Document:

<PAGE>

                                  TERM NOTE

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Debtor's Name: Specialty Laboratories, Inc.

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Debtor's Address:                         Office: #210         Loan Number

2211 Michigan Avenue
Santa Monica, California 90404

                                          Maturity Date:         Amount
                                          March 31, 2002         $5,000,000
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Santa Monica, California         $5,000,000        Date: April 7, 1997

FOR VALUE RECEIVED, on March 31, 2002 (the "Maturity Date"), the undersigned
("Debtor") promises to pay to the order of UNION BANK OF CALIFORNIA, N.A.
("Bank"), as indicated below, the principal sum of Five Million Dollars
($5,000,000), or so much thereof as is disbursed, together with interest on
the balance of such principal from time to time outstanding, at the per annum
rate or rates and at the times set forth below. This Term Note (this "Note")
is governed by the terms and conditions of the Amended and Restated Loan
Agreement (as such term is defined hereinbelow).

1.   PAYMENTS

     PRINCIPAL PAYMENTS. Debtor shall pay principal in sixty (60) consecutive
installments of Eighty-Three Thousand Three Hundred Thirty-Three and 33/100
Dollars ($83,333.33) each on the last day of each month, commencing April 30,
1997. The availability under this Note shall be reduced on the same day and
in the same amount as each scheduled principal payment.

     INTEREST PAYMENTS. Debtor shall pay interest on the last day of each
month (commencing April 30, 1997). Should interest not be paid when due, it
shall become part of the principal and bear interest as herein provided. All
computations of interest under this Note shall be made on the basis of a year
of 360 days, for actual days elapsed.

     a.   BASE INTEREST RATE. At Debtor's option, amounts outstanding
     hereunder in increments of at least One Hundred Thousand Dollars
     ($100,000) shall bear interest at a rate, based on an index selected by
     Debtor, equal to Bank's LIBOR Rate for the Interest Period selected by
     Debtor plus the LIBOR Rate Margin.

     Any Base Interest Rate may not be changed, altered or otherwise modified
     until the expiration of the Interest Period selected by Debtor. The
     exercise of interest rate options by Debtor shall be as recorded in
     Bank's records, which records shall be prima facie evidence of the
     amount borrowed as a Base Interest Rate Loan and the interest rate;
     provided, however, that failure of Bank to make any such notation in its
     records shall not discharge Debtor from its obligation to repay in full
     with interest all amounts borrowed. In no event shall any Interest
     Period extend beyond the Maturity Date.

                                 Page 1

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     To exercise this option, Debtor may, from time to time with respect to
     principal outstanding on which the Base Interest Rate is not accruing,
     and on the expiration of any Interest Period with respect to principal
     outstanding on which the Base Interest Rate has been accruing, select an
     index offered by Bank (or a Base Interest Rate Loan and an Interest
     Period by telephoning an authorized lending officer of Bank located at
     the banking office identified below prior to 10:00 a.m., Pacific time,
     on any Business Day and advising that officer of the selected index, the
     Interest Period and the Origination Date selected (which Origination Date
     shall follow the date of such selection by no more than two (2) Business
     Days).

     Bank will mail a written confirmation of the terms of the selection to
     Debtor promptly after the selection is made. Failure to send such
     confirmation shall not affect Bank's rights to collect interest at the
     rate selected. If, on the date of the selection, the index is
     unavailable for any reason, the selection shall be void. Bank reserves
     the right to fund the principal from any source of funds.

     b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
     not bearing interest at a Base Interest Rate shall bear interest at a
     rate per annum equal to the Reference Rate, which rate shall vary as and
     when the Reference Rate changes.

     Debtor shall pay all amounts due under this Note in lawful money of the
     United States at Bank's Los Angeles Headquarters Commercial Banking
     Office, or such other office as may be designated by Bank, from time to
     time.

2.   LATE PAYMENTS. If any payment required by the terms of this Note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.

3.   INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this Note at a per annum rate equal to five
percent (5%) in excess of the interest rate specified in paragraph 1.b.
above, calculated from the date of default until all amounts payable under
this Note are paid in full.

4.   PREPAYMENT.

     a.   Amounts outstanding under this Note bearing interest at a rate
     based on the Reference Rate may be prepaid in whole or in part at any
     time, without penalty or premium. Amounts outstanding under this Note
     bearing interest at the Base Interest Rate may only be prepaid, in whole
     or in part, provided that Bank has received not less than five (5)
     Business Days' prior written notice of an intention to make such
     prepayment and Debtor pays a prepayment fee to Bank in an amount equal
     to the present value of the product of: (i) the difference (but not less
     than zero) between (a) the Base Interest Rate applicable to the
     principal amount which Debtor intends to repay and (b) the return which
     Bank could obtain if it used the amount of such prepayment of principal
     to purchase at bid price regularly quoted securities issued by the
     United States having a maturity date most closely coinciding with the
     relevant Base Rate Maturity Date and such securities were held by Bank
     until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a
     fraction, the numerator of which is the number of days in the period
     between the date of prepayment and the relevant Base Rate Maturity Date
     and the denominator of which is 360; and (iii) the amount of the
     principal so prepaid (except in the event that principal payments are
     required and have been made as scheduled under the terms of the Base
     Interest Rate Loan being prepaid, then an amount equal to the lesser of
     (A) the amount prepaid or (B) fifty percent (50%) of the sum of (1) the
     amount prepaid and (2) the amount of principal scheduled under the terms
     of the Base Interest Rate Loan being prepaid

                                 Page 2
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     to be outstanding at the relevant Base Rate Maturity Date). Present
     value under this Note is determined by discounting the above product to
     present value using the Yield Rate as the annual discount factor.

     b.   In no event shall Bank be obligated to make any payment or refund
     to Debtor, nor shall Debtor be entitled to any setoff or other claim
     against Bank, should the return which Bank could obtain under the above
     prepayment formula exceed the interest that Bank would have received if
     no prepayment had occurred. All prepayments shall include payment of
     accrued interest on the principal amount so prepaid and shall be applied
     to payment of interest before application to principal. A determination
     by Bank as to the prepayment fee amount, if any, shall be conclusive.

     c.   Such prepayment fee, if any, shall also be payable if prepayment
     occurs as the result of the acceleration of the principal of this Note
     by Bank because of any default hereunder. If, following such
     acceleration, all or any portion of a Base Interest Rate Loan is
     satisfied, whether through sale of property encumbered by any security
     agreement or other agreement securing this Note, at a foreclosure sale
     held thereunder or through the tender of payment at any time following
     such acceleration, but prior to such a foreclosure sale, then such
     satisfaction shall be deemed an evasion of the prepayment conditions set
     forth above, and Bank shall, automatically and without notice or demand,
     be entitled to receive, concurrently with such satisfaction the
     prepayment fee set forth above, and the amount of such prepayment fee
     shall be added to the principal. DEBTOR HEREBY ACKNOWLEDGES AND AGREES
     THAT BANK WOULD NOT EXTEND THE CREDIT TO DEBTOR EVIDENCED BY THIS NOTE
     WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE, TO PAY BANK A PREPAYMENT
     FEE UPON THE SATISFACTION OF ALL OR ANY PORTION OF THE PRINCIPAL BEARING
     INTEREST AT THE BASE INTEREST RATE FOLLOWING THE ACCELERATION OF THE
     MATURITY DATE HEREOF BY REASON OF A DEFAULT. DEBTOR HAS CAUSED THOSE
     PERSONS SIGNING THIS NOTE ON ITS BEHALF TO SEPARATELY INITIAL THE
     AGREEMENT CONTAINED IN THIS PARAGRAPH BY PLACING THEIR INITIALS BELOW:

     INITIALS: [ILLEGIBLE]              [ILLEGIBLE]
               -----------              -----------

5.   DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
not be limited to, any of the following: (a) the failure of Debtor to make
any payment required under this Note when due and, in the case of any
interest payment only, such failure shall continue for five (5) days; (b) any
breach, misrepresentation or other default by Debtor, any guarantor,
co-maker, endorser, or any person or entity other than Debtor providing
security for this Note (hereinafter individually and collectively referred to
as the "Obligor") under any security agreement, guaranty or other agreement
between Bank and any Obligor, and such breach, misrepresentation or other
default, if in respect of a financial covenant which is capable of being
cured, is not cured within thirty (30) days after its occurrence; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any
Obligor of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or
debtor relief and in the case of any involuntary proceeding, the same shall
not be dismissed or discharged within sixty (60) days after commencement; (e)
the assignment by any Obligor for the benefit of such Obligor's creditors of
any substantial part of such Obligor's property; (f) the appointment, or
commencement of any proceeding for the appointment of a receiver, trustee,
custodian or similar official for all or substantially all of any Obligor's
property; (g) the commencement of any proceeding for the dissolution or
liquidation of any Obligor; (h) the termination of existence or death of any
Obligor; (i) the revocation of any guaranty or subordination agreement given
in connection with this Note; (j)

                                 Page 3
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the failure of any Obligor to comply with any order, judgment, injunction,
decree, writ or demand of any court or other public authority; (k) the filing
or recording against any Obligor, or the property of any Obligor, of any
notice of levy, notice to withhold, or other legal process for taxes other
than property taxes; (l) the default by any Obligor personally liable for
amounts owed hereunder on any obligation concerning the borrowing of money;
(m) the issuance against any Obligor, or the property of any Obligor, of any
writ of attachment, execution, or other judicial lien, or (n) the
deterioration of the financial condition of any Obligor which results in Bank
deeming itself, in good faith, insecure. Upon the occurrence of any such
default, Bank, in its discretion, may cease to advance funds hereunder and
may declare all obligations under this Note immediately due and payable;
however, upon the occurrence of an event of default under subsection (d),
(e), (f) or (g) hereof, all principal and interest shall automatically become
immediately due and payable.

6.   ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this Note
are not paid when due, Debtor promises to pay all costs and expenses,
including reasonable attorneys fees, incurred by Bank in the collection or
enforcement of this Note. Debtor and any endorsers of this Note, for the
maximum period of time and the full extent permitted by law, (a) waive
diligence, presentment, demand, notice of nonpayment, protest, notice of
protest, and notice of every kind; (b) waive the right to assert the defense
of any statute of limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the payment of any amounts due
under this Note. The receipt of any check or other item of payment by Bank,
at its option, shall not be considered a payment on account until such check
or other item of payment is honored when presented for payment at the drawee
bank. Bank may delay the credit of such payment based upon Bank's schedule of
funds availability, and interest under this Note shall accrue until the funds
are deemed collected. In any action brought under or arising out of this
Note, Debtor and any Obligor, including their successors and assigns, hereby
consent to the jurisdiction of any competent court within the State of
California, as provided in any alternative dispute resolution agreement
executed between Debtor and Bank, and consent to service of process by any
means authorized by said state's law. The term "Bank" includes, without
limitation, any holder of this Note. This Note shall be construed in
accordance with and governed by the laws of the State of California. This
Note hereby incorporates any alternative dispute resolution agreement
previously, concurrently or hereafter executed between Debtor and Bank.

7.   DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "AMENDED AND RESTATED LOAN AGREEMENT" shall
mean that certain Amended and Restated Loan Agreement dated as of April 7,
1997, by and between Debtor and Bank, as at any time amended, supplemented or
otherwise modified or further restated. "BASE INTEREST RATE" shall mean a
rate of interest based on the LIBOR Rate. "BASE INTEREST RATE LOAN" shall
mean amounts outstanding under this Note that bear interest at the Base
Interest Rate. "BASE RATE MATURITY DATE" shall mean the last day of the
Interest Period with respect to principal outstanding under a Base Interest
Rate Loan.  "BUSINESS DAY" shall mean a day which is not a Saturday or Sunday
on which Bank is open for business in the state identified in paragraph 6
above, and with the respect to the rate of interest based on the LIBOR Rate,
on which dealings in U.S. dollar deposits outside of the United States may be
carried on by Bank. "INTEREST PERIOD" shall mean any calendar period of one
(1), three (3), six (6), nine (9) or, subject to availability, twelve (12)
months. In determining an Interest Period, a month means a period that starts
on one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there
is no such numerically corresponding day, then as to that month, such day
shall be deemed to be the last calendar day of such month. Any Interest
Period which would otherwise end on a non-Business Day shall end on the next
succeeding Business Day unless that is the first day of a month, in which
event such Interest Period shall end on the next preceding Business Day. In
no event shall any Interest Period extend beyond the

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Maturity Date. "LIBOR RATE" shall mean a per annum rate of interest (rounded
upward, if necessary, to the nearest 1/100 of 1%) at which dollar deposits,
in immediately available funds and in lawful money of the United States would
be offered to Bank, outside of the United States, for a term coinciding with
the Interest Period selected by Debtor and for an amount equal to the amount
of principal covered by Debtor's interest rate selection, plus Bank's costs,
including the cost, if any of reserve requirements. "LIBOR RATE MARGIN"
shall mean, (i) two and three-quarters percent (2-3/4%) per annum, effective
on the first day of the month following the month in which Bank receives a
Financial Statement (as such term is defined in the Amended and Restated Loan
Agreement) from Debtor demonstrating that the ratio of Debtor's Total
Liabilities to Tangible Net Worth for the fiscal period covered thereby was
greater than 1.25 to 1.00, (ii) two and forty-five one hundredths percent
(2.45%) per annum, effective on the first day of the month following the month
in which Bank receives a Financial Statement from Debtor demonstrating that
the ratio of Debtor's Total Liabilities to Tangible Net Worth for the fiscal
period covered thereby was less than or equal to 1.25 to 1.00 but greater
than 1.00 to 1.00 and (iii) two percent (2%) per annum, effective on the
first day of the month following the month in which Bank receives a Financial
Statement from Debtor demonstrating that the ratio of Debtor's Total
Liabilities to Tangible Net Worth for the fiscal period covered thereby was
less than or equal to 1.00 to 1.00; provided, however, that (x) if at any
time there exists an Event of Default under the Amended and Restated Loan
Agreement, or any event which, with notice or the lapse of time, or both,
would become an Event of Default under the Amended and Restated Loan
Agreement or (y) if Debtor fails to deliver any Financial Statement to Bank
within the required time period set forth in the Amended and Restated Loan
Agreement, then the ratio of Debtor's Total Liabilities to Tangible Net Worth
shall be deemed to be greater than 1.25 to 1.00 until such Event of Default
or unmatured Event of Default is cured or otherwise waived by Bank or such
Financial Statement is delivered to Bank, as the case may be; and provided
further, however, that the LIBOR Rate Margin shall never be a negative
number. "ORIGINATION DATE" shall mean the Business Day on which funds are
made available to Debtor relating to Debtor's selection of the Base Interest
Rate. "REFERENCE RATE" shall mean the rate announced by Bank from time to
time at its corporate headquarters as its Reference Rate. The Reference Rate
is an index rate determined by Bank from time to time as a means of pricing
certain extensions of credit and is neither directly tied to any external
rate of interest or index nor necessarily the lowest rate of interest charged
by Bank at any given time.

SPECIALTY LABORATORIES, INC.

By [ILLEGIBLE]
   --------------------------------
Title  President
      -----------------------------
By [ILLEGIBLE]
   --------------------------------
Title  V.P. of Finance & Treasurer
      -----------------------------

                                    Page 5<PAGE>

/s/ UNION BANK                    SECURITY AGREEMENT
--------------------- [SEAL]
   Union Bank

This Agreement executed at SANTA MONICA, California, on APRIL 3, 1996
by SPECIALTY LABORATORIES, INC.                  (herein called "Debtor")
-----------------------------------------------
          OWNER(S) OF COLLATERAL
As security for the payment and performance of all of Debtor's obligations to
UNION BANK, A Division of Union Bank of California, N.A., (herein called
"Bank"), irrespective of the manner in which or the time at which such
obligations arose or shall arise, and whether direct or indirect, alone or
with others, absolute or contingent, Debtor does hereby grant a continuing
security interest to Bank in all personal property (herein called
"Collateral"), whether now or hereafter owned or in existence described as
 A.   MOTOR VEHICLES:
<TABLE>
<CAPTION>
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                                                                                                 NEW           NUMBER
   YEAR           TRADE NAME              BODY TYPE                     SERIAL NUMBER             OR             OF
                                                                                                 USED         CYLINDERS
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<S><C>

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 B.   OTHER:
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    ALL ACCOUNTS, DEPOSIT ACCOUNTS, INSTRUMENTS, CHATTEL PAPER, DOCUMENTS, GENERAL INTANGIBLES, INVENTORY, EQUIPMENT,
    FURNITURE, AND FIXTURES, NOW OR HEREAFTER OWNED OR ACQUIRED BY DEBTOR, ALL PROCEEDS AND INSURANCE PROCEEDS OF THE
    FOREGOING, ALL GUARANTIES AND OTHER SECURITY THEREFOR, AND ALL OF DEBTOR'S BOOKS AND RECORDS RELATING THERETO
    (INCLUDING COMPUTER-STORED INFORMATION AND ALL SOFTWARE RELATING THERETO) AND ALL CONTRACT RIGHTS WITH THIRD PARTIES
    RELATING TO THE MAINTENANCE OF ANY SUCH BOOKS, RECORDS AND INFORMATION.
                                                                                          INITIAL         INITIAL
                                                                                            HERE            HERE
                                                                                            PFB             DBH
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</TABLE>
The Collateral described above will be maintained at 2211 MICHIGAN AVENUE,
SANTA MONICA, CA 90404* and any other location(s).  *Southpoint Distribution
Park, Pleasant Hill Road, Shelby County, Memphis, TN. 38117

 C.   ALL PERSONAL PROPERTY OF ANY KIND WHICH IS DELIVERED TO OR IN THE
      POSSESSION OR CONTROL OF BANK OR ITS AGENTS;

 D.   PROCEEDS OF ANY OF THE ABOVE-DESCRIBED PROPERTY. The grant of a security
      interest in proceeds does not imply the right of Debtor to sell or
      dispose of any Collateral described herein without the express consent
      in writing by Bank.

The maximum amount of indebtedness to be secured at any one time is unlimited
unless an amount is inserted    N/A
                             -------------------------------------------------
---------------------------- ($ N/A         ).      MAXIMUM AMOUNT
(To be completed only if an accommodation)  N/A
                                          ------------------------------------
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                          OWNER(S) OF COLLATERAL
is executing this Agreement as an Accommodation Debtor only and his liability
is limited to the security interest created in Collateral described herein.
The Debtor being accommodated is   N/A
                                ----------------------------------------------
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All terms and conditions on the reverse side hereof are incorporated herein
as though set forth in full.

    SPECIALTY LABORATORIES, INC.

<TABLE>
<S>                                         <C>
BY: /s/ Paul F. Beyer
   ----------------------------------       ----------------------------------
   PAUL F. BEYER, PRESIDENT

BY: /s/ Daniel B. Hurwitz
   ----------------------------------       ----------------------------------
   DANIEL B. HURWITZ, VP/CFO

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------
</TABLE>

<PAGE>

                              AGREEMENT

1. The term credit is used throughout this Agreement in its broadest and most
comprehensive sense. Credit may be granted at the request of any one Debtor
without further authorization or notice to any other Debtor, including an
Accommodation Debtor. Collateral shall be security for all obligations of
Debtor to Bank in accordance with the terms and conditions herein.

2. Debtor will: (a) execute such Financing Statement and other documents and
do such other acts and things, all as Bank may from time to time require, to
establish and maintain a valid security interest in Collateral, including
payment of all costs and fees in connection with any of the foregoing when
deemed necessary by Bank; (b) pay promptly when due all indebtedness to Bank;
(c) furnish Bank such information concerning Debtor and Collateral as Bank
may from time to time request, including but not limited to current financial
statements; (d) keep Collateral separate and identifiable and at the location
described herein and permit Bank and its representatives to inspect
Collateral and/or records pertaining thereto from time to time during normal
business hours; (e) not sell, assign or create or permit to exist any lien on
or security interest in Collateral in favor of anyone other than the Bank
unless Bank consents thereto in writing and at Debtor's expense upon Bank's
request remove any unauthorized lien or security interest and defend any
claim affecting the Collateral; (f) pay all charges against Collateral prior
to delinquency including but not limited to taxes, assessments, encumbrances,
insurance and diverse claims, and upon Debtor's failure to do so Bank may pay
any such charge as it deems necessary and add the amount paid to the
indebtedness of Debtor hereunder; (g) reimburse Bank for any expenses
including but not limited to reasonable attorneys' fees and legal expenses
incurred by Bank in seeking to protect, collect or enforce any rights in
Collateral; (h) when required, provide insurance in form and amounts and with
companies acceptable to Bank and when required assign the policies or the
rights thereunder to Bank; (i) maintain Collateral in good condition and not
use Collateral for any unlawful purpose; (j) at its own expense, upon
request of Bank, notify any parties obligated to Debtor on any Collateral to
make payment to Bank and Debtor hereby irrevocably grants Bank power of
attorney to make said notifications and collections; (k) and does hereby
authorize Bank to perform any and all acts which Bank in good faith deems
necessary for the protection and preservation of Collateral or its value or
Bank's security interest therein, including transferring any Collateral into
its own name and receiving the income thereon as additional security
hereunder. Bank may not exercise any right under any corporate security which
might constitute the exercise of control by Bank so as to make any such
corporation an affiliate of Bank within the meaning of the banking laws until
after default.

3. The term default shall mean the occurrence of any of the following events:
(a) non-payment of any indebtedness when due or non-performance of any
obligation when due, whether required hereunder or otherwise; (b)
deterioration or impairment of the value of Collateral; (c) non-performance
by Debtor under this Agreement, default by Debtor of any other agreements
with Bank dealing with the extension of credit or with debt owing Bank or any
misrepresentation of Debtor or its representative to Bank whether or not
contained herein; (d) a change in the composition of any Debtor which is a
business entity; or (e) belief by Bank in good faith that there exists, or
the actual existence of, any deterioration or impairment in the ability of
Debtor to meet its obligations to Bank.

4. Whenever a default exists, Bank, at its option may: (a) without notice
accelerate the maturity of any part or all of the secured obligations and
terminate any agreement for the granting of further credit to Debtor; (b)
sell, lease or otherwise dispose of Collateral at public or private sale;
unless Collateral is perishable and threatens to decline speedily in value or
is a type customarily sold on a recognized market, Bank will give Debtor at
least five (5) days prior written notice of the time and place of any public
sale or of the time after which any private sale or any other intended
disposition may be made; (c) transfer any Collateral into its own name or
that of its nominee; (d) retain Collateral in satisfaction of obligations
secured hereby, with notice of such retention sent to Debtor as required by
law; (e) notify any parties obligated on any Collateral consisting of
accounts, instruments, chattel paper, choses in action or the like to make
payment to Bank and enforce collection of any Collateral herein; (f) require
Debtor to assemble and deliver any Collateral to Bank at a reasonable
convenient place designated by Bank; (g) apply all sums received or collected
from or on account of Collateral including the proceeds of any sales thereof
to the payment of the costs and expenses incurred in preserving and enforcing
rights of Bank including but not limited to reasonable attorneys' fees, and
indebtedness secured hereby in such order and manner as Bank in its sole
discretion determines; Bank shall account to Debtor for any surplus remaining
thereafter, and shall pay such surplus to the party entitled thereto,
including any second secured party who has made a proper demand upon Bank and
has furnished proof to Bank as requested in the manner provided by law; in
like manner, Debtor, unless an Accommodation Debtor only, agrees to pay to
bank without demand any deficiency after any Collateral has been disposed of
and proceeds applied as aforesaid; and (h) exercise its banker's lien or
right of setoff in the same manner as though the credit were unsecured. Bank
shall have all the rights and remedies of a secured party under the Uniform
Commercial Code of California in any jurisdiction where enforcement is
sought, whether in California or elsewhere. All rights, powers and remedies
of Bank hereunder shall be cumulative and not alternative. No delay on the
part of Bank in the exercise of any right or remedy shall constitute a waiver
thereof and no exercise by Bank of any right or remedy shall preclude the
exercise of any other right or remedy or further exercise of the same remedy.

5. Debtor waives: (a) all right to require Bank to proceed against any other
person including any other Debtor hereunder or to apply any Collateral Bank
may hold at any time or to pursue any other remedy; Collateral, endorsers or
guarantors may be released, substituted or added without affecting the
liability of Debtor hereunder; (b) the defense of the Statute of Limitations
in any action upon any obligations of Debtor secured hereby; (c) if he is an
Accommodation Debtor, all rights under Uniform Commercial Code Section 9112;
and (d) any right of subrogation and any right to participate in Collateral
until all obligations hereby secured have been paid in full.

6. Debtor warrants: (a) that it is or will be the lawful owner of all
Collateral free of all claims, liens or encumbrances whatsoever, other than
the security interest granted pursuant hereto; (b) all information, including
but not limited to financial statements furnished by Debtor to Bank
heretofore or hereafter, whether oral or written, is and will be correct and
true as of the date given; and (c) if Debtor is a business entity, the
execution, delivery and performance hereof are within its powers and have
been duly authorized.

7. The right of Bank to have recourse against Collateral shall not be
affected in any way by the fact that the credit is secured by a mortgage,
deed of trust or other lien upon real property.

8. Debtor may terminate this Agreement at any time upon written notice to
Bank of such termination; provided however, that such termination shall not
affect his obligations then outstanding, any extensions or renewals thereof,
nor the security interest granted herein [illegible] shall continue until
such outstanding obligations are satisfied in full. Such termination shall
not affect the obligations of other Debtors if more than one executes this
Agreement.

9. If more than one Debtor executes this Agreement, the obligations hereunder
are joint and several. All words used herein in the singular shall be deemed
to have been used in the plural when the context and construction so require.
Any married persons who sign this Agreement expressly agree that recourse may
be had against his/her separate property for all of his/her obligations to
Bank.

10. This Agreement shall inure to the benefit of and bind Bank, its
successors and assigns and each of the undersigned, their respective heirs,
executors, administrators and successors in interest. Upon transfer by Bank
of any part of the obligations secured hereby, Bank shall be fully discharged
from all liability with respect to Collateral transferred therewith.

11. Whenever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any
provision of this Agreement shall be prohibited or invalid under applicable
law, such provisions shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such or the remaining
provisions of this Agreement.
<PAGE>

UNION
  BANK OF
CALIFORNIA
                 AUTHORIZATION TO OBTAIN CREDIT, GRANT SECURITY,
                             GUARANTEE OR SUBORDINATE

                                     RECITALS

     A.   SPECIALTY LABORATORIES, INC.
  ----------------------------------------------------------------------------
duly organized and existing under the laws of CALIFORNIA with its principal
place of business at 2211 MICHIGAN AVENUE, SANTA MONICA, CA (the "Business")
desires to obtain present or future credit from, grant security to, or give
guaranties or subordinations to Union Bank of California, N.A. ("Bank"). The
Business operates under a fictitious business name, and has filed, published
and/or registered the required writing, stating that the Business is doing
business as N/A and the writing, a copy of which is attached, is currently in
full force and effect.

     B. The Business desires that certain person(s) be authorized to act on
its behalf from time to time in obtaining, among other things, such credit
from, granting security to, or giving guaranties or subordinations to, Bank.

NOW, THEREFORE, IT IS RESOLVED THAT:

1. AUTHORIZATION. Any 2 of the following is/are authorized and directed, in
the name and on behalf of the Business, from time to time, with or without
security, to obtain credit and other financial accommodations from Bank, or to
give guaranties or subordinations to Bank, upon such terms as any such
person(s) shall approve:
   CHAIRMAN/CEO          PRESIDENT/COO        VP FINANCE/TREASURER

2. SCOPE OF AUTHORITY. Without limiting the generality of the authority
granted, each person designated in paragraph 1 above is authorized, from time
to time, in the name and on behalf of the Business, to:

     2.1  Incur Indebtedness To Bank. The work "Indebtedness" as used herein
   means all debts, obligations and liabilities, including without limitation
   obligations and liabilities under guaranties or subordinations, currently
   existing or now or hereafter made, incurred or created, whether voluntary
   or involuntary and however arising or evidenced, whether direct or
   acquired by assignment or succession, whether due or not due, absolute or
   contingent, liquidated or unliquidated, determined or undetermined, and
   whether liability is individual or joint with others, all renewals,
   extensions and modifications thereof, and all attorneys' fees and costs
   incurred in connection with the negotiation, preparation, workout,
   collection and enforcement thereof;

     2.2  Execute, deliver and endorse with respect to Indebtedness to Bank,
   promissory notes, loan agreements, drafts, guaranties, subordinations,
   applications and agreements for letters of credit, acceptance agreements,
   foreign exchange documentation, applications and agreements pertaining to
   the payment and collection of documents, indemnities, waivers, purchase
   agreements and other financial undertakings, leases and other documents
   and agreements in connection therewith, and all renewals, extensions or
   modifications thereof;

     2.3  Grant security interests in, pledge, assign, transfer, endorse,
   mortgage or hypothecate, and execute security or pledge agreements,
   financing statements and other security interest perfection documentation,
   mortgages and deeds of trust on, and give trust receipts for, any or all
   property of the Business as may be agreed upon by any officer as security
   for any or all Indebtedness of the Business or any other individual or
   entity ("Person"), and grant and execute renewals, extensions or
   modifications thereof;

     2.4  Sell to, or discount or rediscount with, Bank all negotiable
   instruments, including without limitation promissory notes, commercial
   paper, drafts, accounts, acceptances, leases, chattel paper, contracts,
   documents, instruments or evidences of debt at any time owned, held or
   drawn by the Business, and draw, endorse or transfer any of such
   instruments or documents on behalf of the Business, guarantee payment or
   repurchase thereof, and execute and deliver to Bank all documents and
   agreements in connection therewith, and all renewals, extensions or
   modifications thereof;

     2.5  Direct the disposition of the proceeds of any credit extended by
   Bank, and deliver to Bank and accept from Bank delivery of any property of
   the Business at any time held by Bank.

     2.6  Specify in writing to Bank the individuals who are authorized, in
   the name of and on behalf of the Business, to request advances under loans
   or credit lines made available by Bank to the Business, subject to the
   terms thereof.

3. WRITINGS. Any instruments, documents, agreements or other writings executed
under or pursuant to these resolutions (collectively, the "Authorization")
may be in such form and contain such terms and conditions as may be required
by Bank in its sole discretion, and execution thereof by any officer
authorized under the Authorization shall be conclusive evidence of such
officer's and the Business's approval of the terms and conditions thereof.

4. CERTIFICATION. The Secretary or any Assistant Secretary of the Business is
hereby authorized and directed from time to time to certify to Bank a copy of
this Authorization, the names and specimen signatures of the persons
designated in paragraph 1 above, and any modification thereof.

5. RATIFICATION/AMENDMENT. The authority given under this Authorization shall
be retroactive and any and all acts so authorized that are performed prior to
the formal adoption are hereby approved and ratified. In the event two or
more resolutions of this Business are concurrently in effect, the provisions
of each shall be cumulative, unless the later(est) shall specifically provide
otherwise. The authority given hereby shall remain in full force and effect,
and Bank is authorized and requested to rely and act thereon, until Bank
shall have received at its LOS ANGELES HEADQUARTERS COMM'L BANKING OFFICE a
certified copy of a further resolution of the Business amending, rescinding
or revoking the Authorization.

<PAGE>

6. REQUESTS FOR CREDIT. Credit may be requested by the Business from Bank in
writing, by telephone, or by other telecommunication method acceptable to
Bank. The Business recognizes and agrees that Bank cannot effectively
determine whether a specific request purportedly made by or on behalf of the
Business is actually authorized or authentic. As it is in the Business's best
interest that Bank extend credit in response to these forms of request, the
Business assumes all risks regarding the validity, authenticity and due
authorization of any request purporting to be made by or on behalf of the
Business. The Business is hereby authorized and directed to repay any credit
that is extended by Bank pursuant to any request which Bank in good faith
believes to be authorized, or when the proceeds of any credit are deposited
to the account of the Business with Bank, regardless of whether any
individual or entity other than the Business may have authority to draw
against such account.

7. BUSINESS AS PARTNER/JOINT VENTURER, LLC MEMBER OR MANAGER. Nothing in its
organizational documents limits or prohibits the Business from acting as a
general or limited partner of a partnership, a member or manager of a limited
liability company, or joint venturer of a joint venture. Any Person designated
in paragraph 1 of the Authorization is authorized, on behalf of the Business,
in its role as a general or limited partner, a member or manager, or a joint
venturer, to execute, deliver and endorse all certificates, authorizations
and agreements (i) to evidence the Business's role in and responsibilities to
and for such partnership, limited liability company or joint venture so that
Bank may rely thereon, and (ii) to evidence such partnership's, limited
liability company's or joint venture's obligations and liabilities to Bank.

8. NO LIMITATION BY THIS AUTHORIZATION. Nothing contained in this
Authorization shall limit or modify the authority of any person to act on
behalf of the Business as provided by law, any agreement or authorization
relating to the Business or otherwise.

                     CERTIFICATE OF SECRETARY OF THE BUSINESS

I hereby certify to Union Bank of California, N.A., ("Bank") that the above
Authorization is a true copy of the resolution(s) of SPECIALTY LABORATORIES,
INC. a corporation duly organized and existing under the laws of CALIFORNIA
(the "Business") duly adopted on 3/7/97, by the Board of Directors of the
Business and duly entered in the records of the Business, and that the
Authorization is in conformity with applicable law and regulation, the
Articles of Incorporation and the By-Laws of the Business and is now in full
force and effect.

I also certify that the following are the names and genuine specimen
signatures of the officers of the Business authorized in paragraph 1 of the
Authorization:

CHAIRMAN/CEO              JAMES B. PETER            /s/ JAMES B. PETER
-----------------------   -----------------------   ------------------------
Corporate Title           Name                      Signature

PRESIDENT/COO             PAUL F. BEYER             /s/ PAUL F. BEYER
-----------------------   -----------------------   ------------------------
Corporate Title           Name                      Signature

VP FINANCE/TREASURER      BART E. THIELEN           /s/ BART E. THIELEN
-----------------------   -----------------------   ------------------------
Corporate Title           Name                      Signature

-----------------------   -----------------------   ------------------------
Corporate Title           Name                      Signature

I agree to notify Bank in writing of any change in any aspect of the
Authorization or of any individual holding any office set forth in this
certificate immediately upon the occurrence of any such change, and to
provide Bank with a copy of the modified resolution(s) and the genuine
specimen signature of any such new officer.

The authority provided for in the Authorization shall remain in full force
and effect, and Bank is authorized and requested to rely and act thereon
until Bank shall receive at its LOS ANGELES HEADQUARTERS COMM'L BANKING
OFFICE either a certified copy of a further resolution of this Business's
Board of Directors amending the Authorization, or a certification of a change
in the authorized officer(s).

Dated:   4/7/97
      -------------------            /s/ Deborah [ILLEGIBLE]
                                     -----------------------------------------
                                     Secretary of SPECIALTY LABORATORIES, INC.

SEAL
(if no seal,                         -----------------------------------------
so state)

                                     /s/ [ILLEGIBLE]
                                     -----------------------------------------
                                     President of SPECIALTY LABORATORIES, INC.

                                     -----------------------------------------

*When the Secretary is among those authorized, the President should also sign
 this Certificate.
<PAGE>

UNION
  BANK OF
CALIFORNIA
                    ALTERNATIVE DISPUTE RESOLUTION AGREEMENT

   This Alternative Dispute Resolution Agreement ("Agreement") is made and
entered into as of the 27TH day of MARCH 1997, by and between the undersigned
("Obligor") and Union Bank of California, N.A., ("Bank") (Obligor and Bank
herein collectively, the "Parties" and individually, a "Party"). Initially
capitalized terms used in this Agreement which are not otherwise defined
herein shall have the respective meanings set forth in Paragraph 7 of this
Agreement.

1. CLAIMS SUBJECT TO ARBITRATION OR JUDICIAL REFERENCE.

   (a) Any Claim other than a Claim that arises out of or relates to any
       obligation under any Subject Document that is secured, in whole or in
       part, by an interest in real property shall, at the written request of
       any Party, be determined by Arbitration.

   (b) Any Claim that arises out of or relates to any obligation under any
       Subject Document that is secured, in whole or in part, by an interest
       in real property shall be determined by Arbitration only with the
       consent of both Parties. If both Parties do not consent to the
       determination of any such Claim by Arbitration, then such Claim shall,
       at the written request of any Party, be determined by Reference.

   (c) The determination as to whether or not a Claim arises out of or
       relates to any obligation under any Subject Document that is secured,
       in whole or in part, by an interest in real property shall be made at
       the time the arbitrator or referee is selected pursuant to Paragraph 2
       of this Agreement.

2. SELECTION OF ARBITRATOR OR REFEREE. Within 30 days after written demand,
or within 30 days after commencement by any Party, of any lawsuit subject to
this Agreement, the Parties shall select a single neutral arbitrator pursuant
to the Commercial Arbitration Rules of the AAA or a single neutral referee
pursuant to the Judicial Reference Procedures of the AAA. However, the
arbitrator or referee selected must be a retired state or federal court
judge with at least five years of judicial experience in civil matters. In
the event that the selection pursuant to such Commercial Arbitration Rules or
Judicial Reference Procedures does not result in the appointment of a single
neutral arbitrator or a single neutral referee within 30 days, any such Party
may petition the court to appoint a single neutral arbitrator or single
neutral referee with the judicial experience described above. The Parties
shall equally bear the fees and expenses of the arbitrator or referee unless
the arbitrator or referee otherwise provides in the award or statement of
decision.

3. CONDUCT OF ARBITRATION OR REFERENCE.

   (a) Except as provided in this Agreement, the arbitrator shall have the
       powers provided under Applicable State Law and the Commercial
       Arbitration Rules of the AAA, and the referee shall have the powers
       provided under Applicable State Law and the Judicial Reference
       Procedures of the AAA.

   (b) The arbitrator or referee shall determine all challenges to the
       legality or enforceability of this Agreement.

   (c) The arbitrator or referee shall apply the rules of evidence to the
       same extent as they would be applied in a court of law.

   (d) A Party may not conduct discovery unless the arbitrator or referee
       grants such Party leave to do so upon a showing of good cause. All
       discovery shall be completed within 90 days after the appointment of
       the arbitrator or referee, except upon a showing of good cause by any
       Party. The arbitrator or referee shall limit discovery to
       non-privileged material that is relevant to the issues to be
       determined by the arbitrator or referee.

   (e) The arbitrator or referee shall determine the time of the hearing and
       shall designate its location based upon the convenience of the
       arbitrator or referee, the Parties and any witnesses. However, such
       hearing shall be commenced within 30 days after completion of
       discovery, unless the arbitrator or referee grants a continuance upon
       a showing of good cause by any Party. At least 7 days before the date
       set for such hearing, the Parties shall exchange copies of exhibits to
       be offered as evidence, and lists of the witnesses who will testify,
       at such hearing. Once commenced, the hearing shall proceed day to day
       until completed, unless the arbitrator or referee grants a continuance
       upon a showing of good cause by any Party. Any Party may cause to be
       prepared, at its expense, a written transcription or electronic
       recordation of such hearing.

   (f) Subject to the provisions of this Agreement, the arbitrator may award,
       or the referee may report, a statement of decision providing for any
       remedy or relief, including without limitation judicial foreclosure,
       deficiency judgment and equitable relief, and give effect to all legal
       and equitable defenses, including without limitation, statutes of
       limitation, the statute of frauds, waiver and estoppel.

   (g) The award of the arbitrator or the statement of decision of the
       referee shall be supported by written findings of fact and conclusions
       of law delivered by the arbitrator or referee to the Parties
       concurrently with such award or statement of decision.

   (h) In the event that punitive damages are permitted under Applicable
       State Law, the award of the arbitrator or the statement of decision of
       the referee may provide for recovery of punitive damages provided that
       the arbitrator or referee first makes written findings of fact that
       would satisfy the requirements for recovery of punitive damages under
       Applicable State Law. Any such punitive damages shall not exceed a sum
       equal to three times the amount of actual damages as determined by the
       arbitrator or referee.

   (i) The arbitrator shall have the power to award or the referee shall have
       the power to report a statement of decision providing for reasonable
       attorneys' fees (including a reasonable allocation for the costs of
       in-house counsel) and costs to the prevailing party.

   (j) In the event that Applicable State Law provides that publications or
       communications made in a judicial proceeding are subject to a
       litigation privilege, such litigation privilege shall apply to the
       same extent to publications or communications made in the Arbitration
       or Reference.

4. PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision of this
Agreement shall limit the right of any Party (a) to exercise self-help
remedies including, without limitation, set-off, (b) to foreclose against or
sell any collateral, by power of sale or otherwise or (c) to obtain or oppose
provisional or ancillary remedies from a court of competent jurisdiction
before, after or during the pendency of the Arbitration or Reference. The
exercise of, or opposition to, any such remedy does not waive the right of
any Party to Arbitration or Reference pursuant to this Agreement.

5. FINAL, BINDING AND NONAPPEALABLE JUDGMENT. Any court of competent
jurisdiction shall, upon the petition of any Party, confirm the award of the
arbitrator and enter judgment in conformity therewith. Any court of competent
jurisdiction shall, upon the filing of the statement of decision of the
referee, enter judgment thereon. Any such judgment shall be final, binding
and nonappealable.

6. MISCELLANEOUS. In the event that multiple claims are asserted, some of
which are found not subject to this Agreement, the Parties agree to stay the
proceedings of the claims not subject to this Agreement until all other
claims are resolved in accordance with this Agreement. In the event that
claims are asserted against multiple parties, some of whom are not subject to
this Agreement, the Parties

<PAGE>

agree to sever the claims subject to this Agreement and resolve them in
accordance with this Agreement. In the event that any provision of this
Agreement is found to be illegal or unenforceable, the remainder of this
Agreement shall remain in full force and effect. In the event of any
challenge to the legality or enforceability of this Agreement, the prevailing
Party shall be entitled to recover the costs and expenses, including
reasonable attorneys' fees, incurred by it in connection therewith.
Applicable State Law shall govern the interpretation of this Agreement. This
Agreement fully states all of the terms and conditions of the Parties'
agreement regarding the matters mentioned in, or incidental to, this
Agreement. This Agreement supersedes all oral negotiations and prior
writings concerning the subject matter hereof.

7. DEFINED TERMS. As used in this Agreement, the following terms shall have
the respective meanings set forth below:

   (a) "AAA" shall mean the American Arbitration Association.

   (b) "Applicable State Law" shall mean the law of the state in which this
       Agreement is executed by Obligor; provided, however, that if any Party
       seeks (i) to exercise self-help remedies, including without limitation
       set-off, (ii) to foreclose against or sell any collateral, by power of
       sale or otherwise or (iii) to obtain or oppose provisional or
       ancillary remedies from a court of competent jurisdiction before,
       after or during the pendency of the Arbitration or Reference, the law
       of the state where such collateral is located shall govern the
       exercise of or opposition to such rights and remedies.

   (c) "Arbitration" shall mean an arbitration conducted pursuant to this
       Agreement in accordance with Applicable State Law, and under the
       Commercial Arbitration Rules of the AAA, as in effect at the time the
       arbitrator is selected pursuant to paragraph 2 of this Agreement.

   (d) "Claim" shall mean any claim, cause of action, action, dispute or
       controversy between or among the Parties, including any claim, cause
       of action, action, dispute or controversy alleged in or subject to a
       lawsuit between or among the Parties, which arises out of or relates
       to:

      (i)   any of the Subject Documents.

      (ii)  any negotiations, correspondence or communications relating to
            any of the Subject Documents, whether or not incorporated into
            the Subject Documents or any indebtedness evidenced thereby.

      (iii) the administration or management of the Subject Documents or any
            indebtedness evidenced thereby or

      (iv)  any alleged agreements, promises, representations or transactions
            in connection therewith, including but not limited to any claim,
            cause of action, action, dispute or controversy which arises out
            of or is based upon an alleged tort or other breach of legal duty.

   (e) "Reference" shall mean a judicial reference conducted pursuant to this
       Agreement in accordance with Applicable State Law and under the
       Judicial Reference Procedures of the AAA, as in effect at the time the
       referee is selected pursuant to paragraph 2 of this Agreement.

   (f) "Subject Documents" shall mean any and all documents, instruments and
       agreements previously, concurrently or hereafter executed by Obligor
       in favor of Bank, or between Obligor and Bank, which incorporate by
       reference an alternative dispute resolution agreement or another
       agreement providing for the resolution of Claims between or among the
       Parties by arbitration or judicial reference, any and all related
       documents, instruments and agreements, and any and all extensions,
       renewals, amendments, substitutions and replacements of any of the
       foregoing; and "Subject Document" shall mean any one of such Subject
       Documents.

8. WAIVER OF RIGHT TO TRIAL BY JURY. In connection with an Arbitration or
Reference, or any other action or proceeding, the Parties hereby expressly,
intentionally and deliberately waive any right they may otherwise have to
trial by jury of any Claim.

This Agreement is duly executed by the Parties as of the date first written
above.

UNION BANK OF CALIFORNIA, N.A.

BY: /s/ Steve Dunne
    ----------------------------------
    STEVE DUNNE

TITLE: VICE PRESIDENT
    ----------------------------------

SPECIALTY LABORATORIES, INC.
A CALIFORNIA CORPORATION

<TABLE>
<S>                      <C>                            <C>
BY: /s/ Paul F. Beyer    President
   ------------------------------------------------     ------------------------
                         TITLE

BY: /s/ [ILLEGIBLE] V.P. of Finance & Treasurer
   ------------------------------------------------     ------------------------
                         TITLE

   ------------------------------------------------     ------------------------

   ------------------------------------------------     ------------------------

   ------------------------------------------------     ------------------------

   ------------------------------------------------     ------------------------
</TABLE>

<PAGE>

     [LOGO]                 AGREEMENT TO FURNISH INSURANCE
    Union Bank
    Member FDC
A Division of Union Bank of California, N.A.

<TABLE>
<S>                                    <C>               <C>                   <C>
--------------------------------------------------------------------------------------------------------------
Borrower Name

SPECIALTY LABORATORIES, INC.
--------------------------------------------------------------------------------------------------------------
Borrower Address                        Office           Loan Number
                                        21061
2211 MICHIGAN AVENUE                  ------------------------------------------------------------------------
SANTA MONICA, CA 90404                  Maturity Date                          Amount

--------------------------------------------------------------------------------------------------------------
                                            Date: April 3, 1996
                                                 -------------------------------
TO UNION BANK:
I, the undersigned purchaser/borrower, agree to furnish the following insurance coverage:

BUSINESS PERSONAL PROPERTY:
    Fire and extended coverage.
    Lender's Loss Payable Endorsement.    Evidence of Workman's Compensation Insurance.
                                          Evidence of Liability Insurance.
Collateral Location:
    2211 MICHIGAN AVENUE, SANTA MONICA, CA
    90404* and any other location(s).

  * Southpoint Distribution Park, Pleasant Hill Road, Shelby County, Memphis, TN. 38117.
</TABLE>

        -----------                ---------
          INITIAL                   INITIAL
            HERE                      HERE
        [ILLEGIBLE]                [ILLEGIBLE]

In connection with the credit extention by Union Bank, I have, or will
instruct the insurance agent for such insurance to provide Union Bank
Commercial Note Center at  ATTN: Carrillo -- 21061, P.O. BOX 30115, LOS
ANGELES, CA 90030-0115  with proof of insurance in the form of a policy or
certificate of insurance, including the endorsements set forth above.

I understand and agree that the Proof of Insurance must be delivered to Union
Bank within ten days from the date of this agreement.

               ---------------------------------------------------
                    INSURANCE AGENT:
                       ARMSTRONG/ROBITAILLE
                    -----------------------------------------
                    (Name)

                       17501 E. 17th Street #200
                    -----------------------------------------
                    (Street)

                       Tustin, CA  92681-4147
                    -----------------------------------------
                    (City, State, Zip)

                       (714) 665-6248       (714) 832-9432
                    -----------------------------------------
                    (Telephone Number)      (Fax Number)
               ---------------------------------------------------

SPECIALTY LABORATORIES INC.

<TABLE>

<S>                                         <C>
BY: /s/ Paul F. Beyer
   ----------------------------------       ----------------------------------
   PAUL F. BEYER, PRESIDENT

BY: /s/ Daniel B. Hurwitz
   ----------------------------------       ----------------------------------
   DANIEL B. HURWITZ, VP/CFO

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------

   ----------------------------------       ----------------------------------
------------------------------------------------------------------------------
FOR BANK USE:                                 Policy Number:
                                                            ------------------
Date Insurance Verified:                      Covering:
                        --------------------           -----------------------
Person talked to:                             Effective from:
                 ---------------------------                ------------------
Insurance Co./Agent:                          Amount of Coverage:
                    ------------------------                     -------------
</TABLE>

<PAGE>

 UNION
    BANK OF                         AUTHORIZATION
CALIFORNIA
<TABLE>
<S>                                    <C>               <C>                   <C>
--------------------------------------------------------------------------------------------------------------
Borrower Name
                SPECIALTY LABORATORIES, INC.
--------------------------------------------------------------------------------------------------------------
Borrower Address                        Office           Loan Number
                                        21061              8512643562
2211 MICHIGAN AVENUE                  ------------------------------------------------------------------------
SANTA MONICA, CA 90404                  Maturity Date                          Amount
                                          MARCH 31, 2002                         $5,000,000.00
--------------------------------------------------------------------------------------------------------------
Union Bank of California, N.A. ("Bank") is hereby authorized and instructed to disburse the proceeds of that
certain Note referenced above in the following manner:

       Deposit the proceeds into my/our account # 2100688231 as may be requested
       verbally or in writing.

       TOTAL LOAN PROCEEDS:                                                      $5,000,000.00
--------------------------------------------------------------------------------------------------------------
Fees itemized below are payable as follows (check one):

/X/ Charge account # 2100688231         / / Check enclosed
                   ------------------

                                                        LOAN FEE                       $  10,000.00

                                                        TOTAL:                         $  10,000.00
--------------------------------------------------------------------------------------------------------------
                                            TERMS AND CONDITIONS
--------------------------------------------------------------------------------------------------------------
1. Bank is authorized to charge account number  2100688231 in the name(s) of SPECIALTY LABORATORIES, INC.

   -----------------------------------------------------------------------------------------------------------
   _______________ for payments of interest (or principal/interest) when due in connection with this Note and
   all renewals or extensions thereof.
2. Bank shall disburse proceeds in the amounts stated above in accordance with the foregoing authorization or
   when Bank receives verbal or written authorization from Borrower(s) to do so, or any one of the Borrowers,
   if there are joint Borrowers, but not later than MARCH 31, 2002. The Bank, at its discretion, may elect to
   extend this date without notice to or acknowledgement by the borrower(s). This Authorization and the above
   mentioned Note will remain in full force and effect until the obligations in connection with this Note have
   been fulfilled.
3. Unless dated by Bank prior to execution, the Note shall be dated by Bank as of the date on which Bank
   disburses proceeds.
4. Notwithstanding anything to the contrary herein, Bank reserves the right to decline to advance the proceeds
   of the above described Note if there is a filing as to the Borrower(s), or any of them of a voluntary or
   involuntary petition under the provisions of the Federal Bankruptcy Act or any other insolvency law; the
   issuance of any attachment, garnishment, execution or levy of any asset of the Borrower(s), or any endorser
   or guarantor which results in Bank deeming itself, in good faith insecure.
5. The borrower(s) authorize Bank to release information concerning the borrower(s) financial condition to
   suppliers, other creditors, credit bureaus and other credit reporters; and also authorizes Bank to obtain
   such information from any third party at any time.

The Borrower(s) by their execution of this Authorization accept the foregoing terms, conditions and
instructions.

Executed on   4/7/97

SPECIALTY LABORATORIES, INC.

BY: /s/ Paul F. Beyer    President
   -------------------------------------------------     ----------------------------------------------
                         TITLE

BY: /s/ Bart E. Thielen  V.P. of Finance & Treasurer
   -------------------------------------------------     ----------------------------------------------
                         TITLE

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

 UNION
    BANK OF                         AUTHORIZATION
CALIFORNIA
<TABLE>
<S>                                    <C>               <C>                   <C>
--------------------------------------------------------------------------------------------------------------
Borrower Name
                SPECIALTY LABORATORIES, INC.
--------------------------------------------------------------------------------------------------------------
Borrower Address                        Office           Loan Number
                                        21061              8512643562              0080-00-0-000
2211 MICHIGAN AVENUE                  ------------------------------------------------------------------------
SANTA MONICA, CA 90404                  Maturity Date                          Amount
                                          MAY 31, 1999                           $15,000,000.00
--------------------------------------------------------------------------------------------------------------
Union Bank of California, N.A. ("Bank") is hereby authorized and instructed to disburse the proceeds of that
certain Note referenced above in the following manner:

       Deposit the proceeds of my/our revolving note into my/our account # 2100688231
       from time to time and in such amounts as may be requested verbally or in writing.

       Change in terms and increase of obligation #0080-00-0-000 which matures 4/30/01.
                                                                                 $ 6,500,000.00

       TOTAL LOAN PROCEEDS:                                                      $15,000,000.00
--------------------------------------------------------------------------------------------------------------
Fees itemized below are payable as follows (check one):

/X/ Charge account #                   / / Check enclosed
                   ------------------

                                                        LOAN FEE                       $  7,500.00

                                                        TOTAL:                         $  7,500.00
--------------------------------------------------------------------------------------------------------------
                                            TERMS AND CONDITIONS
--------------------------------------------------------------------------------------------------------------
1. Bank is authorized to charge account number  2100688231 in the name(s) of SPECIALTY LABORATORIES, INC.

   -----------------------------------------------------------------------------------------------------------
   _______________ for payments of interest (or principal/interest) when due in connection with this Note and
   all renewals or extensions thereof.
2. Bank shall disburse proceeds in the amounts stated above in accordance with the foregoing authorization or
   when Bank receives verbal or written authorization from Borrower(s) to do so, or any one of the Borrowers,
   if there are joint Borrowers, but not later than MAY 31, 1999.   The Bank, at its discretion, may elect to
   extend this date without notice to or acknowledgement by the borrower(s). This Authorization and the above
   mentioned Note will remain in full force and effect until the obligations in connection with this Note have
   been fulfilled.
3. Unless dated by Bank prior to execution, the Note shall be dated by Bank as of the date on which Bank
   disburses proceeds.
4. Notwithstanding anything to the contrary herein, Bank reserves the right to decline to advance the proceeds
   of the above described Note if there is a filing as to the Borrower(s), or any of them of a voluntary or
   involuntary petition under the provisions of the Federal Bankruptcy Act or any other insolvency law; the
   issuance of any attachment, garnishment, execution or levy of any asset of the Borrower(s), or any endorser
   or guarantor which results in Bank deeming itself, in good faith insecure.
5. The borrower(s) authorizes Bank to release information concerning the borrower(s) financial condition to
   suppliers, other creditors, credit bureaus and other credit reporters; and also authorizes Bank to obtain
   such information from any third party at any time.

The Borrower(s) by their execution of this Authorization accept the foregoing terms, conditions and
instructions.

Executed on   4/7/97

SPECIALTY LABORATORIES, INC.

BY: /s/ Paul F. Beyer    President
   -------------------------------------------------     ----------------------------------------------
                         TITLE

BY: /s/ Bart E. Thielen  V.P. of Finance & Treasurer
   -------------------------------------------------     ----------------------------------------------
                         TITLE

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------

   -------------------------------------------------     ----------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>

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