Document:

Exhibit 10.1

 

THIRD AMENDED AND
RESTATED CREDIT AGREEMENT

 

Dated as of June
30, 2005

 

among

 

WAMPOLE
LABORATORIES, LLC and

INVERNESS MEDICAL (UK) HOLDINGS LIMITED,

 

as Borrowers,

 

THE OTHER CREDIT
PARTIES SIGNATORY HERETO,

 

as Credit Parties,

 

THE LENDERS SIGNATORY
HERETO

 

FROM TIME TO TIME,

 

as Lenders,

 

GENERAL ELECTRIC
CAPITAL CORPORATION,

 

as Agent and
Lender,

 

MERRILL LYNCH
CAPITAL,

a division of Merrill Lynch Business Financial Services Inc.,

 

as Documentation
Agent, Co-Syndication Agent and Lender,

 

and

 

UBS SECURITIES
LLC,

 

as Co-Syndication
Agent,

 

with

 

GECC CAPITAL
MARKETS GROUP, INC. and MERRILL LYNCH CAPITAL,

 

as Co-Lead
Arrangers

 

 

INDEX OF
APPENDICES

 

	
  Annex A (Recitals)

  	
  -

  	
  Definitions

  
	
  Annex B (Section 1.2)

  	
  -

  	
  Letters of Credit

  
	
  Annex C (Section 1.8)

  	
  -

  	
  Cash Management System

  
	
  Annex D (Section 2.1(a))

  	
  -

  	
  Closing Checklist

  
	
  Annex E (Section 4.1(a))

  	
  -

  	
  Financial Statements and Projections – Reporting

  
	
  Annex F (Section 6.10)

  	
  -

  	
  Financial Covenants

  
	
  Annex G (Section 9.9(a))

  	
  -

  	
  Lenders’ Wire Transfer Information

  
	
  Annex H (Section 11.10)

  	
  -

  	
  Notice Addresses

  
	
  Annex I (from Annex A Commitments Definition)

  	
  -

  	
  Commitments as of Closing Date

  
	
  Annex J (from Annex A – Subordinated Bond Issuance Definition)

  	
  -

  	
  Subordination Terms and Conditions

  
	
  Exhibit 1.1(a)(i)

  	
  -

  	
  Form of Notice of US Revolving Credit Advance

  
	
  Exhibit 1.1(a)(ii)

  	
  -

  	
  Form of US Revolving Note

  
	
  Exhibit 1.1(b)(i)

  	
  -

  	
  Form of Notice of European Revolving Credit Advance

  
	
  Exhibit 1.1(b)(ii)

  	
  -

  	
  Form of European Revolving Note

  
	
  Exhibit 1.1(c)(i)(1)

  	
  -

  	
  Form of US Term Note

  
	
  Exhibit 1.1(c)(ii)

  	
  -

  	
  Form of European Term Note

  
	
  Exhibit 1.1(d)(i)

  	
  -

  	
  Form of US Swing Line Note

  
	
  Exhibit 1.1(e)(i)

  	
  -

  	
  Form of European Swing Line Note

  
	
  Exhibit 1.5(e)

  	
  -

  	
  Form of Notice of Conversion/Continuation

  
	
  Exhibit 2.3(c)

  	
  -

  	
  Form of Conversion US Term Note

  
	
  Exhibit 2.3(d)

  	
  -

  	
  Form of Conversion European Term Note

  
	
  Exhibit 9.1(a)

  	
  -

  	
  Form of Assignment Agreement

  
	
  Exhibit A-1

  	
  -

  	
  Material Contracts

  
	
  Exhibit B-1

  	
  -

  	
  Application for Standby Letter of Credit

  
	
  Schedule 1.1

  	
  -

  	
  Agent’s Representatives

  
	
  Schedule 2

  	
  -

  	
  European Security Agreements

  
	
  Schedule 3

  	
  -

  	
  European Pledge Agreements

  
	
  Schedule 4

  	
  -

  	
  European Intellectual Property Security Agreements

  
	
  Disclosure Schedule 1.4

  	
  -

  	
  Use of Proceeds

  
	
  Disclosure Schedule 3.1

  	
  -

  	
  Corporate Existence; Compliance with Law

  
	
  Disclosure Schedule 3.2

  	
  -

  	
  Executive Offices, Collateral Locations, FEIN

  
	
  Disclosure Schedule 3.4(a)(i)

  	
  -

  	
  2004 Audited Financials

  
	
  Disclosure Schedule 3.4(a)(ii)

  	
  -

  	
  Unaudited Financial Statements

  
	
  Disclosure Schedule 3.4(b)

  	
  -

  	
  Pro Forma

  
	
  Disclosure Schedule 3.4(c)

  	
  -

  	
  Projections

  
	
  Disclosure Schedule 3.6

  	
  -

  	
  Ownership of Property; Liens

  
	
  Disclosure Schedule 3.7 (d)

  	
  -

  	
  Labor Matters - Agreements

  
	
  Disclosure Schedule 3.7 (g)

  	
  -

  	
  Material Complaints or Charges

  
	
  Disclosure Schedule 3.8

  	
  -

  	
  Ventures, Subsidiaries and Affiliates; Outstanding
  Stock and Indebtedness

  

 

 

	
  Disclosure Schedule 3.11

  	
  -

  	
  Taxes

  
	
  Disclosure Schedule 3.12

  	
  -

  	
  ERISA

  
	
  Disclosure Schedule 3.13

  	
  -

  	
  Litigation

  
	
  Disclosure Schedule 3.15

  	
  -

  	
  Intellectual Property

  
	
  Disclosure Schedule 3.17

  	
  -

  	
  Environmental Matters

  
	
  Disclosure Schedule 3.18

  	
  -

  	
  Insurance

  
	
  Disclosure Schedule 3.19

  	
  -

  	
  Deposit Accounts

  
	
  Disclosure Schedule 3.20

  	
  -

  	
  Government Contracts

  
	
  Disclosure Schedule 3.22

  	
  -

  	
  Material Agreements

  
	
  Disclosure Schedule 3.28(c)

  	
  -

  	
  Acquisition

  
	
  Disclosure Schedule 5.1

  	
  -

  	
  Trade Names

  
	
  Disclosure Schedule 6.2

  	
  -

  	
  Investments; Loans and Advances

  
	
  Disclosure Schedule 6.3

  	
  -

  	
  Indebtedness

  
	
  Disclosure Schedule 6.4(a)

  	
  -

  	
  Transactions with Affiliates

  
	
  Disclosure Schedule 6.4(b)

  	
  -

  	
  Loans to Employees

  
	
  Disclosure Schedule 6.7

  	
  -

  	
  Liens

  
	
  Disclosure Schedule
  6.12

  	
  -

  	
  Sale-Leaseback
  Transactions

  
	
  Disclosure Schedule
  6.20

  	
   

  	
  Business Activities of
  Innovations

  
	
  Disclosure Schedule
  11.19(a)

  	
  -

  	
  Indebtedness of
  Excluded Subsidiaries

  
	
  Disclosure Schedule
  11.19(b)

  	
  -

  	
  Existing Liens of
  Excluded Subsidiaries

  

 

ii

 

	
  1.

  	
  AMOUNT AND TERMS OF
  CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Credit Facilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Prepayments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Interest and
  Applicable Margins

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Intentionally Omitted

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  Intentionally Omitted

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  Cash Management Systems

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  Receipt of Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  Application
  and Allocation of Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  Loan Account and
  Accounting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  Indemnity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  Access

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  Taxes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.16

  	
  Capital
  Adequacy; Increased Costs; Illegality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.17

  	
  Single Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.18

  	
  Limitations
  on Obligations of European Credit Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.19

  	
  Eligible Swap
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Conditions to the Initial
  Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Further Conditions to Each Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Conditions to Conversion of the
  Revolving Loan Commitment on the Conversion Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Corporate Existence; Compliance with Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Executive Offices, Collateral Locations, FEIN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Corporate Power, Authorization, Enforceable
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Financial Statements and Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Material Adverse Effect

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Ownership of Property; Liens

  	
   

  

 

iii

 

	
   

  	
  3.7

  	
  Labor Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8

  	
  Ventures, Subsidiaries and Affiliates; Outstanding
  Stock and Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Government Regulation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.10

  	
  Margin Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.11

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.12

  	
  ERISA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.13

  	
  No Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.14

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.15

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.16

  	
  Full Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.17

  	
  Environmental Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.18

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.19

  	
  Deposit Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.20

  	
  Government Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.21

  	
  Customer and Trade Relations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.22

  	
  [Intentionally Omitted.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.23

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.24

  	
  Acquisition Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.25

  	
  Foreign Assets Control Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.26

  	
  Subordinated Debt

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.27

  	
  [Intentionally Omitted.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  FINANCIAL
  STATEMENTS AND INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reports and Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Communication with Accountants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Maintenance of Existence and Conduct of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Payment of Charges

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Insurance; Damage to or Destruction of Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Supplemental Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Intellectual Property

  	
   

  

 

iv

 

	
   

  	
  5.8

  	
  Environmental Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Landlords’ Agreements, Mortgagee Agreements, Bailee
  Letters and Real Estate Purchases

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10

  	
  ERISA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11

  	
  European Credit Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12

  	
  [Intentionally Omitted.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13

  	
  Post-Closing Covenant.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14

  	
  IMC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15

  	
  Covenants Relating to Foreign Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17

  	
  Restated Financial Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Mergers, Subsidiaries, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Investments; Loans and Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Employee Loans and Affiliate Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Capital Structure and Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Guaranteed Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.7

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8

  	
  Sale of Stock and Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.9

  	
  ERISA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10

  	
  Financial Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Hazardous Materials

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.12

  	
  Sale-Leasebacks

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13

  	
  Cancellation of Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.14

  	
  Restricted Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.15

  	
  Change of Corporate Name or Location; Change of
  Fiscal Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16

  	
  No Impairment of Intercompany Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.17

  	
  No Speculative Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.18

  	
  Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.19

  	
  Changes Relating to Subordinated Debt; Material
  Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.20

  	
  Business Activities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.21

  	
  Collateral In China

  	
   

  

 

v

 

	
  7.

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Survival of Obligations Upon Termination of
  Financing Arrangements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  EVENTS OF
  DEFAULT; RIGHTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Waivers by Credit Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  ASSIGNMENT AND
  PARTICIPATIONS; APPOINTMENT OF AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Assignment and Participations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Appointment of Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Agent’s Reliance, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  GE Capital and Affiliates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  Lender Credit Decision

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Successor Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Setoff and Sharing of Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Advances; Payments; Non-Funding Lenders;
  Information; Actions in Concert

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10

  	
  Agent as Joint Creditor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11

  	
  Compliance with Foreign Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.12

  	
  Eligible Swap Counterparties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  SUCCESSORS AND
  ASSIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Complete Agreement; Modification of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Amendments and Waivers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Fees and Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  No Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.6

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.7

  	
  Conflict of Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.8

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.9

  	
  GOVERNING LAW

  	
   

  

 

vi

 

	
   

  	
  11.10

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.11

  	
  Section Titles

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.12

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.13

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.14

  	
  Press Releases and Related Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.15

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.16

  	
  Advice of Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.17

  	
  Judgment Currency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.18

  	
  Subordination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.19

  	
  Negative Pledge

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.20

  	
  No Strict Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.21

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATION
  OF OBLIGATIONS

  	
   

  

 

vii

 

This
THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as
of June 30, 2005, is by and among INVERNESS MEDICAL INNOVATIONS, INC., a
Delaware corporation (“Innovations”), WAMPOLE LABORATORIES, LLC, a
Delaware limited liability company (“US Borrower”), INVERNESS MEDICAL
(UK) HOLDINGS LIMITED, a company organized under the laws of England and Wales
(“European Borrower”; US Borrower and European Borrower are sometimes collectively
referred to as “Borrowers” and individually as a “Borrower”), the
other Credit Parties signatory hereto, the Lenders signatory hereto from time
to time, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as
administrative agent for Lenders, MERRILL LYNCH CAPITAL, a division of Merrill
Lynch Business Financial Services Inc. (“ML Capital”), as documentation
agent and co-syndication agent, UBS SECURITIES LLC, as co-syndication agent (“UBS
Securities”), and GECC CAPITAL MARKETS GROUP, INC. and ML CAPITAL, as
co-lead arrangers.

 

RECITALS

 

WHEREAS,
pursuant to that certain Second Amended and Restated Credit Agreement, dated as
of September 30, 2003 (as amended, supplemented or otherwise modified from time
to time prior to the date hereof, the “Existing Credit Agreement”), by
and among the Borrowers, the lending institutions party thereto (the “Existing
Lenders”), the Agent, ML Capital, as documentation agent and co-syndication
agent, and UBS Securities, as co-syndication agent, the Existing Lenders have
made available certain financing to the Borrowers upon the terms and conditions
contained therein;

 

WHEREAS,
the Borrowers have requested, among other things, additional financing and
Lenders are willing to provide such financing on the terms and conditions set
forth herein;

 

WHEREAS,
the Borrowers and Existing Lenders have agreed to amend and restate the
Existing Credit Agreement as provided herein; and

 

WHEREAS,
capitalized terms used in this Agreement, including the Recitals hereto, shall
have the meanings ascribed to them in Annex A and, for purposes of
this Agreement and the other Loan Documents, the rules of construction set
forth in Annex A shall govern. 
All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, “Appendices”) hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, shall constitute but a single agreement.  These Recitals shall be construed as part of
the Agreement.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree that the Existing Credit Agreement shall be amended and
restated as follows:

 

 

1.                                      AMOUNT
AND TERMS OF CREDIT

 

1.1                                 Credit Facilities.

 

(a)                                  US
Revolving Credit Facility.

 

(i)            Subject to the terms and conditions
hereof, each US Revolving Lender agrees to make available (and continue
outstanding any US Revolving Credit Advances (as defined in the Existing Credit
Agreement) outstanding pursuant to the terms of the Existing Credit Agreement)
to US Borrower from time to time until the Commitment Termination Date its Pro
Rata Share of advances in Dollars (each, including any such US Revolving Credit
Advances (as defined in the Existing Credit Agreement) outstanding pursuant to
the terms of the Existing Credit Agreement, a “US Revolving Credit Advance”).  The Pro Rata Share of the US Revolving Loan
of any US Revolving Lender shall not at any time exceed its separate US
Revolving Loan Commitment.  The
obligations of each US Revolving Lender hereunder shall be several and not
joint.  Until the Commitment Termination
Date, US Borrower may borrow, repay and reborrow under this Section 1.1(a)(i).  Each US Revolving Credit Advance shall be
made on notice by US Borrower to one of the representatives of Agent identified
in Schedule 1.1 at the address specified therein.  Any such notice must be given no later than
(A) 11:00 a.m. (New York time) on the Business Day of the proposed US
Revolving Credit Advance, in the case of an Index Rate Loan, or (B) 11:00
a.m. (New York time) on the date which is 3 Business Days prior to the proposed
US Revolving Credit Advance, in the case of a LIBOR Loan.  Each such notice (a “Notice of US
Revolving Credit Advance”) must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i), and
shall include the information required in such Exhibit and such other
information as may be reasonably required by Agent.  If US Borrower desires to have the
US Revolving Credit Advances bear interest by reference to a LIBOR Rate, US
Borrower must comply with Section 1.5(e).

 

(ii)           Except as provided in Section 1.12,
US Borrower shall execute and deliver to each US Revolving Lender a note to
evidence the US Revolving Loan Commitment of that US Revolving Lender.  Each note shall be in the principal amount of
the US Revolving Loan Commitment of the applicable US Revolving Lender, substantially
in the form of Exhibit 1.1(a)(ii) (each a “US Revolving Note”
and, collectively, the “US Revolving Notes”).  Each US Revolving Note shall represent the
obligation of the US Borrower to pay the amount of the applicable US Revolving
Lender’s US Revolving Loan Commitment or, if less, such US Revolving Lender’s
Pro Rata Share of the aggregate unpaid principal amount of all US Revolving
Credit Advances to US Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the aggregate US
Revolving Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date.

 

(b)                                 European
Revolving Credit Facility.

 

(i)            Subject to the terms and conditions
hereof, each European Revolving Lender agrees to make available (and continue
outstanding any European Revolving Credit Advances (as defined in the Existing
Credit Agreement)  to European Borrower
from time to time until the Commitment Termination Date its Pro Rata Share of
advances in Dollars (each, including any such European Revolving Credit
Advances (as defined in the Existing Credit Agreement) outstanding pursuant to
the terms of the Existing Credit Agreement, a “European Revolving Credit
Advance”).  The Pro Rata Share of the
European Revolving Loan of any European Revolving Lender shall not at any time
exceed its separate European Revolving Loan

 

2

 

Commitment.  The
obligations of each European Revolving Lender hereunder shall be several and
not joint.  Until the Commitment
Termination Date, European Borrower may borrow, repay and reborrow under this Section 1.1(b)(i).  Each European Revolving Credit Advance shall
be made on notice by European Borrower to one of the representatives of Agent
identified in Schedule 1.1 at the address specified therein.  Any such notice must be given no later than
(A) 11:00 a.m. (New York time) on the Business Day of the proposed
European Revolving Credit Advance, in the case of an Index Rate Loan, or
(B) 11:00 a.m. (New York time) on the date which is 3 Business Days prior
to the proposed European Revolving Credit Advance, in the case of a LIBOR
Loan.  Each such notice (a “Notice of
European Revolving Credit Advance”) must be given in writing (by telecopy
or overnight courier) substantially in the form of Exhibit 1.1(b)(i),
and shall include the information required in such Exhibit and such other
information as may be reasonably required by Agent.  If European Borrower desires to
have the European Revolving Credit Advances bear interest by reference to a
LIBOR Rate, European Borrower must comply with Section 1.5(e).

 

(ii)           Except as provided in Section 1.12,
European Borrower shall execute and deliver to each European Revolving Lender a
note to evidence the European Revolving Loan Commitment of that European
Revolving Lender.  Each note shall be in
the principal amount of the European Revolving Loan Commitment of the
applicable European Revolving Lender, substantially in the form of Exhibit
1.1(b)(ii) (each a “European Revolving Note” and, collectively, the “European
Revolving Notes”).  Each European
Revolving Note shall represent the obligation of the European Borrower to pay
the amount of the applicable European Revolving Lender’s European Revolving Loan
Commitment or, if less, such European Revolving Lender’s Pro Rata Share of the
aggregate unpaid principal amount of all European Revolving Credit Advances to
European Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the aggregate
European Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.

 

(c)                                  US
Term Loan.

 

(i)            Subject to the terms and conditions
hereof, each of the US Term Lenders agrees to make a term loan in Dollars
(collectively, the “US Term Loan”) on the Closing Date to US Borrower in
the amount of such US Term Lender’s US Term Loan Commitment.  The obligations of such US Term Lender
hereunder shall be several and not joint. 
Each such US Term Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(c)(i) (each a “US Term Note”
and collectively the “US Term Notes”), and, except as provided in Section
1.12, the US Borrower shall execute and deliver the US Term Note to the
applicable US Term Lender.  Each US Term
Note shall represent the obligation of the US Borrower to pay the applicable US
Term Lender’s US Term Loan Commitment, together with interest thereon as
prescribed in Section 1.5.

 

(ii)           To the extent outstanding, the US
Borrower shall repay the US Term Loan in eleven (11) consecutive quarterly
installments on the last day of December, March, June and September of each
year, commencing September 30, 2005, in an amount equal to .25% of the US Term
Loan Commitment, as in effect on the Conversion Date after, if

 

3

 

applicable, giving effect to the conversion of the US
Revolving Loan Commitment contemplated by Section 1.1(i).

 

The final installment shall be due on March 31, 2008
and shall be in the amount of the remaining principal balance of the US Term
Loan.

 

(iii)          Notwithstanding Section 1.1(c)(ii),
the aggregate outstanding principal balance of the US Term Loan and all other
non-contingent Obligations shall be due and payable in full in immediately
available funds on the Commitment Termination Date, if not sooner paid in
full.  No payment with respect to the US
Term Loan may be reborrowed.

 

(iv)          Each payment of principal with respect
to the US Term Loan shall be paid to Agent for the ratable benefit of each US
Term Lender making a US Term Loan, ratably in proportion to each such US Term
Lender’s respective US Term Loan Commitment.

 

(d)                                 European
Term Loan.

 

(i)            Subject to the terms and conditions
hereof, each of the European Term Lenders agrees to make a term loan in Dollars
(collectively, the “European Term Loan”) on the Closing Date to European
Borrower in the amount of such European Term Lender’s European Term Loan
Commitment.  The obligations of each
European Term Lender hereunder shall be several and not joint.  Each such European Term Loan shall be
evidenced by a promissory note substantially in the form of Exhibit
1.1(d)(i) (each a “European Term Note” and collectively the “European
Term Notes”), and, except as provided in Section 1.12, the European
Borrower shall execute and deliver the European Term Note to the applicable
European Term Lender.  Each European Term
Note shall represent the obligation of the European Borrower to pay the
applicable European Term Lender’s European Term Loan Commitment, together with
interest thereon as prescribed in Section 1.5.

 

(ii)           To the extent still outstanding,
European Borrower shall repay the European Term Loan in eleven (11) consecutive
quarterly installments on the last day of December, March, June and September
of each year, commencing September 30, 2005, in an amount equal to .25% of the
European Term Loan Commitment, as in effect on the Conversion Date after, if applicable,
giving effect to the conversion of the European Revolving Loan Commitment
contemplated by Section 1.1(i).

 

(iii)          The final installment shall be due on
March 31, 2008 and shall be in the amount of the remaining principal balance of
the European Term Loan.

 

(iv)          Notwithstanding Section 1.1(d)(ii),
the aggregate outstanding principal balance of the European Term Loan and all
other non-contingent Obligations shall be due and payable in full in
immediately available funds on the Commitment Termination Date, if not sooner
paid in full.  No payment with respect to
the European Term Loan may be reborrowed.

 

(v)           Each payment of principal with
respect to the European Term Loan shall be paid to Agent for the ratable
benefit of each European Term Lender making a European

 

4

 

Term Loan, ratably in proportion to each such European
Term Lender’s respective European Term Loan Commitment.

 

(e)                                  US
Swing Line Facility.

 

(i)            Agent shall notify the Swing Line
Lender upon Agent’s receipt of any Notice of US Revolving Credit Advance.  Subject to the terms and conditions hereof,
the Swing Line Lender may, in its discretion, make available from time to time
until the Commitment Termination Date advances of any Index Rate Loan in
Dollars (each, including any such Swing Line Advances (as defined in the
Existing Credit Agreement) outstanding pursuant to the terms of the Existing
Credit Agreement, a “US Swing Line Advance”) in accordance with any such
notice.  The provisions of this Section 1.1(e)(i)
shall not relieve US Revolving Lenders of their obligations to make US
Revolving Credit Advances under Section 1.1(a)(i); provided  that
if the Swing Line Lender makes a US Swing Line Advance pursuant to any such
notice, such US Swing Line Advance shall be in lieu of any US Revolving Credit
Advance that otherwise may be made by US Revolving Lenders pursuant to such
notice.  The aggregate amount of US Swing
Line Advances outstanding shall not exceed at any time the lesser of
(A) the US Swing Line Commitment and (B) the US Maximum Amount less
the outstanding balance of the US Revolving Loan at such time (“US Swing
Line Availability”).  Until the
Commitment Termination Date, US Borrower may from time to time borrow, repay
and reborrow under this Section 1.1(e)(i).  Each US Swing Line Advance shall be made
pursuant to a Notice of US Revolving Credit Advance delivered to Agent by US
Borrower in accordance with Section 1.1(a)(i).  Any such notice must be given no later than
11:00 a.m. (New York time) on the Business Day of the proposed US Swing Line
Advance.  Unless the Swing Line Lender
has received at least one Business Day’s prior written notice from the
Requisite Lenders or the US Requisite Revolving Lenders, instructing it not to
make a US Swing Line Advance, the Swing Line Lender shall, notwithstanding the
failure of any condition precedent set forth in Section 2.2, be entitled
to fund that US Swing Line Advance, and to have each US Revolving Lender make
US Revolving Credit Advances in accordance with Section 1.1(e)(iii)
or purchase participating interests in accordance with Section 1.1(e)(iv).  Notwithstanding any other provision of this
Agreement or the other Loan Documents, the US Swing Line Loan shall constitute
an Index Rate Loan. US Borrower shall repay the aggregate outstanding principal
amount of the US Swing Line Loan upon demand therefore by Agent.

 

(ii)           US Borrower shall execute and deliver
to the Swing Line Lender a promissory note to evidence the US Swing Line
Commitment.  Such note shall be in the
principal amount of the US Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(e)(ii)
(each a “US Swing Line Note” and, collectively, the “US Swing Line
Notes”). The US Swing Line Note shall represent the obligation of US
Borrower to pay the amount of the US Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all US Swing Line Advances made to US
Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the US Swing
Line Loan and all other noncontingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.

 

5

 

(iii)          The Swing Line Lender may, at any time
and from time to time in its sole and absolute discretion, but not less
frequently than weekly, on behalf of US Borrower (and US Borrower hereby
irrevocably authorizes the Swing Line Lender to so act on its behalf), request
each US Revolving Lender (including the Swing Line Lender) to make a US
Revolving Credit Advance to US Borrower (which shall be an Index Rate Loan) in
an amount equal to that US Revolving Lender’s Pro Rata Share of the principal
amount of the US Borrower’s US Swing Line Loan (the “US Refunded Swing Line
Loan”) outstanding on the date such notice is given.  Unless any of the events described in Sections
8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(e)(iv)
shall apply) and regardless of whether the conditions precedent set forth in
this Agreement to the making of a US Revolving Credit Advance are then
satisfied, each US Revolving Lender shall disburse directly to Agent, its Pro
Rata Share of a US Revolving Credit Advance on behalf of the Swing Line Lender
prior to 3:00 p.m. (New York time) in immediately available funds on the
Business Day next succeeding the date that notice is given.  The proceeds of those US Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to
repay the US Refunded Swing Line Loan of the US Borrower.

 

(iv)          If, prior to refunding a US Swing Line
Loan with a US Revolving Credit Advance pursuant to Section 1.1(e)(iii),
one of the events described in Sections 8.1(h) or 8.1(i) has occurred,
then, subject to the provisions of Section 1.1(d)(v) below, each US
Revolving Lender shall, on the date such US Revolving Credit Advance was to
have been made for the benefit of the US Borrower, purchase from the Swing Line
Lender an undivided participation interest in the US Swing Line Loan to US
Borrower in an amount equal to its Pro Rata Share of such US Swing Line
Loan.  Upon request, each US Revolving
Lender shall promptly transfer to the Swing Line Lender, in immediately
available funds, the amount of its participation interest.

 

(v)           Each US Revolving Lender’s obligation
to make US Revolving Credit Advances in accordance with Section 1.1(e)(iii)
and to purchase participation interests in accordance with Section 1.1(e)(iv)
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right that such US Revolving Lender may have against the Swing Line
Lender, US Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of any Default or Event of Default; (C) any
inability of US Borrower to satisfy the conditions precedent to borrowing set
forth in this Agreement at any time; or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing; provided
that no US Revolving Lender shall have any obligation to make any US
Revolving Credit Advances in accordance with Section 1.1(e)(iii) or
to purchase participation interests in accordance with Section 1.1(e)(iv)
in the event that the Swing Line Lender shall have been instructed not to make
a US Swing Line Advance in accordance with Section 1.1(e)(i) prior to
the date of any such US Swing Line Advance. 
If any US Revolving Lender does not make available to Agent or the Swing
Line Lender, as applicable, the amount required pursuant to Sections
1.1(e)(iii) or 1.1(e)(iv), as the case may be, the Swing Line Lender
shall be entitled to recover such amount on demand from such US Revolving
Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the Federal Funds Rate for the first two
Business Days and at the Index Rate thereafter.

 

6

 

(f)                                    European
Swing Line Facility.

 

(i)            Agent shall notify the Swing Line
Lender upon Agent’s receipt of any Notice of European Revolving Credit
Advance.  Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances of any Index
Rate Loan in Dollars (each, including any such Swing Line Advances (as defined
in the Existing Credit Agreement) outstanding pursuant to the terms of the
Existing Credit Agreement, a “European Swing Line Advance”) in
accordance with any such notice.  The
provisions of this Section 1.1(e)(i) shall not relieve European
Revolving Lenders of their obligations to make European Revolving Credit
Advances under Section 1.1(b)(i); provided  that if
the Swing Line Lender makes a European Swing Line Advance pursuant to any such
notice, such European Swing Line Advance shall be in lieu of any European
Revolving Credit Advance that otherwise may be made by European Revolving
Lenders pursuant to such notice.  The
aggregate amount of European Swing Line Advances outstanding shall not exceed
at any time the lesser of (A) the European Swing Line Commitment and
(B) the European Maximum Amount less the outstanding balance of the
European Revolving Loan at such time (“European Swing Line Availability”).  Until the Commitment Termination Date,
European Borrower may from time to time borrow, repay and reborrow under this Section 1.1(f)(i).  Each European Swing Line Advance shall be
made pursuant to a Notice of European Revolving Credit Advance delivered to
Agent by European Borrower in accordance with Section 1.1(b)(i).  Any such notice must be given no later than
11:00 a.m. (New York time) on the Business Day of the proposed European Swing
Line Advance.  Unless the Swing Line
Lender has received at least one Business Day’s prior written notice from the
Requisite Lenders or the European Requisite Revolving Lenders, instructing it
not to make a European Swing Line Advance, the Swing Line Lender shall,
notwithstanding the failure of any condition precedent set forth in Section
2.2, be entitled to fund that European Swing Line Advance, and to have each
European Revolving Lender make European Revolving Credit Advances in accordance
with Section 1.1(f)(iii) or purchase participating interests in
accordance with Section 1.1(f)(iv). 
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the European Swing Line Loan shall constitute an Index Rate Loan.
European Borrower shall repay the aggregate outstanding principal amount of the
European Swing Line Loan upon demand therefore by Agent.

 

(ii)           European Borrower shall execute and
deliver to the Swing Line Lender a promissory note to evidence the European
Swing Line Commitment.  Such note shall
be in the principal amount of the European Swing Line Commitment of the Swing
Line Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(f)(ii) (each a “European Swing Line Note” and, collectively, the
“European Swing Line Notes”). The European Swing Line Note shall
represent the obligation of European Borrower to pay the amount of the European
Swing Line Commitment or, if less, the aggregate unpaid principal amount of all
European Swing Line Advances made to European Borrower together with interest
thereon as prescribed in Section 1.5.  The entire unpaid balance of the European
Swing Line Loan and all other noncontingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.

 

(iii)          The Swing Line Lender may, at any time
and from time to time in its sole and absolute discretion, but not less
frequently than weekly, on behalf of European Borrower (and European Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf),
request each European Revolving Lender (including the Swing Line Lender) to

 

7

 

make a European Revolving Credit Advance to European
Borrower (which shall be an Index Rate Loan) in an amount equal to that
European Revolving Lender’s Pro Rata Share of the principal amount of the
European Borrower’s European Swing Line Loan (the “European Refunded Swing
Line Loan”) outstanding on the date such notice is given.  Unless any of the events described in Sections
8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(f)(iv)
shall apply) and regardless of whether the conditions precedent set forth in
this Agreement to the making of a European Revolving Credit Advance are then
satisfied, each European Revolving Lender shall disburse directly to Agent, its
Pro Rata Share of a European Revolving Credit Advance on behalf of the Swing
Line Lender prior to 3:00 p.m. (New York time) in immediately available funds
on the Business Day next succeeding the date that notice is given.  The proceeds of those European Revolving
Credit Advances shall be immediately paid to the Swing Line Lender and applied
to repay the European Refunded Swing Line Loan of the European Borrower.

 

(iv)          If, prior to refunding a European
Swing Line Loan with a European Revolving Credit Advance pursuant to Section 1.1(f)(iii),
one of the events described in Sections 8.1(h) or 8.1(i) has occurred,
then, subject to the provisions of Section 1.1(f)(v) below, each
European Revolving Lender shall, on the date such European Revolving Credit
Advance was to have been made for the benefit of the European Borrower,
purchase from the Swing Line Lender an undivided participation interest in the
European Swing Line Loan to European Borrower in an amount equal to its Pro
Rata Share of such European Swing Line Loan. 
Upon request, each European Revolving Lender shall promptly transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation interest.

 

(v)           Each European Revolving Lender’s
obligation to make European Revolving Credit Advances in accordance with Section 1.1(f)(iii)
and to purchase participation interests in accordance with Section 1.1(f)(iv)
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right that such European Revolving Lender may have against the Swing
Line Lender, European Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of any Default or Event of Default;
(C) any inability of European Borrower to satisfy the conditions precedent
to borrowing set forth in this Agreement at any time; or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided  that no European Revolving Lender shall
have any obligation to make any European Revolving Credit Advances in accordance
with Section 1.1(f)(iii) or to purchase participation interests in
accordance with Section 1.1(f)(iv) in the event that the Swing Line
Lender shall have been instructed not to make a European Swing Line Advance in
accordance with Section 1.1(f)(i) prior to the date of any such European
Swing Line Advance.  If any European
Revolving Lender does not make available to Agent or the Swing Line Lender, as
applicable, the amount required pursuant to Sections 1.1(f)(iii) or 1.1(f)(iv),
as the case may be, the Swing Line Lender shall be entitled to recover such
amount on demand from such European Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.

 

(g)           Reliance on Notices; Appointment
of Borrower Representative.  Agent
shall be entitled to rely upon, and shall be fully protected in relying upon,
any Notice of US

 

8

 

Revolving Credit Advance, Notice of European Revolving
Credit Advance, Notice of Conversion/Continuation or similar notice believed by
Agent to be genuine.  Agent may assume
that each Person executing and delivering any notice in accordance herewith was
duly authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary.  Each
of US Borrower and European Borrower hereby designates Innovations as its
representative and agent on its behalf for the purposes of giving and receiving
all other notices and consents hereunder or under any of the other Loan
Documents and taking all other actions (including in respect of compliance with
covenants) on behalf of such Borrower under the Loan Documents.  Borrower Representative hereby accepts such
appointment.  Agent and each Lender may
regard any notice or other communication pursuant to any Loan Document from
Borrower Representative as a notice or communication from all Borrowers, and
may give any notice or communication required or permitted to be given to any
Borrower or Borrowers hereunder to Borrower Representative on behalf of such
Borrower or Borrowers.  Each of US
Borrower and European Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made on its
behalf by Borrower Representative shall be deemed for all purposes to have been
made by such Borrower and shall be binding upon and enforceable against such
Borrower to the same extent as if the same had been made directly by such
Borrower.

 

(h)           Loans Under Existing Credit
Agreement.  The Credit Parties
acknowledge and agree that, as of the Closing Date, (i) the outstanding
principal amount of the US Revolving Credit Advances under the Existing Credit
Agreement equals $9,000,000, and that such US Revolving Credit Advances are
continued as US Revolving Credit Advances hereunder, (ii) the outstanding
principal amount of the European Revolving Credit Advances under the Existing
Credit Agreement equals $22,000,000, and that such European Revolving Credit
Advances are continued as European Revolving Credit Advances hereunder and are
deemed to be advanced on the Closing Date; and (iii) no Letters of Credit are
outstanding under the Existing Credit Agreement.  All US Revolving Loan Commitments and
European Revolving Loan Commitments under the Existing Credit Agreement shall
be continued under this Agreement and are as set forth on Annex I
hereto.  Notwithstanding anything set
forth herein to the contrary, in order to effect the continuation of the
outstanding Loans contemplated by the foregoing, the additional amount to be
funded on the Closing Date by each Revolving Lender hereunder in respect of its
Revolving Loan Commitment shall be net of the principal amount of such Lender’s
Revolving Loans outstanding under the Existing Credit Agreement and continued
hereunder.

 

(i)            Conversion of Revolving Loan
Commitment on the Conversion Date. 
If on the Conversion Date, if applicable, (A) GE Capital’s and ML
Capital’s (together with their respective successors’ and assigns’) aggregate
Pro Rata Share of outstanding US Revolving Credit Advances does not exceed
Fifteen Million Dollars ($15,000,000) (the “Minimum US Conversion Amount”),
the US Borrower shall deliver a Notice of US Revolving Credit Advance to Agent
requesting a US Revolving Credit Advance in an amount such that after giving
effect to such requested US Revolving Credit Advance the Minimum US Conversion
Amount has been achieved, or (B) GE Capital’s and ML Capital’s (together with
their respective successors’ and assigns’) aggregate Pro Rata Share of
outstanding European Revolving Credit Advances does not exceed Fifteen Million
Dollars ($15,000,000) (the “Minimum European Conversion Amount”), the
European Borrower shall deliver a Notice of European Revolving Credit Advance
requesting a European Revolving Credit Advance in an amount such that after
giving effect to such

 

9

 

requested European Revolving Credit Advance the Minimum
European Conversion Amount has been achieved. 
On the Conversion Date and provided that the conditions set forth in Section
2.3 hereof have been satisfied, (A) Seven Million Five Hundred Thousand
Dollars of the aggregate US Revolving Loan Commitment held by GE Capital
together with its successors and assigns shall be converted into a US Term Loan
Commitment and, on the Conversion Date, the aggregate US Term Loan Commitment
of GE Capital (together with its successors and assigns, as applicable) shall
be the amount reflected on Annex I hereto under the heading “Commitments
as of the Conversion Date”; (B) Seven Million Five Hundred Thousand Dollars of
the aggregate US Revolving Loan Commitment held by ML Capital together with its
successors and assigns shall be converted into a US Term Loan Commitment and,
on the Conversion Date, the aggregate US Term Loan Commitment of ML Capital
(together with its successors and assigns, as applicable) shall be the amount
reflected on Annex I hereto under the heading “Commitments as of the
Conversion Date”; (C) Seven Million Five Hundred Thousand Dollars of the
aggregate European Revolving Loan Commitment held by GE Capital together with
its successors and assigns shall be converted into a European Term Loan
Commitment and, on the Conversion Date, the aggregate European Term Loan
Commitment of GE Capital (together with its successors and assigns, as
applicable) shall be the amount reflected on Annex I hereto under the
heading “Commitments as of the Conversion Date”; and (D) Seven Million Five
Hundred Thousand Dollars of the aggregate European Revolving Loan Commitment
held by ML Capital together with its successors and assigns shall be converted
into a European Term Loan Commitment and, on the Conversion Date, the aggregate
European Term Loan Commitment of ML Capital (together with its successors and
assigns, as applicable) shall be the amount reflected on Annex I hereto
under the heading “Commitments as of the Conversion Date”.  Immediately upon the conversion of such
Revolving Loan Commitments pursuant to the preceding sentence, the converted
Loans shall bear interest at the rate then applicable to the US Term Loan or
the European Term Loan as provided in Section 1.5(a)(iii) or (iv),
as the case may be, and the aggregate US Revolving Loan Commitment and European
Revolving Loan Commitment shall be permanently reduced to Fifty Million Dollars
($50,000,000).  Within a reasonable time
following the Conversion Date, if any, (i) US Borrower shall execute and
deliver to each of GE Capital and ML Capital and/or their respective assignees
a US Revolving Note reflecting the reduced US Revolving Loan Commitment of each
of GE Capital and ML Capital and/or their respective assignees and (ii)
European Borrower shall execute and deliver to each of GE Capital and ML
Capital and/or their respective assignees a European Revolving Note reflecting
the reduced European Revolving Loan Commitment of each of GE Capital and ML
Capital and/or their respective assignees. 
Within a reasonable period of time following receipt of such replacement
notes, each of GE Capital and ML Capital and/or their respective assignees
shall return the US Revolving Notes previously issued to them to Borrowers.

 

1.2           Letters
of Credit.  Subject
to and in accordance with the terms and conditions contained herein and in Annex B,
Borrowers shall have the right to request, and Revolving Lenders agree to
incur, or purchase participations in, Letter of Credit Obligations.

 

1.3                                 Prepayments.

 

(a)           Voluntary Prepayments; Reductions
in Revolving Loan Commitments. Borrowers may at any time on at least 5 days’
prior written notice by Borrower Representative to Agent (i) without
premium or penalty, voluntarily prepay all or part of the Term Loans, and/or

 

10

 

(ii) without premium or penalty, permanently
reduce the US Revolving Loan Commitment or the European Revolving Loan
Commitment; provided  that (A) any such prepayments or
reductions shall be in a minimum amount of $1,000,000 and equivalent multiples
in excess thereof, (B) the US Revolving Loan Commitment or the European
Revolving Loan Commitment, as applicable, shall not be reduced to an amount
less than $5,000,000 unless the US Revolving Loan Commitment or the European
Revolving Loan Commitment, as applicable, is terminated in its entirety after
payment of the Term Loans in full in cash by the applicable Borrower, and
(C) after giving effect to such reductions, the applicable Borrower shall
comply with Section 1.3(b)(i). 
In addition, US Borrower or European Borrower, as the case may be, may
at any time on at least 10 days’ prior written notice to Agent terminate the US
Revolving Loan Commitment or the European Revolving Loan Commitment, as
applicable; provided  that upon such termination, all Loans and
other Obligations shall be immediately due and payable in full and all Letter
of Credit Obligations shall be cash collateralized or otherwise satisfied in
accordance with Annex B hereto. 
Any voluntary prepayment and any reduction or termination of the US
Revolving Loan Commitment or the European Revolving Loan Commitment must be
accompanied by payment of the Fee required by Sections 1.9(b) and (c),
if any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b).  Upon any
such reduction or termination of the US Revolving Loan Commitment, US Borrower’s
right to request US Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request US Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be, and
there shall be a corresponding pro rata reduction in the L/C Sublimit.  Upon any such reduction or termination of the
European Revolving Loan Commitment, European Borrower’s right to request
European Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request European Swing Line Advances,
shall simultaneously be permanently reduced or terminated, as the case may be,
and there shall be a corresponding pro rata reduction in the L/C Sublimit.  Each notice of partial prepayment shall
designate the Loans or other Obligations to which such prepayment is to be
applied; and provided, further, that any voluntary partial
prepayments of any Term Loan made by or on behalf of any Borrower shall be
applied pro rata to prepay the scheduled installments of such Borrower’s Term
Loan.

 

(b)                                 Mandatory
Prepayments.

 

(i)            If at any time the aggregate
outstanding balances of the US Revolving Loan and the US Swing Line Loan exceeds the US Maximum Amount, US Borrower
shall immediately repay the aggregate outstanding US Revolving Credit Advances
to the extent required to eliminate such excess.  If any such excess remains after repayment in
full of the aggregate outstanding US Revolving Credit Advances, US Borrower
shall provide cash collateral for the Letter of Credit Obligations incurred on
behalf of the US Borrower in the manner set forth in Annex B to the
extent required to eliminate such excess. 
If at any time the aggregate outstanding balances of the European
Revolving Loan and the European Swing Line Loan exceed the European Maximum
Amount, European Borrower shall immediately repay the aggregate outstanding
European Revolving Credit Advances to the extent required to eliminate such
excess.  If any such excess remains after
repayment in full of the aggregate outstanding European Revolving Credit
Advances, European Borrower shall provide cash collateral for the Letter of
Credit Obligations incurred on behalf of the European Borrower in the manner
set forth in Annex B to the extent required to eliminate such
excess.

 

11

 

(ii)           Immediately upon receipt by any US
Credit Party of proceeds of any asset disposition (excluding proceeds of asset
dispositions permitted by Section 6.8(a)) or any sale of Stock of
any Subsidiary of any US Credit Party (other than any issuance or sale of Stock
to any other Credit Party permitted by Section 6.5(b), 6.8(d) or 6.8(e)),
Borrowers shall prepay the Loans in an amount equal to all such proceeds in
excess of the Asset Disposition Threshold Amount, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by such US Credit Party
in connection therewith (in each case, paid to non-Affiliates),
(B) transfer taxes, (C) amounts payable to holders of senior Liens
(to the extent such Liens constitute Permitted Encumbrances hereunder), if any,
and (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith.  Any such
prepayment shall be paid and applied in accordance with Section 1.3(c)(i).

 

(iii)          Immediately upon receipt by any
European Credit Party of proceeds of any asset disposition (excluding proceeds
of asset dispositions permitted by Section 6.8(a)) or any sale of
Stock of any Subsidiary of any European Credit Party (other than any issuance
or sale of Stock to any other Credit Party permitted by Section 6.5(b), 6.8(d)
or 6.8(e)), Borrowers shall prepay the Loans in an amount equal to all
such proceeds in excess of the Asset Disposition Threshold Amount, net of
(A) commissions and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by such
European Credit Party in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders
of senior Liens (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for taxes in accordance
with generally accepted accounting principles in effect in the jurisdiction of
organization of the applicable European Credit Party in connection
therewith.  Any such prepayment shall be
paid and applied in accordance with Section 1.3(c)(ii).

 

(iv)          If any Credit Party issues Stock
(other than any issuance of Stock to any other Credit Party permitted by Section
6.5(b) or in connection with the 2005 Equity Raise), no later than the
Business Day following the date of receipt of the proceeds thereof, Borrowers
shall prepay the Loans in an amount equal to fifty percent (50%) of the cash
proceeds for any such issuance, net of underwriting discounts and commissions
and other reasonable fees, costs and expenses paid to non-Affiliates in
connection therewith.  Any such
prepayment shall be applied in accordance with Section 1.3(c)(iii).  If Innovations consummates the 2005 Equity
Raise, no later than the Business Day following the date of receipt of the
proceeds thereof, Borrowers shall (A) prepay the Term Loans in an amount equal
to 100% of the cash proceeds of such issuance, net of underwriting discounts
and commissions and other reasonable fees, costs and expenses paid to
non-Affiliates in connection therewith and (B) prepay the Revolving Loans in an
amount equal to fifty percent (50%) of the remainder (after giving effect to
clause (A)) of such net cash proceeds. 
Any such prepayment shall be paid and applied in accordance with Section
1.3(c)(iv).

 

(v)           If any Credit Party issues any
Subordinated Debt (other than any refinancing thereof to the extent permitted
by Section 6.3(a)(vi)), no later than the Business Day following the
date of receipt of the cash proceeds thereof, Borrowers shall prepay the Loans
in an amount equal to one hundred percent (100%) of the proceeds of any such
issuance, net of commissions and other reasonable and customary transaction
costs, fees and expenses properly

 

12

 

attributable to such transaction and payable by such
Credit Party in connection therewith (in each case, paid to
non-Affiliates).  Any such prepayment
shall be paid and applied in accordance with Section 1.3(c)(v).

 

(vi)          [Intentionally Omitted.]

 

(vii)         Until the Termination Date, Borrowers
shall prepay the Obligations on the date that is 10 days after the earlier of
(A) the date on which the Credit Parties’ annual audited Financial
Statements for the immediately preceding Fiscal Year, commencing with the
Fiscal Year ending December 31, 2005, are delivered pursuant to Annex E
or (B) the date on which such annual audited Financial Statements were
required to be delivered pursuant to Annex E, in an amount equal to
(1) seventy-five percent (75%) of Excess Cash Flow for the immediately
preceding Fiscal Year if the Total Leverage Ratio for such Fiscal Year is equal
to or greater than 3.25:1.00, and (2) fifty percent (50%) of Excess Cash Flow
for the immediately preceding Fiscal Year if the Total Leverage Ratio for such
Fiscal Year is less than 3.25:1.00.  Any
prepayments paid pursuant to this clause (vii) shall be applied in
accordance with Section 1.3(c)(vii).  Each such prepayment shall be accompanied by
a certificate signed by Borrower Representative’s Chief Financial Officer,
Treasurer or Vice President, Finance, certifying the manner in which Excess
Cash Flow and the resulting prepayment were calculated, which certificate shall
be in form and substance reasonably satisfactory to Agent.

 

(c)                                  Application
of Certain Mandatory Prepayments.

 

(i)            If the 2005 Equity Raise has not yet
occurred or does not occur, any prepayments pursuant to Section 1.3(b)(ii)
above arising from any asset disposition by any US Credit Party and any
prepayments pursuant to Section 5.4(c) arising from any casualty or
condemnation proceeds with respect to property of any US Credit Party shall be
paid and applied as follows: (A) an amount equal to 50% of such proceeds shall
be paid and applied first, by US Borrower to pay interest then due any
payable on the US Term Loan; second, by US Borrower to prepay the
scheduled principal installments of the US Term Loan in inverse order of
maturity until prepaid in full; third, by European Borrower to pay
interest then due and payable on the European Term Loan; fourth, by European
Borrower to prepay the scheduled principal installments of the European Term
Loan in inverse order of maturity until prepaid in full; fifth, , by US
Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law; and
(B) an amount equal to 50% of such proceeds shall be paid and applied first,
by US Borrower to pay interest then due and payable on the US Swing Line Loan; second,
by US Borrower to prepay the principal balance of the US Swing Line Loan until
paid in full; third, by US Borrower to pay interest then due and payable
on US Revolving Credit Advances; fourth, by US Borrower to prepay the
principal balance of the US Revolving Credit Advances until paid in full; fifth,
by US Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; sixth,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; seventh, by European
Borrower to pay interest then due and payable on the European Swing Line Loan; eighth,
by European Borrower to prepay the principal balance of the European Swing Line
Loan until paid in full, ninth, by European Borrower to pay interest
then

 

13

 

due and payable on European Revolving Credit Advances;
tenth, by European Borrower to prepay European Revolving Credit Advances
until paid in full; eleventh, by European Borrower to provide cash
collateral in the manner set forth in Annex B for any Letter of
Credit Obligations incurred on its behalf, until all such Letter of Credit
Obligations have been fully cash collateralized; and any excess shall be
returned to Borrowers or to any other Person entitled thereto under applicable
law.  If the 2005 Equity Raise has
occurred, any prepayments pursuant to Section 1.3(b)(ii) above
arising from any asset disposition by any US Credit Party and any prepayments
pursuant to Section 5.4(c) arising from any casualty or
condemnation proceeds with respect to property of any US Credit Party shall be
paid and applied as follows:  first,
by US Borrower to pay interest then due and payable on the US Swing Line Loan; second,
by US Borrower to prepay the principal balance of the US Swing Line Loan until
paid in full; third, by US Borrower to pay interest then due and payable
on US Revolving Credit Advances; fourth, by US Borrower to prepay the
principal balance of the US Revolving Credit Advances until paid in full; fifth,
by US Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; sixth,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; seventh, by European
Borrower to pay interest then due and payable on the European Swing Line Loan; eighth,
by European Borrower to prepay the principal balance of the European Swing Line
Loan until paid in full, ninth, by European Borrower to pay interest
then due and payable on European Revolving Credit Advances; tenth, by
European Borrower to prepay European Revolving Credit Advances until paid in
full; eleventh, by European Borrower to provide cash collateral in the
manner set forth in Annex B for any Letter of Credit Obligations
incurred on its behalf, until all such Letter of Credit Obligations have been
fully cash collateralized; and any excess shall be returned to Borrowers or to
any other Person entitled thereto under applicable law.  If, when and to the extent Innovations and/or
any of its Subsidiaries is required to use the proceeds of Asset Sales (as such
term is defined in the Indenture) to repay the Revolving Loans and permanently
reduce the availability of the Revolving Loan Commitments, the European
Revolving Loan Commitment shall be so reduced to the extent the proceeds of
such Asset Sale were applied to the European Revolving Loan and the US
Revolving Loan Commitment shall be so reduced to the extent the proceeds of such
Asset Sale were applied to the US Revolving Loan.  Otherwise, none of the US Revolving Loan
Commitment or the European Revolving Loan Commitment shall be permanently
reduced by the amount of any such prepayment.

 

(ii)           If the 2005 Equity Raise has not yet
occurred or does not occur, any prepayments pursuant to Section 1.3(b)(iii)
above arising from any asset disposition by any European Credit Party and any
prepayments pursuant to Section 5.4(c) arising from any casualty or
condemnation proceeds with respect to property of any European Credit Party
shall be paid and applied as follows: (A) an amount equal to 50% of such
proceeds shall be paid and applied first, by European Borrower to pay
interest then due and payable on the European Term Loan; second, by European
Borrower to prepay the scheduled principal installments of the European Term
Loan in inverse order of maturity until prepaid in full; third, by US
Borrower to pay any interest then due and payable on the US Term Loan; fourth,
by US Borrower to prepay the scheduled principal installments of the US Term
Loan in inverse order of maturity until prepaid in full; fifth, by US
Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law; and
(B) an amount equal to 50% of

 

14

 

such proceeds shall be paid and applied first,
by European Borrower to pay interest then due and payable on the European Swing
Line Loan; second, by European Borrower to prepay the principal balance
of the European Swing Line Loan until paid in full; third, by European
Borrower to pay interest then due and payable on European Revolving Credit
Advances; fourth, by European Borrower to prepay the principal balance
of the European Revolving Credit Advances until paid in full; fifth, by
European Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf until all such
Letter of Credit Obligations have been fully cash collateralized; sixth,
by US Borrower to pay interest then due and payable on the US Swing Line Loan; seventh,
by US Borrower to prepay the principal balance of the Swing Line Loan until
paid in full; eighth, by US Borrower to pay interest then due and
payable on US Revolving Credit Advances; ninth, by US Borrower to prepay
the principal balance of the US Revolving Credit Advances until paid in full; tenth,
by US Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; eleventh,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law.  If the 2005 Equity Raise has occurred, any prepayments
pursuant to Section 1.3(b)(iii) above arising from any asset
disposition by any European Credit Party and any prepayments pursuant to Section 5.4(c)
arising from any casualty or condemnation proceeds with respect to property of
any European Credit Party shall be paid and applied as follows: first,
by European Borrower to pay interest then due and payable on the European Swing
Line Loan; second, by European Borrower to prepay the principal balance
of the European Swing Line Loan until paid in full; third, by European
Borrower to pay interest then due and payable on European Revolving Credit
Advances; fourth, by European Borrower to prepay the principal balance
of the European Revolving Credit Advances until paid in full; fifth, by
European Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf until all such
Letter of Credit Obligations have been fully cash collateralized, sixth;
by US Borrower to pay interest then due and payable on the US Swing Line Loan; seventh,
by US Borrower to prepay the principal balance of the Swing Line Loan until
paid in full; eighth, by US Borrower to pay interest then due and
payable on US Revolving Credit Advances; ninth, by US Borrower to prepay
the principal balance of the US Revolving Credit Advances until paid in full; tenth,
by US Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; eleventh,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law. None
of the European Revolving Loan Commitments or US Revolving Loan Commitments
shall be permanently reduced by the amount of any such prepayments except as
otherwise provided in the last sentence of clause (i).

 

(iii)          Any prepayments pursuant to Section
1.3(b)(iv) above (other than as a result of the 2005 Equity Raise) shall be
paid and applied as follows: first, by US Borrower to pay interest then
due and payable on the US Term Loan; second, by US Borrower to prepay the
scheduled principal installments of the US Term Loan in inverse order of
maturity until prepaid in full; third, by European Borrower to pay any
interest then due and payable on the European Term Loan; fourth, by
European Borrower to prepay the scheduled principal

 

15

 

installments of the European Term Loan in inverse
order of maturity until prepaid in full; fifth, by US Borrower to pay
interest then due and payable on the US Swing Line Loan; sixth, by US
Borrower to prepay the principal balance of the US Swing Line Loan until paid
in full; seventh, by US Borrower to pay interest then due and payable on
US Revolving Credit Advances; eighth, by US Borrower to prepay the
principal balance of the US Revolving Credit Advances until paid in full; ninth,
by US Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; tenth,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; eleventh, by European
Borrower to pay interest then due and payable on the European Swing Line Loan; twelfth,
by European Borrower to prepay the principal balance of the European Swing Line
Loan until paid in full, thirteenth, by European Borrower to pay
interest then due and payable on European Revolving Credit Advances; fourteenth,
by European Borrower to prepay European Revolving Credit Advances until paid in
full; fifteenth, by European Borrower to provide cash collateral in the
manner set forth in Annex B for any Letter of Credit Obligations
incurred on its behalf, until all such Letter of Credit Obligations have been
fully cash collateralized; and any excess shall be returned to Borrowers or to
any other Person entitled thereto under applicable law.  None of the US Revolving Loan Commitments or
the European Revolving Loan Commitments shall be permanently reduced by the amount
of any such prepayments.

 

(iv)          Any prepayments pursuant to Section
1.3(b)(iv) resulting from the 2005 Equity Raise shall be paid and applied
as follows: (A) an amount equal to 100% of the net cash proceeds described in Section
1.3(b)(iv) with respect thereto shall be paid and applied first, by
US Borrower to pay interest then due and payable on the US Term Loan; second,
by US Borrower to prepay the outstanding principal amount of the US Term Loan
until prepaid in full; third, by European Borrower to pay any interest
then due and payable on the European Term Loan; fourth, by European
Borrower to prepay the outstanding principal amount of the European Term Loan
until prepaid in full; and (B) any excess of the amount described in clause (A)
above remaining after the prepayment contemplated in clause (A) above shall be
paid and applied as follows: an amount equal to 50% of such excess amount shall
be paid and applied first, by US Borrower to pay interest then due and
payable on the US Swing Line Loan; second, by US Borrower to prepay the
principal balance of the US Swing Line Loan until paid in full; third,
by US Borrower to pay interest then due and payable on US Revolving Credit
Advances; fourth, by US Borrower to prepay the principal balance of the
US Revolving Credit Advances until paid in full; fifth, by US Borrower
to provide cash collateral in the manner set forth in Annex B for
any Letter of Credit Obligations incurred on its behalf, until all such Letter
of Credit Obligations have been fully cash collateralized; sixth, by US
Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; seventh, by European
Borrower to pay interest then due and payable on the European Swing Line Loan; eighth,
by European Borrower to prepay the principal balance of the European Swing Line
Loan until paid in full; ninth, by European Borrower to pay interest
then due and payable on European Revolving Credit Advances; tenth, by
European Borrower to prepay European Revolving Credit Advances until paid in
full; eleventh, by European Borrower to provide cash collateral in the
manner set forth in Annex B for any Letter of Credit Obligations
incurred on its behalf, until all such Letter of Credit Obligations have been
fully cash collateralized; and any excess shall be returned to Borrowers or to
any other Person entitled thereto under applicable law.  None of the

 

16

 

US Revolving Loan Commitments or the European
Revolving Loan Commitments shall be permanently reduced by the amount of any
such prepayments.

 

(v)           Any prepayments pursuant to Section
1.3(b)(v) above shall be paid and applied as follows: first, by US
Borrower to pay interest then due any payable on the US Term Loan; second,
by US Borrower to prepay the scheduled principal installments of the US Term
Loan in inverse order of maturity until prepaid in full; third, by
European Borrower to pay interest then due and payable on the European Term
Loan; fourth,  by European Borrower
to prepay the scheduled principal installments of the European Term Loan in
inverse order of maturity until prepaid in full; fifth, by US Borrower
to pay interest then due and payable on the US Swing Line Loan; sixth,
by US Borrower to prepay the principal balance of the US Swing Line Loan until
paid in full; seventh, by US Borrower to pay interest then due and
payable on US Revolving Credit Advances; eighth, by US Borrower to
prepay the principal balance of the US Revolving Credit Advances until paid in
full; ninth, by US Borrower to provide cash collateral in the manner set
forth in Annex B for any Letter of Credit Obligations incurred on
its behalf, until all such Letter of Credit Obligations have been fully cash
collateralized; tenth, by US Borrower in respect of any Eligible Swap
Obligations to the extent such Eligible Swap Obligations are due and payable; eleventh,
by European Borrower to pay interest then due and payable on the European Swing
Line Loan; twelfth, by European Borrower to prepay the principal balance
of the European Swing Line Loan until paid in full, thirteenth, by
European Borrower to pay interest then due and payable on European Revolving
Credit Advances; fourteenth, by European Borrower to prepay European
Revolving Credit Advances until paid in full; fifteenth, by European
Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; and any
excess shall be returned to Borrowers or to any other Person entitled thereto
under applicable law.  None of the US
Revolving Loan Commitments or the European Revolving Loan Commitments shall be
permanently reduced by the amount of any such prepayments.

 

(vi)          [Intentionally Omitted.]

 

(vii)         Any prepayments pursuant to Sections
1.3(b)(vii) above shall be paid and applied as follows: first, by US
Borrower to pay interest then due and payable on the US Term Loan; second,
by US Borrower to prepay the scheduled principal installments of the US Term
Loan pro rata until prepaid in full; third, by European Borrower to pay
interest then due and payable on the European Term Loan; fourth, by
European Borrower to prepay the scheduled principal installments of the
European Term Loan pro rata until prepaid in full; fifth, by US Borrower
to pay interest then due and payable on the US Swing Line Loan; sixth,
by US Borrower to prepay the principal balance of the Swing Line Loan until
paid in full; seventh, by US Borrower to pay interest then due and
payable on US Revolving Credit Advances; eighth, by US Borrower to
prepay the principal balance of the US Revolving Credit Advances until paid in
full; ninth, by US Borrower to provide cash collateral in the manner set
forth in Annex B for any Letter of Credit Obligations incurred on
its behalf, until all such Letter of Credit Obligations have been fully cash
collateralized; tenth, by European Borrower to pay interest then due and
payable on the European Swing Line Loan; eleventh, by European Borrower
to prepay the principal balance of the European Swing Line Loan until paid in
full; twelfth, by European Borrower to pay interest then due and payable
on European Revolving Credit Advances;

 

17

 

thirteenth, by European Borrower to
prepay European Revolving Credit Advances until paid in full; fourteenth,
by European Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; fifteenth,
by US Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law.

 

(viii)        Any prepayments required in this Section
1.3(c) shall be applied first to the repayment of Index Rate Loans of the
type of Loan required to be prepaid and then to LIBOR Rate Loans.  In the event any LIBOR Rate Loans are
required to be prepaid pursuant to this Section 1.3(c), payments may be
made to a cash collateral account held by Agent and applied to the Loans at the
end of the applicable LIBOR Period. 
Loans repaid with proceeds held in the cash collateral account shall not
be deemed repaid until such amounts are actually applied to the payment of the
Loans.

 

(d)           No Implied Consent.  Nothing in this Section 1.3 shall
be construed to constitute Agent’s or any Lender’s consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.

 

1.4           Use
of Proceeds.  Borrowers shall utilize the proceeds of the
Term Loans, the Revolving Loans and the Swing Line Advances solely for the
Acquisition, Permitted Acquisitions, other acquisitions consented to by
Requisite Lenders pursuant to Section 6.1, and for the financing of
Borrowers’ ordinary working capital and general corporate needs.  Disclosure Schedule (1.4)
contains a description of Borrowers’ sources and uses of funds as of the
Closing Date, including Loans and Letter of Credit Obligations to be made or
incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.

 

1.5                                 Interest and
Applicable Margins.

 

(a)           Borrowers shall pay interest to
Agent, for the ratable benefit of Lenders in accordance with the various Loans
being made by each Lender, in arrears on each applicable Interest Payment Date,
at the following rates:  (i) with
respect to the US Revolving Credit Advances, the Index Rate plus the
Applicable US Revolver Index Margin per annum or, at the election of US
Borrower, the applicable LIBOR Rate plus the Applicable US Revolver
LIBOR Margin per annum, based on the aggregate US Revolving Credit Advances
outstanding from time to time; (ii) with respect to the European Revolving
Credit Advances, the Index Rate plus the Applicable European Revolver
Index Margin per annum or, at the election of European Borrower, the applicable
LIBOR Rate plus the Applicable European Revolver LIBOR Margin per annum,
based on the aggregate European Revolving Credit Advances outstanding from time
to time; (iii) with respect to the US Term Loan, the Index Rate plus
2.25% per annum or, at the election of US Borrower, the applicable LIBOR Rate plus
3.50%; (iv) with respect to the European Term Loan, the Index Rate plus
2.25% per annum or, at the election of European Borrower, the applicable LIBOR
Rate plus 3.50%; (v) with respect to the US Swing Line Loan, the
Index Rate plus the Applicable US Revolver Index Margin per annum; and
(vi) with respect

 

18

 

to the European Swing Line Loan, the Index Rate plus
the Applicable European Revolver Index Margin per annum.

 

The
Applicable Margins will be as follows as of the Closing Date:

 

	
  Applicable US
  Revolver Index Margin

  	
   

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable US
  Revolver LIBOR Margin

  	
   

  	
  3.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable
  European Revolver Index Margin

  	
   

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable
  European Revolver LIBOR Margin

  	
   

  	
  3.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable L/C
  Margin

  	
   

  	
  3.75

  	
  %

  

 

The
Applicable L/C Margin, the Applicable US Revolver Index Margin, the Applicable
US Revolver LIBOR Margin, the Applicable European Revolver Index Margin and the
Applicable European Revolver LIBOR Margin shall be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrowers’ consolidated
financial performance, commencing with the first day of the first calendar
month that occurs more than 5 days after delivery of Borrowers’ quarterly
Financial Statements to Lenders for the Fiscal Quarter ending June 30,
2005.  Adjustments in Applicable Margins
shall be determined by reference to the following grids:

 

	
  If Total Leverage Ratio is:

  	
   

  	
  Level of

  Applicable Margins:

  	
   

  
	
  <
  2.25

  	
   

  	
  Level I

  	
   

  
	
  <
  2.75, but > 2.25

  	
   

  	
  Level II

  	
   

  
	
  < 4.00, but >
  2.75

  	
   

  	
  Level III

  	
   

  
	
  > 4.00

  	
   

  	
  Level IV

  	
   

  

 

	
   

  	
   

  	
  Applicable
  Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level
  III

  	
   

  	
  Level IV

  	
   

  
	
  Applicable US
  Revolver Index Margin

  	
   

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.50

  	
  %

  
	
  Applicable US
  Revolver LIBOR Margin

  	
   

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.75

  	
  %

  
	
  Applicable
  European Revolver Index Margin

  	
   

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.50

  	
  %

  
	
  Applicable
  European Revolver LIBOR Margin

  	
   

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.75

  	
  %

  
	
  Applicable L/C
  Margin

  	
   

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.75

  	
  %

  

 

If any Event of Default
has occurred and is continuing, the Applicable US Revolver Index Margin, the
Applicable US Revolver LIBOR Margin, the Applicable European Revolver Index
Margin and the Applicable European Revolver LIBOR Margin shall be the highest
level set forth

 

19

 

in the foregoing grid
until the next Business Day following the earlier to occur of (A) the date on
which such Event of Default has been waived in accordance with Section 11.2
or (B) the date on which the Chief Executive Officer and Chief Financial
Officer, Treasurer or Vice President, Finance, of Innovations shall have
provided to Agent a certificate, in form and substance satisfactory to Agent,
certifying that such Event of Default has been cured.

 

All
adjustments in the Applicable Margins after June 30, 2005 shall be implemented
quarterly on a prospective basis, for each calendar month commencing at least 5
days after the date of delivery to Lenders of the quarterly unaudited or annual
audited (as applicable) Financial Statements evidencing the need for an
adjustment.  Failure to timely deliver
such Financial Statements shall, in addition to any other remedy provided for
in this Agreement, result in an increase in the Applicable Margins to the
highest level set forth in the foregoing grid, until the first day of the first
calendar month following the delivery of those Financial Statements
demonstrating that such an increase is not required.  If a Default or Event of Default has occurred
and is continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the next Business Day
following the earlier to occur of (A) the date on which such Event of Default
has been waived in accordance with Section 11.2 or (B) the date on which
the Chief Executive Officer and Chief Financial Officer, Treasurer or Vice
President, Finance, of Innovations shall have provided to Agent a certificate,
in form and substance satisfactory to Agent, certifying that such Event of
Default has been cured.

 

(b)           If any payment on any Loan becomes
due and payable on a day other than a Business Day, the maturity thereof will
be extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.

 

(c)           All computations of interest on Index
Rate Loans shall be made by Agent on the basis of a 365-day year, in each case
for the actual number of days occurring in the period for which such interest
and Fees are payable.  All computations
of Fees calculated on a per annum basis and interest on LIBOR Rate Loans shall
be made by Agent on the basis of a 360-day year, in each case for the actual
number of days occurring in the period for which such interest is payable.  The Index Rate is a floating rate determined
for each day.  Each determination by
Agent of an interest rate and Fees hereunder shall be final, binding and
conclusive on Borrowers, absent manifest error.

 

(d)           So long as an Event of Default has
occurred and is continuing under Section 8.1(a), (h) or (i) or so
long as any other Event of Default has occurred and is continuing and at the
election of Agent (or upon the written request of Requisite Lenders) confirmed
by written notice from Agent to Borrower Representative, the interest rates
applicable to the Loans and the Letter of Credit Fees shall be increased by two
percentage points (2%) per annum above the rates of interest or the rate of
such Fees otherwise applicable hereunder (“Default Rate”), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Event of Default until that Event of
Default is cured or waived and shall be payable upon demand.

 

20

 

(e)           So long as no Default or Event of
Default shall have occurred and be continuing, the applicable Borrower shall
have the option to (i) request that any Revolving Credit Advance be made
as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than any US Swing Line Loan or European Swing Line Loan) from
Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index
Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.13(b)
if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any Loan (other
than any US Swing Line Loan or European Swing Line Loan) as a LIBOR Loan upon
the expiration of the applicable LIBOR Period and the succeeding LIBOR Period
of that continued Loan shall commence on the first day after the last day of
the LIBOR Period of the Loan to be continued. 
Any Loan or group of Loans having the same proposed LIBOR Period to be
made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of such
amount.  Any such election must be made
by 11:00 a.m. (New York time) on the 3rd Business Day prior to (1) the
date of any proposed Revolving Credit Advance which is to bear interest at the
LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR
Loans to be continued as such, or (3) the date on which the applicable
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by such Borrower in such election.  If no election is received with respect to a
LIBOR Loan by 11:00 a.m. (New York time) on the 3rd Business Day prior to the
end of the LIBOR Period with respect thereto (or if a Default or an Event of
Default has occurred and is continuing), that LIBOR Loan shall be converted to
an Index Rate Loan at the end of its LIBOR Period.  The applicable Borrower must make such
election by notice to Agent in writing, by telecopy or overnight courier.  In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice
of Conversion/Continuation”) in the form of Exhibit 1.5(e).

 

(f)            Notwithstanding anything to the
contrary set forth in this Section 1.5, if a court of competent
jurisdiction determines in a final order that the rate of interest payable
hereunder exceeds the highest rate of interest permissible under law (the “Maximum
Lawful Rate”), then so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that if at any time thereafter the rate
of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers
shall continue to pay interest hereunder at the Maximum Lawful Rate until such
time as the total interest received by Agent, on behalf of Lenders, is equal to
the total interest that would have been received had the interest rate payable
hereunder been (but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this Agreement.
Thereafter, interest hereunder shall be paid at the rate(s) of interest and in
the manner provided in Sections 1.5(a) through (e), unless and until the
rate of interest again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply.  In no event
shall the total interest received by any Lender pursuant to the terms hereof
exceed the amount that such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate.  If the Maximum Lawful Rate
is calculated pursuant to this paragraph, such interest shall be calculated at
a daily rate equal to the Maximum Lawful Rate divided by the number of days in
the year in which such calculation is made. 
If, notwithstanding the provisions of this Section 1.5(f), a
court of competent jurisdiction shall finally determine that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall,
to the extent permitted by applicable law, promptly apply such excess

 

21

 

in the order specified in Section 1.11 and
thereafter shall refund any excess to Borrowers or as a court of competent
jurisdiction may otherwise order.

 

1.6                                 Intentionally
Omitted.

 

1.7                                 Intentionally
Omitted.

 

1.8                                 Cash Management
Systems.  The Credit Parties
have established, and will maintain until the Termination Date, the cash
management systems described in Annex C (the “Cash Management
Systems”).

 

1.9                                 Fees.

 

(a)           Borrowers or Innovations, as
applicable, shall pay to GE Capital the Fees specified in the GE Capital Fee
Letter and the Closing Date Fee Letter in the amounts, and at the times,
specified for payment therein.

 

(b)           As additional compensation for the US
Revolving Lenders, US Borrower shall pay to Agent, for the ratable benefit of
such US Revolving Lenders, in arrears, on the first Business Day of each month
prior to the Commitment Termination Date and on the Commitment Termination
Date, a Fee calculated on the average daily Unutilized US Amount for such month
at the rate per annum set forth in the table below:

 

	
  If Unutilized US Amount is:

  	
   

  	
  Fee:

  
	
  > 50% of the US
  Maximum Amount

  	
   

  	
  0.50% of the Unutilized
  Amount

  
	
  <
  50% of the US Maximum Amount

  	
   

  	
  0.375% of the
  Unutilized Amount

  

 

(c)           As additional compensation for the
European Revolving Lenders, European Borrower shall pay to Agent, for the
ratable benefit of such European Revolving Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a Fee calculated on the average daily Unutilized
European Amount for such month at the rate per annum set forth in the table
below:

 

	
  If Unutilized European Amount
  is:

  	
   

  	
  Fee:

  
	
  > 50% of the
  European Maximum Amount

  	
   

  	
  0.50% of the Unutilized
  Amount

  
	
  <
  50% of the European Maximum Amount

  	
   

  	
  0.375% of the
  Unutilized Amount

  

 

(d)           The applicable Borrower shall pay to
Agent, for the ratable benefit of Revolving Lenders, the Letter of Credit Fee
as provided in Annex B.

 

1.10         Receipt
of Payments. 
Borrowers shall make each payment of principal, interest, Fees or other
amounts due under this Agreement or any of the other Loan Documents not later
than 2:00 p.m. (New York time) on the day when due in immediately available
funds in Dollars to the Collection Account without setoff, counterclaim or
deduction of any kind.  For purposes of
computing interest and Fees as of any date, all payments shall be deemed
received

 

22

 

on the Business Day on which immediately available
funds therefor are received in the Collection Account prior to 2:00 p.m. New
York time.  Payments received after 2:00
p.m. New York time on any Business Day or on a day that is not a Business Day
shall be deemed to have been received on the following Business Day.

 

1.11                           Application and
Allocation of Payments.

 

(a)           So long as no Default or Event of
Default has occurred and is continuing, (i) payments matching specific
scheduled payments then due shall be applied to those scheduled payments;
(ii) voluntary prepayments shall be applied as determined by the
applicable Borrower and directed by Borrower Representative, subject to the
provisions of Section 1.3(a); and (iii) mandatory prepayments
shall be applied as set forth in Sections 1.3(b) and (c).  All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to any other payment, and
as to all payments made when a Default or Event of Default has occurred and is
continuing or following the Commitment Termination Date, each Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of such Borrower, and each Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply any and
all such payments against the Obligations of Borrowers as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or
any other books and records.  The
Borrowers acknowledge and agree that, in the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order:  (1) to Fees and Agent’s expenses
reimbursable hereunder; (2) to interest on the US Swing Line Loan and
European Swing Line Loan, ratably in proportion to the interest accrued as to
each such Loan; (3) to principal payments on the US Swing Line Loan and
European Swing Line Loan; (4) to interest on the other Loans, ratably in
proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans; (6) to provide cash collateral for Letter of
Credit Obligations in the manner described in Annex B; (7) to
any Eligible Swap Obligations; and (8) to all other Obligations, including
expenses of Lenders to the extent reimbursable under Section 11.3.

 

(b)           Agent is authorized to, and at its
sole election may, charge to the applicable US Revolving Loan balance on behalf
of US Borrower and cause to be paid all Fees, expenses, Charges, costs
(including insurance premiums in accordance with Section 5.4(a))
and interest and principal, other than principal of such US Revolving Loan,
owing by US Borrower under this Agreement or any of the other Loan Documents if
and to the extent US Borrower fails to pay promptly any such amounts as and
when due.  Agent shall use reasonable
efforts to provide Borrower Representative with notice prior to charging such
amounts but failure to do so shall not effect its rights to so charge.  At Agent’s option and to the extent permitted
by law, any charges so made shall constitute part of the applicable US
Revolving Loan hereunder.

 

(c)           Agent is authorized to, and at its
sole election may, charge to the applicable European Revolving Loan balance on
behalf of European Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.4(a))
and interest and principal, other than principal of such European Revolving
Loan, owing by European Borrower under this Agreement or any of the other Loan
Documents if and to the extent European Borrower fails to pay promptly any such
amounts as and when due.

 

23

 

Agent shall use reasonable efforts to provide Borrower
Representative with notice prior to charging such amounts but failure to do so
shall not effect its rights to so charge. 
At Agent’s option and to the extent permitted by law, any charges so
made shall constitute part of the applicable European Revolving Loan hereunder.

 

(d)           Upon the exercise of any rights and
remedies by Agent under any of the Loan Documents with respect to Collateral
pledged by any US Credit Party to secure the Obligations of the US Credit
Parties after an Event of Default shall have occurred and be continuing, any
and all Proceeds received by Agent pursuant to any of the Loan Documents with
respect to such Collateral shall be applied and distributed by Agent in the
following order:  (i) to Fees and
expenses of the Agent reimbursable hereunder that have been allocated to the US
Credit Parties as determined by Agent; (ii) to interest on the US Swing Line
Loan; (iii) to principal of the US Swing Line Loan; (iv) to interest on the US
Revolving Loan and the US Term Loan ratably in proportion to interest accrued
thereon; (vi) to principal of the US Revolving Loan and the US Term Loan
ratably in proportion to the outstanding principal amounts thereof;
(vii) to all other Obligations of the US Credit Parties to the Lenders to
the extent reimbursable under Section 11.3; (v) to the
Eligible Swap Obligations; (vi) to interest on the European Swing Line Loan;
(vii) to principal of the European Swing Line Loan; (viii) to interest on
the European Revolving Loan and the European Term Loan ratably in proportion to
interest accrued thereon; (ix) to principal of the European Revolving Loan
and the European Term Loan ratably in proportion to the outstanding principal
amounts thereof; (x) to all other Obligations of the European Credit
Parties to the Lenders to the extent reimbursable under Section 11.3;
and (xi) to the US Borrower or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.

 

(e)           Upon the exercise of any rights and
remedies by Agent under any of the Loan Documents with respect to Collateral
pledged by any European Credit Party to secure the Obligations of the European
Credit Parties after an Event of Default shall have occurred and be continuing,
any and all Proceeds received by Agent pursuant to any of the Loan Documents
with respect to such Collateral shall be applied and distributed by Agent in
the following order:  (i) to Fees
and expenses of the Agent reimbursable hereunder that have been allocated to
the European Credit Parties as determined by Agent; (ii) to interest on
the European Swing Line Loan; (iii) to principal of the European Swing Line
Loan; (iv) to interest on the European Revolving Loan and the European Term
Loan, ratably in proportion to the accrued interest thereon; (v) to
principal payments on the European Revolving Loan and the European Term Loan,
ratably in proportion to the outstanding amounts thereof; (vi) to all
other Obligations of the European Lenders to the extent reimbursable under Section 11.3;
(vii) as contemplated by Section 5.11  to the extent such European Credit Party has
guaranteed or secured the payment of the US Swing Line Loan, the US Revolving
Loan and the US Term Loan, (w) to interest on the US Swing Line Loan; (x) to
principal of the US Swing Line Loan; (y) to interest on the US Revolving Loan
and the US Term Loan, ratably in proportion to the accrued interest thereon,
(z) then to the principal of the US Revolving Loan and the US Term Loan,
ratably in proportion to the outstanding amounts thereof, (viii) as
contemplated by Section 5.11 to the extent such European Credit Party
has guaranteed or secured the payment of the US Swing Line Loan, the US
Revolving Loan and the US Term Loan, then to all other obligations of the US
Credit Parties to the Lenders to the extent reimbursed under Section 11.3;
and (xii) to the European Borrower or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may
direct.

 

24

 

1.12         Loan
Account and Accounting. 
Agent shall maintain a loan account (the “Loan Account”) on its
books to record:  all Advances and the
Term Loans, all payments made by Borrowers, and all other debits and credits as
provided in this Agreement with respect to the Loans or any other
Obligations.  All entries in the Loan
Account shall be made in accordance with Agent’s customary accounting practices
as in effect from time to time. The balance in the Loan Account, as recorded on
Agent’s most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and
Lenders by each Borrower; provided  that any failure to so record
or any error in so recording shall not limit or otherwise affect any Borrower’s
duty to pay the Obligations.  Agent shall
render to Borrower Representative a monthly accounting of transactions with
respect to the Loans setting forth the balance of the Loan Account as to each
Borrower for the immediately preceding month. 
Unless Borrower Representative notifies Agent in writing of any
objection to any such accounting (specifically describing the basis for such
objection), within 30 days after the date thereof, each and every such
accounting shall (absent manifest error) be deemed final, binding and
conclusive on Borrowers in all respects as to all matters reflected
therein.  Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrowers.  Notwithstanding any provision herein contained
to the contrary, any Lender may elect (which election may be revoked) to
dispense with the issuance of Notes to that Lender and may rely on the Loan
Account as evidence of the amount of Obligations from time to time owing to it.

 

1.13                           Indemnity.

 

(a)           Each Credit Party that is a signatory
hereto shall jointly and severally indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person’s respective
officers, directors, employees, attorneys, agents and representatives (each, an
“Indemnified Person”), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys’ fees and disbursements and other costs of investigation
or defense, including those incurred upon any appeal) that may be instituted or
asserted against or incurred by any such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents and the administration of such credit, and in
connection with or arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Loan Documents (collectively, “Indemnified Liabilities”);
provided, that no such Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from that
Indemnified Person’s gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

 

25

 

(b)           To induce Lenders to provide the
LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are
repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any provision of this Agreement or
any other Loan Document or occurs as a result of acceleration, by operation of
law or otherwise); (ii) any Borrower shall default in payment when due of
the principal amount of or interest on any LIBOR Loan; (iii) any Borrower
shall refuse to accept any borrowing of, or shall request a termination of, any
borrowing of, conversion into or continuation of, LIBOR Loans after such
Borrower has given notice requesting the same in accordance herewith; or
(iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after
such Borrower has given a notice thereof in accordance herewith, the applicable
Borrower shall indemnify and hold harmless each Lender from and against all
losses, costs and expenses resulting from or arising from any of the
foregoing.  Such indemnification shall
include any loss (excluding loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained.  For
the purpose of calculating amounts payable to a Lender under this subsection,
each Lender shall be deemed to have actually funded its relevant LIBOR Loan
through the purchase of a deposit bearing interest at the LIBOR Rate in an
amount equal to the amount of that LIBOR Loan and having a maturity comparable
to the relevant LIBOR Period; provided  that each Lender may fund
each of its LIBOR Loans in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection.  This covenant shall survive the
termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.  As promptly
as practicable under the circumstances, each Lender shall provide Borrower
Representative with its written calculation in reasonable detail of all amounts
payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower Representative shall
object in writing within 10 Business Days of receipt thereof, specifying the
basis for such objection in detail.

 

1.14         Access.  Each Credit Party that is a party hereto
shall, during normal business hours, from time to time upon three Business Days’
prior notice by Agent to Borrower Representative (or, if a Default or an Event
of Default shall have occurred and be continuing, upon same-day notice by Agent
to Borrower Representative), as frequently as Agent determines to be
appropriate but in no event more often than twice in any period of twelve (12)
consecutive months unless a Default or Event of Default shall have occurred and
be continuing: (a) provide Agent and any of its officers, employees and
agents access to its properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral; (b) permit Agent,
and any of its officers, employees and agents, to inspect, audit and make
extracts from any Credit Party’s books and records; and (c) permit Agent,
and its officers, employees and agents, to inspect, review, evaluate and make
test verifications and counts of the Accounts, Inventory and other Collateral
of any Credit Party.  If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice.  Furthermore, so
long as any Event of Default has occurred and is continuing, Credit Parties
shall provide Agent and each Lender with access to their suppliers and customers.  Each Credit Party shall make available to
Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably
request.  Each Credit Party shall deliver
any document or instrument necessary for Agent, as it may from time to time
reasonably request, to obtain records from any service bureau

 

26

 

or other Person that maintains records for such Credit
Party, and shall maintain duplicate material records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party. Agent
will give Lenders at least 5 days’ prior written notice of regularly scheduled
audits.  Representatives of other Lenders
may accompany Agent’s representatives on regularly scheduled audits.

 

1.15                           Taxes.

 

(a)           Except as required by law, any and
all payments by each Borrower hereunder or under the Notes shall be made, in
accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes.  If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Notes, (i) the sum payable shall be increased as much as shall be necessary
so that after making all required deductions (including deductions applicable
to additional sums payable under this Section 1.15) Agent or
Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) such Borrower shall make
such deductions, and (iii) such Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with
applicable law.  Within 30 days after the
date of any payment of Taxes, Borrower Representative shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.  Agent and Lenders shall not be obligated to
return or refund any amounts received pursuant to this Section 1.15
except as provided in clause (d) below.

 

(b)           Each Credit Party that is a signatory
hereto shall indemnify and, within 10 days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid on
demand by a Tax authority or pursuant to law, by Agent or such Lender, as
appropriate, and in connection with any payments made by such Credit Party, any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.

 

(c)           Each Lender organized under the laws
of a jurisdiction outside the United States of America (a “Foreign Lender”)
as to which payments to be made under this Agreement or under the Notes are
exempt from United States’ withholding tax under an applicable statute or tax
treaty shall provide to Borrower Representative and Agent a properly completed
and executed IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the IRS or the United States of America
certifying as to such Foreign Lender’s entitlement to such complete exemption
(a “Certificate of Exemption”). 
Any foreign Person that seeks to become a Lender under this Agreement
shall provide a Certificate of Exemption to Borrower Representative and Agent
prior to becoming a Lender hereunder.  No
foreign Person may become a Lender hereunder if such Person fails to deliver a
Certificate of Exemption as to such complete exemption in advance of becoming a
Lender.

 

(d)           In the event that any Lender receives
a refund in respect of Taxes as to which it has been paid additional sums by a
Credit Party pursuant to clause (a) or indemnified by a Credit Party pursuant
to clause (b) and such Lender determines in its good faith judgment that such
refund is attributable to such additional sums or indemnification, then such
Lender shall promptly notify Agent, Administrative Borrower and such Credit
Party (if other than

 

27

 

Administrative Borrower) and shall within 30 Business
Days after delivery of such notification remit to the applicable Credit Party
an amount as such Lender determines to be the proportion of the refunded amount
as will leave it, after such remittance, in no better or worse position that it
would have been if the Taxes had not been imposed and the corresponding
additional sums or indemnification payment not been made.

 

1.16                           Capital Adequacy;
Increased Costs; Illegality.

 

(a)           If any Lender shall have determined
in good faith that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender and thereby
reducing the rate of return on such Lender’s capital as a consequence of its
obligations hereunder, then, to the extent such reduction occurs with respect
to a Lender’s return on an Obligation of any US Credit Party or Parties, US
Borrower shall, and to the extent such reduction occurs with respect to a
Lender’s return on an Obligation of any European Credit Party or Parties,
Borrowers shall from time to time upon demand by such Lender (with a copy of
such demand to Agent) pay to Agent as additional interest, for the account of
such Lender, additional amounts sufficient to compensate such Lender for such
reduction.  A certificate as to the
amount of that reduction and showing the basis of the computation thereof in
reasonable detail submitted by such Lender to Borrower Representative and to
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.

 

(b)           If, due to either (i) the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), in each case adopted after the Closing Date, there shall
be any increase in the cost to any Lender of agreeing to make or making,
funding or maintaining any Loan, then, to the extent such increase in costs
occurs with respect to an Obligation of any US Credit Party or Parties, US
Borrower shall, and to the extent such increase occurs with respect to an
Obligation of any European Credit Party or Parties, Borrowers shall from time
to time, upon demand by such Lender (with a copy of such demand to Agent), pay
to Agent as additional interest, for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost.  A certificate as to the amount of such
increased cost in reasonable detail, submitted to Borrower Representative and
to Agent by such Lender, shall be conclusive and binding on Borrowers for all
purposes, absent manifest error.  Each
Lender agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender’s
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrowers
pursuant to this Section 1.16(b).

 

(c)           Notwithstanding anything to the
contrary contained herein, if the introduction of or any change in any law or
regulation (or any change in the interpretation

 

28

 

thereof) shall make it unlawful, or any central bank
or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender’s good faith opinion, adversely affecting it or its Loans or the
income obtained therefrom, on notice thereof and demand therefor by such Lender
to Borrower Representative through Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or maintain LIBOR
Loans shall terminate and (ii) each Borrower shall forthwith prepay in
full all outstanding LIBOR Loans owing by such Borrower to such Lender,
together with interest accrued thereon, unless Borrower Representative on
behalf of such Borrower, within 5 Business Days after the delivery of such
notice and demand, converts all LIBOR Loans into Index Rate Loans.

 

(d)           Within 15 days after receipt by
Borrower Representative of written notice and demand from any Lender (an “Affected
Lender”) for payment of additional amounts or increased costs as provided
in Sections 1.15(a), 1.16(a) or 1.16(b), Borrower Representative may, at
its option, notify Agent and such Affected Lender of its intention to replace
the Affected Lender.  So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers’ expense, a
replacement Lender (“Replacement Lender”) for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent.  If Borrowers obtain a Replacement Lender
within 90 days following notice of their intention to do so, the Affected
Lender must sell and assign its Loans and Commitments to such Replacement
Lender for an amount equal to the principal balance of all Loans held by the
Affected Lender and all accrued interest and Fees with respect thereto through
the date of such sale; provided, that Borrowers shall have reimbursed
such Affected Lender for the additional amounts or increased costs that it is
entitled to receive under this Agreement through the date of such sale and
assignment.  Notwithstanding the
foregoing, Borrowers shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrowers’ notice of intention
to replace such Affected Lender. 
Furthermore, if Borrowers give a notice of intention to replace and do
not so replace such Affected Lender within 90 days thereafter, Borrowers’
rights under this Section 1.16(d) shall terminate and Borrowers
shall promptly pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).

 

1.17         Single Loan.  The US Term Loan, the US Revolving Loan and
all of the other Obligations of US Borrower arising under this Agreement and
the other Loan Documents shall constitute one general obligation of US Borrower
secured, until the Termination Date, by the Collateral pledged by the US Credit
Parties to secure such Obligations pursuant to the Collateral Documents.  All Loans to European Borrower and all of the
other Obligations of European Borrower arising under this Agreement and the
other Loan Documents shall constitute one general obligation of European
Borrower secured, until the Termination Date, by all of the Collateral pursuant
to the Collateral Documents.

 

1.18                           Limitations on
Obligations of European Credit Parties.

 

(a)           Notwithstanding anything set forth in
this Agreement or any other Loan Documents to the contrary, other than as may
be required by Section 5.11, no European Credit

 

29

 

Party shall at any time be liable in any manner
(whether pursuant to any guaranty or otherwise) for any portion of the
principal of the US Term Loan, the US Revolving Loan or any interest thereon or
Fees or in respect of any Indemnified Liabilities, any Eligible Swap
Obligations or any other Obligations payable with respect thereto (and the US
Credit Parties are solely liable for such Obligations), and no assets of any
European Credit Party shall at any time serve, directly or indirectly, as
security for, and in no event shall more than 65% (or with respect to Swissco,
66%) of the total stock or other equity interests of any European Credit Party
secure, any portion of the principal of the US Term Loan, the US Revolving Loan
or any interest thereon or any Fees or in respect of any Indemnified
Liabilities or any other Obligations payable with respect thereto or any
Eligible Swap Obligations.

 

(b)           The Lenders acknowledge the terms and
conditions of that certain Pledge of Shares, dated June 30, 2005, among
Innovations Inc., Orgenics International Holdings B.V.,  and Agent.

 

(c)           To the extent that any of the German
Credit Parties is liable as a result of its execution or, as the case may be,
accession to this Agreement as Credit Party and Guarantor under this Agreement
and the other Loan Documents for any of the Obligations of an affiliated
company (verbundenes Unternehmen) of another
German Credit Party within the meaning of § 15 of the German Stock
Corporation Act (Aktiengesetz) (other than the
relevant German Credit Party’s subsidiaries), the enforcement of any claims,
indemnities or guarantees under this Agreement and the other relevant Loan
Documents against the relevant German Credit Party shall at all times, until
the full and complete discharge of any and all Obligations of the Credit
Parties, be limited to an amount equal to the net assets of the relevant German
Credit Party, which are calculated as that German Credit Party’s total assets
less its liabilities (including liability reserves (Rückstellungen))
less its registered share capital (Stammkapital)
from time to time (the “Net Assets”).  For the purposes of calculating the Net
Assets the following balance sheet items shall be adjusted as follows:

 

(i)            the amount of any increase of the
registered share capital out of retained earnings (Kapitalerhöhung
aus Gesellschaftsmitteln) after the date of this Agreement that has
been effected without the prior written consent of the Agent shall be deducted
from the registered share capital of the relevant German Credit Party; and

 

(ii)           loans and other contractual
liabilities incurred in violation of the provisions of the Loan Documents shall
be disregarded.

 

(d)           Furthermore, if and to the extent
legally permissible and commercially justifiable in respect of the relevant
German Credit Party’s business, such German Credit Party shall, in a situation
where

 

(i)                                     it
does not have sufficient assets to maintain its capital; and

 

(ii)                                  the
Agent would (but for this clause) be entitled to enforce the security granted
hereunder,

 

30

 

realise any and all of its assets that (i) are shown
in the balance sheet with a book value (Buchwert) which
is significantly lower than the market value of such assets, and (ii) are not
necessary for the that German Credit Party’s business (betriebsnotwendig).

 

(e)           None of the claims, indemnities or
guarantees under this Agreement and the other relevant Loan Documents against the
relevant German Credit Party will be enforced to the extent that the relevant
German Credit Party demonstrates in reasonable detail by way of legal opinion
by a German law firm of national good standing which is reasonably acceptable
to the Agent or a firm of auditors of national good standing reasonably
acceptable to the Agent that there is a substantial likelihood that the
entering into this Agreement or the enforcement of claims, indemnities or
guarantees under this Agreement and the other relevant Loan Documents against the
relevant German Credit Party leads to personal civil or criminal liability of, actual
or former managing directors of the relevant German Credit Party or of the
companies affiliated with it (regardless of the fact that the managing director
acted in good faith) due to a breach of the duty of care owing by the relevant
director, vis-à-vis the respective company (Gebot der Rücksichtnahme
auf die Eigenbelange der Gesellschaft) or of the prohibition of an
intervention effacing the existence of a company (Verbot des
existenzvernichtenden Eingriffs). The Agent shall be obliged to
retransfer proceeds from such enforcement which occurred in violation of the
above.

 

(f)            For the avoidance of doubt, none of
the above restrictions on enforcement set forth in paragraphs (c), (d) and (e)
above shall apply if the enforcement relates to obligations of the relevant
German Credit Party.

 

1.19         Eligible
Swap Obligations. 
Notwithstanding anything to the contrary contained herein or in any
other Loan Document, following the Termination Date, the Eligible Swap
Obligations shall no longer be secured by any Collateral under any Collateral
Document or subject to, or guarantied by, any Guaranty.

 

2.                                      CONDITIONS
PRECEDENT

 

2.1           Conditions to the Initial Loans.  No Lender shall be obligated to enter into
this Agreement, to make any Loan or incur any Letter of Credit Obligations on
the Closing Date, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied or provided for in a manner
satisfactory to Agent, or waived in writing by Agent and Lenders:

 

(a)           Credit Agreement; Loan Documents.  This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, Borrowers, each other Credit
Party, Agent and Requisite Lenders; and Agent shall have received such
documents, instruments, agreements and legal opinions as Agent shall reasonably
request in connection with the transactions contemplated by this Agreement and
the other Loan Documents, including all those listed in the Closing Checklist
attached hereto as Annex D, each in form and substance reasonably
satisfactory to Agent.

 

31

 

(b)                                 Availability.  US Borrower and European
Borrower shall have aggregate US Revolving Borrowing Availability and European
Revolving Borrowing Availability of at least $5,000,000 (on a pro forma basis,
after giving effect to the consummation of the Related Transactions and with
trade payables being paid currently, and expenses and liabilities being paid in
the ordinary course of business and without acceleration of sales and without a
deterioration of working capital).

 

(c)                                  Approvals.  Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an
officer’s certificate in form and substance reasonably satisfactory to Agent
affirming that no such consents or approvals are required.

 

(d)                                 Payment
of Fees. Borrowers and Innovations, as applicable,
shall have (i) paid the Fees required to be paid on the Closing Date in
the respective amounts specified in Section 1.9 (including the Fees
specified in the GE Capital Fee Letter and the Closing Fee Letter), and (ii) reimbursed
Agent for all fees, costs and expenses (including, without limitation,
reasonable legal fees and expenses) of closing presented as of the Closing
Date.

 

(e)                                  Capital
Structure: Other Indebtedness.  The capital structure of each Credit Party
and the terms and conditions of all Indebtedness of each Credit Party after
giving effect to the Acquisition, shall be acceptable to Agent in its sole
discretion.

 

(f)                                    Due Diligence.  Agent and Co-Syndication Agents shall have
completed their business and legal due diligence, including, without
limitation, in respect of the rules, regulations and policies of the FDA, with
respect to the Acquisition with results reasonably satisfactory to Agent and
Co-Syndication Agents.

 

(g)                                 Consummation
of Related Transactions.  Agent shall have received fully executed
copies of the Acquisition Agreement and each of the Related Transactions
Documents requested by Agent, each of which shall be in form and substance
reasonably satisfactory to Agent and its counsel and Lenders.  The Acquisition and the other Related
Transactions shall have been consummated (simultaneously with the Loans made on
the Closing Date) in accordance with the terms of the Acquisition Agreement and
the other Related Transactions Documents.

 

The aggregate
purchase price for the Acquisition shall consist of not more than aggregate
cash consideration equal to $56,500,000 plus certain tax payments plus
aggregate fees and closing costs (including those payable to Agent and Lenders)
payable on the Closing Date which shall not exceed $2,500,000 in the aggregate.

 

(h)                                 LTM EBITDA; Senior Consolidated Leverage Ratio; Total Leverage Ratio. 
The Reporting Credit Parties shall have LTM EBITDA, after giving pro
forma effect to the Acquisition as if the Acquisition had been consummated on
the first day of the period, calculated on a consolidated basis for the
twelve-month period ended March 31, 2005 of not less than
$44,000,000.  The Reporting Credit
Parties shall have a Senior Consolidated Leverage Ratio 

 

32

 

and Total Leverage Ratio, after giving pro forma effect to the
Acquisition as if the Acquisition had occurred on the first day of the period
and the borrowings hereunder on the Closing Date, calculated on a consolidated
basis for the twelve-month period ended March 31, 2005 of not more than
2.30:1.00 and 6.10:1.00, respectively.

 

(i)                                     [Intentionally
Omitted.]

 

(j)                                     Minimum Cash.  Agent shall have received evidence reasonably
satisfactory to it that the Credit Parties, on a consolidated basis, shall have
available cash of at least $10,000,000 in Blocked Accounts or in a bank account
of Stirling Medical Innovations Limited on the Closing Date, after giving pro
forma effect to the Acquisition.

 

2.2                                 Further Conditions to Each Loan.  Except as otherwise expressly provided
herein, no Lender shall be obligated to fund any Advance or incur any Letter of
Credit Obligation, if, as of the date thereof:

 

(a)                                  any
representation or warranty by any Credit Party contained herein or in any other
Loan Document is untrue or incorrect as of such date, except to the extent that
such representation or warranty expressly relates to an earlier date and except
for changes therein expressly permitted or expressly contemplated by this
Agreement, and Agent, Majority Lenders, US Requisite Revolving Lenders (with
respect to any US Revolving Credit Advance or incurring any Letter of Credit
Obligation on behalf of US Borrower), European Requisite Revolving Lenders
(with respect to any European Revolving Credit Advance or incurring any Letter
of Credit Obligation on behalf of European Borrower), Requisite Term Lenders
(with respect to any Term Loan), or Requisite Lenders have determined not to
make such Advance or incur such Letter of Credit Obligation as a result of the
fact that such warranty or representation is untrue or incorrect;

 

(b)                                 any
event or circumstance having a Material Adverse Effect has occurred since December 31,
2004 as determined by the Agent, Majority Lenders, US Requisite Revolving
Lenders, European Requisite Revolving Lenders or Requisite Lenders and Agent,
Majority Lenders, US Requisite Revolving Lenders (with respect to any US
Revolving Credit Advance or incurring any Letter of Credit Obligation on behalf
of US Borrower), European Requisite Revolving Lenders (with respect to any
European Revolving Credit Advance or incurring any Letter of Credit Obligation
on behalf of European Borrower), Requisite Term Lenders (with respect to any
Term Loan), or Requisite Lenders have determined not to make such Advance or
incur such Letter of Credit Obligation as a result of the fact that such event
or circumstance has occurred;

 

(c)                                  any
Default or Event of Default has occurred and is continuing or would result
after giving effect to any Advance (or the incurrence of any Letter of Credit
Obligation), and Agent, Majority Lenders, US Requisite Revolving Lenders (with
respect to any US Revolving Credit Advance or incurring any Letter of Credit
Obligation on behalf of US Borrower), European Requisite Revolving Lenders
(with respect to any European Revolving Credit Advance or incurring any Letter
of Credit Obligation on behalf of European Borrower), Requisite Term Lenders
(with respect to any Term Loan), or Requisite Lenders shall have 

 

33

 

determined not to make such Advance or incur any Letter of Credit Obligation
as a result of that Default or Event of Default; or

 

(d)                                 after
giving effect to any Advance (or the incurrence of any Letter of Credit
Obligations), (i) the outstanding principal amount of the aggregate US
Revolving Loan would exceed the US Maximum Amount, in each case, less the then
outstanding principal amount of the US Swing Line Loan, or (ii) the
outstanding principal amount of the aggregate European Revolving Loan would
exceed the European Maximum Amount, in each case, less the then outstanding
principal amount of the European Swing Line Loan.

 

The request and acceptance by any Borrower
of the proceeds of any Advance or the incurrence of any Letter of Credit
Obligations shall be deemed to constitute, as of the date thereof, (i) a
representation and warranty by Borrowers that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by the Credit Parties of the
granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.

 

2.3                                 Conditions to Conversion of the Revolving Loan Commitment on the Conversion
Date.  GE
Capital and ML Capital (or their respective successors or assigns) shall not be
obligated to convert any portion of its respective Revolving Loan Commitment
into a Term Loan Commitment as provided in Section 1.1(i) hereof
if, as of the date thereof:

 

(a)                                  GE
Capital’s and ML Capital’s (together with their respective successors’ and
assigns’) aggregate Pro Rata Share of outstanding US Revolving Credit Advances
does not equal or exceed the Minimum US Conversion Amount;

 

(b)                                 GE
Capital’s and ML Capital’s (together with their respective successors’ and
assigns’) aggregate Pro Rata Share of outstanding European Revolving Credit
Advances does not equal or exceed the Minimum European Conversion Amount;

 

(c)                                  US
Borrower shall not have executed and delivered to each of GE Capital and ML
Capital (or their respective successors or assigns) an amended and restated note
to evidence the increased US Term Loan Commitment and shall be deemed to
replace the US Term Note referenced in Section 1.1(c)(i).  Each note shall be in the principal amount of
the US Term Loan Commitment allocable to each of GE Capital and ML Capital (or
their respective successors or assigns), as applicable, as adjusted on the
Conversion Date, and substantially in the form of Exhibit 2.3(c) (each
a “Conversion US Term Note” and, collectively, the “Conversion US
Term Notes”); and

 

(d)                                 European
Borrower shall not have executed and delivered to each of GE Capital and ML
Capital (or their respective successors or assigns) an amended and restated
note to evidence the increased European Term Loan Commitment and shall be
deemed to replace the European Term Note referenced in Section 1.1(d)(i).  Each note
shall be in the principal amount of the European Term Loan Commitment allocable
to each of GE Capital and ML Capital (or their respective successors or
assigns), as applicable, as adjusted on the Conversion Date, and substantially
in the form of Exhibit 2.3(d) (each a “Conversion European
Term Note” and, collectively, the “Conversion European Term Notes”).

 

34

 

3.                                      REPRESENTATIONS AND
WARRANTIES

 

To induce Lenders to make the Loans and to incur
Letter of Credit Obligations, the Credit Parties executing this Agreement,
jointly and severally, make the following representations and warranties, after
giving effect to the Acquisition, to Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.

 

3.1                                 Corporate Existence; Compliance with Law.

 

(a)                                  Each
Credit Party (i) is a corporation, limited liability company or limited
partnership duly organized, validly existing and in good standing (or the
foreign equivalent thereof, if any) under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule (3.1);
(ii) is duly qualified to conduct business and is in good standing (or the
foreign equivalent thereof, if any) in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to result in a Material Adverse Effect; (iii) has the
requisite corporate, company or partnership power and corporate, company or
partnership authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease and to conduct its business as now, heretofore and proposed to be
conducted; (iv) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (v) is in compliance
with its charter and bylaws or equivalent constitutive documents or partnership
or operating agreement, as applicable; (vi) subject to specific
representations set forth herein regarding ERISA or a Foreign Government Scheme
or Arrangement, as applicable, Environmental Laws, tax and other laws, is in
compliance with all applicable provisions of law, except where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; and (vii) without limiting any other
provision of this Section 3.1, has received all approvals required
by applicable regulations of the FDA (and the equivalent Governmental Authority
of each country in which any Credit Party operates, conducts business or
distributes products), and each such approval is and remains in full force and
effect, except where the failure to have received or maintained such approvals
could not reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Without
limiting the generality of Section 3.1 or any other representation
or warranty made herein, each Credit Party and each of the facilities operated
by such Credit Party and, to such Credit Party’s knowledge, each of such Credit
Party’s licensed employees and contractors (other than contracted agencies), if
any, in the exercise of their respective duties on behalf of such Credit Party
or any such facilities, is in compliance with all applicable statutes, laws,
ordinances, rules and regulations of any federal, state or local
governmental authority with respect to regulatory matters primarily relating to
patient healthcare and/or patient healthcare information, including without
limitation the HIPAA (collectively, “Healthcare Laws”), except where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect.  Each Credit Party has maintained
in all material respects all records required to be maintained by any
governmental agency or authority or otherwise under the Healthcare Laws and, to
the 

 

35

 

knowledge of such Credit Party, there are no presently existing circumstances
which could reasonably be expected to result in material violations of the
Healthcare Laws.  Each Credit Party and
its Affiliates and, to the knowledge of such Credit Party, the owners of the
facilities and other businesses managed by such Credit Party or its Affiliates,
if any, have such permits, licenses, franchises, certificates and other
approvals or authorizations of governmental or regulatory authorities as are
necessary under applicable law to own their respective properties and to
conduct their respective business (including without limitation such permits as
are required under such Healthcare Laws), except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect.

 

(c)                                  None
of the Credit Parties is a “covered entity” within the meaning of HIPAA and
none of the Credit Parties and/or its business and operations are subject to or covered by the so-called “Administrative
Simplification” provisions of HIPAA.

 

3.2                                 Executive
Offices, Collateral Locations, FEIN.  As of the Closing Date, the current location
of each Credit Party’s chief executive office and the warehouses and premises
at which any Collateral is located are set forth in Disclosure Schedule (3.2),
and none of such locations has changed within the 12 months preceding the
Closing Date.  In addition, Disclosure
Schedule (3.2) lists the federal employer identification number or
other organizational number set forth on its organizational documents of each
Credit Party taxable in the United States of America.

 

3.3                                 Corporate
Power, Authorization, Enforceable Obligations.  The execution, delivery and performance by
each Credit Party of the Loan Documents to which it is a party and the creation
of all Liens provided for therein: (a) are within such Person’s corporate,
company or partnership power; (b) have been duly authorized by all
necessary corporate, limited liability company or limited partnership action; (c) do
not contravene any provision of such Person’s charter, bylaws or equivalent
constitutive documents or partnership or operating agreement, as applicable; (d) do
not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach
or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not result in
the creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Agent, on behalf of itself and Lenders, pursuant
to the Loan Documents; and (g) do not require the consent or approval of
any Governmental Authority or any other Person, except those referred to in Section 2.1(c),
all of which will have been duly obtained, made or complied with prior to the
Closing Date.  Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
fraudulent conveyance or transfer or other laws affecting creditors’ rights
generally or by equitable principles of general applicability.

 

3.4                                 Financial
Statements and Projections.  Except for the Projections, and subject to
the matters disclosed in that the certain current report on Form 8-K filed
by Innovations with the Securities and Exchange Commission under the Exchange
Act on June 29, 2005,

 

36

 

all Financial Statements concerning the
Reporting Credit Parties that are referred to below have been prepared in
accordance with GAAP consistently applied throughout the periods covered
(except as disclosed therein and except, with respect to unaudited Financial
Statements, for the absence of footnotes and normal year-end audit adjustments)
and present fairly in all material respects the financial position of the
Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.

 

(a)                                  Financial
Statements.

 

(i)                                     The audited consolidated balance sheets at December 31, 2004
and the related statements of income and cash flows of Innovations for the
Fiscal Year then ended, certified by BDO Seidman, LLP (the “2004 Audited
Financials”) are attached hereto as Disclosure Schedule (3.4(a)(i)).

 

(ii)                                  The unaudited balance sheet at March 31, 2005 and the related
statement of income and cash flows of Innovations for the Fiscal Quarter then
ended, each of which shall have been reviewed by BDO Seidman, LLP as provided
in Statement on Auditing Standards No. 71 are attached hereto as Disclosure
Schedule (3.4(a)(ii)).

 

(b)                                 Pro
Forma.  The
Pro Forma delivered on the date hereof and attached hereto as Disclosure Schedule (3.4(b))
was prepared by Innovations giving pro forma effect to the Related Transactions
and was based on the unaudited consolidated balance sheet of the Reporting
Credit Parties, dated March 31, 2005, and is in any event subject to the
matters disclosed in that the certain current report on Form 8-K filed by
Innovations with the Securities and Exchange Commission under the Exchange Act
on June 29, 2005.

 

(c)                                  Projections.  The Projections delivered
on the date hereof and attached hereto as Disclosure Schedule (3.4(c))
have been prepared by the Reporting Credit Parties in light of the past
operations of their businesses, but including future payments of known
contingent liabilities stated at the reasonably estimated present values
thereof and reflect projections through December 31, 2008, beginning on January 1,
2005 on a quarter-by-quarter basis for the first year and on a year-by-year
basis thereafter.  Subject to the matters
disclosed in that the certain current report on Form 8-K filed by
Innovations with the Securities and Exchange Commission under the Exchange Act
on June 29, 2005, the Projections are based upon estimates and assumptions
stated therein, all of which the Reporting Credit Parties believe to be
reasonable and fair in light of current conditions and current facts known to
the Reporting Credit Parties and, as of the Closing Date, reflect the Reporting
Credit Parties’ good faith and reasonable estimates of the future financial
performance of the Reporting Credit Parties and of the other information
projected therein for the period set forth therein.  It is understood that the Projections are
estimates only and not a guarantee of actual results.

 

3.5                                 Material
Adverse Effect. 
Between December 31, 2004 and the Closing Date:  (a) no Credit Party has incurred any obligations,
contingent or noncontingent liabilities, liabilities for Charges, long-term
leases or unusual forward or long-term commitments that are not reflected in
the Pro Forma and that, alone or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, (b) no contract, lease or other
agreement or instrument has been entered into by any Credit Party or has become
binding upon any Credit Party’s assets and 

 

37

 

no law or regulation applicable to any
Credit Party has been adopted, in each case, that has had or could reasonably
be expected to have a Material Adverse Effect, and (c) no Credit Party is
in default and, to the best of Borrowers’ knowledge, no third party is in
default under any material contract, lease or other agreement or instrument,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect.  Between December 31,
2004 and the Closing Date, no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.

 

3.6                                 Ownership
of Property; Liens. 
As of the Closing Date, the real estate (“Real Estate”) listed in
Disclosure Schedule (3.6) constitutes all of the real property
owned, leased, subleased, or used by any Credit Party.  Except as set forth in Disclosure Schedule (3.6),
the aggregate value of Collateral located on any property leased or subleased
by any Credit Party does not exceed $500,000. 
Each Credit Party owns good and marketable fee simple title to all of
its owned Real Estate, and valid leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies
of all such leases or a summary of terms thereof reasonably satisfactory to Agent
have been delivered to Agent.  Disclosure
Schedule (3.6) further describes any Real Estate with respect to which
any Credit Party is a lessor, sublessor or assignor as of the Closing
Date.  Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its personal
property and assets.  As of the Closing
Date, none of the properties and assets of any Credit Party are subject to any
Liens other than Permitted Encumbrances, and there are no facts, circumstances
or conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances.  Each Credit Party has received all deeds,
assignments, waivers, consents, nondisturbance and attornment or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Credit Party’s right, title and interest in and to all such Real
Estate and other properties and assets.  Disclosure
Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate.  As of the Closing Date, no portion of any
Credit Party’s Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all
material respects to its original condition or otherwise remedied.  As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.

 

3.7                                 Labor
Matters.  As
of the Closing Date, (a) no strikes or other material labor disputes
against any Credit Party are pending or, to any Credit Party’s knowledge,
threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters; (c) all payments
due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) except
as set forth in Disclosure Schedule (3.7), no Credit Party is a
party to or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party’s
knowledge, threatened by any labor 

 

38

 

union or group of employees; (f) there
are no representation proceedings pending or, to any Credit Party’s knowledge,
threatened with the National Labor Relations Board, and no labor organization
or group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7),
there are no material complaints or charges against any Credit Party pending
or, to the knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.

 

3.8                                 Ventures,
Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.  Except as set forth in Disclosure
Schedule (3.8), as of the Closing Date, no Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. 
As of the Closing Date, all of the issued and outstanding Stock of each
Credit Party (other than Innovations) is owned by each of the Stockholders and
in the amounts set forth in Disclosure Schedule (3.8).  Except as set forth in Disclosure Schedule (3.8),
there are no outstanding rights to purchase, options, warrants or similar
rights or agreements pursuant to which any Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock or other equity securities
or any Stock or other equity securities of its Subsidiaries.  All outstanding Indebtedness and Guaranteed
Indebtedness of each Credit Party as of the Closing Date (except for the
Obligations) is described in Section 6.3 (including Disclosure Schedule (6.3)).

 

3.9                                 Government
Regulation. 
No Credit Party is an “investment company” or an “affiliated person” of,
or “promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act of
1940.  No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder. The making
of the Loans by Lenders to Borrowers, the incurrence of the Letter of Credit
Obligations on behalf of Borrowers, and the application of the proceeds thereof
and repayment thereof and the consummation of the Related Transactions will not
violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.

 

3.10                           Margin
Regulations. 
No Credit Party is engaged, nor will it engage, principally or as one of
its important activities, in the business of extending credit for the purpose
of “purchasing” or “carrying” any “margin stock” as such terms are defined in
Regulation U of the Federal Reserve Board as now and from time to time
hereafter in effect (such securities being referred to herein as “Margin Stock”).  None of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase
or carry any Margin Stock or for any other purpose that might cause any of the
Loans or other extensions of credit under this Agreement to be considered a “purpose
credit” within the meaning of Regulations T, U or X of the Federal Reserve
Board.  No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.

 

39

 

3.11                           Taxes.  All material tax returns,
reports and statements, including information returns, required by any
Governmental Authority (“Tax Returns”) to be filed by any Credit Party
have been filed with the appropriate Governmental Authority; all such Tax
Returns are true, correct and complete in all material respects; and all
material Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any
such fine, penalty, interest, late charge or loss has been paid),  excluding Charges or other amounts being
contested in accordance with Section 5.2(b).  There are no Liens for Charges (other than
for current Charges not yet due and payable) upon the assets of any Credit
Party.  No material adjustment relating
to such Tax Returns has been proposed formally or informally by any
Governmental Authority and, to the knowledge of each Credit Party, no basis
exists for any such adjustment.  Proper
and accurate amounts have been withheld by each Credit Party from its respective
employees, independent contractors, creditors and other third parties for all
periods in material compliance with all applicable federal, state, local and
foreign laws and such withholdings have been timely paid to the respective
Governmental Authorities.  Disclosure Schedule (3.11)
sets forth as of the Closing Date those taxable years for which any Credit
Party’s tax returns are currently being audited by the IRS or any other
applicable Governmental Authority, and any assessments or threatened assessments
in connection with such audit, or otherwise currently outstanding. Except as
indicated on Disclosure Schedule (3.11), as of the Closing Date,
all Charges that have been claimed, proposed, asserted or assessed against any
Credit Party  (or with respect to any of
their assets) have been fully paid or finally settled.  None of the Credit Parties and their
respective predecessors are liable for any Charges:  (a) under any agreement (including any
tax sharing agreements), or (b) to each Credit Party’s knowledge, as a
transferee, except, in the case of each of clauses (a) and (b),
under the Acquisition Agreement in an amount not to exceed $650,000 or to the
extent assumed in connection with a Permitted Acquisition.  As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a),
by reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.

 

3.12                           ERISA.

 

(a)                                  Disclosure
Schedule (3.12) lists (i) all ERISA
Affiliates and (ii) all Plans and separately identifies all Pension Plans,
including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans,
including all Retiree Welfare Plans. 
Copies of all such listed Plans, together with a copy of the latest
IRS/DOL 5500-series form for each such Plan, have been delivered to Agent.  Except with respect to Multiemployer Plans,
each Qualified Plan has been determined by the IRS to qualify under Section 401
of the IRC, the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt
status.  Each Plan is in compliance in
all material respects with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23.  Neither any Credit Party nor ERISA Affiliate
has failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan.  Neither any Credit Party nor
ERISA Affiliate has engaged in a “prohibited transaction,” as defined in Section 406
of ERISA and Section 4975 of the IRC, in connection with any Plan, that
would 

 

40

 

subject any Credit Party to a material tax on prohibited transactions
imposed by Section 502(i) of ERISA or Section 4975 of the IRC.

 

(b)                                 Except
as set forth in Disclosure Schedule (3.12):  (i) no Title IV Plan has any Unfunded
Pension Liability; (ii) no ERISA Event or event described in Section 4062(e) of
ERISA with respect to any Title IV Plan has occurred or is reasonably expected
to occur; (iii) there are no pending, or to the knowledge of any Credit
Party, threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA
Affiliate has incurred or reasonably expects to incur any liability as a result
of a complete or partial withdrawal from a Multiemployer Plan; (v) within
the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has
been terminated, whether or not in a “standard termination” as that term is
used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of any
Credit Party or any ERISA Affiliate (determined at any time within the last
five years) with Unfunded Pension Liabilities been transferred outside of the “controlled
group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit
Party or ERISA Affiliate (determined at such time); (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of
any Plan measured on the basis of fair market value as of the latest valuation
date of any Plan; and (vii) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor’s Corporation or an equivalent rating
by another nationally recognized rating agency.

 

(c)                                  Except
as set forth in Disclosure Schedule (3.12), with respect to each
scheme or arrangement mandated by a government other than the United States of
America providing for post-employment benefits (a “Foreign Government Scheme
or Arrangement”) and with respect to each employee benefit plan maintained
or contributed to by any Credit Party or any Subsidiary of any Credit Party
that is not subject to United States law providing for post-employment benefits
(a “Foreign Plan”):  (i) all
material employer and employee contributions required by law or by the terms of
any Foreign Government Scheme or Arrangement or any Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices;  (ii) the fair market
value of the assets of each funded Foreign Plan, the liability of each insurer
for any Foreign Plan funded through insurance or the book reserve established
for any Foreign Plan, together with any accrued contributions, is sufficient to
procure or provide for the accumulated benefit obligations, as of the date
hereof, with respect to all current and former participants in such Foreign
Plan according to the actuarial assumptions and valuations most recently used
to account for such obligations, in accordance with applicable generally
accepted accounting principles, and the liability of each Credit Party and each
Subsidiary of a Credit Party with respect to a Foreign Plan is reflected in
accordance with normal accounting practices on the financial statements of such
Credit Party or such Subsidiary, as the case may be; and (iii) each
Foreign Plan required to be registered has been registered and has been
maintained in good standing with applicable regulatory authorities unless, in
each case, the failure to do so would not be reasonably likely to have a
Material Adverse Effect.

 

3.13                           No
Litigation.  No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority
or before any arbitrator or panel of arbitrators

 

41

 

(collectively, “Litigation”), that (a) challenges
any Credit Party’s right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, (b) except
as set forth on Disclosure Schedule (3.13), would prohibit or
affect the licensing, approvals or marketing of products subject to regulatory
approval and, if so prohibiting or affecting, could reasonably be expected to
have a Material Adverse Effect, or (c) has a reasonable risk of being
determined adversely to any Credit Party and that, if so determined, could
reasonably be expected to have a Material Adverse Effect.  Except as set forth on Disclosure Schedule (3.13),
as of the Closing Date there is no Litigation pending or, to any Credit Party’s
knowledge, threatened, that seeks damages in excess of $500,000 (or the
Equivalent Amount thereof) or injunctive relief against, or alleges criminal
misconduct of, any Credit Party.

 

3.14                           Brokers.  Except for Covington
Associates, the fees of which have been paid by the Borrowers, no broker or
finder brought about the obtaining, making or closing of the Loans or the
Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

 

3.15                           Intellectual
Property.  As
of the Closing Date, each Credit Party owns or has rights to use all
Intellectual Property necessary to continue to conduct its business as now or
heretofore conducted by it or proposed to be conducted by it in all material
respects.  As of the Closing Date, each
material Patent registration and application therefor, Trademark registration
and application therefor, Copyright registration and
application therefor and License owned or licensed by any Credit Party is
listed, together with application or registration numbers to the extent
available and determinable, as applicable, in Disclosure Schedule (3.15).  To the knowledge of the Credit Parties, each
of the Credit Parties conducts its business and affairs without infringement of
or interference with any Intellectual Property of any other Person other than
any infringement or interference that could not reasonably be expected to have
a Material Adverse Effect.  Except as set
forth in Disclosure Schedule (3.15), no Credit Party is aware of
any infringement claim by any other Person with respect to any Intellectual
Property, which infringement could reasonably be expected to have a Material
Adverse Effect.

 

3.16                           Full
Disclosure. 
No information contained in this Agreement, any of the other Loan
Documents or Financial Statements or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement (in
each case, other than the Projections), taken together with all other such
information and statements, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made or such information was provided.  The Liens granted to Agent, on behalf of
itself and Lenders, pursuant to the Collateral Documents will at all times be
fully perfected first priority Liens in and to the Collateral described
therein, subject, as to priority, only to Permitted Encumbrances.

 

3.17                           Environmental
Matters.

 

(a)                                  Except
as set forth in Disclosure Schedule (3.17), as of the Closing Date:
(i) the Real Estate is free of contamination from any Hazardous Material
except for such 

 

42

 

contamination that would not adversely
impact the value or marketability of such Real Estate and that would not result
in Environmental Liabilities that could reasonably be expected to exceed
$500,000 (or the Equivalent Amount thereof); (ii) no Credit Party has caused
or suffered to occur any Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate; (iii) the Credit Parties
are and have been in compliance with all Environmental Laws, except for such
noncompliance that would not result in Environmental Liabilities which could
reasonably be expected to exceed $500,000 (or the Equivalent Amount thereof); (iv) the
Credit Parties have obtained, and are in compliance with, all Environmental
Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where
the failure to so obtain or comply with such Environmental Permits would not
result in Environmental Liabilities that could reasonably be expected to exceed
$500,000 (or the Equivalent Amount thereof), and all such Environmental Permits
are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $500,000 (or the Equivalent Amount thereof), and no Credit
Party has permitted any current or former tenant or occupant of the Real Estate
to engage in any such operations; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$500,000 (or the Equivalent Amount thereof) or injunctive relief against, or
that alleges criminal misconduct by, any Credit Party; (vii) no notice has
been received by any Credit Party identifying it as a “potentially responsible
party” or requesting information under CERCLA or analogous state statutes, and
to the knowledge of the Credit Parties, there are no facts, circumstances or
conditions that may result in any Credit Party being identified as a “potentially
responsible party” under CERCLA or analogous state statutes; and (viii) the
Credit Parties have provided to Agent copies of all existing environmental
reports, reviews and audits and all written information pertaining to actual or
potential Environmental Liabilities, in each case relating to any Credit Party.

 

(b)                                 Each
Credit Party hereby acknowledges and agrees that Agent (i) is not now, and
has not ever been, in control of any of the Real Estate or any Credit Party’s
affairs, and (ii) does not have the capacity through the provisions of the
Loan Documents or otherwise to influence any Credit Party’s conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.

 

3.18                           Insurance.  Disclosure Schedule (3.18)
lists all insurance policies of any nature maintained, as of the Closing Date,
for current occurrences by each Credit Party.

 

3.19                           Deposit
Accounts.  Disclosure
Schedule (3.19) lists all banks and other financial institutions at
which any Credit Party maintains deposit or other accounts as of the Closing
Date, and such Schedule correctly identifies the name of each depository,
the name in which the account is held, a description of the purpose of the
account, and the complete account number therefor.

 

3.20                           Government
Contracts. 
Except as set forth in Disclosure Schedule (3.20), as of the
Closing Date, no Credit Party is a party to any contract or agreement with any 

 

43

 

Governmental Authority and no Credit Party’s
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727)
or any similar state or local law.

 

3.21                           Customer
and Trade Relations.  As of the Closing Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in:  (i) the business relationship of any
Credit Party with any customer or group of customers whose purchases during the
preceding 12 months caused them to be ranked among the ten largest customers of
such Credit Party; or (ii) the business relationship of any Credit Party
with any supplier material to its operations.

 

3.22                           [Intentionally
Omitted.]

 

3.23                           Solvency.  Both before and after
giving effect to (a) the Loans and Letter of Credit Obligations to be made
or incurred on the Closing Date or such other date as Loans and Letter of
Credit Obligations requested hereunder are made or incurred, (b) the
disbursement of the proceeds of such Loans pursuant to the instructions of the
Borrowers; (c) the consummation of the Related Transactions; and (d) the
payment and accrual of all transaction costs in connection with the foregoing,
the Credit Parties, taken as a group on a consolidated basis, will be Solvent.

 

3.24                           Acquisition
Agreement. 
As of the Closing Date, Borrowers have delivered to Agent a complete and
correct copy of the Acquisition Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith).  No Credit Party and, to the Credit Parties’
knowledge, no other Person party thereto is in default in the performance or
compliance with any provisions thereof. 
The Acquisition Agreement complies with, and the Acquisition has been
consummated (simultaneously with the Loans made on the Closing Date) in
accordance with, all applicable laws. 
The Acquisition Agreement is in full force and effect as of the Closing
Date and has not been terminated, rescinded or withdrawn.  All requisite approvals by Governmental
Authorities having jurisdiction over Seller, any Credit Party and other Persons
referenced therein with respect to the consummation of the Acquisition have
been obtained, and no such approvals impose any conditions to the consummation
of the Acquisition or, other than as described in the Acquisition Agreement,  to the conduct by
any Credit Party of its business thereafter. 
To the best of each Credit Party’s knowledge, none of the Seller’s
representations or warranties in the Acquisition Agreement contain
any untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading.  Each
of the representations and warranties given by each applicable Credit Party in
the Acquisition Agreement is true and correct in all material respects, and,
notwithstanding anything contained in the Acquisition Agreement to the
contrary, such representations and warranties of the Credit Parties are
incorporated into this Agreement by this Section 3.24 and shall,
solely for purposes of this Agreement and the benefit of Agent and Lenders,
survive the consummation of the Acquisition; provided that a breach by any of
the Credit Parties of any such representations and warranties so incorporated
and as to which a similar representation and warranty is not independently made
herein shall not constitute a breach of this Section 3.24 unless
such breach causes any such representation and warranty to be materially
inaccurate.

 

44

 

3.25                           Foreign
Assets Control Regulations.  Each Credit Party is and will remain in full
compliance with the following laws and regulations applicable to it: (a) ensuring
that no person who owns a controlling interest in or otherwise controls such
Credit Party is or shall be (i) listed on the Specially Designated
Nationals and Blocked Person List maintained by the Office of Foreign Assets
Control (“OFAC” ), Department of the Treasury, and/or any other similar
lists maintained by OFAC pursuant to any authorizing statute, Executive Order
or regulation or (ii) a person designated under Section 1(b), (c) or
(d) of Executive Order No. 13224 (September 23, 2001), any
related enabling legislation or any other similar Executive Orders, and (b) except
where the failure to comply individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect, compliance with all
applicable Bank Secrecy Act (“BSA”) laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money
laundering violations.

 

3.26                           Subordinated
Debt.  As of
the Closing Date, Borrowers have delivered to Agent a complete and correct copy
of the Subordinated Note Documents (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith).  Innovations, at the time of incurrence
thereof, had the corporate power and authority to incur the Indebtedness
evidenced by the Subordinated Notes.  The
subordination provisions of the Subordinated Notes and the Intercreditor
Agreement are enforceable against the holders of the Subordinated Notes by
Agent and Lenders, except as enforcement may be limited by bankruptcy,
insolvency or other laws affecting creditors’ rights generally.  All Obligations, including the Loans and the
Letter of Credit Obligations, constitute senior Indebtedness entitled to the
benefits of the subordination provisions contained in the Subordinated Notes
and the Intercreditor Agreement. 
Borrowers acknowledge that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance upon the subordination
provisions of the Subordinated Notes and the Intercreditor Agreement and this Section 3.26.  The incurrence of the Obligations by the
Credit Parties (assuming that the Revolving Loans and the Term Loans are fully
extended on the Closing Date) does not violate the Indenture.

 

3.27                           [Intentionally
Omitted.]

 

3.28.                        Acquisition.

 

(a)                                  The
Acquisition involves only assets comprising a business, or those assets of a
business, of the same general type engaged in by Borrowers as of the Closing
Date, and which business would not subject Agent or any Lender to regulatory or
third party approvals in connection with the exercise of its rights and
remedies under this Agreement or any other Loan Documents other than approvals
applicable to the exercise of such rights and remedies with respect to
Borrowers prior to the Acquisition;

 

(b)                                 The
Acquisition has been approved by Seller’s board of directors or otherwise duly
authorized by Seller; and

 

(c)                                  Except
as set forth on Disclosure Schedule (3.28(c)) and except for the
Loans hereunder, no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or 

 

45

 

other liabilities have been incurred, assumed or otherwise been required
to be reflected on a consolidated balance sheet of Borrowers and Seller after
giving effect to the Acquisition.

 

4.                                      FINANCIAL
STATEMENTS AND INFORMATION

 

4.1                                 Reports
and Notices. 
Each Credit Party executing this Agreement hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to
Agent or to Agent and Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and in the
manner set forth in Annex E.

 

4.2                                 Communication
with Accountants. 
Each Credit Party executing this Agreement authorizes (a) Agent and
each Co-Syndication Agent, twice in any twelve (12) month period or more
frequently with the consent of Borrower Representative, which consent shall not
be unreasonably withheld, and (b) so long as an Event of Default has
occurred and is continuing, Agent and each Lender, to communicate directly with
its independent certified public accountants, including BDO Seidman, LLP, and
authorizes and, at Agent’s request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all Financial
Statements and other supporting financial documents, schedules and information
relating to any Credit Party (including copies of any issued management
letters) with respect to the business, financial condition and other affairs of
any Credit Party.

 

5.                                      AFFIRMATIVE
COVENANTS

 

Each Credit Party executing this Credit Agreement
jointly and severally agrees as to all Credit Parties that from and after the
date hereof and until the Termination Date:

 

5.1                                 Maintenance
of Existence and Conduct of Business.  Except as permitted under Section 6.1,
each Credit Party shall:  (a) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its material rights and franchises; (b) continue
to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) at all times maintain, preserve and protect all
of its assets and properties used or useful in the conduct of its business, and
keep the same in good repair, working order and condition in all material
respects (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices,
except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect; and (d) transact business only in such corporate
and trade names as are set forth in Disclosure Schedule (5.1).

 

5.2                                 Payment
of Charges.

 

(a)                                  Subject
to Section 5.2(b), each Credit Party shall pay and discharge or
cause to be paid and discharged promptly all Charges payable by it, including (i) Charges
imposed upon it, its income and profits, or any of its property (real, personal
or mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or
rental charges payable to warehousemen or bailees, in each case, before any
thereof shall become past due.

 

46

 

(b)                                 Each
Credit Party may in good faith contest, by appropriate proceedings, the
validity or amount of any Charges, Taxes or claims described in Section 5.2(a);
provided, that (i) adequate reserves with respect to such contest
are maintained on the books of such Credit Party, in accordance with GAAP; (ii) no
Lien shall be imposed to secure payment of such Charges (other than payments to
warehousemen and/or bailees) that is superior to any of the Liens securing the
Obligations or the Eligible Swap Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection
or enforcement of such Charges; (iii) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest; (iv) such
Credit Party shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses, if any,
and shall deliver to Agent, at Agent’s request, evidence reasonably acceptable
to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met; and (v) Agent
has not advised Borrowers in writing that Agent reasonably believes that
nonpayment or nondischarge thereof could have or result in a Material Adverse
Effect.

 

5.3                                 Books
and Records. 
Each Credit Party shall keep adequate books and records with respect to
its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule (3.4(a)).

 

5.4                                 Insurance;
Damage to or Destruction of Collateral.

 

(a)                                  The
Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on
the date hereof or otherwise in form and amounts and with insurers reasonably
acceptable to Agent.  Such policies of
insurance (or the loss payable and additional insured endorsements delivered to
Agent) shall contain provisions pursuant to which the insurer agrees to provide
30 days prior written notice to Agent in the event of any non-renewal,
cancellation or amendment of any such insurance policy.  If any Credit Party at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above, or to pay all premiums relating thereto, Agent may at any time
or times thereafter obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto that Agent deems
advisable.  Agent shall have no obligation
to obtain insurance for any Credit Party or pay any premiums therefor.  By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party’s
failure to maintain such insurance or pay any premiums therefor.  All sums so disbursed, including reasonable
attorneys’ fees, court costs and other charges related thereto, shall be
payable on demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.

 

(b)                                 Agent
reserves the right at any time upon any material adverse change in any Credit
Party’s risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent’s good
faith opinion, adequately protect both Agent’s and Lender’s interests in all or
any portion of the Collateral and to ensure that each Credit Party is protected
by insurance in amounts and with coverage customary for its industry.  If reasonably requested by Agent, each Credit
Party shall deliver to Agent from time to time a 

 

47

 

report of a reputable insurance broker, reasonably satisfactory to Agent,
with respect to its insurance policies.

 

(c)                                  Each
Credit Party shall deliver to Agent, in form and substance reasonably
satisfactory to Agent, endorsements to (i) all “All Risk” and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming
Agent, on behalf of itself and Lenders, as additional insured.  Each Credit Party irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents designated
by Agent), so long as any Default or Event of Default has occurred and is
continuing or the anticipated insurance proceeds exceed $2,000,000 (or the
Equivalent Amount thereof), as such Credit Party’s true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such “All Risk” policies of insurance, endorsing the name of such Credit Party
on any check or other item of payment for the proceeds of such “All Risk”
policies of insurance and for making all determinations and decisions with
respect to such “All Risk” policies of insurance.  Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing
power-of-attorney.  Borrower
Representative shall promptly notify Agent of any loss, damage, or destruction
to the Collateral in the amount of $2,000,000 (or the Equivalent Amount
thereof) or more, whether or not covered by insurance.  After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, either apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(c), or permit or require
the applicable Credit Party to use such money, or any part thereof, to replace,
repair, restore or rebuild the Collateral in a diligent and expeditious manner
with materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction. 
Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $2,000,000 (or the Equivalent
Amount thereof) in the aggregate, Agent shall permit the applicable Credit
Party to replace, restore, repair or rebuild the property; provided  that
if such Credit Party shall not have completed or entered into binding
agreements to complete such replacement, restoration, repair or rebuilding
within 180 days of such casualty, Agent may apply such insurance proceeds to
the Obligations in accordance with Section 1.3(c).  All insurance proceeds that are to be made
available to US Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the US
Revolving Loan of US Borrower (which application shall not result in a
permanent reduction of the US Revolving Loan Commitment).  All insurance proceeds that are to be made
available to European Borrower to replace, repair, restore or rebuild the
Collateral shall be applied by Agent to reduce the outstanding principal
balance of the European Revolving Loan of European Borrower (which application
shall not result in a permanent reduction of the European Revolving Loan
Commitment).  All insurance proceeds made
available to any Credit Party (other than Borrowers) to replace, repair,
restore or rebuild Collateral shall be deposited in a cash collateral
account.  Thereafter, such funds shall be
made available to such Credit Party to provide funds to replace, repair,
restore or rebuild the Collateral as follows: 
(x) European Borrower shall request a European Revolving Credit
Advance or a release from the cash collateral account be made to such Credit
Party in the amount requested to be released and US Borrower shall request a US
Revolving Credit Advance or a release from the cash collateral account to be
made to such Credit Party in the amount requested to be so released; and
(y) so long as the conditions set forth in Section 2.2 have
been met, Revolving Lenders shall make such US Revolving Credit Advance

 

48

 

or such European Revolving Credit Advance, as the case may be, or
Agent shall release funds from the cash collateral account upon such
request.  To the extent not used to
replace, repair, restore or rebuild the Collateral in accordance with this Section 5.4,
such insurance proceeds shall be applied in accordance with Section 1.3(c).

 

5.5                                 Compliance
with Laws. 
Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those relating to
HIPAA and labor matters, those affecting the licensing, labeling, marketing and
distribution of products, including those related to the FDA (and the
equivalent Governmental Authority of each jurisdiction in which any Credit
Party operates, conducts business or distributes products) and Environmental
Laws and Environmental Permits, except to the extent that the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

5.6                                 Supplemental
Disclosure. 
From time to time as may be reasonably requested by Agent (which request
will not be made more frequently than once each year absent the occurrence and
continuance of a Default or an Event of Default), the Credit Parties shall
supplement each Disclosure Schedule hereto, or any representation herein
or in any other Loan Document, with respect to any matter hereafter arising
that, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any
information in such Disclosure Schedule or representation which has been
rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately
marked to show the changes made therein); provided  that (a) no
such supplement to any such Disclosure Schedule or representation shall
amend, supplement or otherwise modify any Disclosure Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent
and Requisite Lenders in writing, and (b) no supplement shall be required
or permitted as to representations and warranties that relate solely to the
Closing Date.

 

5.7                                 Intellectual
Property. 
Each Credit Party will conduct its business and affairs (a) without
intentional infringement of or intentional interference with any Patents or
trade secrets of any other Person in any material respect and (b) without
infringement of or interference with any Intellectual Property (other than
Patents and trade secrets) of any other Person in any material respect, provided
that no Credit Party shall be deemed to have violated the covenant set
forth in clause (b) if, prior to taking action which is later
judged by a court of competent jurisdiction to have infringed or interfered
with any such Intellectual Property, such Credit Party shall have (i) obtained
an opinion of reputable intellectual property counsel which (A) provides
that such action will not infringe or interfere with such Intellectual Property
and (B) is in such form which would reasonably entitle such Credit Party to
rely on such opinion, (ii) notified Agent of its intent to take such
action and (iii) within ten (10) days of Agent’s request, delivered a
copy of such opinion to Agent.

 

5.8                                 Environmental
Matters. 
Each Credit Party shall and shall cause each Person within its control
to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance that could not reasonably be expected to have a Material Adverse
Effect; (b) implement any and 

 

49

 

all investigation, remediation, removal and
response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply in all material
respects with Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits
or any Release on, at, in, under, above, to, from or about any Real Estate that
is reasonably likely to result in Environmental Liabilities in excess of
$500,000 (or the Equivalent Amount thereof); and (d) promptly forward to
Agent a copy of any order, notice, request for information or any communication
or report received by such Credit Party in connection with any such violation
or Release or any other matter relating to any Environmental Laws or
Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $500,000 (or the Equivalent Amount
thereof), in each case whether or not the Environmental Protection Agency or
any Governmental Authority has taken or threatened any action in connection
with any such violation, Release or other matter.  If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit
Party shall, upon Agent’s written request (i) cause the performance of
such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrowers’
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater.  Borrowers shall reimburse Agent for the costs
of such audits and tests and the same will constitute a part of the Obligations
secured hereunder.

 

5.9                                 Landlords’
Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases.  Subject to the penultimate
sentence of Section 6.15 hereof, except as otherwise agreed to by
Agent in its sole discretion, each Credit Party shall obtain a landlord’s
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property or bailee with respect to
any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably be satisfactory in form and substance to Agent.  Each Credit Party shall timely and in all
material respects pay and perform its obligations under all leases and other
agreements with respect to each leased location or public warehouse where any
Collateral is or may be located except as otherwise consented to by Agent.  If any Credit Party proposes to acquire a fee
ownership interest in Real Estate after the Closing Date, it shall, if required
by Agent, concurrently provide to Agent a mortgage or deed of trust granting
Agent a first priority Lien on such Real Estate, together with environmental
audits, mortgage title insurance commitment, real property survey, local
counsel opinions(s), and, if required by Agent, supplemental casualty insurance
and flood insurance, and such other documents, instruments or agreements
reasonably requested by Agent, in each case, in form and substance reasonably
satisfactory to Agent.

 

50

 

5.10                           ERISA.  Each Credit Party shall
comply in all material respects with the applicable provisions of ERISA and the
Code and any foreign laws and regulations relating to any Foreign Plan or
Foreign Government Scheme or Arrangement, except to the extent such failure(s)
to comply, individually and in the aggregate, could not reasonably be expected
to have a Material Adverse Affect.  Each
Credit Party shall furnish to the Agent (a) written notice as soon as
possible, and in any event within 10 Business Days after any Credit Party knows
or has reason to know, of: (i) a material increase in the benefits of any
existing Plan, the establishment of any new Pension Plan, or the commencement
of contributions to any Multiemployer Plan; (ii) an ERISA Event,  together with a statement of an officer
setting forth the details of such ERISA Event and the action(s) which the
Credit Parties propose to take with respect thereto; (iii) the imposition
of a Lien under Section 412 of the IRC or Section 302 or 4058 of
ERISA; (iv) the imposition of a Lien with respect to any Foreign Plan; and
(b) written notice on an annual basis on each anniversary of the Closing
Date until the Termination Date, of the circumstances where the fair market value
of the assets of a funded Foreign Plan, the liability of each insurer for such
Foreign Plan funded through insurance or the book reserve established for such
Foreign Plan, together with any accrued contributions, are insufficient to
satisfy all the accumulated benefit obligations with respect to all current and
former participants in such Foreign Plan according to the actuarial assumptions
and valuations most recently used to account for such obligations in accordance
with generally accepted accounting principles. 
At Agent’s request, the Credit Parties shall furnish to the Agent copies
of each annual report (From 5500 series) filed for each Plan.  The Credit Parties shall furnish to the
Agent, within 30 days after receipt by any Credit Party or ERISA Affiliate,  copies of each
actuarial report for each Title IV Plan or Multiemployer Plan and each annual
report for any Multiemployer Plan.

 

5.11                           European
Credit Parties. 
If at any time any European Credit Party that is treated for purposes of
Section 956 of the IRC as a “controlled foreign corporation, thereafter
fails to be treated as a controlled foreign corporation, then at the request of
the Agent or the Requisite Lenders, Innovations shall cause each such European
Credit Party to execute and deliver to the Agent (a) a Guaranty in form
and substance reasonably satisfactory to the Agent, guarantying the Obligations
of US Borrower hereunder and under the other Loan Documents, and (b) Collateral
Documents in form and substance reasonably satisfactory to Agent, granting to
Agent a Lien over such European Credit Party’s properties and assets, in each
case, to the extent such European Credit Party has, or is required to have,
entered into a Guaranty or a Collateral Document with respect to the
Obligations of the European Credit Parties, and to the extent such Guaranty or
Collateral Document is not prohibited by the law of the jurisdiction of
formation of such European Credit Party, and shall cause the pledge of all
Stock of such European Credit Party to Agent to secure all of the Obligations
to the extent only a portion of such Stock was previously pledged to Agent to
secure the Obligations of US Credit Parties. 
If Innovations shall at any time file consolidated US federal income tax
returns which include its and all of its Subsidiaries’ worldwide income on a
world-wide basis, then at the request of the Agent or the Requisite Lenders,
Innovations shall cause each European Credit Party to execute and deliver to
the Agent (a) a Guaranty in form and substance reasonably satisfactory to
the Agent, guarantying the Obligations of US Borrower hereunder and under the
other Loan Documents, and (b) Collateral Documents in form and substance
reasonably satisfactory to Agent, granting to Agent a Lien over such European
Credit Party’s properties and assets, in each case, to the extent such European
Credit Party has, or is required to have, entered into a Guaranty or a
Collateral Document with respect to the Obligations of the European Credit
Parties, and to the extent such 

 

51

 

Guaranty or Collateral Document is not
prohibited by the law of the jurisdiction of formation of such European Credit
Party, and shall cause the pledge of all Stock of such European Credit Party to
Agent to secure all of the Obligations to the extent only a portion of such
Stock was previously pledged to Agent to secure the Obligations of US Credit
Parties.  The security interests required
to be granted pursuant to this Section 5.11 shall be valid and
enforceable perfected security interests prior to the rights of all third
Persons and subject to no other Liens except Permitted Encumbrances, except as
enforcement may be limited by bankruptcy, insolvency and other laws affecting
creditors’ rights generally.  The
Collateral Documents and other instruments related thereto shall be duly
recorded or filed in such manner and in such places and at such times, and such
other actions shall be taken, as are required by law to establish, perfect,
preserve and protect the Liens, in favor of Agent, required to be granted
pursuant to such documents and all taxes, fees and other charges payable in
connection therewith shall be paid in full by European Credit Parties.  At the time of the execution and delivery of
the additional documents, European Credit Parties shall cause to be delivered
to Agent such opinions of counsel, mortgage policies, title surveys, real
estate appraisals, certificates of title, stock certificates and other related
documents as may be reasonably requested by Agent to assure themselves that
this Section 5.11 has been complied with.

 

5.12                           [Intentionally
Omitted.]

 

5.13                           Post-Closing
Covenant.

 

(a)                                  Within
60 days following the Closing Date, Borrowers shall deliver a schedule to
Agent listing each material Patent registration and application therefor,
Trademark registration and application therefor, Copyright registration and
application therefor and License owned or licensed by any Credit Party,
together with application or registration numbers to the extent available and
determinable, as applicable.  Such schedule shall
be certified by an officer of Innovations and shall contain a representation
that the Person (to the extent such Person is Innovations or any of its
Subsidiaries) identified as the owner or assignee of each material Patent,
Trademark and Copyright set forth on such schedule owns each such Patent,
Trademark or Copyright, as applicable. 
Promptly following delivery of such schedule, the Credit Parties shall
provide Agent with such information as is necessary to enable Agent to take
action to obtain a fully perfected first priority security interest, in
accordance with, and subject to limitations under, applicable law, in all of
the intellectual property of the Credit Parties to the extent such intellectual
property is registered in the United States, the United Kingdom or Switzerland
(to the extent such perfected first priority security interest is not in effect
on the date hereof or prior to delivery of such schedule).   In addition, following delivery of such
schedule, the Credit Parties shall promptly take all actions as may be
reasonably requested by Agent in order for Agent to perfect its security
interest, in accordance with, and subject to limitations under, applicable law,
in the Patents, Trademarks and Copyrights owned by the Credit Parties to the
extent such intellectual property is registered in Canada, Japan, Germany,
Italy or France.

 

(b)                                 On or
before September 28, 2005, Innovations and Borrowers shall deliver to
Agent and Lenders, (i) a restated audited consolidated balance sheet of
Innovations at December 31, 2004 and the related statements of income and
cash flows of Innovations for the Fiscal Year then ended,
certified without qualification by BDO Seidman, LLP and (ii) a
restated unaudited balance sheet at March 31, 2005 and the related
statement of income and cash flows of 

 

52

 

Innovations for the Fiscal Quarter then
ended, each of which shall have been reviewed by BDO Seidman, LLP as provided
in Statement on Auditing Standards No. 71 ((i) and (ii) are
collectively referred to herein as the “Restated Financial Statements”).  The Restated Financial Statements shall be
accompanied by (i) a statement prepared in reasonable detail showing the
calculation used in determining the calculation of EBITDA for the Reporting
Credit Parties on a consolidated basis for, to the extent delivered prior to August 15,
2005,  the 12 month period ended March 31,
2005 and, to the extent delivered on or after August15, 2005,  the 12 month period ended June 30, 2005,
and (ii) the certification of the Chief Financial Officer, Treasurer or
Vice President, Finance, of Innovations (on behalf of Innovations and not in
such Person’s individual capacity) that the Restated Financial Statements
present fairly in accordance with GAAP (subject to normal year-end adjustments
in the case of the March 31, 2005 Financial Statements) the financial
position, results of operations and statement of cash flows of the Credit
Parties on a consolidated and consolidating basis (in the case of consolidating
Financial Statements, subject to intercompany eliminations and other
consolidating adjustments), as at the end of each such period and for the
period then ended.

 

(c)                                  Within
30 days following the Closing Date, Borrowers shall deliver to Agent fully
executed copies of each of the Related Transaction Documents (to the extent not
previously required to be delivered).

 

5.14                           IMC.  If at any time the fair
market value or book value of IMC’s assets exceeds $65,000,000 Canadian
Dollars, IMC shall promptly execute an amended and restated or additional Deed
of Hypothec on the Universality of Movable Property increasing the sum secured
by such Deed to an amount satisfactory to Agent.

 

5.15                           Covenants
Relating to Foreign Subsidiaries.

 

(a)                                  Promptly
upon Agent’s request, Borrowers shall take all actions necessary to cause
Inverness Medical Australia Pty Ltd to join this Agreement as a European Credit
Party and, in connection therewith, shall cause Inverness Medical Australia Pty
Ltd to take such actions and execute and deliver such documents as Agent may
reasonably request; provided, that, the Credit Parties shall not be
liable for or required to reimburse Agent or any Lender for any stamp duty or
other taxes that may be required to be paid by Agent or Lenders in connection
with such request by Agent (unless such request is made in connection with (i) any
request by the Credit Parties for consent to take any action with respect to
Inverness Medical Australia Pty Ltd that would, without the prior consent of
Agent and Requisite Lenders, result in a breach of Sections 6.2, 6.3, 6.14
or 11.19 hereof, or (ii) any action by any of the Credit Parties or
any Excluded Subsidiary in violation of Sections 6.2, 6.3, 6.14 or 11.19)
to the extent such stamp duty or other tax results solely from the guarantee by
Inverness Medical Australia Pty Ltd of the Obligations in excess of the value
of the assets of Inverness Medical Australia Pty Ltd at such time.

 

(b)                                 Inverness
Medical Investments shall at all times own and control at least 50.1% of the
economic and voting rights of Inverness Medical (Shanghai) Co., Ltd., have the
right to appoint the majority of the directors to the board of directors of
Inverness Medical (Shanghai) Co., Ltd. and possess, directly or indirectly, the
power to direct the management of, policies of and requirements for capital
contributions to Inverness Medical (Shanghai) Co., Ltd. 

 

53

 

No capital calls or other request for
contributions of any type which would cause the amount of all funds or assets
contributed to the capital of, or loaned or otherwise made available to
Inverness Medical (Shanghai) Co., Ltd. to exceed $4,000,000 in the aggregate
since the formation of Inverness Medical (Shanghai) Co., Ltd. shall occur under
that certain Joint Venture Contract dated as of November 5, 2004 between
Inverness Medical Investments and Shanghai Biochip Co., Ltd., any
organizational documents of Inverness Medical (Shanghai) Co., Ltd. or any
contract, agreement or requirement of law. 
Upon the request of Agent, Inverness Medical Investments shall promptly
provide Agent with a copy of the financial statements it receives pursuant to Section 14.1.2
of that certain Joint Venture Contract dated as of November 5, 2004
between Inverness Medical Investments and Shanghai Biochip Co., Ltd.

 

5.16                           Further
Assurances. 
Each Credit Party executing this Agreement agrees that it shall and
shall cause each other Credit Party to, at such Credit Party’s expense and upon
request of Agent, duly execute and deliver, or cause to be duly executed and
delivered, to Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of Agent
to carry out more effectively the provisions and purposes of this Agreement or
any other Loan Document.

 

5.17                           Restated
Financial Statements.  (a) If the Restated Financial Statements
are delivered to Agent and Lenders prior to August 15, 2005, the Reporting
Credit Parties on a consolidated basis shall have EBITDA of not less than
$28,000,000 for the 12 month period ended March 31, 2005, calculated based
on such Restated Financial Statements.

 

(b)                                 If
the Restated Financial Statements are delivered to Agent and Lenders on or
after August 15, 2005, the Reporting Credit Parties on a consolidated
basis shall have EBITDA of not less than $30,000,000 for the 12 month period
ended June 30, 2005, calculated based on such Restated Financial
Statements and the other Financial Statements for any applicable period after March 31,
2005 delivered hereunder in accordance with the terms hereof.

 

6.                                      NEGATIVE COVENANTS

 

Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
until the Termination Date:

 

6.1                                 Mergers,
Subsidiaries, Etc. 
No Credit Party shall directly or indirectly, by operation of law or
otherwise, (a) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any
Person, except that (i) any wholly-owned Subsidiary of US Borrower may
merge with US Borrower so long as US Borrower is the survivor thereof, (ii) any
wholly-owned Subsidiary of European Borrower may merge with European Borrower
so long as European Borrower is the survivor thereof, (iii) any US Credit
Party (other than Innovations and US Borrower) may merge with any other US
Credit Party (other than Innovations and US Borrower), (iv) any European Credit
Party (other than European Borrower) may merge with any other European Credit
Party (other than European Borrower), and (v) Innovations, Swissco and
Inverness Japan may consummate the Acquisition in accordance with the
Acquisition Agreement or (b) except for the formation of any Subsidiary or
any acquisition of all of the Stock of any Person (an “Acquisition
Subsidiary”) solely for the purpose of consummating an acquisition which is
reasonably expected to be a Permitted 

 

54

 

Acquisition or for which the Credit Parties
are seeking approval of the Requisite Lenders and provided  that (A) prior
to the consummation of such acquisition (I) such Acquisition Subsidiary shall
constitute an Excluded US Subsidiary or Excluded European Subsidiary, as
applicable (and, after consummation of such acquisition, shall constitute a US
Credit Party or European Credit Party, as applicable), (II) such Acquisition
Subsidiary shall hold no assets (other than the greater of $10,000 and any
minimum capital required by law), (III) such Acquisition Subsidiary shall not
conduct any business and (IV) no Credit Party shall transfer any funds or other
assets to such Acquisition Subsidiary other than capital contributions
permitted under the foregoing clause (II) and as necessary to consummate a
Permitted Acquisition, and (B) such Acquisition Subsidiary shall be
dissolved and the assets of such Acquisition Subsidiary shall be distributed to
a Credit Party if (I) such Permitted Acquisition is not consummated within 120
days following the formation or acquisition of such Acquisition Subsidiary, or
(II) the Credit Parties do not receive the consent of Requisite Lenders to such
acquisition within 120 days following the formation or acquisition of such
Acquisition Subsidiary, form any Subsidiary or acquire all or substantially all
of the assets or Stock of any Person without the prior written consent of
Requisite Lenders.  Notwithstanding the
foregoing, any Credit Party may acquire all or substantially all of the assets
or Stock of any Person (or in the case of an asset acquisition of substantially
all of the assets of a business line or division of a Person) (the “Target”)
(in each case, a “Permitted Acquisition”), subject to the satisfaction
of each of the following conditions:

 

(i)                                     Agent shall receive at least ten (10) Business Days prior
written notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed Permitted
Acquisition (Agent hereby agreeing to provide copies of such notice to the
Lenders promptly following receipt thereof);

 

(ii)                                  such Permitted Acquisition shall only involve assets comprising a
business, or those assets of a business, of the type engaged in by Borrowers as
of the Closing Date, and which business would not subject Agent or any Lender
to regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents other than
approvals applicable to the exercise of such rights and remedies with respect
to Borrowers prior to such Permitted Acquisition;

 

(iii)                               such Permitted
Acquisition shall be consensual and shall have been approved by the Target’s
board of directors or otherwise duly authorized by the Target;

 

(iv)                              no additional Indebtedness, Guaranteed Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of the Reporting Credit Parties and
Target after giving effect to such Permitted Acquisition, except ordinary
course trade payables, accrued expenses and Indebtedness of the Target to the
extent no Default or Event of Default has occurred and is continuing or would
result after giving effect to such Permitted Acquisition;

 

(v)                                 the consideration payable in connection with all Permitted
Acquisitions, including all transaction costs, ordinary course trade payables,
accrued expenses and Indebtedness incurred, assumed or otherwise to be
reflected on a consolidated balance sheet of Reporting Credit Parties and
Target after giving effect to such Permitted Acquisition shall consist solely
of (A) common stock, par value $.001 per share of Innovations containing 

 

55

 

substantially the same rights and preferences as in effect on the date hereof
and/or (B) cash not to exceed $20,000,000 in the aggregate for all
Permitted Acquisitions in any Fiscal Year;

 

(vi)                              the Target shall have positive EBITDA for the trailing twelve-month
period preceding the date of the Permitted Acquisition, as determined based
upon the Target’s financial statements for its most recently completed fiscal
year and its most recent interim financial period completed within 60 days
prior to the date of consummation of such Permitted Acquisition; provided,
that if the consideration payable in connection with such Permitted Acquisition
consists solely of common stock, par value $.001 per share of Innovations
containing substantially the same rights and preferences as in effect on the
date hereof, this condition need not be satisfied;

 

(vii)                           the business and
assets acquired in such Permitted Acquisition shall be free and clear of all
Liens (other than Permitted Encumbrances);

 

(viii)                        subject to clause (ix) below, Agent will be granted a
first priority perfected Lien (subject to Permitted Encumbrances) in all assets
acquired pursuant thereto (other than with respect to intellectual property
that is not material in which case such Lien shall be perfected within 60 days
following the closing of such Permitted Acquisition) or in the assets and Stock
of the Target and any Acquisition Subsidiary (other than with respect to
intellectual property that is not material in which case such Lien shall be
perfected within 60 days following the closing of such Permitted Acquisition),
and each Credit Party, any Acquisition Subsidiary and the Target shall have
executed such documents and taken such actions as may be required by Agent in
connection therewith;

 

(ix)                                within 60 days following the closing of any Permitted Acquisition in
which the Target or any Acquisition Subsidiary is an entity formed outside of
the United States, Agent will be granted a first priority Lien (subject to
Permitted Encumbrances) in all assets acquired pursuant thereto or in the
assets and Stock of the Target and any Acquisition Subsidiary (provided,
that, in the case of Stock held by a Domestic Subsidiary, Agent shall be
granted a Lien in such Stock under, and subject to any applicable limitations
set forth in, the US Pledge Agreement concurrently with the closing of such
Permitted Acquisition), and each Credit Party, any Acquisition Subsidiary and
the Target shall have executed such documents and taken such actions as may be
required by Agent in connection therewith; provided, that, prior to the
closing of such Permitted Acquisition, (A) the Borrowers shall have
provided Agent with reasonably detailed written information as to the procedure
required under applicable law for Agent to be granted a first priority Lien in
all such assets along with confirmation reasonably acceptable to Agent from
Borrowers’ local counsel from such jurisdiction that such procedure is correct;
(B) Agent shall have consented in writing to the delay in providing such
Lien; and (C) both before and immediately after giving effect to such
Permitted Acquisition, the European Credit Parties shall have Accounts,
Inventory, Real Property, plant, Equipment and available cash (not subject to
any Lien other than Permitted Encumbrances (except for Permitted Encumbrances
of the type described in clauses (j) and (k) of the definition thereof)) with a
net book value of not less than $50,000,000;

 

(x)                                   notwithstanding the foregoing clause (ix), the Agent may, in
its sole discretion, elect to waive such condition with respect to all or a
portion of the assets of the

 

56

 

Target or any Acquisition Subsidiary to the extent that (A) the
grant of such first priority perfected Lien, the execution of any such documents
or the performance of any such actions is prohibited by the law of the
jurisdiction of formation of the applicable Credit Party, any Acquisition
Subsidiary or the Target, (B) the Agent determines that, taking into
consideration the costs associated therewith in relation to the value or
importance of such first priority perfected Lien, it is not in the best
interest of both the Lenders and the Credit Parties to grant such Lien, or (3) the
value of the assets or Stock with respect to any Permitted Acquisition which
shall be the subject of any waiver under this Section 6.1(x) is, in
the aggregate, less than $10,000,000 (or the Equivalent Amount thereof); provided,
that Agent may, at any time and from time to time elect, in its sole
discretion, to enforce the conditions that had been previously waived under
this Section 6.1(x);

 

(xi)                                within 30 days following the closing of any Permitted Acquisition,
or, if earlier, the date upon which any Credit Party files a current report on Form 8-K
with the Securities and Exchange Commission under the Exchange Act which
discloses such Permitted Acquisition and includes the financial information
provided for below, Borrowers shall deliver to Agent, in form and substance
reasonably satisfactory to Agent (Agent hereby agreeing to provide copies of
such documents to the Lenders promptly following receipt thereof), (A) if
such Permitted Acquisition constitutes a merger or consolidation with, or
acquisition of all of the Stock of, any Person, (x) an audited (or, if not
available, unaudited) balance sheet and income statement and, if available,
cash flow statement of the Target for the most recently completed fiscal year
of the Target, and (y) a balance sheet as of the end of the most recently
completed fiscal quarter of the Target and an income statement and, if
available, cash flow statement, in each case, for the elapsed portion of the
fiscal year of the Target to date ending on the last day of the most recently
completed fiscal quarter of the Target, in each case, which shall be complete
and shall fairly present in all material respects the assets, liabilities,
financial condition and results of operations of the Target in accordance with
GAAP consistently applied, and (B) if such Permitted Acquisition
constitutes the acquisition of all or substantially all of the assets of any
Person and the financial statements described in clause (A) above are not
available, a schedule setting forth the assets acquired and the book value
thereof and, if available, an income statement reflecting the performance of
such assets for the most recently ended Fiscal Year;

 

(xii)                             both before and immediately after giving effect to such Permitted
Acquisition, the Credit Parties shall have aggregate US Revolving Borrowing
Availability, European Revolving Borrowing Availability and available cash (not
subject to any Lien other than Permitted Encumbrances (except for Permitted
Encumbrances of the type described in clauses (j) and (k) of the definition
thereof)) of at least $10 million (or the Equivalent Amount thereof);

 

(xiii)                          at or prior to the closing of any Permitted Acquisition, the
Borrowers shall deliver to Agent a certificate of the Chief Financial Officer,
Treasurer or Vice President, Finance, of Innovations to the effect that: (A) each
Credit Party (after taking into consideration all rights of contribution and
indemnity such Credit Party has against Innovations and each other Subsidiary
of Innovations) is Solvent immediately prior to and will be Solvent upon the
consummation of the Permitted Acquisition; (B) each of the applicable
conditions set forth in this Section 6.1 have been satisfied; (C) on
a pro forma basis, no Event of Default shall have occurred and be continuing or
would result after giving effect to such Permitted Acquisition

 

57

 

and the Reporting Credit Parties would have
been in compliance with the financial covenants set forth in Annex F for
the four quarter period reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the consummation of such
Permitted Acquisition (giving effect to such Permitted Acquisition and all
Loans funded in connection therewith as if made on the first day of such
period); and (D) the Reporting Credit Parties have completed their due
diligence investigation with respect to the Target and such Permitted
Acquisition, which investigation was conducted in a manner similar to that
which would have been conducted by a prudent purchaser of a comparable business
and the results of which investigation were delivered to Agent and Lenders;

 

(xiv)                         on or prior to the date of such Permitted Acquisition, Agent shall
have received, in form and substance reasonably satisfactory to Agent, copies
of the executed acquisition agreement and related agreements and instruments,
and all opinions, certificates, lien search results and other documents
reasonably requested by Agent; and

 

(xv)                            at the time of such
Permitted Acquisition and after giving effect thereto, no Default or Event of
Default has occurred and is continuing.

 

6.2                                 Investments;
Loans and Advances. 
Except as otherwise expressly permitted by this Section 6,
no Credit Party shall make or permit to exist any investment in, or make,
accrue or permit to exist loans or advances of money to, any Person, through
the direct or indirect lending of money, holding of securities or otherwise,
except that:  (a) Borrowers may hold
investments comprised of notes payable, or stock or other securities issued by
Account Debtors to any Credit Party pursuant to negotiated agreements with
respect to settlement of such Account Debtor’s Accounts in the ordinary course
of business, so long as the aggregate amount of such Accounts so settled by
Borrowers does not exceed $500,000 (or the Equivalent Amount thereof); (b) each
Credit Party may maintain its existing investments and loans as of the Closing
Date as set forth on Disclosure Schedule (6.2) hereof; (c) the
Credit Parties may make investments and loans to Restricted Credit Parties, provided
that the aggregate amount of such investments and loans permitted by
this clause (c) shall not exceed $2,000,000 (or the Equivalent
Amount thereof) at any time; (d) so long as Agent has not delivered an
Activation Notice, the Credit Parties may make investments, subject to Control
Letters in favor of Agent for the benefit of Lenders or otherwise subject to a
perfected security interest in favor of Agent for the benefit of Lenders, in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year
from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (iii) certificates of deposit maturing no
more than one year from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $300,000,000
and having a senior unsecured rating of “A” or better by a nationally
recognized rating agency (an “A Rated Bank”), (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above;
(e) the Credit Parties may make loans to Inverness Japan in an amount
necessary to consummate the Acquisition; (f) each Credit Party may make
investments specifically permitted under Section 6.3(a)(viii); (g) the
Credit Parties may make investments permitted under Section 6.1; (h) the

 

58

 

Credit Parties may make additional
investments and loans not otherwise permitted by this Section 6.2
(other than loans or other investments in Restricted Credit Parties), provided
that the aggregate amount of such investments and loans permitted by
this clause (h) shall not exceed $2,000,000 (or the Equivalent
Amount thereof) at any time; and (i) the Credit Parties may make
investments in and/or loans to Inverness Medical (Shanghai) Co., Ltd. to the
extent contemplated by Section 5.15(b); (j) any Credit Party may
make capital contributions to any other Credit Party it holds an interest in
and any Credit Party may make any other investment in any other Credit Parties
to the extent permitted under Section 6.5(b).

 

6.3                                 Indebtedness.

 

(a)                                  No
Credit Party shall create, incur, assume or permit to exist any Indebtedness,
except (without duplication) (i) Indebtedness secured by purchase money
security interests and Capital Leases permitted in Section 6.7(c), (ii) the
Loans and the other Obligations, (iii) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv)(A) existing
Indebtedness described in Disclosure Schedule (6.3), and
refinancings thereof or amendments or modifications thereto that do not have
the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and that are otherwise on
terms and conditions no less favorable to any Credit Party, Agent or any Lender,
as determined by Agent in good faith, than the terms of the Indebtedness being
refinanced, amended or modified, and (B) Indebtedness secured solely by a
Lien on the IVC Mortgaged Property in an outstanding principal amount not
exceeding the lesser of (x) $6,000,000 and (y) the fair market value of the IVC
Mortgaged Property at the time of the incurrence of such Indebtedness, as
determined by a nationally recognized independent real property appraisal firm; (v) Indebtedness specifically permitted under Section 6.17;
(vi) the Subordinated Debt evidenced by the Subordinated Notes and
refinancings thereof or amendments thereto to the extent permitted hereunder or
by the Intercreditor Agreement; (vii) the Subordinated Bonds; (viii) Indebtedness
consisting of intercompany loans and advances made by a Credit Party to any
other Credit Party; provided  that:  (A) each Credit Party receiving such
loan or advance shall, within 30 days of the date of such loan or advance,
execute and deliver to the other Credit Parties making such loan or advance a
demand note or such other documentation reasonably satisfactory to Agent, to
evidence any such intercompany Indebtedness owing at any time by such Credit
Party to such other Credit Parties which demand note or other documentation
shall be in form and substance reasonably satisfactory to Agent and shall be
pledged and delivered to Agent pursuant to the applicable Pledge Agreement or
Collateral Document (i) as additional collateral security for the
Obligations of all of the Credit Parties and the Eligible Swap Obligations of
the US Credit Parties in the case of intercompany loans from a US Credit Party,
and (ii) as additional collateral security for the Obligations of the
European Credit Parties only in the case of intercompany loans from a European
Credit Party; provided that if the execution and delivery of a note or
other documentation evidencing such loan or advance is not required to provide
Agent, on behalf of Lenders, with a first priority perfected security interest
in such intercompany Indebtedness, such execution and delivery shall not be
required; (B) each of the Credit Parties shall record all intercompany
transactions on its books and records in a manner reasonably satisfactory to
Agent; (C) the obligations of the Credit Parties with respect to such
intercompany loans and advances shall be subordinated to the Obligations and
the Eligible Swap Obligations pursuant to Section 11.18; (D) no
Default or Event of Default would occur and be continuing after giving 

 

59

 

effect to any such proposed intercompany
loan; and (E) the Restricted Credit Parties shall not be permitted to
incur any Indebtedness to any Credit Party if such Credit Party is not
permitted to advance such Indebtedness under Section 6.2(c), (ix) [Intentionally
Omitted]; (x) [Intentionally Omitted]; (xi) [Intentionally Omitted];
(xii) Indebtedness under Interest Hedge Agreements and Foreign Exchange
Agreements (including, without limitation, Lender Swap Contracts) entered into
in the ordinary course of business; provided  that such agreements
(A) are designed solely to protect Credit Parties against fluctuations in
foreign currency exchange rates or interest rates and (B) do not increase
the Indebtedness of the obligor outstanding at any time other than as a result
of fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder; and
(xiii) Indebtedness incurred by any Credit Party not to exceed at any time
$1,000,000 in the aggregate (or the Equivalent Amount thereof) for all Credit
Parties.

 

(b)                                 No
Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness, other than (i) the Obligations; (ii) Indebtedness
secured by a Permitted Encumbrance if the asset securing such Indebtedness has
been sold or otherwise disposed of in accordance with Sections 6.8(b) or
(c); (iii) Indebtedness permitted by Section 6.3(a)(i) so
long as any Liens securing such Indebtedness are terminated simultaneously
therewith; (iv) Indebtedness permitted by Section 6.3(a)(iv) upon
any refinancing thereof in accordance with Section 6.3(a)(iv); (v) Indebtedness
permitted by Section 6.3(a)(viii); (vi) payments of interest
by Innovations on the Subordinated Notes to the extent permitted by the
Intercreditor Agreement, and (vii) as otherwise permitted in Section 6.14.

 

6.4                                 Employee
Loans and Affiliate Transactions.

 

(a)                                  Except
as set forth on Disclosure Schedule (6.4) and except as otherwise
expressly permitted in this Section 6, with respect to (i) Restricted
Credit Parties (other than Orgenics Holding), no Credit Party shall enter into
or be a party to any transaction with any Restricted Credit Parties, except in
the ordinary course of business and consistent with past practices; and
(ii)Affiliates, no Credit Party shall enter into or be a party to any
transaction with any Affiliate of such Credit Party (other than any Affiliate
which is a Credit Party (other than Orgenics Holdings)) except in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party’s
business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm’s length transaction
with a Person not an Affiliate of such Credit Party.  In addition, if any such transaction or
series of related transactions with any Affiliate (other than a Credit Party) involves
payments in excess of $500,000 (or the Equivalent Amount thereof) in the
aggregate, the terms of these transactions must be disclosed in advance to
Agent and Lenders.  All such transactions
existing as of the date hereof are described in Disclosure Schedule (6.4(a)).

 

(b)                                 Except
as set forth on Disclosure Schedule (6.4(b)), no Credit Party shall
enter into any lending or borrowing transaction with any employees of any
Credit Party, except loans to its respective employees in the ordinary course
of business consistent with past practices for travel and entertainment
expenses, relocation costs and similar purposes up to a maximum of  $500,000 (or the
Equivalent Amount thereof) in the aggregate at any one time outstanding.

 

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6.5                                 Capital
Structure and Business.  No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations that could
reasonably be expected to have or result in a Material Adverse Effect, (b) make
any change in its capital structure as described in Disclosure Schedule (3.8),
including the issuance or sale of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
outstanding Stock, except that (i) Innovations may issue or sell shares of
its Stock (x) for cash so long as the proceeds thereof are applied in
prepayment of the Obligations to the extent required by Section 1.3(b)(iv),
and (y) in connection with consummation of a Permitted Acquisition, in each
case, so long as no Change of Control occurs after giving effect thereto, (ii) any
US Credit Party may issue or sell shares of its Stock to any other US Credit
Party (except that US Borrower shall not issue or sell any of its Stock to any
US Credit Party other than Innovations), (iii) any European Credit Party
may issue or sell shares of its Stock to any US Credit Party, and (iv) any
European Credit Party may issue or sell shares of its Stock to any other
European Credit Party, provided  that Borrower Representative
shall have provided Agent prior written notice of such issuance or sale and,
upon Agent’s request, the Borrowers shall have delivered to Agent an opinion of
counsel acceptable to Agent which shall provide (A) that Agent’s Lien on
the Stock so sold or issued shall, after giving effect to such sale or
issuance, continue in full force and effect and shall continue to have the
priority contemplated by this Credit Agreement and the other Loan Documents, (B) that
such issuance or sale does not violate applicable law, and (C) such other
opinions as Agent may reasonably request, all in form and substance
satisfactory to Agent, or (c) amend its charter or bylaws in a manner that
would adversely affect Agent, Lenders or any Eligible Swap Counterparty or such
Credit Party’s duty or ability to repay the Obligations and the Eligible Swap
Obligations.  No Credit Party shall
engage in any business other than the businesses currently engaged in by it or
businesses reasonably related thereto.

 

6.6                                 Guaranteed
Indebtedness. 
No Credit Party shall create, incur, assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred
for the benefit of any other Credit Party if the primary obligation is
expressly permitted by this Agreement.

 

6.7                                 Liens.  No Credit Party shall
create, incur, assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens (A) in
existence on the date hereof and summarized on Disclosure Schedule (6.7)
securing the Indebtedness described on Disclosure Schedule (6.3)
and permitted refinancings, extensions and renewals thereof, including
extensions or renewals of any such Liens; provided  that the
principal amount of the Indebtedness so secured is not increased and the Lien
does not attach to any other property, and (B) on the IVC Mortgaged
Property which secures Indebtedness permitted under clause (iv)(B) of Section 6.3;
(c) Liens created after the date hereof by conditional sale or other title
retention agreements (including Capital Leases) or in connection with purchase
money Indebtedness with respect to Equipment and Fixtures acquired by any
Credit Party in the ordinary course of business, involving the incurrence of an
aggregate amount of purchase money Indebtedness and Capital Lease Obligations
of not more than $3,000,000 (or the Equivalent Amount thereof) outstanding at
any one time for all such Liens (provided  that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within 20 days following such purchase and does not exceed 100% of the
purchase price of the subject 

 

61

 

assets); and (d) other Liens securing Indebtedness permitted by Section 6.3(a)(xiii).  In addition, no Credit Party shall become a
party to any agreement, note, indenture or instrument, or take any other
action, that would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of itself and Lenders and any
Eligible Swap Counterparty, as additional collateral for the Obligations and
the Eligible Swap Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.

 

6.8                                 Sale
of Stock and Assets.  No Credit Party shall sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, except as
permitted under Section 6.3 or 6.5, including the Stock of
any of its Subsidiaries (whether in a public or a private offering or
otherwise) or any of its Accounts, other than (a) the sale of Inventory in
the ordinary course of business, (b) the sale, transfer, conveyance or
other disposition by a Credit Party of Equipment, Fixtures or Real Estate that
are obsolete or no longer used or useful in such Credit Party’s business, other
Equipment and Fixtures and other assets (including the Stock of any Subsidiary)
having a value not exceeding $2,000,000 (or the Equivalent Amount thereof) in
the aggregate in any Fiscal Year; (c) [Intentionally Omitted.] (d) the
transfer by a US Credit Party of assets or the Stock of a Subsidiary of such US
Credit Party to another US Credit Party; provided  that
Innovations shall not transfer the Stock of US Borrower to another US Credit
Party; and (e) the transfer by a European Credit Party of assets or the
Stock of a Subsidiary of such European Credit Party to another European Credit
Party, provided  that Borrower Representative shall have provided
Agent prior written notice of such transfer and, upon Agent’s request, the
Borrowers shall have delivered to Agent an opinion of counsel acceptable to
Agent which shall provide (i) that Agent’s Lien on the Stock or assets so
transferred shall, after giving effect to such transfer, continue in full force
and effect and shall continue to have the priority contemplated by this Credit
Agreement and the other Loan Documents, (ii) that such transfer does not
violate applicable law and (iii) such other opinions as Agent may
reasonably request, all in form and substance satisfactory to Agent.  With respect to any disposition of assets or
other properties permitted pursuant to clauses (b) and (c) above,
subject to Section 1.3(b), Agent agrees on reasonable prior written
notice to release its Lien on such assets or other properties in order to
permit the applicable Credit Party to effect such disposition and shall execute
and deliver to Borrowers, at Borrowers’ expense, appropriate UCC-3 termination
statements and other releases as reasonably requested by Borrowers.

 

6.9                                 ERISA.  No Credit Party shall, or
shall cause or permit any ERISA Affiliate to, cause or permit to occur an event
that could result in the imposition of a Lien under Section 412 of the IRC
or Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event
to the extent such ERISA Event could reasonably be expected to have a Material
Adverse Effect. No Credit Party shall cause
of permit an event that could result in the imposition of a Lien with respect
to any Foreign Plan.  No Credit Party
shall cause or permit the fair market value of the assets of any funded Foreign
Plan, the liability of each insurer for such Foreign Plan funded through
insurance or the book reserve established for such Foreign Plan, together with
any accrued contributions, to become insufficient to satisfy all the
accumulated benefit obligations with respect to all current and former
participants in such Foreign Plan according to the actuarial assumptions and
valuations most recently used to account for such obligations in accordance
with generally accepted accounting principles to the extent such underfunding
could reasonably be expected to have a Material Adverse Effect.

 

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6.10                           Financial
Covenants. 
No Credit Party shall breach or fail to comply with any of the Financial
Covenants.

 

6.11                           Hazardous
Materials. 
No Credit Party shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for
any Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of
any of the Real Estate or any of the Collateral, other than such violations or
Environmental Liabilities that could not reasonably be expected to have a
Material Adverse Effect.

 

6.12                           Sale-Leasebacks.  Except as set forth on Disclosure
Schedule (6.12), no Credit Party shall engage in any sale-leaseback,
Synthetic Lease or similar transaction involving any of its assets.

 

6.13                           Cancellation
of Indebtedness. 
No Credit Party shall cancel any claim or debt owing to it, except for
reasonable consideration negotiated on an arm’s length basis and in the
ordinary course of its business consistent with past practices.

 

6.14                           Restricted
Payments.  No
Credit Party shall make any Restricted Payment, except (a) intercompany
loans and advances between Credit Parties to the extent permitted by Section 6.3,
provided  that any such intercompany loans and advances to
Innovations shall be used solely for the purposes set forth in the proviso in Section 6.20,
(b) dividends and distributions by any Subsidiary of a Credit Party to any
Credit Party (other than Innovations) which holds an interest in such
Subsidiary, (c) payments of principal and interest of intercompany loans
issued in accordance with Section 6.3, (d) employee loans
permitted under Section 6.4(b), (e) the Credit Parties may
make cash distributions to Innovations to enable Innovations to pay, and
Innovations may pay, debt service on the Subordinated Notes to the extent
permitted by the Intercreditor Agreement, provided  that, with
respect to this clause (e), (i) no Default or Event of Default has
occurred and is continuing or would result after giving effect to any such
Restricted Payment, and (ii) the timing of any such Restricted Payments
shall be set at a date that permits the delivery of Financial Statements
necessary to determine current compliance with the Financial Covenants prior to
such payment, (f) the Credit Parties may make cash distributions to
Innovations to enable Innovations to pay, and Innovations may pay, regularly
scheduled interest payments on Indebtedness incurred pursuant to the
Subordinated Bonds to the extent required by the Indenture; and (g) the
Credit Parties may make cash distributions to Innovations to enable Innovations
to prepay, and Innovations may prepay the outstanding obligations under the
Subordinated Notes; provided, that, with respect to this clause (g),
(i) no Default or Event of Default has occurred and is continuing or would
result after giving effect to such Restricted Payment, (ii) the 2005
Equity Raise shall have occurred; (iii) such payment shall be made within
270 days following the Closing Date; (iv) after giving effect to such
payment, Borrowers shall be in pro forma compliance with the Financial
Covenants most recently tested for which Financial Statements are available as
if such payment had occurred on the first day of the relevant test period; and (v) after
giving effect to such payment, US Borrower and European Borrower shall have
aggregate US Revolving Borrowing Availability, European Revolving Borrowing
Availability and available cash (not subject to any Lien other than 

 

63

 

Permitted Encumbrances (except for
Permitted Encumbrances of the type described in clauses (j) and (k) of the
definition thereof)) of at least $30,000,000.

 

6.15                           Change
of Corporate Name or Location; Change of Fiscal Year.  No Credit Party shall (a) change
its name as it appears in official filings in the jurisdiction of its
incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) change
its organization identification number, if any, issued by its jurisdiction of
incorporation or other organization, or (e) change its jurisdiction of
incorporation or organization, in each case without at least 15 days prior
written notice to Agent and after Agent’s written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, including requiring delivery of reasonably satisfactory
landlord agreements or bailee letters, has been completed or taken, and provided
that any such new location for any Credit Party shall be in the same
country in which such Collateral is held or stored as of the Closing Date.  Notwithstanding the foregoing, any Credit
Party may change the warehouses or locations at which Collateral is held or
stored without prior notice to Agent and Agent’s acknowledgement and without
obtaining a landlord agreement or bailee letter, as applicable, if the value of
the Collateral so transferred, together with all Collateral previously
transferred and not disposed of in accordance with the terms of this Agreement
and for which Agent has not received a reasonably satisfactory landlord waiver
or bailee letter is less than $2,000,000 in the aggregate,.  No Credit Party shall change its Fiscal Year.

 

6.16                           No
Impairment of Intercompany Transfers.  No Credit Party shall directly or indirectly
enter into or become bound by any agreement, instrument, indenture or other
obligation (other than this Agreement, the other Loan Documents, the
Indebtedness incurred pursuant to the Subordinated Bonds and the Subordinated
Notes and any agreement or indenture in connection therewith) that could
directly or indirectly restrict, prohibit or require the consent of any Person
with respect to the payment of dividends or distributions or the making or
repayment of intercompany loans by a Subsidiary of Innovations to Innovations
or to any Borrower or between Borrowers.

 

6.17                           No
Speculative Transactions.  No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.

 

6.18                           Leases.  No Credit Party shall enter
into any operating lease for Equipment or Real Estate, if the aggregate of all
such operating lease payments payable in any Fiscal Year for all Credit Parties
on a consolidated basis would exceed $13,500,000 (or the Equivalent Amount
thereof).

 

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6.19                           Changes
Relating to Subordinated Debt; Material Contracts.

 

(a)                                  No
Credit Party shall change or amend the terms of any Subordinated Debt Documents
unless otherwise expressly permitted under the Intercreditor Agreement or with
the consent of the Agent and the Requisite Lenders.

 

(b)                                 No
Credit Party shall change or amend the terms of any Material Contract.

 

6.20                           Business
Activities. 
From and after the consummation of the Related Transactions on the
Closing Date, Innovations shall not engage in any business or have any assets
or incur any Indebtedness or Guaranteed Indebtedness (other than the
Obligations) other than (i) owning the Stock of its Subsidiaries owned by
it as of the Closing Date or acquired following the Closing Date in accordance
with Section 6.1, (ii) the entering into, and the performance
of obligations under, this Agreement, the other Loan Documents to which it is a
party and the Related Transaction Documents to which it is a party, (iii) the
receipt of cash dividend or cash distribution from US Borrower in accordance
with the terms hereof, (iv) activities associated with expenses and other
amounts paid (including, but not limited to, prepayments of the obligations
outstanding under the Subordinated Notes) with any distributions paid to Innovations
which are permitted under Section 6.14, (v) Subordinated Debt
as evidenced by the Subordinated Debt Documents, (vi) incurring
Indebtedness to the extent permitted under Section 6.3(a)(viii), (vii) entering
into any agreements in connection with a Permitted Acquisition and undertaking
or assuming any obligations contemplated thereby (to the extent such entry,
undertaking or assumption does not and could not cause Innovations to violate
any other requirement of this Section 6.20), and (viii) the activities
described on Disclosure Schedule (6.20); provided, however,
Innovations may engage in activities incidental to (A) the maintenance of
its corporate existence in compliance with applicable law, (B) legal, tax
and accounting matters in connection with any of the foregoing activities and (C) the
licensing of intellectual property rights by Innovations from Swissco.  Unipath BV shall not engage in any business
or have any assets or incur any Indebtedness or Guaranteed Indebtedness and
shall dissolve on or before September 30, 2005.  Inverness Medical Germany GmbH shall not
engage in any business or have any assets or incur any Indebtedness or
Guaranteed Indebtedness other than, without duplication (i) owning the
Stock of its Subsidiaries owned by it as of the Closing Date or acquired
following the Closing Date in accordance with Section 6.1, (ii) the
entering into, and the performance of obligations (including the incurrence of
Indebtedness or Guaranteed Indebtedness) under, this Agreement, the other Loan
Documents to which it is a party and the Related Transaction Documents to which
it is a party, (iii) incurring Indebtedness to the extent permitted under Section 6.3(a)(viii);
provided, that, the proceeds of any such Indebtedness shall be
promptly contributed or loaned to one or more of its Subsidiaries or
distributed to one or more of its stockholders to the extent otherwise
permitted pursuant to the terms hereof; and (iv) owning assets consisting
of bank accounts and cash and financial assets therein in an amount not to
exceed $250,000 (or the Equivalent Amount thereof) at any time and intercompany
Indebtedness owing by its Subsidiaries.

 

6.21                           Collateral
In China.  At no time shall the aggregate value of all
assets, other than the value of Inverness Medical (Shanghai) Co., Ltd., owned
by the Credit Parties or any of the Excluded Subsidiaries (other than Inverness
Medical (Shanghai) Co. Ltd.) and located in China exceed $2,500,000.

 

65

 

7.                                      TERM

 

7.1                                 Termination.  The financing arrangements
contemplated hereby shall be in effect until the Commitment Termination Date,
and the Loans and all other Obligations shall be automatically due and payable
in full on such date.

 

7.2                                 Survival
of Obligations Upon Termination of Financing
Arrangements. 
Except as otherwise expressly provided for in the Loan Documents, no
termination or cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Agent and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date.  Except as otherwise expressly
provided herein or in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations of or binding upon the Credit
Parties, and all rights of Agent and each Lender, all as contained in the Loan
Documents, shall not terminate or expire, but rather shall survive any such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that the provisions of Section 11,
the payment obligations under Sections 1.15 and 1.16, and the
indemnities contained in the Loan Documents shall survive the Termination Date.

 

8.                                      EVENTS OF
DEFAULT; RIGHTS AND REMEDIES

 

8.1                                 Events
of Default. 
The occurrence of any one or more of the following events (regardless of
the reason therefor) shall constitute an “Event of Default” hereunder:

 

(a)                                  Any
Borrower (i) fails to make any payment of principal of, or interest on,
the Loans or any of the other Obligations when due and payable, (ii) fails
to make any payment of Fees owing in respect of the Loans or any of the other
Obligations when due and payable and such failure continues for a period of 3
Business Days or more, or (iii) fails to pay or reimburse Agent or Lenders
for any expense reimbursable hereunder or under any other Loan Document within
10 days following Agent’s demand for such reimbursement or payment of expenses.

 

(b)                                 Any
Credit Party fails or neglects to perform, keep or observe any of the
provisions of Sections 1.1(i), 1.4, 1.8, 5.1, 5.4(a), 5.9, 5.10, 5.13(b),
5.14, 5.15, 5.17 or 6, or any of the provisions set forth in Annexes C
or F,  respectively.

 

(c)                                  Any
Borrower fails or neglects to perform, keep or observe any of the provisions of
Section 4 or any provisions set forth in Annexes E,
respectively, and the same shall remain unremedied for 3 Business Days or more.

 

(d)                                 Any
Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for 30
days or more.

 

66

 

(e)                                  A
default or breach occurs under any other agreement, document or instrument to
which any Credit Party is a party that is not cured within any applicable grace
period therefor, and such default or breach (i) involves the failure to
make any payment when due in respect of any Indebtedness or Guaranteed
Indebtedness (other than the Obligations) of any Credit Party (other than any
Immaterial Subsidiary) in excess of $1,000,000 (or the Equivalent Amount
thereof) in the aggregate (including (x) undrawn committed or available
amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of
such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of
$1,000,000 (or the Equivalent Amount thereof) in the aggregate to become due
prior to its stated maturity or prior to its regularly scheduled dates of
payment, or cash collateral in respect thereof to be demanded, in each case,
regardless of whether such default is waived, or such right is exercised, by
such holder or trustee.

 

(f)                                    Any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate made or delivered to
Agent or any Lender by (i) any Credit Party (other than an Immaterial
Subsidiary) is untrue or incorrect in any material respect as of the date when
made or deemed made or (ii) any Immaterial Subsidiary is untrue or
incorrect in any material respect as of the date when made or deemed made and
such breach could reasonably be expected to have a Material Adverse Effect.

 

(g)                                 Assets
of any Credit Party with a fair market value of $1,000,000 (or the Equivalent
Amount thereof) or more are attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of any Credit Party
and such condition continues for 30 days or more.

 

(h)                                 A
case or proceeding is commenced against any Credit Party (other than any
Immaterial Subsidiary) seeking a decree or order in respect of such Credit
Party (i) under the Bankruptcy Code, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, examiner, assignee, trustee or sequestrator
(or similar official) for such Credit Party or for any substantial part of any
such Credit Party’s assets, or (iii) ordering the winding-up or
liquidation or examinership of the affairs of such Credit Party, and such case
or proceeding shall remain undismissed or unstayed for 60 days or more or a
decree or order granting the relief sought in such case or proceeding shall be
entered by a court of competent jurisdiction.

 

(i)                                     Any
Credit Party (other than any Immaterial Subsidiary) (i) files a petition
seeking relief under the Bankruptcy Code, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) consents to or
fails to contest in a timely and appropriate manner the institution of
proceedings thereunder or the filing of any such petition or the appointment of
or taking possession by a custodian, receiver, liquidator, examiner, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party’s assets, (iii) makes an
assignment for the benefit of creditors, (iv) takes any action in
furtherance of any of the foregoing; or (v) admits in writing its
inability to, or is generally unable to, pay its debts as such debts become
due.

 

67

 

(j)                                     A
final judgment or judgments for the payment of money in excess of $500,000 (or
the Equivalent Amount thereof) in the aggregate at any time are outstanding
against one or more of the Credit Parties (other than any Immaterial
Subsidiary) and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.

 

(k)                                  Any
material provision of any Loan Document for any reason ceases to be valid,
binding and enforceable in accordance with its terms (or any Credit Party shall
challenge the enforceability of any Loan Document or shall assert in writing,
or engage in any action or inaction based on any such assertion, that any
provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.

 

(l)                                     Any
Change of Control occurs or, for so long as any Subordinated Bonds remain
outstanding, any “Change of Control” (as such term is defined in the
Indenture).

 

(m)                               Any
event occurs, whether or not insured or insurable, as a result of which
revenue-producing activities cease or are substantially curtailed at any
facility of Credit Parties generating more than 10% of Credit Parties’
consolidated revenues for the Fiscal Year preceding such event, and such
cessation or curtailment continues for more than 20 days.

 

(n)                                 Any
default or breach by any Credit Party occurs and is continuing under any
Material Contract that could reasonably be expected to have a Material Adverse
Effect or any Material Contract shall be terminated by the other party thereto
for any reason (other than the expiration of such Material Contract in
accordance with the terms thereof) and such termination could reasonably be
expected to have a Material Adverse Effect.

 

(o)                                 Any “Default”
or “Event of Default” under and as defined in the Subordinated Debt
Documents occurs.

 

(p)                                 Any
of the Excluded Subsidiaries, other than Inverness Medical (Shanghai) Co.,
Ltd., fails or neglects to perform, keep or observe
any of the provisions set forth in Section 11.19.

 

8.2                                 Remedies.

 

(a)                                  If
any Default or Event of Default has occurred and is continuing, Agent may (and
at the written request of the US Requisite Revolving Lenders or the Requisite
Lenders shall), without notice, suspend the US Revolving Loan facility with
respect to additional Advances and/or the incurrence of additional Letter of
Credit Obligations thereunder, whereupon, subject to the provisions of Section 2.2,
any additional Advances and additional Letter of Credit Obligations in respect
of the US Revolving Loan facility shall be made or incurred in Agent’s sole
discretion (or in the sole discretion of the US Requisite Revolving Lenders or
the Requisite Lenders, if such suspension occurred at their direction) so long
as such Default or Event of Default is continuing.  If any Default or Event of Default has
occurred and is continuing, Agent may (and at the written request of the
European Requisite Revolving Lenders 

 

68

 

or the Requisite Lenders shall), without
notice, suspend the European Revolving Loan facility with respect to additional
Advances and/or the incurrence of additional Letter of Credit Obligations
thereunder, whereupon, subject to the provisions of Section 2.2,
any additional Advances and additional Letter of Credit Obligations in respect
of the European Revolving Loan facility shall be made or incurred in Agent’s
sole discretion (or in the sole discretion of the European Requisite Revolving
Lenders or the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing.  If any Default or Event of Default has
occurred and is continuing, Agent may (and at the written request of Requisite
Lenders shall), without notice except as otherwise expressly provided herein,
increase the rate of interest applicable to the Loans and the Letter of Credit
Fees to the Default Rate.

 

(b)                                 If
any Event of Default has occurred and is continuing, Agent may (and at the
written request of the Requisite Lenders shall), without notice: (i) terminate
the US Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) terminate the
European Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (iii) declare all or
any portion of the Obligations, including all or any portion of any Loan to be
forthwith due and payable, and require that the Letter of Credit Obligations be
cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrowers and each other Credit Party; or (iv) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code (or the foreign
equivalent) and under the Irish Conveyancing and Law of Property Act 1881 as
amended by the Irish Conveyancing Acts 1882 and 1911; provided, that
upon the occurrence of an Event of Default specified in Sections 8.1(h) or
(i), the US Revolving Loan facility and the European Revolving Loan
facility shall be immediately terminated and all of the Obligations, including
the aggregate US Revolving Loan and the European Revolving Loan, shall become
immediately due and payable without declaration, notice or demand by any
Person.

 

8.3                                 Waivers
by Credit Parties. 
Except as otherwise provided for in this Agreement or by applicable law,
each Credit Party waives:  (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way
be liable, and hereby ratifies and confirms whatever Agent may do in this
regard, (b) all rights to notice and a hearing prior to Agent’s taking
possession or control of, or to Agent’s replevy, attachment or levy upon, the
Collateral or any bond or security that might be required by any court prior to
allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.

 

9.                                      ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

9.1                                 Assignment
and Participations.

 

Subject to the
terms of this Section 9.1, any Lender may make an assignment of, or
sell participations in, at any time or times, the Loan Documents, Loans, Letter of Credit Obligations

 

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and any Commitment or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties
thereunder.  Any assignment by a Lender
shall:  (i) require the consent of
Agent, which consent, shall not be unreasonably withheld, and the execution of
an assignment agreement (an “Assignment Agreement”) substantially in the
form attached hereto as Exhibit 9.1(a) and otherwise in form
and substance reasonably satisfactory to, and acknowledged by, Agent; provided
that such consent shall not be required with respect to an assignment to
a Lender, an Affiliate of a Lender or to an investment fund that invests in
commercial loans and that is managed or advised by a Lender, an Affiliate of a
Lender, the same investment advisor that manages a Lender or by an Affiliate of
such investment advisor; (ii) be conditioned on such assignee Lender
representing to the assigning Lender and Agent that it is purchasing the
applicable Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment of a Revolving Loan Commitment,
the assignee Lender shall have a Revolving Loan Commitment in an amount at
least equal to $2,500,000; provided  that such amounts shall not
be applicable to any assignment to a Lender, an Affiliate of a Lender or to an
investment fund that invests in commercial loans and that is managed or advised
by a Lender, an Affiliate of a Lender, the same investment advisor that manages
a Lender or by an Affiliate of such investment advisor; (iv) after giving
effect to any such partial assignment of a Term Loan Commitment, the assignee
Lender shall have a Term Loan Commitment in an amount at least equal to
$2,000,000; provided  that such amounts shall not be applicable to
any assignment to a Lender, an Affiliate of a Lender or to an investment fund
that invests in commercial loans and that is managed or advised by a Lender, an
Affiliate of a Lender, the same investment advisor that manages a Lender or by
an Affiliate of such investment advisor; (v) include a payment to Agent of
an assignment fee of $3,500; and (vi) so long as no Event of Default has
occurred and is continuing, require the consent of Borrower Representative,
which shall not be unreasonably withheld or delayed; provided  that
such consent shall not be required for an assignment to any Lender, an
Affiliate of a Lender or to an investment fund that invests in commercial loans
and that is managed or advised by a Lender, an Affiliate of a Lender, the same
investment advisor that manages a Lender or by an Affiliate of such investment
advisor.  In the case of an assignment by
a Lender under this Section 9.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as all
other Lenders hereunder.  In addition,
any assignment by a European Lender of its Loans and Commitments shall only be
made as an integrated part of (and any such assignment shall be deemed to be
and constitute evidence of) an assignment on a proportionate basis of such
Lender’s rights and interest under the Collateral Documents to which it is a
party and in the Collateral created or granted thereunder.  The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment.  Each Borrower hereby acknowledges and agrees
that any assignment shall give rise to a direct obligation of Borrowers to the
assignee and that the assignee shall be considered to be a “Lender”.  In all instances, each Lender’s liability to
make Loans hereunder shall be several and not joint and shall be limited to
such Lender’s Pro Rata Share of the applicable Commitment.  In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such
Lender shall so notify Borrowers and Borrowers shall, upon the request of Agent
or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned.  Notwithstanding the foregoing
provisions of this Section 9.1(a), (i) any Lender may at any
time pledge the Obligations held by it and such Lender’s rights under this
Agreement and the other Loan Documents to a Federal Reserve Bank,

 

70

 

provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender’s obligations hereunder or under any other Loan
Document, (ii) any Lender may at any time pledge the Obligations held by
it and such Lender’s rights under this Agreement and the other Loan Documents
to its lender, provided, however, that no such pledge
shall permit any assignee lender to exercise any rights of the pledging Lender
under this Agreement and the other Loan Documents other than its right to
payment of the Obligations, and no such pledge shall release such Lender from
such Lender’s obligations hereunder or under any other Loan Document and any
pledge in violation of the foregoing shall be null and void, and (iii) any
Lender that is an investment fund may assign the Obligations held by it and
such Lender’s rights under this Agreement and the other Loan Documents to
another investment fund managed by the same investment advisor.  The Lenders acknowledge and agree that in
order for any assignee Lender or participant to have the benefit of (i) that
certain Second Amended and Restated Guarantee between Swissco, as Guarantor,
and GE Capital, as Security Agent, dated as of June 30, 2005, as amended,
restated, supplemented or otherwise modified from time to time, and (ii) that
certain Second Amended and Restated Security Assignment between Swissco, as
Assignor, and GE Capital, as Security Agent, dated 30 June 2005, as
amended, restated, supplemented or otherwise modified from time to time, the
assigning Lender must take such actions as may be required under the laws of
Switzerland to ensure that such assignee Lender or participant obtains the
benefits of such Guarantee and Security Assignment.  The Lenders acknowledge and agree that in
order for any assignee Lender or participant to have the benefit of the
security granted with respect to certain bank accounts with Austrian banks
under (i) the bank account pledge agreement by and among DMD,
DIENSTLEISTUNGEN & VERTRIEB FÜR MEDIZIN UND DIAGNOSTIK GMBH, GE
Capital as Administrative Agent and the Lenders and (ii) the bank account
pledge agreement by and among VIVA DIAGNOSTIKA - DIAGNOSTISCHE PRODUKTE - GMBH,
Agent and the Lenders, both as amended, supplemented or otherwise modified from
time to time, the parties to such agreements must take such actions as may be
required under Austrian law to ensure that an assignee Lender or participant
obtains the benefits of such security, in particular by complying with the
assignment provisions as stipulated in such agreements.  In connection with any such assignment or
participation, Agent shall use reasonable efforts to make available to any such
assigning Lender its local counsel in those foreign jurisdictions in which any
such actions may be required in connection with such assignment or
participation.

 

(a)                                  Any
participation by a Lender of all or any part of its Commitments shall be made
with the understanding that all amounts payable by Borrowers hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except actions directly affecting (i) any
reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension
of the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents).  Solely for purposes of Sections
1.13, 1.15, 1.16 and 9.8, each Borrower acknowledges and agrees that a participation shall give rise to a direct obligation of
Borrowers to the participant and the participant shall be considered to be a “Lender”.  Except as set forth in the preceding sentence
no Borrower or Credit Party shall have any obligation or duty to any
participant.  Neither Agent nor any
Lender (other than the Lender 

 

71

 

selling a participation) shall have any duty to any participant and may
continue to deal solely with the Lender selling a participation as if no such
sale had occurred.

 

(b)                                 Except
as expressly provided in this Section 9.1, no Lender shall, as
between Borrowers and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.

 

(c)                                  Each
Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as shall be
reasonably requested and, if so requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. 
Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit
Parties and their respective affairs contained in any selling materials
provided by them and all other information provided by them and included in
such materials, except that any Projections delivered by Borrowers shall only
be certified by Borrowers as having been prepared by Borrowers in compliance
with the representations contained in Section 3.4(c).

 

(d)                                 Any
Lender may furnish any information concerning Credit Parties in the possession
of such Lender from time to time to assignees and participants (including
prospective assignees and participants); provided  that such
Lender shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.

 

(e)                                  So
long as no Event of Default has occurred and is continuing, no Lender shall
assign or sell participations in any portion of its Loans or Commitments to a
potential Lender or participant, if, as of the date of the proposed assignment
or sale, the assignee Lender or participant would be subject to capital
adequacy or similar requirements under Section 1.16(a), increased
costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).

 

(f)                                    Agent
agrees to record each Term Loan and each Advance on the Register referred to in
Section 9.1(h).  Each Term
Loan and each Advance recorded on the Register (the “Registered Loan”)
may not be evidenced by promissory notes other than Registered Notes (as
defined below).  Upon the registration of
each Term Loan or each Advance, each Borrower agrees, at the request of any
Lender, to execute and deliver to such Lender a promissory note, in conformity
with the terms of this Agreement, in registered form to evidence such
Registered Loan, in form and substance reasonably satisfactory to such Lender,
and registered as provided in Section 9.1(h) (a “Registered
Note”), payable to the order of such Lender and otherwise duly completed, provided
that any Registered Note issued to evidence Advances shall be issued in
the principal amount of the applicable Lender’s US Revolving Loan Commitment or
European Revolving Loan Commitment, as applicable.  Once recorded on the Register, each Term Loan
and each Advance may not be removed from the Register so long as it or they
remain outstanding, and a Registered Note may not be exchanged for a promissory
note that is not a Registered Note.

 

72

 

(g)                                 Agent
shall maintain, on behalf of Borrower, or cause to be maintained, a register
(the “Register”) on which it enters the name of a Lender as the
registered owner of each Term Loan and each Advance, as the case may be, held
by such Lender.  A Registered Loan (and
the Registered Note, if any, evidencing the same) may be assigned or sold in
whole or in part only by registration of such assignment or sale on the
Register (and each Registered Note shall expressly so provide).  Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register (other
than with respect to an assignment or delegation to an Affiliate of Lender),
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered
Notes in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s).  Prior to
the registration of assignment or sale of any Registered Loan (and the
Registered Note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Loan (and the Registered Note, if any, evidencing the same)
is registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding notice to the
contrary.  In the case of an assignment
or delegation to an Affiliate of Lender, the assigning Lender shall maintain a
comparable Register, on behalf of Borrower Representative.

 

(i)                                     In
the event that a Lender sells participations in the Registered Loan, such
Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the “Participant Register”).  A Registered Loan (and the Registered Note,
if any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). 
Any participation of such Registered Loan (and the Registered Note, if
any, evidencing the same) may be effected only by the registration of such
participation on the Participant Register.

 

9.2                                 Appointment
of Agent.  GE
Capital is hereby appointed to act on behalf of all Lenders as Agent under this
Agreement and the other Loan Documents. 
The provisions of this Section 9.2 are solely for the
benefit of Agent and Lenders and no Credit Party nor any other Person shall
have any rights as a third party beneficiary of any of the provisions
hereof.  In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for
any Credit Party or any other Person (other than Lenders).  Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents.  The duties of
Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan
Document or otherwise a fiduciary relationship or other relationship in respect
of any Lender except as expressly set forth herein.  Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity.  Neither
Agent nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under 

 

73

 

any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.

 

Each Lender hereby authorizes and empowers Agent with
the right of delegation and substitution and under relief from any restrictions
(including but not limited to restrictions of Section 181 German Civil Code)
to execute on its sole signature on behalf of such Lender any and all
agreements, sub-powers-of-attorney to third persons or other instruments and
take such actions, make all statements and accept all declarations deemed
necessary or useful in order to effect any Collateral on behalf of such Lender.

 

If Agent shall request instructions from Requisite
Lenders, US Requisite Revolving Lenders, European Requisite Revolving Lenders,
Requisite Term Lenders, Majority Lenders or all affected Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, US Requisite Revolving Lenders, European
Requisite Revolving Lenders, Requisite Term Lenders, Majority Lenders or all
affected Lenders, as the case may be, and Agent shall not incur liability to
any Person by reason of so refraining. 
Agent shall be fully justified in failing or refusing to take any action
hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent,
expose Agent to Environmental Liabilities or (c) if Agent shall not first
be indemnified to its satisfaction against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.  Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a result
of Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders, US Requisite
Revolving Lenders, European Requisite Revolving Lenders, Requisite Term
Lenders, Majority Lenders or all affected Lenders, as applicable.

 

9.3                                 Agent’s
Reliance, Etc. 
Neither Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
or the other Loan Documents, except for damages caused by its or their own
gross negligence or willful misconduct. 
Without limiting the generality of the foregoing, Agent:  (a)  may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form reasonably satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the advice of
such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or the other Loan Documents on
the part of any Credit Party or to inspect the Collateral (including the books and
records) of any Credit Party; (e) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (f) shall
incur no

 

74

 

liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

 

9.4                                 GE
Capital and Affiliates.  With respect to its
Commitments hereunder, GE Capital shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agent; and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated, include GE Capital in its
individual capacity.  GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not Agent and without any duty to account therefor to
Lenders.  GE Capital and its Affiliates
may accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges the potential conflict of interest
between GE Capital as a Lender holding disproportionate interests in the Loans
and GE Capital as Agent.

 

9.5                                 Lender
Credit Decision. 
Each Lender acknowledges that it has, independently and without reliance
upon Agent or any other Lender and based on the Financial Statements referred
to in Section 3.4(a) and such other documents and information
as it has deemed appropriate, made its own credit and financial analysis of the
Credit Parties and its own decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.  Each Lender acknowledges
the potential conflict of interest of each other Lender as a result of Lenders
holding disproportionate interests in the Loans, and expressly consents to, and
waives any claim based upon, such conflict of interest.

 

9.6                                 Indemnification.  Lenders agree to indemnify
Agent (to the extent not reimbursed by Credit Parties and without limiting the
obligations of Credit Parties hereunder), ratably according to their respective
Pro Rata Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against Agent in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted to be taken by Agent
in connection therewith; provided, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent’s gross negligence or willful misconduct. 
Without limiting the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.

 

75

 

9.7                                 Successor
Agent.  Agent
may resign at any time by giving not less than 30 days’ prior written notice
thereof to Lenders and Borrower Representative. 
Upon any such resignation, the Requisite Lenders shall have the right to
appoint a successor Agent.  If no
successor Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Agent’s
giving notice of resignation, then the resigning Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is
willing to accept such appointment, or otherwise shall be a commercial bank or
financial institution or a subsidiary of a commercial bank or financial institution
if such commercial bank or financial institution is organized under the laws of
the United States of America or of any State thereof and has a combined capital
and surplus of at least $300,000,000.  If
no successor Agent has been appointed pursuant to the foregoing, within 30 days
after the date such notice of resignation was given by the resigning Agent,
such resignation shall become effective and the Requisite Lenders shall
thereafter perform all the duties of Agent hereunder until such time, if any,
as the Requisite Lenders appoint a successor Agent as provided above.  Any successor Agent appointed by Requisite
Lenders hereunder shall be subject to the approval of Borrower Representative,
such approval not to be unreasonably withheld or delayed; provided  that
such approval shall not be required if a Default or an Event of Default has
occurred and is continuing.  Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. 
Upon the earlier of the acceptance of any appointment as Agent hereunder
by a successor Agent or the effective date of the resigning Agent’s
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue.  After any resigning Agent’s
resignation hereunder, the provisions of this Section 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was acting as Agent under this Agreement and the other Loan Documents.

 

9.8                                 Setoff
and Sharing of Payments.  In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default and
subject to Section 9.9(f), each Lender is hereby authorized at any
time or from time to time, without notice to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of any Borrower or Guarantor (regardless of whether such
balances are then due to such Borrower or Guarantor) and any other properties
or assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of any Borrower or Guarantor against and on account
of any of the Obligations that are not paid when due.  Any Lender exercising a right of setoff or
otherwise receiving any payment on account of the Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders
shall sell) such participations in each such other Lender’s or holder’s Pro
Rata Share of the Obligations as would be necessary to cause such Lender to
share the amount so offset or otherwise received with each other Lender or
holder in accordance with their respective Pro Rata Shares (other than offset
rights exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16).  Each Lender’s obligation under this Section 9.8
shall be in addition to and not in limitation of its obligations to purchase a
participation in an amount equal to its Pro Rata Share of the US Swing Line
Loan and European Swing Line Loan under Section 1.1.  Each Credit Party executing this Agreement
agrees, to the fullest extent permitted by law, that (a) any Lender may
exercise its right to offset 

 

76

 

with respect to amounts in excess of its
Pro Rata Share of the Obligations and may sell participations in such amounts
so offset to other Lenders and holders and (b) any Lender so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of offset, bankers’ lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of the Loans and the other Obligations in the
amount of such participation. 
Notwithstanding the foregoing, if all or any portion of the offset
amount or payment otherwise received is thereafter recovered from the Lender
that has exercised the right of offset, the purchase of participations by that
Lender shall be rescinded and the purchase price restored without interest.

 

9.9                                 Advances;
Payments; Non-Funding Lenders; Information; Actions in Concert.

 

(a)                                  Advances;
Payments.

 

(i)                                     Revolving Lenders shall refund or participate in (A) the US
Swing Line Loan in accordance with clauses (iii) and (iv) of
Section 1.1(e) and (B) the European Swing Line Loan in
accordance with clauses (iii) and (iv) of Section 1.1(f),
as applicable.  If the Swing Line Lender
declines to make a US Swing Line Loan or a European Swing Line Loan or if US
Swing Line Availability or European Swing Line Availability (as the case may
be) is zero, Agent shall notify US Revolving Lenders or European Revolving
Lenders, as applicable, promptly after receipt of a Notice of US Revolving
Credit Advance or Notice of European Revolving Credit Advance (as the case may
be) and in any event prior to 1:00 p.m. (New York time) on the date such
notice is received, by telecopy, telephone or other similar form of
transmission.  Each US Revolving Lender
or European Revolving Lender, as applicable, shall make the amount of such
Lender’s Pro Rata Share of such Revolving Credit Advance available to Agent in
same day funds by wire transfer to Agent’s account as set forth in Annex G
not later than 3:00 p.m. (New York time) on the requested funding date, in
the case of an Index Rate Loan, and not later than 11:00 a.m. (New York
time) on the requested funding date, in the case of a LIBOR Loan.  After receipt of such wire transfers (or, in
the Agent’s sole discretion, before receipt of such wire transfers), subject to
the terms hereof, Agent shall make the requested Revolving Credit Advance to
the Borrower designated by Borrower Representative in the Notice of US
Revolving Credit Advance or the Notice of European Revolving Credit Advance, as
the case may be.  All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction of any
kind.

 

(ii)                                  On the 2nd Business Day of each calendar week or more frequently at
Agent’s election (each, a “Settlement Date”), Agent shall advise each
Lender by telephone, or telecopy of the amount of such Lender’s Pro Rata Share
of principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan.  Provided that each
Lender has funded all payments or Advances required to be made by it and has
purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Agent shall
pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees
paid by Borrowers since the previous Settlement Date for the benefit of such
Lender on the Loans held by it.  To the
extent that any Lender (a “Non-Funding Lender”) has failed to fund all
such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against

 

77

 

that Non-Funding Lender’s Pro Rata Share of all payments received
from Borrowers.  Such payments shall be
made by wire transfer to such Lender’s account (as specified by such Lender to
Agent) not later than 1:00 p.m. (Chicago time) 2:00 p.m. (New York
time) on the next Business Day following each Settlement Date.

 

(b)                                 Availability
of Lender’s Pro Rata Share.  Agent may assume that each Revolving Lender
will make its Pro Rata Share of each Revolving Credit Advance available to
Agent on each funding date.  If such Pro
Rata Share is not, in fact, paid to Agent by such Revolving Lender when due,
Agent will be entitled to recover such amount on demand from such Revolving
Lender without setoff, counterclaim or deduction of any kind.  If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent.  Nothing in this Section 9.9(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder
or to prejudice any rights that Borrowers may have against any Revolving Lender
as a result of any default by such Revolving Lender hereunder.  To the extent that Agent advances funds to
any Borrower on behalf of any Revolving Lender and is not reimbursed therefor
on the same Business Day as such Advance is made, Agent shall be entitled to retain
for its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.

 

(c)                                  Return
of Payments.

 

(i)                                     If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand
without setoff, counterclaim or deduction of any kind.

 

(ii)                                  If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to any Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent
will not be required to distribute any portion thereof to any Lender.  In addition, each Lender will repay to Agent
on demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to any
Borrower or such other Person, without setoff, counterclaim or deduction of any
kind.

 

(d)                                 Non-Funding
Lenders.  The
failure of any Non-Funding Lender to make any Revolving Credit Advance or any
payment required by it hereunder or to purchase any participation in any US
Swing Line Loan or European Swing Line Loan to be made or purchased by it on
the date specified therefor shall not relieve any other Lender (each such other
Revolving Lender, an “Other Lender”) of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder.  Notwithstanding anything set
forth herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any 

 

78

 

Loan Document or constitute a “Lender” or a
“Revolving Lender” (or be included in the calculation of “Requisite Lenders”, “US
Requisite Revolving Lenders”, “European Requisite Revolving Lenders”, “Majority
Lenders” or “Requisite Term Lenders” hereunder) for any voting or consent
rights under or with respect to any Loan Document.  At Borrower Representative’s request, Agent
or a Person reasonably acceptable to Agent shall have the right with Agent’s
consent and in Agent’s sole discretion (but shall have no obligation) to
purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that
it shall, at Agent’s request, sell and assign to Agent or such Person, all of
the Commitments of that Non-Funding Lender for an amount equal to the principal
balance of all Loans held by such Non-Funding Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.

 

(e)                                  Dissemination
of Information. 
Agent shall use reasonable efforts to provide Lenders with any notice of
Default or Event of Default received by Agent from, or delivered by Agent to,
any Credit Party, with notice of any Event of Default of which Agent has
actually become aware and with notice of any action taken by Agent following
any Event of Default; provided, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable to Agent’s gross negligence or willful misconduct.  Lenders acknowledge that Borrowers are
required to provide Financial Statements to Lenders in accordance with Annex
E hereto and agree that Agent shall have no duty to provide the same to
Lenders.

 

(f)                                    Actions in Concert.  Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no
Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders.

 

9.10                           Agent as
Joint Creditor.

 

(a)                                  (a) Each
of the Credit Parties and each of the Lenders agree that Agent shall be the
joint creditor (together with the relevant Lender) of each and every Obligation
of any Credit Party towards each and any of the Lenders under the Loan Documents,
and that accordingly Agent shall have its own independent right to demand
performance by such Credit Party of those Obligations when due.  Any discharge of any Obligation to Agent
shall, to the same extent, discharge the corresponding obligation owing to the
Lenders.

 

(b)                                 Without
limiting the generality of sub-paragraph (a) above,                      for the purpose of creating a solidarité
active in accordance with Article 1541 of the Civil Code of
Quebec, between each Lender, taken individually, on the one hand, and the
Agent, on the other hand, each Credit Party and each such Lender acknowledge
and agree with the Agent that such Lender and the Agent are hereby conferred
the legal status of solidary creditors of each Credit Party in respect of all
Obligations, present and future, owed by each Credit Party to each such Lender
and the Agent (collectively, the “Solidary Claim”).  Accordingly, but subject (for the avoidance
of doubt) to Article 1542 of the Civil Code of Quebec, each Credit Party
is 

 

79

 

irrevocably bound towards the Agent and each Lender with respect to the amount
of the entire Solidary Claim owed by it. 
As a result of the foregoing, the parties hereto acknowledge that the
Agent and each Lender shall at all times have a valid and effective right of
action for the entire Solidary Claim of the Agent and such Lender and the right
to give full acquittance for it. 
Accordingly, without limiting the generality of the foregoing, the
Agent, as solidary creditor with each Lender, shall at all times have a valid
and effective right of action in respect of all Obligations, present and
future, owed by each Credit Party to the Agent and to the Lender or any of them
and the right to give a full acquittance for same.  The parties further agree and acknowledge
that the Agent’s Liens on the Collateral shall be granted to the Agent, for its
own benefit and for the benefit of the Lenders.

 

(c)                                  Without
limiting or affecting Agent’s rights against any Credit Party (whether under
this paragraph or under any other provision of the Loan Documents), Agent
agrees with each Lender, severally but not jointly, that it shall exercise its
rights as a joint creditor with respect to the security interest granted under
the Loan Documents in accordance with the Credit Agreement and such Loan
Documents.  However, nothing in the
previous sentence shall limit to any extent Agent’s rights in whatever capacity
to take any action to protect or preserve any rights under any Loan Document or
to enforce any security interest created thereby as contemplated by the Credit
Agreement and the Loan Documents (or to do any act reasonably incidental to the
foregoing).

 

(d)                                 This Section 9.10
applies unless Agent specifies that it shall not apply in relation to a specific
Credit Party or all Credit Parties incorporated in a particular jurisdiction.

 

9.11                           Compliance
with Foreign Law. 
Each Lender hereby authorizes Agent on behalf of itself and Lenders to
take a Lien upon all of IMC’s right, title and interest in, to and under all
personal (movable) property and assets, whether now owned or hereafter acquired
under the laws of the Province of Quebec, Canada.

 

9.12                           Eligible
Swap Counterparties.  It is understood and agreed that the rights
and benefits of any Eligible Swap Counterparty under the Loan Documents consist
exclusively of such Eligible Swap Counterparty’s right to share in payments and
collections out of the Collateral as more fully set forth (and subject to the
limitations set forth) herein and therein and to receive payments, if any, in
accordance with Section 1.3(c).

 

10.                               SUCCESSORS AND ASSIGNS

 

10.1                           Successors
and Assigns. 
This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, Agent, Lenders and their
respective successors and assigns (including, in the case of any Credit Party,
a debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein.  No Credit
Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Lenders.  Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express
written consent of Agent and Lenders shall be void.  The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Agent and Lenders

 

80

 

with respect to the transactions contemplated hereby and no Person shall
be a third party beneficiary of any of the terms and provisions of this
Agreement or any of the other Loan Documents. 
For the purpose of Article 1278 and following of the French Civil
Code, the Credit Parties agree that upon any novation, whether due to a
transfer or otherwise under this Agreement, any and all security and guarantees
created by the Loan Documents are hereby and shall be expressly preserved for
the benefit of any assignee Lender and the other Lenders; provided, however, no
assignments, transfers, hypothecations or other conveyances under this Section 10.1
are intended to act as a novation of any of the rights, benefits, duties or
obligations of the respective parties hereto, hereunder or under any of the
other Loan Documents.

 

11.                               MISCELLANEOUS

 

11.1                           Complete
Agreement; Modification of Agreement.  The Loan Documents constitute the complete
agreement between the parties with respect to the subject matter thereof and
may not be modified, altered or amended except as set forth in Section 11.2.  Any letter of interest, commitment letter or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.

 

11.2                           Amendments
and Waivers.

 

(a)                                  Except
for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or any consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Agent and Borrowers, and by Requisite Lenders, US Requisite
Revolving Lenders, European Requisite Revolving Lenders, Requisite Term Lenders
or all affected Lenders, as applicable. 
Except as set forth in clauses (b) and (c) below
and as otherwise expressly provided in this Agreement, all such amendments,
modifications, terminations or waivers shall require the written consent of
Requisite Lenders.

 

(b)                                 No
amendment, modification, termination or waiver of or consent with respect to
any provision of this Agreement that waives compliance with the conditions
precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Lenders, US Requisite
Revolving Lenders (with respect to the making of any US Revolving Credit
Advance, converting or continuing any US Revolving Loan as a LIBOR Loan or
incurring any Letter of Credit Obligation on behalf of US Borrower), European
Requisite Revolving Lenders (with respect to the making of any European
Revolving Credit Advance, converting or continuing any European Revolving Loan
as a LIBOR Loan or incurring any Letter of Credit Obligation on behalf of
European Borrower), Requisite Term Lenders (with respect to the making of any
Term Loan or the continuation or conversion of a Term Loan as a LIBOR Loan) and
Borrowers.  Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of
Credit Obligations set forth in Section 2.2 unless the same shall
be in writing and signed by Agent, 

 

81

 

Requisite
Lenders, US Requisite Revolving Lenders, European Requisite Revolving Lenders
or Requisite Term Lenders, as applicable, and Borrowers.

 

(c)                                  No
amendment, modification, termination or waiver shall, unless in writing and
signed by Agent, Requisite Lenders and each Lender directly affected
thereby:  (i) increase the principal
amount of any Lender’s Commitment (which action shall be deemed only to affect
those Lenders whose Commitments are increased and may be approved by Requisite
Lenders, including those Lenders whose Commitments are increased); (ii) reduce
the principal of, rate of interest on or Fees payable with respect to any Loan
or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date (other than payment dates of mandatory prepayments under
Section 1.3(b)(ii)-(vii) or final maturity date of the
principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) release any Guaranty or, except as otherwise permitted herein
or in the other Loan Documents, release, or permit any Credit Party to sell or
otherwise dispose of, any Collateral with a value exceeding $5,000,000 (or the
Equivalent Amount thereof) in the aggregate (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans that shall
be required for Lenders or any of them to take any action hereunder (which
shall be deemed to affect all Lenders); and (vii) amend or waive this Section 11.2
or the definitions of the term “Requisite Lenders”, “US Requisite Revolving
Lenders”, “European Requisite Revolving Lenders” or “Requisite Term Lenders”
insofar as such definitions affect the substance of this Section 11.2
(which shall be deemed to affect all Lenders). 
Furthermore, no amendment, modification, termination or waiver affecting
the rights or duties of Agent or L/C Issuer under this Agreement or any other
Loan Document shall be effective unless in writing and signed by Agent or L/C
Issuer, as the case may be, in addition to Lenders required hereinabove to take
such action.  Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given.  No amendment, modification, termination or
waiver shall be required for Agent to take additional Collateral pursuant to
any Loan Document.  No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note.  No notice to or demand on any Credit Party in
any case shall entitle such Credit Party or any other Credit Party to any other
or further notice or demand in similar or other circumstances.  Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.2
shall be binding upon each Lender and each holder of the Notes at the time
outstanding and each future holder of the Notes.

 

(d)                                 If,
in connection with any proposed amendment, modification, waiver or termination
(a “Proposed Change”):

 

(i)                                     requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent
is required is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clauses (ii), (iii),
(iv) and (v) below being referred to as a “Non-Consenting
Lender”),

 

(ii)                                  requiring the consent of US Requisite Revolving Lenders, the consent
of Revolving Lenders holding 51% or more of the aggregate US Revolving Loan
Commitments is obtained, but the consent of US Requisite Revolving Lenders is
not obtained,

 

82

 

(iii)                               requiring the consent of European Requisite Revolving Lenders, the
consent of Revolving Lenders holding 51% or more of the aggregate European
Revolving Loan Commitments is obtained, but the consent of European Requisite
Revolving Lenders is not obtained,

 

(iv)                              requiring the consent of Requisite Lenders, the consent of Lenders
holding 51% or more of the aggregate Commitments is obtained, but the consent
of Requisite Lenders is not obtained, or

 

(v)                                 requiring the consent of Requisite Term Lenders, the consent of Term
Lenders holding 51% or more of the outstanding principal amount of the Term
Loan is obtained, but the consent of Requisite Term Lenders is not obtained, or

 

then, at Borrower Representative’s request,
Agent or a Person reasonably acceptable to Agent shall have the right with
Agent’s consent and in Agent’s sole discretion (but shall have no obligation)
to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders
agree that they shall, upon Agent’s request, sell and assign to Agent or such
Person, all of the Commitments of such Non-Consenting Lenders for an amount
equal to the principal balance of all Loans held by the Non-Consenting Lenders
and all accrued interest and Fees with respect thereto through the date of
sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement; provided  that if Agent is a Non-Consenting
Lender, Requisite Lenders shall appoint a new Agent simultaneously with such
assignment.

 

(e)                                  Upon
payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations), termination of the Commitments and a release of
all claims against Agent and Lenders, and so long as no suits, actions,
proceedings or claims are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrowers termination statements, mortgage releases and
other documents necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.

 

11.3                           Fees and
Expenses. 
Borrowers shall reimburse Agent for all fees, costs and expenses,
including the reasonable fees, costs and expenses of counsel or other advisors
(including consultants, auditors, environmental and management consultants and
appraisers), incurred in connection with the negotiation and preparation of the
Loan Documents.  Borrowers shall
reimburse Agent, and with respect to clauses (c) and (d) below,
Lenders, for all fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors (including consultants, auditors,
environmental and management consultants and appraisers, incurred in connection
with:

 

(a)                                  the forwarding to Borrowers or any
other Person on behalf of Borrowers by Agent of the proceeds of any Loan
(including a wire transfer fee);

 

(b)                                 any
amendment, modification or waiver of, consent with respect to, or termination
of, any of the Loan Documents or Related Transactions Documents or advice in
connection with the syndication and administration of the Loans made pursuant
hereto or its rights hereunder or thereunder;

 

83

 

(c)                                  any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Borrower or any other Person and whether as a party,
witness or otherwise) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection herewith
or therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against any or all of the Borrowers or any other Person
that may be obligated to Agent by virtue of the Loan Documents; including any
such litigation, contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Loans during the pendency
of one or more Events of Default; provided  that in the case of
reimbursement of counsel for Lenders other than Agent, such reimbursement shall
be limited to one (1) counsel for all such Lenders; provided, further,
that no Person shall be entitled to reimbursement under this clause (c) in
respect of any litigation, contest, dispute, suit, proceeding or action to the
extent any of the foregoing results from such Person’s gross negligence or
willful misconduct;

 

(d)                                 any
attempt to enforce any remedies of Agent against any or all of the Credit
Parties or any other Person that may be obligated to Agent or any Lender by
virtue of any of the Loan Documents, including any such attempt to enforce any
such remedies in the course of any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one (1) counsel for all such Lenders;

 

(e)                                  any workout or restructuring of the
Loans during the pendency of one or more Events of Default; and

 

(f)                                    efforts
to (i) monitor the Loans or any of the other Obligations, (ii) evaluate,
observe or assess any of the Credit Parties or their respective affairs, and (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of any of the Collateral;

 

including, as to each of clauses (a) through
(f) above, all reasonable attorneys’ and other professional and
service providers’ fees arising from such services and other advice, assistance
or other representation, including those in connection with any appellate
proceedings, and all expenses, costs, charges and other fees incurred by such
counsel and others in connection with or relating to any of the events or
actions described in this Section 11.3, all of which shall be
payable, on demand, by Borrowers to Agent. 
Without limiting the generality of the foregoing, such expenses, costs,
charges and fees may include: reasonable fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying
and duplication expenses; court reporter fees, costs and expenses; long
distance telephone charges; air express charges; telegram or telecopy charges; reasonable
secretarial overtime charges; and reasonable expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal or other
advisory services.

 

11.4                           No
Waiver. 
Agent’s or any Lender’s failure, at any time or times, to require strict
performance by the Credit Parties of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of Agent or
such Lender thereafter

 

84

 

to demand strict compliance and performance herewith or
therewith.  Any suspension or waiver of
an Event of Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and whether the same or
of a different type.  Subject to the
provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by any Credit Party shall be deemed to have been suspended or waived by Agent
or any Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and the
applicable Requisite Lenders, and directed to Borrowers specifying such
suspension or waiver.

 

11.5                           Remedies.  Agent’s and Lenders’ rights
and remedies under this Agreement shall be cumulative and nonexclusive of any
other rights and remedies that Agent or any Lender may have under any other
agreement, including the other Loan Documents, by operation of law or
otherwise.  Recourse to the Collateral
shall not be required.

 

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

 

11.7                           Conflict
of Terms.  Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

 

11.8                           Confidentiality.  Agent and each Lender agree
to use commercially reasonable efforts (equivalent to the efforts Agent or such
Lender applies to maintaining the confidentiality of its own confidential
information) to maintain as confidential all confidential information provided
to them by the Credit Parties until the date which is the later to occur of (a) the
date which is 3 years following receipt thereof or (b) the date which is 2
years following the Termination Date, except that Agent and any Lender may
disclose such information (a) to Persons employed or engaged by Agent or
such Lender with respect to this credit; (b) to any bona fide assignee or
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a) above);
(c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of
Agent’s or such Lender’s counsel, is required by law; (e) in connection
with the exercise of any right or remedy under the Loan Documents or in
connection with any Litigation to which Agent or such Lender is a party; or (f) that
ceases to be confidential through no fault of Agent or any Lender.

 

11.9                           GOVERNING
LAW.  EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING

 

85

 

ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.  EACH CREDIT PARTY HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK,
NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED,
THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK
COUNTY; PROVIDED  FURTHER, 
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.  EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM  NON  CONVENIENS AND HEREBY CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL
RECEIPT THEREOF OR 3 BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS,
PROPER POSTAGE PREPAID.

 

11.10                     Notices.  Except as otherwise
provided herein, whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other parties, or whenever
any of the parties desires to give or serve upon any other parties any
communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be deemed to have been validly served, given or
delivered:  (a) upon the earlier of
actual receipt and 3 Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid; (b) upon transmission, when sent by telecopy or other similar
facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10); (c) 1 Business Day after
deposit with a reputable overnight courier with all charges prepaid or (d) when
delivered, if hand-delivered by

 

86

 

messenger, all of which shall be addressed
to the party to be notified and sent to the address or facsimile number indicated
in Annex H or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. 
The giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. 
Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to any Person (other than
Borrower Representative or Agent) designated in Annex H to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.

 

11.11                     Section Titles.  The Section titles and
Table of Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

 

11.12                     Counterparts.  This Agreement may be
executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.

 

11.13                     WAIVER OF JURY
TRIAL. 
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.

 

11.14                     Press Releases
and Related Matters.  Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure (a) using the name of GE Capital or
its affiliates or (b) referring to this Agreement, the other Loan
Documents or the Related Transactions Documents, in each case without at least
2 Business Days’ prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure; provided, however, that with
respect to clause (b) only, the applicable Credit Party also shall
be permitted to issue such release or disclosure if GE Capital has not objected
to such release or disclosure within five (5) days after receipt of notice
thereof.  Each Credit Party consents to
the publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement
reasonably acceptable to Borrower Representative.  Agent and Co-Syndication Agents may, on
notice to the Borrower Representative, provide to industry trade organizations
information necessary and customary for inclusion in league table measurements
at Agent’s expense.

 

87

 

11.15                     Reinstatement.  This Agreement shall remain
in full force and effect and continue to be effective should any petition be
filed by or against any Borrower for liquidation or reorganization, should any
Borrower become insolvent or make an assignment for the benefit of any creditor
or creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower’s assets, and shall continue to be effective
or to be reinstated, as the case may be, if at any time payment and performance
of the Obligations or the Eligible Swap Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligee of the Obligations or Eligible Swap
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations and/or
Eligible Swap Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

11.16                     Advice of
Counsel. 
Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Sections 11.9
and 11.13, with its counsel. 

 

11.17                     Judgment
Currency.

 

(a)                                  If
for the purposes of obtaining judgment in any court it is necessary to convert
a sum due hereunder or under the Notes in any currency (the “Original
Currency”) into another currency (the “Other Currency”) the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures Agent could purchase the Original Currency with the Other Currency
at 11:00 A.M., local time, on the second Business Day preceding that on
which final judgment is given.

 

(b)                                 The
obligation of a Borrower in respect of any sum due in the Original Currency
from it to any Lender or Agent hereunder or under the Notes held by such Lender
shall, notwithstanding any judgment in any Other Currency, be discharged only
to the extent that on the Business Day following receipt by such Lender or
Agent (as the case may be) of any sum adjudged to be so due in such Other
Currency such Lender or Agent (as the case may be) may in accordance with
normal banking procedures purchase the Original Currency with such Other Currency;
if the amount of the Original Currency so purchased is less than the sum
originally due to such Lender or Agent (as the case may be) in the Original
Currency, such Borrower agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify such Lender or Agent (as the case may be)
against such loss, and if the amount of the Original Currency so purchased
exceeds the sum originally due to any Lender or Agent (as the case may be) in
the Original Currency, such Lender or Agent (as the case may be) agrees to
remit to such Borrower such excess.

 

11.18                     Subordination.

 

(a)                                  Each
Credit Party executing this Agreement covenants and agrees that the payment of
all indebtedness, principal, interest (including interest which accrues after
the commencement of any case or proceeding in bankruptcy, or for the
reorganization of any Credit

 

88

 

Party), fees, charges, expenses, attorneys’
fees and any other sum, obligation or liability owing by any other Credit Party
to such Credit Party, including any intercompany trade payables or royalty or
licensing fees (collectively, the “Subordinated Obligations”), is
subordinated, to the extent and in the manner provided in this Section 11.18,
to the prior payment in full of all Obligations and the Eligible Swap
Obligations (herein, the “Senior Obligations”) and that the
subordination is for the benefit of the Agent and Lenders, and Agent may
enforce such provisions directly; provided, however, that with
respect to the Eligible Swap Obligations, the subordination provisions herein
shall terminate and be of no further force or effect from and after the
Termination Date.

 

(b)                                 Each
Credit Party executing this Agreement hereby (i) authorizes Agent to
demand specific performance of the terms of this Section 11.18,
whether or not any other Credit Party shall have complied with any of the
provisions hereof applicable to it, at any time when such Credit Party shall
have failed to comply with any provisions of this Section 11.18
which are applicable to it and (ii) irrevocably waives any defense based
on the adequacy of a remedy at law, which might be asserted as a bar to such
remedy of specific performance.

 

(c)                                  Upon
any distribution of assets of any Credit Party in any dissolution, winding up,
liquidation, examinership or reorganization (whether in bankruptcy, insolvency,
examinership or receivership proceedings or upon an assignment for the benefit
of creditors or otherwise):

 

(i)                                     The
Agent and Lenders shall first be entitled to receive payment in full in cash of
the Senior Obligations before any Credit Party is entitled to receive any
payment on account of the Subordinated Obligations;

 

(ii)                                  Any
payment or distribution of assets of any Credit Party of any kind or character,
whether in cash, property or securities, to which any other Credit Party would
be entitled except for the provisions of this Section 11.18(c),
shall be paid by the liquidating trustee or agent or other Person making such
payment or distribution directly to the Agent, to the extent necessary to make
payment in full of all Senior Obligations remaining unpaid after giving effect
to any concurrent payment or distribution or provisions therefor to the Agents
and Lenders; and

 

(iii)                               In the
event that notwithstanding the foregoing provisions of this Section 11.18(c),
any payment or distribution of assets of any Credit Party of any kind or
character, whether in cash, property or securities, shall be received by any
other Credit Party on account of the Subordinated Obligations before all Senior
Obligations are paid in full, such payment or distribution shall be received
and held in trust for and shall be paid over to the Agent for application to
the payment of the Senior Obligations until all of the Senior Obligations shall
have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the Agents and Lenders.

 

No right of the Agent and Lenders or any other present
or future holders of any Senior Obligations to enforce the subordination
provisions herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of any Credit Party or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by any
Credit Party 

 

89

 

with the terms hereof, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.

 

11.19                     Negative
Pledge.  Each
of the Excluded Subsidiaries, other than Inverness Medical (Shanghai) Co.,
Ltd., hereby covenants and agrees with Agent and Lenders that such Person shall
not (a) create, incur, assume or permit to exist any Indebtedness other
than (i) Indebtedness existing on the Closing Date listed on Disclosure
Schedule 11.19(a), (ii) refinancings thereof or amendments or
modifications thereto that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to such
Person, as determined by Agent in good faith, than the terms of the
Indebtedness being refinanced, amended or modified, (iii) Indebtedness
owing to Credit Parties to the extent permitted to be advanced by the Credit
Parties pursuant to Section 6.2(h), and (iv) in the case of
Orgenics only, other Indebtedness; provided  that the aggregate
combined amount of all outstanding Indebtedness of Orgenics shall not exceed
$5,000,000 (or the Equivalent Amount thereof) at any time; or (b) create,
incur, assume or permit to exist any Lien on or with respect to any of its
other properties or assets (whether now owned or hereafter acquired) except for
(i) Permitted Encumbrances; (ii) Liens in existence on the date
hereof and summarized on Disclosure Schedule 11.19(b) securing
the Indebtedness described on Disclosure Schedule 11.19(a); (iii) permitted
refinancings, extension and renewals thereof, including extensions or renewals
of any such Liens; provided  that the principal amount of the
Indebtedness so secured is not increased and the Lien does not attach to any
other property; and (iv) in the case of Orgenics only, Liens securing the
Indebtedness permitted by clause (a)(iv) above.

 

11.20                     No Strict
Construction. 
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement.  In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

 

11.21                     Waiver.  Requisite Lenders hereby
waive, as of the Closing Date, the Events of Default (as defined in the
Existing Credit Agreement) under the Existing Credit Agreement resulting solely
from the failure of the Reporting Credit Parties to have (a) a Total
Leverage Ratio of not more than 5.75:1.00 for the 12-month period ended December 31,
2004 as required by clause (e) of Annex F of the Existing
Credit Agreement; provided that the Total Leverage Ratio is not more
than 6.20:1.00 for such period; (b) a Total Leverage Ratio of not more
than 5.00:1.00 for the 12-month period ended March 31, 2005 as required by
clause (e) of Annex F of the Existing Credit Agreement; provided,
that the Total Leverage Ratio is not more than 5.50:1.00 for such period; and (c) LTM
EBITDA of not less than $32,000,000 on December 31, 2004 as required by clause
(c) of Annex F of the Existing Credit Agreement; provided,
that, LTM EBITDA of the Reporting Credit Parties was not less than $31,000,000
on such date.  For purposes of this Section 11.21,
the defined terms “Total Leverage Ratio” and “LTM EBITDA” shall have the
meanings ascribed to such terms in the Existing Credit Agreement.

 

90

 

12.                               AFFIRMATION OF
OBLIGATIONS

 

Upon the effectiveness of this Agreement pursuant to Section 2.1
hereof, from and after the Closing Date: 
(a) the terms and conditions of the Existing Credit Agreement shall
be amended as set forth herein and, as so amended, shall be restated in their
entirety, but only with respect to the rights, duties and obligations among
Credit Parties, the Lenders and the Agent accruing from and after the Closing
Date; (b) this Agreement shall not in any way release or impair the
rights, duties, Obligations or Liens created pursuant to the Existing Credit
Agreement or any other Loan Document (as defined therein) or affect the
relative priorities thereof, in each case to the extent in force and effect
thereunder as of the Closing Date and except as modified hereby or by
documents, instruments and agreements executed and delivered in connection
herewith, and all of such rights, duties, Obligations and Liens are assumed,
ratified and affirmed by each of the Credit Parties; (c) all
indemnification obligations of the Credit Parties under the Existing Credit
Agreement and any other Loan Documents (as defined therein) shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect for the benefit of the Lenders, the Agent, and any other Person
indemnified under the Existing Credit Agreement or any other Loan Document (as
defined therein) at any time prior to the Closing Date; (d) the
Obligations incurred under the Existing Credit Agreement shall, to the extent
outstanding on the Closing Date, continue outstanding under this Agreement and
shall not be deemed to be paid, released, discharged or otherwise satisfied by
the execution of this Agreement, and this Agreement shall not constitute a
refinancing, substitution or novation of such Obligations or any of the other
rights, duties and obligations of the parties hereunder, and the terms “Obligations”,
“Guaranteed Obligations” and “Secured Obligations” as such terms are used in
the Loan Documents shall include the Obligations as increased, amended and
restated under this Agreement; (e) the execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of the Lenders or the Agent (as defined therein) under the
Existing Credit Agreement, nor constitute a waiver of any covenant, agreement
or obligation under the Existing Credit Agreement, except to the extent that
any such covenant, agreement or obligation is no longer set forth herein or is
modified hereby; (f) any and all references to the Existing Credit
Agreement in any Collateral Document or other Loan Document shall, without
further action of the parties, be deemed a reference to the Existing Credit Agreement,
as amended and restated by this Agreement, and as this Agreement shall be
further amended, restated, supplemented or otherwise modified from time to
time, and any and all references to the Collateral Documents or Loan Documents
in any such Collateral Documents or any other Loan Documents shall be deemed a
reference to the Collateral Documents or Loan Documents under the Existing
Credit Agreement, as amended and restated by this Agreement, and as this
Agreement shall be further amended, restated, supplemented or otherwise
modified from time to time; and (g) the Liens granted pursuant to the
Collateral Documents to which each of the Credit Parties is a party shall
continue without any diminution thereof and shall remain in full force and
effect on and after the Closing Date.

 

91

 

IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  WAMPOLE
  LABORATORIES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duane L. James

  	
   

  
	
   

  	
  Name:

  	
   Duane
  L. James

  
	
   

  	
  Title:

  	
   Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVERNESS
  MEDICAL (UK) HOLDINGS

  LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duane L. James

  	
   

  
	
   

  	
  Name:

  	
   Duane
  L. James

  
	
   

  	
  Title:

  	
   Authorized
  Person

  
						

 

 

	
   

  	
  AGENT AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL

  
	
   

  	
  CORPORATION, as Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Wagnblas

  	
   

  
	
   

  	
  Duly Authorized Signatory

  

 

 

	
   

  	
  MERRILL LYNCH CAPITAL, a division of

  Merrill Lynch Business Financial Services Inc.,

  as Co-Syndication Agent, Documentation Agent

  and Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Faraaz Kamran

  	
   

  
	
   

  	
  Duly Authorized Signatory

  

 

 

	
   

  	
  UBS SECURITIES LLC, as Co-Syndication
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Ladd III

  	
   

  
	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barbara S. Wang

  	
   

  
	
   

  	
  Duly Authorized Signatory

  

 

 

	
   

  	
  UBS AG, CAYMAN ISLANDS BRANCH, as a

  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wilfred V. Saint

  	
   

  
	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard L. Tavrow

  	
   

  
	
   

  	
  Duly Authorized Signatory

  

 

 

The following Persons are signatories to this
Agreement in their capacity as Credit Parties and not as Borrowers.

 

	
   

  	
  CREDIT PARTIES:

  

 

	
   

  	
  APPLIED BIOTECH, INC.

  
	
   

  	
  ADVANTAGE DIAGNOSTICS CORPORATION

  
	
   

  	
  FOREFRONT DIAGNOSTICS, INC.

  
	
   

  	
  INVERNESS
  MEDICAL INTERNATIONAL

  HOLDING CORP.

  
	
   

  	
  INVERNESS
  MEDICAL INTERNATIONAL

  HOLDING CORP. II

  
	
   

  	
  INVERNESS MEDICAL, INC.

  
	
   

  	
  INNOVATIONS RESEARCH, LLC

  
	
   

  	
  ISCHEMIA TECHNOLOGIES, INC.

  
	
   

  	
  IVC INDUSTRIES, INC.

  
	
   

  	
  MORPHEUS ACQUISITION CORP.

  
	
   

  	
  OSTEX INTERNATIONAL, INC.

  
	
   

  	
  SELFCARE TECHNOLOGY, INC.

  
	
   

  	
  UNIPATH ONLINE, INC.

  
	
   

  	
  BINAX, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Duane L. James

  	
   

  
	
   

  	
  Name:

  	
   Duane
  L. James

  
	
   

  	
  Title:

  	
   Treasurer,
  Treasurer, Treasurer, Treasurer,
 Treasurer,Treasurer, Treasurer,
  Treasurer,
 Treasurer, Treasurer, Treasurer,
  Treasurer,
 Treasurer, Vice President,
  respectively

  
					

 

 

	
   

  	
  CAMBRIDGE
  DIAGNOSTICS IRELAND

  LIMITED

  
	
   

  	
  DMD,
  DIENSTLEISTUNGEN & VERTRIEB FÜR

  MEDIZIN UND DIAGNOSTIK GMBH

  
	
   

  	
  INVERNESS MEDICAL CANADA, INC.

  
	
   

  	
  INVERNESS MEDICAL EURASIA LIMITED

  
	
   

  	
  INVERNESS MEDICAL FRANCE SAS

  
	
   

  	
  INVERNESS MEDICAL GERMANY GMBH

  
	
   

  	
  ORGENICS INTERNATIONAL HOLDINGS BV

  
	
   

  	
  SCANDINAVIAN MICRO BIODEVICES APS

  
	
   

  	
  STIRLING MEDICAL INNOVATIONS LIMITED

  INVERNESS MEDICAL SWITZERLAND GMBH

  
	
   

  	
  UNIPATH DIAGNOSTICS GMBH

  
	
   

  	
  UNIPATH LIMITED

  
	
   

  	
  VIVA
  DIAGNOSTIKA - DIAGNOSTISCHE

  PRODUKTE GMBH

  
	
   

  	
  INVERNESS MEDICAL JAPAN, LTD.

  
	
   

  	
  INVERNESS MEDICAL INNOVATIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher J. Lindop

  	
   

  
	
   

  	
  Name:

  	
   Christopher
  J. Lindop

  
	
   

  	
  Title:

  	
   Authorized
  Person, Authorized Person,
 Authorized Person, Authorized Person,
 Authorized Person, Authorized Person,
 Authorized Person, Authorized Person,
 Authorized Person, Authorized Person,
 Authorized Person, Authorized Person,
 Authorized Person, Authorized Person,
 Chief Financial Officer, respectively

  
					

 

 

	
   

  	
  INVERNESS MEDICAL INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay McNamara

  	
   

  
	
   

  	
  Name: Jay McNamara

  
	
   

  	
  Title:  Assistant Secretary

  

 

 

	
   

  	
  INVERNESS MEDICAL CANADA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Doug Shaffer

  	
   

  
	
   

  	
  Name: Doug Shaffer

  
	
   

  	
  Title: President

  

 

 

	
   

  	
  The following Person is a signatory to
  this

  Agreement for purposes of Section 11.19 only.

  
	
   

  	
   

  
	
   

  	
  ORGENICS LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher J. Lindop

  	
   

  
	
   

  	
  Name:  Christopher J. Lindop

  
	
   

  	
  Title :   Authorized Person

  

 

 

ANNEX A (RECITALS)

TO

CREDIT AGREEMENT

 

DEFINITIONS

 

Capitalized terms used in the Loan Documents shall
have (unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:

 

 “2005 Equity
Raise” means the issuance of Stock by Innovations for cash proceeds of at
least $20,000,000, net of underwriting discounts and commissions and other
reasonable fees, costs and expenses paid to non-Affiliates in connection
therewith, on or before September 28, 2005.

 

“ABI” means Applied Biotech, Inc., a
California corporation.

 

“Abbott Determine/Dainascreen Group” means the assets
acquired from Seller pursuant to the Acquisition Agreement.

 

“Account Debtor” means any Person who may
become obligated to any Credit Party under, with respect to, or on account of,
an Account, Chattel Paper or General Intangibles (including a payment
intangible).

 

“Accounting Changes” has the meaning ascribed
thereto in Annex F.

 

“Accounts” means all “accounts,” as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including (a) all accounts receivable, other receivables, book debts and
other forms of obligations (other than forms of obligations evidenced by
Chattel Paper, or Instruments), (including any such obligations that may be
characterized as an account or contract right under the Code), (b) all of
each Credit Party’s rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Credit Party’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all rights to payment due
to any Credit Party for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Credit Party or in connection with any other transaction
(whether or not yet earned by performance on the part of such Credit Party), (e) all
health care insurance receivables and (f) all collateral security of any
kind, given by any Account Debtor or any other Person with respect to any of
the foregoing.

 

“Acquisition” means the acquisition of
substantially all the assets of Abbott Laboratories’ Determine/Daina Screen
Group, by Innovations, Inverness Japan and Swissco, pursuant to, and as more
fully described in, the Acquisition Agreement.

 

A-1

 

“Acquisition Agreement” means that certain
Asset Purchase Agreement, dated as of May 28, 2005, by and among Seller
and Innovations, Swissco and Inverness Japan.

 

“Acquisition Subsidiary” has the meaning
ascribed to it in Section 6.1(b).

 

“Activation Event” and “Activation Notice” have
the meanings ascribed thereto in Annex C.

 

“Advance” means any US Revolving Credit
Advance, European Revolving Credit Advance, US Swing Line Advance or European
Swing Line Advance, as the context may require.

 

“Affiliate” means, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person’s officers, directors, joint venturers and
partners and (d) in the case of Borrowers, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of any
Borrower.  For the purposes of this
definition, “control” of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term “Affiliate”
shall specifically exclude Agent and each Lender.

 

“Agent” means GE Capital in its capacity as
administrative agent for Lenders or its successor appointed pursuant to Section 9.7.

 

“Agreement” means this Third Amended and
Restated Credit Agreement by and among Innovations, Borrowers, the other Credit
Parties party thereto, GE Capital, as Agent and Lender, and the other Lenders
from time to time party thereto, as the same may be amended, supplemented,
restated or otherwise modified from time to time.

 

“Alternative Currency” means Swedish kronor,
British pounds, Swiss francs, and European Union euros, Israeli New Shekels, or
such other currency as Agent approves, provided  that no currency
shall be an Alternative Currency if it is not freely transferable and freely
convertible into Dollars in the London foreign exchange market as determined by
Agent.

 

“Appendices” has the meaning ascribed to it in
the recitals to the Agreement.

 

“Applicable European Revolver Index Margin”
means the per annum interest rate from time to time in effect and payable in
addition to the Index Rate applicable to the European Revolving Loan, as
determined by reference to Section 1.5(a).

 

“Applicable European Revolver LIBOR Margin”
means the per annum interest rate from time to time in effect and payable in
addition to the LIBOR Rate applicable to the European Revolving Loan, as
determined by reference to Section 1.5(a).

 

A-2

 

“Applicable L/C Margin” means the per annum
fee, from time to time in effect, payable with respect to outstanding Letter of
Credit Obligations as determined by reference to Section 1.5(a).

 

“Applicable Margins” means collectively the
Applicable L/C Margin, the Applicable US Revolver Index Margin, the Applicable
US Revolver LIBOR Margin, the Applicable European Revolver Index Margin and the
Applicable European Revolver LIBOR Margin.

 

“Applicable US Revolver Index Margin” means the
per annum interest rate from time to time in effect and payable in addition to
the Index Rate applicable to the US Revolving Loan, as determined by reference
to Section 1.5(a).

 

“Applicable US Revolver LIBOR Margin” means the
per annum interest rate from time to time in effect and payable in addition to
the LIBOR Rate applicable to the US Revolving Loan, as determined by reference
to Section 1.5(a).

 

“Asset Disposition Threshold Amount” means the
amount of gross proceeds required to repay the Loans pursuant to Sections
1.3(b)(ii) and 1.3(b)(iii) in excess of $1,000,000 in any
Fiscal Year assuming for purposes hereof that the phrase “in excess of the
Asset Disposition Threshold Amount” was deleted from each such section.

 

“Assignment Agreement” has the meaning ascribed
to it in Section 9.1(a).

 

“Assignment of Representations and Warranties”
means that certain Assignment Agreement, dated as of the date hereof, by and
among Swissco, Innovations, Inverness Japan, Seller and Agent, in form and
substance satisfactory to Agent.

 

“Bankruptcy Code” means the provisions of Title
11 of the United States Code, 11 U.S.C. §§101 et seq.

 

“Blocked Accounts” has the meaning ascribed to
it in Annex C.

 

“Borrower Representative” means Innovations, in
its capacity as Borrower Representative pursuant to the provisions of Section 1.1(f).

 

“Borrowers” and “Borrower” have the
respective meanings ascribed thereto in the preamble to the Agreement.

 

“Business Day” means any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to be
closed in the State of New York and in reference to LIBOR Loans shall mean any
such day that is also a LIBOR Business Day.

 

“Capital Expenditures” means, with respect to
any Person, all expenditures (by the expenditure of cash or the incurrence of
Indebtedness) by such Person during any measuring period for any fixed assets
or improvements or for replacements, substitutions or additions thereto that
have a useful life of more than one year and that are required to be
capitalized under GAAP.

 

A-3

 

“Capital Lease” means, with respect to any
Person, any lease of any property (whether real, personal or mixed) by such
Person as lessee that, in accordance with GAAP, would be required to be
classified and accounted for as a capital lease on a balance sheet of such
Person.

 

“Capital Lease Obligation” means, with respect
to any Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.

 

“Cash Collateral Account” has the meaning
ascribed to it Annex B.

 

“Cash Equivalents” has the meaning ascribed to
it in Annex B.

 

“Cash Management Systems” has the meaning
ascribed to it in Section 1.8.

 

“Change of Control” means any of the
following:  (a) any person or group
of persons (within the meaning of the Securities Exchange Act of 1934) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,) of 30% or more of the issued and outstanding shares of
capital Stock of Innovations having the right to vote for the election of
directors of Innovations under ordinary circumstances; (b) during any
period of twelve consecutive calendar months, individuals who at the beginning
of such period constituted the board of directors of Innovations (together with
any new directors whose election by the board of directors of Innovations or
whose nomination for election by the Stockholders of Innovations was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in office;
(c) Innovations ceases to own and control all of the economic and voting
rights associated with all of the outstanding capital Stock of either Borrower;
or (d) the Credit Parties ceases to own, directly or indirectly and
control all of the economic and voting rights associated with all of the
outstanding capital stock of their Subsidiaries.

 

“Charges” means all federal, state, county,
city, municipal, local, foreign or other governmental taxes (including any
interest, penalties, or other additions to tax that may become payable in
respect thereof and taxes owed to the PBGC at the time due and payable),
levies, assessments, charges, liens, claims or encumbrances upon or relating to
(a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of any Credit Party, (d) any Credit
Party’s ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party’s business.

 

“Chattel Paper” means any “chattel paper,” as
such term is defined in the Code, including electronic chattel paper, now owned
or hereafter acquired by any Credit Party.

 

“Closing Checklist” means the schedule,
including all appendices, exhibits or schedules thereto, listing certain
documents and information to be delivered in connection with the Agreement, the
other Loan Documents and the transactions contemplated thereunder,
substantially in the form attached hereto as Annex D.

 

A-4

 

“Closing Date” means June 30, 2005.

 

“Closing Date Fee Letter” means that certain
letter, dated as of the Closing Date, among Agent and Borrowers with respect to
certain Fees to be paid from time to time by Borrowers to Agent, for the
benefit of the Lenders.

 

“Code” means the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the State of New York;
provided, that to the extent that the Code is used to define any term
herein or in any Loan Document and such term is defined differently in
different Articles or Divisions of the Code, the definition of such term
contained in Article or Division 9 shall govern; provided  further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of, or remedies with respect to, Agent’s
or any Lender’s Lien on any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.

 

“Collateral” means the property covered by the
Collateral Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations (or a portion thereof) and the
Eligible Swap Obligations.

 

“Collateral Documents” means the Guaranties,
the US Security Agreement, the US Pledge Agreement, the US Intellectual
Property Security Agreement, the European Pledge Agreements, the European
Security Agreements, the European Intellectual Property Security Agreements,
the Assignment of Representations and Warranties and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.

 

“Collection Account” means that certain account
of Agent, account number 50271079 in the name of Agent at Deutsche Bank Trust
Company Americas in New York, New York, ABA No. 021 001 033, or such other
account as may be specified in writing by Agent as the “Collection Account”.

 

“Commitment Termination Date” means the
earliest of (a) March 31, 2008, (b) the date of termination of
Lenders’ obligations to make Advances and to incur Letter of Credit Obligations
or permit existing Loans to remain outstanding pursuant to Section 8.2(b),
and (c) the date of indefeasible prepayment in full by Borrowers of the
Loans and the cancellation and return (or stand-by guarantee) of all Letters of
Credit or the cash collateralization of all Letter of Credit Obligations pursuant
to Annex B and the permanent reduction of all Commitments to zero
dollars ($0).

 

“Commitments” means (a) as to any Lender,
the aggregate of such Lender’s US Revolving Loan Commitment (including without
duplication the Swing Line Lender’s US Swing Line Commitment as a subset of its
US Revolving Loan Commitment), European Revolving

 

A-5

 

Loan Commitment (including without duplication the
Swing Line Lender’s European Swing Line Commitment as a subset of its European
Revolving Loan Commitment), US Term Loan Commitment and European Term Loan
Commitment as set forth on Annex I to this Agreement or in the most
recent Assignment Agreement executed by such Lender, and (b) as to all
Lenders, the aggregate of all Lenders’ US Revolving Loan Commitments (including
without duplication the Swing Line Lender’s US Swing Line Commitment as a
subset of its US Revolving Loan Commitment), European Revolving Loan
Commitments (including without duplication the Swing Line Lender’s European
Swing Line Commitment as a subset of its European Revolving Loan Commitment),
US Term Loan Commitments and European Term Loan Commitments, which aggregate
commitment shall be ONE HUNDRED MILLION DOLLARS ($100,000,000) on the Closing
Date, as to each of clauses (a) and (b), as such
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.

 

“Compliance Certificate” has the meaning
ascribed to it in Annex E.

 

“Concentration Accounts” has the meaning ascribed
to it in Annex C.

 

“Contracts” means all “contracts,” as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party, in
any event, including all contracts, undertakings, or agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which
any Credit Party may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.

 

“Control Letter” means a letter agreement
between Agent and (i) the issuer of uncertificated securities with respect
to uncertificated securities in the name of any Credit Party, (ii) a
securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a
securities account in the name of any Credit Party, (iii) a futures
commission merchant or clearing house, as applicable, with respect to commodity
accounts and commodity contracts held by any Credit Party, whereby, among other
things, the issuer, securities intermediary or futures commission merchant
disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders
of Agent without further consent by the affected Credit Party.

 

“Conversion Date” means, if the 2005 Equity
Issuance shall not have occurred on or before September 28, 2005, September 29,
2005.

 

“Conversion European Term Note” has the meaning
ascribed to it in Section 2.3(d).

 

“Conversion US Term Note” has the meaning
ascribed to it in Section 2.3(c).

 

“Copyright License” means any and all rights
now owned or hereafter acquired by any Credit Party under any written agreement
granting any right to use any Copyright or Copyright registration.

 

A-6

 

“Copyrights” means all of the following now
owned or hereafter adopted or acquired by any Credit Party:  (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States of America, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or
renewals thereof.

 

“Credit Parties” means Innovations, each
Borrower and each of their respective Subsidiaries (other than the Excluded
Subsidiaries).

 

“Current Assets” shall mean, with respect to
any Person, all current assets of such Person as of any date of determination
calculated in accordance with GAAP, but excluding cash, cash equivalents and
debts due from Affiliates.

 

“Current Liabilities” shall mean, with respect
to any Person, all liabilities which should, in accordance with GAAP, be
classified as current liabilities, and in any event shall include all
Indebtedness payable on demand or within one year from any date of
determination without any option on the part of the obligor to extend or renew
beyond such year, and all accruals for federal or other taxes based on or
measured by income and payable within such year, but excluding (i) in the
case of US Borrower, the aggregate outstanding principal balance of the US
Revolving Loan, and (ii) in the case of European Borrower, the aggregate
outstanding principal balance of the European Revolving Loan.

 

“Default” means any event that, with the
passage of time or notice or both, would, unless cured or waived, become an
Event of Default.

 

“Default Rate” has the meaning ascribed to it
in Section 1.5(d).

 

“Deposit Accounts” means all “deposit accounts”
as such term is defined in the Code, now or hereafter held in the name of any
Credit Party.

 

“Disclosure Schedules” means the Schedules
prepared by Borrowers and denominated as Disclosure Schedules (1.4)
through (11.19(b)) in the Index to the Agreement.

 

“Documents” means all “documents,” as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.

 

“Dollars” or “$”  means lawful currency of the United States of
America.

 

“Domestic Subsidiaries” means all Subsidiaries
of Innovations incorporated or organized under the laws of the United States of
America, any state thereof or the District of Columbia.

 

“EBITDA” means, with respect to any Person for
any fiscal period, without duplication, an amount equal to (a) consolidated
net income of such Person for such period determined in accordance with GAAP, minus
(b) the sum of (i) income tax credits, (ii) interest income, (iii) gain
from extraordinary items for such period, (iv) any aggregate net gain (but
not

 

A-7

 

any aggregate net loss) during such period arising
from the sale, exchange or other disposition of capital assets by such Person
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities), and (v) any
other non-cash gains that have been added in determining consolidated net
income, in each case to the extent included in the calculation of consolidated
net income of such Person for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items for
such period (including exit costs but only to the extent incurred during the
period beginning on April 1, 2005 and ending on June 30, 2006
(including, but not limited to, severance costs, lease termination costs and
other contract termination costs to the extent such contracts relate solely to
the facilities which are being exited during such period) under EITF 94-3 in an
amount not to exceed $5,000,000), (iv) the amount of non-cash charges
(including depreciation and amortization) for such period to the extent that a
cash outlay is not reasonably foreseeable, (v) amortized debt discount for
such period, and (vi) the amount of any deduction to consolidated net
income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication.  For purposes of
this definition, the following items shall be excluded in determining
consolidated net income of a Person:  (1) the
income (or deficit) of any other Person (other than a Subsidiary) in which such
Person has an ownership interest, except to the extent any such income has
actually been received by such Person in the form of cash dividends or
distributions; (2) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(3) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made in the ordinary course of
business in accordance with GAAP within such Financial Covenant testing period;
(4) any write-up of any asset; (5) any net gain from the collection
of the proceeds of life insurance policies; (6) any net gain or loss
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person, and (7) any deferred credit representing
the excess of equity in any Subsidiary of such Person at the date of
acquisition of such Subsidiary over the cost to such Person of the investment
in such Subsidiary.  For purposes of
clarification (i) clause (b)(iii) of this definition, “gains
from extraordinary items” shall include any amounts realized by any Person
during any fiscal period that are not generated by the operation of such Person’s
business in the ordinary course, as well as any judgments, settlements,
proceeds or other consideration derived, by such Person during such fiscal
period, from any claim, counterclaim, cross-claim or other cause of action of
any kind or nature whatsoever, except to the extent that such judgments,
settlements, proceeds or other consideration either (A) do not in the
aggregate exceed the aggregate amount of legal fees and costs incurred by such
Person during the 24-month period ending with such fiscal period in connection
with the prosecution of such claims, counterclaims, cross-claims or other
causes of action or (B) represent the recovery of items that would
otherwise have been included in consolidated net income of that Person had a
third party not breached or defaulted on its obligations to such Person and (ii) clause
(c)(iii) of this definition, “loss from extraordinary items” shall
include any loss suffered by any Person during any applicable fiscal period
that is not related to the operation of such Person’s business in the ordinary
course, as well as any payments in respect of any judgments, settlements or
other costs paid by such Person during any 

 

A-8

 

applicable fiscal period, in connection with any
claim, counterclaim, cross-claim or other cause of action of any kind or nature
whatsoever.

 

“Eligible Swap Counterparty” means Agent, any
Affiliate of Agent, any Lender and/or any Affiliate of any Lender that: (i) from
time to time enters into a Swap Contract with Innovations or any Domestic
Subsidiary and (ii) in the case of an Affiliate of a Lender other than
Agent, is expressly identified by Agent, in its sole discretion, as an Eligible
Swap Counterparty.  Without limitation of
Agent’s discretion to identify an Affiliate of a Lender as an Eligible Swap
Counterparty, no Affiliate of any Lender shall be designated an Eligible Swap
Counterparty unless such Person maintains reporting systems acceptable to Agent
with respect to Swap Contract exposure; provided, ML Capital, for so long as it
remains a Lender hereunder, together with its Affiliates, shall at all times be
deemed an “Eligible Swap Counterparty.”

 

“Eligible Swap Obligations” means any
liabilities or obligations for the performance of covenants, tasks or duties or
for payment of monetary amounts (whether or not such performance is required or
contingent, or such amounts are liquidated or determinable) owing by
Innovations or any Domestic Subsidiary under any Lender Swap Contract.

 

“Environmental Laws” means all applicable
federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards
and regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation).  Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601
et seq.) (“CERCLA”); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.);
the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.);
the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.);
the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.);
the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.),
and any and all regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.

 

“Environmental Liabilities” means, with respect
to any Person, all liabilities, obligations, responsibilities, response,
remedial and removal costs, investigation and feasibility study costs, capital
costs, operation and maintenance costs, losses, damages, punitive damages,
property damages, natural resource damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants), fines, penalties, sanctions and
interest incurred as a result of or related to any claim, suit, action,
investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law, including any arising under or related to any Environmental
Laws, Environmental Permits, or in connection with any Release or threatened
Release or presence of a Hazardous Material whether on, at, in, under, from or
about or in the vicinity of any real or personal property.

 

A-9

 

“Environmental Permits” means all permits,
licenses, authorizations, certificates, approvals or registrations required by
any Governmental Authority under any Environmental Laws.

 

“Equipment” means all “equipment,” as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located and, in any event, including all such Credit Party’s machinery
and equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment, including embedded software and peripheral
equipment and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts, molds, dies,
stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property,
together with all additions and accessions thereto, replacements therefore, all
parts therefore, all substitutes for any of the foregoing, fuel therefore, and
all manuals, drawings, instructions, warranties and rights with respect
thereto, and all products and proceeds thereof and condemnation awards and
insurance proceeds with respect thereto.

 

“Equivalent Amount” means the equivalent amount
in Dollars of such amount expressed in an Alternative Currency as determined by
Agent on such date on the basis of the Spot Rate for the purchase of Dollars
with such Alternative Currency on such date.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any regulations
promulgated thereunder.

 

“ERISA Affiliate” means, with respect to any
Credit Party, any trade or business (whether or not incorporated) that,
together with such Credit Party, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC.

 

“ERISA Event” means, with respect to any Credit
Party or any ERISA Affiliate, (a) any event described in Section 4043(c) of
ERISA with respect to a Title IV Plan; (b) the withdrawal of any Credit
Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (g) any other event or condition that might
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069
or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; (i) the
revocation or threatened revocation of a Qualified Plan’s qualification or tax
exempt status; or (j) the termination of a Plan described in Section 4064
of ERISA.

 

A-10

 

“ESOP” means a Plan that is intended to satisfy
the requirements of Section 4975(e)(7) of the IRC.

 

“European Blocked Accounts” has the meaning ascribed
to it in Annex C.

 

“European Borrower” has the meaning ascribed to
it in the preamble to this Agreement.

 

“European Credit Party” means each
of European Borrower, IMC, Swissco and Orgenics Holdings, Inverness Medical
Investments and each of their respective Subsidiaries (other than the Excluded
European Subsidiaries).

 

“European Intellectual Property Security Agreements”
means each of the intellectual property security agreements made in favor of
Agent by each applicable European Credit Party of even date herewith, as listed
on Schedule 4 attached hereto.

 

“European Lock Boxes” has the meaning ascribed
to it in Annex C.

 

“European Master Standby Agreement” means the
Second Amended and Restated Master Agreement for Standby Letters of Credit
dated as of the Closing Date between European Borrower, as Applicant, and GE
Capital, as issuer.

 

“European Maximum Amount” means, as of any date
of determination, an amount equal to the European Revolving Loan Commitment of
all Lenders as of that date.

 

“European Pledge Agreements” means each of the
pledge agreements made in favor of Agent by each applicable European Credit
Party of even date herewith, as listed on Schedule 3 attached
hereto.

 

“European Relationship Bank” has the meaning
ascribed to it in Annex C.

 

“European Requisite Revolving Lenders” means (a) Lenders
holding at least 66 2/3% of the European Revolving Loan Commitments of all
Lenders, and (b) if the European Revolving Loan Commitments have been
terminated, Lenders holding more than 66 2/3% of the aggregate outstanding
amount of all European Revolving Loans.

 

“European Revolving Borrowing Availability”
means as of any date of determination the European Maximum Amount less
the sum of the aggregate European Revolving Loan and European Swing Line Loan
then outstanding.

 

“European Revolving Credit Advance” has the
meaning ascribed to it in Section 1.1(b)(i).

 

“European Revolving Lenders” means those
Lenders having a European Revolving Loan Commitment.

 

“European Revolving Loan” means, at any time,
the sum of (i) the aggregate amount of European Revolving Credit Advances
outstanding to European Borrower plus (ii) the

 

A-11

 

aggregate Letter of Credit Obligations incurred on
behalf of European Borrower.  Unless the
context otherwise requires, references to the outstanding principal balance of
the European Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations incurred on behalf of European Borrower.

 

“European Revolving Loan Commitment” means (a) as
to any Lender, the aggregate commitment of such Lender to make European
Revolving Credit Advances or incur Letter of Credit Obligations at the request
of European Borrower as set forth on Annex I to this Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as
to all Lenders, the aggregate commitment of all Lenders to make European
Revolving Credit Advances or incur Letter of Credit Obligations at the request
of European Borrower, which aggregate commitment shall be (i) FORTY
MILLION DOLLARS ($40,000,000) on the Closing Date, and (ii) TWENTY FIVE
MILLION DOLLARS ($25,000,000) on the Conversion Date, if applicable, as such
amount may be adjusted, if at all, from time to time in accordance with this
Agreement.

 

“European Revolving Note” has the meaning
ascribed to it in Section 1.1(b)(ii).

 

“European Security Agreements” means each of
the security agreements, fixed charges, floating charges or similar agreements
made in favor of Agent, by each applicable European Credit Party, as listed on Schedule 2
attached hereto, and any other agreement delivered on or after the Closing Date
(including by way of supplement to the foregoing) by any Person granting a Lien
on the assets of such Person (including without limitation, any Lien on bank
accounts of such Person) to secure all or any part of the Obligations, in each
case as amended, supplemented or modified from time to time in accordance with
its terms.

 

“European Swing Line Advance” has the meaning
ascribed to it in Section 1.1(e)(i).

 

“European Swing Line Availability” has the
meaning ascribed to it in Section 1.1(e)(i).

 

“European Swing Line Commitment” means, as to
the Swing Line Lender, the commitment of the Swing Line Lender to make European
Swing Line Advances as set forth on Annex I to the Agreement, which
commitment constitutes a subfacility of the European Revolving Loan Commitment
of the Swing Line Lender.

 

“European Swing Line Loan” means, as the
context may require, at any time, the aggregate amount of European Swing Line
Advances outstanding to European Borrower.

 

“European Swing Line Note” has the meaning
ascribed to it in Section 1.1(e)(ii).

 

“European Term Loan Lender” means those Lenders
having a European Term Loan Commitment.

 

“European Term Loan” has the meaning ascribed
to it in Section 1.1(c)(ii).

 

A-12

 

“European Term Loan Commitment” means (a) as
to any Lender with a European Term Loan Commitment, the commitment of such
Lender to make its Pro Rata Share of the European Term Loan as set forth on Annex I
to the Agreement or in the most recent Assignment Agreement executed by such
Lender, and (b) as to all Lenders with a European Term Loan Commitment,
the aggregate original commitment of all Lenders to make the European Term
Loan, which aggregate commitment is equal to (i) TEN MILLION DOLLARS
($10,000,000) on the Closing Date and (ii) TWENTY FIVE MILLION DOLLARS
($25,000,000) on the Conversion Date, if applicable.  After advancing the European Term Loan, each reference
to a Lender’s European Term Loan Commitment shall refer to that Lender’s Pro
Rata Share of the outstanding European Term Loan.

 

“European Term Note” has the meaning ascribed
to it in Section 1.1(c)(ii).

 

“Event of Default” has the meaning ascribed to
it in Section 8.1.

 

“Excess Cash Flow” means, without duplication,
with respect to the Credit Parties and any Fiscal Year, consolidated net income
plus (a) depreciation, amortization and Interest Expense to the extent
deducted in determining consolidated net income, minus (b) Capital
Expenditures during such Fiscal Year (excluding the financed portion thereof
and excluding any Capital Expenditures in such Fiscal Year to the extent in
excess of the amount permitted to be made in such Fiscal Year pursuant to
clause (a) of Annex F), minus (c) Interest Expense paid or
accrued (excluding any original issue discount, interest paid in kind or
amortized debt discount, to the extent included in determining Interest
Expense) and scheduled principal payments paid in respect of Funded Debt, plus
or minus (as the case may be), (d) extraordinary gains or losses which are
cash items not included in the calculation of net income, minus (e) mandatory
prepayments paid in cash pursuant to Section 1.3 other than
mandatory prepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(ii),
1.3(b)(iii), 1.3(b)(iv), 1.3(b)(v) or 5.4(c), plus
(f) taxes deducted in determining consolidated net income to the extent
not paid for in cash, plus decreases or minus increases (as the case may be) (g) in
Working Capital , minus (g) voluntary principal payments paid in
respect of the Term Loans, minus (h) cash consideration paid in connection
with Permitted Acquisitions, minus (i) prepayments of the Subordinated
Notes to the extent permitted to be repaid hereunder, plus or minus
(as the case may be), (j) losses or gains included in consolidated net income
as a result of asset dispositions.

 

“Exchange Act” means the Securities and
Exchange Act of 1934, as amended from time to time.

 

“Excluded European Subsidiaries” means,
collectively (a) Unipath BV, an entity organized under the laws of The
Netherlands; (b) Unipath Management Limited, a company organized under the
laws of England and Wales; (c) Unipath Scandinavia AB, an entity organized
under the laws of Sweden; (d) Inverness Medical Benelux Bvab, an entity
organized under the laws of Belgium; (e) Orgenics and each of the
subsidiaries of Orgenics; (f) Inverness Medical Australia Pty Ltd.; (g) Inverness
Medical (Shanghai) Co., Ltd. and (h) Pregymed GmbH.

 

“Excluded Subsidiaries” means, collectively,
the Excluded US Subsidiaries and the Excluded European Subsidiaries.

 

A-13

 

“Excluded US Subsidiary” means SelfCare-PBM,
LLC, a Delaware limited liability company.

 

“Existing Credit Agreement” has the meaning
ascribed to it in the Recitals.

 

“Existing Lenders” has the meaning ascribed to
it in the Recitals.

 

“Fair Labor Standards Act” means the Fair Labor
Standards Act, 29 U.S.C. §201 et seq.

 

“FDA” the U.S. Food and Drug Administration or
any successor thereto.

 

“Federal Funds Rate” means, for any day, a
floating rate equal to the weighted average of the rates on overnight Federal
funds transactions among members of the Federal Reserve System, as determined by
Agent in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).

 

“Federal Reserve Board” means the Board of
Governors of the Federal Reserve System.

 

“Fees” means any and all fees payable to Agent
or any Lender pursuant to the Agreement or any of the other Loan Documents.

 

“Financial Covenants” means the financial
covenants set forth in Annex F.

 

“Financial Statements” means the consolidated
and consolidating income statements, statements of cash flows and balance
sheets of the Reporting Credit Parties delivered in accordance with Section 3.4
and Annex E.

 

“Fiscal Month” means any of the monthly
accounting periods of the Credit Parties.

 

“Fiscal Quarter” means any of the quarterly
accounting periods of the Credit Parties, ending on March 31, June 30,
September 30 and December 31 of each year.

 

“Fiscal Year” means any of the annual
accounting periods of the Credit Parties ending on December 31 of each
year.

 

“Fixed Charge Coverage Ratio” means, with
respect to Reporting Credit Parties for any fiscal period, the ratio of EBITDA
to Fixed Charges.

 

“Fixed Charges” means, with respect to any
Person for any fiscal period, (a) the aggregate of all Interest Expense
paid or accrued during such period, plus (b) scheduled payments of
principal with respect to Indebtedness during such period, plus (c) Capital
Expenditures during such period, plus (d) cash payments of income
taxes of the Credit Parties.

 

“Fixtures” means all “fixtures” as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party.

 

A-14

 

“Foreign Exchange Agreement” means a foreign
currency exchange hedging product providing foreign currency exchange
protection.

 

“Foreign Government Scheme or Arrangement” has
the meaning ascribed to it in Section 3.12(c).

 

“Foreign Plan” has the meaning ascribed to it
in Section 3.12(c).

 

“Funded Debt” means, with respect to any
Person, without duplication, all Indebtedness for borrowed money evidenced by
notes, bonds, debentures, or similar evidences of Indebtedness that by its
terms matures more than one year from, or is directly or indirectly renewable
or extendible at such Person’s option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from the date of creation thereof, and specifically
including Capital Lease Obligations, current maturities of long-term debt,
revolving credit and short-term debt extendible beyond one year at the option
of the debtor, surety bonds relating to litigation, and also including, in the
case of Borrowers, the Obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.

 

“GAAP” means generally accepted accounting
principles in the United States of America consistently applied, as such term
is further defined in Annex F to the Agreement.

 

“GE Capital” means General Electric Capital
Corporation, a Delaware corporation.

 

“GE Capital Fee Letter” means that certain
letter, dated as of May 3, 2005, between GE Capital and Innovations with
respect to certain Fees to be paid from time to time by Borrowers to GE
Capital.

 

“General Intangibles” means all “general
intangibles,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, including all right, title and interest that such
Credit Party may now or hereafter have in or under any Contract, all payment
intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefore and reissues, extensions or renewals thereof, rights in
Intellectual Property (including, without limitation, “intent to use” trademark
applications), interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible
rights, all liability, life, key man and business interruption insurance, and
all unearned premiums), uncertificated securities, choses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, 

 

A-15

 

including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under the
control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.

 

“German Credit Parties” means each of Inverness
Medical Germany GmbH, DMD, Dienstleistungen & Vertrieb für Medizin und
Diagnostik GmbH, VIVA Diagnostika – Diagnostische Produkte – GmbH, Unipath
Diagnostics GmbH and any other Subsidiary incorporated or otherwise organized
under the laws of in Germany which becomes a Credit Party under this Agreement
after the date hereof.

 

“Goods” means all “goods” as defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
including embedded software to the extent included in “goods” as defined in the
Code, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals.

 

“Governmental Authority” means any nation or
government, any state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Guaranteed Indebtedness” means as to any
Person, any obligation of such Person guaranteeing, providing comfort or
otherwise supporting any Indebtedness, lease, dividend, or other obligation (“primary
obligation”) of any other Person (the “primary obligor”) in any
manner, including any obligation or arrangement of such Person to (a) purchase
or repurchase any such primary obligation, (b) advance or supply funds (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, (d) protect
the beneficiary of such arrangement from loss (other than product warranties
given in the ordinary course of business) or (e) indemnify the owner of
such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of
(x) the stated or determinable amount of the primary obligation in respect
of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.

 

“Guaranties” means, collectively, the US
Guaranty and any other guaranty executed by any Guarantor in respect of the
Obligations.

 

“Guarantors” means Innovations, each Subsidiary
of Innovations (other than (i) the European Borrower, (ii) the US
Borrower in the case of the Obligations of the US Credit Parties, and (iii) the
Excluded Subsidiaries) and each other Person, if any, that executes a guaranty
or other similar agreement in favor of Agent, for itself and the ratable
benefit of Lenders, in connection with the transactions contemplated by the
Agreement and the other Loan Documents.

 

A-16

 

“Hazardous Material” means any substance,
material or waste that is regulated by, or forms the basis of liability now or
hereafter under, any Environmental Laws, including any material or substance
that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,”  “restricted hazardous waste,” “pollutant,” “contaminant,”
“hazardous constituent,” “special waste,” “toxic substance” or other similar
term or phrase under any Environmental Laws, or (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or
any radioactive substance.

 

“Healthcare Laws” has the meaning ascribed to
it in Section 3.1.

 

“HIPAA” means the Health Insurance Portability
and Accountability Act of 1996, as the same may be amended, modified or
supplemented from time to time, and any successor statute thereto, and any and
all rules or regulations promulgated from time to time thereunder.

 

“HIPAA Compliance Date” has the meaning
ascribed to it in Section 3.1.

 

“HIPAA Compliance Plan” has the meaning
ascribed to it in Section 3.1.

 

“IMC” means Inverness Medical Canada Inc.

 

“Immaterial Subsidiary” means any Credit Party
which (a) generated less than 5% of the Credit Parties’ consolidated revenues
for the fiscal period most recently ended and (b) owned less than
5% of the assets (as determined on a book value basis) of the Credit Parties on
a consolidated basis for such fiscal period, in each case as acceptable to
Agent; provided  that no Credit Party which otherwise satisfies
the criteria set forth in clauses (a) and (b) above
shall be treated as an Immaterial Subsidiary in this Agreement if (x) the
aggregate revenues generated by all Immaterial Subsidiaries would exceed 10% of
the Credit Parties’ consolidated revenues for the fiscal period most recently
ended or (y) all Immaterial Subsidiaries own more than 10% of the assets
of the Credit Parties on a consolidated basis, in each after including such
Credit Party as an Immaterial Subsidiary for purposes of calculating compliance
with clauses (x) and (y) above.

 

“Indebtedness” means, with respect to any
Person, without duplication, (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property payment for which
is deferred 6 months or more, but excluding obligations to trade creditors
incurred in the ordinary course of business that are unsecured and not overdue
by more than 6 months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers’
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e) all
Capital Lease Obligations and the present value (discounted at the Index Rate
as in effect on June 30, 2005) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such
Person under any foreign exchange contract, currency swap agreement, interest
rate swap, cap or collar 

 

A-17

 

agreement or other similar agreement or arrangement
designed to alter the risks of that Person arising from fluctuations in
currency values or interest rates, in each case whether contingent or matured
after taking into account the effect of any legally enforceable netting
obligations of such Person under such contracts, (h) all Indebtedness
referred to above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property or other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, and (i) the Obligations.

 

“Indemnified Liabilities” has the meaning
ascribed to it in Section 1.13.

 

“Indemnified Person” has the meaning ascribed
to in Section 1.13.

 

“Indenture” means the Indenture among
Innovations, the Guarantors named therein and U.S. Bank and Trust Company, as
Trustee, dated February 10, 2004, governing the Subordinated Bonds.

 

“Index Rate” means, for any day, a floating
rate equal to the higher of (i) the rate publicly quoted from time to time
by The Wall Street Journal as the “base rate on corporate
loans posted by at least 75% of the nation’s 30 largest banks” (or, if The Wall Street
Journal ceases quoting a base rate of the type described, the highest per
annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled “Selected Interest Rates”
as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds
Rate plus 50 basis points per annum. 
Each change in any interest rate provided for in the Agreement based
upon the Index Rate shall take effect at the time of such change in the Index Rate.

 

“Index Rate Loan” means a Loan or portion
thereof bearing interest by reference to the Index Rate.

 

“Innovations” has the meaning ascribed to it in
the preamble to this Agreement.

 

“Instruments” means all “instruments,” as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, wherever located, and, in any event, including all certificated
securities, all certificates of deposit, and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a
part of a group of writings that constitute, Chattel Paper.

 

“Intellectual Property” means any and all
Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with
such Trademarks.

 

“Intercreditor Agreement” means the Intercreditor
and Subordination Agreement, dated as of November 14, 2002, by and among
Agent, Innovations, US Borrower and the senior noteholders party thereto, as
the same may be amended, restated, supplemented or otherwise modified and in
effect from time to time.

 

“Interest Expense” means, with respect to any
Person for any fiscal period, interest expense (whether cash or non-cash) of
such Person determined in accordance with GAAP for the relevant period ended on
such date, including, interest expense with respect to any 

 

A-18

 

Funded Debt of such Person and interest expense for
the relevant period that has been capitalized on the balance sheet of such
Person but excluding all non-cash charges as they relate to the amortization or
write-offs of capitalized financing or debt origination fees or costs.

 

“Interest Hedge Agreements” means agreements
relating to the obligations of any Person pursuant to any arrangement with any
other Person whereby, directly or indirectly, such Person is entitled to
receive from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in exchange
for periodic payments made by such Person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements; provided, that any such arrangements are non-speculative in
nature.

 

“Interest Payment Date” means (a) as to
any Index Rate Loan, the first Business Day of each Fiscal Quarter to occur
while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day
of the applicable LIBOR Period; and provided  that, in addition to
the foregoing, each of (x) the date upon which all of the Commitments have
been terminated and the Loans have been paid in full and (y) the
Commitment Termination Date shall be deemed to be an “Interest Payment Date”
with respect to any interest that has then accrued under the Agreement.

 

“Inventory” means all “inventory,” as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, and in any event including inventory, merchandise, goods and
other personal property that are held by or on behalf of any Credit Party for
sale or lease or are furnished or are to be furnished under a contract of
service, or that constitute raw materials, work in process, finished goods,
returned goods, or materials or supplies of any kind, nature or description
used or consumed or to be used or consumed in such Credit Party’s business or
in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

 

“Inverness Medical Investments” means Inverness
Medical Investments, LLC, a Delaware limited liability company.

 

“Inverness Japan” means Inverness Medical
Japan, Ltd.

 

“Investment Property” means all “investment
property” as such term is defined in the Code now owned or hereafter acquired
by any Credit Party, wherever located, including (i) all securities,
whether certificated or uncertificated, including stocks, bonds, interests in
limited liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (ii) all securities entitlements of any
Credit Party, including the rights of any Credit Party to any securities
account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts of any Credit Party; (iv) all commodity contracts of any Credit
Party; and (v) all commodity accounts held by any Credit Party.

 

“IRC” means the Internal Revenue Code of 1986
and all regulations promulgated thereunder.

 

“IRS” means the Internal Revenue Service.

 

A-19

 

“IVC Mortgaged Property” means the real
property owned by IVC Industries, Inc. and located at 500 Halls Mill Road,
Freehold, New Jersey.

 

“L/C Issuer” has the meaning ascribed to it in Annex B.

 

“L/C Sublimit” has the meaning ascribed to it
in Annex B.

 

“Lender Swap Contract” means any Swap Contract
by and between Innovations or any Domestic Subsidiary and an Eligible Swap
Counterparty.

 

 “Lenders”
means GE Capital, the other Lenders named on the signature pages of the
Agreement, and, if any such Lender shall decide to assign all or any portion of
the Obligations, such term shall include any assignee of such Lender.

 

“Letter of Credit Fee” has the meaning ascribed
to it in Annex B.

 

“Letter of Credit Obligations” means all
outstanding obligations incurred by Agent and Lenders at the request of US
Borrower or European Borrower (as the case may be), whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance of
Letters of Credit by Agent or another L/C Issuer or the purchase of a
participation as set forth in Annex B with respect to any Letter of
Credit.  The amount of such Letter of
Credit Obligations shall equal the maximum amount that may be payable at such
time or at any time thereafter by Agent or Lenders thereupon or pursuant
thereto.

 

“Letter-of-Credit Rights” means “letter-of-credit
rights” as such term is defined in the Code, now owned or hereafter acquired by
any Credit Party, including rights to payment or performance under a letter of
credit, whether or not such Credit Party, as beneficiary, has demanded or is
entitled to demand payment or performance.

 

“Letters of Credit” means standby letters of
credit issued for the account of US Borrower or European Borrower (as the case
may be) by any L/C Issuer, and bankers’ acceptances issued by US Borrower or
European Borrower (as the case may be), for which Agent and Lenders have
incurred Letter of Credit Obligations.

 

“LIBOR Business Day” means a Business Day on
which banks in the City of London are generally open for interbank or foreign
exchange transactions.

 

“LIBOR Loan” means a Loan or any portion
thereof bearing interest by reference to the LIBOR Rate.

 

“LIBOR Period” means, with respect to any LIBOR
Loan, each period commencing on a LIBOR Business Day selected by European
Borrower or US Borrower, as applicable pursuant to the Agreement and ending
one, two or three months thereafter, as selected by European Borrower’s or US
Borrower’s irrevocable notice to Agent as set forth in Section 1.5(e);
provided, that the foregoing provision relating to LIBOR Periods is
subject to the following:

 

A-20

 

(a)                                  if
any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day,
such LIBOR Period shall be extended to the next succeeding LIBOR Business Day
unless the result of such extension would be to carry such LIBOR Period into
another calendar month in which event such LIBOR Period shall end on the
immediately preceding LIBOR Business Day;

 

(b)                                 any
LIBOR Period that would otherwise extend beyond the Commitment Termination Date
shall end 2 LIBOR Business Days prior to such date;

 

(c)                                  any
LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Period) shall end on the last LIBOR Business Day
of a calendar month;

 

(d)                                 Borrowers
shall select LIBOR Periods so as not to require a payment or prepayment of any
LIBOR Loan during a LIBOR Period for such Loan; and

 

(e)                                  Borrowers
shall select LIBOR Periods so that there shall be no more than 8 separate LIBOR
Loans in existence at any one time.

 

“LIBOR Rate” means for each LIBOR Period, a
rate of interest determined by Agent equal to:

 

(a)                                  the
offered rate for deposits in United States Dollars for the applicable LIBOR
Period that appears on Telerate Page 3750 as of 11:00 a.m. (London
time), on the second full LIBOR Business Day next preceding the first day of
such LIBOR Period (unless such date is not a Business Day, in which event the
next succeeding Business Day will be used); divided by

 

(b)                                 a
number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
the day that is 2 LIBOR Business Days prior to the beginning of such LIBOR
Period (including basic, supplemental, marginal and emergency reserves under
any regulations of the Federal Reserve Board or other Governmental Authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Federal Reserve Board that are required to
be maintained by a member bank of the Federal Reserve System).

 

If such interest rates shall cease to be available
from Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower Representative.

 

“License” means any Copyright License, Patent
License, Trademark License or other license of rights or interests now held or
hereafter acquired by any Credit Party.

 

“Lien” means any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having 

 

A-21

 

substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).

 

“Litigation” has the meaning ascribed to it in Section 3.13.

 

“Loan Account” has the meaning ascribed to it
in Section 1.12.

 

“Loan Documents” means this Agreement, the
Notes, the Collateral Documents, the GE Capital Fee Letter, the Closing Date
Fee Letter, the US Master Standby Agreement, the European Master Standby
Agreement, the Intercreditor Agreement and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and
delivered to, or in favor of, Agent or any Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby (excluding, in any event, all Lender Swap Contracts).  Any reference in the Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.

 

“Loans” means, collectively, the US Revolving
Loan, the European Revolving Loan, the US Swing Line Loan, the European Swing
Line Loan and the Term Loans.

 

“Lock Boxes” has the meaning ascribed to it in Annex C.

 

“LTM EBITDA” means, as of any date of
determination, EBITDA of the Reporting Credit Parties for the twelve (12)
Fiscal Month period most recently ended for which Financial Statements have
been delivered to Agent and Lenders in accordance with the terms hereof. For
purposes of calculating LTM EBITDA, consolidated net income shall include the
income (or deficit) of any Person acquired during a measurement period, for the
period prior to the date of such acquisition in respect of such measurement
period, subject to all pro forma adjustments reasonably satisfactory to
Requisite Lenders.

 

“Majority Lenders” means Lenders having (a) greater
than 50% of the Commitments of all Lenders, or (b) if the Commitments have
been terminated, more than 50% of the aggregate outstanding amount of all
Loans.

 

“Margin Stock” has the meaning ascribed to in Section 3.10.

 

“Material Adverse Effect” means a material
adverse effect on (a) the business, assets, operations, prospects or
financial or other condition of the US Credit Parties considered as a whole,
the European Credit Parties considered as a whole or the Credit Parties
considered as a whole, (b) any Borrower’s ability to pay any of the Loans
or any of the other Obligations in accordance with the terms of the Agreement
or any Guarantor’s ability to honor its guaranty obligation pursuant to the
Guaranties, (c) the Collateral or Agent’s Liens, on behalf of itself and 

 

A-22

 

Lenders, on the Collateral or the priority of such
Liens, or (d) Agent’s or any Lender’s rights and remedies under the
Agreement and the other Loan Documents.

 

“Material Contracts” means, collectively, the
Acquisition Agreement, the Subordinated Debt Documents and each of the
agreements set forth on Exhibit A-1 to this Agreement.

 

“ML Capital” has the meaning ascribed to it in
the preamble to this Agreement.

 

“Multiemployer Plan” means a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA, and to which any
Credit Party or ERISA Affiliate is making, is obligated to make or has made or
been obligated to make, contributions on behalf of participants who are or were
employed by any of them.

 

 “Non-Funding
Lender” has the meaning ascribed to it in Section 9.9(a)(ii).

 

“Notes” means, collectively, the US Revolving
Notes, the European Revolving Notes, the US Swing Line Notes, the European
Swing Line Notes, the US Term Notes, the European Term Notes, the Conversion US
Term Notes and the Conversion European Term Notes.

 

“Notice of Conversion/Continuation” has the
meaning ascribed to it in Section 1.5(e).

 

“Notice of European Revolving Credit Advance”
has the meaning ascribed to it in Section 1.1(b).

 

“Notice of US Revolving Credit Advance” has the
meaning ascribed to it in Section 1.1(a).

 

“Obligations” means all loans, advances, debts,
liabilities and obligations for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing
by any Credit Party to Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or
not evidenced by any note, agreement or other instrument, arising under the
Agreement or any of the other Loan Documents. 
This term (i) includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys’ fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents, including, without limitation, the L/C Obligations, but (ii) excludes,
in any event, all Eligible Swap Obligations (except as otherwise provided in
the last sentence of this definition). 
Notwithstanding the forgoing, with respect to Inverness Medical
Investments, in its capacity as (i) a Grantor under the US Security
Agreement and the US Intellectual Property Security Agreement, (ii) a
Guarantor under the US Guaranty, and (iii) a Pledgor under the US Pledge
Agreement, “Obligations” or similar terms under such documents shall mean
Obligations of the European Credit Parties and shall not include Obligations of
the US Credit Parties.  Subject to Section 1.19
hereof, solely for purposes of any collateral security for, or any guaranty of,
the 

 

A-23

 

Obligations provided by the US Credit Parties in any
Collateral Document entered into by the US Credit Parties (or any term or
provisions in any other Loan Document related thereto), the term “Obligations”
as used therein shall include the Eligible Swap Obligations unless otherwise
expressly excluded therein; provided, that, it is understood and agreed
that, notwithstanding the foregoing or any other provision to the contrary in
any of the Collateral Documents or other Loan Documents, in no event shall (i) any
European Credit Party be liable in any manner (whether pursuant to any guaranty
or otherwise) for any Eligible Swap Obligation, (ii) any assets of any
European Credit Party at any time serve directly or indirectly as security for
any Eligible Swap Obligations, or (iii) more than 65% (or in the case of
Swissco, 66%) of the total stock or other equity interests of any European
Credit Party secure any Eligible Swap Obligations.

 

“Orgenics” means Orgenics Ltd., an entity
organized under the laws of Israel.

 

“Orgenics Holdings” means Orgenics
International Holdings BV, an entity organized under the laws of The
Netherlands.

 

“Participant Register” has the meaning ascribed
to it in Section 9.1(i).

 

“Patent License” means rights under any written
agreement now owned or hereafter acquired by any Credit Party granting any
right with respect to any invention on which a Patent is in existence.

 

“Patents” means all of the following in which
any Credit Party now holds or hereafter acquires any interest:  (a) all letters patent of the United
States of America or of any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States of
America or of any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State, or any other
country, and (b) all reissues, continuations, continuations-in-part or
extensions thereof.

 

“PBGC” means the Pension Benefit Guaranty
Corporation.

 

“Pension Plan” means a Plan described in Section 3(2) of
ERISA.

 

“Permitted Acquisition” has the meaning
ascribed to it in Section 6.1.

 

“Permitted Encumbrances” means the following
encumbrances:  (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable or which
are being contested in accordance with Section 5.2(b); (b) pledges
or deposits of money securing statutory obligations under workmen’s
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or
deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) inchoate and unperfected
workers’, mechanics’ or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real
Estate; (e) carriers’, warehousemen’s, suppliers’ or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $100,000 (or
the Equivalent Amount thereof) at any time, so long as such Liens attach only
to 

 

A-24

 

Inventory; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of
Default under Section 8.1(j); (h) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title) thereto, so
long as the same do not materially impair the use, value, or marketability of
such Real Estate; (i) presently existing or hereafter created Liens in
favor of Agent, on behalf of Lenders; (j) a first priority charge in favor of
the Irish Industrial Development Authority on the real property owned by
Cambridge Diagnostics Ireland Ltd. located at Mervue Business Park – Unit 1D,
Galway, Ireland, and (k) Liens expressly permitted under clauses (b) and
(c) of Section 6.7 of the Agreement, and (l) bankers’
liens and set-off rights of banks against deposit accounts of a Credit Party at
such bank to the extent (i) permitted by a blocked account agreement
entered into among such bank, Agent and the applicable Domestic Credit Party, (ii) Agent
has consented to such lien or set-off right, or (iii) relating to an
account which is not required to be subject to a blocked account agreement.

 

“Person” means any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public
benefit corporation, other entity or government (whether federal, state,
county, city, municipal, local, foreign, or otherwise, including any
instrumentality, division, agency, body or department thereof).

 

“Plan” means, at any time, an “employee benefit
plan”, as defined in Section 3(3) of ERISA, that any Credit Party or
ERISA Affiliate maintains, contributes to or has an obligation to contribute
to, on behalf of participants who are or were employed by any Credit Party or
ERISA Affiliate.

 

“Pledge Agreements” means the US Pledge
Agreement together with all supplements thereto, and any other pledge or
similar agreement delivered on or prior to the Closing Date listed on Schedule 3
hereto, granting a Lien on the Stock described on Schedule 3 hereto
in favor of Agent, and any other agreement delivered after the Closing Date
(including by way of supplement to any pledge agreement) by any Person granting
a Lien on any Stock owned by such Person, in each case as amended, supplemented
or modified from time to time in accordance with its terms; provided  that,
subject to Section 5.11, any such pledge agreement granting a Lien
on the Stock of a European Credit Party shall provide that (i) only 65% of
the voting Stock of such European Credit Party shall secure the Obligations of
the US Credit Parties and (ii) 100% of the voting and non-voting Stock of
such European Credit Party shall secure the Obligations of the European Credit
Parties.

 

“Proceeds” means “proceeds,” as such term is
defined in the Code, including (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any
claim of any Credit Party against third parties (i) for past, present or
future infringement of any Patent or Patent License, or (ii) for past,
present or future infringement or dilution of any Copyright, Copyright License,
Trademark or Trademark License, or for injury to 

 

A-25

 

the goodwill associated with any Trademark or
Trademark License, (d) any recoveries by any Credit Party against third
parties with respect to any litigation or dispute concerning any of the
Collateral including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on
account of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all
rights arising out of Collateral.

 

“Pro Forma” means the unaudited consolidated
and consolidating balance sheet of the Reporting Credit Parties as of March 31,
2005 after giving pro  forma effect to the Related Transactions.

 

“Projections” means the Reporting Credit
Parties’ forecasted consolidated:  (a) balance
sheets; (b) profit and loss statements; and (c) cash flow statements,
all consistent with the historical Financial Statements of the Reporting Credit
Parties.

 

 “Pro Rata
Share” means with respect to all matters relating to any Lender, (a) with
respect to the US Revolving Loan, the percentage obtained by dividing (i) the
US Revolving Loan Commitment of such Lender by (ii) the aggregate US
Revolving Loan Commitments of all US Revolving Lenders, (b) with respect
to the European Revolving Loan, the percentage obtained by dividing (i) the
European Revolving Loan Commitment of such Lender by (ii) the aggregate
European Revolving Loan Commitments of all European Revolving Lenders, (c) with
respect to the US Term Loan, the percentage obtained by dividing (i) the
US Term Loan Commitment of such Lender by (ii) the aggregate US Term Loan
Commitments of all US Term Lenders, (d) with respect to the European Term
Loan, the percentage obtained by dividing (i) the European Term Loan
Commitment of such Lender by (ii) the aggregate European Term Loan
Commitments of all European Term Lenders, and (e) with respect to all
Loans, the percentage obtained by dividing (i) the aggregate Commitments
of that Lender by (ii) the aggregate Commitments of all Lenders as any
such percentages may be adjusted by assignments permitted pursuant to Section 9.1;
provided  that, with respect to the US Revolving Loan, the European
Revolving Loan, the US Term Loan, the European Term Loan or all Loans, on and
after the Commitment Termination Date, the percentage referenced above shall be
obtained by dividing (i) the aggregate outstanding principal balance of
the applicable Loan or all Loans held by that Lender, by (ii) the
outstanding principal balance of the applicable Loan or all Loans held by all
Lenders.

 

 “Qualified
Plan” means a Pension Plan that is intended to be tax-qualified under Section 401(a) of
the IRC.

 

“Real Estate” has the meaning ascribed to it in
Section 3.6.

 

“Refunded European Swing Line Loan” has the
meaning ascribed to it in Section 1.1(e)(iii).

 

“Refunded US Swing Line Loan” has the meaning
ascribed to it in Section 1.1(d)(iii).

 

A-26

 

“Register” has the meaning ascribed to it in Section 9.1(h).

 

“Registered Loan” has the meaning ascribed to
it in Section 9.1(g).

 

“Registered Note” has the meaning ascribed to
it in Section 9.1(g).

 

“Related Transactions” means the initial
borrowing of the Loans on the Closing Date, the Acquisition, the payment of all
fees, costs and expenses associated with all of the foregoing and the execution
and delivery of all of the Related Transactions Documents.

 

“Related Transactions Documents” means the Loan
Documents, the Acquisition Agreement and all other agreements or instruments
executed and/or delivered in connection with the Related Transactions.

 

“Release” means any release, threatened
release, spill, emission, leaking, pumping, pouring, emitting, emptying,
escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Material in the indoor or outdoor environment,
including the movement of Hazardous Material through or in the air, soil, surface
water, ground water or property.

 

“Reporting Credit Parties” means, collectively,
Innovations and its Subsidiaries; provided  that if Reporting
Credit Parties which are Excluded Subsidiaries generate more than 5% of the
Reporting Credit Parties’ EBITDA on a consolidated basis for the fiscal period
most recently ended as determined by Agent by reference to the Financial
Statements for such fiscal period, the Reporting Credit Parties shall not
include more than 5% of the aggregate EBITDA of such Excluded Subsidiaries for
purposes of calculating EBITDA hereunder.

 

“Requisite Lenders” means (a) Lenders
holding at least 66 2/3% of the Commitments of all Lenders, and (b) if the
Commitments have been terminated, Lenders holding more than 66 2/3% of the
aggregate outstanding amount of all Loans.

 

“Requisite Term Lenders” means Lenders holding
more than 66 2/3% of the aggregate outstanding amount of all Term Loans.

 

“Restated Financial Statements” has the meaning
ascribed to it in Section 5.13(b).

 

“Restricted Credit Parties” means, collectively
(a) Inverness Japan, (b) Inverness Medical France SAS, and (c) Orgenics
International Holdings, BV.

 

“Restricted Payment” means, with respect to any
Credit Party (a) the declaration or payment of any dividend or the
incurrence of any liability to make any other payment or distribution of cash
or other property or assets in respect of Stock; (b) any payment on
account of the purchase, redemption, defeasance, sinking fund or other
retirement of such Credit Party’s Stock or any other payment or distribution
made in respect thereof, either directly or indirectly; (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any 

 

A-27

 

outstanding warrants, options or other rights to
acquire Stock of such Credit Party now or hereafter outstanding; (e) any
payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Credit Party’s Stock or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission; (f) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Credit Party other than
payment of compensation in the ordinary course of business to Stockholders who
are employees of such Person; and (g) any payment of management fees (or
other fees of a similar nature) by such Credit Party to any Stockholder of such
Credit Party or its Affiliates.

 

“Retiree Welfare Plan” means, at any time, a
Welfare Plan that provides for continuing coverage or benefits for any
participant or any beneficiary of a participant after such participant’s termination
of employment, other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant.

 

“Revolving Lenders” means, as of any date of
determination, Lenders having a US Revolving Loan Commitment and a European
Revolving Loan Commitment.

 

“Revolving Loan Commitment” means, as to any
Lender, the aggregate of the US Revolving Loan Commitment and the European
Revolving Loan Commitment of such Lender.

 

“Revolving Loans” means, collectively the US
Revolving Loans and the European Revolving Loans.

 

“Seller” means Abbott Laboratories, an Illinois
corporation, Abbott Cardiovascular, Inc. and Abbott Japan Co., Ltd.

 

“Senior Consolidated Leverage Ratio” means,
with respect to the Reporting Credit Parties on a consolidated basis, the ratio
of (a) the sum of Funded Debt as of any date of determination less
Subordinated Debt as of such date less available cash in excess of
$5,000,000 in Blocked Accounts on such date, to (b) LTM EBITDA for the
twelve months ending on that date of determination.

 

“Senior Obligations” has the meaning ascribed
to it in Section 11.18.

 

“Software” means all “software” as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, other
than software embedded in any category of Goods, including all computer
programs and all supporting information provided in connection with a
transaction related to any program.

 

“Solvent” 
means, with respect to any Person or group of Persons on a consolidated
basis on a particular date, that on such date (a) the fair value of the
property of such Person or group is greater than the total amount of
liabilities, including contingent liabilities, of such Person or group; (b) the
present fair salable value of the assets of such Person or group is not less
than the amount that will be required to pay the probable liability of such
Person or group on its debts as they become absolute and matured; (c) such
Person or group does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s or 

 

A-28

 

group’s ability to pay as such debts and liabilities
mature; (d) such Person or group is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which such Person’s
or group’s property would constitute an unreasonably small capital and; (e) it
is not insolvent and would not be deemed to be insolvent under any laws
applicable to it.  The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.

 

“Spot Rate” for a currency means the rate
quoted by the Agent as the spot rate for the purchase by Agent of such currency
with another currency through its foreign exchange office at approximately 11:00 a.m.
(London time) on the date two Business Days prior to the date as of which the
foreign exchange computation is made.

 

“Stock” means all shares, options, warrants,
general or limited partnership interests, membership interests or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other “equity security” (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934).

 

“Stockholder” means, with respect to any
Person, each holder of Stock of such Person.

 

“Subordinated Bonds” means those certain 8.75%
senior subordinated notes due February 15, 2012 in the original principal
amount of $150,000,000 issued by Innovations to certain holders thereof.

 

“Subordinated Debt” means the Indebtedness of
Innovations evidenced by the Subordinated Bonds, the Subordinated Notes and any
other Indebtedness of any Credit Party which is subordinated to the Obligations
in a manner and form satisfactory to Agent and Lenders in their sole
discretion, as to right and time of payment and as to any other rights and remedies
thereunder.

 

“Subordinated Debt Documents” means,
collectively, the Subordinated Note Documents, the Indenture and any other
agreement, instrument, guaranty or other document evidencing or relating to any
Subordinated Debt, in each case in form and substance satisfactory to Agent and
Requisite Lenders.

 

“Subordinated Note and Warrant Purchase Agreement”
means that certain Subordinated Note and Warrant Purchase Agreement, dated as
of September 20, 2002, by and among Innovations, each of the investors
party thereto and Pear Tree Partners, L.P.

 

“Subordinated Note Documents” means,
collectively, the Subordinated Notes, the Subordinated Note and Warrant
Purchase Agreement and the Warrants.

 

A-29

 

“Subordinated Notes” means those certain 10%
Subordinated Notes due September 20, 2008, dated September 20, 2002,
in the original aggregate principal amount of $20,000,000 issued by Innovations
to certain subordinated noteholders.

 

“Subordinated Obligations” has the meaning
ascribed to it in Section 11.18.

 

“Subsidiary” means, with respect to any Person,
(a) any corporation of which an aggregate of more than 50% of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person or one or
more Subsidiaries of such Person, or with respect to which any such Person has
the right to vote or designate the vote of 50% or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership
or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50% or
of which any such Person is a general partner or may exercise the powers of a
general partner.  Unless the context
otherwise requires, each reference to a Subsidiary shall be a reference to a
Subsidiary of a Borrower.

 

“Supporting Obligations” means all “supporting
obligations” as such term is defined in the Code, including letters of credit
and guaranties issued in support of Accounts, Chattel Paper, Documents, General
Intangibles, Instruments, or Investment Property.

 

“Swap Contract” means any “swap agreement,” as
defined in Section 101 of the Bankruptcy Code, that is intended to provide
protection against fluctuations in interest or currency exchange rates and
shall include, without limitation, Interest Hedge Agreements and Foreign
Exchange Agreements.

 

“Swing Line Advances” means, collectively, US
Swing Line Advances and European Swing Line Advances.

 

“Swing Line Lender” means GE Capital.

 

“Swissco” means Inverness Medical Switzerland
GmbH, an entity organized under the laws of Switzerland.

 

“Synthetic Lease” means any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing arrangement whereby the arrangement is considered borrowed
money Indebtedness for tax purposes but is classified as an operating lease or
does not otherwise appear on a balance sheet under GAAP.

 

“Target” has the meaning ascribed to it in Section 6.1.

 

“Taxes” means taxes, levies, imposts,
deductions, Charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of Agent or a Lender
by the jurisdictions under the laws of which Agent and Lenders are organized or
conduct business or any political subdivision thereof.

 

A-30

 

“Term Lenders” means those Lenders having US
Term Loan Commitments and/or European Term Loan Commitments.

 

“Term Loan Commitment” means, as to any Lender,
the aggregate of the US Term Loan Commitment and the European Term Loan
Commitment of such Lender.

 

“Term Loans” means, collectively, the US Term
Loan and the European Term Loan.

 

“Termination Date” means the date on which (a) the
Loans have been indefeasibly repaid in full in cash, (b) all other
Obligations under this Agreement and the other Loan Documents (excluding in any
event (i) contingent indemnity and similar claims for which no amount is
then owing that survive termination of any Loan Document and (ii) any
Eligible Swap Obligations) have been completely discharged (c) all Letter
of Credit Obligations have been cash collateralized, canceled or backed by
standby letters of credit in accordance with Annex B, and (d) none
of Borrowers shall have any further right to borrow any monies under this
Agreement.

 

“Title IV Plan” means a Pension Plan (other
than a Multiemployer Plan), that is covered by Title IV of ERISA, and that any
Credit Party or ERISA Affiliate maintains, contributes to or has an obligation
to contribute to on behalf of participants who are or were employed by any of
them.

 

“Total Leverage Ratio” means, with respect to
the Reporting Credit Parties, on a consolidated basis, the ratio of (a) Funded
Debt as of any date of determination less available cash in excess of
$5,000,000 in Blocked Accounts on such date, to (b) LTM EBITDA for the
twelve months ending on that date of determination.

 

“Trademark License” means rights under any
written agreement now owned or hereafter acquired by any Credit Party granting
any right to use any Trademark.

 

“Trademarks” means all of the following now
owned or hereafter existing or adopted or acquired by any Credit Party: (a) all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles
of like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith (other than “intent
to use” trademark applications), including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated
with or symbolized by any of the foregoing.

 

“UBS” means UBS AG, Cayman Islands Branch.

 

“Unfunded Pension Liability” means, at any
time, the aggregate amount, if any, of the sum of (a) the amount by which
the present value of all accrued benefits under each Title IV Plan exceeds the
fair market value of all assets of such Title IV Plan allocable to such
benefits in accordance with Title IV of ERISA, all determined as of the most
recent valuation date for each 

 

A-31

 

such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period
of 5 years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued)
that could be avoided by any Credit Party or any ERISA Affiliate as a result of
such transaction.

 

“Unutilized European Amount” means, as of any
date of determination, the difference between (a) the European Maximum
Amount as of such date and (b) the average for the period of the daily
closing balances of the aggregate European Revolving Loan (including Letter of
Credit Obligations incurred for the benefit of the European Borrowers) and the
European Swing Line Loan outstanding during the period for which the Fee
referenced in Section 1.9(b) is due.

 

“Unutilized US Amount” means, as of any date of
determination, the difference between (a) the US Maximum Amount as of such
date and (b) the average for the period of the daily closing balances of
the aggregate US Revolving Loan (including Letter of Credit Obligations
incurred for the benefit of the US Borrowers) and the US Swing Line Loan
outstanding during the period for which the Fee referenced in Section 1.9(b) is
due.

 

“US Borrower” has the meaning ascribed to it in
the preamble to this Agreement.

 

“US Credit Party” means Innovations, US
Borrower and each of their respective Domestic Subsidiaries (other than
Inverness Medical Investments and the Excluded US Subsidiaries).

 

“US Guaranty” means the Second Amended and
Restated Guaranty, dated as of the Closing Date, executed by each US Credit
Party in favor of Agent and Lenders, as amended and in effect from time to
time.

 

“US Intellectual Property Security Agreement”
means the Second Amended and Restated US Intellectual Property Security
Agreement, dated as of the Closing Date, made in favor of Agent by the Credit
Parties which are signatories thereto, as amended and in effect from time to
time.

 

“US Master Standby Agreement” means the Amended
and Restated Master Agreement for Standby Letters of Credit dated as of the
Closing Date between US Borrower, as Applicant, and GE Capital, as issuer.

 

“US Maximum Amount” means, as of any date of
determination, an amount equal to the US Revolving Loan Commitment of all
Lenders as of that date.

 

“US Pledge Agreement” means the Second Amended
and Restated Pledge Agreement, dated as of the Closing Date, executed by each
of the US Credit Parties in favor of Agent pledging all Stock of its Domestic
Subsidiaries, if any, and all intercompany notes owing to or held by such US
Credit Party, as amended and in effect from time to time.

 

“US Requisite Revolving Lenders” means (a) Lenders
holding at least 66 2/3% of the of the US Revolving Loan Commitments of all
Lenders, and (b) if the US Revolving Loan

 

A-32

 

Commitments have been terminated, Lenders holding more
than 66 2/3% of the aggregate outstanding amount of all US Revolving Loans.

 

“US Revolving Borrowing Availability” means as
of any date of determination the US Maximum Amount less the sum of the
aggregate US Revolving Loan and US Swing Line Loan then outstanding.

 

“US Revolving Credit Advance” has the meaning
ascribed to it in Section 1.1(a)(i).

 

“US Revolving Lenders” means those Lenders
having a US Revolving Loan Commitment.

 

“US Revolving Loan” means, at any time, the sum
of (i) the aggregate amount of US Revolving Credit Advances outstanding to
US Borrower plus (ii) the aggregate Letter of Credit Obligations
incurred on behalf of US Borrower. 
Unless the context otherwise requires, references to the outstanding
principal balance of the US Revolving Loan shall include the outstanding
balance of Letter of Credit Obligations incurred on behalf of US Borrower.

 

“US Revolving Loan Commitment” means (a) as
to any Lender, the aggregate commitment of such Lender to make US Revolving
Credit Advances as set forth on Annex I to this Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make US Revolving Credit
Advances, which aggregate commitment shall be (i) FORTY MILLION DOLLARS
($40,000,000) on the Closing Date, and (ii) TWENTY FIVE MILLION DOLLARS
($25,000,000) on the Conversion Date, if applicable, as such amount may be
adjusted, if at all, from time to time in accordance with this Agreement.

 

“US Revolving Note” has the meaning ascribed to
it in Section 1.1(a)(ii).

 

“US Security Agreement” means the Second
Amended and Restated Security Agreement, dated as of the Closing Date, entered
into by and among Agent and each of the US Credit Parties, as amended and in
effect from time to time.

 

“US Swing Line Advance” has the meaning
ascribed to it in Section 1.1(e)(i).

 

“US Swing Line Availability” has the meaning
ascribed to it in Section 1.1(e)(i).

 

“US Swing Line Commitment” means, as to the
Swing Line Lender, the commitment of the Swing Line Lender to make US Swing
Line Advances as set forth on Annex I to the Agreement, which
commitment constitutes a subfacility of the US Revolving Loan Commitment of the
Swing Line Lender.

 

“US Swing Line Loan” means, as the context may
require, at any time, the aggregate amount of US Swing Line Advances
outstanding to US Borrower.

 

“US Swing Line Note” has the meaning ascribed
to it in Section 1.1(e)(ii).

 

A-33

 

“US Term Lenders” means those Lenders having a
US Term Loan Commitment.

 

“US Term Loan” has the meaning ascribed to it
in Section 1.1(c)(i).

 

“US Term Loan Commitment” means (a) as to
any Lender with a US Term Loan Commitment, the commitment of such Lender to
make its Pro Rata Share of the US Term Loan as set forth on Annex I
to the Agreement or in the most recent Assignment Agreement executed by such
Lender, and (b) as to all Lenders with a US Term Loan Commitment, the
aggregate commitment of all Lenders to make the US Term Loan, which aggregate
commitment is equal to (i) TEN MILLION DOLLARS ($10,000,000) on the
Closing Date (ii) TWENTY FIVE MILLION DOLLARS ($25,000,000) on the
Conversion Date, if applicable.  After
advancing the US Term Loan, each reference to a Lender’s US Term Loan
Commitment shall refer to that Lender’s Pro Rata Share of the outstanding US
Term Loan.

 

“US Term Note” has the meaning ascribed to it
in Section 1.1(c)(i)(1).

 

“Warrants” means, collectively, those certain
Warrants for the Purchase of Shares of Common Stock of Inverness Medical
Innovations, Inc. issued by Innovations for the account of the investors
party to the Subordinated Note and Warrant Purchase Agreement.

 

“Welfare Plan” means a Plan described in Section 3(i) of
ERISA.

 

“Working Capital” means, with respect to the
Credit Parties (other than US Borrower) or US Borrower, as the context may
require, Current Assets minus Current Liabilities.

 

Rules of construction with respect to accounting
terms used in the Agreement or the other Loan Documents shall be as set forth
in Annex F.  All other undefined
terms contained in any of the Loan Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Code to the extent
the same are used or defined therein; in the event that any term is defined
differently in different Articles or Divisions of the Code, the definition
contained in Article or Division 9 shall control; provided, that,
in any event, the term “security interest” shall include a hypothec.  Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause
refer to such Section, subsection or clause as contained in the
Agreement.  The words “herein,” “hereof”
and “hereunder” and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any
such Annex, Exhibit or Schedule.

 

Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular
and the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter genders.  The words “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation”; the word “or”
is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations.  Whenever any provision
in any Loan

 

A-34

 

Document refers to the knowledge (or an analogous phrase) of any Credit
Party, such words are intended to signify that an officer of such Credit Party
has actual knowledge or awareness of a particular fact or circumstance, or in
the exercise of its duties with reasonable diligence, should have known or been
aware of a particular fact or circumstance. 
Each of the Credit Parties represents and warrants to Agent and Lenders
that the officers of such Credit Party are the individuals in such entities who
are primarily responsible for addressing or managing all such particular
matters.

 

A-35

 

ANNEX B (Section 1.2)

to

CREDIT AGREEMENT

 

LETTERS OF CREDIT

 

(a)           Issuance.
Subject to the terms and conditions of the Agreement, Agent and Revolving
Lenders agree to incur, from time to time prior to the Commitment Termination
Date, upon the request of (i) US Borrower and for US Borrower’s account or (ii)
European Borrower and for European Borrower’s account, Letter of Credit
Obligations by causing Letters of Credit to be issued by GE Capital or a
Subsidiary thereof or a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an “L/C Issuer”) for
the applicable Borrower’s account and guaranteed by Agent; provided,
that if the L/C Issuer is a Revolving Lender, then such Letters of Credit shall
not be guaranteed by Agent but rather each Revolving Lender shall, subject to
the terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Agent, as more fully described in paragraph (b)(ii)
below.  The aggregate amount of all such
Letter of Credit Obligations shall not at any time exceed THIRTY-FIVE MILLION
DOLLARS ($35,000,000) (the “L/C Sublimit”); provided  that
(A) the aggregate amount of Letter of Credit Obligations of US Borrower shall
not at any time exceed the US Maximum Amount less the aggregate outstanding
principal balance of the US Revolving Credit Advances and the US Swing Line
Loan and (B) the aggregate amount of Letter of Credit Obligations of European
Borrower shall not at any time exceed the European Maximum Amount less the
aggregate outstanding principal balance of the European Revolving Credit
Advances and the European Swing Line Loan. 
No such Letter of Credit shall have an expiry date that is more than the
earlier of one year following the date of issuance thereof, unless otherwise
determined by the Agent, in its sole discretion, and neither Agent nor
Revolving Lenders shall be under any obligation to incur Letter of Credit
Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date that is later than the date which is five (5)
Business Days prior to the Commitment Termination Date.

 

(b)           (i)            Advances
Automatic; Participations.  In the
event that Agent or any Revolving Lender shall make any payment on or pursuant
to any Letter of Credit Obligation, such payment shall then be deemed
automatically to constitute a US Revolving Credit Advance or a European
Revolving Credit Advance (as the case may be) under Section 1.1(a)
of the Agreement regardless of whether a Default or Event of Default has
occurred and is continuing and notwithstanding any Borrower’s failure to
satisfy the conditions precedent set forth in Section 2, and each
Revolving Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement.  The
failure of any Revolving Lender to make available to Agent for Agent’s own
account its Pro Rata Share of any such Advance or payment by Agent under or in
respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Agent its Pro Rata Share thereof,
but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender’s Pro Rata Share
of any such payment.

 

(ii)           If
it shall be illegal or unlawful for any Borrower to incur Advances as
contemplated by paragraph (b)(i) above because of an Event of Default
described in

 

 

B-1

 

Sections
8.1(h) or (i) or otherwise or if it shall be illegal
or unlawful for any Revolving Lender to be deemed to have assumed a ratable
share of the reimbursement obligations owed to an L/C Issuer, or if the L/C
Issuer is a Revolving Lender, then (A) immediately and without further
action whatsoever, each Revolving Lender shall be deemed to have irrevocably
and unconditionally purchased from Agent (or such L/C Issuer, as the case may
be) an undivided interest and participation equal to such Revolving Lender’s
Pro Rata Share (based on the US Revolving Loan Commitments or European
Revolving Loan Commitments, as the case may be) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender’s Pro Rata Share (based on
the US Revolving Loan Commitments or the European Revolving Loan Commitments,
as the case may be) of the Letter of Credit Obligations with respect to such
Letter of Credit on the date of such issuance. 
Each Revolving Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided
in the Agreement with respect to US Revolving Credit Advances and European
Revolving Credit Advances.

 

(c)           Cash
Collateral.

 

(i)            If
any Borrower is required to provide cash collateral for any Letter of Credit
Obligations pursuant to the Agreement prior to the Commitment Termination Date,
such Borrower will pay to Agent for the ratable benefit of itself and Revolving
Lenders cash or cash equivalents acceptable to Agent (“Cash Equivalents”)
in an amount equal to 105% of the maximum amount then available to be drawn
under each applicable Letter of Credit outstanding for the benefit of such
Borrower.  Such funds or Cash Equivalents
shall be held by Agent in an interest-bearing cash collateral account (the “Cash
Collateral Account”) maintained at a bank or financial institution
acceptable to Agent.  The Cash Collateral
Account shall be in the name of the applicable Borrower and shall be pledged to,
and subject to the control of, Agent, for the benefit of Agent and Lenders, in
a manner satisfactory to Agent.  Each
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. 
The Agreement, including this Annex B, shall constitute a
security agreement under applicable law.

 

(ii)           If
any Letter of Credit Obligations, whether or not then due and payable, shall
for any reason be outstanding on the Commitment Termination Date, the
applicable Borrower shall either (A) provide cash collateral therefore in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like
tenor and duration (plus 30 additional days) as, and in an amount equal to 105%
of the aggregate maximum amount then available to be drawn under, the Letters
of Credit to which such outstanding Letter of Credit Obligations relate and
shall be issued by a Person, and shall be subject to such terms and conditions,
as are be satisfactory to Agent in its sole discretion.

 

B-2

 

(iii)          From
time to time after funds are deposited in the Cash Collateral Account by the
applicable Borrower, whether before or after the Commitment Termination Date,
Agent may apply such funds or Cash Equivalents then held in the Cash Collateral
Account to the payment of any amounts, and in such order as Agent may elect, as
shall be or shall become due and payable by the applicable Borrower to Agent
and Lenders with respect to such Letter of Credit Obligations of such Borrower
and, upon the satisfaction in full of all Letter of Credit Obligations of such
Borrower, to any other Obligations of such Borrower then due and payable.

 

(iv)          Neither
Borrower nor any Person claiming on behalf of or through any Borrower shall
have any right to withdraw any of the funds or Cash Equivalents held in the
Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to Agent
and Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be applied to other Obligations then due and owing and upon
payment in full of such Obligations, any remaining amount shall be paid to the
applicable Borrower or as otherwise required by law.  Interest earned on deposits in the Cash
Collateral Account shall be for the account of Agent.

 

(d)           Fees
and Expenses.  Each Borrower agrees
to pay to Agent for the benefit of Revolving Lenders, as compensation to such
Lenders for Letter of Credit Obligations incurred on its behalf hereunder,
(i) all costs and expenses incurred by Agent or any Lender on account of
such Letter of Credit Obligations, and (ii) for each quarter during which
any Letter of Credit Obligation shall remain outstanding, a fee (the “Letter
of Credit Fee”) in an amount equal to the Applicable L/C Margin from time
to time in effect multiplied by the maximum amount available from time to time
to be drawn under the applicable Letter of Credit.  Such fee shall be paid to Agent for the
benefit of the Revolving Lenders in arrears, on the first day of each quarter
and on the Commitment Termination Date. 
In addition, each Borrower shall pay to any L/C Issuer, on demand, such
fees (including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.

 

(e)           Request
for Incurrence of Letter of Credit Obligations.  The applicable Borrower shall give Agent at
least 2 Business Days’ prior written notice requesting the incurrence of any
Letter of Credit Obligation.  The notice
shall be accompanied by the form of the Letter of Credit (which shall be
acceptable to the L/C Issuer) and a completed Application for Standby Letter of
Credit or Application in the form of Exhibit B-1 attached
hereto.  Notwithstanding anything
contained herein to the contrary, Letter of Credit applications by a Borrower
and approvals by Agent and the L/C Issuer may be made and transmitted pursuant
to electronic codes and security measures mutually agreed upon and established
by and among the applicable Borrower, Agent and the L/C Issuer.

 

(f)            Obligation
Absolute.  The obligation of each
Borrower to reimburse Agent and Revolving Lenders for payments made with
respect to any Letter of Credit Obligation issued on its behalf shall be
absolute, unconditional and irrevocable, without necessity of presentment,
demand, protest or other formalities, and the obligations of each Revolving
Lender to make payments to Agent with respect to Letters of Credit shall be
unconditional and irrevocable.  Such

 

B-3

 

obligations
of Borrowers and Revolving Lenders shall be paid strictly in accordance with
the terms hereof under all circumstances including the following:

 

(i)            any
lack of validity or enforceability of any Letter of Credit or the Agreement or
the other Loan Documents or any other agreement;

 

(ii)           the
existence of any claim, setoff, defense or other right that any Borrower or any
of their respective Affiliates or any Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom any such transferee may be acting), Agent, any Lender, or any
other Person, whether in connection with the Agreement, the Letter of Credit,
the transactions contemplated herein or therein or any unrelated transaction
(including any underlying transaction between Borrowers or any of their
respective Affiliates and the beneficiary for which the Letter of Credit was
procured);

 

(iii)          any
draft, demand, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

 

(iv)          payment
by Agent (except as otherwise expressly provided in paragraph (g)(ii)(C)
below) or any L/C Issuer under any Letter of Credit or guaranty thereof against
presentation of a demand, draft or certificate or other document that does not
comply with the terms of such Letter of Credit or such guaranty;

 

(v)           any
other circumstance or event whatsoever, that is similar to any of the
foregoing; or

 

(vi)          the
fact that a Default or an Event of Default has occurred
and is continuing.

 

(g)           Indemnification;
Nature of Lenders’ Duties.

 

(i)            In
addition to amounts payable as elsewhere provided in the Agreement, each of US
Borrower and European Borrower, as applicable, hereby agrees to pay and to
protect, indemnify, and save harmless Agent and each Lender from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees and allocated costs of internal
counsel) that Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or
guaranty thereof on its behalf, or (B) the failure of Agent or any Lender
seeking indemnification or of any L/C Issuer to honor a demand for payment
under any Letter of Credit issued on its behalf or guaranty thereof as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority, in each case other
than to the extent solely as a result of the gross negligence or willful
misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).

 

B-4

 

(ii)           As
between Agent and any Lender and Borrowers, Borrowers assume all risks of the
acts and omissions of, or misuse of any Letter of Credit by beneficiaries, of
any Letter of Credit.  In furtherance and
not in limitation of the foregoing, to the fullest extent permitted by law, neither
Agent nor any Lender shall be responsible for: 
(A) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document issued by any party in connection with the application
for and issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, that may prove
to be invalid or ineffective for any reason; (C) failure of the
beneficiary of any Letter of Credit to comply fully with conditions required in
order to demand payment under such Letter of Credit; provided, that in
the case of any payment by Agent under any Letter of Credit or guaranty
thereof, Agent shall be liable to the extent such payment was made solely as a
result of its gross negligence or willful misconduct (as finally determined by
a court of competent jurisdiction) in determining that the demand for payment
under such Letter of Credit or guaranty thereof complies on its face with any
applicable requirements for a demand for payment under such Letter of Credit or
guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Letter of Credit or guaranty thereof or of the proceeds thereof;
(G) the credit of the proceeds of any drawing under any Letter of Credit
or guaranty thereof; and (H) any consequences arising from causes beyond
the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent’s or any Lender’s rights or powers
hereunder or under the Agreement.

 

(iii)          Nothing
contained herein shall be deemed to limit or to expand any waivers, covenants
or indemnities made by any Borrower in favor of any L/C Issuer in any letter of
credit application, reimbursement agreement or similar document, instrument or
agreement between such Borrower and such L/C Issuer, including the US Master
Standby Agreement and European Master Standby Agreement entered into with
Agent.

 

B-5

 

ANNEX C (Section 1.8)

to

CREDIT AGREEMENT

 

CASH MANAGEMENT SYSTEM

 

I.              US
Cash Management.  Innovations and US
Borrower shall, and Innovations shall cause each of its Domestic Subsidiaries
(other than the Excluded US Subsidiaries) to, establish and maintain the Cash
Management Systems described below:

 

(a)           On
or before the Closing Date and until the Termination Date, (i) US Borrower
shall establish lock boxes (“Lock Boxes”) or at Agent’s discretion,
blocked accounts (“Blocked Accounts”) at one or more of the banks set
forth in Disclosure Schedule (3.19), and shall request in writing
and otherwise take such reasonable steps to ensure that all Account Debtors
forward payment directly to such Lock Boxes, and (ii) Innovations and US
Borrower shall, and Innovations shall cause each of its Domestic Subsidiaries
(other than the Excluded US Subsidiaries) to, deposit promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all cash, checks, drafts or other similar items of payment relating to or
constituting payments made in respect of any and all Collateral (whether or not
otherwise delivered to a Lock Box) into one or more Blocked Accounts in US
Borrower’s name or any such Subsidiary’s name and at a bank identified in Disclosure
Schedule (3.19) (each, a “Relationship Bank”).  On or before the Closing Date, US Borrower
shall have established a concentration account in its name (each a “Concentration
Account” and collectively, the “Concentration Accounts”) at the bank
or banks that shall be designated as the Concentration Account bank for US
Borrower in Disclosure Schedule (3.19) (each a “Concentration
Account Bank” and collectively, the “Concentration Account Banks”),
which banks shall be reasonably satisfactory to Agent.

 

(b)           Intentionally
omitted.

 

(c)           On
or before the Closing Date (or such later date as Agent shall consent to in
writing), each Concentration Account Bank and all other Relationship Banks
shall have entered into tri-party blocked account agreements with Agent, for
the benefit of itself and Lenders, and the applicable US Credit Party, in form
and substance reasonably acceptable to Agent, which shall become operative on
or prior to the Closing Date.  Each such
blocked account agreement shall provide, among other things, that (i) all
items of payment deposited in such account and proceeds thereof deposited in
the applicable Concentration Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of itself and Lenders, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any
other claim against such account, as the case may be, other than for payment of
its service fees and other charges directly related to the administration of
such account and for returned checks or other items of payment, and
(iii) from and after the Closing Date (A) with respect to banks at
which a Blocked Account is maintained, such bank agrees, from and after the
receipt of a notice (an “Activation Notice”) from Agent (which
Activation Notice may be given by Agent at any time at which (1) a Default
or Event of Default has occurred and is continuing, (2) Agent reasonably
believes based upon information available to it that a Default or an Event of
Default is likely to occur; (3) Agent reasonably believes that an event or
circumstance that is likely to have a Material Adverse Effect

 

C-1

 

has
occurred, or (4) Agent reasonably has grounds to question the integrity of
US Borrower’s Cash Management Systems or any US Credit Party’s compliance with
the provisions of this Annex C or any other provisions of the Loan
Documents to the extent related to such Cash Management Systems (any of the
foregoing being referred to herein as an “Activation Event”)), to
forward immediately all amounts in each Blocked Account to such Borrower’s Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the applicable Concentration Account and (B) with respect to
each Concentration Account Bank, such bank agrees from and after the receipt of
an Activation Notice from Agent upon the occurrence of an Activation Event, to
immediately forward all amounts received in the applicable Concentration
Account to the Collection Account through daily sweeps from such Concentration
Account into the Collection Account.  Notwithstanding
the foregoing, Agent shall promptly, and in any event within 3 Business Days,
rescind any Activation Notice issued, and notify the applicable Relationship
Bank(s) in writing with respect thereto, if none of the conditions set forth in
clauses (iii)(A)(1) through (4) above continue to exist.

 

(d)           So
long as no Default or Event of Default has occurred and is continuing, US
Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account; provided, that (i) Agent shall have consented in writing
in advance to the opening of such account or Lock Box with the relevant bank
and (ii) prior to the time of the opening of such account or Lock Box, the
applicable US Credit Party and such bank shall have executed and delivered to
Agent a tri-party blocked account agreement, in form and substance reasonably
satisfactory to Agent.  Such US Credit
Party shall close any of its accounts (and establish replacement accounts in
accordance with the foregoing sentence) promptly and in any event within 30
days following notice from Agent that the creditworthiness of any bank holding
an account is no longer acceptable in Agent’s reasonable judgment, or as
promptly as practicable and in any event within 60 days following notice from
Agent that the operating performance, funds transfer or availability procedures
or performance with respect to accounts or Lock Boxes of the bank holding such
accounts or Agent’s liability under any tri-party blocked account agreement
with such bank is no longer acceptable in Agent’s reasonable judgment.

 

(e)           The
Lock Boxes, Blocked Accounts and the Concentration Accounts shall be cash
collateral accounts, with all cash, checks and other similar items of payment
in such accounts securing payment of the Loans and all other Obligations and
the Eligible Swap Obligations (subject to Section 1.19 hereof and to the
limitations provided in the last sentence of the definition of “Obligations” in
Annex A), and in which each US Credit Party shall have granted a Lien to
Agent, on behalf of itself and Lenders, pursuant to the US Security Agreement.

 

(f)            All
amounts deposited in the Collection Account shall be deemed received by Agent
in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11.  In no event shall any amount be so applied
unless and until such amount shall have been credited in immediately available
funds to the Collection Account.

 

(g)           Each
US Credit Party shall, and Innovations shall cause its domestic Affiliates,
officers, employees, agents, directors or other Persons acting for or in
concert with such Person (each a “Related Person”) to, (i) hold in
trust for Agent, for the benefit of itself and Lenders, all checks, cash and
other items of payment received by such US Credit Party or any

 

C-2

 

such
Related Person, and (ii) within 1 Business Day after receipt by such
US Credit Party or any such Related Person of any checks, cash or other items
of payment, deposit the same into a Blocked Account of such Person.  Each US Credit Party and each Related Person
thereof acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral.  All proceeds of the sale or other disposition
of any Collateral, shall be deposited directly into the applicable Blocked
Accounts.

 

II.            European
Cash Management.  European Borrower
shall, and Innovations shall cause each other European Credit Party (other than
Inverness Japan) to, establish and maintain the Cash Management Systems
described below:

 

(a)           On
or before the Closing Date and until the Termination Date, European Credit
Parties shall request in writing and otherwise take such reasonable steps to
ensure that all Account Debtors forward payment directly to their operating
accounts (each, a “European Operating Account” and collectively, “European
Operating Accounts”) with each of their relationship banks identified in Disclosure
Schedule (3.19) (each, a “European Relationship Bank”), and
(ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all
Collateral into one or more European Operating Accounts.

 

(b)           On
or before the Closing Date (or such later date as Agent shall consent to in
writing, or as provided in Section 5.13(c) and (d)),
European Credit Parties shall have caused each European Relationship Bank, to
have entered into a blocked account agreement with Agent, for the benefit of
itself and Lenders, in form and substance reasonably acceptable to Agent, which
shall become operative on or prior to the Closing Date.  Each such blocked account agreement shall
provide, among other things, that (i) all items of payment deposited in
such account and proceeds thereof deposited in the applicable European
Operating Account are held by such bank as agent or bailee-in-possession for
Agent, on behalf of itself and Lenders, and (ii) the bank executing such
agreement has no rights of setoff or recoupment or any other claim against such
account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment (it being understood that it shall be
sufficient for each European Credit Party to comply with this subclause (b)
to notify its European Relationship Banks of the security in favor of Agent
over the respective European Operating Accounts and to receive in response an
acknowledgment of such notice from the European Relationship Banks and deliver
a copy of such acknowledgment to Agent).

 

(c)           So
long as no Default or Event of Default has occurred and is continuing, European
Credit Parties may amend Disclosure Schedule (3.19) to add or
replace a European Relationship Bank or European Operating Account; provided,
that (i) Agent shall have consented in writing in advance to the opening
of such account with the relevant bank and (ii) prior to the time of the
opening of such account, such bank shall have executed and delivered to Agent a
blocked account agreement, in form and substance reasonably satisfactory to
Agent.  European Credit Parties shall
close any of their accounts (and establish replacement accounts in accordance
with the foregoing sentence) promptly and in any event within 30 days following
notice from Agent that the creditworthiness of any bank holding an account is
no longer acceptable in

 

C-3

 

Agent’s
reasonable judgment, or as promptly as practicable and in any event within 60
days following notice from Agent that the operating performance, funds transfer
or availability procedures or performance with respect to accounts or European
Lock Boxes of the bank holding such accounts or Agent’s liability under any
blocked account agreement with such bank is no longer acceptable in Agent’s
reasonable judgment.

 

(d)           The
European Operating Accounts shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing payment of
the European Term Loan and all other Obligations of the European Borrower, and
in which each applicable European Credit Party shall have granted a Lien to
Agent, on behalf of itself and Lenders, pursuant to a pledge or security
agreement securing the Obligations of the European Borrower.

 

(e)           Each
European Credit Party shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
such European Credit Party to (i) hold in trust for Agent, for the benefit
of itself and Lenders, all checks, cash and other items of payment received by
such European Credit Party, and (ii) within 1 Business Day after
receipt by such European Credit Party of any checks, cash or other items of
payment, deposit the same into a European Operating Account of such European
Credit Party.  Each European Credit Party
thereof acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral securing the Obligations of the European
Borrower are part of such Collateral. 
All proceeds of the sale or other disposition of such Collateral shall
be deposited directly into the applicable European Operating Account.

 

C-4

 

ANNEX D (Section 2.1(a))

to

CREDIT AGREEMENT

 

CLOSING CHECKLIST

 

In addition to,
and not in limitation of, the conditions described in Section 2.1
of the Agreement, pursuant to Section 2.1(a), the following items
must be received by Agent in form and substance satisfactory to Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the
Agreement):

 

A.            Appendices.  All Appendices to the Agreement, in form and
substance satisfactory to Agent.

 

B.            Notes.  Duly executed originals of the US Revolving
Notes, European Revolving Notes, US Swing Line Note, European Swing Line Note,
European Term Notes and US Term Notes for each Lender, dated the Closing Date.

 

C.            Security
Agreements.  Duly executed originals
of the US Security Agreement and the European Security Agreements and all
instruments, documents and agreements executed pursuant thereto.

 

D.            Insurance.  Satisfactory evidence that the insurance
policies required by Section 5.4 are in full force and effect,
together with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements, as requested by Agent, in favor of Agent, on
behalf of Lenders.

 

E.             Security
Interests and Code Filings.

 

(a)           Evidence
satisfactory to Agent that Agent (for the benefit of itself and Lenders) has a
valid and perfected first priority security interest in (i) the Collateral
of the US Credit Parties to secure all of the Obligations and (ii) the
Collateral of the European Credit Parties to secure the obligations of the
European Credit Parties, including (i) such documents duly executed by
each Credit Party (including financing statements under the Code (or foreign
equivalent) and other applicable documents under the laws of any jurisdiction with
respect to the perfection of Liens) as Agent may request in order to perfect
its security interests in the Collateral and (ii) copies of Code (or
foreign equivalent) search reports (or, where not available, such other
equivalent information available and reasonably satisfactory to Agent) listing
all effective financing statements (or equivalent information) that name any
Credit Party as debtor, together with copies of such financing statements (or
equivalent information), none of which shall cover the Collateral.

 

(b)           Evidence
satisfactory to Agent, including copies, of all financing statements (or, where
not available, such other equivalent documentation available and reasonably
satisfactory to Agent) filed in favor of any Credit Party with respect to each
location, if any, at which Inventory may be consigned.

 

D-1

 

(c)           Control
Letters from (i) all issuers of uncertificated securities and financial
assets held by each US Credit Party, (ii) all securities intermediaries
with respect to all securities accounts and securities entitlements of each US
Credit Party, and (iii) all futures commission agents and clearing houses
with respect to all commodities contracts and commodities accounts held by any
US Credit Party.

 

F.             [Intentionally
Omitted.]

 

G.            Intellectual
Property Security Agreements.  Duly
executed originals of the US Intellectual Property Security Agreement and the
European Intellectual Property Security Agreements, each dated the Closing Date
and signed by each applicable Credit Party which owns Trademarks, Copyrights
and/or Patents, as applicable, all in form and substance reasonably
satisfactory to Agent, together with all instruments, documents and agreements
executed pursuant thereto.

 

H.            Guaranties.  Duly executed originals of the Guaranties and
all documents, instruments and agreements executed pursuant thereto.

 

I.              Pledge
Agreements.  Duly executed originals
of each of the Pledge Agreements accompanied by (as applicable) (a) share
certificates representing all of the outstanding Stock being pledged pursuant
to each such Pledge Agreement and stock powers for such share certificates
executed in blank, (b) the original intercompany notes and other
instruments evidencing Indebtedness being pledged pursuant to each such Pledge
Agreement, duly endorsed in blank, and (c) such other instruments,
documents, certifications and filings as are required thereunder.

 

J.             Initial
Notice of US Revolving Credit Advance. 
Duly executed originals of a Notice of US Revolving Credit Advance,
dated the Closing Date, with respect to the initial US Revolving Credit Advance
to be requested by US Borrower on the Closing Date.

 

K.            Initial
Notice of European Revolving Credit Advance.  Duly executed originals of a Notice of
European Revolving Credit Advance, dated the Closing Date, with respect to the
initial European Revolving Credit Advance to be requested by European Borrower
on the Closing Date.

 

L.             Letter
of Direction.  Duly executed
originals of a letter of direction from Borrower Representative addressed to
Agent, on behalf of itself and Lenders, with respect to the disbursement on the
Closing Date of the proceeds of the Term Loans and the initial US Revolving
Credit Advance and the initial European Revolving Credit Advance.

 

M.           Cash
Management System; Blocked Account Agreements.  Evidence satisfactory to Agent that, as of
the Closing Date, Cash Management Systems complying with Annex C to
the Agreement have been established and are currently being maintained in the
manner set forth in such Annex C, together with copies of duly
executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.

 

D-2

 

N.            Charter
and Good Standing.  For each Credit
Party, such Person’s (a) charter or other organizational documents and all
amendments thereto, (b) good standing certificates or the foreign
equivalent (including verification of tax status) in its jurisdiction of
incorporation and (c) good standing certificates or the foreign equivalent
(including verification of tax status) and certificates of qualification to
conduct business in each jurisdiction where its ownership or lease of property
or the conduct of its business requires such qualification, each dated a recent
date prior to the Closing Date and certified by the applicable Secretary of
State or other authorized Governmental Authority.

 

O.            Bylaws
and Resolutions.  For each Credit
Party, (a) such Person’s bylaws or the foreign equivalent, together with
all amendments thereto and (b) resolutions of such Person’s Board of
Directors and, to the extent required under applicable law, stockholders,
approving and authorizing the execution, delivery and performance of the Loan Documents
to which such Person is a party and the transactions to be consummated in
connection therewith, each certified as of the Closing Date by such Person’s
corporate secretary or an assistant secretary as being in full force and effect
without any modification or amendment.

 

P.             Incumbency
Certificates.  For each Credit Party,
signature and incumbency certificates of the officers of each such Person
executing any of the Loan Documents, certified as of the Closing Date by such
Person’s corporate secretary or an assistant secretary as being true, accurate,
correct and complete.

 

Q.            Opinions
of Counsel.  Duly executed originals
of opinions of each of: (a) Foley Hoag LLP, US counsel for the Credit
Parties, (b) Paul T. Hempel, Esq., general counsel to the Credit Parties or Jay
McNamara, Associate General Counsel to the Credit Parties, (c) Perkins Coie
LLP, local counsel to Ostex International, Inc. in Washington, (d) Perkins Coie
LLP, local counsel to ABI and Forefront in California, and (e) any other local
or foreign counsel opinions reasonably requested by Agent, each in form and
substance reasonably satisfactory to Agent and its counsel, dated the Closing
Date, and to include in such opinion an express statement to the effect that
Agent and Lenders are authorized to rely on such opinion.

 

R.            Intentionally
Omitted.

 

S.             Accountants’
Letters.  A letter from the Credit
Parties to their independent auditors authorizing the independent certified
public accountants of the Credit Parties to communicate with Agent and Lenders
in accordance with Section 4.2.

 

T.            Appointment
of Agent for Service.  Evidence that
CT Corporation has been appointed as agent for each Credit Party for service of
process.

 

U.            Solvency
Certificate. The Credit Parties shall deliver to Agent for the benefit of
Lenders a solvency certificate of the Chief Financial Officer, Treasurer or
Vice President, Finance, of Innovations reasonably satisfactory in form and
substance to Agent.

 

V.            Fee
Letter.  Duly executed originals of
the GE Capital Fee Letter and the Closing Date Fee Letter.

 

D-3

 

W.           Officer’s
Certificate.  Agent shall have
received duly executed originals of a certificate of the Chief Financial
Officer, Treasurer or Vice President, Finance, of Innovations, dated the
Closing Date, stating (on behalf of the Credit Parties and not in such Person’s
individual capacity) that, with respect to the Credit Parties, since December
31, 2004, (i) no event or condition has occurred or is existing which
could reasonably be expected to have a Material Adverse Effect; (ii) there
has been no material adverse change in the industry in which any Borrower
operates; (iii) no Litigation has been commenced which has a reasonable
prospect of being determined adversely to any Credit Party and which, if
successful, would have a Material Adverse Effect and no Litigation has been
commenced which, if so determined, could challenge any of the transactions
contemplated by this Agreement and the other Loan Documents or the Acquisition
Agreement; (iv) there have been no Restricted Payments made by any Credit
Party in violation of the Existing Credit Agreement; and (vi) there has
been no material increase in liabilities, liquidated or contingent, and no
material decrease in assets of the Credit Parties on a consolidated basis.

 

X.            Waivers.  Agent, on behalf of Lenders, shall have
received landlord waivers and consents, bailee letters and mortgagee agreements
in form and substance reasonably satisfactory to Agent, in each case as
required pursuant to Section 5.9.

 

Y.            Subordination
and Intercreditor Agreements.  Agent
and Lenders shall have received any and all subordination and/or intercreditor
agreements (including the Intercreditor Agreement), all in form and substance
reasonably satisfactory to Agent, in its sole discretion, as Agent shall have
deemed necessary or appropriate with respect to any Indebtedness of any Credit
Party.

 

Z.            Audited
Financials; Financial Condition. 
Agent and Lenders shall have received the Financial Statements, Projections
and other materials set forth in Section 3.4, certified by
Innovations’ Treasurer or Vice President, Finance, in each case in form and
substance reasonably satisfactory to Agent and Lenders, and Agent and Lenders
shall be satisfied with all of the foregoing. 
Agent and Lenders shall have further received a certificate of the Chief
Financial Officer, the Treasurer and/or Vice President, Finance, of Innovations
(on behalf of Innovations and not in such Person’s individual capacity), based
on such Pro Forma and Projections, to the effect that (a) the Pro Forma
fairly presents the financial condition of the Reporting Credit Parties as of
the date thereof after giving effect to the transactions contemplated by the
Loan Documents; and (b) the Projections are based upon estimates and
assumptions stated therein, all of which Innovations believes to be reasonable
and fair in light of current conditions and current facts known to Innovations
and, as of the Closing Date, reflect Innovations’ good faith and reasonable
estimates of its future financial performance and of the other information
projected therein for the period set forth therein.

 

AA.        Assignment
of Representations, Warranties, Covenants, Indemnities and Rights.  Agent shall have received a duly executed
copy of an Assignment of Representations, Warranties, Covenants, Indemnities
and Rights in respect of the relevant Credit Parties’ rights under the
Acquisition Agreement, which assignment shall be expressly permitted under the
Acquisition Agreement or shall have been consented to by Seller in writing.

 

D-4

 

BB.          US
Master Standby Agreement.  A duly
executed copy of the US Master Standby Agreement.

 

CC.          European
Master Standby Agreement.  A duly
executed copy of the European Master Standby Agreement.

 

DD.         Other.  Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.

 

D-5

 

ANNEX E (Section 4.1(a))

to

CREDIT AGREEMENT

 

FINANCIAL STATEMENTS AND
PROJECTIONS – REPORTING

 

Innovations shall
deliver or cause to be delivered to Agent or to Agent and Lenders, as
indicated, the following:

 

(a)           Intentionally
Omitted.

 

(b)           Quarterly
Financials.  To Agent and Lenders,
within 45 days after the end of each Fiscal Quarter, consolidated and
consolidating financial information regarding the Credit Parties, the
Restricted Credit Parties and the Excluded Subsidiaries, certified by the
Treasurer or Vice President, Finance, of Innovations (on behalf of Innovations
and not in such Person’s individual capacity), including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case in the case of
financial information regarding the Credit Parties, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments).  Such financial information shall be
accompanied by (A) a Compliance Certificate in respect of each of the
Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer, Treasurer or Vice President,
Finance, of Innovations (on behalf of Innovations and not in such Person’s
individual capacity) that (i) such financial information presents fairly
in accordance with GAAP (subject to normal year-end adjustments) the financial
position, results of operations and statements of cash flows of the Credit
Parties, on both a consolidated and consolidating basis (in the case of
consolidating Financial Statements, subject to intercompany eliminations and
other consolidating adjustments), as at the end of such Fiscal Quarter and for
that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.  In addition, Innovations shall
deliver to Agent and Lenders, within 45 days after the end of each Fiscal
Quarter, (i) a management discussion and analysis that includes a comparison to
budget for that Fiscal Quarter and a comparison of performance for that Fiscal
Quarter to the corresponding period in the prior year, and (ii) a schedule of
tangible assets, Accounts and accounts payable for Innovations and each of its
Subsidiaries and for the US Credit Parties, the Excluded US Subsidiaries, the
European Credit Parties, the Excluded European Subsidiaries, and the Restricted
Credit Parties.

 

(c)           Operating
Plan. To Agent and Lenders, as soon as available, but not later than 60
days after the end of each Fiscal Year, an annual operating plan for the Credit
Parties, on a consolidated and consolidating basis, approved by the Board of
Directors of Innovations, for the following Fiscal Year, which
(i) includes a statement of all of the material assumptions on which such
plan is based, (ii) includes quarterly balance sheets, income statements
and statements of cash flows for the following year and (iii) integrates
sales, gross profits, operating

 

E-1

 

expenses,
operating profit and cash flow projections, all prepared on the same basis and
in similar detail as that on which operating results are reported (and in the
case of cash flow projections, representing management’s good faith estimates
of future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.

 

(d)           Annual
Audited Financials. To Agent and Lenders, within 90 days after the end of
each Fiscal Year, audited Financial Statements for the Credit Parties on a
consolidated and (unaudited) consolidating basis, consisting of balance sheets
and statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent.  Such Financial Statements shall be
accompanied by (i) a statement prepared in reasonable detail showing the
calculations used in determining compliance with each of the Financial
Covenants, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred as a
result of the Reporting Credit Parties’ failure to comply with the Financial
Covenants (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed
to Agent, on behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications required by
nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm’s certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters, (v) a schedule
of all intercompany balances among the Credit Parties as of the last day of
that Fiscal Year; and (vi) the certification of the Chief Financial
Officer, Treasurer or Vice President, Finance, of Innovations (on behalf of
Innovations and not in such Person’s individual capacity) that all such
Financial Statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows of the Credit
Parties on a consolidated and consolidating basis (in the case of consolidating
Financial Statements, subject to intercompany eliminations and other
consolidating adjustments), as at the end of such Fiscal Year and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.

 

(e)           Management
Letters.  To Agent and Lenders,
within 5 Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.

 

(f)            Default
Notices.  To Agent and Lenders, as
soon as practicable, and in any event within 5 Business Days after an executive
officer of any Credit Party has actual knowledge of the existence of any
Default, Event of Default

 

E-2

 

or
other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business
Day.

 

(g)           SEC
Filings and Press Releases.  To Agent
and Lenders, promptly upon their becoming available, copies of:  (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority; and (iii) all press
releases and other statements made available by any Credit Party to the public
concerning material changes or developments in the business of any such Person;
provided, that, to the extent any of the documents referenced in
clauses (i), (ii) or (iii) have been made publicly
available, such documents shall not be required to be delivered to Agent and
Lenders.

 

(h)           Subordinated
Debt and Equity Notices.  To Agent,
(A) as soon as practicable, copies of all material written notices given or received
by any Credit Party with respect to any Subordinated Debt or Stock of such
Person, and, within 2 Business Days after any Credit Party obtains knowledge of
any matured or unmatured event of default with respect to any Subordinated
Debt, notice of such event of default, and (B) upon request of Agent, copies of
all Subordinated Debt Documents as reasonably requested by Agent.

 

(i)            Supplemental
Schedules.  To Agent, supplemental
disclosures, if any, required by Section 5.6.

 

(j)            Litigation.  To Agent in writing, promptly upon learning
thereof, notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $500,000 (or the Equivalent
Amount thereof), (ii) seeks injunctive relief that could reasonably be
expected to have a Material Adverse Effect, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against any
Credit Party or ERISA Affiliate in connection with any Plan, (iv) alleges
criminal misconduct by any Credit Party, (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental
Liabilities or (vi) involves any product recall.

 

(k)           Insurance
Notices.  To Agent, disclosure of
losses or casualties required by Section 5.4.

 

(l)            Lease
Default Notices.  To Agent, within 2
Business Days after receipt thereof, copies of (i) any and all default
notices received under or with respect to any leased location or public
warehouse where any material Collateral is located, and (ii) such other
notices or documents as Agent may reasonably request.

 

(m)          Lease
Amendments.  To Agent, within 2
Business Days after receipt thereof, copies of all material amendments to the
real estate leases pertaining to the properties located at (i) Mervue Business
Park, Galway, Ireland, and (ii) Stannard Way, Priory Business Park, Bedford
MK44 3UP, England.

 

(n)           Regulatory
Notices.  To Agent and Lenders,
within 2 Business Days after receipt thereof, copies of any notice or
correspondence from any Governmental Authority

 

E-3

 

received
by any Credit Party alleging a violation of laws or regulations that could
reasonably be expected to result in a Material Adverse Effect.

 

(o)           Status
of ABI.  At Agent’s request, a verbal
summary providing the status of and any actions taken by any Credit Party with
respect to the Application Integrity Policy Application delivered to Applied
Biotech, Inc. by the FDA.

 

(p)           Other
Documents.  To Agent and Lenders,
such other financial and other information respecting any Credit Party’s
business or financial condition as Agent or any Lender shall from time to time
reasonably request.

 

E-4

 

ANNEX F (Section 6.10)

to

CREDIT AGREEMENT

 

FINANCIAL COVENANTS

 

The Reporting
Credit Parties shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

 

(a)           Minimum
Fixed Charge Coverage Ratio.  The
Reporting Credit Parties shall have on a consolidated basis at the end of each
Fiscal Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month
period then ended of not less than the following:

 

	
  Fiscal Quarter Ending:

  	
   

  	
  Fixed Charge Coverage Ratio:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2005

  	
   

  	
  .70:1:00

  	
   

  
	
  December 31, 2005

  	
   

  	
  .85:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  .85:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  .90:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  .95:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  .95:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  .95:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  .95:1.00

  	
   

  
	
  September 20, 2007

  	
   

  	
  1.00:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  1.00:1.00

  	
   

  

 

(b)           Minimum
EBITDA.  The Reporting Credit Parties
on a consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, LTM EBITDA of not less than the following:

 

	
  Fiscal Quarter Ending:

  	
   

  	
  EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2005

  	
   

  	
  $

  	
  44,000,000

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  48,000,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  48,000,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  48,000,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

F-1

 

(c)           Maximum
Senior Consolidated Leverage Ratio. 
The Reporting Credit Parties, on a consolidated basis, shall have, at
the end of each Fiscal Quarter set forth below, a Senior Consolidated Leverage
Ratio as of the last day of such Fiscal Quarter and for the 12-month
period then ended of not more than the following:

 

2.00:1.00 for
the Fiscal Quarter ending September 30, 2005

2.00:1.00 for
the Fiscal Quarter ending December 31, 2005

2.00:1.00 for
the Fiscal Quarter ending March 31, 2006

2.00:1.00 for
the Fiscal Quarter ending June 30, 2006

2.00:1.00 for
the Fiscal Quarter ending September 30, 2006

2.00:1.00 for
the Fiscal Quarter ending December 31, 2006

1.50:1.00 for
the Fiscal Quarter ending March 31, 2007

1.50:1.00 for
the Fiscal Quarter ending June 30, 2007

1.50:1.00 for
the Fiscal Quarter ending September 30, 2007

1.50:1.00 for
the Fiscal Quarter ending December 31, 2007

 

 

(d)           Maximum
Total Leverage Ratio.  The Reporting
Credit Parties, on a consolidated basis, shall have, at the end of each Fiscal
Quarter set forth below, a Total Leverage Ratio as of the last day of such
Fiscal Quarter and for the 12 month period then ended of not more than the
following:

 

5.75:1.00 for
the Fiscal Quarter ending September 30, 2005

5.50:1.00 for
the Fiscal Quarter ending December 31, 2005

5.50:1.00 for
the Fiscal Quarter ending March 31, 2006

5.00:1.00 for
the Fiscal Quarter ending June 30, 2006

5.00:1.00 for
the Fiscal Quarter ending September 30, 2006

5.00:1.00 for
the Fiscal Quarter ending December 31, 2006

4.75:1.00 for
the Fiscal Quarter ending March 31, 2007

4.50:1.00 for
the Fiscal Quarter ending June 30, 2007

4.25:1.00 for
the Fiscal Quarter ending September 30, 2007

4.00:1.00 for
the Fiscal Quarter ending December 31, 2007

 

Unless otherwise
specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP
consistently applied.  That certain items
or computations are explicitly modified by the phrase “in accordance with GAAP”
shall in no way be construed to limit the foregoing.  If any “Accounting Changes” (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then the Credit Parties, Agent and Lenders agree to enter into
negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Credit Parties’ financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not been
made; provided, however, that the agreement of Requisite Lenders
to any required amendments of such

 

F-2

 

provisions
shall be sufficient to bind all Lenders. 
“Accounting Changes” means (i) changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants (or successor thereto or any agency
with similar functions); (ii) changes in accounting principles concurred
in by Innovations’ certified public accountants; (iii) purchase accounting
adjustments under FASB 141 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a
result of purchase accounting adjustments. 
All such adjustments resulting from expenditures made subsequent to the
Closing Date (including capitalization of costs and expenses or payment of
pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period.  If Agent, Credit Parties and
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. 
If Agent, Credit Parties and Requisite Lenders cannot agree upon the
required amendments within 30 days following the date of implementation of any
Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.  For purposes of Section 8.1, a
breach of a Financial Covenant contained in this Annex F shall be deemed
to have occurred as of any date of determination by Agent or as of the last day
of any specified measurement period, regardless of when the Financial
Statements reflecting such breach are delivered to Agent.

 

F-3

 

ANNEX G (Section 9.9(a))

to

CREDIT AGREEMENT

 

WIRE TRANSFER INFORMATION

 

	
  Name:

  	
   

  	
  General Electric Capital Corporation

  
	
  Bank:

  	
   

  	
  Deutsche Bank Trust Company Americas

  
	
   

  	
   

  	
  New York, New York

  
	
  ABA #:

  	
   

  	
  021001033

  
	
  Account #:

  	
   

  	
  50271079

  
	
  Account
  Name:

  	
   

  	
  HH — Cash Flow Collections

  
	
  Reference:

  	
   

  	
  CFN 4940 Inverness Med.

  

 

 

G-1

 

ANNEX H (Section 11.10)

to

CREDIT AGREEMENT

 

NOTICE ADDRESSES

 

(A)          If
to Agent or GE Capital, at

General
Electric Capital Corporation

2 Bethesda
Metro Center, Suite 600

Bethesda,
Maryland  20814

Attention:
Andrew Cosgrove, Account Manager

Telecopier
No.:  (866) 234-2969

Telephone
No.:  (301) 634-3233

 

with copies
to:

 

Paul,
Hastings, Janofsky & Walker LLP

1055
Washington Boulevard

Stamford,
Connecticut  06901

Attention:
Christopher H. Craig, Esq.

Telecopier
No.:  (203) 359-3031

Telephone
No.:  (203) 961-7496

 

and

 

GE Capital
Healthcare Financial Services, Inc.

2 Bethesda
Metro Center, Suite 600

Bethesda, Maryland  20814

Attention:
Maryanne Courtney, Esq.

Telephone
No.:  (301) 634-3260

Telecopier
No.:  (301) 664-9866

 

(B)           If
to any Borrower, to Borrower Representative, at

 

Inverness
Medical Innovations, Inc.

51 Sawyer
Road, Suite 200

Waltham,
Massachusetts  02453

Attention: Ron
Zwanziger, Chief Executive Officer

Telecopier
No.: (781) 647-3939

Telephone No.:
(781) 647-3900

 

with copies to:

 

Inverness
Medical Innovations, Inc.

51 Sawyer
Road, Suite 200

Waltham,
Massachusetts  02453

 

H-1

 

Attention:
General Counsel

Telecopier
No.: (781) 647-3939

Telephone No.:
(781) 647-3900

 

and

 

Foley Hoag LLP

Seaport World
Trade Center West

155 Seaport
Boulevard

Boston,
Massachusetts 02210-2600

Attention:              Malcolm
Henderson, Esq.

Telecopier
No.: (617) 832-7000

Telephone No.:
(617) 832.1276

 

H-2

 

ANNEX I (from Annex A –
Commitments definition)
to

CREDIT AGREEMENT

 

	
  Commitments
  on the Closing Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  GENERAL
  ELECTRIC CAPITAL CORPORATION:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment

  	
   

  	
   

  	
   

  
	
  (including a
  US Swing Line Commitment of $5,000,000):

  	
   

  	
  $

  	
  17,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment

  	
   

  	
   

  	
   

  
	
  (including a
  European Swing Line Commitment of $5,000,000):

  	
   

  	
  $

  	
  17,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Term Loan Commitment:

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MERRILL
  LYNCH CAPITAL, a division

  	
   

  	
   

  	
   

  
	
  of
  Merrill Lynch Business Financial Services Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Term Loan Commitment: :

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  UBS AG,
  CAYMAN ISLANDS BRANCH

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  	
   

  

 

I-1

 

	
  Commitments
  on the Conversion Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GENERAL
  ELECTRIC CAPITAL CORPORATION:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment

  	
   

  	
   

  
	
  (including a
  US Swing Line Commitment of $5,000,000):

  	
   

  	
  $

  	
  10,000,000

  
	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment

  	
   

  	
   

  
	
  (including a
  European Swing Line Commitment of $5,000,000):

  	
   

  	
  $

  	
  10,000,000

  
	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  12,500,000

  
	
   

  	
   

  	
   

  
	
  European
  Term Loan Commitment:

  	
   

  	
  $

  	
  12,500,000

  
	
   

  	
   

  	
   

  
	
  MERRILL
  LYNCH CAPITAL, a division

  	
   

  	
   

  
	
  of
  Merrill Lynch Business Financial Services Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  
	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  
	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  12,500,000

  
	
   

  	
   

  	
   

  
	
  European
  Term Loan Commitment: :

  	
   

  	
  $

  	
  12,500,000

  
	
   

  	
   

  	
   

  
	
  UBS AG,
  CAYMAN ISLANDSBRANCH

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  
	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  

 

I-2Exhibit 10.1

 

BEST BUY CO., INC.

NON-QUALIFIED STOCK OPTION AND PERFORMANCE SHARE AWARD AGREEMENT

[Award Date:  October 11, 2004]

 

I.                 The Award. 
As of the Award Date set forth in the Award Notification accompanying
this award, Best Buy Co., Inc. grants to you (i) the number of
performance shares of Best Buy common stock set forth in such Award
Notification (the “Performance Shares”) and (ii) an option to purchase the
number of shares of Best Buy common stock set forth in such Award Notification
(the “Option”) at the option price per share set forth in such Award
Notification, on the terms and conditions contained in this Non-Qualified Stock
Option and Performance Share Award Agreement (this “Agreement”) and the Best
Buy Co., Inc. 2004 Omnibus Stock and Incentive Plan (the “Plan”).  Capitalized terms not defined in the body of
this Agreement are defined in the Addendum.

 

II.             Option

 

2.1                   Duration and Exercisability of Option.  You may not exercise any portion of the
Option prior to one year from the Award Date, and the Option expires 10 years
after the Award Date (the “Expiration Date”). 
You may exercise the Option in cumulative installments of 25% on and
after each of the first four anniversaries of the Award Date.  The entire Option will vest earlier and become
exercisable upon your Qualified Retirement, Disability or death or if your
employment is terminated without Cause or you terminate your employment for
Good Reason within 12 months following a Change of Control.  The Option may only be exercised by you during
your lifetime, and may not be assigned or transferred other than by will or the
laws of descent and distribution.

 

2.2                   Exercise and Tax Withholding.  The
Option may be exercised in whole or in part by notice to Best Buy (through the
Plan administrator or other means as shall be specified by Best Buy from
time-to-time) stating the number of shares to be purchased under the Option and
the method of payment.  The notice must
be accompanied by payment in full of the exercise price for all shares designated
in the notice.  Payment of the exercise
price may be made by cash, check or delivery of previously owned shares of
stock having a Fair Market Value (as defined in the Plan) on the date of
exercise equal to the exercise price. The Option will not be eligible for
treatment as a qualified or incentive stock option for federal income tax
purposes.  You are liable for any federal
and state income or other taxes applicable upon the grant or exercise of the
Option or the disposition of the underlying shares, and you acknowledge that
you should consult with your own tax advisor regarding the applicable tax
consequences.  Upon exercise of the
Option, Best Buy will withhold from the shares that would otherwise be
delivered to you a number of shares having a fair market value equal to the
amount of all applicable taxes required by Best Buy to be withheld or collected
upon the exercise of the Option, unless your notice of exercise indicates your
desire to satisfy such withholding obligations through the payment of cash or
the delivery of previously acquired shares of Best Buy common stock, and such
cash or shares are delivered to Best Buy promptly thereafter.

 

2.3                   Retirement, Disability, Death or Termination.  Upon your Qualified Retirement,
you will have one year from the date of your retirement to exercise the
Option.  If you die while employed, the
representative of your estate or your heirs will have one year from the date of
your death to exercise the Option.  If
you become Disabled, you will have one year from the effective date of such
classification to exercise the Option. 
If your employment is terminated by Best Buy or an Affiliate without
Cause or if you resign or otherwise voluntarily terminate your employment with
Best Buy or an Affiliate, you will have 60 days from the date of your
termination to exercise the Option, to the extent the Option had vested as of
your termination date.  In no case,
however, may the Option be exercised after the Expiration Date.  The Option may not be exercised following
termination of employment for Cause.

 

III.         Performance Shares

 

3.1                   Restricted Period.  The Performance Shares are subject to the
restrictions contained in this Agreement and the Plan during the period (the “Restricted
Period”) beginning on the Award Date and ending on the third anniversary of the
Award Date, subject to the provisions of Section 3.3 below.  The restrictions will lapse and the
Performance Shares will become transferable and non-forfeitable as of the third
anniversary of the Award Date if the Vesting Criteria set forth in the attached
Vesting Criteria Schedule have been met. 
If the Vesting Criteria are not met as of such date, your rights to the
Performance Shares will be immediately forfeited.  The Compensation and Human Resources Committee
will determine in its sole discretion whether the Vesting Criteria are met.

 

 

3.2                   Restrictions.  The Performance Shares are subject to the
following restrictions during the Restricted Period:

 

(a)        The
Performance Shares are subject to forfeiture to Best Buy as provided in this
Agreement and the Plan.

(b)        The
Performance Shares may not be sold, assigned, transferred or pledged during the
Restricted Period.  You may not transfer
the right to receive the Performance Shares, other than by will or the laws of
descent and distribution, and any such attempted transfer will be void.

(c)        The
Performance Shares will be issued in your name, either by book-entry
registration or issuance of a stock certificate, and
the certificate will be held by Best Buy. 
If a certificate is issued, the certificate may bear an appropriate
legend referring to the restrictions applicable to the Performance Shares.

 

3.3                   Forfeiture/Acceleration.  If your employment is terminated by reason of
death or Qualified Retirement or you become Disabled prior to the third
anniversary of the Award Date, the restrictions will lapse and the Performance
Shares will become non-forfeitable and transferable as of the date of such
termination.  If, prior to the third
anniversary of the Award Date, your employment is terminated without Cause or
you terminate your employment for Good Reason within 12 months following a
Change in Control,  the restrictions will
lapse and the Performance Shares will become non-forfeitable and transferable
as of the date of such termination.  If
your employment is terminated prior to the third anniversary of the Award Date
for any other reason, your rights to all of the Performance Shares will be
immediately and irrevocably forfeited.

 

3.4                   Rights. 
Upon issuance of the Performance Shares, you will, subject to the
restrictions of this Agreement and the Plan, have all of the rights of a
shareholder with respect to the Performance Shares, unless and until the
Performance Shares are forfeited, except that you will not have the right to
vote the Performance Shares during the Restricted Period.  Any dividends or other distributions (whether
cash, stock, or otherwise) paid on the Performance Shares during the Restricted
Period will be held by Best Buy until the end of the Restricted Period, at
which time Best Buy will pay you all such dividends and other distributions,
plus interest compounded quarterly based on the prime interest rate, on any
cash dividends or distributions, less any applicable tax withholding amounts.  If the Performance Shares are forfeited as
described in Section 3.3 of this Agreement, then all rights to such
payments will also be forfeited.

 

3.5                   Income Taxes.  You are liable for any federal and state
income or other taxes applicable upon the grant of the Performance Shares if
you make an election under Section 83(b) of the Internal Revenue Code
of 1986, as amended, within 30 days of the date of grant, or upon the lapse of
the restrictions on the Performance Shares, and the subsequent disposition of
the Performance Shares, and you acknowledge that you should consult with your
own tax advisor regarding the applicable tax consequences.  Upon the lapse of the restrictions on the
Performance Shares, Best Buy will withhold from the Performance Shares the
number of Performance Shares having a fair market value equal to the amount of
all applicable taxes required by Best Buy to be withheld upon the lapse of the
restrictions on the Performance Shares unless, prior to the end of the
Restricted Period, you notify Best Buy of your desire to satisfy such
withholding obligations through the payment of cash or the delivery of
previously acquired shares of Best Buy common stock, and such cash or shares
are delivered to Best Buy promptly thereafter.

 

IV.         Confidentiality.  In
consideration of the Option and the Performance Shares,
you acknowledge that Best Buy operates in a competitive environment and that
Best Buy has a substantial interest in protecting its Confidential Information,
and you agree, during your employment by Best Buy and thereafter, to maintain
the confidentiality of Best Buy’s Confidential Information and to use such
Confidential Information for the exclusive benefit of Best Buy.

 

V.             Terms and Conditions. 
This Agreement does not guarantee your continued employment or alter the
right of Best Buy or its affiliates to terminate your employment at any
time.  You have no rights in the shares
subject to the Option until such shares are received upon exercise of the
Option. This Award is granted pursuant to the Plan and is subject to its terms.  In the event of any conflict between the
provisions of this Agreement and the Plan, the provisions of the Plan will
govern.  By
your acceptance of this award, you acknowledge receipt of a copy of the
Prospectus for the Plan and your agreement to the terms and conditions of the
Plan and this Agreement.

 

	
   

  	
  BEST BUY CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

2

 

ADDENDUM TO

NON-QUALIFIED STOCK OPTION AND
PERFORMANCE SHARE AWARD AGREEMENT

 

For
the purposes hereof the terms used herein will have the following meanings:

 

“Affiliate”
will mean a company controlled directly or indirectly by Best Buy, where “control”
will mean the right, either directly or indirectly, to elect a majority of the
directors thereof without the consent or acquiescence of any third party.

 

“Beneficial
Owner” will have the meaning defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended.

 

“Cause”
will mean:

 

(i)            You have
breached your obligations of confidentiality to Best Buy or any of its
Affiliates;

 

(ii)           You commit
an act, or omit to take action, in bad faith which results in material
detriment to Best Buy or any of its Affiliates;

 

(iii)          You
have violated Best Buy’s Conflict of Interest policy (unless authorized by
state or federal law);

 

(iv)          You have
committed fraud, misappropriation, embezzlement or other act of dishonesty,
including theft or misuse of Best Buy property, equipment or store merchandise
or violation or abuse of Best Buy’s discount policy, in connection with Best
Buy or any of its Affiliates or its or their businesses;

 

(v)           You have
been convicted or have pleaded guilty or nolo contendere to criminal misconduct
constituting a felony or a gross misdemeanor, which gross misdemeanor involves
a breach of ethics, moral turpitude, or immoral or other conduct reflecting
adversely upon the reputation or interest of Best Buy or its Affiliates;

 

(vi)          Your
use of narcotics, liquor or illicit drugs has had a detrimental effect on your
performance of employment responsibilities; or

 

(vii)         You
are in material default under any agreement between you and Best Buy or any of
its Affiliates following any applicable notice and cure period.

 

A
“Change of Control” will be deemed to have occurred if the conditions set forth
in any one of the following paragraphs will have been satisfied:

 

(I)            any
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of Best Buy representing 50% or more of the combined voting power of
Best Buy’s then outstanding securities excluding, at the time of their original
acquisition, from the calculation of securities beneficially owned by such
Person, any securities acquired directly from Best Buy or its Affiliates or in
connection with a transaction described in clause (a) of paragraph III
below; or

 

(II)           individuals
who at the Award Date constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of Best Buy) whose
appointment or election by the Board or nomination for election by Best Buy’s
shareholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the Award
Date or whose appointment, election or nomination for election was previously
so approved or recommended, cease for any reason to constitute a majority
thereof; or

 

A-1

 

(III)         there
is consummated a merger or consolidation of Best Buy or any Affiliate with any
other company, other than (a) a merger or consolidation which would result
in the voting securities of Best Buy outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Best Buy or any Affiliate, at
least 50% of the combined voting power of the voting securities of Best Buy or
such surviving entity or parent thereof outstanding immediately after such
merger or consolidation, or (b) a merger or consolidation effected to
implement a recapitalization of Best Buy (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly of securities
of Best Buy representing 50% or more of the combined voting power of Best Buy’s
then outstanding securities; or

 

(IV)         the
shareholders of Best Buy approve a plan of complete liquidation of Best Buy or
there is consummated an agreement for the sale or disposition by Best Buy of
all or substantially all Best Buy’s assets, other than a sale or disposition by
Best Buy of all or substantially all of Best Buy’s assets to an entity, at
least 50% of the combined voting power of the voting securities of which are
owned by shareholders of Best Buy in substantially the same proportions as
their ownership of Best Buy immediately prior to such sale; or

 

(V)           the Board determines in its sole discretion that a change in
control of Best Buy has occurred.

 

(VI)         Notwithstanding
the foregoing, a “Change in Control” will not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of Best Buy
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all
or substantially all of the assets of Best Buy immediately following such
transaction or series of transactions.

 

“Confidential
Information” will mean any and all information in whatever form, whether
written, electronically stored, orally transmitted or memorized pertaining
to:  trade secrets; customer lists,
records and other information regarding customers; price lists and pricing
policies, financial plans, records, ledgers and information; purchase orders,
agreements and related data; business development plans; products and
technologies; product tests; manufacturing costs; product or service pricing;
sales and marketing plans; research and development plans; personnel and
employment records, files, data and policies (regardless of whether the
information pertain to you or other employees of Best Buy); tax or financial
information; business and sales methods and operations; business
correspondence, memoranda and other records; inventions, improvements and
discoveries; processes and methods; and business operations and related data
formulae; computer records and related data; know-how, research and
development; trademark, technology, technical information, copyrighted
material; and any other confidential or proprietary data and information which
you encounter during employment, all of which are held, possessed and/or owned
by Best Buy and all of which are used in the operations and business of Best
Buy.  Confidential Information does not
include information which is or becomes generally known within Best Buy’s
industry through no act or omission by you; provided, however, that the
compilation, manipulation or other exploitation of generally known information
may constitute Confidential Information.

 

“Disabled”
will mean an employee who is deemed disabled if he or she is unable to perform
any of the material and substantial duties of his or her regular occupation due
to a sickness or injury, and such inability to perform continues for at least
six consecutive months.  If any such
Affiliate does not have a long term disability plan in effect at such time, you
will be deemed disabled for the purposes hereof if you would have qualified for
long term disability payments under Best Buy’s long term disability plan had
you then been an employee of Best Buy.

 

“Good Reason” will mean the occurrence of any of the following events
following a Change in Control, except for the occurrence of such an event in
connection with the termination of your employment by Best Buy or any successor
company or affiliated entity then employing you for Cause, Disability or death:

 

(I)            the
assignment of employment duties or responsibilities which are not substantially
comparable in responsibility and status to the employment duties and
responsibilities held by you immediately prior to the Change in Control;

 

A-2

 

(II)           a material reduction in your base salary as in effect
immediately prior to the Change in Control; or

 

(III)         being
required to work in a location more than 50 miles from your office location
immediately prior to the Change in Control, except for requirements of
temporary travel on Best Buy’s business to an extent substantially consistent
with your business travel obligations immediately prior to the Change in
Control.

 

“Person”
will have the meaning defined in Sections 3(a)(9) and 13(d) of the
Securities Exchange Act of 1934, as amended, except that such term will not
include (i) Best Buy or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of Best Buy
or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of Best Buy in
substantially the same proportions as their ownership of stock of Best Buy.

 

“Qualified
Retirement” will mean any termination of employment for retirement on or after
age 60, so long as the employee has served Best Buy continuously for at least
the three years immediately preceding the retirement.

 

A-3

 

VESTING CRITERIA SCHEDULE TO

 

NON-QUALIFIED STOCK OPTION AND PERFORMANCE
SHARE AWARD AGREEMENT

 

Dated October 11, 2004

 

Performance Share Vesting

 

Performance Share Vesting
is determined based on the following illustration:

 

 

TSR Formula

 

Total
Shareholder Return (TSR) represents the annual return shareholders receive on
their investment, including both paid dividends and capital gains (stock price
appreciation).  A 90 day average price is
used at the beginning of the 3 year period and at the end of the 3 year period,
for both Best Buy and the S&P 500. 
TSR % is determined for both Best Buy and the S&P 500 using the
formula below.

 

 

Vesting Formula

 

Best
Buy’s TSR % is then compared to the S&P 500 TSR %.

 

For
Performance from 50th Percentile to 75th Percentile,
vesting is determined based on the following formula:

 

	
   

  	
  (Best Buy TSR% -
  S&P 50th Percentile TSR%)

  	
   =

  	
  Performance

  Share Vesting

  
	
  (S&P 75th Percentile TSR% - S&P
  50th Percentile TSR%)

  

 

 

For
Performance from the 75th Percentile to the Average of Top Quartile,
vesting is determined based on the following formula:

 

	
   

  	
  (Best Buy TSR% - S&P 75th Percentile
  TSR%)

  	
   

  	
  + 100%  =

  	
  Performance

  Share Vesting

  
	
  (S&P Avg. of Top Quartile TSR% - S&P 75th
  Percentile TSR%)

  	
   

  
						

 

A-4

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