WCMA(R) NOTE AND LOAN AGREEMENT

 

                                                                   EXHIBIT 10.4

[MERRILL LYNCH LOGO]                                               NO. 272-07763
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                         WCMA(R) NOTE AND LOAN AGREEMENT

WCMA NOTE AND LOAN AGREEMENT ("Loan Agreement") dated as of August 9, 1996,
between U.S. MEDICAL INSTRUMENTS, INC., a corporation organized and existing
under the laws of the State of California having its principal office at 16825
Via Del Campo Court, San Diego, CA 92127 ("Customer"), and MERRILL LYNCH
BUSINESS FINANCIAL SERVICES INC., a corporation organized and existing under the
laws of the State of Delaware having its principal office at 33 West Monroe
Street, Chicago, IL 60603 ("MLBFS").

In accordance with that certain WORKING CAPITAL MANAGEMENT(R) ACCOUNT AGREEMENT
NO. 272-07763 ("WCMA Agreement") between Customer and MLBFS' affiliate, MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("MLPF&S"). Customer has subscribed
to the WCMA Program described in the WCMA Agreement. The WCMA Agreement is by
this reference incorporated as a part hereof. In conjunction therewith and as
part of the WCMA Program, Customer has requested that MLBFS provide, and subject
to the terms and conditions herein set forth MLBFS has agreed to provide, a
commercial line of credit for Customer (the "WCMA Line of Credit").

Accordingly, and in consideration of the premises and of the mutual covenants of
the parties hereto, Customer and MLBFS hereby agree as follows:

1. DEFINITIONS

(a) SPECIFIC TERMS. In addition to terms defined elsewhere in this Loan
Agreement, when used herein the following terms shall have the following
meanings:

(i) "Activation Date" shall mean the date upon which MLBFS shall cause the WCMA
Line of Credit to be fully activated under MLPF&S' computer system as part of
the WCMA Program

(ii) "Additional Agreements" shall mean all agreements, instruments, documents
and opinions other than this Loan Agreement, whether with or from Customer or
any other party, which are contemplated hereby or otherwise reasonably required
by MLBFS in connection herewith, or which evidence the creation, guaranty or
collateralization of any of the Obligations or the granting or perfection of
liens or security interests upon any collateral for the Obligations.

(iii) "Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.

(iv) "Commitment Expiration Date" shall mean September 9, 1996.

(v) "General Funding Conditions" shall mean each of the following conditions to
any WCMA Loan by MLBFS hereunder: (A) no Event of Default, or event which with
the giving of notice, passage of time, or both, would constitute an Event of
Default, shall have occurred and be continuing or would result from the making
of any WCMA Loan hereunder by MLBFS; (B) there shall not have occurred any
material adverse change in the business or financial condition of Customer, (C)
all representations and warranties of Customer herein or in any Additional
Agreements shall then be true and correct in all material respects; (D) MLBFS
shall have received this Loan Agreement and all of the Additional Agreements,
duly executed and filed or recorded where applicable, all of which shall be in
form and substance reasonably satisfactory to MLBFS; (E) MLBFS shall have
received evidence reasonably satisfactory to it as the ownership of and the
perfection and priority of MLBFS' liens and security interests on any collateral
for the Obligations furnished pursuant to any of the Additional Agreements; and
(F) any additional conditions specified in the "WCMA Line of Credit Approval"

letter executed by MLBFS with respect to the transactions contemplated hereby
shall have been met to the reasonable satisfaction of MLBFS.

(vi) "Interest Rate" shall mean a variable per annum rate of interest equal to
the sum of 2.65% and the 30- Day Commercial Paper Rate. The "30-Day Commercial
Paper Rate" shall mean, as of the date of any determination, the interest rate
from time to time published in the "Money Rates" section of The Wall Street
Journal for 30-day high-grade unsecured notes sold through dealers by major
corporations. The Interest Rate will change as of the date of publication in The
Wall Street Journal of a 30-Day Commercial Paper Rate that is different from
that published on the preceding Business Day. In the event that The Wall Street
Journal shall, for any reason, fail or cease to publish the 30-Day Commercial
Paper Rate, MLBFS will choose a reasonably comparable index or source to use as
the basis for the Interest Rate.

(vii) "Line Fee" shall mean a fee of $12,500.00 payable to MLBFS in connection
with the WCMA Line of Credit for the period from the Activation Date to the
Maturity Date.

(viii) "Maturity Date" shall mean August 31, 1997, or Such later date as may be
consented to in writing by MLBFS.

(ix) "Maximum WCMA Line of Credit" shall mean an amount equal to the lesser of:
(i) the cash surrender value of that certain Flexible Benefit Annuity No. 540717
issued by TMG Life Insurance Company to Robert Siegel (the "Annuity"), and
collaterally assigned by Robert Siegel to MLBFS in connection herewith. or (ii)
$2,325,000.00.

(x) "Obligations" shall mean all liabilities, indebtedness and other obligations
of Customer to MLBFS, howsoever created, arising or evidenced, whether now
existing or hereafter arising, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary or point or several, and,
without limiting the foregoing, shall include interest accruing after the filing
of any petition in bankruptcy, and all present and future liabilities,
indebtedness and obligations of Customer under this Loan Agreement.

(xi) "WCMA Account" shall mean and refer to the Working Capital Management
Account of Customer with MLPF&S identified as Account No. 272-07763.

(xii) "WCMA Loan" shall mean each advance made by MLBFS pursuant to this Loan
Agreement.

(b) OTHER TERMS. Except as otherwise defined herein: (i) all terms used in this
Loan Agreement which are defined in the Uniform Commercial Code of Illinois
("UCC") shall have the meanings set forth in the UCC, and (ii) capitalized terms
used herein which are defined in the WCMA Agreement shall have the meaning set
forth in the WCMA Agreement.

2. WCMA PROMISSORY NOTE

FOR VALUE RECEIVED, Customer hereby promises to pay to the order of MLBFS, at
the times and in the manner set forth in this Loan Agreement, or in such other
manner and at such place MLBFS may hereafter designate in writing, the
following: (a) on the Maturity Date, the aggregate unpaid principal amount of
all WCMA Loans (the "WCMA Loan Balance"); (b) Interest at the Interest Rate on
the outstanding WCMA Loan Balance, from and including the date on which the
initial WCMA Loan is made until the date of payment of all WCMA Loans in full;
and (c) on demand, all other sums payable pursuant to this Loan Agreement,
including, but not limIted to, the Line Fee and any late charges. Except as
otherwise expressly set forth herein, Customer hereby waives presentment, demand
for payment, protest and notice of protest, notice of dishonor, notice of
acceleration, notice of intent to accelerate and all other notices and
formalities in connection with this WCMA Promissory Note and this Loan
Agreement.

3. WCMA LOANS

(a) Activation Date. Provided that: (i) the Commitment Expiration Date shall not
then have occurred, and (ii) Customer shall have subscribed to the WCMA Program
and its subscription to the WCMA Program shall then be in effect, the Activation
Date shall occur on or promptly after the date following the acceptance of

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this Loan Agreement by MLBFS at its office in Chicago, Illinois, upon which each
of the General Funding Conditions shall have been met or satisfied to the
reasonable satisfaction of MLBFS. No activation by MLBFS of the WCMA Line of
Credit for a nominal amount shall be deemed evidence of the satisfaction of any
of the conditions herein set forth, or a waiver of any of the terms or
conditions hereof.

(b) WCMA LOANS. Subject to the terms and conditions hereof, during the period
from and after the Activation Date to the Maturity Date: (i) MLBFS will make
WCMA Loans to Customer in such amounts as Customer may from time to time request
in accordance with the terms hereof, up to an aggregate outstanding amount not
to exceed the Maximum WCMA Line of Credit, and (ii) Customer may repay any WCMA
Loans in whole or in part at any time without premium or penalty, and request a
re-borrowing of amounts repaid on a revolving basis. Customer may request WCMA
Loans by use of WCMA Checks, FTS, Visa(R) charges, wire transfers, or such other
means of access to the WCMA Line of Credit as may be permitted by MLBFS from
time to time; it being understood that so long as the WCMA Line of Credit shall
be in effect, any charge or debit to the WCMA Account which but for the WCMA
Line of Credit would under the terms of the WCMA Agreement result in an
overdraft, shall be deemed a request by Customer for a WCMA Loan.

(c) CONDITIONS OF WCMA LOANS. Notwithstanding the foregoing, MLBFS shall not be
obligated to make any WCMA Loan, and may without notice refuse to honor any such
request by Customer, if at the time of receipt by MLBFS of Customer's request:
(i) the making of such WCMA Loan would cause the Maximum WCMA Line of Credit to
be exceeded; or (ii) the Maturity Date shall have occurred, or the WCMA Line of
Credit shall have otherwise been terminated in accordance with the terms hereof;
or (iii) Customer's subscription to the WCMA Program shall have been terminated;
or (iv) an event shall have occurred and is continuing which shall have caused
any of the General Funding Conditions to not then be met or satisfied to the
reasonable satisfaction of MLBFS. The making by MLBFS of any WCMA Loan at a time
when any one or more of said conditions shall not have been met shall not in any
event be construed as a waiver of said condition or conditions or of any Event
of Default, and shall not prevent MLBFS at any time thereafter while any
condition shall not have been met from refusing to honor any request by Customer
for a WCMA Loan.

(d) FORCE MAJEURE. MLBFS shall not be responsible, and shall have no liability
to Customer or any other party, for any delay or failure of MLBFS to honor any
request of Customer for a WCMA Loan or any other act or omission of MLBFS,
MLPF&S or any of their affiliates due to or resulting from any system failure,
error or delay in posting or other clerical error, loss of power, fire, Act of
God or other cause beyond the reasonable control of MLBFS, MLPF&S or any of
their affiliates unless directly arising out of the willful wrongful act or
active gross negligence of MLBFS. In no event shall MLBFS be liable to Customer
or any other party for any incidental or consequential damages arising from any
act or omission by MLBFS, MLPF&S or any of their affiliates in connection with
the WCMA Line of Credit of this Loan Agreement.

(e) INTEREST. The WCMA Loan Balance shall bear interest at the Interest Rate
Interest shall be computed for the actual number of days elapsed on the basis of
a year consisting of 360 days Notwithstanding any provision to the contrary in
this Agreement or any of the Additional Agreements, no provision of this
Agreement or any of the Additional Agreements shall require the payment or
permit the collection of any amount in excess of the maximum amount of interest
permitted to be changed by law ("Excess Interest"). If any Excess Interest is
provided for, or is adjudicated as being provided for, in this Agreement or any
of the Additional Agreements, then (a) Customer shall not be obligated to pay
any Excess Interest; and (b) any Excess Interest that MLBFS may have received
hereunder or under any of the Additional Agreements shall, at the option if
MLBFS, be: (i) applied as a credit against the then unpaid balance of the WCMA
Line of Credit, (ii) refunded to the payer thereof, or (iii) any combination of
the foregoing. Except as otherwise provided herein, accrued and unpaid interest
on the WCMA Loan Balance shall be payable monthly on the last Business Day of
each calendar month, commencing with the last Business Day of the calendar month
in which the Activation Dale shall occur. Customer hereby irrevocably authorizes
and directs MLPF&S to pay MLBFS such accrued interest from any available free
credit balances in the WCMA Account, and if such available free credit balances
are insufficient to satisfy any interest payment due, to liquidate any
investments in the Money Accounts (other than any investments constituting any
Minimum Money Accounts Balance under the WCMA Directed Reserve program) in an
amount up to the balance of such accrued interest, and pay to MLBFS the
available proceeds on account thereof. If available free credit balances in the
WCMA Account and available proceeds of the Money Accounts are insufficient to
pay the entire balance of accrued interest, and Customer

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otherwise fails to make such payment when due, MLBFS may, in its sole
discretion, make a WCMA Loan in an amount equal to the balance of such accrued
interest and pay the proceeds of such WCMA Loan to itself on account of such
interest. The amount of any such WCMA Loan will be added to the WCMA Loan
Balance. If MLBFS declines to extend a WCMA Loan to Customer under these
circumstances, Customer hereby authorizes and directs MLPF&S to make all such
interest payments to MLBFS from any Minimum Money Accounts Balance. If there is
no Minimum Money Accounts Balance, or it is insufficient to pay all such
interest, MLBFS will invoice Customer for payment of the balance of the accrued
interest, and Customer shall pay such interest as directed by MLBFS within 5
Business Days or receipt of such invoice.

(f)  PAYMENTS.  All payments required or permitted to be made pursuant to this
Loan Agreement shall be made in lawful money of the United States. Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may
be made by the delivery of checks (other than WCMA Checks), or by means of FTS
or wire transfer of funds (other than funds from the WCMA Line of Credit) to
MLPF&S for credit to Customer's WCMA Account. Notwithstanding anything in the
WCMA Agreement to the contrary, Customer hereby irrevocably authorizes and
directs MLPF&S to apply available free credit balances in the WCMA Account to
the repayment of the WCMA Loan Balance prior to application for any other
purpose. Payments to MLBFS from funds in the WCMA Account shall be deemed to be
made by Customer upon the same basis and schedule as funds are made available
for investment in the Money Accounts in accordance with the terms of the WCMA
Agreement. All funds received by MLBFS from MLPF&S pursuant to the aforesaid 
authorization shall be applied by MLBFS  to repayment of the WCMA Loan Balance.
The acceptance by or on behalf of MLBFS of a check or other payment for a
lesser amount than shall be due from Customer, regardless of any endorsement or
statement thereon or transmitted therewith, shall not be deemed an accord and
satisfaction or anything other than a payment on account, and MLBFS or anyone
acting on behalf of MLBFS may accept such check or other payment without
prejudice to the rights of MLBFS to recover the balance actually due or to
pursue any other remedy under this Loan Agreement or applicable law for such
balance. All checks accepted by or on behalf of MLBFS in connection with the
WCMA Line of Credit are subject to final collection.

(g)  EXCEEDING THE MAXIMUM WCMA LINE OF CREDIT.  In the event that the WCMA
Loan Balance shall at any time exceed the Maximum WCMA Line of Credit, Customer
shall within 1 Business Day of the first to occur of (i) any request or demand
of MLBFS, or (ii) receipt by Customer of a statement from MLPF&S showing a WCMA
Loan Balance in excess of the Maximum WCMA Line of Credit, deposit sufficient
funds into the WCMA Account to reduce the WCMA Loan Balance below the Maximum
WCMA Line of Credit.

(h)  LINE FEE; EXTENSIONS.  (i) In consideration of the extension of the WCMA
Line of Credit by MLBFS to Customer during the period from the Activation Date
to the Maturity Date, Customer has paid or shall pay the Line Fee to MLBFS. If
such fee has not heretofore been paid by Customer, Customer hereby authorizes
MLBFS, at its option, to either cause said fee to be paid with a WCMA Loan
which is added to the WCMA Loan Balance, or invoice Customer for said fee (in
which event Customer shall pay said fee within 5 Business Days after receipt of
such invoice). No delay in the Activation Date, howsoever caused shall entitle
Customer to any rebate or reduction in the Line Fee or extension of the
Maturity Date.

(ii) In the event MLBFS and Customer, in their respective sole discretion,
agree to renew the WCMA Line of Credit beyond the current Maturity Date,
Customer agrees to pay a renewal Line Fee or Line Fees (if the Maturity Date is
extended for more than one 12-month period), in the amount per 12-month period
or other applicable period then set forth in the writing signed by MLBFS which
extends the Maturity Date; it being understood that any request by Customer for
a WCMA Loan or failure of Customer to pay any WCMA Loan Balance outstanding on
the immediately prior Maturity Date, after the receipt by Customer of a writing
signed by MLBFS extending the Maturity Date, shall be deemed a consent by
Customer to both the renewal Line Fees and the new Maturity Date. If no renewal
Line Fees are set forth in the writing signed by MLBFS extending the Maturity
Date, the renewal Line Fee for each 12-month period shall be deemed to be the
same as the immediately preceding periodic Line Fee. Each such renewal Line
Fee, at the option of MLBFS, either be paid with a WCMA Loan which is added to
the WCMA Loan Balance or invoiced to Customer, as aforesaid, on or at any time
after the first Business Day of the first month of the 12-month period for
which such fee is due.

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(i)  STATEMENTS.  MLPF&S will include in each  monthly statement it issues
under the WCMA Program information with respect to WCMA Loans and the WCMA Loan
Balance. Any questions that Customer may have with respect to such information
should be directed to MLBFS; and any questions with respect to any other matter
in such statements or about or affecting the WCMA Program should be directed 
to MLPF&S.

(j)  USE OF LOAN PROCEEDS; SECURITIES TRANSACTIONS.  The proceeds of each WCMA
Loan shall be used by customer solely for working capital in the ordinary
course of is business, or, with the prior written consent of MLBFS, for other
lawful business purposes of Customer not prohibited hereby. Customer agrees
that under no circumstances will funds borrowed from MLBFS through the WCMA
line of credit be used: (i) for personal, family or household purposes of any
person whatsoever, (ii) to purchase, carry or trade in securities, including
shares of the money accounts, or (iii) to repay debt incurred to purchase,
carry or trade in securities; nor will any such funds be remitted, directly or
indirectly, to MLPF&S or any other broker or dealer in securities, by WCMA
check, check, FTC, wire transfer, or otherwise.

4.  REPRESENTATIONS AND WARRANTIES

Customer represent and warrants to MLBFS that:

(a)  ORGANIZATION AND EXISTENCE.  Customer is a corporation, duly organized and
validly existing in good standing under the laws of the State of California and
is qualified to do business and in good standing in each other state where the
nature of its business or the property owned by it make such qualification 
necessary.

(b)  EXECUTION, DELIVERY AND PERFORMANCE.  The execution, delivery and
performance by Customer of this Loan Agreement and such of the Additional
Agreements to which it is a party: (i) have been duly authorized by all
requisite action, (ii) do not and will not violate or conflict with any law or
other governmental requirement, or any of the agreements, instruments or
documents which formed or govern Customer, and (iii) do not and will not breach
or violate any of the provisions of, and will not result in a default by
Customer under, any other agreement, instrument or document to which it is a
party or by which it or its properties are bound.

(c)  NOTICES AND APPROVALS.  Except as may have been given or obtained, no
notice to or consent or approval of any governmental body or authority or
other third party whatsoever (including, without limitation, any other
creditor) is required in connection with the execution, delivery or performance
by Customer of such of this Loan Agreement and the Additional Agreements to
which it is a party.

(d)  ENFORCEABILITY.  This Loan Agreement and such of the Additional Agreements
to which it is a party are the legal, valid and binding obligations of
Customer, enforceable against it in accordance with their respective terms,
except as enforceability may be limited by bankruptcy and other similar laws
affecting the rights of creditors generally or by general principles of equity.

(e)  FINANCIAL STATEMENTS.  Except as expressly set froth in Customer's
financial statements, all financial statements of Customer furnished to MLBFS
have been prepared in conformity with generally accepted accounting principles,
consistently applied, are true and correct, and fairly present the financial
condition of it as at such dates and the results of its operations for the
periods then ended; and since the most recent date covered by such financial
statements, there has been no material adverse change in any such financial
condition or operation.

(f)  LITIGATION.  No litigation, arbitration, administrative or governmental
proceedings are pending or, to the knowledge of Customer, threatened against
Customer, which would, if adversely determined, materially and adversely affect
the liens and security interests of MLBFS hereunder or under any of the
Additional Agreements, the financial condition of Customer or the continued
operations of Customer.

(g)  TAX RETURNS.  All federal, state and local tax returns, reports and
statements required to be filed by Customer have been filed with the
appropriate governmental agencies and all taxes due and payable by

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Customer have been timely paid (except to the extent that any such failure to
file or pay will not materially and adversely affect either the liens and
security interests of MLBFS hereunder or under any of the Additional
Agreements, the financial condition of Customer, or the continued operations of
Customer). 

Each of the foregoing representations and warranties are continuing and shall
be deemed remade by Customer concurrently with each request for a WCMA Loan.

5.      FINANCIAL AND OTHER INFORMATION

Customer shall furnish or cause to be furnished to MLBFS during the term of
this Loan Agreement all of the following:

(a)     ANNUAL FINANCIAL STATEMENTS. Within 120 days after the closing of each
fiscal year of Customer, Customer shall furnish or cause to be furnished to
MLBFS a copy of the annual audited financial statements of Customer consisting
of at least a balance sheet as at the close of such fiscal year and related
statements of income, retained earnings and cash flows, certified by its
current independent certified public accountants or other independent certified
public accountants reasonably acceptable to MLBFS.

(b)     INTERIM FINANCIAL STATEMENTS. Within 45 days after the close of each
fiscal quarter of Customer, Customer shall furnish or cause to be furnished to
MLBFS: (i) a statement of profit and loss for the fiscal quarter then ended,
and (ii) a balance sheet as at the close of such fiscal quarter, all in
reasonable detail and certified by its chief financial officer.

(c)     SEC REPORTS. Customer shall furnish MLBFS with a copy of each 10-K and
10-Q report filed with the SEC not later than 10 days after the date filed with
the SEC.

(d)     MONTHLY ANNUITY STATEMENTS. Within 15 days after the end of each
calendar month during the term hereof, Customer shall cause TMG Life Insurance
Company to furnish to MLBFS a statement setting forth the cash surrender value
of the Annuity as of the last day of the preceding calendar month.

(e)     OTHER INFORMATION. Customer shall furnish or cause to be furnished to
MLBFS such other information as MLBFS may from time to time reasonably request
relating to Customer.

6.      OTHER COVENANTS

Customer further agrees during the term of this Loan Agreement that:

(a)     FINANCIAL RECORDS; INSPECTION. Customer will: (i) maintain at its
principal place of business complete and accurate books and records, and
maintain all of its financial records in a manner consistent with the financial
statements heretofore furnished to MLBFS, or prepared on such other basis as
may be approved in writing by MLBFS; and (ii) permit MLBFS or its duly
authorized representatives, upon reasonable notice and at reasonable times, to
inspect its properties (both real or personal), operations, books and records.

(b)     TAXES. Customer will pay when due all taxes, assessments and other
governmental charges, howsoever designated, and all other liabilities and
obligations, except to the extent that any such failure to pay will not
materially and adversely affect either any liens and security interests of
MLBFS under any Additional Agreements, the financial condition of Customer or
the continued operations of Customer.

(c)     COMPLIANCE WITH LAWS AND AGREEMENTS. Customer will not violate any law,
regulation or other governmental requirement, any judgment or order of any
court or governmental agency or authority, or any agreement, instrument or
document to which it is a party or by which it is bound, if any such violation
will materially and adversely affect either any liens and security interests of
MLBFS under any Additional Agreements, or the financial condition or the
continued operations of Customer.

(d)     CONTINUITY. Except upon the prior written consent of MLBFS, which
consent will not be unreasonably withheld: (i) Customer will not be a party to
any merger or consolidation with or purchase or otherwise

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acquire all or substantially all of the assets or stock of, or any material
partnership or joint venture interest in, any person or entity, or sell,
transfer or lease all or any substantial part of its assets if any such action
causes a material change in its control or principal business, or a material
adverse change in its financial condition or operations; (ii) Customer will
preserve its existence and good standing in the jurisdictions of establishment
and operation, and will not operate in any material business other than a
business substantially the same as its business as of the date of application
by Customer for credit from MLBFS; and (iii) Customer will not cause or permit
any material change in its controlling ownership, controlling senior management
or, except upon not less than 30 days prior written notice to MLBFS, its name
or principal place of business.

(e)     ANNUITY. So long as this Loan Agreement shall be in effect or there are
any Obligations, Customer shall cause the Annuity to remain in effect.

7.      EVENTS OF DEFAULT

The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:

(a)     FAILURE TO PAY. Customer shall fail to pay to MLBFS or deposit into the
WCMA Account when due any amount owing or required to be deposited by Customer
under this Loan Agreement, or shall fail to pay when due any other Obligations,
and any such failure shall continue for more than 5 Business Days after written
notice thereof shall have been given by MLBFS to Customer.

(b)     FAILURE TO PERFORM. Customer shall default in the performance or
observance of any covenant or agreement on its part to be performed or observed
under this Loan Agreement or any of the Additional Agreements (not constituting
an Event of Default under any other clause of this Section), and such default
shall continue unremedied for 10 Business Days after written notice thereof
shall have been given by MLBFS to Customer.

(c)     BREACH OF WARRANTY. Any representation or warranty made by Customer
contained in this Loan Agreement or any of the Additional Agreements shall at
any time prove to have been incorrect in any material respect when made.

(d)     DEFAULT UNDER OTHER AGREEMENT. A default or Event of Default by
Customer shall occur under the terms of any other agreement, instrument or
document with or intended for the benefit of MLBFS, MLPF&S or any of their
affiliates, and any required notice shall have been given and required passage
of time shall have elapsed.

(e)     BANKRUPTCY, ETC. A proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt or receivership law or statute
shall be filed by Customer, or any such proceeding shall be filed against
Customer and shall not be dismissed or withdrawn within 60 days after filing,
or Customer shall make an assignment for the benefit of creditors, or Customer
shall become insolvent or generally fail to pay, or admit in writing its
inability to pay, its debts as they become due.

(f)     MATERIAL IMPAIRMENT. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of payment or performance by
Customer has been materially impaired.

(g)     ACCELERATION OF DEBT TO OTHER CREDITORS. Any event shall occur which
results in the acceleration of the maturity of any indebtedness of $100,000.00
or more of Customer to another creditor under any indenture, agreement,
undertaking, or otherwise.

8.      REMEDIES

(a)     REMEDIES UPON DEFAULT. Upon the occurrence and during the continuance
of any Event of Default, MLBFS may at its sole option do any one or more or all
of the following, at such time and in such order as MLBFS may in its sole
discretion choose:

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(i) TERMINATION. MLBFS may without notice terminate the WCMA Line of Credit and
all obligations to provide the WCMA Line of Credit or otherwise extend any
credit to or for the benefit of Customer; and upon any such termination MLBFS
shall be relieved of all such obligations.

(ii) ACCELERATION. MLBFS may declare the principal of and interest on the WBMA
Loan Balance, and all other Obligations to be forthwith due and payable,
whereupon all such amounts shall be immediately due and payable, without
presentment, demand for payment, protest and notice of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate or other notice
or formality of any kind, all of which are hereby expressly waived.

(b) SET-OFF. MLBFS shall have the further right upon the occurrence and during
the continuance of an Event of Default to set-off, appropriate and apply toward
payment of any of the Obligations, in such order of application as MLBFS may
from time to time and at any time elect, any cash, credit, deposits, accounts,
securities and any other property of Customer which is in transit to or in the
possession, custody or control of MLBFS, MLPF&S or any agent, bailee, or
affiliate of MLBFS or MLPF&S, including, without limitation, the WCMA Account
and any Money Accounts, and all cash and securities therein or controlled
thereby, and all proceeds thereof. Customer hereby collaterally assigns and
grants to MLBFS a security interest in all such property as additional security
for the Obligations. Upon the occurrence and during the continuance of an Event
of Default, MLBFS shall have all rights in such property available to
collateral assignees and secured parties under all applicable laws, including,
without limitation, the UCC.

(c) REMEDIES ARE SEVERABLE AND CUMULATIVE. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Additional Agreements, at law or in equity, and any
one or more of such rights and remedies may be exercised simultaneously or
successively.

9. MISCELLANEOUS

(a) NON-WAIVER. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement or any of the Additional
Agreements shall operate as a waiver thereof, and no single or partial exercise
of any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. Neither any waiver
of any provision of this Loan Agreement or any of the Additional Agreements, nor
any consent to any departure by Customer therefrom, shall be effective unless
the same shall be in writing and signed by MLBFS. Any waiver of any provision of
this Loan Agreement or any of the Additional Agreements and any consent to any
departure by Customer from the terms of this Loan Agreement or any of the
Additional Agreements shall be effective only in the specific instance and for
the specific purpose for which given. Except as otherwise expressly provided
herein, no notice to or demand on Customer shall in any case entitle Customer to
any other or further notice or demand in similar or other circumstances.

(b) DISCLOSURE. Customer hereby irrevocably authorize MLBFS and each of its
affiliates, including without limitation MLPF&S, to at any time (whether or not
an Event of Default shall have occurred) obtain from and disclose to each other
any and all financial and other information about Customer.

(c) COMMUNICATIONS. All notices and other communications required or permitted
hereunder shall be in writing, and shall be either delivered personally, mailed
by postage prepaid certified mail or sent by express overnight courier or by
facsimile. Such notices and communications shall be deemed to be given on the
date of personal delivery, facsimile transmission or actual delivery of
certified mail, or one Business Day after delivery to an express overnight
courier. Unless otherwise specified in a notice sent or delivered in
accordance with the terms hereof, notices and other communications in writing
shall be given to the parties hereto at their respective addresses set forth at
the beginning of this Loan Agreement, or, in the case of facsimile
transmission, to the parties at their respective regular facsimile telephone
number. 

(d) COSTS, EXPENSES AND TAXES. Customer shall upon demand pay or reimburse
MLBFS for: (i) all Uniform Commercial Code filing and search fees and expenses
incurred by MLBFS in connection with the verification, perfection or
preservation of MLBFS' rights hereunder or in any collateral for the
Obligations; (ii) any and all stamp, transfer and other taxes and fees payable
or determined to be payable in connection with

                                      -8-

the execution, delivery and/or recording of this Loan Agreement or any of the
Additional Agreements; and (iii) all reasonable fees and out-of-pocket expenses
(including, but not limited to, reasonable fees and expenses of outside
counsel) incurred by MLBFS in connection with the enforcement of this Loan
Agreement or any of the Additional Agreements or the protection of MLBFS'
rights hereunder or thereunder, excluding, however, salaries and expenses of
MLBFS' employees. The obligations of Customer under this paragraph shall
survive the expiration or termination of this Loan Agreement and the discharge
of the other Obligations.

(e)     RIGHT TO PERFORM OBLIGATIONS. If Customer shall fail to do any act or
thing which it has covenanted to do under this Loan Agreement or any
representation or warranty on the part of Customer contained in this Loan
Agreement shall be breached, MLBFS may, in its sole discretion, after 5 days
written notice is sent to Customer (or such lesser notice, including no notice,
as is reasonable under the circumstances), do the same or cause it to be done
or remedy any such breach, and may expend its funds for such purpose. Any and
all reasonable amounts so expended by MLBFS shall be repayable to MLBFS by
Customer upon demand, with interest at the Interest Rate during the period from
and including the date funds are so expended by MLBFS to the date of repayment,
and all such amounts shall be additional Obligations. The payment or
performance by MLBFS of any of Customer's obligations hereunder shall not
relieve Customer of said obligations or of the consequences of having failed to
pay or perform the same, and shall not waive or be deemed a cure of any Event
of Default.

(f)     LATE CHARGE. Any payment required to be made by Customer pursuant to
this Loan Agreement not paid within 10 days of the applicable due date shall be
subject to a late charge in an amount equal to the lesser of: (i) 5% of the
overdue amount, or (ii) the maximum amount permitted by applicable law. Such
late charge shall be payable on demand, or, without demand, may in the sole
discretion of MLBFS be paid by WCMA Loan and added to the WCMA Loan Balance in
the same manner as provided herein for accrued interest.

(g)     FURTHER ASSURANCES. Customer agrees to do such further acts and things
and to execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonably require or deem advisable to effectuate the
purposes of this Loan Agreement or any the Additional Agreements.

(h)     BINDING EFFECT. This Loan Agreement and the Additional Agreements shall
be binding upon, and shall inure to the benefit of MLBFS. Customer and their
respective successors and assigns. Customer shall not assign any of its rights
or delegate any of its obligations under this Loan Agreement or any of the
Additional Agreements without the prior written consent of MLBFS. Unless
otherwise expressly agreed to in a writing signed by MLBFS, no such consent
shall in any event relieve Customer of any of its obligations under this Loan
Agreement or the Additional Agreements.

(i)     HEADINGS. Captions and section and paragraph headings in this Loan
Agreement are inserted only as a matter of convenience, and shall not affect
the interpretation hereof.

(j)     GOVERNING LAW. This Loan Agreement, and, unless otherwise expressly
provided therein, each of the Additional Agreements, shall be governed in all
respects by the laws of the State of Illinois.

(k)     SEVERABILITY OF PROVISIONS. Whenever possible, each provision of this
Loan Agreement and the Additional Agreements shall be interpreted in such
manner as to be effective and valid under applicable law. Any provision of this
Loan Agreement or any of the Additional Agreements which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Loan Agreement and the Additional
Agreements or affecting the validity or enforceability of such provision in any
other jurisdiction.

(l)     TERM. This Loan Agreement shall become effective on the date accepted
by MLBFS at its office in Chicago, Illinois, and, subject to the terms hereof,
shall continue in effect so long thereafter as the WCMA Line of Credit shall be
in effect or there shall be any Obligations outstanding.

(m)     INTEGRATION. THIS LOAN AGREEMENT, TOGETHER WITH THE ADDITIONAL
AGREEMENTS, CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS THE FULL AND
FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF,
AND 

                                      -9-

MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN AGREEMENTS OR PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. Without limiting the foregoing,
Customer acknowledges that: (1) no promise or commitment has been made to it by
MLBFS, MLPF&S or any of their respective employees, agents or representatives to
extend the availability of the WCMA Line of Credit or the due date of the WCMA
Loan Balance beyond the current Maturity Date, or to Increase the Maximum WCMA
Line of Credit, or otherwise extend any other credit to Customer or any other
party; (ii) no purported extension of the Maturity Date, Increase in the Maximum
WCMA Line of Credit or other extension or agreement to extend credit shall be
valid or binding unless expressly set forth in a written instrument signed by
MLBFS; and (iii) except as otherwise expressly provided herein, this Loan
Agreement supersedes and replaces any and all proposals, letters of intent and
approval and commitment letters from MLBFS to Customer, none of which shall be
considered an Additional Agreement. No amendment or modification of this
Agreement or any of the Additional Agreements to which Customer is a party shall
be effective unless in writing signed by both MLBFS and Customer.

(n) Jurisdiction; Waiver. CUSTOMER ACKNOWLEDGES THAT THIS LOAN AGREEMENT IS
BEING ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS SOLE DISCRETION, TO ENFORCE THIS LOAN AGREEMENT AND THE ADDITIONAL
AGREEMENTS IN EITHER THE STATE OF ILLINOIS OR IN ANY OTHER JURISDICTION WHERE
CUSTOMER OR ANY COLLATERAL FOR THE OBLIGATIONS MAY BE LOCATED. CUSTOMER
CONSENTS TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN ANY STATE OR
FEDERAL COURT IN THE COUNTY OF COOK FOR SUCH PURPOSES, AND CUSTOMER WAIVES ANY
AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE. CUSTOMER FURTHER WAIVES
ANY RIGHTS TO COMMENCE ANY ACTION AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN
THE COUNTY OF COOK AND STATE OF ILLINOIS. MLBFS AND CUSTOMER HEREBY EACH
EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER PARTY WITH
RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THE WCMA LINE OF CREDIT, THIS LOAN AGREEMENT, ANY ADDITIONAL AGREEMENTS AND/OR
ANY OF THE TRANSACTIONS WHICH ARE THE SUBJECT MATTER OF THIS LOAN AGREEMENT.

IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and
year first above written.

U.S. MEDICAL INSTRUMENTS, INC.

By:[X]_______________________________________________________________
                Signature (1)                   Signature (2)

_____________________________________________________________________
                Printed Name                    Printed Name

____________________________________________________________________
                Title                           Title

Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.

By:__________________________________

                                      -10-

[MERRILL LYNCH Logo]
- --------------------------------------------------------------------------------

                            CERTIFICATE OF SECRETARY
                             (WCMA LINE OF CREDIT)

THE UNDERSIGNED HEREBY CERTIFIES that the undersigned is the duly appointed and
acting Secretary (or Assistant Secretary) of U.S. MEDICAL INSTRUMENTS, INC., a
corporation duly organized, validly existing and in good standing under the
laws of the State of California, and that the following is a true, accurate and
compared transcript of resolutions duly, validly and lawfully adopted on the
_____ day of ________________, 1996 by the Board of Directors of said
corporation acting in accordance with the laws of the state of incorporation
and the charter and by-laws of said corporation:

        "Resolved, that it is advisable and in the best interests of this
        Corporation that in connection with Working Capital Management Account
        No. 272-07763 that this Corporation is subscribing from Merrill Lynch,
        Pierce, Fenner & Smith Incorporated it obtain from MERRILL LYNCH
        BUSINESS FINANCIAL SERVICES INC. ("MLBFS") a commercial line of credit
        referred to by MLBFS as a "WCMA Line of Credit", and

        "FURTHER RESOLVED, that the President, any Vice President, Treasurer,
        Secretary or other officer of this Corporation, or any one or more of
        them, be and each of them hereby is authorized and empowered for and on
        behalf of this Corporation to: (a) execute and deliver to MLBFS: (i) a
        WCMA Note and Loan Agreement and all other agreements, instruments and
        documents required by MLBFS in connection with said Line of Credit; and
        (ii) any present or future extensions of and amendments to any of the
        foregoing; all in such form as such other shall approve, as conclusively
        evidenced by his signature thereon; (b) grant to MLBFS such liens and
        security interests on any of the assets of this Corporation as
        collateral therefor and/or the other obligations of this Corporation to
        MLBFS as may be required by MLBFS; and (c) do and perform all such acts
        and things deemed by any such officer to be necessary or advisable to
        carry out and perform the undertakings and agreements of this
        Corporation in connection therewith; and all prior acts of said officers
        in these premises are hereby ratified and confirmed; and

        "FURTHER RESOLVED, that MLBFS is authorized to rely upon the foregoing
        resolutions until it receives written notice of any change or
        revocation, which change or revocation shall not in any event affect the
        obligations of this Corporation with respect to any transaction
        committed to by MLBFS or having its inception prior to the receipt of
        such notice by MLBFG."

THE UNDERSIGNED FURTHER CERTIFIES that the foregoing resolutions have not been
rescinded, modified or repealed in any manner and are in full force and effect
as of the date of this Certificate, and that the following individuals are now
the duly elected and acting officers of said corporation:

        President:
                   -------------------------------------------

        Vice President:
                        --------------------------------------

        Secretary:
                   -------------------------------------------

        Treasurer:
                   -------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Certificate and has
affixed the seal of said corporation hereto, pursuant to due authorization, all
as of this _____ day of ____________________, 1996.

[(CORPORATE SEAL)]
                                        ---------------------------------------
                                                       Secretary

                                        ---------------------------------------
                                                      Printed Name 

Basic Info X:

Name: WCMA(R) NOTE AND LOAN AGREEMENT
Type: Loan Agreement
Date: Sept. 9, 1996
Company: U S MEDICAL INSTRUMENTS INC
State: California

Other info:

Date:

  • August 9 , 1996
  • Saturday
  • Sunday
  • September 9 , 1996
  • August 31 , 1997
  • fiscal quarter

Organization:

  • 16825 Via Del Campo Court
  • the State of Delaware
  • New York Stock Exchange
  • Working Capital Management Account of Customer
  • Uniform Commercial Code of Illinois
  • WCMA Promissory Note
  • General Funding Conditions
  • WCMA Line of Credit of this Loan Agreement
  • Interest Rate Interest
  • WCMA Directed Reserve
  • Minimum Money Accounts Balance
  • Maximum WCMA Line of Credit
  • MLPF & S
  • TMG Life Insurance Company
  • WBMA Loan Balance
  • WCMA Loan Balance
  • the State of Illinois
  • the State of California
  • Board of Directors
  • Pierce , Fenner & Smith Incorporated
  • MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.

Location:

  • San Diego
  • PIERCE
  • United States
  • State of California
  • Chicago
  • Illinois
  • U.S.

Money:

  • $ 12,500.00
  • $ 2,325,000.00
  • $ 100,000.00

Person:

  • Robert Siegel

Percent:

  • 2.65 %