facsimile or other written notice
thereof to Agent on behalf of Borrowers declare Bank’s obligations in respect of the LIBOR Pricing
Option or the Euro Pricing Option to be terminated forthwith, and (ii) all LIBOR Pricing Options
and all Euro Pricing Options then in effect shall forthwith cease to be in effect, and interest
shall from and after such date be calculated at the interest rate applicable to amounts to which
no Pricing Option applies; and (iii) Borrowers’ right to elect LIBOR Pricing Options or Euro
Pricing Options is terminated until Bank notifies Agent on behalf of Borrowers that the right to
elect LIBOR Pricing Options or Euro Pricing Options is reinstated.




          (j) If, due to either (i) the introduction of or any change in or in the interpretation of any
law or regulation or (ii) the compliance with an guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there shall be any increase
in the cost to Bank of agreeing to make or of making, funding or maintaining Loans subject to the
LIBOR Pricing Option or the Euro Pricing Option, then from time to time, upon written demand by
Bank if it shall at the time be the general policy or practice of Bank to demand such compensation
in similar circumstances under comparable provisions of other credit agreements, Borrowers shall
pay to Bank additional amounts sufficient to compensate Bank for such increased cost and Bank shall
be entitled to additional compensation for only that portion of such costs incurred from and after
the date that is ten (10) days prior to the date Borrower receives such notice. A certificate as
to the amount of such increased cost




13









 




submitted to Agent on behalf of Borrowers by Bank shall be conclusive and binding for all
purposes, absent manifest error.




          (k) If, with respect to any LIBOR Pricing Option or Euro LIBOR Pricing Option the LIBOR
Rate or the Euro LIBOR Rate for any LIBOR Interest Period or Euro LIBOR Interest Period will not
adequately reflect the cost to Bank of making a Loan subject to the relevant LIBOR Pricing
Option or the relevant Euro LIBOR Pricing Option for such LIBOR Interest Period or for such Euro
LIBOR Interest Period, Bank shall forthwith so notify Borrowers in writing, whereupon Borrowers’
right to elect any LIBOR Pricing Option or Euro LIBOR Pricing Option shall be suspended until
Bank shall notify them that Bank has determined that the circumstances causing such suspension
no longer exist. Bank shall use its best efforts to substitute a comparable rate during such
time that the LIBOR Pricing Option or the Euro LIBOR Pricing Option is so suspended.




     2.3 Applicable LIBOR/Euro LIBOR Margin



          (a) Borrowers shall make an election on an annual basis to utilize the pricing contained in
either Option A or Option B as set forth in clause (b) of this Section. Agent, on behalf of the
Borrower, shall notify the Bank of their election by September 1 of each year and that election
will become effective as of the October 1 of such year and remain in effect until the following
October 1 (an “Election Year”). As of the date of this Agreement, Borrowers have elected to have
Option A apply for the period of time from the date of this Agreement until October 1, 2008.




          (b) The Applicable LIBOR/Euro LIBOR Margin (“LIBOR+”) expressed as a percentage, in effect
on any date shall be determined based on the ratio of Total Funded Debt to EBITDA of Borrowers
(which shall be determined pursuant to clause (c) of this paragraph), as follows under either
Option A or Option B, as may be applicable for such Election Year.



Option A




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Level I Status Funded	 	Level II Status Funded	 	Level III Status Funded
	 	 	Debt/EBITDA	 	Debt/EBITDA	 	Debt/EBITDA
	Applicable Margin	 	≤1.00:1.00	 	>1.00:1.00≤2.00:1.00	 	>2.00:1.00<3.00:1.00
	Libor Rate/Euro
Libor Rate
Revolver
	 	 	+0.65	%	 	 	+0.75	%	 	 	+1.25	%





Option B




	 	 	 	 	 	 	 
	 	 	Level I Status Funded	 	Level II Status Funded	 	Level III Status Funded
	 	 	Debt/EBITDA	 	Debt/EBITDA	 	Debt/EBITDA
	Applicable Margin	 	≤1.00:1.00	 	>1.00:1.00≤2.00:1.00	 	>2.00:1.00<3.00:1.00
	Unused Fee
	 	10 basis points	 	10 basis points	 	10 basis points
	 
	 	 	 	 	 	 
	Libor Rate/Euro
Libor Rate Revolver
	 	+0.50%	 	+0.60%	 	+1.10%






14









 





          (c) The Total Funded Debt to EBITDA in effect on a certain date is determined as follows: the
Borrowers shall calculate Total Funded Debt to EBITDA each quarter and attach quarterly financial
statements to such calculation and deliver same to Bank at the time that the Bank receives the
financial statements of Borrowers delivered to Bank pursuant to Section 4.1 hereof; provided,
however, that if such financial statements or Total Funded Debt to EBITDA are not delivered on a
timely basis, are not accurate and correct, or are not prepared in accordance with the
requirements of this Agreement, then the Total Funded Debt to EBITDA shall be the ratios
determined by Bank in its sole judgment. If the Total Funded Debt to EBITDA as recalculated
requires a change in Applicable LIBOR/Euro LIBOR Margin, the Applicable LIBOR/Euro LIBOR Margin
will change accordingly starting on the first day of the calendar month following the Bank’s
receipt of such financial statements. Notwithstanding the foregoing, the Applicable LIBOR/Euro
LIBOR Margin in effect on the first day of the LIBOR Interest Period or the Euro LIBOR Interest
Period applicable to a Pricing Option shall remain in effect for such entire LIBOR Interest Period
or Euro LIBOR Interest Period with respect to the amount of the Loan subject to such Pricing
Option.




          (d) If any financial statements of Borrowers are later determined to have been incorrect, and
if the Total Funded Debt to EBITDA determined pursuant to the correct information would result in a
greater amount owing by Borrowers for the relevant period than had been actually paid by Borrowers
for such period, Borrowers shall pay to Bank upon demand, the difference between the amount
actually paid for the relevant period and the amount owed based on the Total Funded Debt to EBITDA
determined pursuant to the correct information, together with interest on the amount owed at the
Prime Rate. If any financial statements of Borrowers are later determined to have been incorrect,
and if the Total Funded Debt to EBITDA determined pursuant to the correct information will result
in a lesser amount of money owing by Borrowers for the relevant period than had actually been paid
by Borrowers for such period, then Borrowers shall receive from Bank to the ratable benefit of
Borrowers upon demand, the difference between the amount actually paid for the relevant period and
the amount owed based on the Total Funded Debt to EBITDA, determined pursuant to the correct
information.




          (e) If any financial statements of Borrowers are later determined to have been incorrect as a
result of a retroactive change in Generally Accepted Accounting Principles, and if the Total
Funded Debt to EBITDA determined pursuant to such changed information would result in a lesser
amount owing by Borrowers for the relevant period than had been actually paid by Borrowers for
such period, Bank upon demand shall rebate or credit the difference to Borrowers between the
amount actually paid for the relevant period and the amount owed based on the Total Funded Debt to
EBITDA determined pursuant to the changed information.




     2.4 Accounting. After the end of each calendar month, Bank will:



          (a) if Bank so elects, charge Agent or any Borrower’s account for any or all amounts then due
to Bank under this Agreement for interest, expenses and the like and notify Borrowers in writing
of such charges; and




15









 





          (b) render to Agent a statement of Borrowers’ loan account with Bank hereunder, which
statement shall be considered correct and to have been accepted by Borrowers and shall be
conclusively binding upon Borrowers, absent manifest error, unless a Borrower notifies Bank in
writing of any discrepancy within fifteen (15) Business Days from the mailing of such statement. As
used herein, “Business Days” are days on which the principal office of Bank is open for the
transaction of its full banking business.




     2.5 Costs. Borrowers shall pay to Bank its reasonable and customary costs and
expenses (including, without limitation, reasonable attorneys’ fees, court costs, litigation and
other expense) incurred or paid by Bank in negotiating, documenting, administering and enforcing
this Agreement and the Loan Documents and in establishing, maintaining, protecting, perfecting or
enforcing any of Bank’s rights or any Borrower’s obligations, including, without limitation, any
and all such reasonable and customary costs and expenses incurred or paid by Bank in defending
Bank’s title or right to the Collateral or in collecting or enforcing payment of the Collateral
and all costs of filing financing, continuation or termination statements or mortgages with
respect to the Collateral.



     2.6 Banking Services. Borrowers shall maintain a full financial services relationship
with Bank (including depository accounts and banking services) so long as the fees related to such
accounts and banking services are reasonable, customary and consistent with fees being charged to
similarly-situated borrowers.



     2.7 Use of Proceeds. The proceeds of the Loans will be used only for general
corporate purposes.



     2.8 Maximum Interest Rate. In no event shall the interest rate and other charges
hereunder exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges hereunder in excess of the highest
permissible rate applicable hereto, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the principal balance of the Loans, in the inverse order of
maturity, and the provisions hereof shall be deemed amended to provide for the highest permissible
rate. If there are no Obligations outstanding, Bank shall refund to Borrowers such excess.



     2.9 Currency Option. (a) Bank hereby provides to Borrowers the option to choose to
have its Loans made to Borrowers in freely tradable foreign currency reasonable acceptable to the
Bank (a “Foreign Currency”) instead of U.S. Dollars (the “Foreign Currency Option”). Any borrowing
to be funded in a Foreign Currency is subject to the following terms and conditions,
notwithstanding anything to the contrary in this Agreement:




	 	(i)	 	Agent must give Bank written notices of its intention to use
the Foreign Currency Option at least 3 days prior to the actual funding date.
Such written notice shall specify the actual funding date, the principal
amount of such funding and state that the Borrowers are not then in default
under the terms of this Agreement.










16









 












	 	(ii)	 	Borrowers, right to elect a Foreign Currency Option for any portion of
outstanding Loans is subject to the following limitations: (A) the total
number of Foreign Currency Options outstanding at any one time under this
Agreement shall not exceed five; (B) Borrowers may not elect a Foreign
Currency Option at a time when an Event of Default has occurred and has not
been waived; (C) no Foreign Currency Option shall end later than the
maturity date of the Note evidencing the borrowing of the relevant principal
amount; and (D) once a Foreign Currency Option has been selected for a
portion of the Loans, no other Foreign Currency Option may apply to that
same portion of the Loans until the expiration of the interest period
applicable to such Foreign Currency Option (but nothing in this clause (D)
shall be construed as prohibiting separate Foreign Currency Options on
different portions of the Loans as contemplated by clause (A) of this
paragraph).
	 
	 	(iii)	 	Borrowers’ right to elect a Foreign Currency Option shall be
suspended automatically if Bank, by telephonic or telegraphic or other written
notice, notifies Borrowers that foreign currency contracts which have a
maturity corresponding to the proposed interest period, in an amount equal to
the amount requested to be subject to a Foreign Currency Option, are not
readily available. Such suspension shall end automatically upon termination of
the circumstances originally creating the suspension.





       
   (a) Notwithstanding anything herein contained to the contrary, if at any time any change in
any law, regulation or official directive, or in the interpretation thereof, by any governmental
body charged with the administration thereof, shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for Bank to fund or maintain its funding
in a Foreign Currency of any portion of the principal amount of the Loans or otherwise to give
effect to Bank’s obligations as contemplated hereby, (A) Bank may by facsimile or other written
notice thereof to Borrowers declare Bank’s obligations in respect of the Foreign Currency Option
to be terminated forthwith, and (B) all Foreign Currency Options then in effect shall forthwith
cease to be in effect, and interest shall from and after such date be calculated at the interest
rate applicable to amounts to which no Foreign Currency Option applies; and (C)
Borrowers’ right to elect Foreign Currency Options is terminated until Bank notifies
Agent that Borrowers’ right to elect Foreign Currency Options is reinstated.




          (b) If. due to either (A) the introduction of or any change in or in the interpretation of
any law or regulation or (B) the compliance with an guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there shall be any increase
in the cost to Bank of agreeing to make or of making, funding or maintaining Loans subject to the
Foreign Currency Option, then from time to time, upon written demand by Bank if it shall at the
time be the general policy or practice of Bank to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, Borrowers shall pay to Bank
additional amounts sufficient to compensate Bank for such




17









 







increased cost. A certificate as to the amount of such increased cost submitted to Borrowers by
Bank shall be conclusive and binding for all purposes, absent manifest error.




          (c) Each Borrower hereby indemnifies Bank and holds Bank harmless from and against any and all
losses or expenses that Bank may sustain or incur as a consequence of any prepayment or any default
by any Borrower in the payment of the principal of or interest on any Foreign Currency Option or
failure by a Borrower to complete a borrowing of, a prepayment of or conversion of or to a Foreign
Currency Option after notice thereof has been given by any Borrower including (but not limited to)
any interest payable by Bank to lenders of funds obtained by it in order to make or maintain its
Foreign Currency Option hereunder, and any other loss obtained by it in order to make or maintain
its Foreign Currency Option hereunder, and any other loss or expense incurred by Bank by reason of
the liquidation or re-employment of deposits or other funds acquired by Bank to make, continue,
convert into or maintain, a Foreign Currency Option.




          (d) Without limiting and in addition to the provisions of this Agreement, if for the purposes
of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any other
Loan Document to which a Borrower is party it becomes necessary to convert into the currency of
such jurisdiction (the “Judgment Currency”) any amount due hereunder in any currency other than
the Judgment Currency, then conversion shall be made at the rate of exchange prevailing on the
business day before the day of which judgment is given. For the purpose, “rate of exchange” means
the rate at which Bank would, on the relevant date at or about 12:00 noon (New York time), be
prepared to sell a similar amount of such currency in New York against the Judgment Currency. In
the event that there is a change in the rate of exchange prevailing between the business day
before the day on which the judgment is given and the date of payment of the amount due, the
applicable credit party shall, on the date of payment, pay such additional amounts (if any) as may
be necessary to ensure that the amount paid on such date is the amount in the Judgment Currency
which when converted at the rate of exchange prevailing on the date of payment is the amount then
due under this Agreement or such other applicable Loan Document in such other currency. Any
additional amount due from Borrowers under this Section will be due as a separate debt and shall
not be affected by judgment being obtained for any other sums due under or in respect of any of
the Loan Documents.




     2.10 Joint and Several Liability; Agent.



          (a) The obligations and liabilities of Borrowers, under, and all representations, warranties
and covenants of Borrowers in, this Agreement and the Loan Documents shall be joint and several in
all respects whatsoever. Whenever the term “Borrower” or “Borrowers” is used in this Agreement or
the Loan Documents it shall mean each individual Borrower and all Borrowers jointly and severally.




          (b) Bank may deal with each Borrower as if it were the sole obligor, without impairing in any
way the liability of any other Borrower. Without limiting the generality of that right, Bank may
in particular release, impair, or fail to perfect an interest in any Collateral of any Borrower,
waive defaults by any Borrower, or extend, compromise or release the liability of any Borrower,
without the consent of any other Borrower.




18









 





          (c) Borrowers represent that they have carefully considered the alternatives to and the legal
consequences of incurring joint and several liability for the Obligations and have determined that
by such arrangement they are able to obtain financing on terms more favorable than otherwise, and
that under a joint and several loan facility they will each realize substantial interest savings
over alternative financing arrangements.




          (d) All Borrowers hereby irrevocably appoint Agent as their representative to deal with Bank
on their behalf in all respects in connection with this Agreement and the transactions
contemplated herein. All Borrowers agree to be bound by all actions of Agent in all such respects.




          (e) Bank may bring a separate action or actions on the Obligations against each, any, or all
of the Borrowers, whether action is brought against any other or all of such Borrowers, or any one
or more of the Borrowers is or is not joined therein. Each Borrower agrees that any release which
may be given to any one or more of the Borrowers or any guarantor of the Obligations shall not
release any other Borrower from its obligations hereunder. Each Borrower hereby waives any right
to assert against Bank any defense (legal or equitable), set off, counterclaim, or claims which
such Borrower individually may now or any time hereafter have against another Borrower or any
other party liable to Bank in any manner whatsoever.




          (f) Any and all present and future debt and other obligations of any Borrower to any other
Borrower are hereby subordinated to the full payment and performance of the Obligations; provided,
however, such debt and other obligations may be incurred and repaid, subject to the terms of this
Agreement, so long as no Default or Event of Default shall have
occurred and not have been waived.




          (g) Each Borrower is presently informed as to the financial condition of each of the other
Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon
the risk of nonpayment of the Obligations. Each Borrower hereby covenants that it will continue to
keep itself informed as to the financial condition of all other Borrowers, the status of all other
Borrowers, and of all circumstances which bear upon the risk of nonpayment. Absent a written
request from any of the Borrowers to Bank for information, each Borrower hereby waives any and all
rights it may have to require Bank to disclose to such Borrower any information which Bank may now
or hereafter acquire concerning the condition or circumstances of any of the Borrowers.




          (h) Each Borrower waives all rights to notices of default, existence, creation, or incurring
of new or additional indebtedness, and all other notices of formalities to which such Borrower
may, as a joint and several Borrower hereunder, be entitled.





19









 





Section 3. Representations and Warranties.




     Each Borrower hereby warrants and represents to Bank the following:




     3.1 Organization and Qualification. Each Borrower is duly organized and validly
existing in good standing under the laws of the jurisdiction of its organization, has the power and
authority (corporate and otherwise) to carry on its business and to enter into and perform this
Agreement, the Notes and each Loan Document to which it is a party and is not qualified and
licensed (nor is such qualification or licensing required) to do business in any other
jurisdiction. All information set forth in the Certificate of Borrower for such Borrower, and in
all attachments thereto, is true and correct.



     3.2 Due Authorization. The execution, delivery and performance by each Borrower of
this Agreement, the Notes and each Loan Document to which it is a party have been duly authorized
by all necessary corporate action, and will not contravene any law or any governmental rule or
order binding on such Borrower, or the certificate of incorporation or regulations of such
Borrower, nor violate any material agreement or instrument by which such Borrower is bound nor
result in the creation of a Lien on any assets of such Borrower except the Liens to Bank granted
herein. Each Borrower has duly executed and delivered this Agreement, the Notes and each Loan
Document to which it is a party and they are valid and binding obligations of each Borrower
enforceable according to their terms except as limited by equitable principles and by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of creditors
generally. No notice to or consent by any government body is needed in connection with this
transaction.



     3.3 Litigation. There are no suits or proceedings pending or, to the best knowledge
of Borrowers, threatened against or affecting any Borrower, and no proceedings before any
governmental body pending or threatened against any Borrower or which, if adversely determined,
would have a material negative affect on the Borrower’s business, financial condition or
prospects.



     3.4 Margin Stock. No part of the Loans will be used to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within
the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any margin slock. If requested
by Bank, each Borrower will furnish to Bank statements in conformity with the requirements of
Federal Reserve Form U-l. Margin Stock as defined in Regulations U and X principally includes: (a)
stocks that are registered on a national securities exchange; (b) debt securities (bonds) that are
convertible into margin stocks; (c) any over-the-counter security designated as qualified for
trading in the National Market System under a designation plan approved by the Securities and
Exchange Commission (NMS security); and (d) shares of most mutual funds, unless 95 per cent of the
assets of the fund are continuously invested in U.S. government, agency, state, or municipal
obligations.



     3.5 Business. Each Borrower has all franchises, authorizations, patents, trademarks,
copyrights and other rights necessary or appropriate to conduct its business, except where the
lack of such rights would not have a material adverse effect on Borrower’s business, assets or
financial condition. They are all in full force and effect and are not in known conflict with the
rights of others. No Borrower is a party to or subject to any agreement or restriction which in
the opinion of such Borrower’s management is so unusual or burdensome that it might have a



20









 




material adverse effect on such Borrower’s business, properties or prospects. Each Borrower is in
material compliance with all material agreements applicable to it, including obligations to
contribute to any employee benefit plan or pension plan regulated by the federal Employee
Retirement Income Security Act (“ERISA”).




     3.6 Laws and Taxes. Each Borrower is in material compliance with all laws applicable
to it, has filed all required tax returns and has paid all taxes shown to be due and payable on
those returns. No taxing authority has asserted or assessed any additional tax liabilities against
any Borrower.



     3.7 Environmental
Laws. (a) Each Borrower has obtained all material permits, licenses
and other authorizations which are required under Environmental Laws and each Borrower is in
compliance in all material respects with all terms and conditions of such required permits,
licenses and authorizations, and is also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws;



          (b) No Borrower is aware of, and has not received notice of, any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent compliance or continued compliance in any material respect with
Environmental Laws, or may give rise to any material common law or legal liability, or otherwise
form the basis of any material claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic or
hazardous substance or waste; and




          (c) There is no material civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or, to
the knowledge of any Borrower, threatened against any Borrower, relating in any way to
Environmental Laws.




     3.8 Financial Condition. All financial statements and information relating to
Borrowers which have been or may hereafter be delivered by Borrowers
to Bank are true and correct
in all material respects and have been prepared in accordance with Generally Accepted Accounting
Principles. Borrowers do not have any material obligations or liabilities of any kind not
disclosed in that financial information, and there has been no material adverse change in the
financial condition of Borrowers since the submission of such financial information to Bank.



     3.9 Solvency. Each Borrower is Solvent and upon consummation of the transactions
contemplated hereby will be Solvent. “Solvent” means that: (a) the present fair salable value of a
Borrower’s assets is in excess of the total amount of its liabilities (including contingent
liabilities); (b) each Borrower is able to pay its debts as they become due; and (c) no Borrower
intends to or believe it will incur obligations beyond its ability to pay as they mature.



21









 





Section 4. Financial Statements and Information.




     4.1 Financial Statements. So long as any Obligations to Bank are outstanding,
Borrowers shall maintain a standard and modern system for accounting in accordance with Generally
Accepted Accounting Principles and Agent shall furnish to Bank:



          (a) Within forty-five (45 ) days after the end of the first three fiscal quarters of each
fiscal year, a copy of its balance sheet as of the end of such quarter, and profit and loss
statements and cash flow statements for such quarter and for the year to date, which statements
shall be in reasonable detail, prepared and certified as complete and correct, subject to changes
resulting from year-end adjustments, by the principal financial officer of the Agent and shall be
in such form as is reasonably acceptable to the Bank;




          (b) Within ninety (90) days after the end of each fiscal year beginning with the current
fiscal year, a copy of its financial statements for such year including its balance sheet, profit
and loss and surplus statements for such year, which statements shall be audited by a firm of
independent certified public accountants acceptable to Bank (which acceptance shall not be
unreasonably withheld), and accompanied by a standard audit opinion of such accountants without
significant qualification;




          (c) With the statements submitted under (a) and (b) above (being on a quarterly and an annual
basis), a certificate signed by the principal financial officer of the Agent, (i) stating he is
familiar with this Agreement and the other Loan Documents and that no Default or Event of Default
has occurred, or if any such condition or event existed or exists, specifying it and describing
what action the Borrower has taken or proposes to take with respect thereto, and (ii) setting
forth, in summary form, figures showing the financial status of the Borrowers in respect of the
financial covenants and restrictions contained in this Agreement;




          (d) Promptly after any Responsible Officer of any Borrower obtains knowledge of any condition
or event which constitutes a Default or Event of Default, a certificate of such person specifying
the nature and period of the existence thereof, and what action Borrowers have taken or is taking
or proposes to take in respect thereof;




          (e) Promptly upon receipt thereof, copies of all letters to management and all audit reports
submitted to Borrowers by independent certified public accountants in connection with each audit
of the books of Borrowers made by such accountants;




          (f) Copies of all statements, notices and reports any Borrower shall hereafter send to its
creditors generally;




          (g) Promptly upon the occurrence thereof, notice that a material reportable event (as defined
in Section 4043(b) of the Employee Retirement Income Security Act of 1974 (“ERISA”)) (a
“Reportable Event”) has occurred with respect to any employee benefit plan maintained by a
Borrower for its employees (a “Plan”); and




          (h) With reasonable promptness, such other information as Bank requests.





22









 







If at any time a Borrower has any subsidiaries which have financial statements that could be
consolidated with those of such Borrower under generally accepted accounting principles, the
financial statements required by subsections (a) and (b) above shall be the financial statements of
Parent’s consolidated world-wide operations, consolidated US operations and consolidated European
operations.



Section 5. Covenants. Each Borrower hereby covenants to Bank the following:




     5.1 Existence; Merger; Disposition of Assets. Except with the prior written consent
of Bank, which consent shall not be unreasonably withheld, each Borrower (a) will maintain its
existence, (b) will not (i) change its capital structure (except that sales of additional shares
of common stock and treasury stock transactions shall be permitted), (ii) merge or consolidate
with any corporation, partnership or other entity (except (A) in connection with any acquisition
or investment not prohibited by this Agreement, a Borrower may merge or consolidate with another
corporation or entity so long as the resulting entity is fully liable as a Borrower under this
Agreement, and (B) any Borrower may merge or consolidate with another Borrower), or (iii) sell,
lease, transfer or otherwise dispose of all or substantially all of its assets (except (A) to
another Borrower or to a new Subsidiary which has complied or is complying with Section 5.4 or (B)
the sale, abandonment or other disposition of obsolete assets).



     5.2 Pledge or Encumbrance of Assets. No Borrower will create, incur, assume, cause or
permit to occur or permit to continue in existence (i) any Lien on any property or asset now owned
or hereafter acquired by a Borrower, except for Permitted Liens, (ii) any material impairment of
the value or priority of Bank’s Lien in Collateral other than impairment in the value of
Collateral resulting from economic fluctuations in the value of assets (including inventory)
outside of the control of Borrowers, (iii) any condition or circumstance allowing a notice of
lien, levy or assessment to be filed against a Borrower or an asset of such Borrower by any
government authority (other than Permitted Liens), or (iv) a seizure, attachment or other levy
upon an asset of a Borrower by a judicial officer (other than Permitted Liens).



     5.3 Guarantees and Loans. No Borrower will enter into any direct or indirect
guarantees other than by endorsement of checks for deposit in the ordinary course of such
Borrower’s business and guarantees permitted by clause (h) of the definition of Permitted
Indebtedness, nor make any advance or loan other than in the ordinary course of such Borrower’s
business as presently conducted except that a Borrower may make loans or advances to its
Affiliates and Subsidiaries and other Permitted Investments.



     5.4 Business. Each Borrower will engage primarily in business of the same general
character as that now conducted. Each Borrower will not make any investment in any other entity,
through the direct or indirect holding of securities or otherwise, except that a Borrower shall be
permitted to (a) conduct its business outside of the United States through newly formed,
wholly-owned (or as near to wholly-owned as legally possible where resident share or other
restrictions on such ownership apply) Subsidiaries, and (b) conduct its business through
newly-formed, wholly-owned domestic Subsidiaries so long as Bank is notified in advance of such
formation and Bank consents to such formation (which consent shall not be unreasonably



23









 




withheld or delayed) and each such Subsidiary (if requested by Bank) (i) grants to Bank a
first-priority and perfectable security interest in its Accounts and the other classes of assets
that are Collateral hereunder, and (ii) executes in favor of Bank an agreement whereby such
Subsidiary is bound to abide by covenants and restrictions substantially similar to those
applicable to Borrowers hereunder, and (c) invest in Permitted Investments.




     5.5 Condition and Repair. Each Borrower will maintain in good repair and working
order, subject to normal wear and tear, all material properties used in its business and from time
to time will make all appropriate repairs and replacements thereof.



     5.6 Insurance. Each Borrower will maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business against loss or damage of the
kinds and in the amounts customarily insured against by corporations of established reputation
engaged in the same or similar businesses, together with any other insurance requested by Bank.
All such policies relating to Collateral will name Bank as an additional insured and, where
applicable, as loss payee under a lender loss payable endorsement satisfactory to Bank, and shall
provide for thirty (30) days written notice to Bank before such policy is altered or canceled.



     5.7 Taxes. Each Borrower has paid and will pay all taxes, assessments and other
governmental charges imposed upon it or any of its assets or in respect of any of its franchises,
business, income or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become a Lien or charge upon any of its
assets, provided that (unless any material item or property would be lost, forfeited or materially
damaged as a result thereof) no such charge or claim need be paid if it is being contested in good
faith by appropriate proceedings promptly initiated and diligently conducted, if Bank is notified
in advance of such contest and if a Borrower establishes any reserve or other appropriate provision
required by generally accepted accounting principles and deposits with Bank cash or bond in an
amount acceptable to Bank.



     5.8 Compliance with Law. Each Borrower will comply with all federal, state and local
laws, regulations and orders applicable to it or its assets, in all respects material to such
Borrower’s business, assets or prospects, including without limitation all Environmental Laws.



     5.9 Transactions with Affiliates. Affiliate Transactions shall be permitted under
this Agreement. As used herein, “Affiliate Transaction” shall mean any of the following: (a)
directly or indirectly making or causing to be made any guarantee for the benefit of any Affiliate
(other than another Borrower), (b) directly or indirectly making or causing to be made any loans
or advances to or investments in any Affiliate (other than another Borrower), or (c) entering into
any transaction with any Affiliate (other than another Borrower) except sales of goods or
inventory to or from subsidiaries in the ordinary course of business. Borrowers shall give Bank
prior written notification of any Affiliate Transaction in excess of $5,000,000.



     5.10 Indebtedness. No Borrower will incur, create, assume or permit to exist
indebtedness for borrowed money (other than the Obligations), or indebtedness on account of
deposits, advances or progress payments under contracts, or notes, bonds, debentures or similar



24









 




obligations (other than Permitted Indebtedness), unless the creditor relating to any new
indebtedness and such Borrower have entered into an intercreditor agreement with Bank effectively
subordinating such new indebtedness to all Obligations on terms reasonably satisfactory to Bank.




     5.11
Leases. No Borrower will enter into any operating or capital lease of real or
personal property as lessee if the aggregate rentals due under such lease and all other leases
then in effect would exceed $2,500,000 in any fiscal year.



     5.12 Management. At least one of William J. Motto or John A. Kraeutler shall be
employed full-time in at least one of the following positions: Chairman of the Board, Chief
Executive Officer or President.



     5.13 Depository. At all times the Bank shall be Borrowers’ principal depository in
which the majority of Borrowers’ operating funds and accounts are deposited and Bank shall be the
principal bank of account of Borrowers.



     5.14 Stock Repurchases. Borrowers shall provide to Bank written notification of any
redemption or repurchase any shares of its capital stock in any fiscal year in a total amount
exceeding $5,000,000.



     5.15 Fixed Charge Coverage Ratio. At the end of each fiscal quarter on a rolling four
quarter basis, Borrowers shall maintain a Fixed Charge Coverage Ratio of at least 1.05:1.0. “Fixed
Charge Coverage Ratio” means the ratio of (a) EBITDA for a given measurement period to (b)
required principal payments on Funded Indebtedness plus income taxes, plus interest expense, plus
unfunded capital expenditures and paid dividends, for such measurement period.



     5.16 Tangible Net Worth. Borrowers shall maintain a Tangible Net Worth as of the end
of each fiscal period of at least $26,500,000 on a consolidated basis.



     5.17 Funded Debt Ratio. At the end of each fiscal quarter of Borrowers during the
term of this Agreement on a rolling four quarter basis, the ratio of Borrowers’ Funded Debt to
EBITDA shall not exceed 3.00:1.00.



     5.18 Representations. Each Borrower covenants that the representations set forth
herein will continue to be correct so long as this Agreement is in effect. Each Borrower will,
within three days of its knowledge thereof, give written notice to Bank of the existence of any
event which would prohibit such Borrower from continuing to make the representations set forth in
this Agreement.



Section 6. Security.




     6.1 Security Interest of Bank. To induce Bank to make the Loans, and as security for
all Obligations, each Borrower hereby assigns to Bank as Collateral and grants to Bank a
continuing pledge and security interest in the following property of such Borrower (together with
all proceeds and products thereof and all additions and accessions thereto, replacements thereof,
supporting obligations therefor, guaranties thereof, insurance or condemnation proceeds thereof,




25









 







documents related thereto, all sales of accounts constituting a right of payment therefrom, all
tort or other claims against third parties arising out of damage thereto or destruction thereof,
all property received wholly or partly in trade or exchange therefor, all fixtures attached or
appurtenant thereto, all leases thereof, and all rents, revenues, issues, profits and proceeds
arising from the sale, lease, encumbrance, collection or any other temporary or permanent
disposition thereof, or any other interest therein, the “Collateral”), whether now owned or
existing or hereafter acquired or arising and regardless of where located:




          (a) all Accounts, all Inventory, all Equipment, all General Intangibles, all Investment
Property;




          (b) all instruments, chattel paper, electronic chattel paper, documents, securities, moneys,
cash, letters of credit, letter of credit rights, promissory notes, warrants, dividends,
distributions, contracts, agreements, contract rights or other property, owned by a Borrower or in
which a Borrower has in interest, including but not limited to, those which now or hereafter are
in the possession or control of Bank or in transit by mail or carrier to or in the possession of
any third party acting on behalf of Bank, without regard to whether Bank received the same in
pledge, for safekeeping, as agent for collection or transmission or otherwise or whether Bank had
conditionally released the same, and the proceeds thereof, all rights to payment from, and all
claims against Bank, and any deposit accounts of a Borrower with Bank, including all demand, time,
savings passbook or other accounts and all deposits therein;




          (c) all assets and all personal property now owned or hereafter acquired; all now owned and
hereafter acquired inventory, equipment, fixtures, goods, accounts, chattel paper, documents,
instruments, farm products, general intangibles, supporting obligations, software, and all rents,
issues, profits, products and proceeds thereof, wherever any of the foregoing is located; and




          (d) all cash, instruments, documents, securities, money or other property, owned by a
Borrower or in which a Borrower has an interest, which now or hereafter are at any time in the
possession or control of Bank or in transit by mail or carrier to or in the possession of any
third party acting on behalf of Bank, without regard to whether Bank received the same in pledge,
for safekeeping, as agent for collection or transmission or otherwise or whether Bank had
conditionally released the same, and any deposit accounts of any Borrower with Bank, including all
demand, time, savings, passbook or other accounts.




     6.2 Representations in Exhibit 6.2. Each Borrower represents and warrants that the
representations and warranties set forth in Exhibit 6.2, the Specific Representations Exhibit, are
true and correct. Except as otherwise permitted hereunder and without the prior written consent of
Bank (which consent shall not be unreasonably withheld), no Borrower shall change its name,
transfer its executive offices or maintain records with respect to Accounts at any location other
than its present executive offices specified in that Exhibit.



     6.3 Provisions
Concerning Accounts. (a) Each Borrower represents and warrants that
each Account reflected in its books and records submitted to Bank is, or will at the time it
arises be, owned by such Borrower free and clear of all Liens in favor of any third party (other
than



26









 




Permitted Liens), will be a bona fide existing obligation created by the final sale and delivery of
goods or the completed performance of services by such Borrower in the ordinary course of its
business, will be for a liquidated amount maturing as stated in the supporting data covering such
transaction, and will not be subject to any known deduction, offset, counterclaim, return privilege
or other condition except as reflected on Borrowers’ books and records delivered to Bank. No
Borrower shall re-date any invoices. Any allowances between a Borrower and its customers will be in
accordance with the usual customary practices of such Borrower, as they exist on the date of this
Agreement. Notwithstanding the foregoing, the Bank acknowledges that the Borrowers do have
distribution rebates and such distribution rebates are permitted under this Agreement.




          (b) After Default, Bank or its designee may at any time notify Account Debtors that Accounts
have been assigned to Bank or of Bank’s security interest therein, and after default by Borrowers
hereunder collect the same directly and charge all collection costs and expenses to a Borrower’s
account.




          (c) Bank shall not be liable to Borrowers or any third person for the correctness, validity
or genuineness of any instruments or documents released or endorsed to a Borrower by Bank (which
shall automatically be deemed to be without recourse to Bank in any event), or for the existence,
character, quantity, quality, condition, value or delivery of any goods purporting to be
represented by any such documents; and Bank, by accepting a Lien in the Collateral, or by
releasing any Collateral to a Borrower, shall not be deemed to have assumed any obligation or
liability to any supplier or Account Debtor of a Borrower or to any other third party, and
Borrowers agree to indemnify and defend Bank and hold it harmless in respect to any claim or
proceeding arising out of any matter referred to in this subparagraph.




          (d) A Borrower shall immediately notify Bank if it becomes aware of a receivership petition
or a petition under any chapter of the federal bankruptcy act being filed (or pending) by or
against an Account Debtor owing such Borrower more than $500,000, or if an Account Debtor owing
such Borrower such an amount dissolves, makes an assignment for the benefit of creditors, becomes
insolvent, fails or goes out of business. After the occurrence of an Event of Default, no
discount, credit or allowance shall be given with respect to an Account in excess of $250,000
without the Bank’s consent. The foregoing provisions of this clause (d) do not apply to any
distribution rebates granted by any Borrower.




          (e) Upon the occurrence of an Event of Default, each Borrower appoints Bank and Bank’s
designees as its attorney-in-fact to endorse such Borrower’s name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may come into Bank’s
possession; to sign a Borrower’s name on any invoice or bill of lading relating to any Accounts,
on drafts against Account Debtors, on schedules and assignments of Accounts, on verifications of
Accounts, on notices to Account Debtors, and on proofs of claim, releases of lien or any other
documents needed to collect Accounts; to notify post office authorities to change the address for
delivery of a Borrower’s mail to an address designated by Bank, to receive and open all mail
addressed to any Borrower and to retain all mail relating to Collateral and forward all other mail
to such Borrower; to send requests for verification of Accounts to customers or Account Debtors,
and to do all things necessary to carry out or enforce this Agreement. Each




27









 







Borrower ratifies and approves all acts of Bank or its designees as attorney-in-fact. Bank or its
designees as attorney-in-fact will not be liable for any acts or omissions, or for any error of
judgment or mistake of fact or law except for bad faith. This power, being coupled with an
interest, is irrevocable until all Obligations have been fully satisfied. Any person dealing with
Bank shall be entitled to conclusively rely on any written or oral statement of Bank or its
designee that this power of attorney is in effect. Bank will not exercise this power of attorney
until an Event of Default has occurred.




          (f) If any Accounts in excess of $5,000,000 shall arise out of a contract with the United
States of America or any department, agency, subdivision or instrumentality thereof, Borrowers
shall promptly notify Bank thereof in writing and take all other action requested by Bank to
perfect Bank’s Lien in such Accounts under the provisions of the Federal laws on assignment of
claims.




     6.4
Liens. each Borrower represents and warrants that: it has good and marketable
title to the Collateral, and the Liens granted to Bank pursuant to this Agreement are fully
perfected first priority Liens in and to the Collateral with priority over the rights of every
person other than such Borrower in the Collateral and other than as described in the definition of
“Permitted Liens”; each Borrower is the owner of all personal property in its possession or shown
on its books and records; and all assets of such Borrower are owned free, clear and unencumbered,
except for Permitted Liens.



     6.5 Further Assurances. (a) Each Borrower shall execute and deliver to Bank at Bank’s
request all financing statements, continuation statements, fixture filings, endorsements of
filings, mortgages, schedules of accounts, letters of authority and all other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and maintain perfected Bank’s
security interest in the Collateral and to fully consummate all transactions contemplated under
this Agreement. Each Borrower hereby irrevocably appoints Bank and Bank’s designee as such
Borrower’s true and lawful attorney-in-fact with power to sign the name of such Borrower on any
such documents. Each Borrower ratifies and approves all acts of Bank and its designees as
attorney-in-fact. Bank or its designees as attorney-in-fact will not be liable for any acts or
omissions, or for any error of judgment or mistake of fact or law, except for bad faith.



          (b) If any Collateral, including proceeds, consists of a letter of credit or an advice of
credit in excess of $5,000,000, or an instrument, money, negotiable documents, chattel paper or
similar property (collectively, “Negotiable Collateral”) Borrowers shall, immediately upon receipt
thereof, endorse and assign such Negotiable Collateral over to Bank and deliver actual physical
possession of the Negotiable Collateral to Bank, along with causing the execution and delivery of
any control agreement deemed necessary by Bank to perfect its interest in such Negotiable
Collateral. In addition, Borrowers shall assign and deliver to Bank certain specific promissory
notes for certain foreign subsidiaries of Agent.




          (c) Bank may, at any time or times hereafter upon reasonable notice, during Borrowers usual
business hours, or during the usual business hours of any third party having control over the
records of Borrowers, inspect and verify the Collateral and Borrowers books and records in order
to verify the amount or condition of, or any other matter relating to, the




28









 







Collateral and Borrowers financial condition. Borrowers shall promptly deliver to Bank copies of
all books and records requested by Bank.




     6.6 Reinstatement of Lien. If, at any time after payment in full by Borrowers of all
Obligations and termination of Bank’s Liens, any payments on Obligations secured by Collateral
theretofore made by any Borrower or any other person must be disgorged by Bank for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of a
Borrower or such other person), this Agreement and Bank’s Liens granted hereunder shall be
reinstated as to all disgorged payments as though such payment had not been made, and Borrowers
shall sign and deliver to Bank all documents and things necessary to reperfect all terminated
Liens.



     6.7 Other Amounts Deemed Loans. If a Borrower fails to pay any tax, assessment,
government charge or levy or to maintain insurance within the time permitted by this Agreement, or
to discharge any Lien prohibited hereby, or to comply with any other obligation, Bank may, but
shall not be required to, pay, satisfy, discharge or bond the same for the account of such
Borrower, and to the extent permitted by law and at the option of Bank all monies so paid out
shall be deemed Loans.



     6.8 Borrower Remains Liable. Each Borrower shall remain liable under any contracts
and agreements included in the Collateral to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, and Bank shall not have any
obligation or liability under such contracts and agreements by reason of this Agreement or
otherwise.



     6.9 Financing Statements. Each Borrower hereby authorizes Bank to file a copy of this
Agreement as a Financing Statement with appropriate county and state government authorities
necessary to perfect Bank’s security interest in the Collateral as set forth herein. Each Borrower
hereby further authorizes Bank to file UCC Financing Statements on behalf of such Borrower and Bank
with respect to the Collateral.



     6.10 Additional Collateral and Credit Support. Each Borrower agrees as follows: (a)
the Obligations shall be secured by a pledge of the capital stock of any direct or indirect
subsidiary of any Borrower now in existence or hereafter arising in the future; (b) the Borrowers
shall assign to Bank as collateral security for the Obligations, any and all intercompany notes in
favor of any Borrower whether now in existence or arising in the future; and (c) the Obligations
shall be guaranteed by all existing or hereafter created direct or indirect subsidiaries of any
Borrower to the extent permitted by law; provided, however, that this Section 6.10 shall not be
applicable to any subsidiary of any Borrower that is not created under the laws of the United
States or any state or territory thereof.



Section 7. Conditions Precedent.




     7.1 Conditions to Loans. Bank shall not make any Loan until Borrowers have delivered
to Bank, in addition to this Agreement and the Note, the following in form and substance
satisfactory to Bank:



29









 





          (a) all appropriate financing statements (Form UCC-1) and all consents or waivers of
mortgagees, and all items of Negotiable Collateral.




          (b) a Certificate of Borrower in the form of Exhibit 3.1, and all attachments thereto.




          (c) UCC searches, tax lien and litigation searches, insurance certificates, notices, filings
or other documents which Bank may require to reflect, perfect, or protect the priority of Bank’s
priority Lien in the Collateral and to fully consummate this transaction.




          (d) a favorable opinion of counsel to Borrowers, substantially in the form of Exhibit 7.1(d).




          (e) payment by Borrowers of all fees and expenses of Bank’s counsel and all recording fees
and taxes, if any.




          (f) executed copies of all documents set forth on Bank’s document list for this transaction.




          (g) such additional information and materials as Bank may reasonably request.




     7.2 Conditions to each Loan. Bank will not make any Loan if there has occurred,
and has not been waived, any Default or Event of Default.



Section 8. Events of Default and Remedies.




     8.1 Events of Default. Any of the following events shall be an Event of
Default:



          (a) any representation or warranty made by any Borrower or officer of any Borrower herein, or
in any other Loan Document or any document furnished to Bank by any Borrower under this Agreement,
is incorrect in any material respect when made or when reaffirmed; provided that if the same shall
be susceptible of being cured by Borrowers, including elimination of all adverse effects thereof,
no Event of Default shall exist with respect thereto unless the same shall remain uncured for a
period of thirty (30) days after Borrowers shall have received written notice thereof; or




          (b) Borrowers default in the payment of any principal or interest on any Obligation when due
and payable, by acceleration or otherwise, and such default continues for a period of five (5)
business days thereafter; or




          (c) Any Borrower fails to observe or perform any covenant, condition or agreement to be
observed or performed pursuant to the terms hereof, provided such default continues unremedied for
30 days after written notice thereof to Borrowers by Bank, unless such failure or nonperformance
is curable and Borrowers shall, after delivery of such notice, be




30









 







diligently proceeding to correct such failure or nonperformance and shall in fact correct such
failure or non-performance within ninety (90) days of the delivery of such notice (provided,
further, that this additional 90 day-cure period shall not be applicable to a violation of
Sections 8.1 (b), 5.15, 5.16 or 5.17 of this Agreement); or




          (d) Any Borrower fails to keep its assets insured as required herein, or material uninsured
damage to or loss, theft or destruction of the Collateral occurs; or




          (e) an Insolvency Event occurs with respect to any Borrower or any guarantor of an
Obligation; or




          (f) Any Borrower defaults under the terms of any indebtedness or lease not related to the
Obligations and involving total payment obligations of such Borrower in excess of $500,000 which is
not cured within the time period permitted pursuant to the terms and conditions of such
indebtedness or lease, or an event occurs which gives any creditor or lessor the right to
accelerate the maturity of any such indebtedness or lease payments; or




          (g) 
final judgment for the payment of money in excess of $500,000 is rendered against any
Borrower and remains undischarged for 60 days (or the period for appeal thereof has lapsed) during
which execution is not effectively stayed or bonded; or




          (h) any event occurs which might, in Bank’s opinion, have an material adverse effect on the
Collateral or on a Borrower’s financial condition, operations or prospects; or




          (i) a Reportable Event occurs with respect to any Plan, other than a Reportable Event caused
solely by a decrease in employment or a Reportable Event for which the 30-day notice requirements
of Section 4043(a) of ERISA have been waived by the Pension Benefit Guaranty Corporation (the
“PBGC”); or a trustee is appointed by a United States District Court to administer any Plan; or
the PBGC institutes proceedings to terminate any Plan; or




          (j) an Event of Default occurs and is continuing under any Loan Document; or




          (k) the occupation of a majority of the seats (other than vacant seats) on the board of
directors or other governing body of the Agent by Persons who were neither (i) nominated by the
board of directors or other governing body of Borrower nor (ii) appointed by directors so
nominated; or




          (1) Nonpayment by the Borrowers of any Rate Management Obligation when due or the breach by
the Borrowers of any term, provision or condition contained in any Rate Management Agreement.





31









 





     8.2 Remedies. If any Event of Default shall occur and be continuing:




          (a) Bank may cease advancing money hereunder, and/or declare all Obligations to be due and
payable immediately (and, upon the occurrence of an Event of Default based on an Insolvency Event,
all Obligations shall become automatically due and payable without a declaration by Bank),
whereupon they shall immediately become due and payable without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived by Borrowers.




          (b) Bank may set off against the Obligations, all Collateral, balances, credits, deposits,
accounts or monies of any Borrower then or thereafter held with Bank, including amounts
represented by certificates of deposit.




          (c) Bank may resort to the rights and remedies of a secured party under the Uniform
Commercial Code including the right to enter any premises of any Borrower, with or without legal
process and take possession of the Collateral and remove it and any records pertaining thereto
and/or remain on such premises and use it for the purpose of collecting, preparing and disposing
of the Collateral.




          (d) Bank may dispose of the Collateral as is or at its election may refurbish, repair,
improve, process, finish, operate, demonstrate and prepare for sale the Collateral, and may store,
ship, reclaim, recover, protect, advertise for sale or lease, and insure the Collateral; if any
Collateral consists of documents, Bank may proceed either as to the documents or as to the goods
represented thereby; Bank’s failure to take steps to preserve rights against any parties or
property shall not be deemed to be failure to exercise reasonable care with respect to the
Collateral.




          (e) Bank may in its sole discretion pay, purchase, contest or compromise any encumbrance,
charge or lien which in the opinion of Bank appears to be prior or superior to its Lien, and pay
all expenses incurred in connection therewith.




          (f) Bank may sell the Collateral at public or private sale, and Borrowers shall be credited
with the net proceeds of such sale only when they are actually received by Bank; any requirement
of reasonable notice of any disposition of the Collateral shall be satisfied if such notice is
sent to Borrowers, as provided in the Notices Section of this Agreement, 10 days prior to
such disposition.




          (g) A Borrower shall upon request of Bank assemble the Collateral and any records pertaining
thereto and make them available at a place designated by Bank.




          (h) Bank may use, in connection with any assembly or disposition of the Collateral, any
trademark, trade name, tradestyle, copyright, patent right, trade secret or technical process used
or utilized by any Borrower.




     8.3 Cumulative Remedies. No remedy set forth herein is exclusive of any other
available remedy or remedies, but each is cumulative and in addition to every other remedy given
under this Agreement or any other agreement or now or hereafter existing at law or in




32









 







equity or by statute. Bank may pursue its rights and remedies concurrently or in any sequence, and
no exercise of one right or remedy shall be deemed to be an election. If a Borrower fails to
comply with this Agreement, no remedy of law will provide adequate relief to Bank, and Bank shall
be entitled to temporary and permanent injunctive relief without the necessity of proving actual
damages.




     8.4 Fees and Expenses. Upon a sale, lease or other disposition of the Collateral, the
proceeds shall be applied first to the expenses of retaking, holding, storing, processing and
preparing for sale, selling and the like, and, to the extent permitted by law, to reasonable
attorneys’ fees and legal expenses, and then to the satisfaction of the Obligations secured by
this Agreement. Borrowers shall be liable for any deficiency.



Section 9. Miscellaneous Provisions.




     9.1 Delays and Waiver. No delay or omission to exercise any right shall impair any
such right or be a waiver thereof, but any such right may be exercised from time to time and as
often as may be deemed expedient. A waiver on one occasion shall be limited to that particular
occasion.



     9.2 Waiver by Borrower. Each Borrower waives notice of non-payment, demand,
presentment, protest, or notice of protest of any Accounts or other Collateral, and all other
notices; consents to any renewals or extensions of time of payment thereof; and generally waives
any and all suretyship defenses and defenses in the nature thereof.



     9.3 Complete Agreement. This Agreement and the Exhibits are the complete agreement of
the parties hereto and supersede all previous understandings relating to the subject matter
hereof. This Agreement may be amended only by an instrument in writing which explicitly states
that it amends this Agreement, and is signed by the party against whom enforcement of the
amendment is sought. This Agreement may be executed in counterparts, each of which will be an
original and all of which will constitute a single agreement.



     9.4 Severability. If any part of this Agreement or the application thereof to any
person or circumstance is held invalid, the remainder of this Agreement shall not be affected
thereby. The section headings herein are included for convenience only and shall not be deemed to
be a part of this Agreement.



     9.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the respective legal representatives, successors and assigns of the parties hereto; however, a
Borrower may not assign any of its rights or delegate any of its obligations hereunder. Bank (and
any subsequent assignee) may, upon thirty days notice to Borrowers, transfer and assign this
Agreement and deliver the Collateral to the assignee, who shall thereupon have all of the rights of
Bank; and Bank (or such subsequent assignee who in turn assigns as aforesaid) shall then be
relieved and discharged of any responsibility or liability with respect to this Agreement and said
Collateral. Bank may also assign partial interests or participations in the Loans to other persons.
Bank may disclose to all prospective and actual assignees and participants all financial, business
and other information about Borrowers which Bank may possess at any time.



33









 





     9.6 Subsidiaries. If a Borrower has any Subsidiaries incorporated in the United
States of America or any State thereof at any time during the term of this Agreement, the term
“Borrower” in each representation, warranty and covenant herein shall mean “the Borrower and each
Subsidiary incorporated in the United Slates of America or any State thereof individually and in
the aggregate,” and such Borrower shall cause each such Subsidiary to be in compliance therewith.



     9.7 Notices. Any notices under or pursuant to this Agreement shall be deemed duly sent
when delivered in hand or when mailed by registered or certified mail, return receipt requested,
addressed as follows:



	 	 	 	 	 
	 

	 	To Borrowers:
	 	Meridian Bioscience, Inc., as agent for itself and for
	 

	 	 	 	Meridian Bioscience Corporation
	 

	 	 	 	Omega Technologies, Inc.
	 

	 	 	 	Meridian Life Science, Inc.
	 

	 	 	 	 3471 River Hills Drive
	 

	 	 	 	Cincinnati, Ohio 45244
	 

	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	 
	 

	 	With copy to:
	 	James M. Jansing, Esq.
	 

	 	 	 	Keating, Muething & Klekamp
	 

	 	 	 	 1400 Provident Tower
	 

	 	 	 	One E. 4th Street
	 

	 	 	 	Cincinnati, Ohio 45202
	 
	 	 	 	 
	 

	 	To Bank:
	 	Fifth Third Bank
	 

	 	 	 	 38 Fountain Square Plaza
	 

	 	 	 	Cincinnati, Ohio 45263
	 

	 	 	 	Attention: Commercial Loan Department






     Either party may change such address by sending notice of the change to the other party.



     9.8 Governing Law: Jurisdiction. All acts and transactions hereunder and the rights
and obligations of the parties hereto shall be governed, construed and interpreted in accordance
with the domestic laws of the State of Ohio. Each Borrower agrees that the state and federal
courts in Hamilton County, Ohio or any other court in which Bank initiates proceedings have
exclusive jurisdiction over all matters arising out of this Agreement, and that service of process
in any such proceeding shall be effective if mailed to such Borrower at its address described in
the Notices section of this Agreement. BANK AND BORROWERS HEREBY WAIVE THE RIGHT TO TRIAL BY JURY
OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.



34









 





     IN WITNESS WHEREOF, the Borrowers and the Bank have executed this Agreement by their duly
authorized officers as of the date first above written.



	 	 	 	 	 	 	 	 	 	 	 
	MERIDIAN BIOSCIENCE CORPORATION	 	 	 	MERIDIAN BIOSCIENCE, INC.	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Its:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	OMEGA TECHNOLOGIES, INC.	 	 	 	MERIDIAN LIFE SCIENCE, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Its:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	FIFTH THIRD BANK	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 







35











 





EXHIBIT
2.1(c)




REVOLVING NOTE




			
	$30,000,000
	 	Cincinnati, Ohio

Dated: August 1, 2007






     Meridian Bioscience, Inc., an Ohio corporation, Meridian Bioscience Corporation an
Ohio corporation (“Corp.”), Omega Technologies, Inc., an Ohio corporation (“Omega”), and Meridian
Life Science, Inc., a Maine corporation (collectively and jointly and severally the “Borrowers”
and individually a “Borrower”), for value received, hereby promises to pay to the order of FIFTH
THIRD BANK (the “Bank”) at its offices, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, in
lawful money of the United States of America and in immediately available funds, the principal
sum of $30,000,000 or such lesser unpaid principal amount as may be advanced by the Bank pursuant
to the terms of the Loan and Security Agreement dated August 1, 2007 by and among the Borrowers
and the Bank, as same may be amended from time to time (the “Agreement”). This Note shall mature
and be payable in full on September 15, 2012, or such later date as may be determined and agreed
upon between Bank and Borrowers pursuant to the Agreement.



     The principal balance hereof outstanding from time to time shall bear interest as set forth in
the Agreement. Interest will be calculated based on a 360-day year and charged for the actual
number of days elapsed, and will be payable as set forth in the Agreement. After the occurrence of
an Event of Default, this Note shall bear interest (computed and adjusted in the same manner, and
with the same effect, as interest hereon prior to maturity), payable on demand, at a rate per annum
equal to six percent (6%) above the rate that would otherwise be in effect, until paid, and whether
before or after the entry of judgment hereon.



     The principal amount of each loan made by the Bank and the amount of each prepayment made by
the Borrowers shall be recorded by the Bank on the schedule attached hereto or in the regularly
maintained data processing records of the Bank, The aggregate unpaid principal amount of all
loans set forth in such schedule or in such records shall be presumptive evidence of the principal
amount owing and unpaid on this Note. However, failure by Bank to make any such entry shall not
limit or otherwise affect Borrowers’ obligations under this Note or the Agreement.



     This Note is the Revolving Note referred to in the Agreement, and is entitled to the
benefits, and is subject to the terms, of the Agreement. The principal of this Note is prepayable
in the amounts and under the circumstances, and its maturity is subject to acceleration upon the
terms, set forth in the Agreement. Except as otherwise expressly provided in the Agreement, if any
payment on this Note becomes due and payable on a day other than one on which Bank is open for
business (a “Business Day”), the maturity thereof shall be extended to the next Business Day, and
interest shall be payable at the rate specified herein during such extension period.



     In no event shall the interest rate on this Note exceed the highest rate permissible under
any law which a court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Bank has received interest and other charges
under this



41









 




Note in excess of the highest permissible rate applicable hereto, such excess shall be deemed
received on account of, and shall automatically be applied to reduce the amounts due to Bank from
the Borrowers under this Note, other than interest, and the provisions hereof shall be deemed
amended to provide for the highest permissible rate. If there are no such amounts outstanding,
Bank shall refund to Borrowers such excess.




     Borrowers and all endorsers, sureties, guarantors and other persons liable on this Note hereby
waive presentment for payment, demand, notice of dishonor, protest, notice of protest and all other
demands and notices in connection with the delivery, performance and enforcement of this Note, and
consent to one or more renewals or extensions of this Note.



     This Note may not be changed orally, but only by an instrument in writing.



     This Note is being delivered in, is intended to be performed in, shall be construed and
enforceable in accordance with, and be governed by the internal laws of, the State of Ohio without
regard to principles of conflict of laws. Borrowers agree that the State and federal courts in
Hamilton County, Ohio or any other court in which Bank initiates proceedings have exclusive
jurisdiction over all matters arising out of this Note, and that service of process in any such
proceeding shall be effective if mailed to Borrowers at their address described in the Notices
section of the Agreement. BORROWERS HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING
OUT OF THIS NOTE.



	 	 	 	 	 	 	 	 	 
	MERIDIAN BIOSCIENCE
CORPORATION	 	 	 	MERIDIAN BIOSCIENCE, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	 	 	 	 	Its:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	OMEGA TECHNOLOGIES, INC.	 	 	 	MERIDIAN LIFE SCIENCE, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	 	 	 	 	Its:	 	 
	 

	 	 
	 	 	 	 	 	 





42