-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LLg/dzCREHID4at6Lo4cZH5l5n5PJCm58//13Xc7f3d5mmoRfhZICIFFTlY4nYPO Fw54gwsDHpZfqACJsE2iIw== 0000892569-97-001548.txt : 19970602 0000892569-97-001548.hdr.sgml : 19970602 ACCESSION NUMBER: 0000892569-97-001548 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970530 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FURON CO CENTRAL INDEX KEY: 0000037755 STANDARD INDUSTRIAL CLASSIFICATION: GASKETS, PACKAGING AND SEALING DEVICES & RUBBER & PLASTIC HOSE [3050] IRS NUMBER: 951947155 STATE OF INCORPORATION: CA FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08088 FILM NUMBER: 97616693 BUSINESS ADDRESS: STREET 1: 1199 SOUTH CHILLICOTHE RD CITY: AURORA STATE: OH ZIP: 44202 BUSINESS PHONE: 7148315350 FORMER COMPANY: FORMER CONFORMED NAME: FLUOROCARBON CO DATE OF NAME CHANGE: 19900322 10-Q 1 FORM 10-Q - FOR THE QUARTER ENDED: MAY 3, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MAY 3, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-8088 FURON COMPANY (Exact name of registrant as specified in its charter)
California 95-1947155 - ---------------------------- -------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) 29982 Ivy Glenn Drive Laguna Niguel, CA 92677 - ----------------------------- --------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 831-5350 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares of common stock outstanding as of May 23, 1997: 9,029,066. 1 2 FURON COMPANY INDEX PART I - FINANCIAL INFORMATION - ------------------------------
PAGE NO. -------- Item 1. Financial Statements Condensed Consolidated Balance Sheets May 3, 1997 and February 1, 1997 3 Condensed Consolidated Statements of Income Three months ended May 3, 1997 and May 4, 1996 5 Condensed Consolidated Statements of Cash Flows Three months ended May 3, 1997 and May 4, 1996 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II - OTHER INFORMATION 14 - ---------------------------
2 3 ITEM 1. FINANCIAL STATEMENTS
FURON COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) May 3, February 1, In thousands 1997 1997 - ------------------------------------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 5,260 $ - Accounts receivable, less allowance for doubtful accounts of $1,904 at May 3, 1997 and $2,093 at February 1, 1997 69,105 72,315 Inventories 57,971 58,611 Deferred income taxes 10,411 10,411 Prepaid expenses and other assets 6,092 5,389 ------------------ --------------------- Total current assets 148,839 146,726 Property, plant & equipment, at cost: Land 7,013 7,096 Buildings and leasehold improvements 30,385 30,712 Machinery and equipment 155,087 152,998 ------------------ --------------------- 192,485 190,806 Less accumulated depreciation and amortization (79,850) (76,214) ------------------ --------------------- Net property, plant and equipment 112,635 114,592 Intangible assets, at cost less accumulated amortization of $31,194 at May 3, 1997 and $29,971 at February 1, 1997 73,138 74,640 Other assets 7,876 8,385 ------------------ --------------------- TOTAL ASSETS $ 342,488 $ 344,343 ================== =====================
See accompanying notes. 3 4
FURON COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) May 3, February 1, In thousands, except share data 1997 1997 - ------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Cash, less checks outstanding $ - $ 1,665 Accounts payable 23,860 24,319 Salaries, wages and related benefits payable 10,807 14,141 Current portion of long-term debt 2,076 1,001 Facility rationalization and severance 8,777 10,369 Other current liabilities 19,740 16,407 -------------- -------------- Total current liabilities 65,260 67,902 Long-term debt 172,910 176,983 Other long-term liabilities 23,360 21,933 Deferred income taxes 16,001 16,181 Commitments and contingencies Stockholders' equity: Preferred stock without par value, 2,000,000 shares authorized, none issued or outstanding - - Common stock without par value, 15,000,000 shares authorized, 9,003,582 shares issued and outstanding at May 3, 1997 and 9,003,140 at February 1, 1997 38,762 38,787 Foreign currency translation adjustment (1,823) (977) Unearned ESOP shares (3,224) (3,224) Unearned compensation (191) (238) Additional pension liability (1,413) (1,413) Retained earnings 32,846 28,409 -------------- -------------- Total stockholders' equity 64,957 61,344 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 342,488 $ 344,343 ============== ==============
See accompanying notes. 4 5 FURON COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended ------------------------------------------------------- May 3, May 4, In thousands, except per share amounts 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $ 119,649 $ 94,763 Cost of sales 81,330 68,266 ------------------ ---------------- Gross profit 38,319 26,497 Selling, general and administrative expenses 28,139 20,005 Other (income), expense (410) (1,090) Interest expense 3,049 676 ------------------ ---------------- Income before income taxes 7,541 6,906 Provision for income taxes 2,564 2,348 ------------------ ---------------- Net income $ 4,977 $ 4,558 ================== ================ Net income per share of Common Stock $ 0.54 $ 0.50 ================== ================
See accompanying notes. 5 6 FURON COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended ----------------------------------------------------- May 3, May 4, In thousands 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING ACTIVITIES Net income $ 4,977 $ 4,558 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 4,231 3,202 Amortization 1,406 778 Provision for losses on accounts receivable 155 105 Deferred income taxes (29) 76 Loss on sale of assets 19 - Working capital changes, net of acquisitions and disposals: Accounts receivable 2,063 22 Inventories 640 (2,438) Accounts payable and accrued liabilities (3,910) (1,567) Income taxes payable 3,549 558 Other current assets and liabilities, net (1,741) 235 Changes in other long-term operating assets and liabilities 769 (1,429) ----------------- ----------------- Net cash provided by operating activities 12,129 4,100 INVESTING ACTIVITIES Acquisition of businesses - (3,294) Purchases of property, plant and equipment (2,892) (4,505) Proceeds from sale of businesses 249 406 Proceeds from sale of equipment 57 260 Proceeds from notes receivable - 4 ----------------- ----------------- Net cash used in investing activities (2,586) (7,129) FINANCING ACTIVITIES Proceeds from long-term debt 4,081 7,000 Principal payments on long-term debt (7,069) (4,000) Proceeds, net of cancellations, from issuance of common stock (25) 697 Loan to ESOP - (323) Dividends paid on common stock (540) (538) ----------------- ----------------- Net cash provided by (used in) financing activities (3,553) 2,836 EFFECT OF EXCHANGE RATE CHANGES ON CASH (730) 193 ----------------- ----------------- INCREASE IN CASH AND CASH EQUIVALENTS 5,260 - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - - ----------------- ----------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,260 $ - ================= =================
See accompanying notes. 6 7 FURON COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS May 3, 1997 (Unaudited) 1. GENERAL The accompanying unaudited consolidated financial statements have been condensed in certain respects and should, therefore, be read in conjunction with the consolidated financial statements and related notes thereto, contained in the Company's Annual Report to Shareholders on Form 10-K for the fiscal year ended February 1, 1997. Certain reclassifications have been made to prior year amounts in order to be consistent with the current year presentation. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring adjustments) to present fairly the financial position of the Company as of May 3, 1997, and the results of operations and cash flows for the three months ended May 3, 1997 and May 4, 1996. Results of the Company's operations for the three months ended May 3, 1997 are not necessarily indicative of the results to be expected for the full year. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is effective for financial statements for periods ending after December 15, 1997. The Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating basic earnings per share, the dilutive effect of stock options will be excluded. The impact is expected to result in an increase in basic earnings per share for the first quarter ended May 3, 1997 and May 4, 1996 of $0.02 and $0.01 per share, respectively. The impact of Statement 128 on the calculation of fully diluted earnings per share for these quarters is not expected to be material. 2. INVENTORIES Inventories, stated at the lower of cost (first-in, first-out) or market, are summarized as follows:
May 3, February 1, In thousands 1997 1997 ------------------------------------------------------------------------------------------------------- Raw materials and purchased parts $ 25,227 $ 22,841 Work-in-process 11,490 14,121 Finished goods 21,254 21,649 ------------------ ------------------- $ 57,971 $ 58,611 ================== ===================
7 8 FURON COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS May 3, 1997 (Unaudited) 3. INTANGIBLES Intangible assets, primarily acquired in business combinations, net of accumulated amortization, are summarized as follows:
May 3, February 1, In thousands 1997 1997 --------------------------------------------------------------------------------- Goodwill $ 41,575 $ 42,016 Other intangible assets 31,563 32,624 ------------------ ------------------- $ 73,138 $ 74,640 ================== ===================
4. LONG-TERM DEBT Long-term debt is summarized as follows:
May 3, February 1, In thousands 1997 1997 --------------------------------------------------------------------------------------- Loans under bank credit agreements due through fiscal year 2000 $ 166,000 $ 169,000 Industrial Revenue Bonds 6,775 6,775 Other 2,211 2,209 ----------------- ------------------ Total long-term debt 174,986 177,984 Less current portion 2,076 1,001 ----------------- ------------------ Due after one year $ 172,910 $ 176,983 ================= ==================
Effective March 27, 1997, the Company amended and restated its Credit Agreement to increase the aggregate principal amount from $200.0 million to $250.0 million. For the three months ended May 3, 1997, the weighted average interest rate on the loans under bank credit agreements was 6.4%. Interest paid for the three months ended May 3, 1997 and May 4, 1996 was $2.3 million and $0.8 million, respectively. 8 9 FURON COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS May 3, 1997 (Unaudited) 5. INCOME TAXES The Company's effective tax rate for the three month periods ended May 3, 1997 and May 4, 1996 was 34%. Income taxes paid (received) for the three months ended May 3, 1997 and May 4, 1996 were $(0.5 million) and $0.5 million, respectively. 6. CONTINGENCIES At May 3, 1997, the Company had approximately $1.5 million of foreign currency hedge contracts outstanding consisting of over-the-counter forward contracts. The contracts reflect the selective hedging of the Belgium Franc with varying maturities up to nine months. Net unrealized gains from hedging activities were not material as of May 3, 1997. At May 3, 1997, the Company is obligated under irrevocable letters of credit totaling $9.2 million. The Company is currently involved in various litigation in the normal course of business. Management of the Company is of the opinion that the ultimate resolution of such litigation should not have a material adverse effect on the Company's consolidated financial position or results of operations. Compliance with environmental laws and regulations designed to regulate the discharge of materials into the environment or otherwise protect the environment requires continuing management effort and expenditures by the Company. The Company does not believe that the operating costs incurred in the ordinary course of business to satisfy air and other permit requirements, properly dispose of hazardous wastes and otherwise comply with these laws and regulations form or will form a material component of its operating costs or have or will have a material adverse effect on its competitive or consolidated financial positions. 9 10 FURON COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS May 3, 1997 (Unaudited) 6. CONTINGENCIES (CONTINUED) As of May 3, 1997 the Company's reserves for environmental matters totaled approximately $1.6 million. The Company or one or more of its subsidiaries is currently involved in environmental investigation or remediation directly or as an EPA-named potentially responsible party or private cost recovery/contribution action defendant at various sites, including the following "superfund" waste disposal sites: Solvents Recovery Service of New England in Southington, Connecticut; Gallup's Quarry in Plainfield, Connecticut; Davis Liquid Waste and Picillo in Coventry, Rhode Island; Malvern in Malvern, Pennsylvania; and Granville in Granville, Ohio. While neither the timing nor the amount of the ultimate costs associated with these matters can be determined with certainty, based on information currently available to the Company, including investigations to determine the nature of the potential liability, the estimated amount of investigation and remedial costs expected to be incurred and other factors, the Company presently believes that its environmental reserves should be sufficient to cover the Company's aggregate liability for these matters and, accordingly, does not expect them to have a material adverse effect on its consolidated financial position or results of operations. The actual costs to be incurred by the Company at each site will depend on a number of factors, including one or more of the following: the final delineation of contamination; the final determination of the remedial action required; negotiations with governmental agencies with respect to cleanup levels; changes in regulatory requirements; innovations in investigatory and remedial technology; effectiveness of remedial technologies employed; and the ultimate ability to pay of any other responsible parties. 10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Consolidated sales for the three months ended May 3, 1997 of $119.6 million represented a 26% increase over the same period of the prior year. Comparing sales for the three months ended May 3, 1997 reflects a 16% increase over the previous quarter ended February 1, 1997. For the quarter ended May 3, 1997, Medex recorded sales of $25.3 million. Along with the net effect of the Medex acquisition, the Company has benefited from continued strength in specific industrial markets. Domestically, sales to the healthcare market increased eight fold, all due to Medex, over the same period of the prior year. Sales into the transportation and industrial equipment markets remain strong with the main contributors coming from aircraft, truck, coating and laminating, and food and beverage sectors. Sales into the chemical processing market have softened, while demand from the semiconductor market was down 23%, consistent with industry conditions. Excluding Medex, sales for the three months ended May 3, 1997 of the Company's European operations were down 6% (before the impact of a stronger U.S. dollar, European sales increased 7%) over the same period of the prior year. Gross profit as a percentage of sales for the first quarter ended May 3, 1997 was up 4% from the same period the prior year to 32%. This is the result of significantly higher margins earned by Medex, which were 45.1% for the quarter ended May 3, 1997. After removing the effects of acquisitions and divestitures, for the first quarter ended May 3, 1997 gross profit margin was up 0.7% from 28.3% to 29% over the same period of the prior year. Despite some adverse product mix, the continued operating productivity improvements and controlled fixed manufacturing costs were more than enough to offset the impact of increased raw material prices. Selling, general and administrative expenses as a percentage of sales for the first quarter ended May 3, 1997 was 23.5%, up from 21.1% in the same period a year ago. The increase in operating expense as a percentage of sales from last year is primarily the result of the Medex addition, at 31.4%. After removing the effect of acquisitions and divestitures, these same operating expenses were 21.2%, down from 21.4% in the first quarter of the prior year and down from the 22.3% incurred in the fourth quarter of the prior year. The decline in selling, general and administrative expense as a percentage of sales from last year is mainly the result of fewer costs incurred related to insurance, utilities and reduced travel. Product development expenses were up slightly in the first quarter over the same period prior year as a percentage of sales by 0.1% to 2.8%. Other income and expense net, for the three months ended May 3, 1997 decreased from the same period in the prior year due to non-reoccurrence of dividend income received from one of the Company's investments. 11 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) Interest expense for the three months ended May 3, 1997 was up significantly from the same period in the prior year. This increase is due in full to the debt incurred for the acquisition of Medex. Pretax results of operations improved 9% to $7.5 million from $6.9 million for the three months ended May 3, 1997 and May 4, 1996, respectively. Net of acquisitions and divestitures, pretax results of operations were up 10% from the same period last year. The improvement is generally the result of higher sales and improved margins, somewhat offset by higher operating and interest expenses. For the three months ended May 3, 1997, Medex earnings before interest and taxes was 12.9% of sales (Medex earnings before interest and taxes and amortization was 15.5% of sales). For the three months ended May 3, 1997, consolidated earnings before interest, taxes, depreciation and amortization was $16.2 million, an increase of $4.7 million, or 40% from the same period in the prior year. The Company's effective tax rate for the first quarter ended May 3, 1997 was 34%, unchanged from the same period last year. Liquidity and Capital Resources The Company's financial condition remained strong at May 3, 1997. For the three months ended May 3, 1997, the Company's cash provided by operations was $12.1 million, or $8.0 million higher than the same period last year. The Company's ratio of current assets to current liabilities improved to 2.3 to 1.0, up from 2.2 to 1.0 at the beginning of the period. Net working capital increased $4.8 million during the first quarter to a total of $83.6 million. Inclusive of the Medex acquisition, accounts receivable decreased $2.1 million, inventories decreased $0.6 million and accounts payable and accrued liabilities decreased $3.9 million from the prior year end. Capital expenditures totaled $2.9 million and were primarily for renovating existing facilities, leasehold improvements, or replacement of existing equipment in addition to implementation of the operating systems to support the Company's structure. Cash and cash equivalents increased $6.9 million, in addition to a decrease in long-term debt of $3.0 million which was a result of funds generated by operations. The Company's debt-to-equity ratio is currently 2.7 to 1.0, a decrease from 2.9 to 1.0 at the beginning of the period. The Company continues to believe that it generates sufficient cash flow from its operations to finance near and long-term internal growth, capital expenditures and the principal and interests payments on its loan payable to banks. The Company will 12 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources (continued) continue to evaluate its employment of capital resources including asset management and other sources of financing. The Company continually reviews possible acquisitions and should the Company make a substantial acquisition, it could require the utilization of the remaining $85.0 million available on its existing credit facility or financing from other sources. Contingencies For information regarding environmental matters and other contingencies, see note 6 to the Notes to Condensed Consolidated Financial Statements. Statement Regarding Forward Looking Disclosure Except for the historical information contained in this report, certain matters discussed herein, including (without limitation) the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" (Item 2) in Part I, are forward looking statements. These statements involve risks and uncertainties, including (without limitation) the matters identified in that section and the following: the effect of economic and market conditions and raw material price increases; the impact of costs, insurance recoveries and governmental, judicial and other third party interpretations and determinations in connection with legal and environmental proceedings; and the impact of current or pending legislation and regulation. 13 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. 14 15 PART II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: Page Number ----------- 10.6* Form of Change in Control Agreement between the Registrant and each of its executive officers. 10.13 First Amended and Restated Credit Agreement, dated as of March 27, 1997, by and among the Registrant, the Lenders party thereto, and co-agents, documentation agent, swing line lender and administrative agent, and arranging agent named therein. 11 Statement re: Computation of Net Income Per Share 27 Financial Data Schedule
(b) Reports on Form 8-K: On March 18, 1997, the Registrant filed with the Commission a Form 8-K/A dated that date, which reported the pro forma financial information for Furon on a combined basis, reflecting the acquisition of Medex for the nine months ended November 2, 1996 and the fiscal year ended February 3, 1996. * A management contract or compensatory plan or arrangement 15 16 PART II (continued) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FURON COMPANY --------------------------------------- REGISTRANT /S/MONTY A. HOUDESHELL /S/DAVID L. MASCARIN - --------------------------------------- -------------------- Monty A. Houdeshell David L. Mascarin Vice President, Chief Financial Officer Controller and Treasurer May 30, 1997 16 EX-10.6 2 FORM OF CHNAGE IN CONTROL AGREEMENT 1 Exhibit 10.6 CHANGE IN CONTROL AGREEMENT This Change In Control Agreement ("Agreement") is dated as of _______________, 1997 and is entered into by and between ____________________ ("Executive") and Furon Company, a California corporation ("Furon"). RECITALS Furon considers it essential to the best interest of Furon and its shareholders that Executive be encouraged to remain with Furon and continue to devote full attention to Furon's business notwithstanding the possibility, threat or occurrence of an Event (as defined below) involving Furon. Furon believes that it is in the best interest of Furon and its shareholders to reinforce and encourage the continued attention and dedication of Executive and to diminish inevitable distractions arising from the possibility of an Event. Accordingly, to assure Furon that it will have Executive's undivided attention and services notwithstanding the possibility, threat or occurrence of an Event, and to induce Executive to remain in the employ of Furon, and for other good and valuable consideration, the Board of Directors of Furon has, at the recommendation of its Compensation Committee, caused Furon to enter into this Agreement. 1 2 TERMS AND CONDITIONS Executive and Furon hereby agree to the following terms and conditions: 1. Term of Agreement/Expiration Date. This Agreement shall be effective as of the date first indicated above and shall remain in effect until the Expiration Date described below. The "Expiration Date" is the third anniversary of the date either party gives written notice of the termination of this Agreement. This Agreement supersedes the Change-in-Control Agreement dated as of ________________ between the Executive and Furon (the "Prior Agreement"). The Prior Agreement shall have no further force or effect when this Agreement becomes effective. 2. Event Date. The "Event Date" shall mean the first date during the term of this Agreement on which an Event (as defined in Section 3) occurs; provided, however, that if an Event occurs and if Executive's employment with Furon is terminated within the six-month period prior to the date on which the Event occurs, the "Event Date" shall mean the date immediately prior to the date of such termination. 3. Event. "Event" shall mean any of the following: (a) The dissolution or liquidation of Furon; 2 3 (b) The merger, consolidation, or other reorganization of Furon with or into one or more entities which are not "Subsidiaries" (as defined below), as a result of which 50% or less of the outstanding voting securities of the surviving or resulting entity are, or are to be, owned by former shareholders of Furon; (c) The sale or transfer of substantially all of Furon's business and/or assets to a person or entity which is not a Subsidiary; or (d) A Change in Control. A "Change in Control" shall be deemed to have occurred if: (i) any "person", alone or together with all "affiliates" and "associates" of such person is or becomes (a) an "Acquiring Person" as defined in the Rights Agreement, originally dated as of March 21, 1989, by and between Furon and The Bank of New York, successor Rights Agent, or (b) the "beneficial owner" of 20% or more of the outstanding voting securities of Furon (the terms "person", "affiliates", "associates" and "beneficial owner" are used as such terms are used in the Securities Exchange Act of 1934 and the General Rules and Regulations thereunder); provided, however, that a "Change in Control" shall not be deemed to have occurred if such "person" is (x) Furon, any Subsidiary or any employee benefit plan or employee stock plan of Furon or of any Subsidiary, or any trust or other entity organized, established or holding shares of such voting 3 4 securities by, for or pursuant to, the terms of any such plan, or (y) Executive or Executive and one or more other persons acting as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of securities of Furon; or (ii) individuals who at the beginning of any period of two consecutive calendar years constitute the Board cease for any reason, during such period, to constitute at least a majority thereof, unless the election, or the nomination for election by Furon's shareholders, of each new Board member was approved by a vote of at least three-quarters of the Board members then still in office who were Board members at the beginning of such period. "Subsidiary" shall mean any corporation or other entity of which more than 50% of the outstanding voting stock or voting power is beneficially owned directly or indirectly by Furon. If the approval of the shareholders of Furon for any of the occurrences set forth in subsections (a) through (d) is obtained prior to such occurrence, then such shareholder approval shall constitute the Event. 4. Effective Period. For the purpose of this Agreement, the "Effective Period" is the period commencing on the Event Date, and ending on the earlier of the 4 5 Expiration Date or the [INSERT EXECUTIVE'S MULTIPLIER(1)] anniversary of the Event Date. 5. Termination of Employment. (a) General. Executive shall be entitled to the payments and benefits described in Section 6(a) of this Agreement in the event Executive's employment is terminated (i) by Furon during the Effective Period for any reason, other than as a result of Executive's death or for Disability or Cause in accordance with the terms of this Section 5, or (ii) by Executive for Good Reason pursuant to a Notice of Termination delivered during the Effective Period. (1) Death. Executive's employment shall terminate automatically upon Executive's death. (2) Disability. If the Disability of Executive occurs during the Effective Period (pursuant to the definition of Disability set forth below), Furon may give Executive written notice in accordance with Section 15 of this Agreement of its intention to terminate Executive's employment. In such event, Executive's employment with Furon shall terminate effective on the 30th day after receipt of such notice by Executive (the "Disability - ---------- (1)FOOTNOTE FOR EXHIBIT PURPOSES ONLY: The Multiplier is three for the Registrant's Chief Executive Officer And Chief Operational Officer and two for its other executive officers. 5 6 Effective Date"), provided that, within the 30 Days after such receipt, Executive shall not have returned to full-time performance of Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of Executive from Executive's duties with Furon on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is both (i) determined to be total and permanent by a physician selected by Furon or its insurers and acceptable to Executive or Executive's legal representative, and (ii) entitles Executive to the payment of long-term disability benefits from Furon's long-term disability plan commencing immediately upon the Disability Effective Date. (3) Cause. Furon may terminate Executive's employment during the Effective Period for Cause. For purposes of this Agreement, "Cause" shall be limited to: (i) The conviction of Executive for commission of a felony, or (ii) The willful engaging by Executive in gross misconduct which materially and demonstrably injures Furon. For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered "wilful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's action or omission was in the best interest of Furon. 6 7 (4) Good Reason. Executive's employment may be terminated by Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) The assignment to Executive of any duties inconsistent in any respect with Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect on the Event Date, or any other action by Furon which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Furon promptly after receipt of notice thereof given by Executive; (ii) Any failure by Furon to reappoint Executive to a position held by Executive on the Event Date, except as a result of the termination of Executive's employment by Furon for Cause or Disability, the death of Executive, or the termination of Executive's employment by Executive other than for Good Reason; (iii) Reduction by Furon in Executive's base salary as in effect on the date hereof or as the same may be increased from time-to-time; 7 8 (iv) The taking of any action by Furon (including the elimination of benefit plans without providing substitutes therefore or the reduction of Executive's benefits thereunder) that would substantially diminish the aggregate value of Executive's incentive awards and other fringe benefits including executive benefits and perquisites from the levels in effect prior to the Event Date; (v) Furon's requiring Executive to be based at any office or location which increases the distance from Executive's home to the office or location by more than 35 miles from the distance in effect as of the Event Date; (vi) Any purported termination by Furon of Executive's employment otherwise than pursuant to a Notice of Termination; or (vii) Any failure by Furon to comply with and satisfy Section 10(c) of this Agreement. For purposes of this Section, any good faith determination of "Good Reason" made by Executive shall be conclusive. (b) Notice of Termination. Any termination of Executive's employment by Furon during the Effective Period for any reason, or by Executive for Good 8 9 Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15 of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The facts and circumstances set forth in any Notice of Termination given by Furon pursuant to a purported termination of Executive for Cause shall constitute the exclusive set of facts and circumstances upon which Furon may rely to attempt to demonstrate that Cause for such termination existed. The failure by Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive's rights hereunder. (c) Date of Termination. "Date of Termination" means (i) if Executive's employment is terminated by Furon for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or a later date (within the limit set forth in subsection (b)) specified therein, as the case may be, (ii) if Executive's employment is terminated by Furon other than for Cause or Disability, the Date of 9 10 Termination shall be the date on which Furon notifies Executive of such termination and (iii) if Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Executive or the Disability Effective Date, as the case may be. 6. Obligations of Furon upon Termination. (a) Good Reason, Other Than for Cause, Death or Disability. If Furon shall terminate Executive's employment other than for Cause or Disability during the Effective Period, or Executive shall terminate employment for Good Reason pursuant to a Notice of Termination delivered during the Effective Period, Furon agrees to make the payments and provide the benefits described below. Furon shall not be obligated to make such payments and provide such benefits if the Executive's employment with Furon terminates as a result of Executive's death. (i) Furon shall pay to Executive in a lump sum in cash within 10 days after the Date of Termination an amount equal to the product of (1) and (2), where (1) is [INSERT EXECUTIVE'S MULTIPLIER] and (2) is the sum of (x) Executive's highest rate of annual base salary in effect at any time in the two years preceding the Date of Termination and (y) the highest annual amount of incentive compensation (including both short and long term compensation) paid in respect of the most recent three fiscal years ending before the Date of Termination under Furon's Economic Value Added 10 11 Incentive Compensation Plan or any other incentive compensation plan of Furon; provided, however, that if the incentive compensation otherwise payable under Furon's Economic Value Added Incentive Compensation Plan or any other incentive compensation plan of Furon in respect of the fiscal year preceding the fiscal year in which the Date of Termination occurs has not been paid in full on or before the Date of Termination, "three" in this clause (y) shall be replaced by "four." (The amount in this clause (y) is referred to hereinafter as the "Incentive Compensation Payment.") (ii) (A) Furon shall pay Executive his or her full base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given plus a pro-rata share of the Incentive Compensation Payment. Such pro-rata share shall equal the fraction of Furon's fiscal year which preceded the Date of Termination. (B) In addition, if the incentive compensation otherwise payable under Furon's Economic Value Added Incentive Compensation Plan or any other incentive compensation plan of Furon in respect of the fiscal year preceding the fiscal year in which the Date of Termination occurs has not been paid in full on or before the Date of Termination, the Company shall pay Executive an amount equal to the difference between the Incentive Compensation Payment and the portion (if any) which was actually paid to the Executive of such incentive compensation in respect of the fiscal year preceding the fiscal year in which the Date of Termination occurs. 11 12 (iii) For [INSERT EXECUTIVE'S MULTIPLIER] years after Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, Furon shall continue to provide welfare benefits and fringe benefits and other perquisites to Executive and Executive's family at least equal to those which would have been provided to them if Executive's employment had not been terminated in accordance with the most favorable plans, practices, programs or policies of Furon and its affiliated companies applicable generally to other peer executives and their families immediately preceding the Date of Termination; provided, however, that if Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of Executive for retiree benefits pursuant to such plans, practices, programs and policies, Executive shall be considered to have remained employed until [INSERT EXECUTIVE'S MULTIPLIER] years after the Date of Termination and to have retired on the last day of such period. Following the period of continued benefits referred to in this subsection, Executive and Executive's family shall be given the right provided in Section 4980B of the Internal Revenue Code to elect to continue benefits in all group medical plans. In the event that Executive's 12 13 participation in any of the plans, programs, practices or policies of Furon referred to in this subsection is barred by the terms of such plans, programs, practices or policies, Furon shall provide Executive with benefits substantially similar to those which Executive would be entitled as a participant in such plans, programs, practices or policies. At the end of the period of coverage, Executive shall have the option to have assigned to Executive, at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by Furon and relating specifically to Executive. (iv) Furon shall enable Executive to purchase the automobile, if any, that Furon was providing for Executive at the time Notice of Termination was given at the wholesale value of such automobile at such time, as shown in the current addition of the National Auto Research Publication Blue Book. At Executive's election, Executive may retain any existing club memberships upon reimbursement to Furon of any membership purchase costs or initiation fees and related membership assessments paid by Furon; provided, however, that Executive need not repay Furon any periodic dues, food or beverage charges or other costs previously paid by Furon in connection with such memberships. Any outstanding relocation loans to Executive from Furon shall not be accelerated. The obligations set forth in this Section 6(a)(iv) are hereinafter referred to as the "Special Obligations." 13 14 (v) Any compensation previously deferred by the Executive (together with any accrued earnings or interest thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the amount referred to in this clause (v) and clause (ii) above being referred to as "Accrued Obligations"). (vi) To the extent not theretofore paid or provided, Furon shall timely pay or provide Executive any other amounts or benefits required to be paid or provided or which Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of Furon and its affiliated companies, including but not limited to any benefits payable to Executive under a plan, policy, practice, etc., referred to in Section 7 below, (such other amounts and benefits being hereinafter referred to as "Other Benefits") in accordance with the terms of such plan, program, policy, practice, contract or agreement. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Effective Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for timely performance of the Special Obligations, payment of Accrued Obligations and payment or provision of Other Benefits. Accrued Obligations shall be 14 15 paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 10 days of the Date of Termination. (c) Disability. If the Executives employment is terminated by reason of the Executive's Disability during the Effective Period, this Agreement shall terminate without further obligations to the Executive, other than for timely performance of the Special Obligations, payment of Accrued Obligations and payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause. If Executive's employment shall be terminated for Cause during the Effective Period, this Agreement shall terminate without further obligations to Executive (other than the obligation to pay to Executive his base salary earned through the Date of Termination and payment or provision of the Other Benefits). (e) Other than for Good Reason. (1) If Executive shall voluntarily terminate employment, excluding a termination for Good Reason, within the six month period following the Event Date, this Agreement shall terminate without further obligations to Executive, except that Furon shall (i) pay to Executive his base salary earned through the Date of Termination and pay or provide the Other 15 16 Benefits, (ii) pay to Executive an additional lump sum payment as of the Date of Termination equal to six months' of the Executive's base salary as in effect on the Date of Termination, and (iii) timely perform the Special Obligations. (2) If Executive shall voluntarily terminate employment, excluding a termination for Good Reason, within the Effective Period, but after the six month period following the Event Date, this Agreement shall terminate without further obligations to Executive, except that Furon shall (i) pay to Executive his base salary earned through the Date of Termination and pay or provide the Other Benefits, and (ii) timely perform the Special Obligations. 7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in any plan, program, policy or practice provided by Furon or any of its affiliated companies and for which Executive may qualify, nor, subject to Section 19, shall anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with Furon or any of its affiliated companies. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with Furon or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 16 17 8. Full Settlement. Furon's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Furon may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and, except as provided in Section 6(a)(iii), such amounts shall not be reduced whether or not Executive obtains other employment. Furon agrees to pay, to the full extent permitted by law, all legal fees and expenses which Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by Furon, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal Rate, provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). Executive shall be entitled to payment of such legal fees and expenses on a monthly basis during the pendency of any contest. Accordingly, Furon shall, on the tenth business day of each month following the Executive's Date of Termination, pay Executive any legal fees and expenses incurred by Executive as a result of a contest hereunder for which the Executive presented invoices to Furon on or before the last business day of the preceding month. Notwithstanding the foregoing, Furon shall be entitled to reimbursement by the Executive (1) for any legal fees or expenses of Executive in any contest by Executive about the amount of any payment under this Agreement if it is determined that Furon did not breach this Agreement and 17 18 Executive's claim was not made in good faith, and (2) to the extent it is determined that the amount of such legal fees and expenses was not reasonable. 9. Certain Additional Payments by Furon. (a) In the event that any payment or distribution by Furon to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9(a)) ("Payments") is determined to be subject to (1) the excise tax imposed by Section 4999 of the Code or its successor, (2) any corresponding state excise tax, or (3) any interest or penalties are incurred by Executive with respect to such state or federal excise tax (such state or federal excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then Furon shall pay to Executive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is 18 19 required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm as may be designated by Executive and which is reasonably satisfactory to Furon (the "Accounting Firm"), which shall provide detailed supporting calculations both to Furon and Executive within 15 business days of the receipt of request from Executive or Furon. All fees and expenses of the Accounting Firm shall be borne solely by Furon. Any Gross-Up Payment, as determined pursuant to this Section 9(b), shall be paid by Furon to Executive within five days of the receipt of the Accounting Firm's determination. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by Furon should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that Furon exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Furon to or for the benefit of Executive. (c) Executive shall notify Furon in writing of any written claim actually received by Executive from the Internal Revenue Service requesting the payment by Executive of an Excise Tax in respect of Payments. Such notification shall be given as soon as practicable (which shall be deemed to have occurred if it is given 19 20 within 20 business days) after Executive actually receives such claim and shall apprise Furon of the nature of such claim, and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to Furon (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Furon notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) Give Furon any information reasonably requested by Furon relating to such claim, (ii) Take such action in connection with contesting such claim as Furon shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Furon, (iii) Cooperate with Furon in good faith in order to contest such claim effectively, and (iv) Permit Furon to participate in any proceedings relating to such claim; provided, however, that Furon shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive 20 21 harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), Furon shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Furon shall determine; provided, however, that if Furon directs Executive to pay such claim and sue for a refund, Furon shall advance the amount of such payment to Executive, on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Furon's control of the contest shall be limited to issues with respect to which a Gross Up Payment would be payable hereunder and 21 22 Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by Executive of an amount advanced by Furon pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to Furon's complying with the requirements of Section 9(c)) promptly pay to Furon the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by Furon pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and Furon does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Successors. (a) This Agreement is personal to Executive and without the prior written consent of Furon shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive's legal representatives. 22 23 (b) This Agreement shall inure to the benefit of and be binding upon Furon and its successors and assigns. (c) Furon will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Furon to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Furon would be required to perform it if no such succession had taken place. As used in this Agreement, "Furon" shall mean Furon as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 11. Arbitration. (a) Because it is agreed that time will be of the essence in determining whether any payments are due to Executive under this Agreement, Executive may, if he desires, submit any claim for payment under this Agreement or dispute regarding the interpretation of this Agreement to arbitration. This right to select arbitration shall be solely that of Executive, and Executive may decide whether or not to arbitrate in his discretion. The "right to select arbitration" is not mandatory on Executive, and Executive may choose in lieu thereof to bring an action in an appropriate civil court. Once an arbitration is commenced, however, it may not be 23 24 discontinued without the mutual consent of both parties to the arbitration. During the lifetime of Executive only he can use the arbitration procedure set forth in this Section. (b) Any claim for arbitration may be submitted as follows: If Executive disagrees with Furon regarding the interpretation of this Agreement and the claim is finally denied by Furon in whole or in part, such claim may be filed in writing with an arbitrator of Executive's choice who is selected by the method described in the next three sentences. The first step of the selection shall consist of Executive's submitting a list of five potential arbitrators to Furon. Each of the five arbitrators must be either (1) a member of the National Academy of Arbitrators located in the State of California or (2) a retired California Superior Court or Appellate Court judge. Within two weeks after receipt of the list, Furon shall select one of the five arbitrators as the arbitrator for the dispute in question. If Furon fails to select an arbitrator in a timely manner, Executive shall then designate one of the five arbitrators as the arbitrator for the dispute in question. (c) The arbitration hearing shall be held in the county which includes the address last given prior to the commencement of arbitration by the Executive for notices under Section 15; provided that if such is outside the United States, the arbitration hearing shall be held in Orange County, California. The arbitration hearing shall be held within thirty days (or as soon thereafter as possible) after the picking of the arbitrator. No continuance of said hearing shall be allowed without 24 25 the mutual consent of Executive and Furon. Absence from or nonparticipation at the hearing by either party shall not prevent the issuance of an award. Hearing procedures which will expedite the hearing may be ordered at the arbitrator's discretion, and the arbitrator may close the hearing in his or her sole discretion when he or she decides he or she has heard sufficient evidence to satisfy issuance of an award. (d) The arbitrator's award shall be rendered as expeditiously as possible and in no event later than thirty days after the close of the hearing. In the event the arbitrator finds that Furon has breached this Agreement, he or she shall order Furon to immediately take the necessary steps to remedy the breach. The award of the arbitrator shall be final and binding upon the parties. The award may be enforced in any appropriate court as soon as possible after its rendition. If an action is brought to confirm the award, both Furon and Executive agree that no appeal shall be taken by either party from any decision rendered in such action. (e) Furon will be considered the prevailing party in a dispute if the arbitrator determines (1) that Furon has not breached this Agreement and (2) the claim by Executive was not made in good faith. Otherwise, Executive will be considered the prevailing party. In the event that Executive is the prevailing party, the fee of the arbitrator and all necessary expenses of the hearing (including all attorneys' fees incurred by Executive in pursuing his claim and, if the Executive's home on the Date of Termination was more than 70 miles from the location of the 25 26 arbitration, his reasonable travel and living expenses during the arbitration), including the fees of a stenographic reporter if employed, shall be paid by Furon. 12. Governing Law. The laws of California shall govern the validity and interpretation of this Agreement, with regard to conflicts of laws. 13. Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. 14. Amendment. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. 15. Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 26 27 If to Executive: If to Furon: Furon Company 29982 Ivy Glenn Drive Laguna Niguel, CA 92677 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. Neither the failure of Executive to give any notice required by this Agreement (including but not limited to the notice specified in Section 9(c) hereof), nor defects or errors in any notice given by Executive, shall relieve Furon of any corresponding obligation under this Agreement unless, and only to the extent that, Furon is actually and materially prejudiced thereby. 16. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 17. Withholding Taxes. Furon may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 27 28 18. No Waiver. Executive's or Furon's failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right Executive or Furon may have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. 19. At-Will Employment. Executive and Furon acknowledge that, except as may otherwise be provided under any other written agreement between Executive and Furon, the employment of Executive by Furon prior to the Event Date is "at will" and, prior to the Event Date, Executive's employment may be terminated by either Executive or Furon at any time, in which case Executive shall have no further rights under this Agreement. This Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof. 20. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement. 28 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first written above. FURON COMPANY By _______________________________________ Title _____________________________________ EXECUTIVE __________________________________________ 29 EX-10.13 3 1ST AMENDED AND RESTATED CREDIT AGREEMENT 1 Exhibit 10.13 ================================================================================ FIRST AMENDED AND RESTATED CREDIT AGREEMENT by and among FURON COMPANY, THE LENDERS PARTY HERETO, THE FIRST NATIONAL BANK OF CHICAGO AND NATIONSBANK OF TEXAS, N.A., AS CO-AGENTS, ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH, AS DOCUMENTATION AGENT AND THE BANK OF NEW YORK, AS SWING LINE LENDER AND AS ADMINISTRATIVE AGENT with BNY CAPITAL MARKETS, INC., AS ARRANGING AGENT ---------------- $250,000,000 ---------------- Dated as of March 27, 1997 ================================================================================ 2 TABLE OF CONTENTS 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION ............................................................ 2 1.1. Definitions .................................................................................... 2 1.2. Principles of Construction .................................................................... 26 2. AMOUNT AND TERMS OF LOANS ............................................................................ 27 2.1. Revolving Credit Loans ........................................................................ 27 2.2. Swing Line Loans .............................................................................. 27 2.3. Procedure for Borrowing ....................................................................... 29 2.4. Disbursement of Funds ......................................................................... 30 2.5. Intentionally Omitted ......................................................................... 31 2.6. Termination or Reduction of Revolving Credit Commitments and Swing Line Commitment ............ 31 2.7. Prepayments ................................................................................... 32 2.8. Use of Proceeds ............................................................................... 34 2.9. Payments ...................................................................................... 34 2.10. Records ...................................................................................... 35 3. INTEREST, FEES, YIELD PROTECTIONS, ETC. .............................................................. 36 3.1. Interest Rate and Payment Dates ............................................................... 36 3.2. Fees .......................................................................................... 38 3.3. Conversions ................................................................................... 38 3.4. Concerning Interest Periods ................................................................... 39 3.5. Indemnification for Loss ...................................................................... 40 3.6. Increased Costs, Illegality, etc. ............................................................. 40 3.7. Taxes ......................................................................................... 42 3.8. Option to Fund ................................................................................ 44 3.9. Substitution of a Lender ...................................................................... 45 4. REPRESENTATIONS AND WARRANTIES ....................................................................... 45 4.1. Subsidiaries; Capitalization .................................................................. 46 4.2. Existence and Power ........................................................................... 46 4.3. Authority and Execution ....................................................................... 46 4.4. Binding Agreement ............................................................................. 46 4.5. Litigation .................................................................................... 46 4.6. Required Consents ............................................................................. 47 4.7. Absence of Defaults; No Conflicting Agreements ................................................ 47 4.8. Compliance with Applicable Laws ............................................................... 48 4.9. Taxes ......................................................................................... 48 4.10. Governmental Regulations ..................................................................... 48 4.11. Federal Reserve Regulations; Use of Loan Proceeds ............................................ 48 4.12. Plans ........................................................................................ 49 4.13. Financial Statements ......................................................................... 49 4.14. Property ..................................................................................... 50
3 4.15. Authorizations ............................................................................... 50 4.16. Environmental Matters ........................................................................ 50 4.17. Solvency ..................................................................................... 51 4.18. Medex Acquisition Documents .................................................................. 51 4.19. No Misrepresentation ......................................................................... 51 4.20. Outstanding Options .......................................................................... 51 5. CONDITIONS TO EFFECTIVENESS .......................................................................... 51 5.1. Evidence of Action ............................................................................ 52 5.2. This Agreement ................................................................................ 52 5.3. Medex Guaranty ................................................................................ 52 5.4. Required Consents ............................................................................. 52 5.5. Opinions of Counsel ........................................................................... 52 5.6. Fees and Expenses of Special Counsel .......................................................... 53 6. CONDITIONS TO ALL LOANS .............................................................................. 53 6.1. Compliance .................................................................................... 53 6.2. Borrowing Request ............................................................................. 53 7. AFFIRMATIVE COVENANTS ................................................................................ 53 7.1. Financial Statements and Information .......................................................... 53 7.2. Certificates; Other Information ............................................................... 54 7.3. Legal Existence ............................................................................... 56 7.4. Taxes ......................................................................................... 57 7.5. Insurance ..................................................................................... 57 7.6. Performance of Obligations .................................................................... 57 7.7. Condition of Property ......................................................................... 57 7.8. Observance of Legal Requirements .............................................................. 57 7.9. Inspection of Property; Books and Records; Discussions ........................................ 58 7.10. Authorizations ............................................................................... 58 7.11. Financial Covenants .......................................................................... 58 8. NEGATIVE COVENANTS ................................................................................... 59 8.1. Indebtedness .................................................................................. 59 8.2. Liens ......................................................................................... 60 8.3. Merger, Consolidations and Acquisitions ....................................................... 61 8.4. Dispositions .................................................................................. 62 8.5. Investments, Loans, Etc. ...................................................................... 63 8.6. Restricted Payments ........................................................................... 64 8.7. Business and Name Changes ..................................................................... 64 8.8. ERISA ......................................................................................... 64 8.9. Amendments, Etc. of Certain Agreements ........................................................ 65 8.10. Transactions with Affiliates ................................................................. 65 8.11. Issuance of Capital Stock .................................................................... 65 9. DEFAULT .............................................................................................. 65
4 9.1. Events of Default ............................................................................. 65 9.2. Contract Remedies ............................................................................. 67 10. THE ADMINISTRATIVE AGENT ............................................................................ 68 10.1. Appointment .................................................................................. 68 10.2. Delegation of Duties ......................................................................... 68 10.3. Exculpatory Provisions ....................................................................... 68 10.4. Reliance by Administrative Agent ............................................................. 69 10.5. Notice of Default ............................................................................ 69 10.6. Non-Reliance on Administrative Agent and Other Lenders ....................................... 70 10.7. Indemnification .............................................................................. 70 10.8. Administrative Agent in Its Individual Capacity .............................................. 71 10.9. Successor Administrative Agent ............................................................... 71 10.10. The Documentation Agent; Co-Agents .......................................................... 72 11. OTHER PROVISIONS .................................................................................... 72 11.1. Amendments and Waivers ....................................................................... 72 11.2. Notices ...................................................................................... 73 11.3. No Waiver; Cumulative Remedies ............................................................... 74 11.4. Survival of Representations and Warranties and Certain Obligations ........................... 74 11.5. Expenses ..................................................................................... 74 11.6. Applicable Lending Offices ................................................................... 75 11.7. Assignments and Participations ............................................................... 75 11.8. Indemnity .................................................................................... 77 11.9. Determination of Dollar Equivalent ........................................................... 78 11.10. Limitation of Liability ..................................................................... 78 11.11. Counterparts ................................................................................ 78 11.12. Adjustments; Set-off ........................................................................ 78 11.13. Construction ................................................................................ 79 11.14. Governing Law ............................................................................... 79 11.15. Headings Descriptive ........................................................................ 79 11.16. Severability ................................................................................ 80 11.17. Judgment Currency ........................................................................... 80 11.18. Integration ................................................................................. 80 11.19. Consent to Jurisdiction ..................................................................... 80 11.20. Service of Process .......................................................................... 81 11.21. No Limitation on Service or Suit ............................................................ 81 11.22. WAIVER OF TRIAL BY JURY ..................................................................... 81 11.23. Treatment of Certain Information ............................................................ 81
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EXHIBITS - -------- Exhibit A List of Commitments Exhibit B Form of Borrowing Request Exhibit C Form of Notice of Conversion Exhibit D Form of Compliance Certificate Exhibit E-1 Form of Opinion of O'Melveney & Myers, LLP Counsel to the Borrower and Medex Exhibit E-2 Form of Opinion of Donald D. Bradley, General Counsel of the Borrower Exhibit E-3 Form of Opinion of Vorys, Sater, Seymour and Pease, Special Ohio Counsel to Medex Exhibit F Form of Assignment and Acceptance Agreement Exhibit G Form of Note Exhibit H Form of Medex Guaranty SCHEDULES - --------- Schedule 1.1 List of Applicable Lending Offices Schedule 1.1A List of Applicable Payment Offices Schedule 4.1 List of Subsidiaries; Capitalization Schedule 4.5 List of Litigation Schedule 4.7 Exception to Section 4.7 (No Conflicting Agreements) Schedule 4.12 List of Existing Pension Plans Schedule 8.1 List of Existing Indebtedness Schedule 8.2 List of Existing Liens Schedule 8.5 List of Existing Investments
6 FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 27, 1997, by and among FURON COMPANY, a California corporation (the "Borrower"), the lenders party hereto (together with the Swing Line Lender and their respective assigns, the "Lenders", each a "Lender"), THE FIRST NATIONAL BANK OF CHICAGO and NATIONSBANK OF TEXAS, N.A., as Co-Agents, and THE BANK OF NEW YORK, as swing line lender (in such capacity, the "Swing Line Lender"), ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH, as Documentation Agent, and THE BANK OF NEW YORK, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). RECITALS A. The Borrower, the lenders party thereto and the Administrative Agent entered into a Credit Agreement, dated as of November 12, 1996, which agreement was amended by Amendment No. 1, dated as of December 16, 1996, (as so amended, the "Existing Credit Agreement"). The Aggregate Revolving Credit Commitment Amount under the Existing Credit Agreement was $200,000,000. B. The initial Loans were made under the Existing Credit Agreement on January 3, 1997 and the Merger was consummated on January 17, 1997 (the "Merger Effective Date"). C. The Borrower, the lenders party thereto and the Administrative Agent have agreed that Medex will guaranty the Indebtedness of the Borrower under the Loan Documents and that, in connection therewith and in connection with the making of certain other amendments, the Existing Credit Agreement will be amended by restating it in its entirety as set forth herein. D. Contemporaneously herewith, The Bank of New York ("BNY") with the consents of the Administrative Agent and the Borrower, entered into a Master Assignment and Acceptance Agreement, dated as of March 18, 1997, with ABN Amro Bank N.V., Los Angeles International Branch, The First National Bank of Chicago, NationsBank of Texas, N.A., The Bank of Nova Scotia, Mellon Bank, N.A., Comerica Bank, Union Bank of California, N.A., Bank One, Columbus, NA, Banque Nationale de Paris, Los Angeles Branch, The Industrial Bank of Japan, Limited, Los Angeles Agency and Wachovia Bank of Georgia, N.A. (the "Assignees"), pursuant to which BNY assigned a portion of its Commitment to each of the Assignees as set forth therein. E. In connection with the execution and delivery of this Agreement, the Aggregate Revolving Credit Commitment Amount is being increased to $250,000,000. F. For convenience, this Agreement is dated as of March 27, 1997 (the "Restatement Effective Date"), and references to certain matters related to the period prior thereto have been deleted. 7 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1.1. Definitions As used in this Agreement, terms defined in the preamble have the meanings therein indicated, and the following terms have the following meanings: "ABR Advances": the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Alternate Base Rate. "Accountants": Ernst & Young, LLP (or any successor thereto), or such other firm of certified public accountants of recognized national standing selected by the Borrower and reasonably satisfactory to the Administrative Agent. "Accumulated Funding Deficiency": as defined in Section 302 of ERISA. "Acquisition": with respect to any Person, the purchase or other acquisition by such Person, by any means whatsoever (including through a merger, dividend or otherwise and whether in a single transaction or in a series of related transactions), of (i) any Capital Stock of, or other equity securities of, any other Person if, immediately thereafter, such other Person would be either a Subsidiary of such Person or otherwise under the control of such Person, (ii) any Operating Entity, or (iii) any Property of (A) any other Person or (B) any Operating Entity, in either case other than in the ordinary course of business, provided, however, that no acquisition of all or substantially all of the assets of such other Person or Operating Entity shall be deemed to be in the ordinary course of business. "Acquisition Corp.": FCY, Inc., an Ohio corporation and a wholly-owned Subsidiary of the Borrower. "Acquisition Cost": with respect to any Acquisition by any Person, the sum of (i) all cash consideration paid or agreed to be paid by such Person to make such Acquisition, plus (ii) the fair market value of all non-cash consideration paid by such Person in connection therewith, plus (iii) an amount equal to the principal or stated amount of all liabilities assumed or incurred by such Person in connection therewith plus (iv) all transaction costs incurred in connection therewith. The principal or stated amount of any liability assumed or incurred by a Person in connection with an Acquisition which is a contingent liability shall be an amount equal to the stated amount of such liability or, if the same is not stated, the maximum reasonably anticipated amount payable by such Person in respect thereof as determined by such Person in good faith. "Advance": an ABR Advance, a Eurodollar Advance or an Alternate Currency Euro Advance, as the case may be. "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (i) to vote 10% or more of the securities or other interests having ordinary voting power for the election of directors or other managing Persons thereof or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. 2 8 "Aggregate Credit Exposure": at any time, the sum at such time of (i) the outstanding principal balance (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan) of the Revolving Credit Loans of all Lenders and (ii) the outstanding principal balance of the Swing Line Loans. "Aggregate Revolving Credit Commitment Amount": at any time, the sum at such time of the Revolving Credit Commitment Amounts of all Lenders at such time. "Agreement": this First Amended and Restated Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Alternate Base Rate": on any date, a rate of interest per annum equal to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date. "Alternate Currencies": collectively, (i) German Marks, Japanese Yen and Sterling Pounds and (ii) such other currencies as shall be requested by the Borrower to be an Alternate Currency hereunder subject to the approval of the Administrative Agent and all of the Lenders in their sole and absolute discretion (each, an "Alternate Currency"). "Alternate Currency Euro Advances": collectively, the Alternate Currency Loans (or any portions thereof) at such time as they (or such portions) are maintained and/or being maintained in an Alternate Currency at a rate of interest based upon an Alternate Currency Euro Rate; each a "Alternate Currency Euro Advance". "Alternate Currency Euro Rate": with respect to the Interest Period applicable to any Alternate Currency Euro Advance, a rate of interest per annum, as determined by the Administrative Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%): (a)(i) the rate per annum that appears on page 3750 of the Dow Jones Telerate Screen (or any successor page) for deposits of the applicable Alternate Currency with a maturity comparable to such Interest Period, determined as of 11:00 a.m. (London time) (x) on the date which is two Business Days prior to the commencement of such Interest Period, in the case of an Alternate Currency (other than Sterling Pounds) and (y) on the date of the commencement of such Interest Period, in the case of Sterling Pounds or, if such rate does not appear on page 3750 of the Dow Jones Telerate Screen (or any successor page) or (ii) if such a rate does not appear on page 3750 of the Dow Jones Telerate Screen (or any successor page), the rate per annum equal to the offered quotation notified to the Administrative Agent by the Reference Lender as the offered quotation by first class banks in the London interbank market to the Reference Lender for such Alternate Currency deposits of amounts in immediately available funds comparable to the principal amount of such Alternate Currency Euro Advance of the Reference Lender with a maturity comparable to such Interest Period determined as of 11:00 a.m. (London time) (x) on the date which is two Business Days prior to the commencement of such Interest Period, in the case of an Alternate Currency (other than Sterling Pounds) and (y) on the date of the commencement of such Interest Period, in the case of Sterling Pounds, by (b) a number equal to 1.00 minus the aggregate of the stated maximum rates in effect on such day (without duplication) of all reserve requirements (including, 3 9 without limitation, marginal, emergency, supplemental and special reserves) and similar charges, expressed as a decimal, established by any Governmental Authority, including those established by the Board of Governors of the Federal Reserve System and any other banking authority to which BNY and other major United States money center banks are subject in respect of eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the Board of Governors of the Federal Reserve System) maintained by a member of the Federal Reserve System to the extent Applicable; provided, in the event that the Administrative Agent has made any determination pursuant to Section 3.6(a)(i) in respect of such Alternate Currency Euro Advance, the Alternate Currency Euro Rate determined pursuant to clause (a) of this definition shall instead be the rate reported to the Administrative Agent by the Reference Lender as the rate based on the all-in cost of funds of the Reference Lender to fund such Alternate Currency Euro Advance with a maturity comparable to such Interest Period. The Alternate Currency Euro Rate shall be adjusted automatically on and as of the effective date of any change in any such reserve requirement. "Alternate Currency Equivalent": with respect to any Alternate Currency, on any date of determination thereof, the amount of such Alternate Currency which could be purchased with the amount of Dollars involved in such computation at the spot rate at which such Alternate Currency may be exchanged into Dollars as set forth on such date on Dow Jones Telerate page RWRLD (or any successor page) or, if such rate does not appear on such pages, at the spot exchange rate therefor as determined by the Administrative Agent as of 11:00 a.m. (London time) on such date of determination thereof for delivery two Business Days later. "Alternate Currency Lending Office": in respect of (i) any Lender listed on the signature pages hereof with respect to its Alternate Currency Loans, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for Alternate Currency Loans in such Alternate Currency on Schedule 1.1; thereafter, such other office, branch or affiliate of such Lender through which it shall be making or maintaining Alternate Currency Euro Advances in such Alternate Currency, as reported by such Lender to the Administrative Agent and the Borrower, and (ii) in the case of any other Lender, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for Alternate Currency Loans in such Alternate Currency designated as such on Schedule 2 of the Assignment and Acceptance Agreement or other document pursuant to which it became a Lender; thereafter, such other office of such Lender, through which it shall be making or maintaining Alternate Currency Euro Advances in such Alternate Currency, as reported by such Lender to the Administrative Agent and the Borrower. "Alternate Currency Loan": a Revolving Credit Loan denominated in an Alternate Currency. "Applicable": with respect to Regulation D being applicable to any determination of an Alternate Currency Euro Rate, that Regulation D reserves would be applicable to the Alternate Currency Euro Advance as to which such interest rate would apply (including by giving effect to the assumption that the Lenders had funded such Alternate Currency Euro Advance through the purchase of an Alternate Currency deposit by a subsidiary or affiliate of such Lender in the London interbank market and the transfer thereof to such Lender from such subsidiary or affiliate). "Applicable Currency": with respect to (i) any Revolving Credit Loan, Dollars or an Alternate Currency and (ii) Swing Line Loan, Dollars. 4 10 "Applicable Fee Percentage": with respect to the Commitment Fee, at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level and under the applicable column:
Pricing Level Applicable Fee Percentage ------------- ------------------------- Pricing Level I 0.250% Pricing Level II 0.225% Pricing Level III 0.200% Pricing Level IV 0.175% Pricing Level V 0.150% Pricing Level VI 0.125% Pricing Level VII 0.100%
For the period from and including the Original Effective Date to the Merger Effective Date, the Pricing Level shall be based on the Leverage Ratio as of the first Borrowing Date (after giving effect to the making of the first Loans and the consummation of the Medex Stock Purchase) as set forth in a certificate of a Financial Officer of the Borrower substantially in the form of the Compliance Certificate and showing the calculation of the Leverage Ratio in the manner set forth on Schedule 2 thereto (a "Pricing Certificate") delivered to the Administrative Agent pursuant to Section 5.2(i) of the Existing Credit Agreement. For the Period from and including the Merger Effective Date to the first date thereafter on which the Borrower is obligated to deliver a Compliance Certificate to the Administrative Agent pursuant to Section 7.1(c), the Pricing Level shall be based on the Leverage Ratio as of the Merger Effective Date (after giving effect to the making of the Loans to be made thereon and the consummation of the Merger) as set forth in a Pricing Certificate delivered to the Administrative Agent pursuant to Section 5.3(h) of the Existing Credit Agreement. Changes in the Applicable Fee Percentage resulting from a change in a Pricing Level shall become effective upon the date of the delivery by the Borrower to the Administrative Agent of a Compliance Certificate pursuant to Section 7.1(c) evidencing a change in the Leverage Ratio which would affect the applicable Pricing Level. If the Borrower shall fail to deliver a Compliance Certificate within 45 days after the end of each of the first three fiscal quarters (or 90 days after the end of the last fiscal quarter) as required by Section 7.1(c), Pricing Level I shall apply from and including the 46th day (the 91st day in the case of the last quarter) after the end of such fiscal quarter to the date of the delivery by the Borrower to the Administrative Agent of a Compliance Certificate demonstrating that a different Pricing Level is applicable. "Applicable Lending Office": in respect of (i) any Lender, (A) in the case of such Lender's ABR Advances, its Domestic Lending Office, (B) in the case of such Lender's Eurodollar Advances, its Eurodollar Lending Office, and (C) in the case of such Lender's Alternate Currency Euro Advances, its applicable Alternate Currency Lending Office, and (ii) the Swing Line Lender with respect to its Swing Line Loans, its Domestic Lending Office. "Applicable Margin": with respect to the unpaid principal balance of Eurodollar Advances and Alternate Currency Euro Advances, in each case at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level, subject to the provisos set forth below: 5 11
Pricing Level Applicable Margin ------------- ----------------- Pricing Level I 1.1250% Pricing Level II 0.8750% Pricing Level III 0.6250% Pricing Level IV 0.5000% Pricing Level V 0.4375% Pricing Level VI 0.3750% Pricing Level VII 0.3125%
For the period from and including the Original Effective Date to the Merger Effective Date, the Pricing Level shall be based on the Leverage Ratio as of the first Borrowing Date (after giving effect to the making of the first Loans and the consummation of the Medex Stock Purchase) as set forth in a Pricing Certificate of a Financial Officer of the Borrower substantially in the form of the Compliance Certificate and showing the calculation of the Leverage Ratio in the manner set forth on Schedule 2 thereto delivered to the Administrative Agent pursuant to Section 5.2(i) of the Existing Credit Agreement. For the Period from and including the Merger Effective Date to the first date thereafter on which the Borrower is obligated to deliver a Compliance Certificate to the Administrative Agent pursuant to Section 7.1(c), the Pricing Level shall be based on the Leverage Ratio as of the Merger Effective Date (after giving effect to the making of the Loans to be made thereon and the consummation of the Merger) as set forth in a Pricing Certificate delivered to the Administrative Agent pursuant to Section 5.3(h) of the Existing Credit Agreement. Changes in the Applicable Margin resulting from a change in a Pricing Level shall become effective upon the date of the delivery by the Borrower to the Administrative Agent of a Compliance Certificate pursuant to Section 7.1(c) evidencing a change in the Leverage Ratio which would affect the applicable Pricing Level. If the Borrower shall fail to deliver a Compliance Certificate within 45 days after the end of each of the first three fiscal quarters (or 90 days after the end of the last fiscal quarter) as required by Section 7.1(c), Pricing Level I shall apply from and including the 46th day (the 91st day in the case of the last quarter) after the end of such fiscal quarter to the date of the delivery by the Borrower to the Administrative Agent of a Compliance Certificate demonstrating that a different Pricing Level is applicable. "Applicable Payment Office": in respect of (i) all Loans (other than Alternate Currency Loans), fees and other amounts owing under the Loan Documents, the office of the Administrative Agent listed on Schedule 1.1A as its "Domestic Payment Office", and (ii) in respect of Alternate Currency Loans, the office of the Administrative Agent listed on Schedule 1.1A as its payment office for the applicable Alternate Currency, or such other office or offices as the Administrative Agent may from time to time hereafter designate in writing as such to each Lender and the Borrower. "Approved Bank": any bank whose (or whose parent company's) unsecured non-credit supported short-term commercial paper rating from (i) Standard & Poor's is at least A-1 or the equivalent thereof or (ii) Moody's is at least P-1 or the equivalent thereof. "Assignment and Acceptance Agreement": an assignment and acceptance agreement executed by an assignor and an assignee, substantially in the form of Exhibit F. "Assignment Fee": as defined in Section 11.7(b). "Authorized Signatory": as to (i) any Person which is a corporation, the chairman of the board, the president, any vice president, the chief financial officer or any other officer (ac- 6 12 ceptable to the Administrative Agent) of such Person and (ii) any Person which is not a corporation, the general partner or other managing Person thereof. "Bank One Reimbursement Agreement": the Reimbursement Agreement, dated as of July 1, 1996, between Medex and Bank One, Columbus, NA, as same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Base Consolidated Net Worth": the actual Consolidated Net Worth of the Borrower as of February 2, 1997. "Benefited Lender": as defined in Section 11.12. "BNY Rate": a rate of interest per annum equal to the rate of interest publicly announced in New York City by BNY from time to time as its prime commercial lending rate, such rate to be adjusted automatically (without notice) on the effective date of any change in such publicly announced rate. "BNY Capital Markets": BNY Capital Markets, Inc. "Borrowing Date": any Business Day specified in (i) a Borrowing Request as a date on which the Borrower requests the Lenders to make Revolving Credit Loans or (ii) a Borrowing Request as a date on which the Borrower requests the Swing Line Lender to make a Swing Line Loan. "Borrowing Request": a request for Revolving Credit Loans or a Swing Line Loan in the form of Exhibit B. "Business Day": for all purposes other than as set forth in clause (ii) below, (i) any day other than a Saturday, a Sunday or a day on which commercial banks located in New York City are authorized or required by law or other governmental action to close, and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Advances and Alternate Currency Euro Advances, any day which is a Business Day described in clause (i) above and which is also a day on which trading by and between banks in the interbank market may be carried on in London, England. "Capital Lease Obligations": with respect to any Person, that portion of capital leases of such Person which are required to be capitalized for financial reporting purposes in accordance with GAAP. "Capital Stock": as to any Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Person's equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity. "Cash Equivalents": (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in full support thereof) having maturities of not more than one year from the date of acquisition, (ii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of (x) any Lender or (y) any Approved Bank, in any such case with maturi- 7 13 ties of not more than one year from the date of acquisition, (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with an unsecured non-credit supported short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's or at least P-1 or the equivalent by Moody's, or guaranteed by any industrial or financial company with a long term unsecured non-credit supported senior debt rating of at least A or A-2, or the equivalent, by Standard & Poor's or Moody's, as the case may be, and in each case maturing within one year after the date of acquisition, (iv) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's or Moody's and (v) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (i) through (iv) above. "Change of Control": any transaction or series of related transactions (i) in which any Person or two or more Persons acting in concert acquire beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of 35% or more of the common stock of the Borrower, or (ii) in which individuals who as of the Original Effective Date constitute the board of directors of the Borrower (the "Incumbent Board"), cease for any reason to constitute at least a majority of the board of directors, provided that any person becoming a director subsequent to the Original Effective Date whose election, or nomination for election by the Borrower or shareholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election or removal of the directors of the Borrower, as contemplated in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall, for purposes of this Agreement, be considered as thought such person were a member of the Incumbent Board of the Borrower, or (iii) constituting a "Change in Control," or other similar occurrence under documentation evidencing or governing any Indebtedness of the Borrower of $15,000,000 or more which results in an obligation of the Borrower to prepay, purchase, offer to purchase, redeem or defease such Indebtedness. "Code": the Internal Revenue Code of 1986, as the same may be amended from time to time, or any successor thereto, and the rules and regulations issued thereunder, as from time to time in effect. "Commitment": a Revolving Credit Commitment or the Swing Line Commitment, as the case may be. "Commitment Fee": as defined in Section 3.2(a). "Commitment Percentage": as to any Lender, the percentage equal to such Lender's Revolving Credit Commitment Amount divided by the Aggregate Revolving Credit Commitment Amount. "Company Option Agreement": the Company Option Agreement, dated as of November 12, 1996, by and between Medex and the Borrower, as same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. 8 14 "Compensatory Interest Payment": as defined in Section 3.1(c). "Compliance Certificate": a certificate substantially in the form of Exhibit D. "Consolidated": the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "Consolidated Capital Expenditures": for any period, the aggregate of all expenditures incurred by the Borrower and its Subsidiaries determined on a Consolidated basis in accordance with GAAP during such period which, in accordance with GAAP, are required to be included in "Additions to Property, Plant or Equipment" or similar items reflected on the balance sheet of such Person, provided, however, that "Capital Expenditures" shall not include (i) capitalized leases, or (ii) expenditures of proceeds of insurance settlements in respect of lost, destroyed or damaged assets, equipment or other property to the extent such expenditures are made to replace or repair such lost, destroyed or damages assets, equipment or other property within six months of the receipt of such proceeds or (iii) Acquisition Costs incurred in connection with Permitted Acquisitions. "Consolidated Debt Service": for any period, the sum of (i) Consolidated Interest Expense for such period and (ii) all scheduled payments of principal on Consolidated Total Debt during such period, all as determined on a Consolidated basis in accordance with GAAP. "Consolidated EBITDA": for any period, net income of the Borrower and its Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP plus the sum of, without duplication, (i) Consolidated Interest Expense, (ii) taxes of the Borrower and its Subsidiaries based on, or measured by, income and (iii) depreciation, amortization and other non-cash charges of the Borrower and its Subsidiaries, each to the extent deducted in determining such net income for such period, minus extraordinary gains from sales, exchanges and other dispositions of Property not in the ordinary course of business and other non-recurring items (other than losses). Consolidated EBITDA shall be calculated by disregarding non-cash restructuring charges taken by the Borrower in connection with the Transactions so long as such charges are taken within six months after the first Borrowing Date; provided, however, that in the event that the income realized from the sale or other disposition of an asset would exceed the amount of income which would have been realized but for the taking of such charge, such excess shall be excluded from the calculation of Consolidated EBITDA. In addition, solely for purposes of calculating the Leverage Ratio for the period of the four fiscal quarters ending after the date on which the Medex Stock Purchase is consummated, Consolidated EBITDA shall be calculated as if Medex was a Subsidiary of the Borrower during such period but without deduction for Medex's non-cash restructuring expenses taken for its fiscal year ended June 30, 1996 to the extent that such restructuring charge would ordinarily be taken into account in calculating Medex's net income for such period. "Consolidated Fixed Charges": for any period, the sum of, without duplication, (i) Consolidated Debt Service for such period, and (ii) Consolidated Rent Expense for such period. "Consolidated Interest Expense": for any period, the sum of, without duplication, all cash interest (adjusted to give effect to all interest rate swap, cap or other interest rate hedging arrangements and fees and expenses paid in connection with the same, paid or accrued in respect of Consolidated Total Debt during such period), all as determined on a Consolidated basis in accordance with GAAP. 9 15 "Consolidated Rent Expense": for any period, the rent expense of the Borrower and its Subsidiaries in respect of operating leases for such period, determined on a Consolidated basis in accordance with GAAP, provided, however, that for purposes of this definition, at any date of determination, Consolidated Rent Expense shall be equal to the sum of (i) the amount of such rent expense in respect of operating leases as set forth in the most recently delivered annual reports required under Section 7.1(a) plus (ii) an amount, if positive, equal to rent expense in respect of operating leases entered into after the end of the most recent fiscal year for which such statements were delivered minus $750,000, in each case net of any sublease income during such period. "Consolidated Net Worth": at any date of determination, shareholders' equity in the Borrower and its Subsidiaries as of such date determined on a Consolidated basis in accordance with GAAP; provided that there shall be excluded from Consolidated Net Worth any amount attributable to Capital Stock that is, directly or indirectly, required to be redeemed or repurchased by the issuer thereof at a specified date or upon the occurrence of specified events or at the election of the holder thereof. "Consolidated Total Debt": at any date of determination, the aggregate of (i) all indebtedness for borrowing money, (ii) Capitalized Lease Obligations, and (iii) Contingent Obligations in excess of $100,000. "Contingent Obligation": as to any Person ( a "secondary obligor"), any obligation of such secondary obligor (i) guaranteeing or in effect guaranteeing any return on any investment made by another Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (a "primary obligation") of any other Person (a "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such secondary obligor, whether contingent, (A) to purchase any primary obligation or any Property constituting direct or indirect security therefor, (B) to advance or supply funds (x) for the purchase or payment of any primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of a primary obligor, (C) to purchase Property, securities or services primarily for the purpose of assuring the beneficiary of any primary obligation of the ability of a primary obligor to make payment of a primary obligation, (D) otherwise to assure or hold harmless the beneficiary of a primary obligation against loss in respect thereof, and (E) in respect of the liabilities of any partnership in which a secondary obligor is a general partner, except to the extent that such liabilities of such partnership are nonrecourse to such secondary obligor and its separate Property, provided, however, that the term "Contingent Obligation" shall not include the indorsement of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of a Person shall be deemed to be an amount equal to the stated or determinable amount of a primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. "Conversion Date": the date on which (i) a Eurodollar Advance is converted to an ABR Advance, (ii) the date on which an ABR Advance is converted to a Eurodollar Advance, (iii) the date on which a Eurodollar Advance is converted to a new Eurodollar Advance and (iv) the date on which an Alternate Currency Euro Advance is converted to a new Alternate Currency Euro Advance. "Credit Exposure": with respect to any Lender as at any time, the sum at such time 10 16 of (i) the outstanding principal balance of such Lender's Revolving Credit Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan), and (ii) the Swing Line Exposure of such Lender. "Credit Party": the Borrower, Medex and any other Subsidiary of the Borrower which becomes a party to a Loan Document. "Currency": Dollars or any Alternate Currency. "Default": any event or condition which constitutes an Event of Default or which, with the giving of notice, the lapse of time, or any other condition, would, unless cured or waived, become an Event of Default. "Disposition": with respect to any Person, any sale, assignment, transfer or other disposition by such Person, by any means, of (i) the Capital Stock of, or other equity interests of, any other Person, (ii) any Operating Entity, or (iii) any other Property of such Person other than in the ordinary course of business, provided, however, that no such sale, assignment, transfer or other disposition of Property (other than inventory, except to the extent subject to a bulk sale) shall be deemed to be in the ordinary course of business (a) if the fair market value thereof is in excess of $250,000, or (b) to the extent that the fair market value thereof, when aggregated with all other sales, assignments, transfers and other dispositions made by such Person within the same fiscal year, exceeds $750,000, and then only to the extent of such excess, if any, or (c) it is the sale, assignment, transfer or disposition of (1) all or substantially all of the Property of such Person or (2) any Operating Entity. The contribution of Property to a joint venture permitted by Section 8.5 (i) shall not be deemed to be a Disposition. "Disposition Reduction/Prepayment Date": with respect to any Disposition pursuant to Section 8.4(c), the earlier to occur of (i) the date on which the Borrower delivers written notice to the Administrative Agent that the Net Cash Proceeds of such Disposition are not to be used in whole or in part to make Consolidated Capital Expenditures or Permitted Acquisitions within one year after the receipt of such Net Cash Proceeds by the Borrower or any of its Subsidiaries or (ii) the date which is one year after the date of such receipt. "Disposition Reduction/Prepayment Amount": with respect to any Disposition pursuant to Section 8.4(c), an amount equal to that portion of the Net Cash Proceeds received by the Borrower or any of its Subsidiaries in respect of such Disposition that constitutes Excess Disposition Proceeds minus the amount thereof, if any, which constitutes Reinvested Proceeds. "Disqualified Stock": any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable at the option of the holder thereof by contract or otherwise, is, or upon the happening of an event or passage of time would be, required to be redeemed or is redeemable at the option of the holder thereof at any time, or is convertible into or exchangeable at the option of the holder thereof for debt securities. "Dollar Equivalent": on any date of determination thereof, the amount of Dollars which could be purchased with the amount of the relevant Alternate Currency involved in such computation at the spot rate at which Dollars may be exchanged into such Alternate Currency as set forth on such date on Dow Jones Telerate page RWRLD (or any successor page) or, if such rate does not appear on such page, as shall be determined by the Administrative Agent by 11 17 reference to such other publicly available service for displaying exchange rates as the Administrative Agent and the Borrower agree or, in the absence of such agreement, at the spot exchange rate therefor as determined by the Administrative Agent as of 11:00 a.m. (London time) on such date of determination thereof for delivery two Business Days later. "Dollar Loan": each Dollar Revolving Credit Loan and each Swing Line Loan. "Dollar Revolving Credit Loan" and "Dollar Revolving Credit Loans": a Revolving Credit Loan made in Dollars. "Dollars" and "$": lawful currency of the United States. "Domestic Lending Office": in respect of (i) any Lender listed on the signature pages hereof, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for ABR Advances of such Lender on Schedule 1.1; thereafter, such other office, branch or affiliate of such Lender, through which it shall be making or maintaining ABR Advances, as reported by such Lender to the Administrative Agent and the Borrower, (ii) in the case of any other Lender, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for ABR Advances of such Lender on Schedule 2 of the Assignment and Acceptance Agreement or other document pursuant to which it became a Lender; thereafter, such other office, branch or affiliate through which it shall be making or maintaining ABR Advances, as reported by such Lender to the Administrative Agent and the Borrower, and (iii) the Swing Line Lender, initially, the office, branch or affiliate of the Swing Line designated as the Swing Line Lender's lending office on Schedule 1.1; thereafter, such other office, branch or affiliate of the Swing Line Lender, through which it shall be making or maintaining the Swing Line Loans, as reported by the Swing Line Lender to the Administrative Agent and the Borrower, provided that the Swing Line Lender may report different Domestic Lending Offices for all of its ABR Advances and all of its Swing Line Loans, whereupon references to the Domestic Lending Office of such Lender shall mean either or both of such offices. "Eligible Assignee": a Lender, any affiliate of a Lender and any other bank or insurance company. "Employee Benefit Plan": an employee benefit plan within the meaning of Section 3(3) of ERISA maintained, sponsored or contributed to by the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Environmental Laws": any and all federal, state and local laws relating to the environment, the use, storage, transporting, manufacturing, handling, discharge, disposal or recycling of hazardous substances, materials or pollutants or industrial hygiene, and including, without limitation, (i) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 USCA Section 9601 et seq.; (ii) the Resource Conservation and Recovery Act of 1976, as amended, 42 USCA Section 6901 et seq.; (iii) the Toxic Substance Control Act, as amended, 15 USCA Section 2601 et seq.; (iv) the Water Pollution Control Act, as amended, 33 USCA Section 1251 et seq.; (v) the Clean Air Act, as amended, 42 USCA Section 7401 et seq.; (vi) the Hazardous Materials Transportation Authorization Act of 1994, as amended, 49 USCA Section 5101 et seq. and (vii) all rules, regulations, judgments and restrictions thereunder and any analogous state law. "Equity Offering": any public offering or private placement by the Borrower or any 12 18 of its Subsidiaries of shares of its Capital Stock (other than any such offering or placement solely for the Capital Stock or Property of another Person in connection with a Permitted Acquisition). "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations issued thereunder, as from time to time in effect. "ERISA Affiliate": when used with respect to an Employee Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans, any Person which is a member of any group of organizations within the meaning of Sections 414(b) or (c) of the Code (or, solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the Code) of which the Borrower or any of its Subsidiaries is a member. "ESOP": the Employee Stock Ownership Plan of Furon Company. "Eurodollar Advances": collectively, the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Eurodollar Rate. "Eurodollar Lending Office": in respect of (i) any Lender listed on the signature pages hereof, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for Eurodollar Advances of such Lender on Schedule 1.1; thereafter, such other office, branch or affiliate of such Lender, through which it shall be making or maintaining Eurodollar Advances, as reported by such Lender to the Administrative Agent and the Borrower and (ii) in the case of any other Lender, initially, the office, branch or affiliate of such Lender designated as such Lender's lending office for Eurodollar Advances of such Lender on Schedule 2 of the Assignment and Acceptance Agreement or other document pursuant to which it became a Lender; thereafter, such other office, branch or affiliate through which it shall be making or maintaining Eurodollar Advances, as reported by such Lender to the Administrative Agent and the Borrower. "Eurodollar Rate": with respect to the Interest Period applicable to any Eurodollar Advance, a rate of interest per annum, as determined by the Administrative Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%): (a) the rate per annum for deposits having a maturity most nearly comparable to the Interest Period in respect of such Eurodollar Advance in Dollars which appears on page 3750 of the Dow Jones Telerate Screen (or any successor page) as of 11:00 a.m. London time on the date that is two Business Days prior to the first day of such Interest Period, or if such a rate does not appear on page 3750 of the Dow Jones Telerate Screen (or any successor page), the rate of interest per annum quoted by the Reference Lender at approximately 11:00 a.m. London time (or as soon thereafter as practicable) two Business Days prior to the first day of such Interest Period to leading banks in the interbank eurodollar market as the rate at which the Reference Lender is offering Dollar deposits in an amount approximately equal to its Commitment Percentage of such Eurodollar Advance and having a period to maturity approximately equal to such Interest Period, by 13 19 (b) a number equal to 1.00 minus the aggregate of the then stated maximum rates during such Interest Period of all reserve requirements (including, without limitation, marginal, emergency, supplemental and special reserves), expressed as a decimal, established by the Board of Governors of the Federal Reserve System and any other banking authority to which BNY and other major United States money center banks are subject, in respect of eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the Board of Governors of the Federal Reserve System) or in respect of any other category of liabilities including deposits by reference to which the interest rate on Eurodollar Advances is determined or any category of extensions of credit or other assets which includes loans by non-domestic offices of any Lender to United States residents. Such reserve requirements shall include, without limitation, those imposed under such Regulation D. Eurodollar Advances shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed to be subject to such reserve requirements without benefit of credits for proration, exceptions or offsets which may be available from time to time to any Lender under such Regulation D. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in any such reserve requirement. "Event of Default": as defined in Section 9.1. "Excess Cash Flow": with respect to any fiscal year, Consolidated EBITDA for such fiscal year minus the sum of, without duplication (i) the amount, if positive, equal to (a) the amount of the Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan) outstanding at the beginning of such fiscal year minus (b) the Aggregate Revolving Credit Commitment Amount at the end of such fiscal year (without giving effect to reductions thereof during such period required by Section 2.6(d)), (ii) scheduled payments of principal of Consolidated Total Debt during such fiscal year, (iii) Consolidated Capital Expenditures made during such fiscal year, (iv) taxes (other than income taxes) paid by the Borrower and its Subsidiaries during such fiscal year, and (v) Cash Interest Expense for such fiscal year. "Excess Disposition Proceeds": with respect to any fiscal year, the amount (if positive) equal to the amount of Net Cash Proceeds received by the Borrower and/or any of its Subsidiaries during such fiscal year minus $3,750,000. "Exchange Act": the Securities Exchange Act of 1934, as amended. "Existing Medex Bond Documents": collectively, (i) the Loan Agreement, dated as of July 1, 1996, between the City of Hilliard, Ohio and Medex, (ii) the Bank One Reimbursement Agreement, (iii) the Project Note, dated July 16, 1996, made by Medex in favor of Bank One Trust Company, N.A., and (iv) the Trust Indenture, dated as of July 1, 1996, between the City of Hilliard, Ohio, as issuer and Bank One Trust Company, NA, as trustee, in each case in connection with the City of Hilliard, Ohio Adjustable Rate Industrial Development Revenue Bonds, Series 1996 (Medex, Inc. Project), as each may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Existing Medfusion Bond Documents": collectively, (i) the Loan Agreement dated as of June 1, 1992, between the Development Authority of Fulton County and Medfusion, Inc., (ii) the Wachovia Reimbursement Agreement, (iii) the Trust Indenture dated as of June 1, 1992, between Development Authority of Fulton County, as issuer, and AmSouth Bank N.A., as trustee, in each case in connection with the Development Authority of Fulton County Industrial 14 20 Development Revenue Bonds (Medfusion, Inc. Project), as each may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Existing Pension Plans": as defined in Section 4.12. "Federal Funds Rate": for any day, a rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average of the quotations for such day on such transactions received by BNY as determined by BNY and reported to the Administrative Agent. "Fees": as defined in Section 2.9. "Financial Officer": as to any Person, the chief financial officer of such Person or such other officer as shall be satisfactory to the Administrative Agent. "Financial Statements": as defined in Section 4.13. "Fixed Charge Coverage Ratio": at any date of determination, the ratio of (i) Consolidated EBITDA plus Consolidated Rent Expense minus Consolidated Capital Expenditures to (ii) Consolidated Fixed Charges for the four fiscal quarter period ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarter period. For purposes of the calculation of the Fixed Charge Coverage Ratio, Consolidated Capital Expenditures for any period shall be deemed to be the greater of $10,000,000 or the actual amount of Consolidated Capital Expenditures made during such period. "Fixed Rate Advance": a Eurodollar Advance, an Alternate Currency Euro Advance or a Swing Line Negotiated Rate Advance, as the case may be. "Funded Current Liability Percentage": as defined in Section 401(a)(29) of the Code. "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statement by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied. "German Marks": freely transferable lawful money of Germany. "Governmental Authority": any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator. 15 21 "HSR Act": the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Hazardous Substance": any hazardous or toxic substance, material or waste, including, but not limited to, (i) those substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto and replacements thereof and (ii) any substance, pollutant or material defined as, or designated in, any Environmental Law as a "hazardous substance," "toxic substance," "hazardous material," "hazardous waste," "restricted hazardous waste," "pollutant," "toxic pollutant" or words of similar import. "Highest Lawful Rate": as to any Lender, the maximum rate of interest, if any, that at any time or from time to time may be contracted for, taken, charged or received by such Lender on its Loans, or which may be owing to such Lender pursuant the Loan Documents under the laws applicable to such Lender and this transaction. "Indebtedness": as to any Person, at a particular time, all items which constitute, without duplication, (i) indebtedness for borrowed money, (ii) indebtedness in respect of the deferred purchase price of Property (other than trade payables incurred in the ordinary course of business), (iii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv) obligations with respect to any conditional sale or title retention agreement, (v) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer's payment thereof, (vi) all liabilities secured by any Lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (other than carriers', warehousemen's, mechanics', repairmen's or other like non-consensual statutory Liens arising in the ordinary course of business), (vii) Capital Lease Obligations and (viii) Contingent Obligations. "Indemnified Liability": as defined in Section 11.5. "Indemnified Person": as defined in Section 11.8. "Indemnified Tax": as to any Person, any Tax, except (i) a Tax on the Income imposed on such Person and (ii) any interest, fees or penalties for late payment imposed on such Person, in each case under clauses (i) and (ii) to the extent not attributable to the failure of the Borrower or any of its Subsidiaries to obtain any necessary approvals or consents of, or file or cause to be filed any reports, applications, documents, instruments or information required to be filed pursuant to any applicable law, rule, regulation or request of, any Governmental Authority. "Indemnified Tax Person": the Administrative Agent or any Lender. "Intercompany Indebtedness": loans which are (i) made by the Borrower to any of its direct or indirect Subsidiaries or Affiliates or (ii) made by direct or indirect Subsidiaries or any Affiliates of the Borrower to the Borrower or to other direct or indirect Subsidiaries or Affiliates of the Borrower. 16 22 "Interest Payment Date": (i) as to any ABR Advance, the last day of each calendar quarter commencing on the first of such days to occur after such ABR Advance is made or any Eurodollar Advance is converted to an ABR Advance, (ii) as to any Swing Line Loan, the date on which the outstanding principal balance of such Swing Line Loan shall become due and payable in accordance with Section 2.2(b), (iii) as to any Eurodollar Advance or Alternate Currency Euro Advance as to which the Borrower has selected an Interest Period of seven days, one, two or three months, the last day of such Interest Period, (iv) as to any Eurodollar Advance or Alternate Currency Euro Advance as to which the Borrower has selected an Interest Period of six months, the last day of each three month interval occurring during such Interest Period and the last day of such Interest Period; and (v) as to all Eurodollar Advances, Alternate Currency Euro Advances and Swing Line Loans, the Maturity Date. "Interest Period": (a) subject to the provisions of Section 3.4, with respect to any Eurodollar Advance or Alternate Currency Euro Advance requested by the Borrower, the period commencing on, as the case may be, the Borrowing Date or Conversion Date with respect to such Eurodollar Advance or Alternate Currency Euro Advance and ending one, two, three or six months thereafter, as selected by the Borrower in its irrevocable Borrowing Request or its irrevocable Notice of Conversion, provided, however, that (i) during the Syndication Period, Interest Periods of seven days shall be available, (ii) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day and (iii) any Interest Period which begins on the last 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 Interest Period) shall end on the last Business Day of a calendar month; (b) subject to the provisions of Section 3.4, with respect to any Swing Line Loan requested by the Borrower, the period commencing on the Borrowing Date with respect to such Swing Line Loan and ending on or between one and five days thereafter, as selected by the Borrower in its irrevocable Borrowing Request, provided, however, that (i) during the Syndication Period, Interest Periods of up to seven days shall be available, (ii) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, and (iii) the Borrower shall select Interest Periods so as not to have more than three different Interest Periods outstanding at any one time for all Swing Line Loans. (c) Interest Periods shall be subject to the provisions of Section 3.4. "Interest Rate Protection Arrangement": any interest rate swap, cap or collar arrangement or any other derivative product customarily offered by banks to their customers in order to reduce the exposure of such customers to interest rate fluctuations, as the same may be amended, supplemented or otherwise modified from time to time. "Investments": as defined in Section 8.5. "Japanese Yen": freely transferable lawful money of Japan. "Judgment Currency": as defined in Section 11.17. 17 23 "Judgment Currency Conversion Date": as defined in Section 11.17. "Leverage Ratio": at any date of determination, the ratio of (x) Consolidated Total Debt on such date to (y) Consolidated EBITDA for the four fiscal quarter period ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarter period. "Lien": any mortgage, pledge, hypothecation, assignment, deposit or preferential arrangement, encumbrance, lien (statutory or other), or other security agreement or security interest of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement and any capital or financing lease having substantially the same economic effect as any of the foregoing. "Loan": a Revolving Credit Loan or a Swing Line Loan, as the case may be. "Loans": the Revolving Credit Loans and/or the Swing Line Loans, as the case may be. "Loan Documents": collectively, this Agreement, any promissory notes issued pursuant to Section 2.10 and the Medex Guaranty. "Managing Person": with respect to any Person that is a (i) corporation, its board of directors, (ii) a limited liability company, its board of control, managing member or members, (iii) a limited partnership, its general partner, (iv) a general partnership, its managing partner or executive committee or (v) such other managing body or Person analogous to the foregoing. "Mandatory Borrowing": as defined in Section 2.2(c). "Margin Stock": any "margin stock", as defined in Regulation U of the Board of Governors of the Federal Reserve System, as amended, supplemented or otherwise modified from time to time. "Material Adverse Change": a material adverse change in (i) the financial condition, operations, business or Property of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower or any of its Subsidiaries to perform its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce the Loan Documents. "Material Adverse Effect": a material adverse effect on (i) the financial condition, operations, business or Property of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower or any of its Subsidiaries to perform its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce the Loan Documents. "Maturity Date": November 12, 2001, or such earlier date on which the Loans shall become due and payable, whether by acceleration or otherwise. "Medex": Medex, Inc., an Ohio corporation. 18 24 "Medex Acquisition": the acquisition of Medex pursuant to the Medex Acquisition Documents. "Medex Acquisition Documents": collectively, the Merger Documents and the Offer Documents. "Medex Guaranty": the Guaranty and Subordination Agreement, by and between Medex and the Administrative Agent, substantially in the form of Exhibit H, as amended, supplemented or otherwise modified from time to time. "Medex Stock": the common stock of Medex, $0.01 per value. "Medex Stock Purchase": the purchase of Medex Stock by Acquisition Corp. pursuant to the Offer to Purchase. "Merger": the merger of Medex with and into Acquisition Corp. pursuant to and in accordance with the Merger Agreement, with Medex as the survivor thereof. "Merger Agreement": the Agreement and Plan of Merger, dated as of November 12, 1996, by and among Medex, Acquisition Corp. and the Borrower, as same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Merger Documents": collectively, (i) the Merger Agreement, (ii) the Company Option Agreement, (iii) the Shareholder Option Agreements and (iv) all exhibits, schedules, and disclosure letters referred to therein and any side letters or other agreements affecting the terms of any thereof, as each may be amended, supplemented or otherwise modified in accordance with the provisions of Section 8.9. "Merger Effective Date": as defined in the Recitals. "Moody's": Moody's Investors Service, Inc., or any successor thereto. "Multiemployer Plan": a Pension Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Negotiated Rate": with respect to each Swing Line Negotiated Rate Advance, the rate per annum agreed to by the Borrower and the Swing Line Lender in accordance with section 2.3(b)(ii) as the interest rate that such Swing Line Negotiated Rate Advance shall bear. "Net Cash Proceeds": with respect to any Disposition by the Borrower or any of its Subsidiaries, the aggregate gross sales proceeds received by the Borrower or such Subsidiary in cash in connection with such Disposition minus the sum of (i) sales and other commissions and legal and other expenses incurred in connection with such Disposition, (ii) any taxes paid or payable by the Borrower or such Subsidiary in connection therewith (determined on a Consolidated basis after giving effect to net operating loss and other deductions and applicable tax credits), and (iii) the amount of Indebtedness (other than the Loans) secured by the Property subject to such Disposition which, in accordance with the terms governing such Indebtedness, is required to be repaid upon such Disposition. 19 25 "Net Issuance Proceeds": with respect to any issuance, sale or incurrence of any Refinancing Debt or any Equity Offering, the aggregate amount of cash received by or on behalf of the Borrower after deducting therefrom placement agents' or underwriters' commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) payable by the Borrower or any Subsidiary in connection with such issuance, sale or incurrence. "Notice of Conversion": a notice substantially in the form of Exhibit C. "Obligation Currency": as defined in Section 11.17. "Offer Documents": collectively, a Tender Offer Statement on Schedule 14D-1 together with all exhibits and schedules thereto and the Offer to Purchase, as each may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Offer to Purchase": the Offer to Purchase pursuant to which the Borrower makes the Tender Offer, as the same may be amended, supplemented or otherwise modified in accordance with Section 8.9. "Other Taxes": as defined in Section 3.7(f). "Operating Entity": any Person or any business or operating unit of a Person which is, or could be, operated separate and apart from (i) the other businesses and operations of such Person, or (ii) any other line of business or business segment. "Organizational Documents": as to any Person which is (i) a corporation, the certificate or articles of incorporation and by-laws of such Person, (ii) a limited liability company, the limited liability company agreement or similar agreement of such Person, (iii) a partnership, the partnership agreement or similar agreement of such Person, or (iv) any other form of entity or organization, the organizational documents analogous to the foregoing. "Original Effective Date": November 12, 1996. "Outstanding Options": collectively, options to acquire Medex Stock held by Persons other than those party to Shareholder Agreements, which options were not terminated on or before the Merger and which survived the Merger. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the functions thereof. "Pension Plan": at any date of determination, any Employee Benefit Plan (including a Multiemployer Plan), the funding requirements of which (under Section 302 of ERISA or Section 412 of the Code) are, or at any time within the six years immediately preceding such date, were in whole or in part, the responsibility of the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Permitted Acquisition": an Acquisition permitted by Section 8.3. "Permitted Lien": a Lien permitted to exist under Section 8.2(a). 20 26 "Person": any individual, firm, partnership, limited liability company, joint venture, corporation, association, business enterprise, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity, and for the purpose of the definition of "ERISA Affiliate", a trade or business. "Pricing Level": Pricing Level I, Pricing Level II, Pricing Level III, Pricing Level IV, Pricing Level V, Pricing Level VI or Pricing Level VII, as applicable. "Pricing Level I": any time when the Leverage Ratio is greater than 3.50:1.00. "Pricing Level II": any time when the Leverage Ratio is greater than 3.00:1.00 but less than or equal to 3.50:1.00. "Pricing Level III": any time when the Leverage Ratio is greater than 2.50:1.00 but less than or equal to 3.00:1.00. "Pricing Level IV": any time when the Leverage Ratio is greater than 2.00:1.00 but less than or equal to 2.50:1.00. "Pricing Level V": any time when the Leverage Ratio is greater than 1.50:1.00 but less than or equal to 2.00:1.00. "Pricing Level VI": any time when the Leverage Ratio is greater than 1.00:1.00 but less than or equal to 1.50:1.00. "Pricing Level VII": any time when the Leverage Ratio less than or equal to 1.00:1.00. "Prohibited Transaction": a transaction which is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt (by reason of statutory, class or individual exemption) under Section 4975 of the Code or Section 408 of ERISA. "Property": all types of real, personal, tangible, intangible or mixed property. "Proposed Lender": as defined in Section 3.9. "Real Property": all real property owned or leased by the Borrower or any of its Subsidiaries. "Reference Lender": The Bank of New York. "Refinancing Debt": unsecured Indebtedness incurred by the Borrower to refinance all or a portion of the Indebtedness incurred hereunder to the extent permitted to be incurred by Section 8.1(v). "Regulatory Change": (i) the introduction or phasing in of any law, rule or regulation after the Original Effective Date, (ii) the issuance or promulgation after the Original Effective Date of any directive, guideline or request from any central bank or United States or foreign Governmental Authority (whether or not having the force of law), or (iii) any change after the 21 27 Original Effective Date in the interpretation of any existing law, rule, regulation, directive, guideline or request by any central bank or United States or foreign Governmental Authority charged with the administration thereof. "Reinvested Proceeds": with respect to that portion of Net Cash Proceeds of any Disposition pursuant to Sections 8.4(c) which constitute Excess Disposition Proceeds, the portion of such Net Cash Proceeds which are used to make Consolidated Capital Expenditures or Permitted Acquisitions within one year after the receipt of such Net Cash Proceeds by the Borrower or any of its Subsidiaries. "Reportable Event": with respect to any Pension Plan, (i) any event set forth in Sections 4043(c) (other than a Reportable Event as to which the 30 day notice requirement is waived by the PBGC under applicable regulations), 4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to provide security to a Pension Plan under Section 401(a)(29) of the Code, or (iii) any failure to make any payment required by Section 412(m) of the Code. "Required Lenders": at any time when (i) no Loans are outstanding, Lenders having Revolving Credit Commitment Amounts (or if no Revolving Credit Commitments then exist, Lenders having Revolving Credit Commitment Amounts on the last day on which Revolving Credit Commitments did exist) greater than or equal to 51% of the Aggregate Revolving Credit Commitment Amount and (ii) at any time when Loans are outstanding, Lenders with Credit Exposure greater than or equal to 51% of the Aggregate Credit Exposure. "Required Payment": as defined in Section 3.7(a). "Restatement Effective Date": as defined in the Recitals. "Restricted Payment": as to any Person (i) any dividend or other distribution, direct or indirect, on account of any shares of Capital Stock or other equity interest in such Person now or hereafter outstanding (other than a dividend payable solely in shares of such Capital Stock to the holders of such shares), (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition, direct or indirect, of any shares of any class of Capital Stock or other equity interest in such Person now or hereafter outstanding and (iii) any repayment of Intercompany Indebtedness. "Revolving Credit Commitment": in respect of any Lender, such Lender's undertaking during the Revolving Credit Commitment Period to make Revolving Credit Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not exceeding the Revolving Credit Commitment Amount of such Lender. "Revolving Credit Commitment Amount": as of any date and with respect to any Lender, the amount set forth adjacent to its name under the heading "Revolving Credit Commitment Amount" in Exhibit A on such date or, in the event that such Lender is not listed in Exhibit A, the "Revolving Credit Commitment Amount" which such Lender shall have assumed from another Lender in accordance with Section 11.7 on or prior to such date, as the same may be reduced from time to time pursuant to Section 2.6. 22 28 "Revolving Credit Commitment Period": the period from the Original Effective Date until the Revolving Credit Commitment Termination Date. "Revolving Credit Commitment Termination Date": the earlier of the Business Day immediately preceding the Maturity Date or such other date upon which the Revolving Credit Commitments shall have been terminated in accordance with Section 2.6 or Section 9.2. "Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section 2.1. "SEC": the Securities and Exchange Commission or any Governmental Authority succeeding to the functions thereof. "Shareholder Option Agreements": collectively, each of the Agreements, dated as of November 12, 1996, by and among certain shareholders of Medex who are officers or directors of Medex, Acquisition Corp. and the Borrower, as same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. "Solvent": with respect to any Person on a particular date, the condition that on such date, (i) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute an unreasonably small amount of capital. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability after taking into account probable payments by co-obligors. "Special Counsel": Emmet, Marvin & Martin, LLP, special counsel to the Administrative Agent. "Standard & Poor's": Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto. "Sterling Pounds": freely transferable lawful money of the United Kingdom. "Subsidiary": as to any Person, any corporation, association, partnership, limited liability company, joint venture or other business entity of which such Person or any Subsidiary of such Person, directly or indirectly, either (i) in respect of a corporation, owns or controls more than 50% of the outstanding Capital Stock having ordinary voting power to elect a majority of the Managing Person, irrespective of whether a class or classes shall or might have voting power by reason of the happening of any contingency, or (ii) in respect of an association, partnership, limited liability company, joint venture or other business entity, is entitled to share in more than 50% of the profits and losses, however determined. "Swing Line ABR Advances": the Swing Line Loans (or any portions thereof), at 23 29 such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Alternate Base Rate. "Swing Line Commitment": the undertaking of the Swing Line Lender during the Swing Line Commitment Period to make Swing Line Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not in excess of the Swing Line Commitment Amount, and the commitment of the Lenders to participate therein as set forth in Section 2.2, as the same may be reduced pursuant to Section 2.6. "Swing Line Commitment Amount": $10,000,000. "Swing Line Commitment Period": the period from the Original Effective Date to, but excluding, the Swing Line Termination Date. "Swing Line Exposure": at any time, in respect of any Lender, an amount equal to the aggregate outstanding principal amount of the Swing Line Loans at such time multiplied by such Lender's Commitment Percentage at such time. "Swing Line Loan" and "Swing Line Loans": as defined in Section 2.2(a). "Swing Line Negotiated Rate Advances": the Swing Line Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon a Negotiated Rate. "Swing Line Participation Amount": as defined in Section 2.2(d). "Swing Line Termination Date": the date which is five Business Days prior to the Maturity Date. "Syndication Period": the period commencing on the Original Effective Date and ending on the earlier of the day which is 90 days after the first Borrowing Date and the date on which the Administrative Agent gives written notice to the Borrower that the syndication of the Revolving Credit Commitments and the Revolving Credit Loans have been completed. "Tax": any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by a Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed. "Tax on the Income": as to any Person, a Tax imposed by one of the following jurisdictions or by any political subdivision or taxing authority thereof: (i) the United States, (ii) the jurisdiction in which such Person is organized, (iii) the jurisdiction in which such Person's principal office is located, or (iv) in the case of each Lender or the Administrative Agent, any jurisdiction in which such Person is deemed to be doing business; which Tax is an income tax or franchise tax imposed on all or part of the net income or net profits of such Person or which Tax represents interest, fees, or penalties for late payment of such an income tax or franchise tax. "Tender Offer": the offer by the Borrower to purchase all of the issued and outstanding shares of Medex Stock pursuant to the Offer to Purchase. 24 30 "Termination Event": with respect to any Pension Plan, (i) a Reportable Event, (ii) the termination of a Pension Plan, or the filing of a notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan amendment as a termination, in each case under Section 4041(c) of ERISA, (iii) the institution of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv) the appointment of a trustee to administer any Pension Plan under Section 4042 of ERISA. "Transaction Documents": collectively, the Loan Documents and the Merger Documents. "Transactions": collectively, the making of the Loans, the Tender Offer, the Medex Stock Purchase and the Merger. "Type": with respect to any Revolving Credit Loan, the character of such Revolving Credit Loan as an ABR Advance, an Alternate Currency Euro Advance or a Eurodollar Advance, each of which constitutes a type of loan. "Unfunded Pension Liabilities": with respect to any Pension Plan, at any date of determination, the amount determined by taking the accumulated benefit obligation, as disclosed in accordance with Statement of Accounting Standards No. 87, "Employers' Accounting for Pensions", over the fair market value of Pension Plan assets. "United States": the United States of America (including the States thereof and the District of Columbia). "Unqualified Amount": as defined in Section 3.1(c). "Unrecognized Retiree Welfare Liability": with respect to any Employee Benefit Plan that provides postretirement benefits other than pension benefits and other than as required by Section 601 through 608 of ERISA, the amount of the transition obligation, as determined in accordance with Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as of the most recent valuation date, that has not been recognized as an expense in an income statement of the Borrower and its Subsidiaries, provided that prior to the date such Statement is applicable to the Borrower, such amount shall be based on an estimate made in good faith of such transition obligation. "U.S. Person": a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under any laws of the United States, or any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Wachovia Reimbursement Agreement": the Direct Pay Letter of Credit Reimbursement Agreement, dated as of July 1, 1996, between Medex (as successor in interest to Medfusion, Inc.) and Wachovia Bank of Georgia, National Association, as same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.9. 25 31 1.2. Principles of Construction (a) All terms defined in a Loan Document shall have the meanings given such terms therein when used in the other Loan Documents or any certificate, opinion or other document made or delivered pursuant thereto, unless otherwise defined therein. (b) As used in the Loan Documents and in any certificate, opinion or other document made or delivered pursuant thereto, accounting terms not defined in Section 1.1, and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to reflect such change in GAAP (subject to the approval of the Required Lenders), provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. (c) The words "hereof", "herein", "hereto" and "hereunder" and similar words when used in a Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof, and Section, schedule and exhibit references contained therein shall refer to Sections thereof or schedules or exhibits thereto unless otherwise expressly provided therein. (d) The phrase "may not" is prohibitive and not permissive. (e) Unless the context otherwise requires, words in the singular number include the plural, and words in the plural include the singular. (f) Unless specifically provided in a Loan Document to the contrary, any reference to a time shall refer to such time in New York. (g) Unless specifically provided in a Loan Document to the contrary, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". (h) References in any Loan Document to a fiscal period shall refer to that fiscal period of the Borrower. 26 32 2. AMOUNT AND TERMS OF LOANS 2.1. Revolving Credit Loans Subject to the terms and conditions hereof, each Lender severally (and not jointly) agrees to make revolving credit loans (each a "Revolving Credit Loan" and, as the context may require, collectively with all other Revolving Credit Loans of such Lender and with the Revolving Credit Loans of all other Lenders, the "Revolving Credit Loans") to the Borrower from time to time during the Revolving Credit Commitment Period, provided that immediately after giving effect thereto (i) such Lender's Credit Exposure would not exceed such Lender's Revolving Credit Commitment Amount, and (ii) the Aggregate Credit Exposure would not exceed the Aggregate Revolving Credit Commitment Amount. During the Revolving Credit Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Revolving Credit Commitments, all in accordance with the terms and conditions of this Agreement. Subject to the provisions of Sections 2.3 and 3.3, at the option of the Borrower, Revolving Credit Loans may be (i) Dollar Revolving Credit Loans in which case they may be made as one or more (A) ABR Advances, (B) Eurodollar Advances or (C) any combination thereof or (ii) Alternate Currency Loans in which case they shall be made as one or more Alternate Currency Euro Advances, provided, however, in no event shall the aggregate outstanding principal balance of Alternate Currency Loans (determined on the basis of the Dollar Equivalent of each Alternate Currency Loan) exceed $30,000,000. The Revolving Credit Loans, together with all accrued and unpaid interest thereon, shall mature and be due and payable in the Applicable Currency on the Maturity Date. 2.2. Swing Line Loans (a) Subject to the terms and conditions of this Agreement, the Swing Line Lender agrees to make swing line loans (each a "Swing Line Loan" and, collectively, the "Swing Line Loans") to the Borrower in Dollars from time to time during the Swing Line Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the Swing Line Commitment Amount, provided that immediately after making each Swing Line Loan, (i) the Swing Line Lender's Credit Exposure would not exceed the Swing Line Lender's Revolving Credit Commitment Amount (in its capacity as a Lender), (ii) the aggregate unpaid balance of the Swing Line Loans would not exceed the Swing Line Commitment Amount and (iii) the Aggregate Credit Exposure of all Lenders would not exceed the Aggregate Revolving Credit Commitment Amount. During the Swing Line Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Swing Line Commitment, all in accordance with the terms and conditions of this Agreement. No Swing Line Loan shall be made prior to the making of the first Revolving Credit Loans on the first Borrowing Date. (b) The Swing Line Lender shall not be obligated to make any Swing Line Loan at a time when any Lender shall be in default of its obligations under this Agreement unless the Swing Line Lender has entered into arrangements satisfactory to it and the Borrower to eliminate the Swing Line Lender's risk with respect to such defaulting Lender's participation in such Swing Line Loan. The Swing Line Lender will not make a Swing Line Loan if the Administrative Agent, or any Lender by notice to the Swing Line Lender and the Borrower no later than one Business Day prior to the Borrowing Date with respect to such Swing Line Loan, shall have determined that the conditions set forth in Section 6 have not been satisfied and such conditions remain unsatisfied as of the requested time of the making such Loan. Each Swing Line Loan shall be due and payable 27 33 on the day being the earliest of the last day of the Interest Period applicable thereto, the date on which the Swing Line Commitment shall have been voluntarily terminated by the Borrower in accordance with Section 2.6, and the Maturity Date. (c) On any Business Day on which a Swing Line Loan shall be due and payable and shall remain unpaid, the Swing Line Lender may, in its sole discretion, give notice to the Lenders and the Borrower that such outstanding Swing Line Loan shall be funded with a borrowing of Revolving Credit Loans (provided that such notice shall be deemed to have been automatically given upon the occurrence of a Default or an Event of Default under Sections 9.1(g) or (h)), in which case a borrowing of Revolving Credit Loans made as ABR Advances (each such borrowing, a "Mandatory Borrowing"), shall be made by all Lenders pro rata based on each such Lender's Commitment Percentage on the Business Day immediately succeeding the giving of such notice. The proceeds of each Mandatory Borrowing shall be remitted directly to the Swing Line Lender to repay such outstanding Swing Line Loan. Each Lender irrevocably agrees to make a Revolving Credit Loan pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified in writing by the Swing Line Lender notwithstanding: (i) the amount of such Mandatory Borrowing may not comply with the minimum amount for Loans otherwise required hereunder, (ii) whether any condition specified in Section 6 is then unsatisfied, (iii) whether a Default or an Event of Default then exists, (iv) the Borrowing Date of such Mandatory Borrowing, (v) the aggregate principal amount of all Loans then outstanding (determined on the basis of the Dollar Equivalent of each outstanding Alternate Currency Loan), (vi) the Aggregate Credit Exposure at such time and (vii) the Aggregate Revolving Credit Commitment Amount at such time. (d) Upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall purchase unconditionally, irrevocably, and severally (and not jointly) from the Swing Line Lender a participation in the outstanding Swing Line Loans (including accrued interest thereon) in an amount equal to the product of its Commitment Percentage and the outstanding amount of the Swing Line Loans (the "Swing Line Participation Amount"). Each Lender shall also be liable for an amount equal to the product of its Commitment Percentage and any amounts paid by the Borrower pursuant to this subsection (d) that are subsequently rescinded or avoided, or must otherwise be restored or returned. Such liabilities shall be unconditional and without regard to the occurrence of any Default or Event of Default or the compliance by the Borrower with any of its obligations under the Loan Documents. (e) In furtherance of subsection (d) above, upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall promptly make available to the Administrative Agent for the account of the Swing Line Lender its Swing Line Participation Amount at the Applicable Payment Office of the Administrative Agent in lawful money of the United States and in immediately available funds. The Administrative Agent shall deliver the payments made by each Lender pursuant to the immediately preceding sentence to the Swing Line Lender promptly upon receipt thereof in like funds as received. Each Lender shall indemnify and hold harmless the Administrative Agent and the Swing Line Lender from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs and expenses resulting from any failure on the part of such Lender to pay, or from any delay in paying the Administrative Agent any amount such Lender is required to pay in accordance with this subsection (e) upon receipt of notice of Event of Default from the Administrative Agent pursuant to Section 10.5 (except in respect of 28 34 losses, liabilities or other obligations suffered by the Administrative Agent or the Swing Line Lender, as the case may be, resulting from the gross negligence or willful misconduct of the Administrative Agent or the Swing Line Lender, as the case may be), and such Lender shall be required to pay interest to the Administrative Agent for the account of the Swing Line Lender from the date such amount was due until paid in full, on the unpaid portion thereof, at a rate of interest per annum equal to the Federal Funds Rate, payable upon demand by the Swing Line Lender. The Administrative Agent shall distribute such interest payments to the Swing Line Lender upon receipt thereof in like funds as received. (f) Whenever the Administrative Agent is reimbursed by the Borrower, for the account of the Swing Line Lender, for any payment in connection with Swing Line Loans and such payment relates to an amount previously paid by a Lender pursuant to this Section, the Administrative Agent will promptly pay over such payment to such Lender. 2.3. Procedure for Borrowing (a) Revolving Credit Loans. The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Credit Commitment Period, provided that the Borrower shall notify the Administrative Agent by the delivery of a Borrowing Request, which shall be sent by telecopy and shall be irrevocable (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Borrowing Request manually signed by the Borrower), no later than: 11:00 a.m., four Business Days prior to the requested Borrowing Date, in the case of Alternate Currency Euro Advances, 2:00 p.m., three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Advances, and 2:00 p.m., one Business Day prior to the requested Borrowing Date, in the case of ABR Advances, specifying (A) the aggregate principal amount to be borrowed under the Revolving Credit Commitments (stated in the applicable Alternate Currency in the case of an Alternate Currency Loan), (B) the requested Borrowing Date, (C) whether such borrowing is of a Dollar Revolving Credit Loan and, if so, whether such borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a combination thereof, (D) whether such borrowing is of an Alternate Currency Loan and, if so, the applicable Alternate Currency, and (E) if the borrowing is to consist of one or more Eurodollar Advances or Alternate Currency Euro Advances, the length of the Interest Period for each such Eurodollar Advance or Alternate Currency Euro Advance. Each (i) Eurodollar Advance to be made on a Borrowing Date, when aggregated with all amounts to be converted to a Eurodollar Advance on such date and having the same Interest Period as such first Eurodollar Advance, shall equal no less than $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof, (ii) Alternate Currency Euro Advance to be made on a Borrowing Date shall equal no less than an amount in the applicable Alternate Currency having a Dollar Equivalent of approximately $5,000,000 or such amount plus a whole multiple of approximately $1,000,000 in excess thereof, and (iii) ABR Advance made on each Borrowing Date shall equal no less than $1,000,000 or such amount plus a whole multiple of $500,000 in excess thereof or, if less, unused portion of the Aggregate Revolving Credit Commitment Amount. Upon receipt of each Borrowing Request requesting Revolving Credit Loans, the Administrative Agent shall promptly notify each Lender thereof. (b) Swing Line Loans. The Borrower may borrow under the Swing Line Commitment on any Business Day during the Swing Line Commitment Period, provided that the Borrower shall notify the Administrative Agent and the Swing Line Lender by the delivery of a Borrowing Request, which shall be sent by telecopy and shall, subject to the agreement of the 29 35 Borrower and the Swing Line Lender as to the Negotiated Rate to be applicable to a requested Swing Line Negotiated Rate Advance, be irrevocable (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Borrowing Request manually signed by the Borrower), no later than: 3:00 p.m. on the requested Borrowing Date, specifying (i) the aggregate principal amount to be borrowed under the Swing Line Commitment, (ii) the requested Borrowing Date, (iii) whether such borrowing is to consist of one or more Swing Line Negotiated Rate Advances, Swing Line ABR Advances, or a combination thereof and (iv) the length of the Interest Period for each Swing Line Loan, provided, however, that no Interest Period selected in respect of any Swing Line Loan shall end after the Swing Line Termination Date. Each borrowing of Swing Line Loans shall be in a principal amount not less than $1,000,000 or such amount plus a whole multiple of $250,000 in excess thereof, or, if less, the unused portion of the Swing Line Commitment Amount. 2.4. Disbursement of Funds (a) Revolving Credit Loans. No later than (i) 12:00 noon (local time in the city in which the proceeds of Alternate Currency Loans are to be made available in accordance with the terms hereof) on the date specified in each Borrowing Request for the borrowing of Alternate Currency Loans and (ii) 12:00 noon on the date specified in each Borrowing Request for the borrowing of Dollar Revolving Credit Loans, each Lender will make available its pro rata portion of the Loans requested to be made on such date in the Applicable Currency. All Revolving Credit Loans shall be made available in immediately available funds at the Applicable Payment Office of the Administrative Agent, and the Administrative Agent, will, subject to the satisfaction of the terms and conditions of this Agreement, as determined by the Administrative Agent, make available to the Borrower at such Applicable Payment Office, in the Applicable Currency, and in like funds as received, the aggregate of the amounts so made available by the Lenders. (b) Swing Line Loans. The Swing Line Lender will, subject to its determination that the terms and conditions of this Agreement have been satisfied and, in the case of a Swing Line Negotiated Rate Advance, subject to its agreement with the Borrower on the Negotiated Rate to be applicable thereto, make the requested amount available promptly on that same day to the Administrative Agent at its Applicable Payment Office who, thereupon, will promptly make available to the Borrower at such Applicable Payment Office, in like funds as received, the amount so made available by the Swing Line Lender, to the extent of funds actually received by the Administrative Agent. (c) Failure to Fund. Unless the Administrative Agent shall have received prior notice from a Lender (by telephone or otherwise, such notice to be promptly confirmed by telecopy or other writing) that such Lender will not make available to the Administrative Agent such Lender's Commitment Percentage of the Revolving Credit Loans requested by the Borrower, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the Borrowing Date in accordance with this Section, provided that such Lender received notice of the requested Revolving Credit Loans from the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If and to the extent such Lender shall not have so made its Commitment Percentage of such Revolving Credit Loans available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to 30 36 the Borrower to the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate for such Revolving Credit Loan as set forth in Section 3.1, and, in the case of such Lender, at a rate of interest per annum equal to the Federal Funds Rate (or, in the case of an Alternate Currency Loan, at a rate based upon the all-in cost of the funds for the Applicable Currency as determined by the Administrative Agent). Such payment by the Borrower, however, shall be without prejudice to its rights against such Lender. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Revolving Credit Loan as part of the Revolving Credit Loans for purposes of this Agreement, which Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Revolving Credit Loans. 2.5. Intentionally Omitted 2.6. Termination or Reduction of Revolving Credit Commitments and Swing Line Commitment (a) Voluntary Reductions. (i) The Borrower shall have the right, upon at least three Business Days' prior written notice to the Administrative Agent, to reduce permanently the Aggregate Revolving Credit Commitment Amount, in whole at any time, or in part from time to time, to an amount not less than the sum of (A) the aggregate principal balance (determined on the basis of the Dollar Equivalent for each Alternate Currency Loan) of the Revolving Credit Loans then outstanding (after giving effect to any contemporaneous prepayment thereof) and (B) the Swing Line Exposure, provided, however, that each partial reduction of the Aggregate Revolving Credit Commitment Amount shall be an amount equal to $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (ii) The Borrower shall have the right, upon at least one Business Day's prior written notice to the Administrative Agent and the Swing Line Lender to reduce permanently the Swing Line Commitment Amount in whole at any time, or in part from time to time, to an amount not less than the aggregate principal balance of the Swing Line Loans then outstanding (after giving effect to any contemporaneous prepayment thereof), provided, however, that each partial reduction of the Swing Line Commitment Amount shall be in an amount equal to of $1,000,000 or such amount plus a whole multiple of $250,000 in excess thereof. (b) Mandatory Reduction in Respect of an Equity Offering or Issuance of Refinancing Debt. The Aggregate Revolving Credit Commitment Amount shall be permanently reduced in the event of any Equity Offering or the issuance of any Refinancing Debt by an amount equal to (i) in the case of an Equity Offering consummated within one year after the consummation of the Medex Stock Purchase, 100% of the Net Issuance Proceeds thereof, (ii) in the case of any other Equity Offering, 50% of the Net Issuance Proceeds thereof and (iii) in the case of the issuance of any Refinancing Debt, 100% of the Net Issuance Proceeds thereof; provided, however, that the Aggregate Revolving Credit Commitment Amount shall not be reduced to less than $150,000,000 pursuant to this subsection. (c) Mandatory Termination on Change of Control. Upon the occurrence of a Change of Control, the Revolving Credit Commitments and the Swing Line Commitment shall terminate as of the effective date of such Change of Control unless the Borrower requests by written notice to the Administrative Agent that the Lenders unanimously approve a waiver of this Section 2.6(c) and agree that all or a portion of the Revolving Credit Commitments and the Swing Line 31 37 Commitment shall remain in effect. In the event that the Change of Control has not been approved by the board of directors of the Borrower, the Lenders' decision whether or not to grant a waiver under this Section 2.6(c) shall be in their absolute and sole discretion. In the event that the Change of Control has been approved by the board of directors of the Borrower, the Lenders' decision whether or not to grant a waiver under this Section 2.6(c) shall be in their reasonable judgment. Any waiver of this Section 2.6(c) shall not be effective unless approved by all the Lenders in writing. (d) Mandatory Reductions Relating to Dispositions. With respect to each Disposition described in Section 8.4(c), the Aggregate Revolving Credit Commitment Amount shall be permanently reduced on the applicable Disposition Reduction/Prepayment Date by an amount equal to the Disposition Reduction/Prepayment Amount in respect of such Disposition. (e) In General. Reductions of the Aggregate Revolving Credit Commitment Amount shall be applied pro rata according to the Revolving Credit Commitment Amount of each Lender, provided, however, that in the event that at any time during the Syndication Period, the Aggregate Revolving Credit Commitments are to be reduced pursuant to subsection (b) above and if at such time the Revolving Credit Commitment Amount of BNY exceeds the Revolving Credit Commitment Amount of any other Lender, the first $100,000,000 of such reduction (or such lesser amount as BNY shall direct) shall be applied first to reduce BNY's Revolving Credit Commitment Amount and the balance thereof shall be applied pro rata according to the Revolving Credit Commitment Amount of each Lender (including BNY). In the event that the Aggregate Revolving Credit Commitment Amount is reduced to any amount less than the Swing Line Commitment Amount, the Swing Line Commitment Amount shall be permanently reduced to an amount equal to such Aggregate Revolving Credit Commitment Amount as so reduced. Simultaneously with each reduction of the Aggregate Revolving Credit Commitment Amount under this Section, the Borrower shall pay the Commitment accrued on the amount by which the Aggregate Revolving Credit Commitment Amount has been reduced and prepay the Revolving Credit Loans and the Swing Line Loans as required by Section 2.7(b). 2.7. Prepayments (a) Voluntary Prepayments. The Borrower may, at its option, prepay the Revolving Credit Loans without premium or penalty (but subject to Section 3.5), in full at any time or in part from time to time by notifying the Administrative Agent in writing at least one Business Day prior to the proposed prepayment date, in the case of Revolving Credit Loans consisting of ABR Advances, and at least three Business Days prior to the proposed prepayment date, in the case of Revolving Credit Loans consisting of Eurodollar Advances or Alternate Currency Euro Advances, specifying whether the Revolving Credit Loans to be prepaid consist of ABR Advances, Eurodollar Advances, Alternate Currency Euro Advances or a combination thereof, the amount to be prepaid and the date of prepayment. Each such notice shall be irrevocable and the amount specified in each such notice shall be due and payable on the date specified, together with accrued interest to the date of such payment on the amount prepaid. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender thereof. Each partial prepayment of ABR Advances pursuant to this subsection shall be in an aggregate principal amount of $1,000,000 or such amount plus a whole multiple of $500,000 in excess thereof, or, if less, the outstanding principal balance of the ABR Advances. After giving effect to any partial prepayment with respect to Eurodollar Advances which were made (whether as the result of a borrowing or a conversion) on the same date and which had the same Interest Period, the outstanding principal 32 38 amount of such Eurodollar Advances shall equal (subject to Section 3.3) $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. After giving effect to any partial prepayment with respect to Alternate Currency Euro Advances which were made (whether as the result of a borrowing or a conversion) on the same date and which had the same Interest Period, the outstanding principal amount of such Alternate Currency Euro Advances shall equal the Alternate Currency Equivalent of approximately $5,000,000 or such amount plus a whole multiple of approximately $1,000,000 in excess thereof. (b) Mandatory Prepayments of Revolving Credit Loans and Swing Line Loans Relating to Reductions of the Aggregate Revolving Credit Commitment Amount and the Swing Line Commitment Amount. Simultaneously with each reduction of the Aggregate Revolving Credit Commitment Amount or the Swing Line Commitment Amount under Section 2.6, the Borrower shall prepay the Revolving Credit Loans or the Swing Line Loans, as the case may be, by the amount, if any, by which (i) in the case of a reduction of the Aggregate Revolving Credit Commitment Amount, the Aggregate Credit Exposure exceeds the Aggregate Revolving Credit Commitment Amount after giving effect to such reduction and (ii) in the case of a reduction of the Swing Line Commitment Amount, the outstanding principal balance of the Swing Line Loans exceeds the Swing Line Commitment Amount after giving effect to such reduction. (c) Mandatory Prepayments of Revolving Credit Loans and Swing Line Loans Relating to a Termination of the Revolving Credit Commitments and Swing Line Commitment. Upon the termination of the Revolving Credit Commitments and Swing Line Commitment pursuant to Sections 2.6(a) or (c), the Borrower shall (i) prepay in full the outstanding principal balance of the Revolving Credit Loans and the Swing Line Loans, together with accrued and unpaid interest thereon and (ii) pay in full all fees and other amounts payable under the Loan Documents. (d) Mandatory Prepayments in Respect of an Equity Offering or Issuance of Refinancing Debt. In the event of an Equity Offering or the issuance of Refinancing Debt, the Borrower shall prepay the Revolving Credit Loans by an amount equal to (i) in the case of an Equity Offering consummated within one year after the consummation of the Medex Stock Purchase, 100% of the Net Issuance Proceeds thereof, (ii) in the case of any other Equity Offering, 50% of the Net Issuance Proceeds thereof and (iii) in the case of the issuance of any Refinancing Debt, 100% of the Net Issuance Proceeds thereof. Each payment required to be made under this subsection shall be made on the date of the receipt of the relevant Net Issuance Proceeds. (e) Prepayments Relating to Dollar Equivalent Calculation. If on any date that the Dollar Equivalent is required to be calculated pursuant to Section 11.9 the Aggregate Credit Exposure shall exceed the Aggregate Revolving Credit Commitment Amount, the Borrower shall prepay the Loans in an aggregate principal amount such that immediately after giving effect thereto, the Aggregate Credit Exposure shall not exceed the Aggregate Revolving Credit Commitment Amount. In addition, if on any date that the Dollar Equivalent is required to be calculated pursuant to Section 11.9 the outstanding principal balance of Alternate Currency Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan) shall exceed $30,000,000, the Borrower shall prepay the Alternate Currency Loans in an aggregate principal amount such that immediately after giving effect thereto, the outstanding principal balance of the Alternate Currency Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan) shall not exceed $30,000,000. 33 39 (f) Mandatory Prepayments Relating to Dispositions. In respect of any Disposition described in Section 8.4(c), on the applicable Disposition Reduction/Prepayment Date, the Borrower shall prepay the Revolving Credit Loans by an amount equal to 100% of the Disposition Reduction/Prepayment Amount if any. (g) In General. Simultaneously with each prepayment of a Loan, the Borrower shall prepay all accrued interest on the amount prepaid through the date of prepayment. Unless otherwise specified by the Borrower, each prepayment of (i) Revolving Credit Loans shall first be applied to ABR Advances and (ii) Swing Line Loans shall first be applied to Swing Line ABR Advances. If any prepayment is made in respect of any Eurodollar Advance, Alternate Currency Euro Advance or any Swing Line Negotiated Rate Advance, in whole or in part, prior to the last day of the applicable Interest Period, the Borrower agrees to indemnify the Lenders in accordance with Section 3.5. 2.8. Use of Proceeds The Borrower agrees that the proceeds of the Loans made after the Restatement Effective Date shall be used solely, directly or indirectly, to (i) repay the Indebtedness of Medex under the Existing Medex Bond Documents and the Indebtedness of Medfusion, Inc. under the Existing Medfusion Bond Documents, (ii) make Restricted Payments permitted under Section 8.6(ii)(C), (iii) pay all of the Fees due hereunder, (iv) pay the reasonable out-of-pocket fees and expenses incurred by the Borrower in connection with the Transaction Documents and (v) for the Borrower's general corporate purposes not inconsistent with the provisions hereof. Notwithstanding anything to the contrary contained in any Loan Document, the Borrower agrees that no part of the proceeds of any Loan will be used, directly or indirectly, for a purpose which violates any law, including, without limitation, the provisions of Regulations G, U or X of the Board of Governors of the Federal Reserve System, as amended. 2.9. Payments (a) Each borrowing of Revolving Credit Loans by the Borrower from the Lenders, any conversion of Revolving Credit Loans from one Type to another and any reduction in the Revolving Credit Commitment Amount shall be made pro rata according to the Commitment Percentage of such Lender. Each payment, including each prepayment, of principal and interest on (i) the Revolving Credit Loans, of the Commitment Fee, and of all of the other fees to be paid to the Administrative Agent and the Lenders in connection with this Agreement (the Commitment Fee, together with all of such other fees, being sometimes hereinafter collectively referred to as the "Fees") shall be made by the Borrower prior to 4:00 p.m. on the date such payment is due to the Administrative Agent for the account of the Lenders at the Administrative Agent's Applicable Payment Office, in each case in the Applicable Currency, in immediately available funds and without set-off or counterclaim. As between the Borrower and the Lenders, any payment by the Borrower to the Administrative Agent for the account of the Lenders shall be deemed to be payment by the Borrower to the Lenders. The failure of the Borrower to make any such payment by such time shall not constitute a Default, provided that such payment is made on such due date, but any such payment made after 4:00 p.m. (local time in the city in which the Administrative Agent's Applicable Lending Office is located) on such due date shall be deemed to have been made on the next Business Day for the purpose of calculating interest on amounts outstanding on the Revolving Credit Loans. Promptly upon receipt thereof, the Administrative Agent shall remit, in like funds as received, (i) to the Lenders according to the Commitment Percentage of each 34 40 Lender, in the case of the Commitment Fee, (ii) to the Lenders pro rata according to the aggregate outstanding principal balance of the Revolving Credit Loans, in the case of principal and interest due on the Revolving Credit Loans and (iii) to the Swing Line Lender in the case of principal and interest due on the Swing Line Loan. (b) If any payment hereunder shall be due and payable on a day which is not a Business Day, the due date thereof (except as otherwise provided in the definition of Interest Period) shall be extended to the next Business Day and (except with respect to payments in respect of the Fees) interest shall be payable at the applicable rate specified herein during such extension, provided, however that if such next Business Day is after the Maturity Date, any such payment shall be due on the immediately preceding Business Day. (c) The principal of and interest on each Alternate Currency Loan shall be paid only in the Applicable Currency for such Alternate Currency Loan. 2.10. Records (a) Lender's Records. Each Lender will note on its internal records with respect to each Revolving Credit Loan made by it and the Swing Line Lender will note on its internal records with respect to each Swing Line Loan made by it: (i) the date and amount of such Revolving Credit Loan or Swing Line Loan, as the case may be, (ii) in the case of a Revolving Credit Loan, the character of such Revolving Credit Loan as an ABR Advance, a Eurodollar Advance or an Alternate Currency Euro Advance or a combination thereof, (iii) in the case of a Swing Line Loan, the character of such Swing Line Loan as a Swing Line ABR Advance or a Swing Line Negotiated Rate Advance, (iv) the Interest Period and the interest rate (without regard to the Applicable Margin) or the Negotiated Rate applicable to Eurodollar Advances, Alternate Currency Euro Advances or Negotiated Rate Advances, as the case may be, and (v) each payment and prepayment of the principal of each Revolving Credit Loan or Swing Line Loan, as the case may be. (b) Administrative Agent's Records. The Administrative Agent shall keep records regarding the Revolving Credit Loans, Swing Line Loans and the Loan Documents in accordance with its customary procedures for agented credits. (c) Prima Facie Evidence. The entries made in the records maintained pursuant to subsections (a) and (b) above shall, to the extent not prohibited by applicable law, be prima facie evidence of the existence and amount of the obligations of the Borrower recorded therein absent manifest error; provided that the failure of the Administrative Agent, any Lender or the Swing Line Lender, as the case may be, to make any notation on its records shall not affect the Borrower's or any other Credit Party's obligations in respect of the Revolving Credit Loans, Swing Line Loans or any other Loan Documents. In the event of any inconsistency between the Administrative Agent's records and the Lender's records, the Administrative Agent's records shall govern. (d) Notes. Upon the request of any Lender (in connection with a proposed assignment to a Federal Reserve Bank as contemplated by Section 11.7(f)) to the Administrative Agent and the Borrower, the Borrower agrees, at its expense, to execute and deliver to the Administrative Agent for the account of such Lender one or more promissory notes evidencing the Loan or Loans of such Lender to the Borrower, substantially in the form of Exhibit G. 35 41 3. INTEREST, FEES, YIELD PROTECTIONS, ETC. 3.1. Interest Rate and Payment Dates (a) Prior to Maturity. Except as otherwise provided in Section 3.1(b) and 3.1(c), prior to maturity, the Loans shall bear interest on the outstanding principal balance thereof at the applicable interest rate or rates per annum set forth below:
ADVANCES RATE -------- ---- Each ABR Advance Alternate Base Rate. Each Eurodollar Advance Eurodollar Rate for the applicable Interest Period plus the Applicable Margin. Each Alternate Currency Euro Advance Alternate Currency, Euro Rate for the applicable Interest Period plus the Applicable Margin. Each Swing Line ABR Advance Alternate Base Rate. Each Swing Line Negotiated Rate Advance Negotiated Rate applicable to such Swing Line Negotiated Rate Advance for the applicable Interest Period.
(b) Late Charges. If all or any portion of the principal balance of or interest payable on any of the Loans or any other amount payable under the Loan Documents shall not be paid when due (whether at the stated maturity thereof, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum (whether before or after the entry of a judgment thereon) equal to 2% plus the rate which would otherwise be applicable pursuant to Section 3.1(a), from the date such amount was due to, but not including, the date such amount is paid in full. For purposes of the preceding sentence, the rate applicable pursuant to Section 3.1(a) to any overdue, principal, interest or other amount payable under the Loan Documents shall be (i) in the case of an overdue principal balance of any Eurodollar Advance, the applicable Eurodollar Rate plus the Applicable Margin until the last day of the applicable Interest Period (or the earlier termination thereof pursuant to this Agreement) and thereafter at the Alternate Base Rate, (ii) in the case of an overdue principal balance of any Alternate Currency Euro Advance, the applicable Alternate Currency Euro Rate plus the Applicable Margin until the last day of the applicable Interest Period (or the earlier termination thereof pursuant to this Agreement) and thereafter at the Alternate Currency Euro Rate for additional Interest Periods of one month each (which the Borrower shall be deemed to have elected) plus the Applicable Margin, (iii) in the case of an overdue principal balance of any Swing Line Negotiated Rate Advance, the applicable Negotiated Rate until the last day of the applicable Interest Period (or the earlier termination thereof pursuant to this Agreement) and thereafter at the Alternate Base Rate and (iv) in all other cases, the Alternate Base Rate. All such interest shall be payable on demand. (c) Highest Lawful Rate. At no time shall the interest rate payable on the Loans of any Lender, together with the Fees and all other amounts payable under the Loan Documents to such Lender, to the extent the same are construed to constitute interest, exceed the Highest 36 42 Lawful Rate applicable to such Lender. If with respect to any Lender for any period during the term of this Agreement, any amount paid to such Lender under the Loan Documents, to the extent the same shall (but for the provisions of this Section) constitute or be deemed to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period (such amount being hereinafter referred to as an "Unqualified Amount"), then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a prepayment of the Revolving Credit Loans of such Lender, and (ii) if in any subsequent period during the term of this Agreement, all amounts payable under the Loan Documents to such Lender in respect of such period which constitute or shall be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, then the Borrower shall pay to such Lender in respect of such period an amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a sum which, when added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, and (y) an amount equal to the Unqualified Amount less all other Compensatory Interest Payments made in respect thereof. (d) In General. Interest on (i) ABR Advances and Swing Line ABR Advances to the extent based on the BNY Rate and on Alternate Currency Loans in Sterling Pounds shall be calculated on the basis of a 365 or 366-day year (as the case may be), and (ii) ABR Advances and Swing Line ABR Advances to the extent based on the Federal Funds Rate, on Eurodollar Advances, on Alternate Currency Loans (other than Alternate Currency Loans in Sterling Pounds) and on Swing Line Negotiated Rate Advances shall be calculated on the basis of a 360-day year, in each case, for the actual number of days elapsed. Except as otherwise provided in Section 3.1(b), interest shall be payable in arrears on each Interest Payment Date and upon each payment (including prepayment) of the Loans. Any change in the interest rate on the Loans resulting from a change in the Alternate Base Rate or reserve requirements shall become effective as of the opening of business on the day on which change shall become effective. The Administrative Agent shall, as soon as practicable, notify the Borrower and the Lenders of the effective date and the amount of each such change in the BNY Rate, but any failure to so notify shall not in any manner affect the obligation of the Borrower to pay interest on the Loans in the amounts and on the dates required. Each determination of the Alternate Base Rate, a Eurodollar Rate, or an Alternate Currency Euro Rate by the Administrative Agent pursuant to this Agreement shall be conclusive and binding on all parties hereto absent manifest error. The Borrower acknowledges that to the extent interest payable on ABR Advances or Swing Line ABR Advances is based on the BNY Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the BNY Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which the Lenders may now or in the future make loans to other borrowers. (e) If the Reference Lender shall for any reason no longer be a Lender, it shall thereupon cease to be the Reference Lender. The Administrative Agent and the Borrower shall, by notice to the Lenders, designate another Lender as the Reference Lender so that there shall at all times be at least one Reference Lender. The Reference Lender shall use its best efforts to furnish quotations of rates to the Administrative Agent on a timely basis as contemplated hereby. 37 43 3.2. Fees (a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, a fee (the "Commitment Fee"), during the Revolving Credit Commitment Period, at a rate per annum equal to the Applicable Fee Percentage on the average daily excess of the Aggregate Revolving Credit Commitment Amount over the sum of the aggregate outstanding principal balance of the Revolving Credit Loans (excluding the outstanding principal balance of the Swing Line Loans, if any). The Commitment Fee shall be payable quarterly in arrears on the last day of each calendar quarter commencing on the first such day following the Effective Date, and ending on the date that the Revolving Credit Commitments shall expire or otherwise terminate. The Commitment Fee shall be calculated on the basis of a 360 day year for the actual number of days elapsed. (b) Administrative Agent's Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent. 3.3. Conversions (a) The Borrower shall have the option to convert on any Business Day all or a portion of the outstanding principal amount of ABR Advances (other than ABR Advances constituting Swing Line Loans), Eurodollar Advances or Alternate Currency Euro Advances into (i) in the case of an ABR Advance, one or more Eurodollar Advances, (ii) in the case of a Eurodollar Advance, one or more ABR Advances or one or more new Eurodollar Advances and (iii) in the case of an Alternate Currency Euro Advance, one or more new Alternate Currency Euro Advances of the same Alternate Currency, provided that (A) except as otherwise provided in Section 3.6(b), Eurodollar Advances may be converted into ABR Advances or new Eurodollar Advances only on the last day of the Interest Period applicable to the Eurodollar Advances being converted, (B) except as otherwise provided in Section 3.6(b), Alternate Currency Euro Advances may be converted into new Alternate Currency Euro Advances only on the last day of the Interest Period applicable to the Alternate Currency Euro Advances being converted, (C) the outstanding principal amount of the new Eurodollar Advances having the same Interest Period shall be in an amount equal to $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof, (D) the outstanding principal amount of the new Alternate Currency Euro Advances having the same Interest Period shall be in an amount equal to $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof (or an amount in the applicable Alternate Currency having a Dollar Equivalent of approximately $5,000,000 or such amount plus a whole multiple of approximately $1,000,000 in excess thereof), (E) the outstanding principal amount of the new ABR Advances shall be in an amount equal to $1,000,000 or such amount plus a whole multiple of $500,000 in excess thereof, (F) ABR Advances or Eurodollar Advances may not be converted into Eurodollar Advances if any Default or Event of Default is in existence on the date of the conversion and the Administrative Agent or the Required Lenders have determined that such a conversion is not appropriate, and (G) no conversion pursuant to this Section shall result in a greater number of Eurodollar Advances or Alternate Currency Euro Advances than is permitted under Section 3.4(b). (b) Each such conversion shall be effected by the Borrower by giving the Administrative Agent written notice at its office set forth in Section 11.2, no later than (i) 2:00 p.m. four Business Days prior to the requested Conversion Date in the case of a conversion to 38 44 Alternate Currency Euro Advances, (ii) 2:00 p.m. three Business Days prior to the requested Conversion Date in the case of a conversion to Eurodollar Advances, specifying the ABR Advances, the Eurodollar Advances or the Alternate Currency Euro Advances to be so converted, the date of such conversion (which shall be a Business Day) and, if to be converted into Eurodollar Advances or Alternate Currency Euro Advances, the Interest Period to be applicable thereto. Each such notice shall be irrevocable and shall be given by the delivery by telecopy of a Notice of Conversion (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Notice of Conversion manually signed by the Borrower). The Administrative Agent shall give each Lender prompt notice of any such proposed conversion affecting any of its Loans. (c) If with respect to the expiration of an existing Interest Period for a Eurodollar Advance or an Alternate Currency Euro Advance the Borrower has failed to deliver a Notice of Conversion with respect thereto, the Borrower shall be deemed to have elected (i) if a Eurodollar Advance, to convert such Eurodollar Advance to an ABR Advance and (ii) if an Alternate Currency Euro Advance, to convert such Alternate Currency Euro Advance to a new Alternate Currency Euro Advance with a one month Interest Period, in either case effective as of the expiration date of such existing Interest Period. (d) Each conversion shall be effected by each Lender by applying the proceeds of its new ABR Advance Eurodollar Advance, or Alternate Currency Euro Advance, as the case may be, to its Advances (or portion thereof) being converted (it being understood that any such conversion shall not constitute a borrowing for purposes of Sections 4, 5 or 6). 3.4. Concerning Interest Periods Notwithstanding any other provision of any Loan Document: (a) No Interest Period selected in respect of the conversion of any Eurodollar Advance or any Swing Line Loan shall end after the Maturity Date. (b) The Borrower shall not be permitted to have more than an aggregate of ten Eurodollar Advances and Alternate Currency Euro Advances outstanding at any one time, it being agreed that each borrowing of a Eurodollar Advance or an Alternate Currency Euro Advance, as the case may be, pursuant to a single Borrowing Request shall constitute the making of one Eurodollar Advance for the purpose of calculating such limitation. (c) Notwithstanding anything herein to the contrary, during the Syndication Period, (i) the Borrower may only select Interest Periods of either seven days or one month and (ii) such Interest Periods shall end, if not sooner, on the last day of each calendar month and on the last day of the Syndication Period. 39 45 3.5. Indemnification for Loss Notwithstanding anything contained herein to the contrary, if the Borrower shall fail to borrow or convert on a Borrowing Date or Conversion Date after it shall have given notice to do so in which it shall have requested (or is deemed to have requested) a Eurodollar Advance or an Alternate Currency Euro Advance, or if the Borrower shall fail to borrow a Swing Line Negotiated Rate Advance after the Swing Line Lender shall have agreed to a Negotiated Rate with respect thereto in accordance with Section 2.2, or if a Eurodollar Advance, an Alternate Currency Euro Advance or a Swing Line Negotiated Rate Advance shall be terminated by the Borrower for any reason prior to the last day of the Interest Period applicable thereto, or if, while a Eurodollar Advance, an Alternate Currency Euro Advance or a Swing Line Negotiated Rate Advance is outstanding, any repayment or prepayment of such Eurodollar Advance, Alternate Currency Euro Advance or Swing Line Swing Line Negotiated Rate Advance is made for any reason (including, without limitation, as a result of acceleration or illegality) on a date which is prior to the last day of the Interest Period applicable thereto, the Borrower agrees to indemnify each Lender or the Swing Line Lender, as the case may be, against, and to pay on demand directly to such Lender or the Swing Line Lender, as the case may be, the amount (calculated by such Lender or the Swing Line Lender, as the case may be, using any reasonable method which is customarily used by such Lender or the Swing Line Lender for such purpose) equal to any loss or reasonable out-of-pocket expense suffered by such Lender or the Swing Line Lender as a result of such failure to borrow or convert (other than as a result of a default by such Lender), or such termination, repayment or prepayment, including any loss, cost or expense suffered by such Lender or the Swing Line Lender, as the case may be, in liquidating or employing deposits acquired to fund or maintain the funding of such Eurodollar Advance, Alternate Currency Euro Advance or Swing Line Negotiated Rate Advance, as the case may be, or redeploying funds prepaid or repaid, in amounts which correspond to such Eurodollar Advance, Alternate Currency Euro Advance or Swing Line Negotiated Rate Advance, and any internal processing charge customarily charged by such Lender or the Swing Line Lender, as the case may be, in connection therewith. 3.6. Increased Costs, Illegality, etc. (a) In the event that the Administrative Agent, with respect to clauses (i) and (iv) below or any Lender with respect to clauses (ii) and (iii) below or shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) that, by reason of circumstances affecting the applicable interbank market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of the Eurodollar Rate or the Alternate Currency Euro Rate, as the case may be, with respect to any portion of the Revolving Credit Loans that the Borrower has requested be made as Eurodollar Advances or Alternate Currency Euro Advances, or Eurodollar Advances or Alternate Currency Euro Advances that will result from the requested conversion of any portion of the Advances into or of Eurodollar Advances or Alternate Currency Euro Advances; or (ii) at any time that such Lender has incurred increased costs or reductions in the amounts received or receivable hereunder with respect to any Fixed Rate Advance, in each case by an amount such Lender deems to be material, because of any Regulatory Change such as, for example, but not limited to: (A) a change in the basis of taxation 40 46 of payment to any Lender of the principal of or interest on such Fixed Rate Advance or any other amounts payable hereunder (except for changes in the rate of tax on, or determined by reference to, the Tax on the Income of such Lender), or (B) a change in official reserve (including any marginal, emergency, supplemental, special or other reserve) or similar requirements (except to the extent included in the computation of the respective Eurodollar Rate, the Alternate Currency Euro Rate or Swing Line Negotiated Rate, as the case may be), or any special deposit, assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Applicable Lending Office); or (iii) at any time that the making or continuance of any Fixed Rate Advance has been made (A) unlawful by any law, rule, regulation or order or (B) impossible by compliance by any Lender in good faith with any governmental directive or request (whether or not having the force of law); or (iv) at any time that any Alternate Currency is not available in sufficient amounts, as determined in good faith by the Administrative Agent, to fund any borrowing of Alternate Currency Loans in such Alternate Currency; then, and in any such event, the Administrative Agent, in the case of clause (i) or (iv) above or such Lender, in the case of clause (ii) or (iii) above, shall promptly give notice (by telephone confirmed in writing) to the Borrower, and, except for the Administrative Agent, to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (w) in the case of clause (i) above, (A) in the event that Eurodollar Advances or Alternate Currency Euro Advances are so affected, Eurodollar Advances or Alternate Currency Euro Advances from such applicable Lender or all of the Lenders, as the case may be, shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist, and any Borrowing Request or Notice of Conversion given by the Borrower with respect to Eurodollar Advances or Alternate Currency Euro Advances to be made which have not yet been incurred (including by way of conversion) shall be deemed rescinded by the Borrower and (B) in the event that any Alternate Currency Euro Advance is so affected, the interest rate for such Alternate Currency Euro Advance shall be determined on the basis provided in the proviso to the definition of Alternate Currency Euro Rate, (x) in the case of clause (ii) above, the Borrower shall pay to such Lender, within five Business Days of written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its reasonable discretion shall determine) as shall be required to compensate such Lender for such increased costs or reductions in amounts received or receivable hereunder (a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender in good faith shall, absent manifest error, be final and conclusive and binding on all the parties hereto), (y) in the case of clause (iii) above, the Borrower shall take one of the actions specified in Section 3.6(b) and (z) in the case of clause (iv) above, Alternate Currency Euro Advances in the affected Alternate Currency shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to the notice referred to above by the Administrative Agent no longer exists, and any Borrowing Request given by the Borrower with respect to such Alternate Currency Euro Advances which have not yet been incurred shall be deemed rescinded by the Borrower. Each of the Administrative Agent and the Lenders agree that if it gives notice to the Borrower of any of the events described in clause (ii) and (iii) above, it shall promptly notify the Borrower and the Administrative Agent, if such event ceases to exist. If any such event described in clause (iii) above with respect to Eurodollar Advances or Alternate 41 47 Currency Euro Advances ceases to exist as to a Lender, the obligations of such Lender, as the case may be, to make Eurodollar Advances or Alternate Currency Euro Advances and to convert Eurodollar Advances to new Eurodollar Advances or convert Alternate Currency Euro Advances to new Alternate Currency Euro Advances on the terms and conditions contained herein shall be reinstated. (b) At any time that any Fixed Rate Advance is affected by the circumstances described in Section 3.6(a)(ii) or (iii), the Borrower may (and in the case of an affected Fixed Rate Advance by the circumstances described in Section 3.6(a)(iii) shall) either (x) if the affected Fixed Rate Advance is then being made initially or pursuant to a conversion, cancel the respective borrowing or conversion by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date that the Borrower was notified by the affected Lender or the Administrative Agent pursuant to Section 3.6(a)(ii) or (iii) or (y) if the affected Fixed Rate Advance is then outstanding, upon at least three Business Days' written notice to the Administrative Agent and the affected Lender, (A) in the case of a Eurodollar Advance, require the affected Lender to convert such Eurodollar Advance into an ABR Advance as of the end of the Interest Period then applicable to such Eurodollar Advance or, if earlier, as soon as practicable within the time required by law and (B) in the case of an Alternate Currency Euro Advance or Swing Line Negotiated Rate Advance, take such action as the affected Lender may reasonably request with a view to minimizing the obligations of the Borrower under Section 3.5. (c) If any Lender determines that a Regulatory Change will have the effect of reducing the rate of return on the capital required to be maintained by such Lender or any corporation controlling such Lender based on the existence of such Lender's Revolving Credit Commitment hereunder or its obligations under the Loan Documents to a level below that which such Lender or such corporation could have achieved but for such application or compliance (taking into account such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then the Borrower agrees to pay such to such Lender, within five Business Days of its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased cost to such Lender or such other corporation or the reduction in the rate of return to such Lender or such other corporation as a result of such reduction. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender's reasonable good faith determination of compensation owing under this Section 3.6(c) shall, absent manifest error, be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 3.6(c), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for calculation of such additional amounts. 3.7. Taxes (a) Payments to Be Free and Clear. Subject to subsections (d) and (e) below, all payments by the Borrower under the Loan Documents shall be made free and clear of, and without any deduction or withholding for, any Indemnified Tax. If the Borrower or any other Person is required by any law, rule, regulation, order, directive, treaty or guideline to make any deduction or withholding (which deduction or withholding would constitute an Indemnified Tax) from any amount required to be paid by the Borrower to or on behalf of any Indemnified Tax Person under any Loan Document (each a "Required Payment"): 42 48 (i) the Borrower shall notify the Administrative Agent and such Indemnified Tax Person of any such requirement or any change in any such requirement as soon as the Borrower becomes aware of it; (ii) the Borrower shall pay such Indemnified Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on the Borrower) for its own account or (if the liability is imposed on such Indemnified Tax Person) on behalf of and in the name of such Indemnified Tax Person; (iii) the Borrower shall pay to such Indemnified Tax Person an additional amount such that such Indemnified Tax Person shall receive on the due date therefor an amount equal to the Required Payment had no such deduction or withholding been required; and (iv) the Borrower shall, within 30 days after paying such Indemnified Tax, deliver to the Administrative Agent and the applicable Indemnified Tax Person satisfactory evidence of such payment to the relevant Governmental Authority. (b) Other Indemnified Taxes. If an Indemnified Tax Person or any affiliate thereof is required by any law, rule, regulation, order, directive, treaty or guideline to pay any Indemnified Tax (excluding an Indemnified Tax which is subject to Section 3.7(a) or an Other Tax described in subsection (f) below) with respect to any sum paid or payable by the Borrower to such Indemnified Tax Person under the Loan Documents: (i) such Indemnified Tax Person shall notify the Borrower of any such payment of Indemnified Tax; and (ii) the Borrower shall pay to such Indemnified Tax Person the amount of such Indemnified Tax within five Business Days of such notice. (c) Exception for Existing Taxes. No amount shall be required to be paid to any Indemnified Tax Person under Section 3.7(a)(iii) or (b) with respect to an Indemnified Tax to the extent that such Indemnified Tax would have been required to have been paid under any law, rule, regulation, order, directive, treaty or guideline in effect on the Effective Date. (d) U.S. Tax Certificates. Each Lender that is organized under the laws of any jurisdiction other than the United States or any political subdivision thereof shall deliver to the Administrative Agent for transmission to the Borrower, on or prior to the first Borrowing Date (in the case of each Lender listed on the signature pages hereof) or on the effective date of the Assignment and Acceptance Agreement or master assignment and acceptance agreement pursuant to which it becomes a Lender in accordance with Section 11.7 (in the case of each other Lender), and at such other times as may be necessary in the determination of the Borrower, the Borrower or the Administrative Agent (each in the reasonable exercise of its discretion), such certificates, documents or other evidence, properly completed and duly executed by such Lender (including, without limitation, Internal Revenue Service Form 1001 or Form 4224) to establish that such Lender is not subject to deduction or withholding of United States federal income tax under Section 1441 or 1442 of the Code or otherwise (or under any comparable provisions of any successor statute) with respect to any payments to such Lender of principal, interest, fees or other amounts payable under the Loan Documents. The Borrower shall not be required to pay any additional amount to any such Lender under Section 3.7(a)(iii) if such Lender shall have failed to 43 49 satisfy the requirements of the immediately preceding sentence; provided that if such Lender shall have satisfied such requirements on the first Borrowing Date (in the case of each Lender listed on the signature pages hereof) or on the effective date of the Assignment and Acceptance Agreement or master assignment and acceptance agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection shall relieve the Borrower of its obligation to pay any additional amounts pursuant to Section 3.7(a)(iii) in the event that, as a result of any change in applicable law (including, without limitation, any change in the interpretation thereof), such Lender is no longer properly entitled to deliver certificates, documents or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in the immediately preceding sentence. (e) Other Tax Certificates. Each Indemnified Tax Person agrees to use reasonable efforts to deliver to the Borrower, the Borrower, promptly upon any request therefor from time to time by the Borrower, such forms, documents and information as may be required by applicable law, regulation or treaty from time to time and to file all appropriate forms to obtain a certificate or other appropriate documents from the appropriate Governmental Authorities to establish that payments made in respect of any Revolving Credit Loan can be made without (or at a reduced rate of) withholding of Taxes, provided, however, that if such Indemnified Tax Person is or becomes unable by virtue of any applicable law, regulation or treaty, to establish such exemption or reduction, the Borrower shall nonetheless remain obligated under Subsection 3.7(a) to pay the amounts described therein, and provided further, that no Indemnified Tax Person shall be required to take any action hereunder which, in the sole discretion of such Indemnified Tax Person, would cause such Indemnified Tax Person or any affiliate thereof to suffer a material economic, legal or regulatory disadvantage. (f) Other Taxes. The Borrower agrees to pay any current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, the Loan Documents or otherwise with respect to, the Loan Documents (collectively, the "Other Taxes"). 3.8. Option to Fund Each Lender (including the Swing Line Lender) has indicated that, if the Borrower requests a Eurodollar Advance, Alternate Currency Euro Advance or a Swing Line Negotiated Rate Advance, as the case may be, such Lender may wish to purchase one or more deposits in order to fund or maintain its funding of its Commitment Percentage of such Eurodollar Advance, Alternate Currency Euro Advance or such Swing Line Negotiated Rate Advance, as the case may be, during the Interest Period with respect thereto; it being understood that the provisions of this Agreement relating to such funding are included only for the purpose of determining the rate of interest to be paid in respect of such Eurodollar Advance, Alternate Currency Euro Advance or Swing Line Negotiated Rate Advance, as the case may be, and any amounts owing under Sections 3.5 and 3.7. Each Lender (including the Swing Line Lender) shall be entitled to fund and maintain its funding of all or any part of each Eurodollar Advance, Alternate Currency Euro Advance or Swing Line Negotiated Rate Advance, as the case may be, in any manner it sees fit, but all such determinations hereunder shall be made as if each Lender had actually funded and maintained its Commitment Percentage of each Eurodollar Advance, Alternate Currency Euro Advance and the Swing Line Lender had actually funded and maintained each Swing Line 44 50 Negotiated Rate Advance, as the case may be, during the applicable Interest Period through the purchase of deposits in an amount equal to its Commitment Percentage of such Eurodollar Advance, or Alternate Currency Euro Advance or its Swing Line Negotiated Rate Advance, as the case may be, having a maturity corresponding to such Interest Period. Any Lender may fund its Commitment Percentage of each Eurodollar Advance or Alternate Currency Euro Advance and the Swing Line Lender may fund a Swing Line Loan, from or for the account of any branch or office of such Lender or the Swing Line Lender, as the case may be, as such Lender or the Swing Line Lender, as the case may be, may choose from time to time. 3.9. Substitution of a Lender Notwithstanding anything to the contrary contained herein, if any Lender shall request compensation pursuant to Sections 3.6 or 3.7 in an aggregate amount in excess of $25,000, then, in each such case, the Borrower may require that such Lender transfer all of its right, title and interest under the Loan Documents to one or more of the other Lenders or any other lender identified by the Borrower and acceptable to the Administrative Agent and the Swing Line Lender (a "Proposed Lender"), if such Proposed Lender agrees to assume all of the obligations of such Lender for consideration equal to the outstanding principal amount of such Lender's Revolving Credit Loans, together with interest thereon to the date of such transfer and all other amounts payable under the Loan Documents to such Lender on or prior to the date of such transfer (including, without limitation, any fees accrued hereunder and any amounts which would be payable under Section 3.5 as if all of such Lender's Loans were being prepaid in full on such date). Subject to the execution and delivery of an instrument of assignment and assumption, and such other documents as such Lender may reasonably require, such Proposed Lender shall be a "Lender" for all purposes hereunder. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements of the Borrower contained in Sections 3.5, 3.6, 11.5 and 11.8 (without duplication of any payments made to such Lender by the Borrower or the Proposed Lender) shall survive for the benefit of any Lender replaced under this Section with respect to the time prior to such replacement. The Borrower shall not have the right to so replace a Lender unless it gives notice of its intention to do so within 90 days after its right to replace such Lender arises under this Section. 4. REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Revolving Credit Loans and the Swing Line Lender to make the Swing Line Loans and the Lenders to participate therein, the Borrower makes the following representations and warranties to the Administrative Agent, each Lender and the Swing Line Lender: 45 51 4.1. Subsidiaries; Capitalization As of the Original Effective Date, the Borrower has only the Subsidiaries set forth on Schedule 4.1. Each of the Subsidiaries set forth on Schedule 4.1 is a direct or indirect wholly-owned Subsidiary of the Borrower. As of the Original Effective Date, except as set forth on Schedule 4.1, the shares of, or partnership or other interests in, each Subsidiary of the Borrower are owned beneficially and of record by the Borrower or another Subsidiary of the Borrower, are free and clear of all Liens (other than Permitted Liens) and are duly authorized, validly issued, fully paid and nonassessable. 4.2. Existence and Power The Borrower is duly organized and validly existing in good standing under the laws of the State of California. Each of the Borrower's Subsidiaries is duly organized or formed and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation, except to the extent that the failure to be duly organized or formed and validly existing in good standing would not reasonably be expected to have a Material Adverse Effect. Each of the Borrower and each of its Subsidiaries has all requisite power and authority to own its Property and to carry on its business as now conducted, and is in good standing and authorized to do business in each other jurisdiction in which the nature of the business conducted therein or the Property owned by it therein makes such qualification necessary, except where such failure to qualify or be in good standing would not reasonably be expected to have Material Adverse Effect. 4.3. Authority and Execution Each of the Borrower and Acquisition Corp. have all requisite corporate power and authority to enter into, execute, deliver and perform the terms of the Transaction Documents to which it is a party and, in the case of Acquisition Corp., to consummate the Medex Stock Purchase, all of which have been duly authorized by all proper and necessary corporate action and do not conflict with any provision of its Organizational Documents. Each of the Borrower and Acquisition Corp. has duly executed and delivered the Transaction Documents to which it is a party. 4.4. Binding Agreement The Merger Documents constitute the valid and legally binding obligations of the Borrower and Acquisition Corp., and the Loan Documents constitute the valid and legally binding obligations of the Borrower and Medex, in each case to the extent it is a party thereto, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally. 4.5. Litigation Except as set forth on Schedule 4.5, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority (whether purportedly on behalf of the Borrower or any of its Subsidiaries) pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries or maintained by the Borrower or any of its Subsidiaries or which may affect any of their respective Properties or rights, which (i) would rea- 46 52 sonably be expected to have a Material Adverse Effect or (ii) call into question the validity or enforceability of, or otherwise seek to invalidate, any Loan Document. 4.6. Required Consents (a) No consent, authorization or approval of, filing with, notice to, or exemption by, stockholders or holders of any other equity interest or any Governmental Authority is required to authorize, or is required in connection with the execution and delivery by the Borrower of the Loan Documents and the payment by the Borrower of all amounts due thereunder. (b) Except for consents, authorizations, approvals, filings, notices or exemptions, the failure to obtain or make would not reasonably be expected to have a Material Adverse Effect and except as set forth on Schedule 4.7, no consent, authorization or approval of, filing with, notice to, or exemption by, any Person (other than stockholders or holders of any other equity interest or any Governmental Authority) is required to authorize, or is required in connection with the execution, delivery and performance by the Borrower of the Loan Documents. (c) Except for consents, authorizations, approvals, filings, notices or exemptions which are not required by the Offer Documents or the Merger Documents to be obtained or made as a condition to the consummation of the Medex Stock Purchase and the Merger, respectively, or which are set forth in the Merger Documents as being so required, no consent, authorization or approval of, filing with, notice to, or exemption by, stockholders or holders of any other equity interest or any Governmental Authority is required (i) to authorize, or is required in connection with the execution, delivery and performance of the Merger Documents by the Borrower or Acquisition Corp. or (ii) as a condition to the consummation of the Medex Stock Purchase by the Borrower and Acquisition Corp. (d) Except for consents, authorizations, approvals, filings, notices or exemptions which are not required by the Offer Documents or the Merger Documents to be obtained or made as a condition to the consummation of the Medex Stock Purchase and the Merger, respectively, as set forth on Schedule 4.7 and except for consents, authorizations, approvals, filings, notices or exemptions, the failure to obtain or make would not reasonably be expected to have a Material Adverse Effect, no consent, authorization or approval of, filing with, notice to, or exemption by, any Person (other than stockholders or holders of any other equity interest, the boards of directors of the Borrower and Acquisition Corp. or any Governmental Authority) is required (i) to authorize, or is required in connection with the execution, delivery and performance of the Merger Documents by the Borrower or Acquisition Corp. or (ii) as a condition to the consummation of the Medex Stock Purchase by the Borrower and Acquisition Corp. 4.7. Absence of Defaults; No Conflicting Agreements (a) Neither the Borrower nor any of its Subsidiaries is in default under any mortgage, indenture, contract or agreement to which it is a party or by which it or any of its Property is bound, the effect of which default would reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 4.7, the execution, delivery or performance of the terms of the Transaction Documents and the consummation of Medex Stock Purchase will not constitute a default under, or result in the creation or imposition of, or obligation to create, any Lien upon any Property of the Borrower or any of its Subsidiaries or result in a breach of or require the mandatory repayment of or other acceleration of payment under or pursuant to the 47 53 terms of any such mortgage, indenture, contract or agreement, except to the extent such default, creation, imposition, breach or acceleration would not reasonably be expected to have a Material Adverse Effect. (b) Neither of the Borrower nor any of its Subsidiaries is in default with respect to any judgment, order, writ, injunction, decree or decision of any Governmental Authority which default would reasonably be expected to have a Material Adverse Effect. 4.8. Compliance with Applicable Laws The Borrower and each of its Subsidiaries is complying in all material respects with all statutes, regulations, rules and orders of all Governmental Authorities which are applicable to the Borrower or such Subsidiary, a violation of which would reasonably be expected to have a Material Adverse Effect. 4.9. Taxes The Borrower and each of its Subsidiaries has filed or caused to be filed all tax returns required to be filed and has paid, or has made adequate provision for the payment of, all taxes shown to be due and payable on said returns or in any assessments made against it (other than those being contested as provided under Section 7.4), the failure of which to file or pay would reasonably be expected to have a Material Adverse Effect, and no tax Liens (other than Permitted Liens) have been filed with respect thereto. The charges, accruals and reserves on the books of the Borrower and each of its Subsidiaries with respect to all taxes are, to the best knowledge of the Borrower, adequate for the payment of such taxes, and the Borrower knows of no unpaid assessment which is due and payable against the Borrower or any of its Subsidiaries or any claims being asserted which would reasonably be expected to have a Material Adverse Effect, except such thereof as are being contested as provided under Section 7.4, and for which adequate reserves have been set aside in accordance with GAAP. 4.10. Governmental Regulations Neither the Borrower, any of its Subsidiaries nor any Person controlled by, controlling, or under common control with, the Borrower or any of its Subsidiaries, is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, as amended, or the Investment Company Act of 1940, as amended, or is subject to any statute or regulation which prohibits or restricts the incurrence of Indebtedness, including, without limitation, statutes or regulations relative to common or contract carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services. 4.11. Federal Reserve Regulations; Use of Loan Proceeds (a) Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. (b) Margin Stock will constitute less than 25% of the assets (as determined by any reasonable method) of the Borrower and its Subsidiaries after giving effect to the making of each Loan (i) prior to the consummation of purchase of Medex Stock contemplated by the Tender 48 54 Offer and (ii) after the consummation of the Merger. 4.12. Plans The only Pension Plans in effect as of the Original Effective Date (the "Existing Pension Plans") are listed on Schedule 4.12. Each Employee Benefit Plan of the Borrower, its Subsidiaries and the ERISA Affiliates is in compliance with ERISA and the Code, where applicable, in all material respects. As of the Original Effective Date, (i) the amount of all Unfunded Pension Liabilities under the Pension Plans, excluding any plan which is a Multiemployer Plan, does not exceed an amount which would reasonably be expected to have a Material Adverse Effect, and (ii) the amount of the aggregate Unrecognized Retiree Welfare Liability under all applicable Employee Benefit Plans does not exceed an amount which would reasonably be expected to have a Material Adverse Effect. The Borrower and each of its Subsidiaries and ERISA Affiliates has complied in all material respects with the requirements of Section 515 of ERISA with respect to each Pension Plan which is a Multiemployer Plan. As of the Original Effective Date, the aggregate potential annual withdrawal liability payments, as determined in accordance with Title IV of ERISA, of the Borrower and its Subsidiaries and ERISA Affiliates with respect to all Pension Plans which are Multiemployer Plans does not exceed an amount which would reasonably be expected to have a Material Adverse Effect. The Borrower and its Subsidiaries and ERISA Affiliates have, as of the Original Effective Date, made all contributions or payments to or under each such Pension Plan required by law or the terms of such Pension Plan or any contract or agreement with respect thereto. No material liability to the PBGC has been, or is expected by the Borrower, any of its Subsidiaries or any ERISA Affiliate to be, incurred by the Borrower, any such Subsidiary or any ERISA Affiliate. Liability, as referred to in this Section includes any joint and several liability. Each Employee Benefit Plan which is a group health plan within the meaning of Section 5000(b)(1) of the Code is in material compliance with the continuation of health care coverage requirements of Section 4980B of the Code. 4.13. Financial Statements The Borrower has heretofore delivered to the Administrative Agent and the Lenders copies of its Form 10-K for the fiscal year ending February 3, 1996, containing the audited Consolidated Balance Sheets of the Borrower and its Subsidiaries as of February 3, 1996 and January 28, 1995, and the related Consolidated Statements of Income, Stockholders' Equity and Cash Flows for the periods then ended, and its Form 10-Q for the fiscal quarter ended August 3, 1996, containing the unaudited Consolidated Balance Sheet of the Borrower and its Subsidiaries for such fiscal quarter, together with the related Consolidated Statements of Income and Cash Flows for the fiscal quarter then ended (with the applicable related notes and schedules, the "Financial Statements"). The Financial Statements fairly present the Consolidated financial condition and results of operations of the Borrower and its Subsidiaries as of the dates and for the periods indicated therein and have been prepared in conformity with GAAP. Except as reflected in the Financial Statements or in the footnotes thereto, neither the Borrower nor any of its Subsidiaries has any obligation or liability of any kind (whether fixed, accrued, contingent, unmatured or otherwise) which, in accordance with GAAP, should have been shown in the Financial Statements and was not. Since February 3, 1996, there has been no Material Adverse Change. 49 55 4.14. Property The Borrower and each of its Subsidiaries has (i) good and marketable title to all of its owned Property, title to which is material to the Borrower or such Subsidiary and (ii) a valid leasehold interest in all leased Property, a leasehold interest in which is material to the Borrower or such Subsidiary, in each case subject to no Liens, except Permitted Liens. 4.15. Authorizations The Borrower and each of its Subsidiaries possesses or has the right to use all franchises, licenses and other rights as are material and necessary for the conduct of its business, and with respect to which it is in material compliance, with no known conflict with the valid rights of others which would reasonably be expected to have a Material Adverse Effect. No event has occurred which permits or, to the best knowledge of the Borrower, after notice or the lapse of time or both, or any other condition, would reasonably be expected to permit, the revocation or termination of any such franchise, license or other right which revocation or termination would reasonably be expected to have a Material Adverse Effect. 4.16. Environmental Matters (a) No Hazardous Substances have been generated or manufactured on, transported to or from, treated at, stored at or discharged from any Real Property in violation of any Environmental Laws; no Hazardous Substances have been discharged into subsurface waters under any Real Property in violation of any Environmental Laws; no Hazardous Substances have been discharged from any Real Property on or into Property or waters (including subsurface waters) adjacent to any Real Property in violation of any Environmental Laws, except in each case to the extent it would not reasonably be expected to have a Material Adverse Effect. (b) Neither the Borrower nor any of its Subsidiaries (i) has received notice (written or oral) of any claim, demand, suit, action, proceeding, event, condition, report, directive, Lien, violation, non-compliance or investigation indicating or concerning any potential or actual liability (including, without limitation, potential liability for enforcement, investigatory costs, cleanup costs, government response costs, removal costs, remedial costs, natural resources damages, Property damages, personal injuries or penalties) arising in connection with: (x) any non-compliance with or violation of the requirements of any applicable Environmental Laws, or (y) the presence of any Hazardous Substance on any Real Property (or any Real Property previously owned by the Borrower or any of its Subsidiaries) or the release or threatened release of any Hazardous Substance into the environment which in each case or cumulatively would reasonably be expected to have a Material Adverse Effect, (ii) has any threatened or actual liability in connection with the presence of any Hazardous Substance on any Real Property (or any Real Property previously owned by the Borrower or any of its Subsidiaries) or the release or threatened release of any Hazardous Substance into the environment which would reasonably be expected to have a Material Adverse Effect, (iii) has received notice of any federal or state investigation evaluating whether any remedial action is needed to respond to the presence of any Hazardous Substance on any Real Property (or any Real Property previously owned by the Borrower or any of its Subsidiaries) or a release or threatened release of any Hazardous Substance into the environment for which the Borrower or any of its Subsidiaries is or may be liable which would reasonably be expected to have a Material Adverse Effect, or (iv) has received notice that the Borrower or any of its Subsidiaries is or may be liable to any Person under any Environmental 50 56 Law which liability would reasonably be expected to have a Material Adverse Effect. 4.17. Solvency Immediately after giving effect to the transactions contemplated by the Transaction Documents, the Borrower and its Subsidiaries on a Consolidated basis are and will be Solvent. 4.18. Medex Acquisition Documents The Borrower has delivered to the Administrative Agent a complete and correct copy of the Merger Documents and the Offer Documents. The Merger Agreement has been duly executed and delivered by the parties thereto and is in full force and effect. The representations and warranties of the Borrower and Acquisition Corp. and, to the best of the Borrower's knowledge, Medex, contained in the Merger Agreement (including all exhibits, schedules, and disclosure letters referred to therein or delivered pursuant thereto) will be true and correct in all material respects on the first Borrowing Date as if made on and as of such Borrowing Date, except that any such representation or warranty stated to relate to a specific earlier date will be true and correct in all material respects as of such earlier date. 4.19. No Misrepresentation No representation or warranty contained in any Loan Document and no certificate or report from time to time furnished by the Borrower or any of its Subsidiaries in connection with the Loan Documents, contains or will contain a misstatement of material fact, or, to the best knowledge of the Borrower, omits or will omit to state a material fact required to be stated in order to make the statements therein contained not misleading in the light of the circumstances under which made, provided that any projections or proforma financial information contained therein are based upon good faith estimates and assumptions believed by the Borrower to be reasonable at the time made, it being recognized by the Administrative Agent and the Lenders that such projections as to future events are not to be viewed as facts, and that actual results during the period or periods covered thereby may differ from the projected results. 4.20. Outstanding Options On the Merger Effective Date, the Outstanding Options entitled the holders thereof to acquire not more than 3,000 shares of Medex Stock. 5. CONDITIONS TO EFFECTIVENESS The effectiveness of this Agreement is subject to the prior or simultaneous fulfillment of the following conditions precedent, it being understood that as a condition to the making of any Loan, the conditions in Section 6 shall be satisfied: 51 57 5.1. Evidence of Action (a) The Borrower. The Administrative Agent shall have received a certificate, dated the Restatement Effective Date, of the Secretary or Assistant Secretary of the Borrower (i) certifying that the resolutions of its Managing Person delivered to the Administrative Agent on the Original Effective Date and its Organizational Documents have not been amended since the Original Effective Date or, if so, setting forth the same, and (ii) setting forth the incumbency of its officer or officers who may sign this Agreement, including therein a signature specimen of such officer or officers. (b) Medex. The Administrative Agent shall have received a certificate, dated the Restatement Effective Date, of the Secretary or Assistant Secretary of Medex (i) attaching a true and complete copy of the resolutions of its Managing Person (in form and substance satisfactory to the Administrative Agent) authorizing the Medex Guaranty and the transactions contemplated thereby, (ii) attaching a true and complete copy of its Organizational Documents, (iii) setting forth the incumbency of its officer or officers who may sign the Medex Guaranty, including therein a signature specimen of such officer or officers and (iv) attaching a certificate of good standing of the Secretary of State of the jurisdiction of its incorporation and of each other jurisdiction in which it is qualified to do business, except, in the case of such other jurisdiction, when the failure to be in good standing in such jurisdiction would not have a Material Adverse Effect. 5.2. This Agreement The Administrative Agent shall have received counterparts of this Agreement signed by each of the parties hereto (or receipt by the Administrative Agent from a party hereto of a telecopy signature page signed by such party which shall have agreed to promptly provide the Administrative Agent with originally executed counterparts hereof). 5.3. Medex Guaranty The Administrative Agent shall have received the Medex Guaranty, duly executed by an Authorized Signatory of Medex. 5.4. Required Consents The Administrative Agent shall have received executed copies of the consents of Bank One, Columbus, NA and Wachovia Bank of Georgia, National Association to the execution and delivery by Medex of the Medex Guaranty. 5.5. Opinions of Counsel The Administrative Agent shall have received (i) an opinion of O'Melveny & Myers, LLP, counsel to the Borrower, (ii) an opinion of Donald D. Bradley, Esq., General Counsel of the Borrower, and (iii) an opinion of Vorys, Sater, Seymour and Pease, special Ohio counsel to Medex, each addressed to the Administrative Agent, the Swing Line Lender and the Lenders, and dated the Restatement Effective Date, substantially in the forms of Exhibit E, E-1 and E-2, respectively. It is understood that such opinion is being delivered to the Administrative Agent and the Lenders upon the direction of the Borrower and that the Administrative Agent and the Lenders may and will rely on such opinion. 52 58 5.6. Fees and Expenses of Special Counsel The fees and expenses of Special Counsel in connection with the Transactions to the extent not theretofore paid shall have been paid. 6. CONDITIONS TO ALL LOANS The obligation of each Lender to make any Loan on any Borrowing Date is subject to the satisfaction of the following conditions precedent as of the date of such Loan: 6.1. Compliance On each Borrowing Date and after giving effect to the Loans to be made thereon (i) there shall exist no Default or Event of Default and (ii) the representations and warranties contained in the Loan Documents shall be true and correct with the same effect as though such representations and warranties had been made on such Borrowing Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date. Each borrowing by the Borrower shall constitute a certification by the Borrower as of such Borrowing Date that each of the foregoing matters is true and correct in all respects. 6.2. Borrowing Request The Administrative Agent shall have received, a Borrowing Request, duly executed by the Borrower. 7. AFFIRMATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender or the Administrative Agent, the Borrower shall: 7.1. Financial Statements and Information Maintain, and cause each of its Subsidiaries to maintain, a standard system of accounting in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent and each Lender: (a) As soon as available, but in any event within 90 days after the end of each fiscal year, a copy of its Consolidated Balance Sheet as at the end of such fiscal year, together with the related Consolidated Statements of Income, Stockholders' Equity and Cash Flows as of and through the end of such fiscal year, setting forth in each case in comparative form the figures for the preceding fiscal year. The Consolidated Balance Sheets and Consolidated Statements of Income, Stockholders' Equity and Cash Flows shall be audited and certified without qualification by the Accountants, which certification shall (i) state that the examination by such Accountants in connection with such Consolidated financial statements has been made in accordance with generally accepted auditing standards and, accordingly, included such tests of 53 59 the accounting records and such other auditing procedures as were considered necessary in the circumstances, and (ii) include the opinion of such Accountants that such Consolidated financial statements have been prepared in accordance with GAAP in a manner consistent with prior fiscal periods, except as otherwise specified in such opinion. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish Consolidated Balance Sheets and Consolidated Statements of Income, Stockholders' Equity and Cash Flows by furnishing copies of the Borrower's annual report on Form 10-K in respect of such fiscal year, together with the financial statements required to be attached thereto, provided the Borrower is required to file such annual report on Form 10-K with the SEC and such filing is actually made. (b) As soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year, a copy of the Consolidated Balance Sheet of the Borrower as at the end of each such quarterly period, together with the related Consolidated Statements of Income and Cash Flows for such period and for the elapsed portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the corresponding periods of the preceding fiscal year, certified by a Financial Officer of the Borrower, as being complete and correct in all material respects and as presenting fairly the Consolidated financial condition and the Consolidated results of operations of the Borrower and its Subsidiaries. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish quarterly Consolidated Balance Sheets and Consolidated Statements of Operations and Cash Flows by furnishing copies of the Borrower's quarterly report on Form 10-Q in respect of such fiscal quarter, together with the financial statements required to be attached thereto, provided the Borrower is required to file such quarterly report on Form 10-Q with the SEC and such filing is actually made. (c) Within 45 days after the end of each of the first three fiscal quarters (90 days after the end of the last fiscal quarter), a Compliance Certificate of the Borrower, executed by a Financial Officer. (d) Within 90 days after the end of each fiscal year of the Borrower, an annual financial forecast, with appropriate schedules, for the then fiscal year, including, without limitation, a balance sheet, income statement and statement of cash flow, as prepared for internal distribution to management of Borrower. (e) Such other information as the Administrative Agent or any Lender may reasonably request from time to time. 7.2. Certificates; Other Information Furnish to the Administrative Agent and each Lender: (a) Prompt written notice if: (i) any Indebtedness of the Borrower or any of its Subsidiaries in an aggregate amount in excess of $2,500,000 is declared or shall become due and payable prior to its stated maturity, or is called and not paid when due, (ii) a default shall have occurred under, or the holder or obligee of, any note, certificate, security or other evidence of Indebtedness, with respect to any other Indebtedness of the Borrower or any of its Subsidiaries has the right to declare Indebtedness in an aggregate amount in excess of $2,500,000 due and payable prior to its stated maturity (other than any default or right to accelerate the Indebtedness under the Existing Medex Bond Documents and the Existing Medfusion Bond Documents to the 54 60 extent that such default or such right to accelerate results solely from the consummation of the Medex Stock Purchase or the Merger), (iii) there shall occur and be continuing a Default or an Event of Default or (iv) a Change of Control should occur; (b) Prompt written notice of: (i) any citation, summons, subpoena, order to show cause or other document naming the Borrower or any of its Subsidiaries a party to any proceeding before any Governmental Authority which would reasonably be expected to have a Material Adverse Effect or which calls into question the validity or enforceability of any of the Loan Documents, and include with such notice a copy of such citation, summons, subpoena, order to show cause or other document, (ii) any lapse or other termination of any material license, permit, franchise or other authorization issued to the Borrower or any of its Subsidiaries by any Person or Governmental Authority, or any refusal by any Person or Governmental Authority to renew or extend any such material license, permit, franchise or other authorization, which lapse, termination, refusal or dispute would reasonably be expected to have a Material Adverse Effect; (c) Promptly upon becoming available, copies of all (i) material regular, periodic or special reports, schedules and other material which the Borrower or any of its Subsidiaries may now or hereafter be required to file with or deliver to any securities exchange or the SEC, or any other Governmental Authority succeeding to the functions thereof and (ii) material news releases and annual reports relating to the Borrower or any of its Subsidiaries; (d) Prompt written notice in the event that the Borrower, any of its Subsidiaries or any ERISA Affiliate knows that (i) any Termination Event with respect to a Pension Plan has occurred or will occur, (ii) any condition exists with respect to a Pension Plan which presents a material risk of termination of the Pension Plan, imposition of an excise tax in a material amount, requirement to provide security to the Pension Plan or other liability in a material amount on the Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has applied for a waiver of the minimum funding standard under Section 412 of the Code with respect to a Pension Plan, (iv) the aggregate amount of the Unfunded Pension Liabilities under all Pension Plans would reasonably be expected to have a Material Adverse Effect, (v) the aggregate amount of Unrecognized Retiree Welfare Liability under all applicable Employee Benefit Plans would reasonably be expected to have a Material Adverse Effect, (vi) the Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in a Prohibited Transaction with respect to an Employee Benefit Plan, (vii) the imposition of any tax under Section 4980B(a) of the Code in a material amount or (viii) the assessment of a civil penalty under Section 502(c) of ERISA in a material amount, together with a certificate of a Financial Officer of the Borrower setting forth the details of such event and the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (e) Prompt written notice in the event that Borrower, any of its Subsidiaries or any ERISA Affiliate shall receive a demand letter from the PBGC notifying the Borrower, such Subsidiary or such ERISA Affiliate of any final decision finding liability (other than liability for premium payments) and the date by which such liability must be paid, together with a copy of such letter and a certificate of a Financial Officer of the Borrower setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. 55 61 (f) Promptly upon the same becoming available, and in any event by the date such amendment is adopted, a copy of any Pension Plan amendment that the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt which would require the posting of security under Section 401(a)(29) of the Code, together with a certificate of a Financial Officer of the Borrower setting forth the reasons for the adoption of such amendment. (g) As soon as possible and in any event by the tenth day after any required installment or other payment under Section 412 of the Code owed to a Pension Plan shall have become due and owing and remain unpaid a copy of the notice of failure to make required contributions provided to the PBGC by the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 412(n) of the Code, together with a certificate of a Financial Officer setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (h) If the termination of any Pension Plan would result in the imposition of any tax under Section 4980 of the Code, then as soon as possible, but in no event less than 60 days before the due date of the tax, a certificate of a Financial Officer of the Borrower setting forth the estimated amount of such tax, any reversion, and the proposed use of such reversion. This subsection shall apply to a transaction notwithstanding a reduction or complete elimination of a tax because of the operation of either Sections 4980(d) or 420(a)(3)(A) of the Code. (i) Prompt written notice of any order, notice, claim or proceeding received by, or brought against, the Borrower or any of its Subsidiaries, or with respect to any of the Real Property, under any Environmental Law which would reasonably be expected to have a Material Adverse Effect. (j) Subject to any confidentiality requirements, as soon as reasonably practicable but in any event at least five Business Days in advance of any Equity Offering or the issuance of Refinancing Debt, written notice of such Equity Offering or issuance of Refinancing Debt, as the case may be, together with copies of all registration statements, if any, filed in connection therewith. (k) Prompt written notice of any contest under Section 7.4, 7.6 or 7.8. (l) As soon as reasonably practicable but in any event at least ten days in advance of any merger or consolidation described in Section 8.3(a), written notice of such merger or consolidation. (m) Prompt written notice if the Borrower or any of its Subsidiaries changes its name, structure or status. (n) Such other information as the Administrative Agent or any Lender shall reasonably request from time to time. 7.3. Legal Existence Except as may otherwise be permitted by Sections 8.3 and 8.4, maintain, and cause each of its Subsidiaries to maintain, its corporate, partnership or analogous existence, as the case may be, in good standing in the jurisdiction of its incorporation or formation and in each 56 62 other jurisdiction in which the failure so to do would reasonably be expected to have a Material Adverse Effect provided, however, that any Subsidiary of the Borrower may be dissolved if such dissolution would not reasonably be expected to have a Material Adverse Effect. 7.4. Taxes Pay and discharge when due, and cause each of its Subsidiaries so to do, all Taxes, upon or with respect to the Borrower or such Subsidiary and all Taxes upon the income, profits and Property of the Borrower and its Subsidiaries, which if unpaid, would reasonably be expected to have a Material Adverse Effect or become a Lien on Property of the Borrower or such Subsidiary (other than a Lien described in Section 8.2(a)(i)), unless and to the extent only that such Taxes, shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary, provided that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor. 7.5. Insurance Maintain, and cause each of its Subsidiaries to maintain, with financially sound and reputable insurers insurance with respect to its Property and businesses against such casualties and contingencies of such types and in such amounts as is customary in the case of Persons of established reputations engaged in the same or similar businesses and similarly situated and furnish to the Administrative Agent, upon written request, full information as to the insurance carried; provided, however that the Borrower may maintain a self-insurance program solely for worker's compensation. 7.6. Performance of Obligations Pay and discharge when due, and cause each of its Subsidiaries so to do, all lawful Indebtedness, obligations and claims for labor, materials and supplies or otherwise which, if unpaid, would reasonably be expected to (i) have a Material Adverse Effect, or (ii) become a Lien upon Property of the Borrower or any of its Subsidiaries other than a Permitted Lien, unless and to the extent only that the validity of such Indebtedness, obligation or claim shall be contested in good faith and by appropriate proceedings diligently conducted and provided that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor. 7.7. Condition of Property At all times, maintain, protect and keep in good repair, working order and condition (ordinary wear and tear excepted), and cause each of its Subsidiaries so to do, all Property necessary to the operation of the Borrower's or such Subsidiary's business, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect. 7.8. Observance of Legal Requirements Observe and comply in all respects, and cause each of its Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules, regulations, certifications, franchises, permits, licenses, directions and requirements of all Governmental Authorities, which now or at any time hereafter may be applicable to it, a violation of which would reasonably be expected to have a 57 63 Material Adverse Effect, except such thereof as shall be contested in good faith and by appropriate proceedings diligently conducted by it, provided that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor. 7.9. Inspection of Property; Books and Records; Discussions At all reasonable times, upon reasonable prior notice (which notice shall specify the purpose and nature of the inspection), permit representatives of the Administrative Agent and each Lender at their expense to visit the offices of the Borrower and each of its Subsidiaries, to examine the books and records thereof and Accountants' reports relating thereto, and to make copies or extracts therefrom, to discuss the affairs of the Borrower and each such Subsidiary with the respective officers thereof, and to examine and inspect the Property of the Borrower and each such Subsidiary and to meet and discuss the affairs of the Borrower and each such Subsidiary with the Accountants, provided that (i) the Borrower shall have the right to be present during any such discussions with the Accountants, (ii) unless otherwise agreed to by the Borrower, no more than an aggregate of four inspections, visits or examinations shall be conducted in any fiscal year of the Borrower (other than those conducted after the occurrence and during the continuance of an Event of Default) and (iii) after the occurrence and during the continuance of an Event of Default (whether or not the Commitments have been terminated and whether or not the Loans have been accelerated) all expenses of any visit, inspection or examination pursuant to this Section shall be paid by the Borrower. 7.10. Authorizations Maintain, and cause each of its Subsidiaries to maintain, in full force and effect, all material licenses, franchises, permits, licenses, authorizations and other rights as are necessary for the conduct of its business, except to the extent that the failure to maintain would not reasonably be expected to have a Material Adverse Effect. 7.11. Financial Covenants (a) Fixed Charge Coverage Ratio. Maintain at all times a Fixed Charge Coverage Ratio of not less than 1:75:1.00 for the period from the Original Effective Date through January 31, 1998 and 2.00:1.00 thereafter. (b) Leverage Ratio. Maintain at all times during the periods set forth below, a Leverage Ratio of not more than the ratios set forth below:
Period Ratio Original Effective Date through January 31, 1998 4.25:1.00 February 1, 1998 through July 31, 1999 4.00:1.00 August 1, 1999 through January 29, 2000 3.75:1.00
58 64
Period Ratio January 30, 2000 through July 29, 2000 3.50:1.00 July 30, 2000 through August 4, 2001 3.25:1.00 August 5, 2001 and thereafter 3.00:1.00
(c) Revenues. Derive at all times not less than 90% of Consolidated revenues from the lines of business in which (i) the Borrower or its Subsidiaries engage on the Original Effective Date and (ii) Medex and its Subsidiaries engage on the first Borrowing Date and, in each case, any related business. (d) Consolidated Net Worth. Maintain as of the last day of each fiscal quarter, Consolidated Net Worth of at least (i) 80% of Base Consolidated Net Worth, plus (ii) 50% of all positive Consolidated net income of Borrower and its Subsidiaries earned since February 2, 1997, plus (iii) 50% of the net proceeds from the issuance of equity securities (other than equity securities issued pursuant to any of the Borrower's employee benefit plans) minus the amount of any restructuring charges taken by the Borrower in connection with the Medex Acquisition to the extent not already taken into account in determining Base Consolidated Net Worth as of February 2, 1997. 8. NEGATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender or the Administrative Agent, the Borrower shall not, directly or indirectly: 8.1. Indebtedness Create, incur, assume or suffer to exist any liability for Indebtedness, or permit any of its Subsidiaries so to do, except (i) Indebtedness due under the Loan Documents, (ii) Indebtedness of the Borrower or any of its Subsidiaries existing on the Original Effective Date and Indebtedness of Medex or any of its Subsidiaries existing on the first Borrowing Date, in each case as set forth on Schedule 8.1, excluding increases or refinancings thereof, (iii) Indebtedness of Medex existing on the first Borrowing Date under the Existing Medex Bond Documents in a principal amount not in excess of $4,000,000, and Indebtedness of Medfusion, Inc. existing on the first Borrowing Date under the Existing Medfusion Bond Documents in a principal amount not in excess of $2,750,000, in each case including any related letter of credit reimbursement obligations, excluding increases or refinancings thereof, (iv) Intercompany Indebtedness, (v) Refinancing Debt in an aggregate amount not in excess of $150,000,000, provided that (A) the terms and conditions thereof are no less favorable taken as a whole to the Borrower that the terms and conditions of this Agreement, (B) the maturity date thereof is not sooner than six months after the Maturity Date, (C) interest thereon is payable in cash, (D) the Net Issuance Proceeds thereof are applied to the repayment of the Loans and the reduction of the Aggregate Revolving Credit Commitment Amount in accordance with Section 2.6 hereof and (E) the Administrative Agent receives a copy of the agreement, indenture or other documents governing such Indebtedness, (vi) 59 65 Capitalized Lease Obligations not to exceed $5,000,000 in the aggregate, (vii) Contingent Obligations not to exceed $5,000,000 in the aggregate, (viii) reimbursement obligations in respect of letters of credit (other than the letters of credit referred to in clause (iii) above) not to exceed $10,000,000 in the aggregate, (ix) other unsecured Indebtedness not to exceed $5,000,000 in the aggregate, (x) purchase money Indebtedness and mortgage Indebtedness (other than any such Indebtedness described in clause (ii) above) incurred in connection with the purchase, after the Original Effective Date, of any Property, in an aggregate principal amount not to exceed $10,000,000, (xi) Indebtedness of the Borrower arising out of Interest Rate Protection Arrangements covering a notional principal amount not in excess of the aggregate outstanding principal balance of the Loans and the Refinancing Debt, (xii) Indebtedness assumed in connection with a Permitted Acquisition in an aggregate amount not in excess of $2,500,000, provided, however, that such Indebtedness was not incurred in contemplation of such Permitted Acquisition and (xiii) Contingent Obligations of the Borrower in respect of its guaranty of the obligations of Medex under each of the Bank One Reimbursement Agreement and the Wachovia Reimbursement Agreement. 8.2. Liens (a) Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, or permit any of its Subsidiaries so to do, except (i) Liens for Taxes in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.4, provided that enforcement of such Liens is stayed pending such contest, (ii) Liens in connection with workers' compensation, unemployment insurance or other social security obligations (but not ERISA), (iii) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of indebtedness for borrowed money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business, (iv) zoning ordinances, easements, rights of way, minor defects, irregularities, and other similar restrictions affecting real Property which do not materially adversely affect the value of such real Property or the financial condition of the Borrower or such Subsidiary or materially impair its use for the operation of the business of the Borrower or such Subsidiary, (v) Liens arising by operation of law such as mechanics', materialmen's, carriers', warehousemen's liens incurred in the ordinary course of business which are not delinquent or which are being contested in good faith and by appropriate proceedings diligently conducted, provided that enforcement of such Liens is stayed pending such contest, (vi) Liens arising out of judgments or decrees which are being contested in good faith and by appropriate proceedings diligently conducted, provided that enforcement of such Liens is stayed pending such contest, (vii) Liens in favor of the Administrative Agent and the Lenders under the Loan Documents, (viii) Liens on Medex Stock so long as such Medex Stock constitutes Margin Stock and more than 25% of the assets of the Borrower and its Subsidiaries constitute Margin Stock, (ix) Liens on Property of the Borrower and its Subsidiaries existing on the Original Effective Date as set forth on Schedule 8.2 as renewed or refinanced from time to time, as long as the amounts secured thereby are not increased, (x) Liens on Property securing Indebtedness permitted under Section 8.1(xii), provided that (A) such Liens are limited to the Property acquired in the Permitted Acquisitions and (B) were not created or assumed in contemplation of such acquisition, (xi) purchase money Liens on Property of the Borrower or any of its Subsidiaries acquired after the Original Effective Date to secure Indebtedness of the Borrower permitted by Section 8.1(x), incurred in connection with the acquisition of such Property, provided that each such Lien is limited to such Property so acquired, (xii) Liens on Property acquired in a Permitted Acquisition to the extent that the Indebtedness secured thereby is permitted pursuant to Section 8.1, (xiii) Liens consisting of leases and 60 66 subleases granted to third parties and not interfering in any material respect with the ordinary conduct of the business of the Borrower and its Subsidiaries, (xiv) Liens consisting of the interest or title of the lessor or sublessor under any lease and any Liens arising from UCC financing statements relating solely to leases in respect of which the Borrower or any of its Subsidiaries is the lessee; (xv) Liens in favor of Governmental Authorities arising by operation of law to secure the payment of custom duties in connection with the importation of goods in the ordinary course of business; and (xvi) Liens consisting of licenses of patents, trademarks and other intellectual property granted by the Borrower or any of its Subsidiaries which does not interfere in any material respect with the conduct of the Borrower's or such Subsidiary's business in the ordinary course. (b) Subject to clause (viii) of subsection (a) above, enter into or permit any of its Subsidiaries to enter into, any agreement which prohibits or limits the ability of the Borrower or such Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except (i) purchase money Liens or capital leases otherwise permitted by this Agreement (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (ii) this Agreement. 8.3. Merger, Consolidations and Acquisitions Consolidate with, be acquired by, merge into or with any Person, make any Acquisition or enter into any binding agreement to do any of the foregoing which is not contingent on obtaining the consent of the Required Lenders, or permit any of its Subsidiaries so to do, except: a) provided that immediately before and after giving effect thereto no Default or Event of Default shall exist, any direct or indirect wholly-owned Subsidiary of the Borrower may merge or consolidate with the Borrower or any other direct or indirect wholly-owned Subsidiary of the Borrower, provided that in the event of a merger of the Borrower and such wholly-owned Subsidiary, the Borrower shall be the survivor thereof; (b) one or more short-form mergers involving Medex solely for the purpose of eliminating minority shareholders thereof who held Outstanding Options, provided that (i) immediately before and after giving effect thereto no Default or Event of Default shall exist and (ii) Medex is the surviving corporation; (c) mergers involving Subsidiaries as part of an Acquisition permitted by subsections (e) or (f) below; (d) Investments permitted by Section 8.5; (e) Acquisitions (other than the Medex Acquisition) in respect of which the Acquisition Cost exceeds $25,000,000, provided that with respect to any such Acquisition, (i) no Default or Event of Default shall exist immediately before or after giving effect to such Acquisition, (ii) the Person acquired is in the same or a related business as that of the Borrower or any of its Subsidiaries, or the business or assets being acquired is or is used in the same or related business to that of the Borrower or any of its Subsidiaries, (iii) the Borrower will be in compliance with each of the financial covenants contained in Section 7.11 on a pro-forma basis after giving effect to such Acquisition and any Indebtedness incurred or assumed in connection therewith 61 67 which is permitted by Section 8.1, (iv) immediately after giving effect to each such Acquisition, all of the representations and warranties contained in Section 4 shall be true and correct as if then made, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date and (v) the Administrative Agent shall have received a certificate of a Financial Officer of the Borrower to such effect; and (f) Acquisitions (other than the Medex Acquisition and Acquisitions described in subsection (e) above), provided that (i) no Default or Event of Default shall exist immediately before or after giving effect to such Acquisition, (ii) the Person acquired is in the same or a related business as that of the Borrower or any of its Subsidiaries, or the business or assets being acquired is or is used in the same or related business to that of the Borrower or any of its Subsidiaries, (iii) the Borrower will be in compliance with each of the financial covenants contained in Section 7.11 on a pro-forma basis after giving effect to such Acquisition and any Indebtedness incurred or assumed in connection therewith which is permitted by Section 8.1, and (iv) immediately after giving effect to each such Acquisition, all of the representations and warranties contained in Section 4 shall be true and correct as if then made, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date. 8.4. Dispositions Make any Disposition, or permit any of its Subsidiaries so to do, except: (a) Dispositions of any Investments permitted under Section 8.5(a); (b) Dispositions of Property which, in the reasonable opinion of the Borrower or such Subsidiary, is obsolete or no longer useful in the conduct of its business; (c) other Dispositions as to which the following conditions have been satisfied: (i) no Default or Event of Default shall exist immediately before or after giving effect thereto, (ii) at least 75% of the total consideration received or to be received therefor by the Borrower or any of its Subsidiaries shall be payable in cash on or before the closing thereof and the total consideration shall not be less than the fair market value thereof as reasonably determined by the Managing Person of the Borrower or such Subsidiary, provided, however, that with respect to any single Disposition in respect of which the total consideration to be paid is less than $2,500,000, all or any portion of such consideration may be paid by a note or notes of the buyer, (iii) in the event that the Net Cash Proceeds of such Disposition together with the Net Cash Proceeds of all Dispositions made during the same fiscal year exceed $3,750,000 in the aggregate, the Aggregate Revolving Credit Commitment Amount shall be permanently reduced and the Borrower shall prepay the Loans at the times and in the amounts specified in Sections 2.6 and 2.7, if applicable, and 62 68 (iv) in the event that the Net Cash Proceeds of such Disposition together with the Net Cash Proceeds of all Dispositions made after the Original Effective Date exceed $35,000,000 in the aggregate, the Administrative Agent and the Required Lenders shall have consented thereto in writing and the Administrative Agent and the Lenders shall have received a certificate in respect thereto signed by an Authorized Signatory of the Borrower identifying the Property to be sold or otherwise disposed of and stating (x) that immediately before or after giving effect thereto, no Default or Event of Default shall exist, (y) that the consideration received or to be received by the Borrower or such Subsidiary for such Property has been determined by the Managing Person thereof to be not less than the fair market value of such Property and (z) the total consideration to be paid in respect of such Disposition, together with estimates of items to be deducted therefrom in arriving at the Net Cash Proceeds thereof; (d) Disposition of the Borrower's structural bearings division located in Texas; (e) Dispositions consisting of transfers of assets (i) by a wholly-owned Subsidiary of the Borrower to another wholly-owned Subsidiary of the Borrower or to the Borrower and (ii) to joint ventures to the extent permitted by Section 8.5(i); and (f) Dispositions of Medex Stock so long as Medex Stock constitutes Margin Stock and more than 25% of the assets of the Borrower and its Subsidiaries constitute Margin Stock. 8.5. Investments, Loans, Etc. At any time, purchase or otherwise acquire, hold or invest in the Capital Stock of, or any other interest in, any Person, or make any loan or advance to, or enter into any arrangement for the purpose of providing funds or credit to, or make any other investment, whether by way of capital contribution, time deposit or otherwise, in or with any Person, or permit any of its Subsidiaries so to do, (all of which are sometimes referred to herein as "Investments") except: (a) Investments in Cash Equivalents; (b) Investments existing on the Original Effective Date as set forth on Schedule 8.5; (c) normal business banking accounts and short-term certificates of deposit and time deposits in, or issued by, federally insured institutions in amounts not exceeding the limits of such insurance; (d) Permitted Acquisitions; (e) advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business including under the Borrower's relocation program; (f) notes received from buyers in connection with Dispositions permitted by Section 8.4; 63 69 (g) Investments by the Borrower or any Subsidiary in Intercompany Indebtedness; (h) Investments by Acquisition Corp. in Medex Stock; (i) other Investments (including contributions of Property to joint ventures) not in excess of $7,500,000 in the aggregate; (j) Investments consisting of loans by the Borrower to the ESOP in connection with the operation of the ESOP in the ordinary course not in excess of $10,000,000 in the aggregate; and (k) Investments consisting of the Capital Stock of Subsidiaries now existing or hereafter created, provided, however, that no capital contribution or other Investment in any thereof shall be made unless otherwise permitted by this Section 8.5. (l) Investments consisting of Interest Rate Protection Arrangements to the extent permitted by Section 8.1(xi). 8.6. Restricted Payments Declare or pay any Restricted Payments payable in cash or otherwise or apply any of its Property thereto or set apart any sum therefor, or permit any of its Subsidiaries so to do, except (i) a wholly-owned Subsidiary may declare and pay Restricted Payments to the Borrower or to any other wholly-owned Subsidiary and (ii) provided that immediately before and after giving effect to such declaration and payment no Default or Event of Default shall exist, (A) the Borrower may declare and pay Restricted Payments in an aggregate amount not exceeding 50% of Excess Cash Flow for the immediately preceding fiscal year, provided that any such Restricted Payment shall be determined on a noncumulative basis so that such Restricted Payments permitted to be declared and paid in a fiscal year may not be carried over and paid in a following year, (B) the Borrower may repay Intercompany Indebtedness in respect of which it is the obligor, (C) the Borrower or Medex may purchase any shares of Medex Stock with respect to which the holder thereof has exercised dissenter rights in connection with the Merger (of which there are approximately 300 such shares) and (D) the Borrower or Medex may acquire, without duplication, the Outstanding Options and shares of Medex Stock acquired by the exercise of the Outstanding Options (including, without limitation, through short-form mergers to the extent permitted by Section 8.3(b)), provided that the price paid therefor does not exceed the consideration paid for shares of Medex Stock acquired in the Medex Stock Purchase or in the Merger. 8.7. Business and Name Changes Change its fiscal year or materially change the nature of the business of the Borrower and its Subsidiaries as conducted on the Original Effective Date or of Medex and its Subsidiaries as conducted on the first Borrowing Date or permit any of its Subsidiaries so to do. 8.8. ERISA Establish or contribute, or permit any of its Subsidiaries so to do, to any Pension 64 70 Plan (other than an Existing Pension Plan), cause any Pension Plan to have a Funded Current Liability Percentage of less than 60%, or increase benefits, or permit any of its Subsidiaries so to do, under any Employee Benefit Plan or establish or contribute to any new Employee Benefit Plan, except in each case to the extent required by law and except to the extent it would not reasonably be expected to have a Material Adverse Effect. 8.9. Amendments, Etc. of Certain Agreements Enter into or agree to any amendment, modification or waiver of any term or condition of (i) its Organizational Documents, the Existing Medex Bond Documents, the Existing Medfusion Bond Documents and, subject to the provisions of clause (ii) below, the Offer Documents, in each case in any way which would adversely affect the interests of the Administrative Agent and the Lenders under any of the Loan Documents, (ii) the Offer Documents to the extent that such amendment, modification or waiver mentions BNY, BNY Capital Markets or describes the Loan Documents or the credit facility established hereunder; or (iii) any term or condition of any Merger Document, or permit any of its Subsidiaries so to do. 8.10. Transactions with Affiliates Subject to Section 8.4(e) become a party to any transaction with an Affiliate unless the Borrower's Managing Person shall have determined that the terms and conditions relating thereto are as favorable to the Borrower as those which would be obtainable at the time in a comparable arms-length transaction with a Person other than an Affiliate, or permit any of its Subsidiaries so to do. 8.11. Issuance of Capital Stock Issue any Capital Stock, or permit any of its Subsidiaries so to do, provided that if no Default or Event of Default would exist immediately before or after giving effect thereto, the Borrower or any of its Subsidiaries may issue additional Capital Stock (other than Disqualified Stock). 9. DEFAULT 9.1. Events of Default The following shall each constitute an "Event of Default" hereunder: (a) The failure of the Borrower to make any payment of principal on any Loan when due and payable; or (b) The failure of the Borrower to make any payment of interest, Fees, expenses or other amounts payable under any Loan Document or otherwise to the Administrative Agent with respect to the loan facilities established hereunder within five days of the date when due and payable; or (c) The failure of the Borrower to observe or perform any covenant or agreement contained in Sections 2.8, 7.3, 7.11 or Section 8; or 65 71 (d) The failure of any Credit Party to observe or perform any other term, covenant, or agreement contained in any Loan Document and such failure shall have continued unremedied for a period of 30 days after such Credit Party shall have obtained knowledge thereof; or (e) Any representation or warranty made by any Credit Party (or by an officer thereof on its behalf) in any Loan Document or in any certificate, report, opinion (other than an opinion of counsel) or other document delivered or to be delivered pursuant thereto, shall prove to have been incorrect or misleading (whether because of misstatement or omission) in any material respect when made; or (f) Liabilities and/or other obligations of the Borrower (other than its obligations under the Loan Documents) or any of its Subsidiaries, whether as principal, guarantor, surety or other obligor, for the payment of any Indebtedness in an aggregate amount in excess of $10,000,000 (i) shall become or shall be declared to be due and payable prior to the expressed maturity thereof, or (ii) shall not be paid when due or within any grace period for the payment thereof or, (iii) any holder of any such obligation shall have the right to declare such obligation due and payable or require the Borrower or such subsidiary to redeem such obligation in each case prior to the expressed maturity thereof; (g) The Borrower shall suspend or discontinue its business or the Borrower or any of its Subsidiaries shall (i) make an assignment for the benefit of creditors, (ii) generally not be paying its debts as such debts become due, (iii) admit in writing its inability to pay its debts as they become due, (iv) file a voluntary petition in bankruptcy, (v) become insolvent (however such insolvency shall be evidenced), (vi) file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment of debt, liquidation or dissolution or similar relief under any present or future statute, law or regulation of any jurisdiction, (vii) petition or apply to any tribunal for any receiver, custodian or any trustee for any substantial part of its Property, (viii) be the subject of any such proceeding filed against it which remains undismissed for a period of 60 days, (ix) file any answer admitting or not contesting the material allegations of any such petition filed against it or any order, judgment or decree approving such petition in any such proceeding, (x) seek, approve, consent to, or acquiesce in any such proceeding, or in the appointment of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal agent for it, or any substantial part of its Property, or an order is entered appointing any such trustee, receiver, custodian, liquidator or fiscal agent and such order remains in effect for 60 days, or (xi) take any formal action for the purpose of effecting any of the foregoing or looking to the liquidation or dissolution of the Borrower or such Subsidiary; or (h) An order for relief is entered under the United States bankruptcy laws or any other decree or order is entered by a court having jurisdiction (i) adjudging the Borrower or any of its Subsidiaries bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, liquidation, arrangement, adjustment or composition of or in respect of the Borrower or any of its Subsidiaries under the United States bankruptcy laws or any other applicable Federal or state law, (iii) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Borrower or any of its Subsidiaries or of any substantial part of the Property of any thereof, or (iv) ordering the winding up or liquidation of the affairs of the Borrower or any of its Subsidiaries, and any such decree or order continues unstayed and in effect for a period of 60 days; or 66 72 (i) Judgments or decrees against the Borrower or any of its Subsidiaries aggregating in excess of $10,000,000 (unless adequately insured by a solvent unaffiliated insurance company which has acknowledged coverage) shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of 60 days; or (j) Any Loan Document shall cease, for any reason, to be in full force and effect (other than in accordance with its terms), or any Credit Party shall so assert in writing or shall disavow any of its obligations thereunder; or (k) The Medex Guaranty, for any reason other than the satisfaction in full of all obligations of the Borrower under this Agreement, ceases to be in full force and effect or is declared to be null and void, or Medex denies that it has any further liability, including, without limitation, with respect to future advances by Lenders, under the Medex Guaranty or gives notice to such effect; or (l) (i) any Termination Event shall occur; (ii) any Accumulated Funding Deficiency, whether waived, shall exist with respect to any Pension Plan; (iii) any Person shall engage in any Prohibited Transaction involving any Employee Benefit Plan; (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall fail to pay when due an amount which is payable by it to the PBGC or to a Pension Plan under Title IV of ERISA; (v) the imposition of any tax under Section 4980B(a) of the Code; (vi) the assessment of a civil penalty with respect to any Employee Benefit Plan under Section 502(c) of ERISA; or (vii) any other event or condition shall occur or exist with respect to an Employee Benefit Plan, which in the case of each of clauses (i) through (vii), either individually or in the aggregate would have a Material Adverse Effect. 9.2. Contract Remedies (a) Upon the occurrence of an Event of Default or at any time thereafter during the continuance thereof, (a) if such event is an Event of Default specified in clause (g) or (h) above, the Revolving Credit Commitments of all of the Lenders and the Swing Line Commitment of the Swing Line Lender shall immediately and automatically terminate and the Loans, all accrued and unpaid interest thereon and all other amounts owing under the Loan Documents shall immediately become due and payable, and the Administrative Agent may, and, upon the direction of the Required Lenders shall, exercise any and all remedies and other rights provided in the Loan Documents, and (b) if such event is any other Event of Default, any or all of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, and upon the direction of the Required Lenders shall, by notice to the Borrower, declare the Revolving Credit Commitments of all of the Lenders and the Swing Line Commitment of the Swing Line Lender terminated forthwith, whereupon such Revolving Credit Commitments and the Swing Line Commitment shall immediately terminate, and (ii) with the consent of the Required Lenders, the Administrative Agent may, and upon the direction of the Required Lenders shall, by notice of default to the Borrower, declare the Loans, all accrued and unpaid interest thereon and all other amounts owing under the Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable, and the Administrative Agent may, and upon the direction of the Required Lenders shall, exercise any and all remedies and other rights provided in the Loan Documents. Except as otherwise provided in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. The Borrower hereby further expressly waives and covenants not to assert any appraisement, valuation, stay, extension, redemption or similar laws, now or at any time hereafter in force which might delay, 67 73 prevent or otherwise impede the performance or enforcement of any Loan Document. (b) In the event that the Revolving Credit Commitments of all the Lenders and the Swing Line Commitment of the Swing Line Lender shall have been terminated or the Loans, all accrued and unpaid interest thereon and all other amounts owing under the Loan Documents shall have been declared due and payable pursuant to the provisions of this Section, any funds received by the Administrative Agent and the Lenders from or on behalf of the Borrower shall be applied by the Administrative Agent and the Lenders in liquidation of the Loans and the other obligations of the Borrower under the Loan Documents in the following manner and order: (i) first, to the payment of interest on, and then the principal portion of, any Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed by such Lender or the Borrower; (ii) second, to the payment of any fees or expenses due the Administrative Agent from the Borrower, (iii) third, to reimburse the Administrative Agent and the Lenders for any expenses (to the extent not paid pursuant to clause (ii) above) due from the Borrower pursuant to the provisions of Section 11.5; (iv) fourth, to the payment of accrued Fees and all other fees, expenses and amounts due under the Loan Documents (other than principal and interest on the Loans), (v) fifth, to the payment pro rata according to the outstanding principal balance of the Loans, of interest due on the Loans of each Lender; (vi) sixth, to the payment of principal outstanding on the Loans; and (vii) seventh, to the payment of any other amounts owing to the Administrative Agent and the Lenders under any Loan Document. 10. THE ADMINISTRATIVE AGENT 10.1. Appointment Each Lender hereby irrevocably designates and appoints BNY as the Administrative Agent of such Lender under the Loan Documents and each Lender hereby irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of the Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Loan Documents, together with such other powers as are reasonably incidental thereto. The duties of the Administrative Agent shall be mechanical and administrative in nature, and, notwithstanding any provision to the contrary elsewhere in any Loan Document, the Administrative Agent shall not have any duties or responsibilities other than those expressly set forth therein, or any fiduciary relationship with, or fiduciary duty to, any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent. 10.2. Delegation of Duties The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely upon, and shall be fully protected in, and shall not be under any liability for, relying upon, the advice of counsel concerning all matters pertaining to such duties. 10.3. Exculpatory Provisions 68 74 Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except the Administrative Agent for its own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any other Credit Party or any officer thereof contained in the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, perfection, enforceability or sufficiency of any of the Loan Documents or for any failure of the Borrower or any other Person to perform its obligations thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Loan Documents, or to inspect the Property, books or records of the Borrower or any of its Subsidiaries. The Lenders acknowledge that the Administrative Agent shall not be under any duty to take any discretionary action permitted under the Loan Documents unless the Administrative Agent shall be instructed in writing to do so by Required Lenders and such instructions shall be binding on all Lenders; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or is contrary to law or any provision of the Loan Documents. The Administrative Agent shall not be under any liability or responsibility whatsoever, as Administrative Agent, to the Borrower, any of its Subsidiaries or any other Person as a consequence of any failure or delay in performance, or any breach, by any Lender of any of its obligations under any of the Loan Documents. 10.4. Reliance by Administrative Agent The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by a proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may treat each Lender or the Person designated in the last notice filed with it under this Section, as the holder of all of the interests of such Lender in its Loans until written notice of transfer, signed by such Lender (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. The Administrative Agent shall not be under any duty to examine or pass upon the validity, effectiveness, enforceability or genuineness of the Loan Documents or any instrument, document or communication furnished pursuant thereto or in connection therewith, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. The Administrative Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request or direction of the Required Lenders, and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 10.5. Notice of Default 69 75 The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received written notice thereof from a Lender or the Borrower. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall promptly give notice thereof to the Lenders and the Borrower. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders, provided, however, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem to be in the best interests of the Lenders. 10.6. Non-Reliance on Administrative Agent and Other Lenders Each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any Lender, and based on such documents and information as it has deemed appropriate made its own evaluation of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security and made its own decision to enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, evaluations and decisions in taking or not taking action under any Loan Document, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, Property, financial and other condition or creditworthiness of the Borrower or any other Credit Party which at any time may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.7. Indemnification Each Lender agrees to indemnify and hold harmless the Administrative Agent in its capacity as such (to the extent not promptly reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), pro rata according to the aggregate of the outstanding principal balance of the Loans (or at any time when no Loans are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever including, without limitation, any amounts paid to the Lenders (through the Administrative Agent) by the Borrower pursuant to the terms of the Loan Documents, that are subsequently rescinded or avoided, or must otherwise be restored or returned) which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or 70 76 any other documents contemplated by or referred to therein or the transactions contemplated thereby or any action taken or omitted to be taken by the Administrative Agent under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting solely from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its pro rata share of any unpaid fees owing to the Administrative Agent, and any costs and expenses (including, without limitation, reasonable fees and expenses of counsel) payable by the Borrower under Section 11.5, to the extent that the Administrative Agent has not been paid such fees or has not be reimbursed for such costs and expenses, by the Borrower. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its pro rata share of any amount required to be by the Lenders to the Administrative Agent as provided in this Section shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its pro rata share of such amount, but no Lender shall be responsible for the failure of other Lender to reimburse the Administrative Agent for such other Lender's pro rata share of such amount. The agreements in this Section shall survive the termination of the Revolving Credit Commitments of all of the Lenders and the Swing Line Commitment and the payment of all amounts payable under the Loan Documents. 10.8. Administrative Agent in Its Individual Capacity BNY and its affiliates may make secured or unsecured loans to, accept deposits from, issue letters of credit for the account of, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower or any other Credit Party as though BNY were not Administrative Agent hereunder and BNY Capital Markets did not arrange the transactions contemplated hereby. With respect to the Revolving Credit Commitment and Swing Line Commitment made or renewed by BNY, BNY shall have the same rights and powers under the Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall in each case include BNY. 10.9. Successor Administrative Agent If at any time the Administrative Agent deems it advisable, in its sole discretion, it may submit to each of the Lenders and the Borrower a written notice of its resignation as Administrative Agent under the Loan Documents, such resignation to be effective upon the earlier of (i) the written acceptance of the duties of the Administrative Agent under the Loan Documents by a successor Administrative Agent and (ii) on the 30th day after the date of such notice. Upon any such resignation, the Required Lenders shall have the right to appoint from among the Lenders a successor Administrative Agent reasonably acceptable to the Borrower. If no successor Administrative Agent shall have been so appointed by the Required Lenders and accepted such appointment in writing within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which successor Administrative Agent shall be a commercial bank organized under the laws of the United States or any State thereof and having a combined capital, surplus, and undivided profits of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent's 71 77 rights, powers, privileges and duties as Administrative Agent under the Loan Documents shall be terminated. The Borrower and the Lenders shall execute such documents as shall be necessary to effect such appointment. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it, and any amounts owing to it, while it was Administrative Agent under the Loan Documents. If at any time there shall not be a duly appointed and acting Administrative Agent, the Borrower agrees to make each payment due under the Loan Documents directly and the Lenders entitled thereto during such time. 10.10. The Documentation Agent; Co-Agents Neither the Documentation Agent nor either Co-Agent shall have any duties or obligations under the Loan Documents in its capacity as Documentation Agent or a Co-Agent, as the case may be. 11. OTHER PROVISIONS 11.1. Amendments and Waivers With the written consent of the Required Lenders, the Administrative Agent, the Borrower and any other Credit Party thereto may, from time to time, enter into written amendments, supplements or modifications of the Loan Documents and, with the consent of the Required Lenders, the Administrative Agent on behalf of the Lenders may execute and deliver to any such parties a written instrument waiving or a consent to a departure from, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of the Loan Documents or any Default or Event of Default and its consequences; provided, however, that: (a) no such amendment, supplement, modification, waiver or consent shall, without the consent of all of the Lenders, (i) increase the Revolving Credit Commitment Amount of any Lender or the Aggregate Revolving Credit Commitment Amount, (ii) extend the Maturity Date; (iii) decrease the rate, or extend the time of payment, of interest of, or change or forgive the principal amount or extend the time of payment of, or change the pro rata allocation of payments in respect of any Loan, (iv) change the definition of Alternate Currency so as to add any additional currency as an Alternate Currency, (v) change the provisions of Sections 3.6, 3.7, 9.1(a), 9.1(b), 11.1 or 11.7(a), (vi) change the definition of "Required Lenders" or (vii) release Medex from its obligations under the Medex Guaranty; (b) without the written consent of the Administrative Agent, no such amendment, supplement, modification or waiver shall amend, modify or waive any provision of Section 10 or otherwise change any of the rights or obligations of the Administrative Agent hereunder or under the Loan Documents; and (c) without the written consent of the Swing Line Lender, no such amendment, supplement, modification or waiver shall change the Swing Line Commitment or change any other term or provision that relates to the Swing Line Commitment or the Swing Line Loans. 72 78 Any such amendment, supplement, modification or waiver shall apply equally to each of the Lenders and shall be binding upon the parties to the applicable Loan Document, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the parties to the applicable Loan Document, the Lenders and the Administrative Agent shall be restored to their former position and rights under the Loan Documents to the extent provided for in such waiver, and any Default or Event of Default waived shall not extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. The Loan Documents may not be amended orally or by any course of conduct. 11.2. Notices All notices, requests and demands to or upon the respective parties to the Loan Documents to be effective shall be in writing and, unless otherwise expressly provided therein, shall be deemed to have been duly given or made when delivered by hand, one Business Day after having been sent by overnight courier service, or three Business Days after having been deposited in the mail, certified with return receipt requested (postage prepaid), or, in the case of notice by telecopy, when sent (provided that the sender shall have received a confirmation of transmission), addressed as follows in the case of the Borrower or the Administrative Agent, addressed to the Domestic Lending Office, in the case of each Lender, or addressed to such other addresses as to which the Administrative Agent may be hereafter notified by the respective parties thereto or any future holders of the Loans: The Borrower: Furon Company 29982 Ivy Glenn Drive Laguna Niguel, California 92677 Attention: Monty A. Houdeshell, Vice President and Chief Financial Officer Telephone: (714) 831-5350 Telecopy: (714) 643-1548 The Administrative Agent: The Bank of New York One Wall Street Agency Function Administration 18th Floor New York, New York 10286 Attention: Kalyani Bose Telephone: (212) 635-4693 Telecopy: (212) 635-6365 or 6366 or 6367 with a copy to: The Bank of New York 10990 Wilshire Boulevard - Suite 1125 Los Angeles, California 90024 73 79 Attention: Rebecca K. Levine, Assistant Vice President Telephone: (310) 996-8659 Facsimile: (310) 996-8667 except that any notice, request or demand by the Borrower to or upon the Administrative Agent or the Lenders pursuant to Sections 2.3 or 3.3 shall not be effective until received. Any party to a Loan Document may rely on signatures of the parties thereto which are transmitted by telecopy or other electronic means as fully as if originally signed. 11.3. No Waiver; Cumulative Remedies No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges under the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.4. Survival of Representations and Warranties and Certain Obligations (a) All representations and warranties made under the Loan Documents and in any document, certificate or statement delivered pursuant thereto or in connection therewith shall survive the execution and delivery of the Loan Documents. (b) The obligations of the Borrower under Sections 3.5, 3.6, 3.7, 11.5 and 11.8 shall survive the termination of the Revolving Credit Commitments of all of the Lenders and the Swing Line Commitment and the payment of the Loans and all other amounts payable under the Loan Documents. 11.5. Expenses The Borrower agrees, promptly upon presentation of a statement or invoice therefor, and whether any Loan is made (i) to pay or reimburse the Administrative Agent and BNY Capital Markets for all their respective out-of-pocket costs and expenses reasonably incurred in connection with the development, preparation, execution and syndication of, the Loan Documents and any amendment, supplement or modification thereto (whether or not executed or effective), any documents prepared in connection therewith and the consummation of the transactions contemplated thereby, including, without limitation, the reasonable fees and disbursements of Special Counsel, (ii) to pay or reimburse the Administrative Agent and the Lenders for all of their respective costs and expenses, including, without limitation, reasonable fees and disbursements of counsel, incurred in connection with (A) any Default or Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether consummated or not) of the obligations of the Borrower or any other Credit Party under any of the Loan Documents and (B) the enforcement of this Section and (iii) to pay, indemnify and hold each Lender and the Administrative Agent and each of their respective officers, directors and employees harmless from and against any and all other liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, 74 80 expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable counsel fees and disbursements) with respect to the enforcement and performance of the Loan Documents, the use of the proceeds of the Loans and the enforcement and performance of the provisions of any subordination agreement involving the Administrative Agent and the Lenders (all the foregoing, collectively, the "Indemnified Liabilities") and, if and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower agrees to make the maximum payment not prohibited under applicable law; provided, however, that the Borrower shall have no obligation to pay Indemnified Liabilities to the Administrative Agent or any Lender arising from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent or such Lender or claims between one indemnified party and another indemnified party. The agreements in this Section shall survive the termination of the Revolving Credit Commitments of all of the Lenders and the Swing Line Commitment and the payment of all amounts payable under the Loan Documents. 11.6. Applicable Lending Offices (a) Each Lender shall have the right at any time and from time to time to transfer its Revolving Credit Loans to a different office, provided that such Lender shall promptly notify the Administrative Agent and the Borrower of any such change of office. Such office shall thereupon become such Lender's Domestic Lending Office, Eurodollar Lending Office or Alternate Currency Lending Office for the applicable Alternate Currency, as the case may be, provided, however, that no Lender shall be entitled to receive any greater amount under Section 3.6(a)(ii) or (iii), or Section 3.7, as a result of a transfer of any such Revolving Credit Loans to a different office of such Lender than it would be entitled to immediately prior thereto unless such claim would have arisen even if such transfer had not occurred. (b) Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 3.6(a)(ii) or (iii) or Section 3.7, with respect to any Revolving Credit Loan, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another Applicable Lending Office for such Revolving Credit Loan affected by such event, provided that such designation is made on such terms that such Lender and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Sections 3.5, 3.6, 3.7, 11.5 and 11.8. 11.7. Assignments and Participations (a) The Loan Documents shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Loans, and their respective successors and assigns, except that neither the Borrower nor any other Credit Party may assign, delegate or transfer any of its rights or obligations under the Loan Documents without the prior written consent of the Administrative Agent and each Lender. (b) Each Lender shall have the right at any time, upon written notice to the Administrative Agent of its intent to do so, to sell, assign, transfer or negotiate all or any part of its rights and obligations under the Loan Documents to one or more of its affiliates, to one or more of the other Lenders (or to affiliates of such other Lenders) or, with the prior written consent of the Borrower, the Swing Line Lender and the Administrative Agent (which consents shall not be 75 81 unreasonably withheld and, in the case of the Borrower, shall not be required if an Event of Default shall have occurred and be continuing for a period of 90 days with no cure or waiver thereof), to sell, assign, transfer or negotiate all or any part of its rights and obligations under the Loan Documents to any Eligible Assignee, provided that (i) each such sale, assignment, transfer or negotiation (other than sales, assignments, transfers or negotiations (x) to its affiliates or (y) its entire interest) shall be in a minimum amount of $5,000,000 and (ii) there shall be paid to the Administrative Agent by it a fee (an "Assignment Fee") of $3,000. For each assignment, the parties to such assignment shall execute and deliver to the Administrative Agent for its acceptance and recording an Assignment and Acceptance Agreement. Upon such execution, delivery, acceptance and recording by the Administrative Agent, from and after the effective date specified in such Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance Agreement, the assignor Lender thereunder shall be released from its obligations under the Loan Documents. Upon any such sale, assignment or other transfer, the Revolving Credit Commitment Amounts set forth in Exhibit A shall be adjusted accordingly by the Administrative Agent and a new Exhibit A shall be distributed by the Administrative Agent. (c) Each Lender may, with the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld and, in the case a participation granted by a Lender to one of its affiliates, shall not be required), grant participations in all or any part of its rights under the Loan Documents to one or more Eligible Assignees, provided that (i) its obligations under the Loan Documents shall remain unchanged, (ii) it shall remain solely responsible to the other parties to the Loan Documents for the performance of such obligations, (iii) the Borrower, the Administrative Agent and the Lenders, as applicable, shall continue to deal solely and directly with it in connection with its rights and obligations under the Loan Documents, (iv) no sub-participations shall be permitted and (v) the voting rights of any holder of any participation shall be limited to decisions that only do any of the following: (A) subject the participant to any additional obligation, (B) reduce the principal of, or interest on the Loans or any fees or other amounts payable under the Loan Documents, (C) postpone any date fixed for the payment of principal of, or interest on the Loans or any fees or other amounts payable under the Loan Documents, (D) release any security interest or Collateral, except to the extent that such release is specifically provided for in any Loan Document or (E) release any guarantor under any guarantee. The Borrower acknowledges and agrees that any such participant shall for purposes of Sections 3.5, 3.6 and 3.7, be deemed to be a "Lender"; provided, however, the Borrower shall not, at any time, be obligated to pay any participant in any interest of any Lender hereunder any sum in excess of the sum which the Borrower would have been obligated to pay to such Lender in respect of such interest had such Lender not sold such participation. (d) If any (i) assignment is made pursuant to subsection (b) above or (ii) any participation is granted pursuant to subsection (c) above, to any Person that is not a U.S. Person, such Person shall furnish such certificates, documents or other evidence to the Borrower and the Administrative Agent in the case of clause (i), and to the Borrower or the Lender which sold such participation, as the case may be, in the case of clause (ii), as shall be required by Sections 3.7(d) and 3.7(e). (e) No Lender shall, as between and among the Borrower, the Administrative Agent, the Swing Line Lender and such Lender, as the case may be, be relieved of any of its obligations under the Loan Documents as a result of any sale, assignment, transfer or negotiation of, or granting of participations in, all or any part of its Loans or its Revolving Credit Commitment 76 82 or Swing Line Commitment, except that it shall be relieved of its obligations to the extent of any such sale, assignment, transfer, or negotiation of all or any part of its Loans, its Revolving Credit Commitment, the Swing Line Commitment, as the case may be, pursuant to subsection (b) above. (f) Notwithstanding anything to the contrary contained in this Section, any Lender may at any time or from time to time assign all or any portion of its rights under the Loan Documents to a Federal Reserve Bank, provided that any such assignment shall not release such assignor from its obligations thereunder. 11.8. Indemnity The Borrower agrees to defend, protect, indemnify, and hold harmless the Administrative Agent, BNY Capital Markets and each and all of the Lenders, each of their respective Affiliates and each of the respective officers, directors, employees and agents of each of the foregoing (each an "Indemnified Person" and, collectively, the "Indemnified Persons") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel to such Indemnified Persons in connection with any investigative, administrative or judicial proceeding, whether direct, indirect or consequential and whether based on any federal or state laws or other statutory regulations, including, without limitation, securities and commercial laws and regulations, under common law or at equitable cause, or on contract or otherwise, including any liabilities and costs under Environmental Laws, regulations, or common law principles, arising from or in connection with the past, present or future operations of the Borrower, any other Credit Party, or their respective predecessors in interest, or the past, present or future environmental condition of the Property of the Borrower or any of its Subsidiaries, the presence of asbestos-containing materials at any such Property, or the release or threatened release of any Hazardous Substance into the environment from any such Property) in any manner relating to or arising out of the Loan Documents, any commitment letter or fee letter executed and delivered by the Borrower or any of its Subsidiaries and/or the Administrative Agent, the capitalization of the Borrower or any of its Subsidiaries, the Commitments, the making of, management of and participation in the Loans, or the use or intended use of the proceeds of the Loans hereunder, provided that the Borrower shall have no obligation under this Section to an Indemnified Person with respect to any of the foregoing to the extent found in a final judgment of a court having jurisdiction to have resulted from the gross negligence or wilful misconduct of such Indemnified Person or arising from claims between one such Indemnified Person and another such Indemnified Person. The indemnity set forth herein shall be in addition to any other obligations or liabilities of the Borrower to each Indemnified Person under the Loan Documents or at common law or otherwise, and shall survive any termination of the Loan Documents, the expiration of the Commitments and the payment of all Indebtedness of the Credit Parties under the Loan Documents. 77 83 11.9. Determination of Dollar Equivalent For purposes of the Loan Documents, the Dollar Equivalent of each Alternate Currency Loan designated in an Alternate Currency shall be recalculated (i) on each Borrowing Date, (ii) on each date that the Aggregate Revolving Credit Commitment Amount or the Swing Line Commitment Amount is reduced and (iii) on the last Business Day of each month. The Dollar Equivalent for each Alternate Currency Loan shall remain in effect until the same is recalculated by the Administrative Agent as provided above and notice of such recalculation is sent to the Borrower. The Administrative Agent shall promptly notify the Borrower, the Swing Line Lender and the Lenders of each such determination of the Dollar Equivalent for each Alternate Currency Loan. 11.10. Limitation of Liability No claim may be made by the Borrower, any of its Subsidiaries, any Lender or other Person against the Administrative Agent, any Lender, or any directors, officers, employees, or agents of any of them for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by any Loan Document, or any act, omission or event occurring in connection therewith, and each of the Borrower, its Subsidiaries, any Lender or other Person hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 11.11. Counterparts This Agreement may be executed by one or more of the parties thereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same document. It shall not be necessary in making proof of any Loan Document to produce or account for more than one counterpart signed by the party to be charged. A counterpart of any Loan Document or to any document evidencing, and of any an amendment, modification, consent or waiver to or of any Loan Document transmitted by telecopy shall be deemed to be an originally executed counterpart. A set of the copies of the Loan Documents signed by all the parties thereto shall be deposited with each of the Borrower and the Administrative Agent. Any party to a Loan Document may rely upon the signatures of any other party thereto which are transmitted by telecopy or other electronic means to the same extent as if originally signed. 11.12. Adjustments; Set-off (a) If any Lender (a "Benefited Lender") shall at any time receive any payment of all or any part of the principal of its Loans owing to such Lender, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9.1(g) or (h), or otherwise), in a greater proportion than any such payment to and collateral received by any other Lender in respect of the principal of such other Lender's Loans owing to such other Lender, or interest thereon, such Benefited Lender shall purchase for cash from each of the other Lenders such portion of each such other Lender's Loans, and shall provide each of such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders, provided, 78 84 however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender's Loans may exercise all rights of payment (including, without limitation, rights of set-off, to the extent not prohibited by law) with respect to such portion as fully as if such Lender were the direct holder of such portion. (b) In addition to any rights and remedies of the Lenders provided by law, upon the occurrence of an Event of Default and the acceleration of the obligations owing in connection with the Loan Documents, or at any time upon the occurrence and during the continuance of an Event of Default, under Section 9.1(a) or (b), each Lender shall have the right, without prior notice to the Borrower or any other Credit Party, any such notice being expressly waived by the Borrower and each such other Credit Party to the extent not prohibited by applicable law, to set-off and apply against any indebtedness, whether matured or unmatured, of the Borrower or such other Credit Party, as the case may be, to such Lender any amount owing from such Lender to the Borrower or such other Credit Party, as the case may be, at, or at any time after, the happening of any of the above-mentioned events. To the extent not prohibited by applicable law, the aforesaid right of set-off may be exercised by such Lender against the Borrower or such other Credit Party, as the case may be, or against any trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor of the Borrower or such other Credit Party, as the case may be, or against anyone else claiming through or against the Borrower or such other Credit Party, as the case may be, or such trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the making, filing or issuance, or service upon such Lender of, or of notice of, any such petition, assignment for the benefit of creditors, appointment or application for the appointment of a receiver, or issuance of execution, subpoena, order or warrant. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 11.13. Construction Each party to a Loan Document represents that it has been represented by counsel in connection with the Loan Documents and the transactions contemplated thereby and that the principle that agreements are to be construed against the party drafting the same shall be inapplicable. 11.14. Governing Law The Loan Documents and the rights and obligations of the parties thereunder shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York, without regard to principles of conflict of laws, but including Section 5-1401 of the General Obligations Law. 11.15. Headings Descriptive Section headings have been inserted in the Loan Documents for convenience only and shall not be construed to be a part thereof. 79 85 11.16. Severability Every provision of the Loan Documents is intended to be severable, and if any term or provision thereof shall be invalid, illegal or unenforceable for any reason, the validity, legality and enforceability of the remaining provisions thereof shall not be affected or impaired thereby, and any invalidity, illegality or unenforceability in any jurisdiction shall not affect the validity, legality or enforceability of any such term or provision in any other jurisdiction. 11.17. Judgment Currency (a) The Borrower's obligations under the Loan Documents to make payments in the Applicable Currency (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that, on the Business Day immediately following the date of such tender or recovery, the Administrative Agent, the Swing Line Lender or the applicable Lender, as the case may be, may, in accordance with normal banking procedures, purchase the Obligation Currency with such other currency. If for the purpose of obtaining or enforcing judgment against the Borrower in any court or in any jurisdiction, it becomes necessary to convert into any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency, the conversion shall be made at the rate of exchange at which, in accordance with normal banking procedures in the relevant jurisdiction, the Obligation Currency could be purchased with the Judgment Currency as of the day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "Judgment Currency Conversion Date"). (b) If the amount of Obligation Currency purchased pursuant to the last sentence of subsection (a) above is less than the sum originally due in the Obligation Currency, the Borrower covenants and agrees to indemnify the applicable recipient against such loss, and if the Obligation Currency so purchased exceeds the sum originally due to such recipient, such recipient agrees to remit to the Borrower such excess. 11.18. Integration All exhibits to a Loan Document shall be deemed to be a part thereof. Except for agreements between the Administrative Agent and the Borrower with respect to certain fees, the Loan Documents embody the entire agreement and understanding among the Borrower, the Administrative Agent and the Lenders with respect to the subject matter thereof and supersede all prior agreements and understandings among the Borrower, the Administrative Agent and the Lenders with respect to the subject matter thereof. 11.19. Consent to Jurisdiction Each party to a Loan Document hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in the City of New York over any suit, action or proceeding arising out of or relating to the Loan Documents. Each party to a Loan Document hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each Credit Party hereby agrees that a final 80 86 judgment in any such suit, action or proceeding brought in such a court, after all appropriate appeals, shall be conclusive and binding upon it. 11.20. Service of Process Each party to a Loan Document hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by first class mail, return receipt requested or by overnight courier service, to the address of such party set forth in Section 11.2 of the applicable Loan Document executed by such party. Each party to a Loan Document hereby agrees that any such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action, or proceeding, and (ii) shall to the fullest extent enforceable by law, be taken and held to be valid personal service upon and personal delivery to it. 11.21. No Limitation on Service or Suit Nothing in the Loan Documents or any modification, waiver, consent or amendment thereto shall affect the right of the Administrative Agent or any Lender to serve process in any manner permitted by law or limit the right of the Administrative Agent or any Lender to bring proceedings against any Credit Party in the courts of any jurisdiction or jurisdictions in which such Credit Party may be served. 11.22. WAIVER OF TRIAL BY JURY EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS AND CREDIT PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR ADMINISTRATIVE AGENT OF THE ADMINISTRATIVE AGENT OR THE LENDERS, OR COUNSEL TO THE ADMINISTRATIVE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH CREDIT PARTY ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION. 11.23. Treatment of Certain Information Each Lender and the Administrative Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of the same nature, all non-public information supplied by either Borrower or any Subsidiary pursuant to this Agreement which (a) is identified by such Person as being confidential at the time the same is delivered to such Lender or the Administrative Agent, or (b) constitutes any financial statement, financial projections or forecasts, budget, compliance certificate, audit report, management letter or accountants' certification delivered hereunder, provided, however, that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) on a confidential basis, to counsel for any of the 81 87 Lenders or the Administrative Agent, (iii) to the extent required or requested to bank examiners, auditors or accountants, and any analogous counterpart thereof acting in any such capacity, (iv) to the Administrative Agent or the Lenders, (v) in connection with any suit, action or proceeding relating to the Transaction Documents or the Transactions, (vi) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) agrees to keep such information confidential on substantially the same basis as set forth in this Section and the Borrower shall have received prior notice of such disclosure, or (vii) subject to the confidentiality provisions of this Section, to affiliates of the Administrative Agent and each Lender. 82 88 IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. FURON COMPANY By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ THE BANK OF NEW YORK, Individually, as Swing Line Lender and as Administrative Agent By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH, Individually, and as Documentation Agent By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ 89 THE FIRST NATIONAL BANK OF CHICAGO, Individually, and as Co-Agent By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ NATIONSBANK OF TEXAS, N.A., Individually, and as Co-Agent By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ THE BANK OF NOVA SCOTIA By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ MELLON BANK, N.A. By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ COMERICA BANK By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ 90 UNION BANK OF CALIFORNIA, N.A. By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ BANK ONE, COLUMBUS, NA By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ BANQUE NATIONALE DE PARIS By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ 91 THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES AGENCY By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ WACHOVIA BANK OF GEORGIA, N.A. By: ------------------------------------ Name: ------------------------------------ Title: ------------------------------------ EX-11 4 STATEMENT RE: COMPUTATION OF NET INCOME PER SHARE 1 EXHIBIT 11 FURON COMPANY Computation of Net Income Per Share
Three months ended --------------------------------------------------------- May 3, May 4, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ PRIMARY NET INCOME PER SHARE Earnings: Net income $ 4,977,000 $ 4,558,000 =================== ================= Shares: Weighted average number of common shares outstanding 8,923,429 8,861,410 Shares issuable from assumed exercise of stock options 232,078 218,236 ------------------- ----------------- Average shares as adjusted 9,155,507 9,079,646 =================== ================= Primary net income per share $ 0.54 $ 0.50 =================== ================= FULLY DILUTED NET INCOME PER SHARE Earnings: Net income $ 4,977,000 $ 4,558,000 =================== ================= Shares: Weighted average number of common shares outstanding 8,923,429 8,861,410 Shares issuable from assumed exercise of stock options 259,023 252,221 ------------------- ----------------- Average shares as adjusted for full dilution 9,182,452 9,113,631 =================== ================= Fully diluted net income per share $ 0.54 $ 0.50 =================== =================
17 EX-27 5 FINANCIAL DATE SCHEDULE
5 This schedule contains summary financial information extracted from the Company's unaudited condensed statements of income, condensed balance sheets and condensed statements of cash flows and is qualified in its entirety by reference to such financial statements contained within the Company's Form 10-Q for the three months ended May 3, 1997. 1,000 U.S.DOLLAR 3-MOS JAN-31-1998 MAY-3-1997 1 5,260 0 71,009 1,904 57,971 148,839 192,485 79,850 342,488 65,260 6,775 0 0 38,762 26,195 342,488 119,649 119,649 81,330 109,469 (410) 155 3,049 7,541 2,564 4,977 0 0 0 4,977 0.54 0.54
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