Document:

EX-10.5 THIRD REVOLVING CREDIT AND SECURITY AGREE.

 

EXHIBIT 10.5

Third Amended and Restated

Revolving Credit and Security Agreement

     THIS AGREEMENT (the “Agreement”), dated as of March 7, 2006, between HOME DIAGNOSTICS,
INC., a Delaware corporation, whose address is 2400 NW 55th Court, Fort Lauderdale,
Florida 33301 (the “Borrower”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, whose address is 225 Water Street, Jacksonville, Florida 32202 (“Bank”);

W I T N E S S E T H :

     WHEREAS, Borrower and Bank entered into that certain Revolving Credit and Security Agreement
as of October 31, 2003 (the “Original Agreement”); and

     WHEREAS, Borrower and Bank entered into that certain Amended and Restated Revolving Credit and
Security Agreement as of September 17, 2004 (the “Amended Agreement”), which Amended Agreement
amended and restated the Original Agreement in its entirety; and

     WHEREAS, Borrower and Bank entered into that certain Second Amended and Restated Revolving
Credit and Security Agreement as of November 14, 2005 (the “Second Amended Agreement”), which
Second Amended Agreement amended and restated the Amended Agreement in its entirety; and

     WHEREAS, the parties desire to further amend and restate the Second Amended Agreement in its
entirety pursuant to the terms hereof.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained
and to induce Bank to extend credit to Borrower, the parties agree as follows:

     1. Definitions. Capitalized terms that are not otherwise defined herein shall have
the meanings set forth in Exhibit 1 hereto.

     2. The Loans.

          2.1.(a) $7,000,000.00 Revolving Loan. Bank agrees, on the terms and conditions set
forth in this Agreement, to make Advances and to issue letters of credit and bankers acceptances on
behalf of Borrower from time to time during the Revolving Credit Period in amounts such that the
aggregate principal amount of Advances and the face amount of any letters of credit and bankers
acceptances at any one time outstanding will not exceed the Maximum Loan Amount (the “$7,000,000.00
Revolving Loan”). Within the foregoing limit, Borrower may borrow, prepay and reborrow Advances at
any time during the Revolving Credit Period to support working capital and for general corporate
purposes, such as business acquisition and capital expenditures to expand its product lines.

          2.1.(b) $666,532.34 Term Loan. Bank agrees, on the terms and conditions set forth in
this Agreement, subject to the terms and conditions set forth in the $666,532.34 Term Note (as
defined below), to modify the existing credit to Borrower in the original principal amount of
$666,532.34 (the “$666,532.34 Term Loan”).

          2.1.(c) $2,638,888.87 Term Loan. Bank agrees, on the terms and conditions set forth
in this Agreement, subject to the terms and conditions set forth in the $2,638,888.87 Term Note (as
defined below), to extend credit to Borrower in the original principal amount of $2,638,888.87 (the
“$2,638,888.87 Term Loan”), the proceeds of which have been used to refinance an existing loan with
Albion Alliance Mezzanine Fund II, L.P., a Delaware limited partnership.

          2.2. Notes. The Loan shall be evidenced by (i) a Third Amended and Restated
Revolving Promissory Note in the face amount of the Maximum Loan Amount of even date herewith (the

 

 

“$7,000,000.00 Revolving Note”), (ii) a Third Amended and Restated Promissory Note in the face
amount of $666,532.34 of even date herewith (the “$666,532.34 Term Note”), and (iii) a Second
Amended and Restated Promissory Note in the face amount of $2,638,888.87 (the “$2,638,888.87 Term
Note”) and shall be payable in accordance with the terms of each respective Note, as shall be
amended, modified, renewed or restated from time to time, and this Agreement.

          2.3. Lockbox.

          (a) Bank shall require Borrower to establish a lockbox under the control of Bank to which
Account Debtors shall forward all payments on Accounts and other Collateral. Borrower shall pay
all of Bank’s standard fees and charges in connection with such lockbox arrangement as such fees
and charges may change from time to time. Borrower shall notify Account Debtors on the Accounts to
forward payments on the Accounts to the lockbox; provided, however, that after an event or
condition has occurred which but for notice or the passage of time, or both, would constitute an
Event of Default, that Bank shall have the right to directly contact Account Debtors at any time to
ensure that payments on the Accounts are directed to the lockbox. All payment items received by
Borrower on Accounts and sale of Inventory and other Collateral shall be held by Borrower in trust
for Bank and not commingled with Borrower’s funds and shall be deposited promptly by Borrower to
the lockbox. All such items shall be the exclusive property of Bank upon the earlier of the
receipt thereof by Bank or by Borrower. Borrower hereby grants to Bank a security interest in and
lien upon all items and balances held in the lockbox as collateral for the Indebtedness.

          (b) Borrower hereby irrevocably appoints Bank (and any duly authorized Person designated by
Bank) as Borrower’s attorney-in-fact to endorse Borrower’s name on any checks, drafts, money orders
or other media of payment which come into Bank’s possession or control; this power being coupled
with an interest is irrevocable so long as any of the Indebtedness remain outstanding. Such
endorsement by Bank under power of attorney shall, for all purposes, be deemed to have been made by
Borrower (prior to any subsequent endorsement by Bank) in negotiation of the item. Bank will not
exercise such power of attorney until after an event or condition has occurred which but for notice
or the passage of time, or both, would constitute an Event of Default.

          (c) For the purpose of calculating interest due under this Agreement, payment items received
into the lockbox shall be deemed applied by Bank on account of the Loan as collected and cleared by
Bank, subject to chargebacks for uncollected payment items. No payment item received by Bank shall
constitute payment to Bank until such item is actually collected by Bank and credited to the
lockbox; provided, however, Bank shall have the right to charge back to the lockbox any item which
is returned for inability to collect, plus accrued interest during the period of Bank’s provisional
credit for such item prior to receiving notice of dishonor.

          2.4. Advances.

          (a) Under the $7,000,000.00 Revolving Loan, Bank, in its discretion, may require from
Borrower a signed written request for an Advance in form satisfactory to Bank, which request shall
be delivered to Bank no later than 12:00 noon (local time in Fort Lauderdale, Florida) on the date
of the requested Advance, and shall specify the date (which shall be a Business Day) and the amount
of the proposed Advance and provide such other information as Bank may reasonably require. Bank’s
acceptance of such a request shall be indicated by its making the Advance requested. Such an
Advance shall be made available to Borrower in immediately available funds.

          (b) Notwithstanding the foregoing, Bank may, in its sole and absolute discretion, make or
permit to remain outstanding Advances under the $7,000,000.00 Revolving Loan in excess of the
original principal amount of the $7,000,000.00 Revolving Note, and all such amounts shall (i) be
part of the Indebtedness evidenced by the $7,000,000.00 Revolving Note, (ii) bear interest as
provided herein, and (iii) be entitled to all rights and security as provided under the Loan
Documents.

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          2.6. Repayment of Loan.

          (a) Interest on the $7,000,000.00 Revolving Loan shall accrue and be payable as set forth in
the $7,000,000.00 Revolving Note. The $7,000,000.00 Revolving Loan is a demand note, and the
principal amount thereof and all accrued and unpaid interest, fees, expenses and other amounts
payable under the Loan Documents shall be due and payable, on the earlier of the Bank’s demand or
the Termination Date.

          (b) Interest on the $666,532.34 Term Loan shall accrue and be payable as set forth in the
$666,532.34 Term Note. The $666,532.34 Term Loan shall mature, and the principal amount thereof
and all accrued and unpaid interest, fees, expenses and other amounts payable under the Loan
Documents shall be due and payable, as set forth in the $666,532.34 Note.

          (c) Interest on the $2,638,888.87 Term Loan shall accrue and be payable as set forth in the
$2,638,888.87 Term Note. The $2,638,888.87 Term Loan shall mature, and the principal amount
thereof and all accrued and unpaid interest, fees, expenses and other amounts payable under the
Loan Documents shall be due and payable, as set forth in the $2,638,888.87 Term Note.

          (d) Upon the occurrence of an event or condition, which but for notice or the passage of
time, or both, would constitute an Event of Default, Bank may debit the lockbox and/or make
Advances to Borrower (whether or not in excess of the Maximum Loan Amount) and apply such amounts
to the payment of interest, fees, expenses and other amounts to which Bank may be entitled from
time to time and Bank is hereby irrevocably authorized to do so without the consent of Borrower.

          (e) Subject to the terms of any treasury services to which Borrower may subscribe, Borrower
shall make each payment of principal of and interest on the Loan and fees hereunder not later than
12:00 noon (local time Fort Lauderdale, Florida) on the date when due, without set off,
counterclaim or other deduction, in immediately available funds to Bank at its address referred to
in Section 10.4. Whenever any payment of principal of, or interest on, the Loan or of fees shall
be due on a day which is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day. If the date for any payment of principal is extended by operation of
law or otherwise, interest thereon shall be payable for such extended time.

          (f) Intentionally deleted.

          (g) Any prepayment shall not affect Borrower’s obligation to continue making payments under
any swap agreement (as defined in 11 U.S.C. § 101), which shall remain in full force and effect
notwithstanding such prepayment, subject to the terms of such swap agreement.

          2.7. Overdue Amounts. Any payments not made as and when due shall bear interest in
Bank’s discretion from the date due until paid at the Default Rate.

          2.8. Calculation of Interest. All interest under the Notes or hereunder shall be
calculated on the basis of the Actual/360 Computation, as defined in the respective Notes.

          2.9. Sales Tax. Borrower shall notify Bank if any Account includes any sales or
other similar tax and Bank may, but shall not be obligated to, remit any such taxes directly to the
taxing authority and make Advances therefore. In no event shall Bank be liable for any such taxes.

          2.10. Letters of Credit.

          (a) At its discretion Bank may from time to time issue, extend or renew letters of credit
and banker’s acceptances for the account of Borrower or its Subsidiaries. The availability of
Advances under the $7,000,000.00 Revolving Loan shall be reduced by outstanding obligations of Bank
under any letters of credit and bankers acceptances. All payments made by Bank under any such
letters of credit or bankers acceptances (whether or not Borrower is the account party or drawer)
and all fees, commissions, discounts and other amounts owed or to be owed to Bank in connection
therewith, shall be deemed to be Advances under the $7,000,000.00 Revolving Note, shall be secured
by the Collateral, and shall be repaid on demand. Borrower shall complete and sign such
applications and supplemental agreements and provide

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such other documentation as Bank may reasonably require. The form and substance of all letters of
credit and acceptances, including expiration dates, shall be subject to Bank’s approval. Bank may
charge a standard fee or commission for issuance, renewal or extension of a letter of credit or
acceptance. Borrower unconditionally guarantees all obligations of any Subsidiary with respect to
letters of credit issued by Bank for the account of such Subsidiary and all acceptances of any
Subsidiary’s drafts. Upon a Default, Borrower shall, on demand, deliver to Bank good funds equal
to 105% of Bank’s maximum liability under all outstanding letters of credit and bankers
acceptances, to be held as cash Collateral for Borrower’s reimbursement obligations and other
Indebtedness.

          (b) Any letter of credit issued hereunder shall be governed, as applicable, by the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication
500 or any subsequent revision or restatement thereof adopted by the ICC and in use by Bank or the
International Standby Practices, ICC Publication No. 590 or any subsequent revision or restatement
thereof adopted by the ICC and in use by Bank, except to the extent that the terms of such
publication would limit or diminish rights granted to Bank hereunder or in any other Loan Document.

          2.11. Fees.

          (a) Borrower shall pay to Bank a non-refundable facility fee for the $7,000,000.00 Revolving
Loan equal to $3,000.00 payable on the date of this Agreement.

          (b) Intentionally deleted.

          (c) Borrower shall pay to Bank quarterly an unused fee equal to 0.25% per annum on the
average daily unused available principal under the $7,000,000.00 Revolving Loan for the preceding
calendar quarter or portion thereof.

          (d) Borrower shall pay to Bank, at such times as Bank shall require, Bank’s standard fees in
connections with letters of credit, as in effect from time to time, and with respect to standby
letters of credit, at the time of issuance of each standby letter of credit, a fee equal to 1.00%
per annum on the face amount of the standby letter of credit for the period of time the standby
letter of credit will be outstanding.

          2.12. Statement of Account. If requested by Borrower and Bank provides Borrower with
a statement of account on a periodic basis, such statement will be presumed complete and accurate
and will be definitive and binding on Borrower, unless objected to with specificity by Borrower in
writing within forty-five (45) days after receipt.

     3. Conditions Precedent to Borrowing. Prior to any Advance, the following conditions
shall have been satisfied, in the sole opinion of Bank and its counsel:

          3.1. Conditions Precedent to Initial Advance. In addition to any other requirement
set forth in this Agreement, Bank will not make an Advance under the $7,000,000.00 Revolving Loan
unless and until the following conditions shall have been satisfied:

          (a) Loan Documents. Borrower and each other party to any Loan Document, as
applicable, shall have executed and delivered this Agreement, the $7,000,000.00 Revolving Note, the
$2,638,888.87 Term Note, the $666,532.34 Term Note and other required Loan Documents, all in form
and substance satisfactory to Bank.

          (b) Supporting Documents. Borrower shall cause to be delivered to Bank the following
documents:

               (i) A copy of the governing instruments of Borrower and each Subsidiary, and a good
standing certificate of Borrower and each Subsidiary, certified by the appropriate official
of its state of incorporation and the State of Florida, if different;

               (ii) Incumbency certificate and certified resolutions of the board of directors (or
other appropriate governing body) of Borrower and each other Person executing any Loan

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Documents, signed by the Secretary or another authorized officer of Borrower or such
other Person, authorizing the execution, delivery and performance of the Loan Documents;

               (iii) The legal opinion of Borrower’s legal counsel addressed to Bank regarding such
matters as Bank and its counsel may request;

               (iv) Intentionally deleted;

               (v) Satisfactory evidence of payment of all fees due and reimbursement of all costs
incurred by Bank, and evidence of payment to other parties of all fees or costs which
Borrower is required under this Agreement to pay by the date of the initial Advance;

               (vi) UCC-11 searches and other Lien searches showing no existing security interests
in or Liens on the Collateral other than Permitted Liens;

               (vii) Any lien waivers requested by Bank pursuant to
section 5.13(c) hereof; and

               (viii) A satisfactory Perfection Certificate duly completed by Borrower.

          (c) Insurance. Borrower shall have delivered to Bank satisfactory evidence of
insurance meeting the requirements of Section 5.3.

          (d) Perfection of Liens. UCC-1 financing statements and, if applicable, certificates
of title covering the Collateral executed by Borrower shall duly have been recorded or filed in the
manner and places required by law to establish, preserve, protect and perfect the interests and
rights created or intended to be created by the Security Agreement; and all taxes, fees and other
charges in connection with the execution, delivery and filing of the Security Agreement and the
financing statements shall duly have been paid.

          (e) Subordinations. Bank shall have received subordinations satisfactory to it from
(i) all lessors that might have landlord’s Liens on any Collateral, and (ii) all Affiliates as
required by Section 5.9.

          (f) Additional Documents. Borrower shall have delivered to Bank all additional
opinions, documents, certificates and other assurances that Bank or its counsel may require.

          (g) Payment of Fees. Borrower shall have paid all fees, costs and expenses as
required by the Loan Documents in connection with the Closing.

          3.2. Conditions Precedent to Each Advance. The following conditions, in addition to
any other requirements set forth in this Agreement, shall have been met or performed by the Advance
Date with respect to any Advance Request and each Advance Request (whether or not a written Advance
Request is required) shall be deemed to be a representation that all such conditions have been
satisfied:

          (a) Advance Request. Borrower shall have delivered to Bank an Advance Request and
other information, as required under Section 2.5(a), unless the procedures described in Section 2.4
are in effect.

          (b) No Default. No Default shall have occurred and be continuing or would occur upon
the making of the Advance in question and, if Borrower is required to deliver a written Advance
Request, Borrower shall have delivered to Bank an officer’s certificate to such effect, which may
be incorporated in the Advance Request.

          (c) Correctness of Representations. All representations and warranties made by
Borrower herein or otherwise in writing in connection herewith shall be true and correct in all
material respects with the same effect as though the representations and warranties had been made
on and as of the proposed Advance Date, and, if Borrower is required to deliver a written Advance
Request, Borrower

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shall have delivered to Bank an officer’s certificate to such effect, which may be
incorporated in the Advance Request.

          (d) No Adverse Change. There shall have been no change which would have a Material
Adverse Effect on Borrower, any Subsidiary since the date of the most recent financial statements
of such Person delivered to Bank from time to time.

          (e) Limitations Not Exceeded. As to the $7,000,000.00 Revolving Note, the proposed
Advance shall not cause the outstanding principal balance of the $7,000,000.00 Revolving Loan to
exceed the Maximum Loan Amount.

          (f) New Subsidiary Acquisition Funded by Advances. As to Advances under the Loan for
the purpose of financing the acquisition of companies in a related industry, Borrower shall have
delivered: (i) a purchase contract or letter of intent for the entity being acquired; (ii) two (2)
most recent fiscal year-end financial statements of the entity being acquired; and (iii) such other
documents and items that the Bank may request in its reasonable discretion.

          (g) Further Assurances. Borrower shall have delivered such further documentation or
assurances as Bank may reasonably require.

     4. Representations and Warranties. In order to induce Bank to enter into this
Agreement and to make the Loan provided for herein, Borrower makes the following representations
and warranties, all of which shall survive the execution and delivery of the Loan Documents.
Unless otherwise specified, such representations and warranties shall be deemed made as of the date
hereof and as of the Advance Date of any Advance by Bank to Borrower:

          4.1. Valid Existence and Power. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization and is duly
qualified or licensed to transact business in all places where the failure to be so qualified would
have a Material Adverse Effect on it. Each of Borrower and each other Person which is a party to
any Loan Document (other than Bank) has the power to make and perform the Loan Documents executed
by it and all such instruments will constitute the legal, valid and binding obligations of such
Person, enforceable in accordance with their respective terms, subject only to bankruptcy and
similar laws affecting creditors’ rights generally and to the effect of general principles of
equity which may limit the availability of equitable remedies (whether in a proceeding at law or in
equity). Borrower is organized under the laws of Delaware and has not changed the jurisdiction of
its organization within the five years preceding the date hereof except as previously reported to
Bank.

          4.2. Authority. The execution, delivery and performance thereof by Borrower and each
other Person (other than Bank) executing any Loan Document have been duly authorized by all
necessary action of such Person, and do not and will not violate any provision of law or
regulation, or any writ, order or decree of any court or governmental or regulatory authority or
agency or any provision of the governing instruments of such Person, and do not and will not, with
the passage of time or the giving of notice, result in a breach of, or constitute a default or
require any consent under, or result in the creation of any Lien (except liens in favor of Bank)
upon any property or assets of such Person pursuant to, any law, regulation, instrument or
agreement to which any such Person is a party or by which any such Person or its respective
properties may be subject, bound or affected, which would have a Material Adverse Effect on
Borrower.

          4.3. Financial Condition. Other than as disclosed in financial statements delivered
on or prior to the date hereof to Bank, Borrower does not have any direct or contingent obligations
or liabilities (including any guarantees or leases) or any material unrealized or anticipated
losses from any commitments of Borrower except as described on Exhibit 4.3 (if any) which would
have a Material Adverse Effect on Borrower. All such financial statements have been prepared in
accordance with GAAP and fairly present the financial condition of Borrower as of the date thereof.
Borrower is not aware of any material adverse fact (other than facts which are generally available
to the public and not particular to Borrower, such as general economic or industry trends)
concerning the conditions or future prospects of Borrower which has not been fully disclosed to
Bank, including any material adverse change in the operations or financial

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condition of Borrower since the date of the most recent financial statements delivered to
Bank. Borrower is Solvent, and after consummation of the transactions set forth in this Agreement
and the other Loan documents, Borrower will be Solvent.

          4.4. Litigation. Except as disclosed on Exhibit 4.4 (if any), there are no suits or
proceedings pending, or to the knowledge of Borrower threatened, before any court or by or before
any governmental or regulatory authority, commission, bureau or agency or public regulatory body
against or affecting Borrower or its assets, which if adversely determined would have a Material
Adverse Effect on the financial condition or business of Borrower.

          4.5. Agreements, Etc. Borrower is not a party to any agreement or instrument or
subject to any court order, governmental decree or any charter or other corporate restriction,
which would have a Material Adverse Effect on its business, assets, operations or condition
(financial or otherwise), nor is Borrower in default in the performance, observance or fulfillment
of any of the material obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, or any law, regulation, decree, order or the like which would
have a Material Adverse Effect on Borrower.

          4.6. Authorizations. All authorizations, consents, approvals and licenses required
under applicable law or regulation for the ownership or operation of the property owned or operated
by Borrower or for the conduct of any business in which it is engaged have been duly issued and are
in full force and effect where the failure to be in compliance would have a Material Adverse Effect
on Borrower, and it is not in default, nor has any event occurred which with the passage of time or
the giving of notice, or both, would constitute a default, under any of the terms or provisions of
any part thereof, or under any order, decree, ruling, regulation, closing agreement or other
decision or instrument of any governmental commission, bureau or other administrative agency or
public regulatory body having jurisdiction over Borrower, which default would have a Material
Adverse Effect on Borrower. Except as noted herein, no material approval, consent or authorization
of, or filing or registration with, any governmental commission, bureau or other regulatory
authority or agency is required with respect to the execution, delivery or performance of any Loan
Document.

          4.7. Title. Borrower has good title to all of the assets shown in its financial
statements free and clear of all Liens, except Permitted Liens. Borrower alone has full ownership
rights in all Collateral except Permitted Liens.

          4.8. Collateral. The security interests granted to Bank herein and pursuant to any
other Security Agreement (a) constitute and, as to subsequently acquired property included in the
Collateral covered by the Security Agreement, will constitute, security interests under the Code
entitled to all of the rights, benefits and priorities provided by the Code and (b) are, and as to
such subsequently acquired Collateral will be, fully perfected, superior and prior to the rights of
all third persons, now existing or hereafter arising, subject only to Permitted Liens. All of the
Collateral is intended for use solely in Borrower’s business.

          4.9 Jurisdiction of Organization; Location. The jurisdiction in which Borrower is
organized, existing and in good standing, the chief executive office of Borrower where Borrower’s
business records are located, all of Borrower’s other places of business and any other places where
any Collateral is kept, are all correctly and completely indicated on Exhibit 4.9. The Collateral
is located and shall at all times be kept and maintained only at Borrower’s location or locations
as described on Exhibit 4.9 herein. No such Collateral is attached or affixed to any real property
so as to be classified as a fixture unless Bank has otherwise agreed in writing. Borrower has not
changed its legal status or the jurisdiction in which it is organized or moved its chief executive
office within the five (5) years preceding the date hereof.

          4.10. Taxes. Borrower has filed all federal and state income and other tax returns
which are required to be filed, and have paid all taxes as shown on said returns and all taxes,
including withholding, FICA and ad valorem taxes, shown on all assessments received
by it to the extent that such taxes have become due except only for items being actively contested
in accordance with law. Borrower is not subject to any federal, state or local tax Liens nor has
such Person received any notice of deficiency or

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other official notice to pay any taxes. Borrower has paid all sales and excise taxes payable
by it except only for items being actively contested in accordance with law.

          4.11. Labor Law Matters. No goods or services have been or will be produced by
Borrower in violation of any applicable labor laws or regulations or any collective bargaining
agreement or other labor agreements or in violation of any minimum wage, wage-and-hour or other
similar laws or regulations.

          4.12. Accounts. Except as set forth on Exhibit 4.12, each Account, Instrument,
Chattel Paper and other writing constituting any portion of the Collateral (a) is genuine and
enforceable in accordance with its terms except for such limits thereon arising from bankruptcy and
similar laws relating to creditors’ rights and to the effect of general principles of equity which
may limit the availability of equitable remedies (whether in a proceeding at law or in equity); (b)
is not subject to any deduction or discount (other than as stated in the invoice and disclosed to
Bank), defense, set off, claim or counterclaim of a material nature against Borrower except as to
which Borrower has notified Bank in writing; (c) is not subject to any other circumstances that
would impair the validity, enforceability or amount of such Collateral except as to which Borrower
has notified Bank in writing; (d) arises from a bona fide sale of goods or delivery
of services in the ordinary course and in accordance with the terms and conditions of any
applicable purchase order, contract or agreement; (e) is free of all Liens other than Permitted
Liens; and (f) is for a liquidated amount maturing as stated in the invoice therefor.

          4.13. Judgment Liens. Neither Borrower, nor any of its assets, are subject to any
unpaid judgments (whether or not stayed) or any judgment liens in any jurisdiction.

          4.14. Subsidiaries. If Borrower has any Subsidiaries, they are listed on Exhibit
4.14.

          4.15. Environmental. Except as disclosed on Exhibit 4.15, and except for ordinary
and customary amounts of solvents, cleaners and similar materials used in the ordinary course of
Borrower’s business and in strict compliance with all Environmental Laws, neither Borrower, nor to
Borrower’s best knowledge any other previous owner or operator of any real property currently owned
or operated by Borrower, has generated, stored or disposed of any Regulated Material on any portion
of such property, or transferred any Regulated Material from such property to any other location in
violation of any applicable Environmental Laws. Except as disclosed on Exhibit 4.15, no Regulated
Material has been generated, stored or disposed of on any portion of the real property currently
owned or operated by Borrower by any other Person, or is now located on such property. Except as
disclosed on Exhibit 4.15, Borrower is in full compliance with all applicable Environmental Laws
and Borrower has not been notified of any action, suit, proceeding or investigation which calls
into question compliance by Borrower with any Environmental Laws or which seeks to suspend, revoke
or terminate any license, permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Regulated Material.

          4.16. ERISA. Except as disclosed on Exhibit 4.16, Borrower does not have any
pension, profit-sharing or other benefit plan subject to the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”). Borrower has furnished to Bank true and complete copies of the
latest annual report required to be filed pursuant to Section 104 of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), with respect to each employee benefit plan or other
plan maintained for employees of Borrower and covered by Title IV of ERISA (a “Plan”), and
no Termination Event (as hereinafter defined) with respect to any Plan has occurred and is
continuing. For the purposes of this Agreement, a “Termination Event” shall mean a
“reportable event” as defined in Section 4043(b) of ERISA, or the filing of a notice of intent to
terminate under Section 4041 of ERISA. Borrower does not have any unfunded liability with respect
to any such Plan.

          4.17. Investment Company Act. Borrower is not an “investment company” as defined in
the Investment Company Act of 1940, as amended.

          4.18. Names. Except as disclosed on Exhibit 4.18, Borrower currently conducts all
business only under its legal name as set forth above in the introductory section of this
Agreement. Except as disclosed on Exhibit 4.18, during the preceding five (5) years Borrower has
not (i) been known as or

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used any other corporate, fictitious or trade name, (ii) been the surviving entity of a merger or
consolidation or (iii) acquired all or substantially all of the assets of any Person.

          4.19. Insider. Borrower is not, and no Person having “control” (as that term is
defined in 12 U.S.C. Sec. 375(b)(5) or in regulations promulgated pursuant thereto) of Borrower is,
an “executive officer,” “director,” or “principal shareholder” (as those terms are defined in 12
U.S.C. Sec. 375(b) or in regulations promulgated pursuant thereto) of Bank, of a bank holding
company of which Bank is a subsidiary, or of any subsidiary of a bank holding company of which Bank
is a subsidiary.

          4.20. Compliance with Covenants; No Default. Borrower is, and upon funding of the
Loan will be, in compliance with all of the covenants hereof. No Default has occurred, and the
execution, delivery and performance of the Loan Documents and the funding of the Loan will not
cause a Default.

          4.21. Full Disclosure. There is no material fact which is known by Borrower that
Borrower has not disclosed to Bank which would have a Material Adverse Effect. No Loan Document,
nor any agreement, document, certificate or statement delivered by Borrower to Bank, contains any
untrue statement of a material fact or omits to state any material fact which is known by Borrower
necessary to keep the other statements from being materially misleading.

          4.22. Additional Representations. Any additional representations or warranties set
forth on Exhibit 4.22 (if any) hereto are true and correct in all material respects.

          4.23 Perfection Certificate. All representations, warranties and statements made by
Borrower in the Perfection Certificate executed and delivered by Borrower to Bank in connection
with the Loan are true and correct as of the date hereof.

     5. Affirmative Covenants of Borrower. Borrower covenants and agrees that from the
date hereof and until payment in full of the Indebtedness and the formal termination of this
Agreement, Borrower:

          5.1. Use of Loan Proceeds. Shall use the proceeds of the Loan only to support
working capital to be used in the operation of Borrower’s business, and for general corporate
purposes, and Borrower shall furnish Bank all evidence that it may reasonably require with respect
to such uses.

          5.2. Maintenance of Business and Properties. Shall at all times maintain, preserve
and protect all Collateral and all the remainder of its material property used or useful in the
conduct of its business, and keep the same in good repair, working order and condition, normal wear
and tear excepted, and from time to time make, or cause to be made, all material needful and proper
repairs, renewals, replacements, betterments and improvements thereto so that the business carried
on in connection therewith may be conducted properly and in accordance with standards generally
accepted in businesses of a similar type and size at all times, and maintain and keep in full force
and effect all material licenses and permits necessary to the proper conduct of its business, of
which the failure to keep is likely to have a Material Adverse Effect.

          5.3. Insurance. Shall maintain such liability insurance, workers’ compensation
insurance, business interruption insurance and casualty insurance as may be required by law,
customary and usual for prudent businesses in its industry or as may be reasonably required by Bank
and shall insure and keep insured all Collateral and other properties in good and responsible
insurance companies satisfactory to Bank. All hazard insurance covering Collateral shall be in
amounts and shall contain co-insurance and deductible provisions approved by Bank, shall name and
directly insure Bank as secured party and loss payee under a long-form loss payee clause acceptable
to Bank, or its equivalent, and shall not be terminable except upon 30 days’ written notice to
Bank. Borrower shall furnish to Bank copies of all such policies.

          5.4. Notice of Default. Shall provide to Bank immediate notice of (a) the occurrence
of a Default and what action (if any) Borrower is taking to correct the same, (b) any material
litigation or material changes in existing litigation or any judgment against it or its assets in
excess of $100,000.00 in the aggregate, (c) any material damage or loss to property in excess of
$100,000.00 in the aggregate, (d)

9

 

any notice from taxing authorities as to claimed deficiencies having a Material Adverse
Effect, or any tax lien, or any notice relating to alleged ERISA violations having a Material
Adverse Effect, (e) any Reportable Event, as defined in ERISA, (f) any rejection, return, offset,
dispute, loss or other circumstance having a Material Adverse Effect on any Collateral, (g) the
cancellation or termination of, or any default under, any material agreement to which Borrower is a
party or by which any of its properties are bound, or any acceleration of the maturity of any Debt
of Borrower; and (h) any loss or threatened loss of material licenses or permits, which loss or
threatened loss is likely to have a Material Adverse Effect.

          5.5. Inspections. From time to time during normal business hours and upon reasonable
notice to Borrower, shall permit annual inspections of the Collateral and the records of such
Person pertaining thereto and verification of the Accounts, at such times and in such manner as may
be reasonably required by Bank and shall further permit such inspections, reviews and field
examinations of its other records and its properties (with such reasonable frequency and at such
reasonable times as Bank may desire) by Bank as Bank may deem necessary or desirable. The cost of
such field examinations, reviews, verifications and inspections shall be borne by Borrower.

          5.6. Financial Information. Shall maintain books and records in accordance with
GAAP and shall furnish to Bank the following periodic financial information:

               (a) Intentionally Deleted.

               (b) Interim Statements. Within twenty (20) days after the end of each calendar
quarter, a consolidated unaudited management-prepared financial statement of Borrower, including,
without limitation, a balance sheet of Borrower and its Subsidiaries at the end of that period and
a consolidated profit and loss statement and statement of cash flows for that period (and for the
portion of the fiscal year ending with, such period), together with all supporting schedules,
setting forth in comparative form the figures for the same period of the preceding fiscal year, and
certified by the chief financial officer of Borrower as true and correct and fairly representing
the financial condition of Borrower and its Subsidiaries and that such statements are prepared in
accordance with GAAP, except without footnotes and subject to normal year-end audit adjustments;

               (c) Annual Statements. Within one hundred twenty (120) days after the end of each
fiscal year, consolidated audited financial statements reflecting Borrower’s operations during such
fiscal year, including, without limitation, a balance sheet, profit and loss statement and
statement of cash flow, with supporting schedules; all in reasonable detail, prepared in conformity
with generally accepted accounting principles, applied on a basis consistent with that of the
preceding year. All such statements shall be examined by an independent certified public
accountant acceptable to Bank. The opinion of such independent certified public accountant shall
not be acceptable to Bank if qualified due to any limitations in scope imposed by Borrower. Any
other qualification of the opinion by the accountant shall render the acceptability of the
financial statements subject to Bank’s approval;

               (d) No Default Certificates. Together with each report required by Subsections (b)
and (c), a compliance certificate and a certificate of its president or chief financial officer in
form attached hereto as Exhibit 5.6 that no Default then exists or if a Default exists, the nature
and duration thereof and Borrower’s intention with respect thereto, and in addition, shall cause
Borrower’s independent auditors (if applicable) to submit to Bank, together with its audit report,
a statement that, in the course of such audit, it discovered no circumstances which it believes
would result in a Default or if it discovered any such circumstances, the nature and duration
thereof;

               (e) Intentionally Deleted.

               (f) Intentionally Deleted.

               (g) Intentionally Deleted.

               (h) Tax Returns. Within thirty (30) days of filing, a complete copy of federal and
state tax returns, as applicable, together with all schedules thereto, including, without
limitation, K-1 statements

10

 

for all Partnerships and Sub Chapter S corporations, each of which shall be signed and
certified by Borrower to be true, correct and a complete copy of such returns. In the event an
extension is filed, Borrower shall also deliver a copy of such extension within thirty (30) days of
filing; and

               (i) Other Information. Such other information reasonably requested by Bank from time
to time concerning the business, properties or financial condition of Borrower and their respective
Subsidiaries.

          5.7. Maintenance of Existence and Rights. Shall preserve and maintain its corporate
existence, authorities to transact business, rights and franchises, trade names, patents,
trademarks and permits necessary to the conduct of its business, the failure of which is likely to
cause a Material Adverse Effect.

          5.8. Payment of Taxes, Etc. Shall pay before delinquent all of its debts and taxes,
except that Bank shall not unreasonably withhold its consent to nonpayment of taxes being actively
contested in accordance with law (provided that Bank may require reasonable bonding or other
assurances, such as reserving).

          5.9. Subordination. Shall cause all debt and other obligations now or hereafter owed
to any Affiliate to be subordinated in right of payment and security to the Indebtedness in
accordance with subordination agreements satisfactory to Bank.

          5.10. Compliance; Hazardous Materials. Shall strictly comply with all laws,
regulations, ordinances and other legal requirements, specifically including, without limitation,
ERISA, all securities laws and all laws relating to hazardous materials and the environment, the
failure of which is likely to cause a Material Adverse Effect. Unless approved in writing by Bank,
Borrower shall not engage in the storage, manufacture, disposition, processing, handling, use or
transportation of any hazardous or toxic materials, whether or not in compliance with applicable
laws and regulations.

          5.11. Compliance with Assignment Laws. Shall if required by Bank comply with the
Federal Assignment of Claims Act and any other applicable law relating to assignment of government
contracts.

          5.12. Further Assurances. Shall take such further action and provide to Bank such
further assurances as may be reasonably requested to ensure compliance with the intent of this
Agreement and the other Loan Documents.

          5.13. Covenants Regarding Collateral. Borrower makes the following covenants with
Bank regarding the Collateral. Borrower:

          (a) will use the Collateral only in the ordinary course of its business and will not permit
the Collateral to be used in violation of any applicable law or policy of insurance;

          (b) as agent for Bank, will defend the Collateral against all claims and demands of all
Persons, except for Permitted Liens;

          (c) will, at Bank’s request, obtain and deliver to Bank such waivers as Bank may require
waiving the landlord’s, mortgagee’s or other lienholder’s enforcement rights against the Collateral
and assuring Bank’s access to the Collateral in exercise of its rights hereunder;

          (d) will promptly deliver to Bank all promissory notes, drafts, trade acceptances chattel
paper, Instruments or documents of title which are Collateral in tangible form, appropriately
endorsed to Bank’s order, and Borrower will not create any Electronic Chattel Paper without taking
all steps deemed necessary by Bank to confer control of the Electronic Chattel Paper upon Bank in
accordance with the Code;

11

 

          (e) Except for sales of Inventory in the ordinary course of business, will not sell, assign,
lease, transfer, pledge, hypothecate or otherwise dispose of or encumber any Collateral or any
interest therein; and

          (f) shall promptly notify Bank of any future patents, trademarks or copyrights owned by
Borrower and any license agreements entered into by Borrower authorizing said person to use any
patents, trademarks or copyrights owned by third parties.

          (g) shall give Bank at least thirty (30) days prior written notice of any new trade or
fictitious name. Borrower’s use of any trade or fictitious name shall be in compliance with all
laws regarding the use of such names.

     6. Negative Covenants of Borrower. Borrower covenants and agrees that from the date
hereof and until payment in full of the Indebtedness and the formal termination of this Agreement,
Borrower:

          6.1. Debt. Shall not create or permit to exist any Debt, including any guaranties or
other contingent obligations, except Permitted Debt.

          6.2. Liens. Shall not create or permit any Liens on any of its property except
Permitted Liens.

          6.3. Dividends. Shall not pay or declare any dividends (other than stock dividends)
or other distribution or purchase, redeem or otherwise acquire any stock or other equity interests
or pay or acquire any debt subordinate to the Indebtedness unless, after giving effect thereto,
there shall be no Default hereunder and such payment or acquisition is specifically permitted by
Exhibit 6.3 hereto (if any); provided, however, Applied Sciences Corporation, a Taiwanese
corporation (“ASC”), a wholly-owned Subsidiary of Borrower, and DiagnoSys Medical Limited, an
England & Wales corporation, a wholly-owned Subsidiary of Borrower, may pay dividends to Borrower
or another Subsidiary wholly-owned by Borrower.

          6.4. Loans and Other Investments. Shall not make or permit to exist, without the
express written consent of Bank, any advances or loans to, or guarantee or become contingently
liable, directly or indirectly, in connection with the obligations, leases, stock or dividends of,
or own, purchase or make any commitment to purchase any stock, bonds, notes, debentures or other
securities of, or any interest in, or make any capital contributions to (all of which are sometimes
collectively referred to herein as “Investments”) any Person except for (a) purchases of direct
obligations of the federal government, (b) deposits in commercial banks, (c) commercial paper of
any U.S. corporation having the highest ratings then given by the Moody’s Investors Services, Inc.
or Standard & Poor’s Corporation, (d) existing investments in Subsidiaries, (e) endorsement of
negotiable instruments for collection in the ordinary course of business, and (f) advances to
employees for business travel and other expenses incurred in the ordinary course of business which
do not at any time exceed $100,000.00 in the aggregate.

          6.5. Change in Business. Shall not enter into any business which is substantially
different from the business in which it is presently engaged.

          6.6. Intentionally Deleted.

          6.7. Transactions with Affiliates. Except as set forth on Exhibit 6.7, shall not
directly or indirectly purchase, acquire or lease any property from, or sell, transfer or lease any
property to, pay any management fees to or otherwise deal with, in the ordinary course of business
or otherwise, any Affiliate (other than a Subsidiary); provided, however, that any acts or
transactions prohibited by this Section may be performed or engaged in after written notice to Bank
if upon terms not less favorable to Borrower or such Subsidiary than if no such relationship
existed.

          6.8. No Change in Name, Offices or Jurisdiction of Organization; Removal of
Collateral. Shall not, unless it shall have given 30 days’ advance written notice thereof to
Bank, (a) change its name or the location of its chief executive office or other office where books
or records are kept, or change the

12

 

jurisdiction in which the Borrower is organized, or (b) permit any Inventory or other tangible
Collateral to be located at any location other than as specified in the Perfection Certificate.

          6.9. No Sale, Leaseback. Shall not enter into any sale-and-leaseback or similar
transaction.

          6.10. Margin Stock. Shall not use any proceeds of the Loan to purchase or carry any
margin stock (within the meaning of Regulation U of the Board of Governors of Federal Reserve
System) or extend credit to others for the purpose of purchasing or carrying any margin stock.

          6.11. Intentionally Deleted.

          6.12. Subsidiaries. Without the prior written consent of Bank, such consent not to
be unreasonably withheld, shall not acquire, form or dispose of any Subsidiaries or permit any
Subsidiary to issue capital stock except to its parent or as required by applicable law.

          6.13. Change of Ownership. Shall not issue, sell or otherwise dispose of any of its
equity interests or other securities, or rights, warrants or options to purchase or acquire any
such equity interests or securities that effectively changes control of Borrower or otherwise
participate in any change in the ownership of its equity interests that effectively changes control
of Borrower, without the prior written consent of Bank, except for issuances of stock in connection
with the closing of the first underwritten offering by the Borrower or any of its subsidiaries (or
any successor entity) of common stock to the public pursuant to an effective registration statement
under the Securities Act of 1933, as amended.

          6.14. Liquidation, Mergers, Consolidations and Dispositions of Substantial Assets.
Shall not dissolve or liquidate, merge or consolidate, or acquire by purchase, lease or otherwise,
all or a substantial part (more than 10% in the aggregate during the term hereof) of the assets of
any Person, or sell, transfer, lease or otherwise dispose of all or a substantial part (more than
10% in the aggregate during the term hereof) of its property or assets (except in the ordinary
course of business), except for the sale of Inventory in the ordinary course of business, or sell
or dispose of any equity ownership interests in any Subsidiary.

          6.15. Change of Fiscal Year or Accounting Methods. Shall not change its fiscal
year or its accounting methods.

          6.16. Applied Sciences Corporation. Shall not (i) sell or make any voluntary or
involuntary transfer or permit any transfer of any of its assets to ASC, other than transfers in
the ordinary course of business, and (ii) extend any credit to ASC, and in either event not to
exceed $1,000,000.00 in the aggregate of all transfers and all credit. Any credit extended to ASC
shall be fully subordinate to the Bank and the Indebtedness on terms and conditions acceptable to
Bank. In addition, neither Borrower nor any other Person shall permit ASC to (a) sell, transfer,
or suffer any dilution of, all or any part of its stock or other ownership interests; (b) make any
voluntary or involuntary transfer or encumbrance of its stock or other ownership interests or
permit any transfer to be made; (c) incur any indebtedness or other obligations other than in the
ordinary course of its business; (d) without the prior written consent of Bank, not effect any
asset acquisition, any stock acquisition or any other acquisition or permit to effect any asset
acquisition, stock acquisition or any other acquisition other than acquisitions in the ordinary
course of ASC’s current business; or (e) without the prior written consent of Bank, become, or
allow to become, a party to any merger, consolidation or other business combination.

     7. Other Covenants of Borrower. Borrower covenants and agrees that from the date
hereof and until payment in full of the Indebtedness and the formal termination of this Agreement,
Borrower on a consolidated basis shall comply with the following additional covenants:

          7.1. Deposit Relationship. Borrower shall maintain its primary deposit relationship
and its cash management accounts with Bank.

13

 

          7.2. Total Liabilities to Tangible Net Worth Ratio. Borrower shall, at all times,
effective as of October 31, 2003, maintain a ratio of Total Liabilities divided by Tangible Net
Worth of not more than 2.00 to 1.00, to be monitored for compliance quarterly. For purposes of this
computation, “Total Liabilities” shall mean all liabilities of Borrower, excluding debt
subordinated to Bank on terms satisfactory to Bank in its sole discretion and any liability
relating to Albion Alliance Mezzanine Fund II, L.P.’s put rights under Section 9.1 and 9.2 of that
certain Class A Common Stock Purchase Warrant issued by the Borrower on September 3, 2002, and
including capitalized leases and all reserves for deferred taxes and other deferred sums appearing
on the liabilities side of a balance sheet of Borrower, in accordance with GAAP applied on a
consistent basis. “Tangible Net Worth” shall mean total assets minus Total Liabilities. For
purposes of this calculation, the aggregate amount of any intangible assets of Borrower including,
without limitation, employee, officer and affiliate receivables, goodwill, franchises, licenses,
patents, trademarks, trade names, copyrights, service marks, and brand names, shall be subtracted
from total assets. Total cash on hand will reduce any borrowings under the $7,000,000.00 Revolving
Loan and total assets will be reduced by the same amount.

          7.3. Working Capital. Borrower shall, at all times, determined on a quarterly basis,
maintain Working Capital of at least $4,000,000.00. “Working Capital” shall mean the excess of the
current assets over the current liabilities as defined by GAAP.

          7.4. Senior Funded Debt to EBITDA Ratio. Borrower shall, at all times, maintain a
Senior Funded Debt to EBITDA Ratio of not more than 1.00 to 1.00, to be monitored for compliance
quarterly. “Senior Funded Debt” shall mean, as applied to any person or entity, the sum of all
indebtedness for borrowed money, (including, without limitation, capital lease obligations and
unreimbursed drawings under letters of credit), as evidenced by a note, bond debenture or similar
instrument of that person or entity, excluding any debt subordinated to Bank on terms and
conditions acceptable to Bank. “EBITDA” shall mean earnings before interest expense, income taxes,
depreciation and amortization. “EBITDA” will be calculated on a rolling four quarter basis. Total
cash on hand will reduce any Senior Funded Debt.

          7.5. Fixed Charge Coverage Ratio. Borrower shall, at all times, effective as of
October 31, 2003, maintain a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00, to be
monitored for compliance quarterly. This ratio shall be calculated on a rolling four quarters
basis. “Fixed Charge Coverage Ratio” shall mean the sum of earnings before interest paid during the
period, depreciation, amortization, lease and rent expense paid during the period, minus unfinanced
capital expenditures divided by the sum of interest expense paid during the period, current portion
of long term debt, current portion of capitalized leases, lease and rent expense, and withdrawals.
Income taxes will be calculated on an accrual basis.

          7.6. Limitation on Debt. Other than as permitted hereunder, Borrower shall not,
directly or indirectly, create, incur, assume or become liable for, any additional indebtedness,
whether contingent or direct, if, giving effect to such additional Debt on a pro forma basis,
causes the aggregate amount of such additional Debt, including obligations to Bank, to exceed
$100,000.00.

          7.7. Loans and Advances. Other than as permitted hereunder, Borrower shall not, during
any fiscal year, make loans or advances, excepting ordinary course of business travel and expense
advances, to any person or entity, which total more than $100,000.00 in the aggregate.

     8. Default.

          8.1. Events of Default. Each of the following shall constitute an Event of Default:

          (a) There shall occur any default by Borrower in the payment, when due, of any principal of or
interest on the $7,000,000.00 Revolving Note, the $2,638,888.87 Term Note or the $666,532.34 Term
Note, any amounts due hereunder or any other Loan Document, or any other Indebtedness, which
payment is not made within 5 days after such payment is due; or

          (b) There shall occur any default by Borrower or any other party to any Loan Document (other
than Bank) in the performance of any agreement, covenant or obligation contained in this

14

 

Agreement or such Loan Document not provided for elsewhere in this Section 8, which default is
not cured within 10 days after written notice thereof is mailed to Borrower by Bank; or

          (c) Any representation or warranty made by Borrower or any other party to any Loan Document
(other than Bank) herein or therein or in any certificate or report furnished in connection
herewith or therewith shall prove to have been untrue or incorrect in any material respect when
made; or

          (d) Any other obligations, loans, contracts or agreements now or hereafter owed by Borrower or
any Subsidiary or affiliate to Bank or any affiliate of Bank shall be in default and not cured
within any applicable grace period, if any, provided therein, or any such Person shall be in
default under any obligation in excess of $100,000.00 owed to any other obligee, which default
entitles the obligee to accelerate any such obligations or exercise other remedies with respect
thereto; or

          (e) Borrower or any Subsidiary shall (A) voluntarily dissolve, liquidate or terminate
operations or apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of such Person or of all or of a substantial part of its
assets, (B) admit in writing its inability, or be generally unable, to pay its debts as the debts
become due, (C) make a general assignment for the benefit of its creditors, (D) commence a
voluntary case under the federal Bankruptcy Code (as now or hereafter in effect), (E) file a
petition seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, (F) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under Bankruptcy Code, or (G) take any corporate action for the purpose of
effecting any of the foregoing; or

          (f) An involuntary petition or complaint shall be filed against Borrower or any Subsidiary
seeking bankruptcy relief or reorganization or the appointment of a receiver, custodian, trustee,
intervenor or liquidator of Borrower or any Subsidiary, of all or substantially all of its assets,
and such petition or complaint shall not have been dismissed within sixty (60) days of the filing
thereof; or an order, order for relief, judgment or decree shall be entered by any court of
competent jurisdiction or other competent authority approving or ordering any of the foregoing
actions and shall not have been continued or stayed within sixty (60) days of the filing thereof;
or

          (g) A judgment in excess of $100,000.00 shall be rendered against Borrower or any
Subsidiary and shall remain undischarged, undismissed and unstayed for more than thirty (30) days
(except judgments validly covered by insurance with a deductible of not more than $100,000.00) or
there shall occur any levy upon, or attachment, garnishment or other seizure of, any material
portion of the Collateral or other assets of Borrower or any Subsidiary by reason of the issuance
of any tax levy, judicial attachment or garnishment or levy of execution; or

          (h) Loss, theft, damage or destruction of any material portion of the tangible Collateral for
which there is either no insurance coverage or for which, in the reasonable opinion of Bank, there
is insufficient insurance coverage; or

          (i) There shall occur any event, condition or circumstance or sets of events, conditions or
circumstances or any change(s) occurs which is material and adverse to (A) the value of the
Collateral, (B) the EBITDA projected over an extended period of time of Borrower and its
Subsidiaries, taken as a whole, (C) the liabilities of Borrower and its Subsidiaries, taken as a
whole, or (D) the validity or enforceability of the Loan Documents.

          (j) There shall occur a default or event of default occurs under any Subordinated Debt or if
any creditor or other party initiates any foreclosure or collection proceeding under any Permitted
Lien, including, without limitation, a default or event of default under that certain Subordination
Agreement (the “Senior Subordination Agreement”) by and between Bank, Borrower and Albion Alliance
Mezzanine Fund II, L.P., a Delaware limited partnership (“Albion”) and that certain Subordination
Agreement (Junior Notes) by and between Bank, Borrower, Albion, George H. Holley, an individual
residing in the State of Connecticut, and the Estate of Robert Salem (the “Junior Subordination
Agreement”), each dated as of September 17, 2004, as the same shall be amended or modified from
time to time.

15

 

          8.2. Remedies. If any Default shall occur, Bank may, without notice to Borrower, at
its option, withhold further Advances to Borrower. If an Event of Default shall have occurred and
be continuing, Bank may at its option take any or all of the following actions:

          (a) Bank may declare any or all Indebtedness (other than Indebtedness under any swap
agreements, as defined in 11 U.S.C. §101, between Borrower and Bank or any affiliate of Bank, which
shall be governed by the default and termination provisions of said swap agreements) to be
immediately due and payable (if not earlier demanded), terminate its obligation to make Advances to
Borrower, bring suit against Borrower to collect the Indebtedness, exercise any remedy available to
Bank hereunder or at law and take any action or exercise any remedy provided herein or in any other
Loan Document or under applicable law. No remedy shall be exclusive of other remedies or impair
the right of Bank to exercise any other remedies.

          (b) Without waiving any of its other rights hereunder or under any other Loan Document,
Bank shall have all rights and remedies of a secured party under the Code (and the Uniform
Commercial Code of any other applicable jurisdiction) and such other rights and remedies as may be
available hereunder, under other applicable law or pursuant to contract. If requested by Bank,
Borrower will promptly assemble the Collateral and make it available to Bank at a place to be
designated by Bank. Borrower agrees that any notice by Bank of the sale or disposition of the
Collateral or any other intended action hereunder, whether required by the Code or otherwise, shall
constitute reasonable notice to Borrower if the notice is mailed to Borrower by regular or
certified mail, postage prepaid, at least five business days before the action to be taken.
Borrower shall be liable for any deficiencies in the event the proceeds of the disposition of the
Collateral do not satisfy the Indebtedness in full.

          (c) Bank may demand, collect and sue for all amounts owed pursuant to Accounts, General
Intangibles, Chattel Paper, Instruments, Documents or for proceeds of any Collateral (either in
Borrower’s name or Bank’s name at the latter’s option), with the right to enforce, compromise,
settle or discharge any such amounts.

          8.3. Receiver. In addition to any other remedy available to it, Bank shall have the
absolute right, upon the occurrence of an Event of Default, to seek and obtain the appointment of a
receiver to take possession of and operate and/or dispose of the business and assets of Borrower
and any costs and expenses incurred by Bank in connection with such receivership shall bear
interest at the Default Rate, at Bank’s option, and shall be secured by all Collateral.

          8.4. Deposits; Insurance. After the occurrence of an Event of Default, Borrower
authorizes Bank to collect and apply against the Indebtedness when due any cash or deposit accounts
in its possession, and any refund of insurance premiums or any insurance proceeds payable on
account of the loss or damage to any of the Collateral and irrevocably appoints Bank as its
attorney-in-fact to endorse any check or draft or take other action necessary to obtain such funds.

     9. Security Agreement.

          9.1. Security Interest.

          (a) As security for the payment and performance of any and all Indebtedness and the
performance of all obligations and covenants of Borrower to Bank and its affiliates, whether
hereunder and under the other Loan Documents or otherwise, certain or contingent, now existing or
hereafter arising, which are now, or may at any time or times hereafter be owing by Borrower to
Bank or any of Bank’s affiliates, Borrower hereby grants to Bank (for itself and its affiliates) a
continuing security interest in and general lien upon and right of set-off against, all right,
title and interest of Borrower in and to the Collateral, whether now owned or hereafter acquired by
Borrower.

          (b) Except as herein or by applicable law otherwise expressly provided, Bank shall not be
obligated to exercise any degree of care in connection with any Collateral in its possession, to
take any steps necessary to preserve any rights in any of the Collateral or to preserve any rights
therein against prior parties, and Borrower agrees to take such steps. In any case Bank shall be
deemed to have exercised

16

 

reasonable care if it shall have taken such steps for the care and preservation of the
Collateral or rights therein as Borrower may have reasonably requested Bank to take and Bank’s
omission to take any action not requested by Borrower shall not be deemed a failure to exercise
reasonable care. No segregation or specific allocation by Bank of specified items of Collateral
against any liability of Borrower shall waive or affect any security interest in or Lien against
other items of Collateral or any of Bank’s options, powers or rights under this Agreement or
otherwise arising.

          (c) Bank may at any time and from time to time, with or without notice to Borrower, (i)
transfer into the name of Bank or the name of Bank’s nominee any of the Collateral, (ii) notify any
Account Debtor or other obligor of any Collateral to make payment thereon direct to Bank of any
amounts due or to become due thereon and (iii) receive, and after a Default direct the disposition
of, any proceeds of any Collateral.

          9.2. Financing Statements; Power of Attorney. Borrower authorizes Bank at
Borrower’s expense to file any financing statements and/or amendments thereto relating to the
Collateral (without Borrower’s signature thereon) which Bank deems appropriate that (a) indicate
the Collateral (i) as “all assets” of Borrower or words of similar effect, if appropriate,
regardless of whether any particular asset comprised in the Collateral falls within the scope of
Article 9 of the Code, or (ii) by specific Collateral category, and (b) provide any other
information required by part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment. Borrower irrevocably appoints Bank as its
attorney-in-fact to execute any such financing statements and/or control agreements in Borrower’s
name and to perform all other acts, at Borrower’s expense, which Bank deems appropriate to perfect
and to continue perfection of the security interest of Bank. Upon the occurrence of an event or
condition which but for notice or the passage of time, or both, would constitute an Event of
Default, Borrower hereby appoints Bank as Borrower’s attorney-in-fact to endorse, present and
collect on behalf of Borrower and in Borrower’s name any draft, checks or other documents necessary
or desirable to collect any amounts which Borrower may be owed. Bank is hereby granted a license
or other right to use, without charge, upon the occurrence of an event or condition which but for
notice or the passage of time, or both, would constitute an Event of Default, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral, and Borrower’s rights under all licenses and all
franchise agreements shall inure to Bank’s benefit. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing five (5) Business Days for collection,
first to the reasonable costs, expenses and attorneys’ fees and expenses incurred by Bank for
collection and for acquisition, completion, protection, removal, storage, sale and delivering of
the Collateral; secondly, to interest due upon any of the Indebtedness; and thirdly, to the
principal amount of the Indebtedness. If any deficiency shall arise, Borrower shall remain jointly
and severally liable to Bank therefor.

          9.4. Entry. Borrower hereby irrevocably consents to any act by Bank or its agents in
entering upon any premises for the purposes of either (i) inspecting the Collateral or (ii) taking
possession of the Collateral and Borrower hereby waives its right to assert against Bank or its
agents any claim based upon trespass or any similar cause of action for entering upon any premises
where the Collateral may be located.

          9.5. Other Rights. Borrower authorizes Bank without affecting Borrower’s obligations
hereunder or under any other Loan Document from time to time (i) upon the occurrence of an event or
condition which, but for notice or the passage of time, or both, would constitute an Event of
Default, to take from any party and hold additional Collateral or guaranties for the payment of the
Indebtedness or any part thereof, and to exchange, enforce or release such collateral or guaranty
of payment of the Indebtedness or any part thereof and to release or substitute any endorser or
guarantor or any party who has given any security interest in any collateral as security for the
payment of the Indebtedness or any part thereof or any party in any way obligated to pay the
Indebtedness or any part thereof; and (ii) upon the occurrence of an event or condition which, but
for notice or the passage of time, or both, would constitute an Event of Default, to direct the
manner of the disposition of the Collateral and the enforcement of any endorsements, guaranties,
letters of credit or other security relating to the Indebtedness or any part thereof as Bank in its
sole discretion may determine.

17

 

          9.6. Accounts. Upon the occurrence of an event or condition which, but for notice or
the passage of time, or both, would constitute an Event of Default, Bank may notify any Account
Debtor of Bank’s security interest and may direct such Account Debtor to make payment directly to
Bank for application against the Indebtedness. Any such payments received by or on behalf of
Borrower at any time, whether before or after default, shall be the property of Bank, shall be held
in trust for Bank and not commingled with any other assets of any Person (except to the extent they
may be commingled with other assets of Borrower in an account with Bank) and shall be immediately
delivered to Bank in the form received. Bank shall have the right to apply any proceeds of
Collateral to such of the Indebtedness as it may determine.

          9.7. Waiver of Marshaling. Borrower hereby waives any right it may have to require
marshaling of its assets.

          9.8. Control. Borrower will cooperate with Bank in obtaining control of, or control
agreements with respect to, Collateral for which control or a control agreement is required for
perfection of the Bank’s security interest under the Code.

     10. Miscellaneous.

          10.1. No Waiver, Remedies Cumulative. No failure on the part of Bank to exercise,
and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies herein provided are
cumulative and are in addition to any other remedies provided by law, any Loan Document or
otherwise.

          10.2. Survival of Representations. All representations and warranties made herein
shall survive the making of the Loan hereunder and the delivery of the Note, and shall continue in
full force and effect so long as any Indebtedness is outstanding, there exists any commitment by
Bank to Borrower, and until this Agreement is formally terminated in writing.

          10.3. Indemnity By Borrower; Expenses. In addition to all other Indebtedness,
Borrower agrees to defend, protect, indemnify and hold harmless Bank and its Affiliates and all of
their respective officers, directors, employees, attorneys, consultants and agents from and against
any and all losses, damages, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, reasonable attorneys’ and paralegals’ fees, costs and expenses)
incurred by such indemnitees, whether prior to or from and after the date hereof, as a result of or
arising from or relating to (i) performance of any of the Loan Documents or of any document
executed in connection with the transactions contemplated thereby and the perfection of Bank’s
Liens in the Collateral, maintenance of the Loan by Bank, and any and all amendments,
modifications, and supplements of any of the Loan Documents or restructuring of the Indebtedness,
(ii) any suit, investigation, action or proceeding by any Person (other than Borrower), whether
threatened or initiated, asserting a claim for any legal or equitable remedy against any Person
under any statute, regulation or common law principle, arising from or in connection with Bank’s
furnishing of funds to Borrower under this Agreement, (iii) Bank’s preservation, administration and
enforcement of its rights under the Loan Documents and applicable law, including the reasonable
fees and disbursements of counsel for Bank in connection therewith, whether suit be brought or not
and whether incurred at trial or on appeal, and all costs of repossession, storage, disposition,
protection and collection of Collateral, (iv) annual field exams, audits and appraisals performed
by Bank; and/or (v) any matter relating to the financing transactions contemplated by the Loan
Documents or by any document execution in connection with the transactions contemplated thereby,
other than for such loss, damage, liability, obligation, penalty, fee, cost or expense arising from
such indemnitee’s gross negligence or willful misconduct. If Borrower should fail to pay any tax
or other amount required by this Agreement to be paid or which may be reasonably necessary to
protect or preserve any Collateral or Borrower’s or Bank’s interests therein, Bank may make such
payment and the amount thereof shall be payable on demand, shall bear interest at the Default Rate
from the date of demand until paid and shall be deemed to be Indebtedness entitled to the benefit
and security of the Loan Documents. In addition, Borrower agrees to pay and save Bank harmless
against any liability for payment of any state documentary stamp taxes, intangible taxes or similar
taxes (including interest or penalties, if any) which may now or hereafter be determined to be
payable in respect to the execution,

18

 

delivery or recording of any Loan Document or the making of any Advance, whether originally
thought to be due or not, and regardless of any mistake of fact or law on the part of Bank or
Borrower with respect to the applicability of such tax. Borrower’s obligation for indemnification
for all of the foregoing losses, damages, liabilities, obligations, penalties, fees, costs and
expenses of Bank shall be part of the Indebtedness, secured by the Collateral, chargeable against
Borrower’s loan account, and shall survive termination of this Agreement.

          10.4. Notices. Any notice or other communication hereunder under the Note to any
party hereto or thereto shall be by hand delivery, overnight delivery via nationally recognized
overnight delivery service, facsimile with receipt confirmed, telegram, telex or registered or
certified United States mail and unless otherwise provided herein shall be deemed to have been
given or made when delivered, telegraphed, telexed, faxed or three (3) Business Days after having
been deposited in the United States mail, postage prepaid, addressed to the party at its address
specified below (or at any other address that the party may hereafter specify to the other parties
in writing):

	 	 	 
	Bank:

	 	WACHOVIA BANK, NATIONAL ASSOCIATION

Mail Code VA7391

P.O. Box 13327

Roanoke, Virginia 24040
	 
	 	 
	 

	 	WACHOVIA BANK, NATIONAL ASSOCIATION

Mail Code VA7391

10 South Jefferson Street

Roanoke, Virginia 24011

	 
	 	 
	Borrower:

	 	HOME DIAGNOSTICS, INC.

2400 NW 55th Court

Fort Lauderdale, Florida 33309

Attn: Ronald Rubin, Chief Financial Officer

          10.5. Governing Law. This Agreement and the Loan Documents shall be deemed contracts
made under the laws of the State of the Jurisdiction and shall be governed by and construed in
accordance with the laws of said state (excluding its conflict of laws provisions if such
provisions would require application of the laws of another jurisdiction) except insofar as the
laws of another jurisdiction may, by reason of mandatory provisions of law, govern the perfection,
priority and enforcement of security interests in the Collateral.

          10.6. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of Borrower and Bank, and their respective successors and assigns; provided, that
Borrower may not assign any of its rights hereunder without the prior written consent of Bank, and
any such assignment made without such consent will be void.

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

          10.8. No Usury. Regardless of any other provision of this Agreement, the Note or in
any other Loan Document, if for any reason the effective interest should exceed the maximum lawful
interest, the effective interest shall be deemed reduced to, and shall be, such maximum lawful
interest, and (i) the amount which would be excessive interest shall be deemed applied to the
reduction of the principal balance of the Note and not to the payment of interest, and (ii) if the
loan evidenced by the Note has been or is thereby paid in full, the excess shall be returned to the
party paying same, such application to the principal balance of the Note or the refunding of excess
to be a complete settlement and acquittance thereof.

          10.9. Powers. All powers of attorney granted to Bank are coupled with an interest
and are irrevocable.

19

 

          10.10. Approvals. If this Agreement calls for the approval or consent of Bank, such
approval or consent may be given or withheld in the discretion of Bank unless otherwise specified
herein.

          10.11. Participations. Bank shall have the right to enter into one or more
participation with other lenders with respect to the Indebtedness. Upon prior notice to Borrower
of such participation, Borrower shall thereafter furnish to such participant any information
furnished by Borrower to Bank pursuant to the terms of the Loan Documents. Nothing in this
Agreement or any other Loan Document shall prohibit Bank from pledging or assigning this Agreement
and Bank’s rights under any of the other Loan Documents, including collateral therefor, to any
Federal Reserve Bank in accordance with applicable law.

          10.12. Dealings with Multiple Borrowers. If more than one Person is named as
Borrower hereunder, all Indebtedness, representations, warranties, covenants and indemnities set
forth in the Loan Documents to which such Person is a party shall be joint and several. Bank shall
have the right to deal with any individual of any Borrower with regard to all matters concerning
the rights and obligations of Bank hereunder and pursuant to applicable law with regard to the
transactions contemplated under the Loan Documents. All actions or inactions of the officers,
managers, members and/or agents of any Borrower with regard to the transactions contemplated under
the Loan Documents shall be deemed with full authority and binding upon all Borrowers hereunder.
Each Borrower hereby appoints each other Borrower as its true and lawful attorney-in-fact, with
full right and power, for purposes of exercising all rights of such Person hereunder and under
applicable law with regard to the transactions contemplated under the Loan Documents. The
foregoing is a material inducement to the agreement of Bank to enter into the terms hereof and to
consummate the transactions contemplated hereby.

          10.13. Waiver of Certain Defenses. To the fullest extent permitted by applicable
law, upon the occurrence of any Event of Default, neither Borrower nor anyone claiming by or under
Borrower will claim or seek to take advantage of N.C.G.S. 26-7, et seq. or any other law requiring
Bank to attempt to realize upon any Collateral or collateral of any surety or guarantor, or any
appraisement, evaluation, stay, extension, homestead, redemption or exemption laws now or hereafter
in force in order to prevent or hinder the enforcement of this Agreement. Borrower, for itself and
all who may at any time claim through or under Borrower, hereby expressly waives to the fullest
extent permitted by law the benefit of all such laws. All rights of Bank and all obligations of
Borrower hereunder shall be absolute and unconditional irrespective of (i) any change in the time,
manner or place of payment of, or any other term of, all or any of the Indebtedness, or any other
amendment or waiver of or any consent to any departure from any provision of the Loan Documents,
(ii) any exchange, release or non-perfection of any other collateral given as security for the
Indebtedness, or any release or amendment or waiver of or consent to departure from any guaranty
for all or any of the Indebtedness, or (iii) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Borrower or any third party, other than
payment and performance in full of the Indebtedness.

          10.14. Integration. This Agreement and the other Loan Documents constitute the sole
agreement of the parties with respect to the subject matter hereof and thereof and supersede all
oral negotiations and prior writings with respect to the subject matter hereof and thereof.

          10.15. Confidentiality. Bank agrees to keep confidential during the term of the
Loan any material or information about Borrower that was received from Borrower to Bank relating to
Borrower or its business, other than any such information that is available to Bank on a
nonconfidential basis prior to disclosure by Borrower; provided that, in the case of
information received from Borrower after the date hereof, such information is clearly identified in
writing at the time of delivery as confidential (the “Confidential Information”). Notwithstanding
the foregoing or any other provision of this Agreement, Bank may disclose, provide and/or furnish
Confidential Information: (a) to its officers, directors, attorneys, partners, members, managers,
stockholders, controlling persons, affiliates, agents, advisors, representatives and employees
subject to an obligation to maintain the confidentiality of such Confidential Information on
substantially similar terms as those in this subsection; and (b) otherwise pursuant to any of the
following: (i) to any other Person subject to an obligation to maintain the confidentiality of such
Confidential Information on substantially similar terms as those in this subsection, (ii) if
required by any regulatory authority; (iii) to the extent required by applicable laws or
regulations or by any subpoena or

20

 

similar legal process; (iv) to any other party to this Agreement; (v) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
the enforcement of rights hereunder, including defending any action or relating to the relationship
between Bank and Borrower; (vi) to (A) any assignee of or participant in, or any prospective
assignee of or participant in, any of its rights or obligations under this Agreement, or (B) any
direct or indirect contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any swap transaction or
credit derivative transaction relating to the obligations of Borrower; (vii) with the consent of
Borrower; (vii) to the extent such Confidential Information (A) becomes publicly available other
than as a result of a breach of this Subsection, or (B) becomes available to Bank on a
nonconfidential basis from a source other than Borrower; and/or (viii) with respect to public or
non-confidential portions of such Confidential Information. Any person required to maintain the
confidentiality of Confidential Information as provided in this Subsection shall be considered to
have complied with its obligation to do so if such person has exercised the same degree of care to
maintain the confidentiality of Confidential Information as such person would accord its own
confidential information.

          10.16. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES
HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION
PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM (A “DISPUTE”) THAT MAY ARISE OUT OF OR
BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT
BETWEEN OR AMONG THEM OR THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO
EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY
WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY DISPUTE, WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION, MEDIATION,
JUDICIALLY OR OTHERWISE.

          10.17 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ENTER INTO AND ACCEPT THIS AGREEMENT.
EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT
RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER
DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED,
SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS AGREEMENT.

          10.18. Other Provisions. Any other or additional terms and conditions set forth in
Exhibit 10.18 (if any) are hereby incorporated herein.

[EXECUTIONS APPEAR ON FOLLOWING PAGE]

21

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.

	 	 	 	 	 
	 	BANK

WACHOVIA BANK, NATIONAL ASSOCIATION

 	 
	 	By /s/ Aly Heimovics
 	 
	 	Aly Heimovics, Vice President 	 
	 	 	 
	 
	 	BORROWER

HOME DIAGNOSTICS, INC., a Delaware corporation

 	 
	 	By
/s/ Donald P. Parson
 	 
	 	Donald P. Parson, Vice Chairman 	 
	 	 	 
	 

	 	 	 	 	 	 	 
	STATE OF FLORIDA

	 	 	)

)	 	 	SS.:
	COUNTY OF BROWARD

	 	 	)	 	 	 

     The
foregoing instrument was acknowledged before me March 13, 2006, by Aly Heimovics, as Vice
President of Wachovia Bank, National Association, on behalf of the bank. She is personally known
to me or who has/have produced a driver’s license as identification and did (not) take an oath.

	 	 	 	 	 
	 	 	 
	 	/s/ Karen M. Dunn
 	 
	 	Name:  	Karen M. Dunn 	 
	 	Notary Public, State of Florida

My commission expires: 8/13/2009 	 
	 

	 	 	 	 	 	 	 
	STATE
OF NORTH CAROLINA

	 	 	)

)	 	 	SS.:
	COUNTY
OF CHATHAM

	 	 	)	 	 	 

     The
foregoing instrument was acknowledged before me March 9, 2006, by Donald P. Parson, as
Vice Chairman of Home Diagnostics, Inc., a Delaware corporation, on behalf of the corporation.
He/she is personally known to me or who has/have produced a driver’s license as identification and
did (not) take an oath.

	 	 	 	 	 
	 	 	 
	 	/s/ Rhonda Strothe
 	 
	 	Name:  	Rhonda Strothe 	 
	 	Notary Public, State of North Carolina

My commission expires: 6/2/09 	 
	 

22

 

SCHEDULE OF EXHIBITS

(If any exhibit is omitted, the information called for therein

shall be considered “None” or “Not Applicable”)

	 	 	 	 	 
	Exhibit	 	Section Reference	 	Title
	1	 	1 (“Definitions”)
	 	Definitions
	1.1A	 	1.1 (“Collateral”)
	 	Additional Collateral
	1.1B	 	Intentionally deleted
	 	Intentionally deleted
	1.1C	 	1.1 (“Permitted Debt”)
	 	Permitted Debt
	1.1D	 	1.1 (“Permitted Liens”)
	 	Permitted Liens
	1.1E	 	1.1 (“Subordinated Debt”)
	 	Subordinated Debt
	3.1	 	3.1(b)(vii) (“Supporting Documents”)
	 	Perfection Certificate
	4.3	 	4.3 (“Financial Condition”)
	 	Contingent Liabilities
	4.4	 	4.4 (“Litigation”)
	 	Litigation
	4.9	 	4.9 (“Location”)
	 	Offices of Borrower
	4.12	 	4.12 (“Accounts”)
	 	Accounts
	4.14	 	4.14 (“Subsidiaries”)
	 	List of Subsidiaries
	4.15	 	4.15 (“Environmental”)
	 	Environmental Disclosures
	4.16	 	4.16 (“ERISA”)
	 	ERISA
	4.18	 	4.18 (“Names”)
	 	Names; Mergers; Acquisitions
	4.22	 	4.22 (“Additional Representations”)
	 	Additional Representations
	5.6	 	5.6 (“No Default Certificates”)
	 	Non-Default Certificate
	6.3	 	6.3 (“Dividends”)
	 	Permitted Dividends and
	 	 	 
	 	Distributions
	6.7	 	6.7 (“Transactions with Affiliates”)
	 	Transactions with Affiliates
	10.18	 	10.18 (“Other Provisions”)
	 	Additional Terms

 

 

EXHIBIT 1

Definitions

1.1 Defined Terms:

     “Accession” has the meaning set forth in the Code.

     “Account” has the meaning set forth in the Code, together with any guaranties, letters
of credit, Letter-of-Credit Right, and other security therefore, including Supporting Obligations.

     “Account Debtor” means a Person who is obligated under any Account, Chattel Paper,
General Intangible or Instrument.

     “Advance” means an advance of proceeds of the $7,000,000.00 Revolving Loan to Borrower
or the issuance of a letter of credit or bankers acceptance on behalf of Borrower pursuant to this
Agreement.

     “Advance Date” means the date on which an Advance is made.

     “Advance Request” means the written request for an Advance under the $7,000,000.00
Revolving Loan as identified in Subsection 2.5(a) hereof.

     “Affiliate” of a Person means (a) any Person directly or indirectly owning 5% or more
of the voting stock or rights of such named Person or of which the named Person owns 5% or more of
such voting stock or rights; (b) any Person controlling, controlled by or under common control with
such named Person; (c) any officer, director or employee of such named Person or any Affiliate of
the named Person; and (d) any family member of the named Person or any Affiliate of such named
Person.

     “Business Day” means a weekday on which commercial banks are open for business in Fort
Lauderdale, Florida.

     “Chattel Paper” has the meaning set forth in the Code, including Electronic Chattel
Paper, together with any guaranties, letters of credit, Letter-of-Credit Right, and other security
therefore, including Supporting Obligations.

     “Code” means the Uniform Commercial Code, as presently and hereafter enacted in the
Jurisdiction. Any term used in this Agreement and in any financing statement filed in connection
herewith which is defined in the Code and not otherwise defined in this Agreement or in any other
Loan Document has the meaning given to the term in the Code.

     “Collateral” means all property of Borrower, wherever located and whether now owned by
Borrower or hereafter acquired, including but not limited to: (a) all Inventory; (b) all General
Intangibles; (c) all Accounts; (d) all Chattel Paper; (e) all Instruments and Documents and any
other instrument or intangible representing payment for goods or services; (f) all Equipment; (g)
all Investment Property; (h) all Deposit Accounts and funds on deposit therein, including but not
limited to the lockbox or funds otherwise on deposit with or under the control of Bank or its
agents or correspondents; and all parts, replacements, substitutions, profits, products, Accessions
and cash and non-cash proceeds and Supporting Obligations of any of the foregoing (including
insurance proceeds payable by reason of loss or damage thereto) in any form and wherever located.
Collateral shall include all written or electronically recorded books and records relating to any
such Collateral and other rights relating thereto.

     “Debt” means all liabilities of a Person as determined under GAAP and all obligations
which such Person has guaranteed or endorsed or is otherwise secondarily or jointly liable for, and
shall include, without limitation (a) all obligations for borrowed money or purchased assets, (b)
obligations secured by assets whether or not any personal liability exists, (c) the capitalized
amount of any capital or finance lease

 

 

obligations, (d) the unfunded portion of pension or benefit plans or other similar
liabilities, (e) obligations as a general partner, (f) contingent obligations pursuant to
guaranties, endorsements, letters of credit and other secondary liabilities, (g) obligations for
deposits, and (h) obligations under swap agreements, as defined in 11 U.S. C. §101.

     “Default Rate” means the “Default Rate” as defined in any Note.

     “Deposit Account” has the meaning set forth in the Code.

     “Electronic Chattel Paper” has the meaning set forth in the Code.

     “Environmental Laws” means, collectively the following acts and laws, as amended: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980; the Superfund
Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act; the Toxic
Substances Act; the Clean Water Act; the Clean Air Act; the Oil Pollution and Hazardous Substances
Control Act of 1978; and any other “Superfund” or “Superlien” law or any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.

     “Equipment” has the meaning set forth in the Code.

     “Event of Default” means any event specified as such in Section 8.1 hereof
(“Events of Default”), provided that there shall have been satisfied any requirement in
connection with such event for the giving of notice or the lapse of time, or both;
“Default” or “default” means any of such events, whether or not any such requirement for
the giving of notice or the lapse of time or the happening of any further condition, event or act
shall have been satisfied.

     “GAAP” means generally accepted accounting principles as in effect in the Unites
States from time to time.

     “General Intangibles” has the meaning set forth in the Code, together with any
guaranties, letters of credit, Letter-of-Credit Right, and other security therefore, including
Supporting Obligations.

     “Indebtedness” means all obligations now or hereafter owed to Bank or any affiliate of
Bank by Borrower, whether related or unrelated to the Loan, including, without limitation, amounts
owed or to be owed under the terms of the Loan Documents, or arising out of the transactions
described therein, including, without limitation, the Loan, sums advanced to pay overdrafts on any
account maintained by Borrower with Bank, reimbursement obligations for outstanding letters of
credit or banker’s acceptances issued for the account of Borrower or its Subsidiaries, amounts paid
by Bank under letters of credit or drafts accepted by Bank for the account of Borrower or its
Subsidiaries, together with all interest accruing thereon, all existing and future obligations
under any swap agreements as defined in 11 U.S.C.§101 between Bank or any affiliate of Bank and
Borrower whenever executed, all fees, all costs of collection, reasonable attorneys’ fees and
expenses of or advances by Bank which Bank pays or incurs in discharge of obligations of Borrower
or to inspect, repossess, protect, preserve, store or dispose of any Collateral, whether such
amounts are now due or hereafter become due, direct or indirect and whether such amounts due are
from time to time reduced or entirely extinguished and thereafter re-incurred.

     “Instrument” has the meaning set forth in the Code.

     “Inventory” has the meaning set forth in the Code.

     “Investment Property” has the meaning set forth in the Code.

     “Item” means any “item” as defined in Section 4-104 of the Code, and shall also mean
and include checks, drafts, money orders or other media of payment.

 

 

     “Jurisdiction” means the State of Florida.

     “Letter-of-Credit Right” has the meaning set forth in the Code.

     “Lien” means any mortgage, pledge, statutory lien or other lien arising by operation
of law, security interest, trust arrangement, security deed, financing lease, collateral assignment
or other encumbrance, conditional sale or title retention agreement, or any other interest in
property designed to secure the repayment of Indebtedness, whether arising by agreement or under
any statute or law or otherwise.

     “Loan” means collectively the $7,000,000.00 Revolving Loan, the $2,638,888.87 Term
Loan and $666,532.34 Term Loan identified in Section 2.1(a), 2.1(b) and 2.1(c) hereof.

     “Loan Documents” means this Agreement, any other Security Agreement, any Note, the
Advance Requests, UCC-1 financing statements and all other documents and instruments now or
hereafter evidencing, describing, guaranteeing or securing the Indebtedness contemplated hereby or
delivered in connection herewith, as they may be modified, amended, extended, renewed or
substituted from time to time, but does not include swap agreements (as defined in 11 U.S.C. § 101)
        .

     “Material Adverse Effect” means any (i) material adverse effect upon the validity,
performance or enforceability of any of the Loan Documents or any of the transactions contemplated
hereby or thereby, (ii) material adverse effect upon the properties, business, prospects or
condition (financial or otherwise) of Borrower and/or any other Person obligated under any of the
Loan Documents, or (iii) material adverse effect upon the ability of Borrower or any other Person
to fulfill any obligation under any of the Loan Documents.

     “Maximum Loan Amount” means $7,000,000.00.

     “Note” shall have the meaning set forth in Section 2.2 and any other promissory note
now or hereafter evidencing any Indebtedness, and all modifications, extensions and renewals
thereof.

     “Perfection Certificate” means a certificate executed by the chief executive officer
and chief legal officer of Borrower, substantially in the form of Exhibit 3.1 hereto.

     “Permitted Debt” means (a) the Indebtedness; (b) the Subordinated Debt; and (c) any
other Debt listed on Exhibit 1.1C hereto (if any) and any extensions, renewals, replacements,
modifications and refundings of any such Debt if, and to the extent, permitted by Exhibit 1.1C;
provided, however, that the principal amount of such Debt may not be increased from the amount
shown as outstanding on such exhibit.

     “Permitted Liens” means (a) Liens securing the Indebtedness; (b) Liens for taxes and
other statutory Liens, landlord’s Liens and similar Liens arising out of operation of law (provided
they are subordinate to Bank’s Liens on the Collateral) so long as the obligations secured thereby
are not past due or are being contested and the proceedings contesting such obligations have the
effect of preventing the forfeiture or sale of the property subject to such Lien; (c) Liens
described on Exhibit 1.1D hereto (if any), provided, however, that no debt not now secured by such
Liens shall become secured by such Liens hereafter and such Liens shall not encumber any other
assets.

     “Person” means any natural person, corporation, unincorporated organization, trust,
joint-stock company, joint venture, association, company, limited or general partnership, any
government or any agency or political subdivision of any government, or any other entity or
organization.

     “Projections” means Borrower’s forecasted consolidated and consolidating (i) balance
sheets, (ii) profit and loss statements, (iii) cash flow statements, and (iv) capitalization
statements, all prepared on a month by month basis and on a consistent basis with Borrower’s
historical financial statements, together with appropriate supporting details and a statement of
underlying assumptions.

 

 

     “Regulated Materials” means any hazardous, toxic or dangerous waste, substance or
material, the generation, handling, storage, disposal, treatment or emission of which is subject to
any Environmental Law.

     “Reserves” means such amounts as may be required by Bank at any time and from time to
time in Bank’s reasonable discretion without prior notice to Borrower, to reserve against
Borrower’s obligations to Bank or its affiliates or any other obligations by Borrower, whether
direct or contingent.

     “Revolving Credit Period” means the period from and including the date of this
Agreement to but not including the Termination Date.

     “Security Agreement” means this Agreement as it relates to a security interest in the
Collateral, and any other mortgage instrument, security agreement or similar instrument now or
hereafter executed by Borrower or other Person granting Bank a security interest in any Collateral
to secure the Indebtedness.

     “Solvent” means, as to any Person, that such Person has capital sufficient to carry on
its business and transactions in which it is currently engaged and all business and transactions in
which it is about to engage, is able to pay its debts as they mature, and has assets having a fair
valuation greater than its liabilities, at fair valuation.

     “Subordination Agreement” means, collectively, that certain Subordination Agreement by
and between Bank, Borrower and Albion Alliance Mezzanine Fund II, L.P., a Delaware limited
partnership (“Albion”) and that certain Subordination Agreement (Junior Notes) by and between Bank,
Borrower, Albion, George H. Holley, an individual residing in the State of Connecticut, and the
Estate of Robert Salem.

     “Subordinated Debt” means the Debt (i) incurred by the Borrower that is subordinated
to the Debt owing by the Borrower to Bank on terms acceptable to Bank (and identified as being such
by the Borrower and Bank); and (ii) as specifically set forth on Exhibit 1.1E hereto. No
Subordinated Debt may be extended, renewed or refinanced without the Bank’s discretion, which shall
be granted or denied in Bank’s sole and absolute discretion.

     “Subsidiary” means any corporation, partnership or other entity in which Borrower,
directly or indirectly, owns more than fifty percent (50%) of the stock, capital or income
interests, or other beneficial interests, or which is effectively controlled by such Person.

     “Supporting Obligation” has the meaning set forth in the Code.

     “Termination Date” means October 31, 2006, unless extended or renewed by Bank in
writing on terms satisfactory to Bank in its sole discretion.

1.2. Financial Terms. All financial terms used herein shall have the meanings assigned
to them under GAAP unless another meaning shall be specified.

 

 

EXHIBIT 1.1A

ADDITIONAL COLLATERAL

     NONE

 

 

EXHIBIT 1.1C

PERMITTED DEBT

The following shall be additional Permitted Debt:

	1.	 	Debt incurred to purchase Equipment, provided that the amount of such debt shall not at any time
exceed the purchase price of the Equipment purchased.
	 
	2.	 	Debt subordinated in right of payment and security to the Indebtedness in accordance with
subordination agreements approved in writing by Bank.
	 
	3.	 	Debt payable to suppliers and other trade creditors and current operating expenses (other than
for borrowed money)] in the ordinary course of business on ordinary and customary trade terms and
which is not past due not more than 30 days from the due date.
	 
	4.	 	Debt of any Subsidiary to Borrower or another Subsidiary.
	 
	5.	 	Endorsement of checks for collection in the ordinary course of business.
	 
	6.	 	Debt incurred by Borrower in the ordinary course of business (not to exceed $100,000.00 in the
aggregate pursuant to Section 7.6 of the Credit Agreement.
	 
	7.	 	International Commercial Bank of China (ASC’s Line of Credit secured by time deposit)

			
	               	 	FL Facility Leases — Boywic Farms

ASC Facility Leases — Science Based Industrial Park

DiagnoSys Medical Facility Lease

Employee Incentive Stock Option Plan (includes Director annual grants)

ASC Contract Manufacturing Agreement

Dick Damron Employment Agreement

George Godfrey Separation Agreement

Beth K. Schwartz Continuation Agreement

Class F Preferred Stock Redemption (per 2002 Restated Charter)

Employee MBO Bonus Program

Top Hat Program

401K Employer Contribution

Employee Benefits Program

ASC Pension Plan

 

 

EXHIBIT 1.1D

PERMITTED LIENS

The following shall be additional Permitted Liens:

	1.	 	Deposits made in the ordinary course of business in connection with workers’ compensation,
unemployment insurance, social security and similar laws.
	 
	2.	 	Attachment, judgment and other similar non-tax Liens arising in connection with court
proceedings but only if and for so long as (a) the execution or enforcement of such Liens is and
continues to be effectively stayed and bonded on appeal, (b) the validity and/or amount of the
claims secured thereby are being actively contested in good faith by appropriate legal proceedings
and (c) such Liens do not, in the aggregate, materially detract from the value of the assets of the
Person whose assets are subject to such Lien or materially impair the use thereof in the operation
of such Person’s business.
	 
	3.	 	Liens securing Permitted Debt incurred solely for the purpose of financing the acquisition of
Equipment, provided that such Lien does not secure more than the purchase price of such Equipment
and does not encumber property other than the purchased property.
	 
	4.	 	Liens in favor of Albion Alliance Mezzanine Fund II, L.P., a Delaware limited partnership, which
liens shall be fully subordinate in right of security to that of Bank.
	 
	5.	 	Purchase money security interests and capitalized leases on fixed asset purchases (not to exceed
$100,000.00 in the aggregate).
	 
	6.	 	Liens imposed for taxes, assessments or charges of any governmental authority for nonpayment of
taxes, assessments or charges being actively contested in accordance with law (provided that Bank
may require reasonable bonding or other assurances, such as reserving.)
	 
	7.	 	Statutory Liens of landlords (provided that any such landlord has executed a Landlord Waiver and
Consent in form and substance satisfactory to Lender) and of carriers, warehousemen, mechanics and
materialmen.
	 
	8.	 	The following capital and operating leases are secured by specific liens on assets
identified:

          NONE

     The following other supplier and bank agreements are secured by specific liens on the assets
identified:

International Commercial Bank of China (ASC’s Line of Credit secured by time deposit in the
amount of approximately $22,000.00 subject to foreign currency valuation)

CPI Technologies (Supplier Agreement/Machine on HDI’s premises but title and risk of loss is
held by CPI) — Cartoning Machine

US Postage Meter (Rental Agreement) — Postage Meter

 

 

EXHIBIT 1.1E

SUBORDINATED DEBT

	1.	 	Up to $1,000,000.00 of Debt to ASC, subordinated in right of payment and security to the
indebtedness in accordance with Section 6.16 of this Agreement.
	 
	2.	 	Up to $1,000,000.00 of Debt to DiagnoSys Medical, subordinated in right of payment and security
to the indebtedness in accordance with Section 6.16 of this Agreement.

 

 

EXHIBIT 3.1

PERFECTION CERTIFICATE

 

 

EXHIBIT 4.3

CONTINGENT LIABILITIES

     NONE

 

 

EXHIBIT 4.4

LITIGATION

     NONE

 

 

EXHIBIT 4.9

OFFICES OF BORROWER

2400 NW 55th Ct Chief Executive Office — HDI

Ft. Lauderdale, FL

33309

2500 NW 55th Ct

Ft. Lauderdale, FL

33309

2310 NW 55TH Ct. #134

Ft. Lauderdale, FL

33309

1633 Parkway Chief Executive Office — DiagnoSys Medical

Solent Business Park

Fareham, Hampshire

PO154 7A

No 13 1st Floor Chief Executive Office — ASC

No 13 2nd Floor

No 15 1st Floor

No 15 2nd Floor

Industrial East Road, IV

Hsinchu City, Taiwan ROC

 

 

EXHIBIT 4.12

ACCOUNTS

Accounts offered early payment terms attached

Accounts provided Return Authorization for product that has not yet been received back to HDI for
credit is attached

Multiple Accounts are offered “rebates” and “chargebacks.” HDI records the sales revenues at net
to report its Accounts Receivable Aging at the “post rebate” carrying value.

 

 

EXHIBIT 4.14

LIST OF SUBSIDIARIES

Applied Sciences Corporation, a Taiwanese corporation

DiagnoSys Medical Limited, an England and Wales corporation

 

 

EXHIBIT 4.15

ENVIRONMENTAL DISCLOSURES

     NONE

 

 

EXHIBIT 4.16

ERISA

     NONE

 

 

EXHIBIT 4.18

NAMES; MERGERS; ACQUISITIONS

Home Diagnostics, Inc., a Delaware corporation

	 	(i)	 	Prestige, Prestige LX, Prestige IQ, Prestige Smart System, Prestige LiteTouch,
TrueTrack, TrueTrack Smart System, Ketocare, Sidekick, Sidekick System, HDI Development
Corp, HDI International Inc., MIT Development Corp., Applied Sciences Corporation,
DiagnoSys Medical Limited
	 
	 	(ii)	 	Acquired DiagnoSys Medical Limited, an England and Wales corporation (May 2005)
	 
	 	(iii)	 	Merger with HDI Development Corp, a Delaware corporation (December 1999)
	 
	 	(iv)	 	Acquired MIT Development Corp, a Delaware corporation and its wholly-owned subsidiary
Applied Sciences Corporation via merger into HDI Development Corp (November 1999)

 

 

EXHIBIT 4.22

ADDITIONAL REPRESENTATIONS

     NONE

 

 

EXHIBIT 5.6

NON-DEFAULT CERTIFICATE

In accordance with the terms of the Third Amended and Restated Revolving Credit and Security
Agreement dated March 7, 2006 by and between Wachovia Bank, National Association and Home
Diagnostics, Inc., a Delaware corporation.

	 	1.	 	I am the principal financial officer or Borrower;
	 
	 	2.	 	The enclosed financial statements are prepared in accordance with generally accepted
accounting principles;
	 
	 	3.	 	No Default (as defined in the Loan Documents) or any event which, upon the giving of
notice or lapse of time or both, would constitute such a Default, has occurred.

Name:________________________

Title:

 

 

EXHIBIT 6.3

PERMITTED DIVIDENDS and DISTRIBUTIONS

	1.	 	Dividends and distributions to George H. Holley, an individual residing in the State of
Connecticut, and the Estate of Robert Salem, subject to the terms of the Promissory Notes
dated 08/01/05 and 09/01/05, respectively.
	 
	2.	 	Statutory requirement in Taiwan to distribute annual profits to shareholders (HDI)
through the declaration of dividends or maintain the profits on the books in Taiwan that
creates a 10% “tax” charge.
	 
	3.	 	Issuance of stock as a result of the exercise of vested Stock Options.
	 
	4.	 	Dividends and distributions to Borrower from DiagnoSys Medical Limited, an England and
Wales corporation.
	 
	5.	 	Issuance and redemption of stock in connection with the closing of the first
underwritten offering by the Borrower or any of its subsidiaries (or any successor entity)
of common stock to the public pursuant to an effective registration statement under the
Securities Act of 1933, as amended.

 

 

EXHIBIT 6.7

TRANSACTIONS WITH AFFILIATES

Employee Incentive Stock Option Plan (includes Director annual grants)

Dick Damron Employment Agreement

George Godfrey Separation Agreement

Beth K. Schwartz Continuation Agreement

Class F Preferred Stock Redemption (per 2002 Restated Charter)

Employee MBO Bonus Program

Top Hat Program

401K Employer Contribution

Employee Benefits Program

Employee Non-compete and Non-Disclosure/Confidentiality Agreements

Satterlee, Stephens, Burke & Burke (Don Parson)

Promissory Note — Estate of Robert Salem — dated 08/01/05 (replaced subordinated debenture)

Promissory Note — George Holley — dated 09/01/05 (replaced subordinated debenture)

 

 

EXHIBIT 10.18

ADDITIONAL TERMS

     NONE

 

 

AMENDMENT LETTER

April 28, 2006

Home Diagnostics, Inc.

2400 N.W. 55th Court

Fort Lauderdale, Florida 33301

Attn: Ronald Rubin, Chief Financial Officer

Re: Wachovia Bank, National Association (the “Bank”), $666,532.34 term loan, $2,638,888.87
term loan, and $7,000,000.00 line of credit (collectively, the “Loans”) to HOME DIAGNOSTICS,
INC., a Delaware corporation (the “Borrower”)

Dear Mr. Rubin:

Reference is made to that certain Third Amended and Restated Promissory Note dated as of March 7,
2006, made by the Borrower in favor of the Bank in the original principal amount of $666,532.34
(the “$666,532.34 Note”), that certain Second Amended and Restated Promissory Note dated as of
March 7, 2006, made by Borrower in favor of Bank in the original principal amount of $2,638,888.87
(the “$2,638,888.87 Note”), that certain Third Amended and Restated Revolving Promissory Note dated
as of March 7, 2006, made by Borrower in favor of Bank in the original principal amount of
$7,000,000.00 (the “$7,000,000.00 Revolving Note”), and that certain Third Amended and Restated
Revolving Credit and Security Agreement dated as of March 7, 2006, by and between the Borrower and
the Bank (the “Credit Agreement”). The $666,532.34 Note, the $2,638,888.87 Note, the $7,000,000.00
Revolving Note, the Credit Agreement and all other documents executed and delivered in connection
therewith are collectively referred to herein as the “Loan Documents”. All capitalized terms used
but not defined herein shall have the meanings assigned in the Loan Documents.

The Borrower has requested and the Bank has agreed to modify certain terms in the Credit Agreement,
as follows:

1. Section 7.4 of the Credit Agreement is hereby deleted in its entirety and the following
Section 7.4 is substituted in lieu thereof:

Senior Funded Debt to EBITDA Ratio. Borrower shall, at all times, maintain a
Senior Funded Debt to EBITDA Ratio of not more than 1.00 to 1.00, to be monitored for
compliance quarterly. “Senior Funded Debt” shall mean, as applied to any person or
entity, the sum of all indebtedness for borrowed money (including, without
limitation, capital lease obligations and unreimbursed drawings under letters of
credit), as evidenced by a note, bond debenture or similar instrument of that person
or entity, excluding any debt subordinated to Bank on terms and conditions acceptable
to Bank. “EBITDA” shall mean earnings before interest expense (including the
non-cash change in fair value of Albion Alliance Mezzanine Fund II, L.P.’s put rights
under that certain Class A Common Stock Purchase Warrant issued by the Borrower on
September 3, 2002 (the “Warrant Put Option”), non-cash stock-based compensation
expense, income taxes, depreciation and amortization. “EBITDA” will be calculated on
a rolling four quarter basis. Total cash on hand will reduce any Senior Funded Debt.

 

 

AMENDMENT LETTER

2. Section 7.5 of the Credit Agreement is hereby deleted in its entirety and the
following Section 7.5 is substituted in lieu thereof:

Fixed Charge Coverage Ratio. Borrower shall, at all times, maintain a Fixed
Charge Coverage Ratio of not less than 1.25 to 1.00, to be monitored for compliance
quarterly. This ratio shall be calculated on a rolling four quarters basis. “Fixed
Charge Coverage Ratio” shall mean the sum of earnings before interest expense
(including the non-cash change in fair value of the Warrant Put Option),
depreciation, amortization, non-cash stock-based compensation expense, lease and rent
expense during the period, minus unfinanced capital expenditures divided by the sum
of interest expense (excluding the non-cash change in fair value of the Warrant Put
Option), current portion of long term debt, current portion of capitalized leases,
lease and rent expense, and withdrawals. Income taxes will be calculated on an
accrual basis.

3. Borrower acknowledges, represents, warrants and confirms to Bank that: the $666,532.34
Note, the $2,638,888.87 Note, the $7,000,000.00 Revolving Note, the Credit Agreement and the
other Loan Documents, as amended or modified to date, (i) are valid and binding upon
Borrower and enforceable in accordance with the respective terms thereof; (ii) all of the
terms, covenants, conditions, representations, warranties and agreements contained in the
Loan Documents are hereby ratified and confirmed in all respects; (iii) there are no
defenses, setoffs, counterclaims, cross-actions or equities in favor of Borrower to or
against the enforcement of the $666,532.34 Note, the $2,638,888.87 Note, the $7,000,000.00
Revolving Note, the Credit Agreement or the other Loan Documents; (iv) no oral
representations, statements, or inducements have been made by Bank with respect to the
Loans, this Letter Agreement or any Loan Document; and (v) Bank is under no obligation to
further amend or modify the Credit Agreement or any other Loan Document.

Except as specifically modified herein, all other terms, conditions and provisions of the Credit
Agreement and the other Loan Documents remain unchanged and in full force and effect. The Bank
shall be under no obligation to further modify or amend, the Credit Agreement, or any of the other
Loan Documents.

	 	 	 	 	 
	 	Very Truly Yours,

Wachovia Bank, National Association

 	 
	 	By:  	/s/ Aly Heimovics
 	 
	 	 	Aly Heimovics, Vice President 	 
	 	 	 	 
	 
	 	AGREED TO AND ACKNOWLEDGED BY:

HOME DIAGNOSTICS, INC., a Delaware corporation

 	 
	 	By:  	/s/ Ronald Rubin
 	 
	 	 	Ronald Rubin, Chief Financial OfficerEX-10.6 OFFICE/DISTRIBUTION BUILDING LEASE

 

Exhibit 10.6

OFFICE /DISTRIBUTION BUILDING LEASE

	 	 	THIS LEASE is made as of the 2 day of May, 1997, by and
between the LANDLORD and TENANT identified below:
	 
	1.	 	INFORMATIONAL PROVISIONS AND DEFINITIONS

	 	1.1.	 	LANDLORD’S NAME & MAILING ADDRESS:
	 
	 	 	 	CORPORATE CENTER DEVELOPERS, a Florida
general partnership 
4860 N.E. 12th Avenue

Fort Lauderdale FL 33334
	 
	 	1.2.	 	[ILLEGIBLE] NAME & MAILING ADDRESS:
	 
	 	 	 	Home Diagnostics,
Inc. 
2300 N.W. 55th
court 
Fort
Lauderdale. FL
33309
	 
	 	1.3.	 	GUARANTOR(S)AND ADDRESS:
	 
	 	1.4.	 	BUILDING (Par. 10): As per Exhibit “A”
	 
	 	1.5.	 	DEMISED PREMISES (Par. 10 and as per Exhibit “A”) GROSS LEASABLE AREA

(Par. 6.4)(Approx.) 72,522 leasable square feet, which includes office space
to be built out as per Exhibit “A”. Plans shall be mutually agreed on between
Landlord and Tenant.

	 	1.6.	 	TERM (Par. 3.5):

	 	 	 	l.6.l. COMMENCEMENT DATE (Par. 3.1): (Approx.) 1st day of March, 1998.

	 
	 	 	 	l.6.2. INITIAL TERM (Par. 3.3): Ten (10) Years (plus partial 1st month if
applicable).
	 
	 	 	 	l.6.3. RENEWAL TERM(S) (Par. 3.4): TWO RENEWAL TERM(S) of five years each.

	 	1.7.	 	TENANT PAYMENTS (Par. 4):

	 	 	 	l.7.l. MINIMUM RENT (Par. 5):

	 	 	 	 	 	 	 
	LEASE YEAR(S)	 	BASE MONTHLY RENT	 	Common Area (CAM)	 	MONTHLY INSTALLMENTS
	1-12
	 	$43.090.16	 	$16.196.58	 	$59.286.74
	13-120
	 	$43.090.16 plus	 	$16.196.58 plus	 	$59.286.74 plus annual CPI
	 
	 	annual CPI increase	 	increase per	 	increase on Base Rent and
	 
	 	 	 	Para. 1.7.3.	 	Actual on Common Expenses.

	 	 	 	1.7.2. RENT FOR RENEWAL TERM(S) (Par. 5): Market Rate
	 
	 	 	 	1.7.3. Share of Common Expenses (Par. 6) Common area expenses and real
estate taxes are estimated at $2.68 per square foot for year #1 of the Lease Term. Any increases in operating
expenses after year #1 of the Lease Term shall be passed through to Tenant on a proportionate
share basis.

	 	1.8.	 	DEPOSITS (Par. 9):

	 	 	 	 	 	 	 	 	 
	Security Deposit:
	 	*$	62.843.94	 	 	paid upon execution of Lease.
	 
	 	 	 	 	 	 	 	 
	First Month Rent:
	 	$	62.843.94	 	 	paid upon plan approval, includes real estate taxes, base rent, CAM and sales tax.
	 
	 	 	 	 	 	 	 	 
	TOTAL:
	 	$	125.687.88	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

 

			
	*	 	Landlord shall credit Tenant with security deposit-currently being held on
existing lease between Home Diagnostics. Inc. and Corporate Center
Developers as a partial payment of security deposit on this Lease.

	 	1.9.	 	PERMITTED USE (Par. 11): Office/Warehouse/Distribution
	 
	 	1.10.	 	EXHIBITS: The exhibits attached to the Lease are hereby
incorporated hereby and made a part hereof.

Addendum

Exhibit “A” - Floor Plan

Exhibit “B” - Rules and Regulations

 

2. LEASE Landlord hereby leases the Demised Premises to Tenant, and Tenant hereby leases the
Demised
Premises from Landlord, upon the terms and conditions hereafter set forth.

3. TERM

     3.1. COMMENCEMENT DATE The Commencement Date of the Term will be date Landlord delivers
possession of the Demised Premises to Tenant for Tenant’s sole and exclusive use. After the
Commencement
Date, upon written demand by Landlord, Tenant agrees to execute and deliver to Landlord a
written document
certifying the Commencement Date of this Lease.

     3.2. LEASE YEAR A “Lease Year” shall mean and refer to a period of 12 full calendar months.
The first Lease Year shall commence on the Commencement Date and shall terminate on the last
day of the
month which is 12 full calendar months thereafter. The last lease Year shall end on the
expiration of
the Term or earlier terminations of this Lease.

     3.3. INITIAL TERM The Initial Term of this lease will be for the number of Lease Years set
forth in Paragraph 1.6.2, beginning on the Commencement Date.

     3.4. RENEWAL TERMS Tenant is hereby given the right to the number of Renewal Term(s) set forth
in Paragraph 1.6.3, if any. Each Renewal Term shall be for the number of years set forth in
Paragraph 1.6.3 after the expiration of the Initial Term or the immediately preceding Renewal Term,
if any. Tenant must exercise its right to any Renewal Term granted to
it by delivering written
notice of its election to exercise the Renewal Term to landlord at least six months prior to the
expiration of the Initial Term or the then existing Renewal Term.
However, it shall be a condition
to Tenant’s right to any Renewal Term that Tenant not be in default when the Renewal Term is
exercised or begins, and if Tenant is in default, then Tenant shall forfeit its right to the
Renewal Term and any future Renewal Terms. All of the terms of this Lease pertaining to the Initial
Term, except for the amount of Rent, shall automatically apply to any Renewal Term.

     3.5. TERM The “Term” of this Lease shall mean and refer to the Initial Term, and any
Renewal Term(s) which are provided to and property exercised by Tenant, as hereinabove described.

4. TENANT PAYMENTS Throughout the Term, Tenant agrees to pay to Landlord, without any prior demand
required therefor and without any setoffs or deductions whatsoever, the “Tenant Payments,” as
provided
in this Lease, which shall include the Rent. Common Expense Contribution, all applicable sales and
use
taxes, and any other monies which pursuant to the terms of this Lease are to be paid to Landlord by
Tenant. If any Tenant Payment is not received by Landlord when it is due. Landlord shall have the
right
to charge Tenant a late fee equal to the greater of $25.00 or 3% of the Tenant Payment, plus
interest at
the highest lawful rate from and after the due date of the Tenant Payment until received by
Landlord,
which late fee and interest shall be paid by Tenant within ten (10) days after written demand by
Landlord
as an additional Tenant Payment. Any Tenant Payment which is paid by check will be subject to
clearance,
and if such check is not honored it shall be deemed as if never paid by Landlord.

5. RENT Throughout the Term. Tenant agrees to pay Landlord the Rent. All Rent shall be paid
to
Landlord in equal monthly installments, in advance, plus applicable sales and use taxes, on the
first day
of each and every calendar month throughout the Term. In the event the Commencement Date is other
than
the first day of a calendar month, the Rent installment for the remaining portion of the calendar
month
in which the Commencement Date falls shall be prorated on the basis of a thirty (30) day month and
shall
be paid on the Commencement Date. The Rent for each Lease Year of the Term will be that set forth
in
Paragraph 1.7.1 and 1.7.2 for the Lease Year. If no specific amount of Rent is set forth for any
Lease
Year(s) indicated in Paragraph 1.7.1 and 1.7.2, or if instead of a set amount of Rent the initials
“C.P.I.” or a similar phrase or initials referring to a Consumer Price Index adjustment are
inserted, then
the Rent applicable to such Lease Year(s) shall be equal to the Rent applicable during the first
Lease
Year of the Term increased by the percentage increase in the Consumer Price Index as of three (3)
months
prior to the beginning of the Lease Year(s) for which the Consumer Price Index adjustment is to be
made,
as compared to the Consumer Price Index as of three (3) months
prior to the Commencement Date. For
these
purposes, the Consumer Price Index to be utilized shall be that published by the Bureau of Labor
Statistics of the U.S. Department of Labor, using the U.S. City Average, all Urban Consumers (1967
- 100).
This Consumer Price Index adjustment shall be made for each Lease Year or group of Lease Years
which are
separately set forth in Paragraph 1.7.1 for which the adjustment is to be made as above determined.
In
the event the Consumer Price Index referred to above is no longer published, then a comparable
index which
measures inflationary factors, and the corresponding decrease in the purchasing power of the U.S.
Dollar,
shall be selected by Landlord and the Consumer Price Index adjustments shall be based upon such
index.
If a Consumer Price Index adjustment is to be made for any Lease Year(s), then Landlord shall
notify
Tenant in writing of the amount of the increased Rent for such Lease Year(s), and if Landlord fails
to
so notify Tenant prior to the commencement of such Lease Year. Tenant shall continue paying the
previously
applicable Rent installments until such time as Tenant is notified in writing of the
appropriate increase

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in the Rent, and within thirty (30) days thereafter Tenant shall pay Landlord any deficiency in
the Rent installments paid by Tenant prior to such notification. Notwithstanding the foregoing, in
no event shall the Rent for any Lease Year for which a Consumer Price Index adjustment is
applicable be less than the Rent for the immediately preceding Lease Year. In addition, and
notwithstanding the foregoing, if Tenant exercises its right to any Renewal Term, Landlord
reserves the right, by written notice to Tenant prior to the beginning of the Renewal Term, to
increase the Rent during the Renewal Term to the prevailing Rent then being charged by Landlord
for similar space, and in that event any Consumer Price Index increases for subsequent Lease Years
will be based upon the percentage increase in the Consumer Price Index as of three months prior to
the beginning of the Lease Year, as compared to the Consumer Price Index as of three months prior
to the beginning of the Renewal Term.

6. COMMON EXPENSE CONTRIBUTION

     6.1. COMMON EXPENSE CONTRIBUTION As an additional Tenant Payment, Tenant shall pay to Landlord
a Common Expense Contribution, which shall be a share of such excess Common Expenses, as
hereafter
determined. The “Common Expenses” include all costs and expenses incurred by Landlord in
connection with
the ownership, operation, maintenance and management of the Building, and in providing
services to the
tenants of the Building including, but not limited to the following:

          6.1.1. Landlord’s insurance including, but not limited to, liability, casualty, rent
loss, workman’s compensation, and flood insurance.

          6.1.2. Cleaning, maintaining, repairing, replacing, and painting of the entire Building
(except the portions of the Building to be maintained by the tenants of the Building) and all
equipment
serving the Building.

          6.1.3. All utilities for the Building and the cost of maintaining and repairing all
utility lines and services, except for utilities for the Demised Premises paid directly by
Tenant.

          6.1.4. The amortized cost of equipment and personal property of Landlord used in
connection with the maintenance and operation of the Building and rent paid for leasing any
such equipment
and personal property, and the amortized cost of installation of capital investment items
which are
primarily for the purpose of reducing (or avoiding increases in) operating costs or which may
be required
by governmental authority. All such costs shall be amortized over the reasonable life of the
capital
investment items with the reasonable life and amortization schedule being determined in
accordance with
generally accepted accounting principles and in no event to extend beyond the reasonable life
of the
Building.

          6.1.5. The wages and salaries of all employees engaged in the direct operation and
maintenance of the Building, including all taxes, insurance and other expenses or benefits
relating to
such employees.

          6.1.6. All supplies and materials used in the operation and maintenance of the
Building.

          6.1.7. Legal, accounting and management fees and expenses incurred with respect to the
Building.

          6.1.8. All costs incurred in complying with any controlling governmental
requirements.

     There shall be excluded from the foregoing Common Expenses only the following: the costs of
initially constructing the Building: principal and/or interest payments made on any mortgage
encumbering the Building: expenses which are for capital improvements and capital expenses as
determined by Landlord’s accountant pursuant to generally accepted accounting principles and
depreciation of the improvements constituting the Building, except pursuant to Paragraph 6.1.5.
above: real estate broker’s commissions for leasing portions of the Building: and costs or
expenses necessitated by the acts of any tenant, or any employee, agent or invitee of any tenant,
to the extent Landlord is able to collect such costs and expenses from the responsible tenant. The
foregoing list of Common Expenses shall not be deemed to impose any requirement that Landlord
incur such expenses or provide such services to or on behalf of Tenant or in connection with the
operation and maintenance of the Building.

     6.2.
Amount Payable Tenant’s Common Expense Contribution shall be paid to Landlord monthly.
On the first day of each and every calendar month throughout the Term, plus applicable sales
taxes, on
the basis of Landlord’s good faith estimate of the Common Expenses, which may be revised by
Landlord from
time to time and at any time, by written notice to Tenant at least ten (10) days prior to the
due date
of the next Common Expense Contribution. If the Commencement Date or the termination date of
this Lease
is a day other than the first day of a calendar month, the Common Expense Contribution payable
by Tenant
for the month in which the Commencement Date or termination date falls shall be appropriately
prorated.

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     6.3. Statements After the end of each calendar year. Landlord shall prepare and deliver to
Tenant a statement of all Common Expenses actually incurred by Landlord for the prior calendar
year. If
the statement reflects Tenant underpaid its share of the actual Common Expenses for the
calendar year,
then within thirty (30) days after delivery of the statement Tenant shall pay any deficiency,
and if the
statement reflects that Tenant overpaid its share of actual Common Expenses for the calendar
year, then
within thirty (30) days after delivery of the statement Landlord shall refund the excess to
Tenant or,
at Landlord’s option, direct Tenant to deduct such excess from future Common Expense
Contributions payable
by Tenant. If this Lease commences or terminates in the middle of a calendar year. Tenant’s
share of all
Common Expenses for such calendar year shall be prorated based upon the number of days in the
calendar
year after the Commencement Date, or prior to the termination date, and without regard to when
any
particular Common Expense was actually incurred during the calendar year. If this Lease
terminates in
the middle of a calendar year, then as soon as Landlord is able to determine Tenant’s actual
share of
Common Expenses for the portion of the year prior to the termination of this Lease. Landlord
shall refund
to Tenant or apply against any other monies owed to Landlord any excess amount paid by Tenant.

     6.4. Determination of Tenant’s Responsibility Tenant’s share of the Common Expenses shall be
equal to the ratio that the Gross Leasable Area of the Demised Premises bears to the entire
Gross Leasable
Area of the Building. The Gross Leasable Area of the Demised Premises, or any other Demised
Premises
within the Building, shall be the square feet of area within such Demised Premises plus a pro
rata share
of the Common Areas of the Building as determined by Landlord. Based upon the foregoing,
Tenant’s initial
share of the Common Expenses is set forth in Paragraph 1.7.3., but that share is subject to
change upon
written notice by Landlord based on the aforementioned formula.

7. TAXES AND ASSESSMENTS

     7.1 Taxes and Assessments Tenant shall be responsible for all real estate taxes, and for
assessments charged by any governmental authority, or condominium or
property owner’s association,
against the Demised Premises during the Term. Such taxes and assessments for the first and last
Lease Year will be prorated as of the commencement and termination dates of this Lease, preceding
the Commencement Date and that portion of the year following the termination date. Landlord will
forward to Tenant all tax bills which Tenant is required to pay and Tenant shall give Landlord
evidence that the tax bills were paid no later than 30 days prior to the final date by which said
taxes may be paid without becoming delinquent or in jeopardy or subject to penalty. In the
alternative, Landlord may require Tenant to pay the amount of such taxes and assessments to
Landlord, and as regards real estate taxes. Landlord may require Tenant to pay each month one
twelfth (1/12) of the estimated taxes for the Demised Premises, and after the tax bill is issued
Tenant shall pay any deficiency or Landlord shall refund to Tenant any excess taxes paid by
Tenant. Notwithstanding the foregoing, in the event the taxes or assessments for the Demised
Premises are assessed against the Building and are not separately assessed against the Demised
Premises, then Landlord may include such taxes and assessments as part of Common Expenses.

     7.2.
Personal Property Taxes Tenant shall pay, prior to delinquency, all taxes assessed or
levied upon its business operation, and upon its leasehold interest, trade fixtures,
furnishings,
equipment, and personal property of any kind owned, installed or used by Tenant in, on or upon
the Demised
Premises, and all alterations, change and additions thereto.

     7.3. Sales Tax Tenant, and not Landlord, shall pay, when due and payable, the Florida
State
Sales Tax and any other sales or excise tax or assessment now or hereafter levied or assessed
upon or
against Tenant’s or Landlord’s interest in the Tenant Payments to be paid under this Lease.

8. UTILITIES

     8.1. Responsibility Tenant shall be responsible for obtaining, maintaining and paying for
telephone and electrical utility service for the Demised Premises. Water and sewer service,
and trash
removal service, will be provided by Landlord as part of the Common Expenses. However, if
Landlord
determines in its sole discretion that Tenant uses more water and sewer service, or trash
removal service
than the other tenants of the Building. Landlord reserves the right to separately charge
Tenant for such
services, and reserves the right to charge Tenant for special trash removal service which may
be required
at any time if Tenant throws out unusual or extraordinary amounts of trash.

     8.2. Landlord shall not be liable for any disruption of any of the above referenced
utility or
other services for reasons beyond the control of Landlord.

9. RENT DEPOSIT Tenant has deposited with Landlord a security deposit (the “Deposit”) as
set forth
in Paragraph 1.8. The foregoing Deposit will be held by Landlord, without liability for interest,
as
security for the full and faithful performance by Tenant of each and every term, covenant and
condition
of this Lease on the part of Tenant to be observed and performed. If Tenant fails to perform any of
the
terms of this Lease, then Landlord may, at its option, and without prejudice to any other remedy
which

4

 

Landlord may have on account thereof, appropriate and apply the entire Deposit, and any other
monies of Tenant held by Landlord, or so much thereof as may be necessary to compensate Landlord
toward the payment of any Tenant Payment then due from Tenant, or toward any loss, damage or
expense sustained by Landlord resulting from such default on the part of Tenant, and in such
event. Tenant shall forthwith, upon demand by Landlord, restore the Deposit to its original sum.
In the event Tenant shall fully and faithfully comply with all of the terms, covenants and
conditions of this lease and promptly pay all Tenant Payments as they
fall due, the Deposit will be
returned to Tenant promptly after the expiration of the Term and after Tenant vacates the Demised
Premises, as herein required.

10. DEMISED PREMISES The “Demised Premises” constitute a portion of the office building constructed
or to be constructed upon the property described in exhibit “A” attached hereto, which portion is
identified on the floor plans attached to Exhibit “A” and is identified in Paragraph 1.5. As used
in this
Lease, the term “Building” means and refers to the office building, and all of the Common Areas as
described in Paragraph 12 and in addition in the event the office building is part of a condominium
which
includes other buildings, then the term “Building” shall mean and refer to all of the buildings
within
the condominium. The boundaries of the Demised Premises are the interior unfinished surface of the
structural ceiling, the interior unfinished surface of the floor, the center of interior walls and
the
unfinished outside surface of exterior walls. Tenant’s right to the use of the Demised Premises
shall
be subject to the rights of Landlord to install, maintain, use, repair and replace pipes, duct
work,
conduits, utility lines and wires through hung ceiling space, column space and partitions in or
beneath
the floor slab or above or below the Demised Premises and serving the Demised Premises or other
parts of
the Building.

11. USE OF PREMISES Tenant shall use the Demised Premises solely for the purpose specified
in
Paragraph 1.9. and shall not use or permit the Demised Premises to be used for any other purpose or
purposes without the prior written consent of Landlord, which consent may be granted or withheld in
Landlord’s sole discretion.

12. COMMON AREAS

     12.1. The “Common Areas” (as initially constructed or as the same may at any time
thereafter be
enlarged or reduced) shall mean all areas, space, facilities, equipment, signs and special
services from
time to time made available by Landlord for the common and joint use and benefit of Landlord,
Tenant and
other tenants and occupants of the Building, and their respective employees, agents,
subtenants,
licensees, customers and invitees.

     12.2. Use of Common Areas Tenant and its employees and invitees are, except as otherwise
specifically provided in this Lease, authorized and privileged during the Term to use the
Common Areas
for their respective intended purposes in common with other persons.

     12.3. Changes by Landlord Landlord shall have the right to determine the nature and
extent of
the Common Areas, and to make such additions, alterations, changes or deletions to the Common
Areas as
Landlord may determine from time to time or which may be required by any governmental
authority.

     12.4. Parking Landlord reserves the right to assign particular parking spaces to any tenant,
and in that event if Tenant, its employees, guests and invitees part their vehicles in any
parking space
assigned to any other tenant. Landlord shall have the right to tow such vehicles at the
expense of Tenant.

13. RIGHTS RESERVED TO LANDLORD Landlord reserves the following rights with respect to the Demised
Premises and the Building:

     13.1. Constantly to have keys to the Demised Premises, and Tenant shall not change the door
locks on the entrance doors into or on any doors within the Demised Premises, or add any locks to
such doors, without the prior written consent of Landlord.

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     13.2. Upon notice to Tenant (except in situations of emergency where no notice shall be
required), to enter the Demised Premises for inspections, repairs, alterations or additions to
the Demised
Premises, or when such entry is required in connection with the inspection, repair, alteration
or addition
to other portions of the Building.

     13.3. Upon notice to Tenant to exhibit the Demised Premises to others.

     13.4. To enter the Demised Premises for any purpose whatsoever related to the safety,
protection,
preservation or improvement of the Demised Premises or the Building without being deemed
guilty of an
eviction or disturbance of Tenant’s use and possession and without being liable in any manner
to Tenant.

14. RULES AND REGULATIONS Tenant agrees that Landlord may establish and amend from time to time
reasonable Rules and Regulations regarding the use, operation and maintenance of the various
demised
premises and the Common Areas, and Tenant covenants to abide by all such Rules and Regulations that
shall
be now or hereafter in effect from time to time. The present Rules and Regulations are attached
hereto
in Exhibit “B”.

15. SIGNS No signs, symbols or identifying marks shall be placed upon the Common Areas, or upon the
windows or the exterior of the doors or walls of the Demised Premises, without the prior written
consent
of Landlord. Landlord agrees to provide and install, at Tenant’s cost, a building standard
identification
sign for Tenant on the exterior of the Demised Premises.

16. REPAIRS AND ALTERATIONS OF DEMISED PREMISES

     16.1. Landlord’s Obligations Subject to the provisions of those paragraphs dealing with
destruction and condemnation, Landlord shall not be required to make any repairs of any kind
or nature
to the Demised Premises, except for necessary repairs to the slab floor (but not any floor
covering) and
structural roof or ceiling thereof (but not any hung or decorative ceiling or light fixtures),
and
structural repairs to the building of which the Demised Premises forms a part, unless the
necessity for
any of such repairs to the slab floor, roof or structure shall have been occasioned by any
act, omission
or negligence of Tenant, or any subtenant, or licensee of Tenant, or their respective
employees, agents,
customers, invitees or contractors, or is otherwise caused by Tenant, in which event Tenant
agrees to
forthwith make any such repairs, at Tenant’s cost and expense.
In any event, Landlord will not
be
required to make any repair unless and until a reasonable time after Tenant gives Landlord
written notice
of the necessity for the repair.

     16.2. Tenant’s Obligations Subject to the provision of those paragraphs dealing with
destruction
and condemnation and the preceding subparagraph, Tenant agrees, at Tenant’s own cost and
expense, to keep
and maintain the Demised Premises and each and every part thereof in good order and condition
and to make
all repairs thereto, including but not limited to the exterior doors and door frames, windows
and window
frames, all of Tenant’s signs, and the lighting, electrical, plumbing, sewage, sprinkler and
alarm
systems, air conditioning and heating systems, equipment, fixtures and facilities exclusively
serving the
Demised Premises (including such as are installed or located outside of the Demised Premises
and which
exclusively serve the Demised Premises).

     16.3. Landlord’s Approval for Repairs Tenant agrees to make no alterations, changes,
improvements, repairs, replacements or additions to the Demised Premises which would
materially alter the
Demised Premises, or the appearance thereof from that previously approved by Landlord, nor to
install any
additional equipment therein (other than trade fixtures, and equipment which does not
overburden the
standard electrical service for the Demised Premises, removable without material damage to the
Demises
Premises) without, in each instance, obtaining the Landlord’s
prior written approval. As a
condition to
Landlord granting its approval, Landlord may require Tenant to supply Landlord with plans and
specifications for such work, and in that event the work shall be made in accordance with
plans and
specifications approved by Landlord. All work shall be performed in a
work man like manner by
duly licensed
contractors approved by Landlord, in compliance with all controlling laws, ordinances, orders,
rules,
regulations, and other requirements of all controlling government authorities and, where
applicable.
Tenant shall be required to obtain all necessary governmental permits and authorizations prior
to
commencing any work.

17. INSURANCE

     17.1. Tenant’s Insurance Tenant agrees to secure and keep in force from and after the date
Landlord shall deliver possession of the Demised Premises to Tenant and throughout the Term, at
Tenant’s own cost and expense, comprehensive general liability insurance with a limit of not less
than $500,000.00 for injury or death to any person and $1,000,000.00 for any single occurrence,
and with a limit of not less than $100,000.00 for property damage, occurring upon, in or about the
Demised Premises, including water damage and sprinkler leakage legal liability if sprinklers are
installed within the Demised

6

 

Premises, or such greater amounts as may be reasonably required by Landlord from time to time in
accordance with industry standards. Landlord shall be named as an additional insured on the
insurance policy. The original policy or a certificate thereof shall be delivered to Landlord
prior to Tenant’s possession of the Demised Premises, and within 30 days prior to the expiration
of such policy, and as often as any such policy shall expire or terminate, a renewal or
replacement policy shall be procured and maintained by Tenant. Tenant’s insurance policy shall
contain a provision that the insurer will give Landlord at least 30 days’ written notice prior to
canceling, terminating, or reducing the amount of Tenant’s insurance.

     17.2. Landlord’s Insurance Landlord shall maintain comprehensive general liability insurance,
casualty insurance, rent insurance, and such other insurance as landlord may deem reasonably
necessary or desirable to protect it against loss with respect to the Building or to protect it
against claims which may arise out of the operation of the Building. Tenant shall have no rights
in any policy or policies maintained by Landlord and shall not be entitled to be a named insured
thereunder.

18. DESTRUCTION

     18.1. If the Demised Premise, or any portion of the Building shall be damaged or
destroyed by
fire or other casualty Landlord shall, except as otherwise provided herein, repair and restore
the same
to substantially the same condition thereof existing immediately prior to such damage or
destruction, or
to the condition thereof existing as of the Commencement Date, in Landlord’s discretion. If by
reason
of such occurrence:

          18.1.1. The Building is damaged in whole or in part as a result of a risk which is not
covered by Landlord’s insurance policies, or is damaged to such an extent that rebuilding or
restoring
the Building is not feasible in Landlord’s discretion: or

          18.1.2. The Demised Premises is damaged in whole or in part during the last year of the
Term: or

          18.1.3.
The Building containing the Demised Premises is damaged to such an extent that
the Building cannot in the sole but reasonable judgment of Landlord be operated as an integral
unit:

Then or in any such events, Landlord may elect either to repair the damage as aforesaid, or to
terminate this Lease by written notice of termination to Tenant, within one hundred twenty (120)
days after the date of such occurrence, and thereupon this Lease shall cease and terminate with
the same force and effect as though the date of Landlord’s notice was the date herein fixed for
the termination of this Lease and Tenant shall vacate and surrender the Demised Premises to
Landlord. Upon the termination of this Lease as aforesaid. Tenant’s liability for all Tenant
Payments reserved hereunder shall cease as of the effective date of the termination of this Lease,
subject, however, to the provisions for the prior abatement hereinafter set forth. Unless this
Lease is terminated by Landlord as aforesaid, this Lease shall remain in full force and effect.

     18.2. If by reason of fire or other casualty the Demised Premises is rendered wholly
untenantable, the Tenant Payments shall be fully abated from and after such casualty, or if
only partially
damaged shall be abated proportionately as to that portion of the Demised Premises rendered
untenantable
(unless Landlord shall elect to terminate this Lease, as aforesaid), until 30 days after
written notice
by Landlord to Tenant that the Demised Premises have been substantially repaired and restored
or until
Tenant’s business operations are restored in the Demised Premises, whichever shall first
occur. Except
for such abatement of the Tenant Payments, as hereinabove set forth, nothing herein contained
shall be
construed to abate any other obligations of Tenant hereunder. If such damage or other casualty
shall be
caused by the negligence of Tenant or of Tenant’s subtenants, licensees, contractors or
invitees or to
their respective agent or employees, there shall be no abatement of Tenant Payments. Except
for the
abatement of the Tenant Payments hereinabove set forth. Tenant shall not be entitled to and
hereby waives
all claims against Landlord for any compensation or damage for loss of use of the whole or any
part of
the Demised Premises and/or for any inconvenience or annoyance occasioned by such damage,
destruction,
repair or restoration.

     18.3. Notwithstanding anything contained herein to the contrary, in the event of any damage or
destruction only to the Demised Premises, or any part thereof, Tenant shall be liable for the
amount of
any deductible otherwise required to be paid by Landlord.

19. CONDEMNATION

     19.1. Total If the whole of the Demised Premises or such part thereof as will render
the remainder untenantable shall be acquired or taken by eminent domain for any public or
quasi-public use or by private purchase in lieu thereof, then this Lease and the Term hereof shall
automatically cease and

7

 

terminate as of the date Landlord’s title to the Demised Premises is finally divested
pursuant to such proceedings.

     19.2.
Partial  If any part of the Demised Premises shall be so taken and such partial taking
shall render that portion not so taken unsuitable for the purposes for which the Demised
Premises are
leased, then Landlord and Tenant shall each have the right to terminate this Lease by written
notice given
to the other within sixty (60) days after the date Landlord’s title to the Demised Premises is
finally
divested pursuant to such proceeding. If any part of the Demised Premises shall be so taken
and this
Lease shall not be terminated, as aforesaid, then this Lease and all of the terms and
provisions hereof
shall continue in full force and effect, except that future Tenant Payments shall be reduced
in the same
proportion that the Gross Leasable Area of the Demised Promises taken bears to the original
Gross Leasable
Area demised, and Landlord shall, upon receipt of the award for such taking, make all
necessary repairs
or alterations (exclusive of Tenant’s improvements, fixtures, furnishings, decorations,
equipment,
inventory, supplies and other personal property and contents) to restore the portion of the
Demised
Premises remaining to as near its former condition as the circumstances will permit, and to
the building
of which the Demised Premises forms a part to the extent necessary to constitute the portion
of the
building not so taken a complete architectural unit: provided, however, that Landlord, in any
event, shall
not be required to spend for such repair and alteration work an amount in excess of the
respective amount
received by Landlord as damages for the taking of such part of the Demised Premises and of the
building
of which it forms a part, and within fifteen (15) days thereafter Tenant at Tenant’s expense,
shall
commence and thereafter diligently proceed as soon as practicable to complete all necessary
repairs and
alterations to Tenant’s improvements, fixtures, furnishings, decorations, equipment,
inventory, supplies
and other personal property and contents.

     19.3. If so much of the Building shall be taken so as to render the continued operation of the
Building impossible or impractical in Landlord’s discretion, then Landlord will have the right
to
terminate this lease by written notice to Tenant, such termination to be effective as of the
date
Landlord’s title to such part of the Building is finally divested pursuant to such
proceedings.

     19.4. If this Lease is terminated as provided in this paragraph, all Tenant Payments shall be
paid by Tenant up to the date that possession is to be taken by public authority and Landlord
shall make
an equitable refund of any Tenant Payments paid by tenant in advance and not yet earned.

     19.5.
Award  All damages or compensation awarded or paid for any such taking shall belong to
and
be the property of Landlord without any participation by Tenant, whether such damages or
compensation
shall be awarded or paid for diminution in value of the fee or any interest of Landlord in the
Building,
or in the leasehold estate created hereby, and Tenant hereby expressly waives and relinquishes
all claims
to such award or compensation or any part thereof and of the right to participate in any such
condemnation
or eminent domain proceedings against the owners of any interest in the Building, provided,
however, that
nothing herein contained shall be construed to preclude Tenant from prosecuting any claim
directly against
the condemning or taking authority, but not against Landlord, for the value of or damages to
personal
property which under the terms of this Lease would remain Tenant’s property upon the
expiration of the
Term, as may be recoverable by Tenant in Tenant’s own right, provided further, that no such
claim shall
diminish or otherwise adversely affect Landlord’s award. Each party agrees to execute and
deliver to the
other all instruments that may be required to effectuate the provisions of this paragraph.

20. MECHANIC’S LIENS If any mechanic’s lien is recorded against the Demised Premises or against
Tenant’s leasehold interest in the Demised Premises by reason of work, labor, services or materials
supplied or claimed to have been supplied to Tenant. Tenant shall, within thirty (30) days after
the recording thereof, cause such lien to be discharged of record. In any event, Landlord’s
interest in the Demised Premises shall not be subject to any lien arising out of any work, labor,
services or materials supplied or claimed to have been supplied to or for Tenant.

21. DEFAULT

      21.1.
Events of Default  The following shall constitute a default on the part of Tenant:

          21.1.1. The failure of Tenant to pay and deliver to Landlord any Tenant Payment after same
is due and within three (3) days after written demand by Landlord, or the failure to pay and
deliver to
Landlord any other monies within three days after written demand by Landlord, and if Landlord
is required
to make more than two such written demands within any consecutive twelve (12) month period, at
the
election of Landlord same shall also constitute a default on the part of Tenant.

          21.1.2. The failure of Tenant to comply with any other provision of this Lease as soon
as is reasonably practical an din any event within seven (7) days after written demand by
Landlord, except
that if any non-monetary failure is not capable of being cured within such seven (7) day
period. Tenant
shall be given a reasonable time to cure such failure so long as Tenant has timely commenced
and

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thereafter diligently proceeds to completely cure such failure as soon as possible. In addition,
if Landlord is required to make more than two such written demands for any similar failure within
any consecutive twelve (12) month period, at the election of Landlord, same shall also constitute
a default on the part of Tenant.

          21.1.3. If any voluntary or involuntary petition or similar pleading under any section
or sections of any bankruptcy act shall be filed by or against Tenant or any guarantor, or any
voluntary
or involuntary proceeding in any court shall be instituted to declare Tenant or any guarantor
insolvent
or unable to pay Tenant’s or any guarantor’s debts, and in the case of an involuntary petition
or
proceeding if same is not dismissed within thirty (30) days from the date it is filed, or if
Tenant or
any guarantor makes an assignment for the benefit of its creditors, or if a receiver is
appointed for any
property of Tenant or any guarantor, or if Tenant’s leasehold interest is levied upon under
execution or
is attached by process of law.

          21.1.4. If Tenant vacates or abandons the Demised Premises.

     21.2.
Landlord’s Remedies Upon Default  In the event Tenant defaults under the terms and
conditions of this Lease, as set forth above, Landlord, at its option, shall have the immediate
right to enter and remove all persons and property from the Demised Premises and such property may
be removed and stored in a warehouse or elsewhere at the cost of and for the account of Tenant, all
without service of notice or resort to legal process and without being deemed guilty of trespass,
or becoming liable for any loss or damage which may be occasioned thereby. Should Landlord elect to
re-enter as herein provided, or should Landlord take possession of the Demised Premises pursuant to
legal proceedings. Landlord may either terminate this Lease or may, from time to time without
terminating this Lease, make such alterations, improvements and repairs to the Demised Premises as
may be necessary in order to relet the Demised Premises, and may relet the Demised Premises or any
part thereof for such term or terms (which may be for a term extending beyond the Term) and at such
rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may
deem advisable, and upon each such reletting all monies received by Landlord from such reletting
shall be applied, first, to the payment of any indebtedness other than Tenant Payments due
hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such
reletting, including brokerage fees and attorneys fees and costs of such alterations, improvements
and repairs: third, to the payment of any Tenant Payments due and unpaid hereunder and the residue,
if any, shall be held by Landlord and applied towards the payment of future Tenant Payments due
hereunder as the same may become due and payable hereunder. In no event shall Tenant have any right
to any monies received by Landlord from any reletting other than to have such monies applied
towards the indebtedness of Tenant to Landlord as aforesaid, and to the extent such monies exceed
any indebtedness of Tenant, same shall be the sole property of Landlord. If such rentals and other
monies received from such reletting during any month is less than the Tenant Payments to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such retry or taking of possession of the
Demised Premises by Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant by Landlord. Notwithstanding any such
reletting without termination. Landlord may at any time thereafter elect to terminate this Lease
for such previous default by written notice to Tenant. Should Landlord at any time terminate this
Lease for any default, in addition to any other remedies it may have, it may recover from tenant
all damages incurred by reason of such breach, including the cost of recovering and reletting the
Demised Premises as referred to above, reasonable attorneys fees and including the worth at the
time of such termination of the excess, if any of the amount of all Tenant Payments reserved in
this Lease for the remainder of the Term, over the then reasonable rental value of the Demised
Premises for the remainder of the Term, all of which amount shall be immediately due and payable
from Tenant to Landlord, or Landlord may retain Tenant’s Security Deposit as liquidated damages. In
any event, this paragraph shall not be deemed to require Landlord to re-enter the Demised Premises
upon default by Tenant, but Landlord may, at its option, do nothing with respect to the Demised
Premises and hold Tenant responsible for all Tenant Payments due Landlord as and when same accrue,
from time to time thereafter. In addition to the foregoing, if Tenant’s possession of the Demised
Premises is terminated due to a monetary default of Tenant, then Landlord will have the right to
accelerate all of the Tenant Payment installments remaining due throughout the Term upon written
notice to Tenant, whereupon same shall become due and payable immediately. However, Landlord may, at
its option, not pursue any of the remedies aforementioned and may avail itself of any other
remedies available to Landlord as provided by law.

9

 

     21.3. Landlord’s Self Help In the event Tenant fails to perform any of its
obligations under this Lease in a manner reasonably satisfactory to Landlord, or in the event
Tenant fails to pay for anything which, under the terms of this Lease Tenant is required to pay
for. Landlord shall have the right, but not the obligation, upon giving Tenant at least three (3)
days prior written notice of its election to do so (in the event of any emergency no prior notice
shall be required) to perform such obligations on behalf of and for the account of Tenant and to
take all such action to perform such obligations, or to pay for Tenant’s obligations. In such
event, Landlord’s costs and expenses incurred in connection with performing or paying for any
obligation of Tenant shall be paid by Tenant as an additional Tenant Payment forthwith upon written
demand by Landlord, with interest from the date Landlord incurs such expense at the highest lawful
rate. The payment by Landlord of any obligation of Tenant shall not constitute a release or waiver
of Tenant therefrom.

     21.4.
Landlord’s Default  Except as otherwise provided in
this Lease, Landlord shall
be in default under this Lease if Landlord fails to perform any of its obligations hereunder and
said failure continues for a period thirty (30) days after written notice from Tenant to Landlord
(unless such failure cannot reasonably be cured within thirty (30) days and in that event Landlord
shall commence to cure said failure within the thirty (30) day period and thereafter diligently
continue to cure the failure). Tenant shall not have the right to set-off against any Tenant
Payment any damages which Tenant may have sustained by reason of Landlord’s failure to perform any
of the terms, covenants or conditions contained in this Lease on its part to be performed, unless
and until Tenant obtains a judgment against Landlord. If Landlord is in default under this Lease,
Tenant’s sole right will be to recover a money judgment against Landlord, and Tenant shall not have
the right to terminate this Lease or to vacate the Demised Premises unless as a result of
Landlord’s default Tenant’s business in the Demised Premises unless as a result of Landlord’s
default Tenant’s business in the Demised Premises is substantially and adversely affected.

22.
LANDLORD’S LIEN FOR RENT  Tenant pledges and assigns unto Landlord all the improvements,
furnishings, fixtures, equipment, and other personal property of Tenant, which may be brought or
put on the Demised Premises, as security for the payment of all Tenant Payments due Landlord
herein, and agrees that Landlord’s lien for such payment, may be enforced by distress, foreclosure
or otherwise, at the option of Landlord, and the Tenant agrees that such lien is granted to and
vested in said Landlord.

23. NO
WAIVER  The failure of Landlord to insist upon the strict performance of any
provisions of this Lease, or the failure of Landlord to exercise any right, option or remedy hereby
reserved shall not be construed as a waiver for the future of any such provision, right, option or
remedy or as a waiver of a subsequent breach thereof. The consent or approval shall not be
construed to waive or render unnecessary the requirement for Landlord’s consent or approval of any
subsequent similar act by Tenant. The receipt by Landlord of any Tenant Payment with knowledge of a
breach of any provision of this Lease shall not be deemed a waiver of such breach. No provision of
this Lease shall be deemed to have been waived unless such waiver shall be in writing signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the Tenant Payments
hereby reserved shall be deemed to be other than on account of the earliest Tenant Payment then
unpaid, nor shall any endorsement or statement on any check or any letter accompanying any check or
payment by Tenant be deemed an accord and satisfaction, and Landlord may accept any such check or
payment without prejudice to Landlord’s right to recover the balance of such Tenant Payments due or
Landlord may pursue any other remedy in this Lease provided, and no waiver by Landlord in favor of
any other Tenant or occupant of the Building shall constitute a waiver in favor of the Tenant
herein.

24.
SURRENDER OF PREMISES  Upon the expiration of the Term or sooner termination of this
Lease, Tenant agrees to quit and surrender the Demised Premises, broom clean, in good condition and
repair, reasonable wear and tear and casualty excepted, together with all keys and combinations to
locks, safes and vaults and all improvements, alteration, additions, fixtures and equipment at any
time made or installed in, upon or to the interior or exterior of the
Demised Premises, all of
which shall thereupon become the property of Landlord without any claim by Tenant therefor. Before
surrendering the Demised Premises, Tenant (if not in default) shall remove all of Tenant’s personal
property and unattached movable trade fixtures, and Tenant shall repair any damage caused thereby.
If Tenant fails to remove any of Tenant’s property and trade fixtures, said property shall, at the
option of Landlord, either be deemed abandoned and become the exclusive property of Landlord, or
Landlord shall have the right to remove said property, at the expense of Tenant, without further
notice to or demand upon Tenant, and hold Tenant responsible for any and all charges and expenses
incurred by Landlord. If the Demised Premises is not so surrendered, Tenant shall indemnify
landlord against all loss or liability resulting from the delay by Tenant in so surrendering the
same, including, without limitation, any claims made by any succeeding occupant founded on such
delay. Tenant’s obligations under this paragraph shall survive the expiration or sooner termination
of the Term.

25.
HOLDING OVER  Should Tenant remain in possession of the
Demised Premises after the
expiration of the Term or earlier termination of this Lease, with or without the consent of
Landlord, express or implied, such holding over shall, in the absence of a written agreement to the
contrary, be deemed to have created and be construed to be a tenancy from month-month terminable on
fifteen (15) days written notice

10

 

by either party to the other, at double the Rent installments (prorated on a monthly basis) in
effect during the Lease Year immediately preceding the expiration of the Term, and otherwise
subject to all of the other terms, covenants and conditions of this Lease insofar as the same may
be applicable to a month-month tenancy, without prejudice to any remedy which Landlord may have
against Tenant for holding over unlawfully, provided, however, that if Tenant holds over with the
prior written consent of Landlord, the Rent installment will not be doubled as hereinabove
provided.

26.
ASSIGNMENT AND SUBLETTING  Tenant shall not voluntarily, involuntarily or by operation
of law assign, transfer, mortgage or otherwise encumber this Lease or any interest of Tenant
herein, in whole or in part, nor sublet, the whole or any part of the Demised Premises or permit
the Demised Premises or any part thereof to be used or occupied by others, without first obtaining
in each and every instance the prior written consent, of Landlord, which consent shall not be
unreasonably withheld, provided, however, that if it would be unreasonable for Landlord to
withhold any such consent, then in lieu of granting such consent. Landlord shall have the right to
terminate this Lease after Tenant requests consent upon fifteen 15 days written notice to Tenant.
Any consent by Landlord shall be held to apply only to the specific transaction thereby authorized
and shall not constitute a waiver of the necessity for such consent to any subsequent assignment,
subletting, or other transaction. For purposes of this paragraph, if Tenant or any guarantor is a
corporation, unincorporated association or partnership, any transfer, assignment or hypothecation
of any stock or interest in such corporation, association or partnership so as to result in a
change in the control thereof by the person, persons or entities owning a majority interest
therein as of the date of this Lease shall be deemed as assignment, provided, however, that this
sentence shall not apply to Tenant or any guarantor the outstanding voting stock of which is held
by more than one hundred (100) persons.

27.
SUBORDINATION AND ATTORNMENT

     27.1. This Lease is subject and subordinate to any and all mortgages which may now or
hereafter encumber the real property of which the Demised Premises is a part thereof, and to all
renewals, modifications and extensions thereof. Tenant shall, upon request of Landlord, execute
any subordination documents which Landlord or any mortgagee of the Demised Premises may reasonably
request, but no such document shall be required to effectuate said subordination. Notwithstanding
the foregoing, it shall be a condition to Tenant’s subordination of this Lease to any future
mortgage that the mortgagee agree to recognize this Lease in the event the mortgage is foreclosed
or the mortgagee obtains title to the Building by deed in lieu of foreclosure, so long as Tenant
is not in default under this Lease.

     27.2.
Attornment  Notwithstanding any other provision of this Lease, all rights of
Landlord, including property rights and the rights in this Lease, are freely saleable,
transferable and conveyable. Tenant agrees that in the event of a sa
e, transfer or assignment of
Landlord’s interest in the Building, or in the event any proceedings are brought for the
foreclosure of or for the exercise of any power of sale under any mortgage made by Landlord
encumbering the Building, to attorn to and to recognize such transferee, purchaser or mortgagee as
landlord under this Lease.

28.
QUIET ENJOYMENT  Tenant, upon paying the rents herein reserved and performing and
observing all of the other terms, covenants and conditions of this Lease on Tenant’s part to be
performed and observed, shall peaceably and quietly have, hold and enjoy the Demised Premises
during the Term, subject, nevertheless, to the terms of this Lease and to any mortgages,
agreements and encumbrances to which this Lease is or may be subordinated.

29.  INDEMNITY AND WAIVER

     29.1.
Indemnity  Tenant agrees to indemnify and hold Landlord harmless from and against
any and all liabilities, expenses, damages, claims and losses incurred by Landlord as a result of:
the failure by Tenant to perform any covenant required to be
performed hereunder: any accident,
injury or damage that shall happen in or about the Demised Premises or the Building resulting from
any act or omission of Tenant or Tenant’s agents, employees or invitees, or resulting from the
condition, maintenance or operation of the Demised Premises by Tenant: the failure of Tenant to
comply with any statute, law, ordinance, rule or regulation or any other requirement of any
controlling governmental authorities: any mechanic’s lien or security agreement filed against the
Demised Premises on account of labor and/or materials supplied to or for Tenant: and any attorney’s
fees incurred by Landlord in connection with any of the foregoing regardless of whether such
attorney’s fees are incurred in legal proceedings or otherwise. If any legal proceedings are
brought against Landlord by reason of any of the foregoing, Tenant will, at its expense and upon
written demand by Landlord, defend such proceedings by counsel approved by Landlord, except that if
such proceedings are commenced by Tenant. Tenant shall pay Landlord’s attorney’s fees if Landlord
is the prevailing party in such proceedings.

     29.2.
Waiver of Certain Claims  Tenant waives all claims it may have against
Landlord for damage or injury to person or properly sustained by Tenant or any persons claiming
through Tenant or by any

11

 

occupant of the Demised Premises, or by any other person, resulting from any part of the
Building for any of its improvements, equipment or appurtenances coming out of repair, or
resulting from any accident on or about the Building or resulting directly or indirectly from any
act or neglect of any tenant or occupant of any part of the Building or of any other person,
including Landlord, to the extent permitted by law. This waiver shall include, but not be limited
to damage caused by electricity, water, steam, excessive heat or
cold, sewage, gas, odors or
noise, or caused by bursting or leaking of pipes or plumbing fixtures, and shall apply equally
whether such damage results from the act or neglect of Tenant or other tenants, or occupants of
any part of the Building whether such damage be caused by or result
from any thing or circumstances above mentioned or referred to or due
to any other thing or circumstance whether of a
like nature or of a wholly different nature. All personal property belonging to Tenant or any
occupant of the Demised Premises that is in or on any part of the Building shall be there at the
risk of Tenant or of such other person only, and Landlord shall not be liable for any damage
thereto or for the fact or misappropriation thereof. The foregoing waiver shall not apply to
claims arising out of Landlord’s negligence or willful acts.

30.
MISCELLANEOUS

     30.1.
Notices  Every notice, demand, request or other communication which may be or is
required to be given under this Lease or by law shall be either hand delivered or sent to the
parties at the addresses set forth above. Any party may designate, by similar written notice to
the other party, any other address for such purposes. In addition to the foregoing, upon written
notice by Landlord, Tenant shall send all notices sent to Landlord to the holder of any mortgage
encumbering the Building or to any other person having an interest in the Building.

     30.2.
Recording  Tenant shall not record this Tease or any memorandum thereof without the
written consent of Landlord.

     30.3.
Entire Agreement. Etc.  This Lease, including the exhibits, riders and/or
addenda, if any, attached hereto, set forth the entire agreement between the parties. All prior and
contemporaneous conversations and all prior writings between the parties hereto or their
representatives are merged herein and extinguished. This Lease shall not be modified except in
writing subscribed to by all parties.

     30.4.
Estoppel Certificate  Tenant shall at any time and from time to time within five
(5) days after written request from Landlord execute, acknowledge and deliver to Landlord, in a
form reasonably satisfactory to Landlord and/or Landlord’s mortgagee, a written statement
certifying, as to the truth of various facts concerning the Lease which may include, but not be
limited to the following: (i) that the Lease is in full force and effect and has not been
modified, altered or amended except as is expressly set forth in the written statement, (ii) that
Tenant has no charge or offset under the Lease or otherwise, against any Tenant Payment due or to
become due hereunder and that Tenant has no claims or defenses to enforcement of the Lease; (iii)
that Tenant has no notice of a prior assignment, hypothecation or pledge of any Tenant Payment due
Landlord, or the Lease by Landlord; (iv) confirmation as to the Term; (v) confirmation as the Rent,
and if rent has not yet commenced, confirmation as to the date installments of Rent are to
commence, and confirmation that no Rent installment has been paid more than thirty (3) days in
advance of its due date except as required by the terms of the Lease; (vi) that Landlord is not in
default under the terms of the Lease: (vii) and any other certification as may reasonably be
required by Landlord or Landlord’s mortgagee.

     30.5.
Attorneys’ Fees  In the event either party is required to commence legal
proceedings in order to enforce its rights or protect its interests
hereunder, the
prevailing party in such legal proceedings shall be paid its reasonable attorneys’ fees from the
other party.

31. PREPARATION OF PREMISES

     31.1. Landlord agrees to construct the Demised Premises pursuant to the floor plan
heretofore approved by Tenant, incorporating in the construction Landlord’s Work as set forth on
Exhibit “A” attached hereto.

     31.2.
While Landlord contemplates that Landlord’s Work will be completed by the date set forth
in Paragraph 1.6.1. Landlord cannot and does not guarantee its
work will be so completed, and
Landlord shall not be liable for any delays in completing Landlord’s Work for any reason. The
Demised Premises shall be deemed ready for occupancy on the date on which Landlord’s work shall
have been substantially completed notwithstanding the fact that minor work or corrections remain to
be performed, the non-completion of which does not materially
interfere with Tenant’s use of the
Demised Premises. Any such minor items will be noted on a punch list to be agreed upon between
Tenant and Landlord prior to the date when possession of the Demised Premises is turned over to
Tenant, and Landlord will complete such work as soon as is reasonably possible thereafter. Tenant
agrees that the correction, completion or adjustment
of punch list items or corrections, or any work required by Landlord under any warranties, do not

12

 

constitute a valid reason for withholding of rental or any other payments due hereunder.

     31.3.
In constructing the improvements within the Demised Premises shown on Exhibit “A”, the
parties agree Tenant will have an allowance equal to the amount set forth in Paragraph 1.5. If the
cost of performing Landlord’s Work will exceed the allowance. Landlord shall so notify
Tenant prior to the commencement of construction and in that event
Tenant shall be given the
opportunity to change the plans so as to reduce the cost of constructing the improvements within the
Demised Premises, or of paying the excess costs, or of having another contractor approved by
Landlord perform the improvements in which event Landlord will pay Tenant, the amount of the
construction costs for the improvements when same are completed up to the amount of the allowance
upon receipt of paid invoices and executed lien waivers. If Tenant is to pay any construction costs
in excess of the allowance set forth in Paragraph l.5., such excess shall be paid in full by Tenant
prior to the commencement of construction of the improvements within the Demised Premises by
Landlord unless the parties agree to the contrary in writing.

     32. In
accordance with the provisions of Florida Statutes Chapter 404,29(8) notification is hereby
tendered concerning the possible existence of Radon Gas in or about the property. Please be advised
that. “RADON GAS: Radon is a naturally occurring radioactive gas that when it has accumulated
in a building in sufficient quantities may present health risks to persons who are exposed to it
over time. Levels of radon that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be obtained from your county
public health unit.”

IN WITNESS
WHEREOF. Landlord has executed this Lease this 6th day of May, 1997

	 	 	 	 	 	 	 
	WITNESSES:	 	CORPORATE CENTER
DEVELOPERS, a Florida	 	 
	 	 	general partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HOLLAND BUILDERS, INC., a Florida
	 	 
	 

	 	 	 	corporation, General Partner	 	 

	 	 	 	 	 	 	 
	/s/ [ILLEGIBLE]
 

	 	 	 	 	 	 
	/s/ [ILLEGIBLE]
 

	 	By
	 	/s/ Gerald M. Holland
 

	 	 
	(As to Landlord)

	 	 	 	Gerald H. Holland. President	 	 

IN WITNESS WHEREOF, Tenant has executed this Lease this 2 day of May, 1997.

	 	 	 	 	 	 	 
	WITNESSES:	 	HOME DIAGNOSTICS, INC.	 	 
	 	 	a Delaware Corporation	 	 
	 
	 	 	 	 	 	 
	/s/ [ILLEGIBLE]
 

	 	 	 	 	 	 
	/s/ [ILLEGIBLE] 
 

(As to Tenant)

	 	By:
	 	/s/ George Holley
 

George Holley, President
	 	 

13

 

ADDENDUM

ATTACHED
HERETO and made a part of this Lease dated May 2 1997 between CORPORATE CENTER
DEVELOPERS, a Florida General Partnership as Landlord and HOME
DIAGNOSTICS. INC., a Delaware
Corporation as Tenant covering approximately 72.22 square feet of leasable area located at the
Executive Airport Corporate Center. 2400 NW 55th Court. Fort
Landerdate. FL.33309.

1)
IMPROVEMENT COSTS: Landlord , grees to construct a Building for Tenant of approximately 72.522
square feet of leasable space to be located at the Executive Airport Corporate Center as per the
floor plan attached hereto and made and part of this Lease. It is understood and agreed to by
Landlord and Tenant that the final plans and cost estimates shall be approved by landlord and
tenant. The preliminary improvement cost for the interior build out is $936.615. Landlord and
Tenant agrees that in the event the interior improvements exceed $936.615 Tenant shall pay to
Landlord, prior to construction, any and all costs in excess of said amount, or the rental rate
shall be adjusted amortizing the additional costs over ten years with a ten and one half percent
(10.5%) annual interest rate computed. In the event build out costs are less than $936.615 Landlord
shall adjust the rental rate accordingly.

2)
BUILDING DESCRIPTION: Landlord shall construct a free standing Building in accordance with the
floor plan attached hereto consisting of approximately 72.522 square feet of space to be built on
the vacant lot located at the Executive Airport Corporate Center,
Fort Landerdate. Florida. The
Building shall be built with approximately 13,426 square feet of office space, 43.058 square feet
of warehouse & packaging area. 11.880 square feet of high density storage, and 4.158 square feet
of mezzanine storage. The front eleva ion of the Building shall conform to the existing buildings
at the Executive Airport Corporate Center. The Building shall be 100% sprinklered and air
conditioned. Final specifications shall be agreed to by tenant and Landlord.

3) BUILDING PERMIT AND SITE PLAN APPROVALS: Landlord shall use diligent effort to obtain site plan
approval and approval of plans from the City of Fort Lauderdale Building Department and any related
governmental agencies. Should the necessary approvals from the Building Department and/or
regulatory agencies be withheld. Landlord shall notify Tenant within
ten (10) days to make any
necessary changes to proceed with obtaining the approvals. Should the Building Department and/or
other regulatory agencies, fail to approve site plans and building plans approved by landlord and
Tenant after diligent effort by Landlord. Landlord shall have the right to cancel this Lease and
return all deposits to Tenant and this Lease shall became null and void without any further
liability to Tenant or Landlord.

4) OCCUPANCY: Tenant shall occupy the space upon issuance of a Certificate of Occupancy which
is estimated to be approximately February, 1998.

5) PARKING: During the term of the lease Landlord shall provide Tenant with 185 parking spaces.

6) OPTION
AND RIGHT OF FIRST REFUSAL: Landlord shall grant Tenant the Option to Purchase the
Building at the estimated sales price of $4,300,000 during the first twelve months of the lease
term. The final sales price shall be established after Tenant has approved the final working
drawings. When final working drawings have been approved by Tenant.
Landlord shall provide tenant
with a cost breakdown of improvement costs and a final sales price for the Option to Purchase.
Landlord and Tenant shall approve all costs prior to construction, Further Landlord shall grant
Tenant the Right of First Refusal to purchase the building during the second twelve (12) months of
the lease term. If during the second twelve (12) months of the lease term another Buyer agrees to
buy the property and Landlord agrees to sell the property under agreed upon terms and conditions.
Landlord shall notify Tenant, in writing, and Tenant shall have five
(5) days to accept the terms
and conditions acceptable to the Landlord.

7) RIGHT OF FIRST REFUSAL FOR EXPANSION: In the event Deer Park Water Company (a tenant of
Landlord) vacales the space located at 2500 NW 55th Court. Fort Lauderdale. FL. Landlord shall grant
Home Diagnostics. Inc. the Right of First Refusal to lease the said space under the following
conditions: In the event another Tenant is interested in leasing the Deer Park space located at
2500 NW 55th Court, Fort Lauderdale. FL and Landlord agrees to the Lease and terms and conditions.
Landlord shall notify Home Diagnostics, Inc. and Home Diagnostics, Inc. Shall have five (5) days to
respond in writing of the intent to lease the space under the same terms and conditions. A formal
lease shall then be executed by Landlord and Tenant within ten (10) days after Home Diagnostics,
Inc. responds in writing.

8) PAY DOWN OF IMPROVEMENT COSTS: Tenant shall have the right, without penalty, to prepay
improvement costs and the base rent shall be adjusted accordingly with the following conditions:

	a)	 	Any prepayment and adjustment shall be a minimum increments of twenty thousand dollars ($20,000)

	b)	 	Any prepayment shall be made during the first twenty four (24) months of the
lease term and shall be made in the months of January or June.

9) CONSTRUCTION FINANCING: Landlord shall use diligent effort to obtain construction financing for

 

 

ADDENDUM (Page 2)

the build to suit. In the event Landlord is unable to obtain construction financing under
reasonable terms and conditions on or before June 15, 1997. Landlord shall have the right to cancel
this Lease and return all deposits to Tenant and this Lease shall become null and void without any
further liability to Tenant or Landlord.

 

 

“EXHIBIT A”

	 	 	 	 	 
	OFFICE
	 	 	13,426 S.F	 
	F2 WAREHOUSE & PACKAGING ETC
	 	 	43058  S.F.	 
	F1 HIGH DENSIM STORAGE
	 	 	11,880  S.F.	 
	F2 WAREHOUSE
MEZZ STOR.
	 	 	4158  S.F.	 
	 
	 	 	 	 
	TOTAL
	 	 	72,522 S.F	 
	 
	 	 	 	 

 

 

EXHIBIT “B”

RULES AND REGULATIONS

1. The sidewalks, walkways and roads shall not be obstructed by any of the tenants or used by
them for any purpose other than for ingress and egress from their respective premises.

2. No
tenant shall alter any lock install any new or additional locks without the prior written
consent of Landlord, and without giving Landlord keys therefor, and no Tenant shall install any
bolt on any door or window of the Demised Premises which would deny access to fire fighters.

3. The
bathrooms toilets, washbowls and other fixtures shall not be used for any purpose other
than for which they were constructed and no Foreign substances of any kind whatsoever shall be
thrown therein.

4. No cutting through demising walls for telephone, telegraph or computer terminals will be
permitted without the prior consent of Landlord.

5. Tenant
shall comply with reasonable requests of Landlord as regards to trash removal and
disposal, and shall comply with all controlling governmental requirements as regards “red bags.”

6. No
radio, television, phonograph or other electrical or other equipment shall be used in a
manner so as to be heard or seen outside the Demised Premises.

7. No load will be placed on any floor of the Demised Premises which exceeds the load which the
floor area was designed to carry.

8. All
mechanical equipment and machinery will be kept free of noise and vibrations which may be
transmitted to any part of the walls or buildings outside of the Demised Premises.

9. Tenant
shall not lay [ILLEGIBLE] or [ILLEGIBLE] floor covering so that such floor covering shall
come in direct contact with the floor of the Demised Premises, and an interliner of builder’s
deadening felt shall first be affixed to the floor by paste or other
material soluble in water, so that ,such floor covering may be easily removed. The use of
cement or other similar material is prohibited.

10. Tenant
shall not install any window covering other than blinds, draperies, shades or other
tasteful window treatment on the windows of the Demised Premises.

11. All
deliveries to and from the Demised Premises, including loading and unloading, shall be made
only at the rear of the Demised Premises (unless the Demised Premises do not have a rear entrance).

12. Tenant shall keep the area, immediately adjoining the Demised Premises clean and free from dirt
and rubbish, and Tenant shall not place, suffer or permit any obstructions or property in such
areas or in any area outside of the Demised Premises.

13. Tenant shall not use the Common Areas of the Building, or any portion of the Building outside
of the Demised Premises, for business or promotional purposes.

14. The
Common Areas shall not be used for the storage of cars, trucks or any other property of
Tenant. All cars, trucks or other vehicles packed upon the Common Areas must be in good operating
condition.

15. Tenant shall not use, permit or suffer the use of any portion of the Demised Premises for
residential purposes.

16. No live animals shall be kept on or within the Demised Premises.

17. Tenant shall not display, paint or place any handbills, bumper stickers or other
advertising or promotional materials or devices on any vehicles parked in the parking areas.

18. Tenant shall not place any signs, notices, advertisements or materials of any kind in its
windows or on the exterior of the Demised Premises without the prior written consent of Landlord.

 

 

FIRST AMENDMENT TO LEASE AGREEMENT

          THIS AMENDMENT TO LEASE AGREEMENT, made and entered into this 1st day of
December, 2000, by and between:

CORPORATE CENTER DEVELOPERS, a

Florida General Partnership, hereinafter

referred to as “Lessor”;

and

HOME DIAGNOSTICS, INC., a Florida corporation, 

hereinafter referred to as “Lessee”;

          WITNESSETH:

          WHEREAS, Lessor and Lessee did enter into a certain lease agreement on the 2nd
day of May, 1997; and

          WHEREAS, Lessee desires to add additional GROSS LEASABLE AREA to the Lease as indicated below;

          NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter contained,
and other good and valuable considerations, the receipt whereof is hereby acknowledged, it is
agreed by and between Lessor and Lessee as follows:

	 	1.	 	That certain May 2, 1997 Lease Agreement by and between Lessor and Lessee shall
be and the same is hereby amended, to read as follows:

	 	A.	 	ADDITIONAL DEMISED PREMISES: Lessor and Lessee agree to add
Units 214, 215, 216, 217, 218, 219 and 220 of Building #3 to the Demised
Premises as indicated on Exhibit “A-1”. (30,346 S.F.)
	 
	 	B.	 	COMMENCEMENT DATE FOR ADDITIONAL DEMISED PREMISES:
1st day of November, 2000.
	 
	 	C.	 	TENANT PAYMENT FOR ADDITIONAL DEMISED PREMISES: $19,117.98
monthly plus Common Area Maintenance (CAM) expenses. This amount will be
adjusted annually based on CPl increases at same time as DEMISED PREMISES.

 

 

	 	2.	 	That in all other respects, the May 2, 1997 Lease Agreement is hereby ratified and
reaffirmed.

       IN WITNESS WHEREOF, the parties have hereunto set their hands and seals on the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	WITNESSES	 	CORPORATE CENTER DEVELOPERS	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ [ILLEGIBLE]
 

	 	By: 
	 	Holland Builders, Inc.	 	 	 	 
	 

	 	 	 	     its general partner	 	 	 	 
	 
	/s/ [ILLEGIBLE]
 

	 	By
	 	/s/ Gerald Holland
 

Title: President
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	WITNESSES	 	HOME DIAGNOSTICS, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ [ILLEGIBLE]
 

	 	By:
	 	/s/  Beth K. Schwartz, as CFO
 

	 	 
	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 	 	 
	/s/
[ILLEGIBLE]
 

	 	 	 	 	 	 	 	 

 

EXHIBIT A-1

 

 

Amendment to Lease

This Amendment to that Office/Distribution Building Lease between Boywic Farms, Ltd., a
Florida limited partnership, as
successor-in-interest to Corporate Center Developers, a Florida
general partnership (“Landlord”) and Home Diagnostics, Inc., a Florida corporation (“Tenant”) with
an effective date of May 2, 1997, as amended December 1, 2000 (collectively “Lease”) for the
premises located at 2500 N.W. 55th Court, Fort Lauderdale, Florida, is further amended
as follows on this 3rd day of May, 2005:

	 	1.	 	Tenant shall occupy Suites 210 and 211, which total 7,451 square feet (Additional
Demised Premises), at a current rent of $8.27 per square foot N/N/N plus the
applicable sales tax and the applicable Common Area Maintenance (CAM)
payments (estimated at $3.44 per square foot for the year 2005) plus sales tax on
the CAM payments. Suite 210 and 211 shall therefore be added to the Demised
Premises referenced as indicated on Exhibit “A-l” (7,451 square feet).
	 
	 	2.	 	The Commencement Date for the Additional Demised Premises shall be May 3,
2005. The Tenant shall occupy Suites 210 and 211 “AS IS” and Landlord shall
not be required to pay for any additional tenant improvements on the Additional
Demises Premises.
	 
	 	3.	 	The Tenant rental payment for the Additional Demised Premises shall be
$5,134.98 each month plus sales tax plus CAM expenses plus sales tax on the
CAM. This amount will be adjusted annually based on CPI increases at the same
time as the Demised Premises. The total monthly rental payments for the
Additional Demised Premises including the rental payment plus sales tax and the
CAM payment plus sales tax shall be equal to $7,707.19. The first monthly
payment, May 3, 2005 to May 31, 2005, will be pro-rated accordingly.

The parties agree that they will otherwise be subject to the terms and conditions of the Lease
pursuant to this Agreement. In all other respects, the Lease shall remain unchanged.

IN WITNESS WHEREOF, the parties have executed this Amendment to Lease as of the day and year first
above written.

	 	 	 	 	 	 	 	 	 	 	 
	Tenant:	 	 	 	Landlord:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	HOME DIAGNOSTICS, INC,	 	 	 	BOYWIC FARMS, LTD.	 	 
	A Florida corporation	 	 	 	Florida limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BY:

	 	/s/ Beth K. Schwartz, CFO
	 	 	 	BY:
	 	/s/ George W. Weaver	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	BETH K. SCHWARTZ,
CFO	 	 	 	GEORGE W. WEAVER, General Partner

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